Exhibit 2.2
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made this 18th day of October, 2002, by and among B&H
GOLD CORPORATION., a Wisconsin corporation, GOLD'S, INC. a Wisconsin
corporation, GOLD'S MARKET, INC., a Wisconsin corporation, and GOLD'S OF MEQUON,
LLC, a Wisconsin limited liability company (collectively being referred to
hereinafter as "Seller"); Xxxxxx X. Gold and Xxxxx Gold, collectively the
shareholders and majority members of Seller (being referred to hereinafter
collectively as the "Shareholders" and individually as a "Shareholder"); MEGA
MARTS, 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 four (4) 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, the Shareholders are collectively all of the stockholders and
members of Seller, except for two other members of Gold's of Mequon LLC, each of
which holds a 10% interest;
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, 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") of the Business:
(i) Inventory. All inventory owned by Seller and held for sale (or
rental) in the ordinary course of business at the Stores as of the Effective
Time, to the extent such inventory is usable, saleable, and not outdated (as
more fully described in Section 4(a) below) 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 associated with the Business (including but not limited to
all trademarks, service marks, trade names, pending trademark, service xxxx and
trade name applications and registrations, copyrights, and the corporate name
"Gold's") ("Intellectual Property");
(iv) Equipment. All fixtures, equipment, furniture, machinery, tools,
racks, partitions, shelving, exterior signs, refrigeration equipment, leasehold
improvements, software, computer hardware, terminals and peripheral equipment,
scanning systems owned by Seller or in which Seller has any interest, including
any leasehold interest, and other supplies located at and used in the operation
of the Business;
(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) Other Personal Property. All other personal property of every
nature or description owned by Seller 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) Accounts Receivable. All accounts receivable (including checks and
coupons) relating to any of the Stores;
(ii) Prepaid Expenses. All prepaid expenses relating to any of the
Stores;
(iii) Non-Operating Assets. The non-operating assets set forth in
Section 1(b)(iii) of the Disclosure Schedule;
(iv) Corporate Records. All corporate and financial books and records,
Seller's corporate charter and similar items
(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." 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
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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, 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, including, without
limitation, under the collective bargaining agreements in effect between Seller
and the labor unions representing its employees ("Labor Agreements"); 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.
(d) Assumption of Employee Accruals. Buyer will assume the liability of
Seller for employee bonuses, vacation and sick pay due from Seller to the
Transferred Employees (as that term is defined in Section 13)), but only in the
amount and to those persons for which Buyer receives a credit as provided in
Section 5(b) herein (the "Assumed Employee Accruals").
(e) Termination of Real Estate Subleases. Seller is currently a sublessee
of Jondex Corp. (an affiliate of Buyer) under four subleases relating to the
Stores (the "Store Subleases"). At the Closing, Xxxxxx'x will cause Jondex Corp.
to terminate each of the Store Subleases and release Seller and the Shareholders
from any further liability under the Store Subleases (to the extent such
liability relates to periods following the Effective Time for the Store in
question), and Seller will relinquish its rights under the Store Subleases and
release Jondex Corp. and Xxxxxx'x from any further liability thereunder (the
"Sublease Terminations"). Rent, percentage rent, tenant's shares of real estate
taxes, common area maintenance expenses and other payments payable by the Seller
under the Store Subleases shall be prorated as of the Effective Time for each
respective Store, in the manner described on Section 1(e) of the Disclosure
Schedule, based on actual amounts incurred or assessed for the year 2002, and
will not be adjusted after the Closing Date.
2. LIABILITIES.
(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
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 (except for real and personal
property taxes to be pro-rated between Buyer and Seller as provided in Section 5
hereof), including, without limitation, any taxes occasioned by the sale
contemplated by this Agreement; or
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(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 Plan" (as those
terms are defined in Section 13 hereof ) incurred prior to and through the
Closing Date, except for Assumed Employee Accruals.
(b) Seller shall pay and discharge, when due, any and all of the debts,
liabilities and obligations of Seller which are not assumed by Buyer.
