Exhibit 2
ACQUISITION AND MERGER AGREEMENT
among
EPITOPE, INC.,
THAMSCOE, INC.
XXXXXX AND XXXXXXXXXX SALES, CO.
and
THE SHAREHOLDERS
OF XXXXXX AND XXXXXXXXXX SALES, CO.
Dated: November 6, 1996
TABLE OF CONTENTS
ARTICLE I
THE MERGER . . . . . . . . . . . . . . . 1
1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Effects of the Merger. . . . . . . . . . . . . . . . . . . . . . 1
1.3 Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
CONVERSION OF SHARES. . . . . . . . . . . . . 2
2.1 Conversion of A&W Common Stock . . . . . . . . . . . . . . . . . 2
2.2 Cancellation of Shares . . . . . . . . . . . . . . . . . . . . . 2
2.3 Epitope Sub Common Stock . . . . . . . . . . . . . . . . . . . . 2
2.4 Share Transfers. . . . . . . . . . . . . . . . . . . . . . . . . 2
2.5 Missing Certificates . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III
CLOSING; OTHER ACTIONS
3.1 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
3.2 Actions at Closing . . . . . . . . . . . . . . . . . . . . . . . 3
3.3 Tax Clearance. . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE IV
DEFINITIONS. . . . . . . . . . . . . . . 4
4.1 Agreement of Merger. . . . . . . . . . . . . . . . . . . . . . . 4
4.3 Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.4 Associate. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.5 A&W Certificate. . . . . . . . . . . . . . . . . . . . . . . . . 4
4.6 A&W Common Stock . . . . . . . . . . . . . . . . . . . . . . . . 4
4.7 A&W Financial Statements . . . . . . . . . . . . . . . . . . . . 4
4.8 California Secretary . . . . . . . . . . . . . . . . . . . . . . 4
4.9 CERCLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.10 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.11 Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.12 Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . 4
4.13 Employee Plans/Agreements. . . . . . . . . . . . . . . . . . . . 4
4.14 Environmental Law. . . . . . . . . . . . . . . . . . . . . . . . 4
4.15 Epitope Common Stock . . . . . . . . . . . . . . . . . . . . . . 5
4.16 Epitope Financial Statements . . . . . . . . . . . . . . . . . . 5
4.17 ERISA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.18 GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.19 Governmental Entity. . . . . . . . . . . . . . . . . . . . . . . 5
4.20 Hazardous Substances . . . . . . . . . . . . . . . . . . . . . . 5
4.21 Injunction . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.22 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.23 Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.24 Requisite Regulatory Approvals . . . . . . . . . . . . . . . . . 5
4.25 Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.26 Surviving Corporation. . . . . . . . . . . . . . . . . . . . . . 5
4.27 Trade Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
A&W AND SHAREHOLDERS. . . . . . . . . . . . . 5
5.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . 5
5.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.3 Authority; No Violation. . . . . . . . . . . . . . . . . . . . . 6
5.4 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . 7
5.5 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 7
5.6 Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.7 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . 8
5.8 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . 9
5.9 No Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 9
5.10 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . 9
5.11 Title to and Condition of Properties . . . . . . . . . . . . . . 11
5.12 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.13 Contracts and Commitments. . . . . . . . . . . . . . . . . . . . 11
5.14 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . 12
5.15 Employment Compensation. . . . . . . . . . . . . . . . . . . . . 12
5.16 Patents, Trademarks, Etc.. . . . . . . . . . . . . . . . . . . . 13
5.17 Customers and Suppliers. . . . . . . . . . . . . . . . . . . . . 13
5.18 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.19 Banks; Powers of Attorney. . . . . . . . . . . . . . . . . . . . 14
5.20 Adverse Conditions . . . . . . . . . . . . . . . . . . . . . . . 15
5.21 Investment Representations . . . . . . . . . . . . . . . . . . . 15
5.22 Nature of Shares . . . . . . . . . . . . . . . . . . . . . . . . 16
5.23 Broker's Fees. . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.24 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.25 Knowledge. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF
EPITOPE. . . . . . . . . . . . . . . . 17
6.1 Corporate Organization . . . . . . . . . . . . . . . . . . . . . 17
6.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.3 Validity of Shares.. . . . . . . . . . . . . . . . . . . . . . . 17
6.4 Authority; No Violation. . . . . . . . . . . . . . . . . . . . . 17
6.5 Consents and Approvals . . . . . . . . . . . . . . . . . . . . . 18
6.6 Financial Statements . . . . . . . . . . . . . . . . . . . . . . 18
6.7 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . 19
6.8 Absence of Undisclosed Liabilities . . . . . . . . . . . . . . . 20
6.9 No Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 20
6.10 Compliance With Laws . . . . . . . . . . . . . . . . . . . . . . 20