3. PURCHASE PRICE; PAYMENT; ALLOCATION.
(a) Purchase Price. The purchase price to be paid by Buyer to Seller for
the Purchased Assets shall be Twenty-Six Million Dollars ($26,000,000),
increased by the amount of Seller's (i) Cash on Hand and (ii) Inventory (as
valued and determined in accordance with Section 4 hereof) as of the Applicable
Inventory Date (as hereinafter defined), and adjusted by the prorations provided
for in Section 5 hereof (the "Purchase Price").
(b) Payment of Purchase Price. Buyer shall pay the Purchase Price to Seller
as follows:
(i) At Closing, the sum of $26,000,000, plus an amount equal to the
parties' mutual good faith estimate of the Purchase Price attributable to Cash
on Hand and the Inventory (the "Estimated Inventory/Cash Amount"), shall be paid
by wire transfer of immediately available funds to an account designated by
Seller;
(ii) 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,
the difference between the final purchase price, as so determined, and the
amount paid by Buyer at the Closing, shall be paid by Buyer to Seller or be paid
by Seller to Buyer, as appropriate.
(c) Allocation of the Purchase Price. The Purchase Price shall be allocated
as follows:
(i) The portion of the Purchase Price constituting Cash on Hand shall
be allocated to cash;
(ii) The portion of the Purchase Price constituting Inventory, as
determined pursuant to Section 4 hereof, shall be allocated to Inventory;
(iii) $4,000,000 shall be allocated to property and equipment, and
among the several Stores as set forth on Section 3(c) of the Disclosure
Schedule;
(iv) $2,433,000 shall be allocated to leasehold improvements, and
among the several Stores as set forth on Section 3(c) of the Disclosure
Schedule;
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(v) The remainder of the Purchase Price shall be allocated to goodwill
and the going concern value of the Business, and among the several Stores as set
forth on Section 3(c) of the Disclosure Schedule.
4. PHYSICAL INVENTORY; DETERMINATION OF INVENTORY PRICE; CLOSING.
(a) As soon as practical after Buyer has received all of the Licenses and
Permits required for its ownership and operation of the Stores (including,
without limitation, liquor licenses, food stamp permits and "WIC" permits), the
parties will jointly select a date, for each of the Stores, on which the amount
of 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 GBS Inventory Service
(the "Inventory Service") (Buyer and Seller shall each have representatives
present during 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 (any merchandise with less than three (3) days
remaining shelf life or which has a manufacturer's date by which it must be sold
that is less than fourteen (14) days after the Applicable Inventory Date being
deemed "outdated" for this purpose), obsolete or otherwise unsaleable at normal
retail price in the ordinary course of business at the Stores, 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.
To the extent that the Effective Time does not correspond with the time of the
completion of the physical inventory at any Store, the value of the Inventory at
that Store will be adjusted, based on Seller's purchasing and sales records, to
reflect purchases and sales of inventory between the time of the completion of
the physical inventory and the Effective Time. In any event, Cash on Hand at
each Store will be determined based on an actual count as of the Effective Time.
Representatives of Buyer and Seller will participate jointly in the
determination of Cash on Hand.
(b) For purposes of this Agreement (including Section 3(a) 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 4(b) of the Disclosure Schedule attached
hereto (determined on the basis of Seller's actual gross margins realized by
department for the fiscal year 2002 through the end of its second quarter),
except that meat (other than processed meat), produce, deli, bakery, seafood,
floral, and supplies shall be valued at their actual cost determined in a manner
consistent with Seller's customary practice.
(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.
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(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 total cost of 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 unsaleable 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 at the Effective Time (as defined below). 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 October 23, 2002
commencing at 9:00 AM (the "Closing" or "Closing Date"). However, the Closing
shall be deemed effective as to each Store as of the opening of business at that
store on the Closing Date or, with respect to a Store that is open 24 hours, at
12:01 a.m. on the Closing 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.
5. 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
2001. Utility charges for the billing periods in which the Effective Time 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 employee bonuses, vacation and sick pay due as
of the Effective Time to the Transferred Employees (as that term is defined in
Section 13). For purposes of this Section 5(b), accrued employee bonuses,
vacation and sick 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, 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.
(c) All costs, charges or prepayments paid or payable by or to Seller under
any Assigned Contracts, as well as the premium for the month of October 2002
under the health insurance policies to be assigned under Section 13(b) below,
will be prorated as of the Applicable Inventory Date.
6. REPRESENTATIONS AND WARRANTIES OF SELLER AND THE SHAREHOLDERS.
To induce Buyer to enter into this Agreement, Seller and the
Shareholders, jointly and severally, make the following representations and
warranties:
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(a) Corporate Organization. B&H Gold Corporation, Gold's, Inc. and Gold's
Market, Inc. are corporations and Gold's of Mequon, LLC is a limited liability
company, all of which are duly organized and validly existing under the laws of
the State of Wisconsin, all filings necessary for the maintenance of their
existence have been made, and there are no proceedings pending for the
dissolution of any of them. Seller has all requisite power and authority to
carry on the Business as it is now being conducted and to own and lease the
properties and assets they 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 or members and Board of Directors or Managers. 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. 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, Articles of
Organization, By-Laws or operating agreement, or any contract, agreement,
security agreement, pledge, document, commitment, instrument, judgment, decree,
order, statute, rule or governmental regulation to which Seller or any
Shareholder is a party or by which they are bound, or which is applicable to
Seller or any 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 interest 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 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. Correct and complete copies of the
Contracts have been provided to Buyer. Each Assigned Contract is in full force
and effect and there has not occurred any event which (with or without the lapse
or passage of time and/or giving of notice) would constitute a default
thereunder by Seller or, to Seller's and the Shareholders' Knowledge, by any
other party.
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(f) Inventory. Inventory on hand at each Purchased Store on the Applicable
Inventory Date will not include any amount (either in quantity or value)
representing items that are obsolete, outdated (within the meaning of Section
4(a) hereof), damaged, spoiled or not usable or salable in the ordinary course
of the Business. 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 (other than Inventory and supplies, but including leasehold
improvements) owned or leased by Seller as of the date of such list, indicating
in each case whether owned or leased. 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. All of the tangible personal property
included among the Purchased Assets (as well as any property leased pursuant to
any of the Assigned Contracts) is in good operating condition and repair,
ordinary wear and tear excepted, and suitable and adequate, in Seller's opinion,
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
financial statements of Seller for the calendar years 2000 and 2001 and interim
financial statements for the period ended June 15, 2002 (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 Seller,
(ii) are complete and correct in all material respects, in accordance with
generally accepted accounting principles ("GAAP"), (iii) have been prepared, in
all material respects, in accordance with GAAP consistently applied during the
periods covered thereby (except as provided in clause (iv) of this paragraph),
and (iv) fairly and accurately present the financial condition, results of
operations and cash flows of the Seller as at the dates, and for the periods,
stated therein; provided, that the Financial Statements do not contain footnotes
and other supplementary information in the form required under GAAP, and do not
reflect customary year end adjustments and accruals (including vacation pay),
nor do they reflect adjustments for capitalization of leases.
(i) Absence of Certain Changes or Events. Since December 29, 2001, 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, (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. No action, suit, proceeding or
investigation before any court, arbitrator, governmental authority or
instrumentality is pending against Seller
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or any Shareholder, or to Seller's or any Shareholder's Knowledge is threatened
against Seller or any 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 Shareholders' Knowledge, no valid basis
exists for any such action, suit, proceeding or investigation.
(k) Fringe Benefit Plans. Section 6(k) of the Disclosure Schedule lists all
employee benefit and fringe benefit plans, practices, policies or arrangements
maintained by Seller, whether formal or informal, including, without limitation,
any bonus, stock option, stock purchase, deferred compensation, pension, profit
sharing, retirement, vacation pay, sick pay, health, dental, disability, life
insurance or other fringe benefit plan or arrangement. Section 6(k) of the
Disclosure Schedule contains a copy of or an accurate and complete description
of each such plan and arrangement. Seller does not have any commitment, whether
formal or informal, to create any such new plan or arrangement not set forth in
Section 6(k) of the Disclosure Schedule.
(l) Consents and Approvals. Except as set forth on Section 6(l) of the
Disclosure Schedule, 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(l) 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.
(m) Employees. Set forth on Section 6(m) of the Disclosure Schedule is a
complete list by each Store location of all of Seller's employees (the
"Employees"), both full and part time, their respective wage rates or salaries
and any bonuses paid to them for fiscal 2001 and fiscal 2002 to date.
(n) Taxes.
(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.
(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 Shareholder's Knowledge is contemplated.
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(o) Condition of Leased Real Estate. To the Knowledge of Seller and the
Shareholders (provided, that for purposes of this sentence "Knowledge" shall
refer to the knowledge of the Shareholders solely, and shall be defined without
regard to clause (ii) of Section 6(x)), 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. The
same are in good operating condition and repair, ordinary wear and tear
excepted. Except as set forth on Section 6(o) of the Disclosure Schedule, to the
Knowledge of Seller and the Shareholders (provided, that for purposes of this
sentence "Knowledge" shall refer to the knowledge of the Shareholders solely,
and shall be defined without regard to clause (ii) of Section 6(x)), 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 any of the Shareholders is aware of any
proposed material change in any such governmental or regulatory requirements or
in any such zoning requirements. To the Knowledge of Seller and the
Shareholders, 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, ordinary wear and tear excepted.
(p) Employment Practices. During the preceding five (5) years, Seller has
not experienced any significant labor dispute, and there is not currently
threatened or contemplated any strike, slow-down, picketing or work stoppage by
any Employees, or any lock-out by Seller of any employees. Seller is not engaged
in any unfair labor practice, no unfair labor practice complaint has been
asserted or is pending or, to Seller's or the Shareholders' Knowledge, is
threatened against Seller, no grievance or arbitration proceeding is pending or,
to Seller's or the Shareholders' Knowledge, threatened, and there is no claim,
suit or proceeding filed or, to Seller's or the Shareholders' Knowledge,
threatened against Seller, alleging discrimination against any past or present
Employee based on age, sex, national origin, religion or race. Seller has
complied at all times and 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 at all times and 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 Seller and the 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. Seller has complied in material all respects with the Labor Agreements.
Seller has obtained and maintained the employee records
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and I-9 forms in proper order as required by law. To the Knowledge of Seller and
the Shareholders, Seller is not currently employing any workers unauthorized to
work.
(q) 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, (W) Seller has not caused there to be any Hazardous Substances (as
that term is hereinafter defined) 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, (2) limit the ability of Buyer to conduct
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; (X) to Seller's and the Shareholders' Knowledge none of the
Real Estate is designated, restricted or being investigated by any governmental
authority as a result of the actual or suspected presence, spillage, leakage,
discharge or other emission of Hazardous Substances, nor is there any basis for
any such designation, restriction or investigation; (Y) no Hazardous Substances
have been generated, used, stored, treated, manufactured, refined, handled,
produced or disposed 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; and (Z) neither Seller nor the Shareholders have, within
the preceding 24 months, received any of the following (nor are there any of the
following, regardless of when they were received, currently outstanding or in
effect): 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 aspect of the manner in which the
Business is or has been conducted, nor any Store premises (except for conditions
present on the Real Estate at the xxxx Xxxxxx took possession of the same) is in
violation of, or subject to any liabilities as a result of any past or current
violations by Seller 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").
(iii) For purposes of this Agreement, the term "Hazardous Substance"
shall mean any product, substance, chemical, contaminant, pollutant, effluent,
waste or other material
11
whose presence, nature, quantity and/or intensity of existence, use,
manufacture, disposal, transportation, emission, discharge, spill, release or
effect, either by itself or in combination with other materials located on any
of the Real Estate, 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.
(r) 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) required to operate the Business in the manner in
which it has heretofore been operated by Seller.
(s) Compliance with Laws. Seller has complied in all material respects with
all applicable 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 may be
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 any of the Shareholders has, within the preceding 24 months,
received any notice alleging any such violation (nor is any such notice,
regardless of when it was received, still in effect or outstanding), nor does
Seller or any of the Shareholders have any Knowledge of any inquiry,
investigation or proceeding relating thereto.
(t) 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(t) 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 any of the
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.
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(u) Intellectual Property. Section 6(u) of the Disclosure Schedule sets
forth a complete and correct list of all of the following owned (as indicated)
or used by Seller in any jurisdiction and all of the same are valid, subsisting
and not expired: (i) patents and patent applications, (ii) registered and
unregistered trademarks, service marks, logos, Internet domain names, trade
names and business names and applications to register the foregoing, (iii)
registered and unregistered copyrights and applications to register copyrights,
and (iv) computer software (other than computer software that is regularly and
commercially available ) (collectively, the "Intangible Rights"). 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
Shareholders (it being acknowledged that Seller has not conducted any search for
potentially conflicting uses of any trade name or other Intangible Rights), no
aspect of the Business (including, without limitation, the use of the Intangible
Rights) conflicts with any intellectual property or similar rights of others,
and neither Seller nor the Shareholders has received any notice, allegation or
assertion from any other person to that effect. To the Knowledge of Seller and
the Shareholders (it being acknowledged that Seller has not conducted any search
for potentially conflicting uses of any trade name or other Intangible Rights),
there is no material infringement or violation by any other person of Seller's
rights in any of the Intangible Rights.
(v) Brokers' Fees. Seller and the Shareholders 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.
(w) Computer Software. Except as disclosed in Section 6(w) of the
Disclosure Schedule, all computer programs and software owned by Seller or used
by Seller in the conduct of the Business and material to the conduct of the
Business (i) are regularly and commercially available without restriction on an
"over-the-counter" or "off-the-shelf" basis and have been so acquired by Seller
and (ii) have not 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 Shareholders. For those warranties and
representations set forth in this Section 6 which are qualified by reference to
the Seller's and or the Shareholders' "awareness" or "Knowledge", the Seller and
the 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 Shareholder or to any officer of director of the Seller;
and (ii) any matter, fact or thing which reasonably should be known by any
Shareholder after "due inquiry" by such Shareholder, taking into account any and
all roles or positions which such 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 Stores and
13
Seller's principal law firm and outside accounting firm.
7. REPRESENTATIONS AND WARRANTIES OF BUYER AND XXXXXX'X. To induce Seller
and the Shareholders to enter into this Agreement, Buyer makes 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) 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.
8. CONDUCT OF BUSINESS PRIOR TO CLOSING. Seller and the Shareholders,
jointly and severally, represent, warrant and 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 in the usual and ordinary course of business upon terms consistent
with past practices);
(c) not encumber any of the Purchased Assets 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
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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 through the Closing Date; 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
through the Effective Time.
9. CONDITIONS TO OBLIGATIONS OF BUYER AND XXXXXX'X. Each and every
obligation of Buyer and Xxxxxx'x under this Agreement 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 Buyer:
(a) Representations and Warranties True. Each and every representation and
warranty of Seller and the 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 as of the date when made and as
of the Effective Time and the Closing Date as though such representation and
warranty were made by Seller and the Shareholders at the Effective Time and at
the Closing Date.
(b) Performance. Seller and the Shareholders shall have performed and
complied 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 Date, 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 Buyer and its counsel and shall be effective at
and as of the Closing Date.
15
(f) Third Party Consents. Seller shall have obtained and delivered to Buyer
executed written consents of any third parties to the sale of the Purchased
Assets to Buyer hereunder ("Third Party Consents") which may be required
pursuant to any agreement or arrangement to which Seller or any Shareholder is a
party, including, without limitation, such documents as may be necessary to
terminate any liens, security interests, encumbrances or other interests of
third parties in or to the Purchased Assets and consents to the assignment by
Seller to Buyer of the material Assigned Contracts. Such consents to assignment
shall also confirm that such party whose consent is being obtained is not in
default thereunder, that Seller is not in default thereunder, and that the
Assigned Contract is in full force and effect and will remain so after its
assignment to Buyer.
(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 Certificates. Buyer shall have received a consent or estoppel
certificate in form and substance satisfactory to Buyer in its reasonable
discretion from the landlord under each of the leases for the Stores (the
"Estoppel Certificate"), to the extent the landlord's consent thereunder is
required.
(i) Termination and Release Agreement. Xxxxxx'x, Seller and the
Shareholders 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 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; and similar matters;
(j) 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
December 29, 2001 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;
(k) 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 the
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;
16
(l) New Labor Agreements. Buyer and the union representing Seller's
employees (the "Union") shall have negotiated and entered into new collective
bargaining agreements ("New Union Agreements"), replacing the Labor Agreements.
With respect to pay scale and seniority, the terms thereof shall be
substantially equivalent to those of the existing Labor Agreements, provided
that (i) the terms relating to employees' health insurance will be changed to
provide for insurance through a self-insured plan maintained by Buyer and (ii)
Buyer will not be obligated to contribute to the Union's multi-employer pension
plan.
(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, and manager(s) and/or member(s), 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 form and substance
mutually agreed upon by the parties.
(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 and Articles of Organization to eliminate
from Seller's corporate names the words "Gold" and "Gold's" and any other words
or terms confusingly similar thereto.
(vi) the Third Party Consents.
(vii) a consulting agreement between Buyer and Xxxxxx Xxxx in
substantially the form attached hereto as Exhibit 9(l)(vii) (the "Gold
Consulting Agreement").
(viii) all other instruments and documents required by this Agreement
to be delivered by Seller or the 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;
17
(D) certificates of title to any vehicles included among the
Purchased Assets.
10. CONDITIONS TO OBLIGATIONS OF SELLER. Each and every obligation of
Seller under this Agreement 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 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 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 Date, 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.
(f) Deliveries at Closing. Buyer shall have delivered to Seller at the
Closing:
(i) that portion of the Purchase Price payable at the Closing;
(ii) the Termination and Release 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;
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(iv) a legal opinion from Xxxxxx'x counsel in form and substance
mutually agreed upon by the parties;
(v) the Gold Consulting Agreement, duly executed by Buyer.
11. CONFIDENTIALITY AND NONCOMPETITION.
(a) Buyer, Xxxxxx'x, the Shareholders and Seller shall, and shall each
cause their respective representatives to, keep the financial terms of this
Agreement and of the transactions contemplated hereby confidential, both prior
to and after the Closing, except that Xxxxxx'x may disclose the financial terms
of the transaction (i) to the extent required under applicable state and federal
securities laws and regulations applicable to it and its corporate parent, and
(ii) to its equity investors, institutional lenders, and the holders of its debt
securities, to the extent reasonably requested by them. Immediately following
the execution hereof, Buyer and Seller shall jointly make a press release in a
form mutually agreeable to the parties. Except as provided in this paragraph,
and without limiting the generality of the foregoing, without the prior written
consent of the Buyer, no disclosure (either prior to or after the Closing) shall
be made by the Seller, the Shareholders or their representatives relating to the
financial terms of this Agreement or of the transactions contemplated hereby.
(b) Seller and each of the Shareholders 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:
(i) 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 selling at retail groceries or
other products typically sold at full line grocery stores;
(ii) divert or attempt to divert any business from Buyer or Xxxxxx'x
or their affiliates or engage in any act which causes or is likely to cause any
present or future customer or supplier of the Business to discontinue or curtail
its business with Buyer or Xxxxxx'x or their affiliates or to do business with
another entity, business, activity or enterprise; or
(iii) solicit, cause or seek to cause any employee of the Business to
terminate, curtail or otherwise modify his employment relationship with Buyer or
Xxxxxx'x or their affiliates for the purpose of entering into an employment or
other relationship with Seller or any entity, firm, business activity or
enterprise with which Seller is affiliated.
(c) Seller and the Shareholders acknowledge and agree that the restrictions
set forth in this Section 11 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 11 is determined to be invalid by any court of
competent jurisdiction, the provisions of this Section 11 shall be deemed to
have been amended and the
19
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 11 so as to render the terms of this
Section 11 enforceable in all respects as so modified.
(d) Seller and the Shareholders acknowledge and agree that irreparable
injury may result to Buyer and Xxxxxx'x in the event Seller or any of the
Shareholders breaches any covenant contained in this Section 11, and that the
remedy at law for the breach of any such covenant will be inadequate. Therefore,
if Seller or any of the Shareholders engages or threatens to engage in any act
in violation of the provisions of this Section 11, 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 11.
12. 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, for purposes reasonably related to Buyer's operation of
the Business and/or ownership of the Purchased Assets.
13. EMPLOYEES.
(a) Termination by Seller and Hiring By Buyer. Seller shall terminate all
of the Employees immediately prior to the Effective Time. Buyer will offer
reasonably equivalent employment to substantially all of the store level
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 Employees so as to ensure that (assuming all such offers of
employment are accepted, and further assuming that no 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"). The Employees hired by Buyer as of the Closing Date are
referred to herein as "Transferred Employees."
(b) Health Insurance. Buyer will provide coverage to the Transferred
Employees under Buyer's employee health insurance plans effective immediately
after the Closing Date. To provide that coverage initially, Seller will retain
its group health insurance policies in place and those policies will be assigned
to Buyer as of the Effective Time (provided that Seller and the Shareholders
make no representation or warranty regarding the assignability of such policies
or
20
the effect of such assignment). Buyer will be responsible for the payment of all
premiums thereunder for periods commencing November 1, 2002.
14. 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 three (3) years following the Closing,
except for the representations and warranties contained in Subsections 6(a),
(b), (c), (d) and (l) which shall survive indefinitely, and those contained in
Subsection 6(n) 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 14. 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 14 shall be cumulative and shall not
preclude the assertion by either party hereto of any other rights or the seeking
of any other remedies against the other party hereto.
(c) Seller's and Shareholders' Indemnification Covenants. Seller and the
Shareholders, jointly and severally, will indemnify Buyer and Xxxxxx'x and their
affiliates 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
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 any Shareholder in this Agreement or in any certificate or other
document or instrument delivered by Seller or any Shareholder to Buyer or
Xxxxxx'x in connection with the transactions contemplated hereby;
(ii) any failure of Seller or any Shareholder to comply with, or any
breach or nonfulfillment by Seller or any Shareholder of, any covenant of Seller
or the Shareholders set forth in this Agreement or in any certificate or other
document or instrument delivered by Seller or any Shareholder to Buyer or
Xxxxxx'x in connection with the transactions contemplated hereby;
(iii) any failure of Seller or any 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(n) 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
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(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(u) hereof is breached.
(d) Buyer's Indemnification Covenants. Buyer and Xxxxxx'x, jointly and
severally, will indemnify Seller and the 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 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 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 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.
(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
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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) Limitations on Claims.
(i) Time Limitations. An Indemnified Party shall not be entitled to
indemnification pursuant to this Section 14 with respect to any claim for
indemnification pursuant to subparagraph 14(c)(i) or Subparagraph 14(d)(i)
unless written notice of such claim is given by the Indemnified Party to the
Indemnifying Party within the applicable Survival Period.
(ii) Indemnification Threshold. Notwithstanding anything to the
contrary herein and except as provided in Section 14(f)(iii) below, any claim by
an Indemnified Party against any Indemnifying Party under Sections 14(c)(i) or
14(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 Fifty Thousand Dollars ($50,000) in the aggregate
(the "Indemnification Threshold"). In applying the Indemnification Threshold,
the Seller and the Shareholders 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. 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).
(iii) Zero-Threshold Claims. Notwithstanding the preceding Section
14(f)(ii), claims related to a breach of the representations and warranties
contained in Subsections 6(a), (b), (c), and (d) ("Zero-Threshold Claims") shall
not be subject to the Indemnification Threshold, but shall be payable on a
dollar-for-dollar basis without any exclusion therefor or limitation thereon.
15. GENERAL PROVISIONS.
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(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
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
(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 Shareholders in writing in accordance with this Section.
If to Seller or to the Shareholders, to:
Gold's Management, Inc.
000 Xxxxxxxx Xxxxx
Xxxxxxx, XX 00000
ATTN: Xxxxxx Xxxx
with a copy to:
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Fox, X'Xxxxx & Xxxxxxx SC
000 Xxxxx Xxxxx Xxxxxx, #000
Xxxxxxxxx, XX 00000
ATTN: Xxxxxxx X. Xxxxxxxxxx
or to such other person or address as Seller or the 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 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 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) 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.
(i) Entire Agreement. This Agreement, including the Disclosure Schedule and
Exhibits hereto, and together with the Sublease Terminations, 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.
(j) 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.
(k) 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.
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(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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
SELLER:
GOLD'S CORPORATION GOLD'S, INC.
By: /s/ Xxxxxx X. Gold By: /s/ Xxxxxx X. Gold
------------------------------------ ---------------------------------
Xxxxxx X. Gold, President Xxxxxx X. Gold, President
GOLD'S MARKET, INC. GOLD'S OF MEQUON, LLC
By: /s/ Xxxxxx X. Gold By: /s/ Xxxxxx X. Gold
------------------------------------ ---------------------------------
Xxxxxx X. Gold, President Xxxxxx X. Gold, Manager
BUYER: XXXXXX'X:
MEGA MARTS, INC. XXXXXX'X, INC.
By: /s/ Xxxxxx X. Xxxx By: s/ Xxxxxx X. Xxxx
------------------------------------ ---------------------------------
Xxxxxx X. Xxxx, Vice President Xxxxxx X. Xxxx, Vice President,
and Secretary Secretary and Treasurer
SHAREHOLDERS:
/s/ Xxxxxx X. Gold /s/ Xxxxx Gold
---------------------------------------- -------------------------------------
Xxxxxx X. Gold Xxxxx Gold
26
LIST OF OMITTED EXHIBITS AND SCHEDULES TO ASSET PURCHASE AGREEMENT DATED OCTOBER
18, 2002, BY AND AMONG B&H GOLD CORPORATION, GOLD'S, INC., GOLD'S MARKET, INC.,
GOLD'S OF MEQUON, LLC, MEGA MARTS, INC. AND XXXXXX'X, INC.
DISCLOSURE SCHEDULE
Section 1(b)(iii) Non-Operating Assets
Section 1(e) Sublease Prorations
Section 3(c) Individual Store Allocation
Section 4(b) Margin Percentage by Department for the Stores
Section 6(d) Security Interests
Section 6(e) Assigned Contracts/Leases, Subleases, Contracts and
Agreements
Section 6(g) List of Equipment
Section 6(i) Absence of Certain Changes or Events
Section 6(k) Employee Benefit and Fringe Benefit Plans
Section 6(l) Consents and Approvals
Section 6(m) List of Employees
Section 6(o) Condition of Leased Real Estate
Section 6(t) Permits and Licenses
Section 6(u) Intellectual Property
Section 6(w) Computer Software
THE ABOVE-DESCRIBED EXHIBITS AND SCHEDULES ARE OMITTED FROM THIS FILING PURSUANT
TO ITEM 601(B)(2) OF REGULATION S-K. THE REGISTRANT, XXXXXX'X, INC., HEREBY
AGREES TO FURNISH A COPY OF SUCH EXHIBITS AND SCHEDULES TO THE COMMISSION UPON
REQUEST
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