6.11 Title to and Condition of Properties . . . . . . . . . . . . . . 21
6.12 Patents, Trademarks, Etc.. . . . . . . . . . . . . . . . . . . . 21
6.13 Adverse Conditions . . . . . . . . . . . . . . . . . . . . . . . 21
6.14 Broker's Fees. . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.15 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
6.16 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VII
ADDITIONAL AGREEMENTS . . . . . . . . . . . . 22
7.1 Actions in Connection with Merger. . . . . . . . . . . . . . . . 22
7.2 Transition . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
7.3 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . 22
7.4 Share Legend . . . . . . . . . . . . . . . . . . . . . . . . . . 23
7.5 Rights of Access . . . . . . . . . . . . . . . . . . . . . . . . 24
7.6 Corporate Records, Contracts, Etc. . . . . . . . . . . . . . . . 24
7.7 Current Financial Information. . . . . . . . . . . . . . . . . . 24
7.8 Certain Forbearances by A&W. . . . . . . . . . . . . . . . . . . 25
7.9 Certain Forbearances by Epitope. . . . . . . . . . . . . . . . . 27
7.10 Preservation of Business . . . . . . . . . . . . . . . . . . . . 27
7.11 Scheduled A&W Debt . . . . . . . . . . . . . . . . . . . . . . . 27
7.12 Noncompetition Agreement . . . . . . . . . . . . . . . . . . . . 28
7.13 Knowledge of Epitope . . . . . . . . . . . . . . . . . . . . . . 29
7.14 Materiality. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.15 Limitation of Liability. . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VIII
CONDITIONS PRECEDENT. . . . . . . . . . . . . 29
8.1 Conditions to Each Party's Obligation to Effect the Merger . . . 29
8.2 Conditions to Obligations of Epitope and Epitope Sub . . . . . . 31
8.3 Conditions to Obligations of A&W . . . . . . . . . . . . . . . . 32
ARTICLE IX
TERMINATION AND AMENDMENT . . . . . . . . . . . 33
9.1 Termination. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.2 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . 33
9.3 Extension; Waiver. . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE X
GENERAL PROVISIONS . . . . . . . . . . . . . 34
10.1 Survival of Representations, Warranties, and Agreements. . . . . 34
10.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.3 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.4 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 36
10.7 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.9 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.10 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.11 Attorney Fees. . . . . . . . . . . . . . . . . . . . . . . . . . 36
10.12 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . 37
Exhibits
A List of Directors and Officers of Surviving Corporation
B A&W Disclosure Schedule
C Registration Agreement
D Form of Employment Agreement
Schedules
7.11 Scheduled A&W Indebtedness
7.12 Noncompetition Territory
ACQUISITION AND MERGER AGREEMENT
THIS ACQUISITION AND MERGER AGREEMENT dated as of November 6, 1996,
is among Epitope, Inc., an Oregon corporation ("Epitope"), Xxxxxx and
Xxxxxxxxxx Sales, Co., a California corporation ("A&W"), the shareholders of
A&W (the "Shareholders"), and Thamscoe, Inc., a California corporation wholly
owned by Epitope ("Epitope Sub").
B A C K G R O U N D
A&W is a producer and wholesale distributor of a variety of fruits
and vegetables. Agritope, Inc., a wholly-owned subsidiary of Epitope, uses
genetic engineering techniques to develop new varieties of vegetables and
other plants in which the ripening process can be controlled.
The boards of directors of Epitope and A&W have determined that it
is in their best interest for Epitope to acquire A&W by merging Epitope Sub
with and into A&W, with A&W remaining as the surviving corporation ("Surviving
Corporation"), under the terms and conditions described in this agreement (the
"Merger"). In connection with the transaction, the Shareholders will receive
Epitope stock worth approximately $7.0 million.
The parties intend that the Merger constitute a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code").
Capitalized terms not otherwise defined have the meanings given in
Article IV.
A G R E M E N T
The parties therefore agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the terms and conditions of this
agreement, Epitope Sub will merge with and into A&W at the Effective Time in
accordance with the California General Corporation Law (the "CGCL"). A&W
shall be the Surviving Corporation in the Merger, and shall continue its
corporate existence after the Effective Time. Upon consummation of the
Merger, the separate corporate existence of Epitope Sub shall cease.
1.2 Effects of the Merger. At and after the Effective Time, the
Merger shall have the effects set forth in Section 1107 of the CGCL.
1.3 Surviving Corporation. From and after the Effective Time,
the articles of incorporation and bylaws of the Surviving Corporation shall be
the articles of incorporation and bylaws of A&W as in effect prior to the
Effective Time, until the same shall be further amended. From and after the
Effective Time, the directors and officers of the Surviving Corporation shall
be the persons listed on Exhibit A attached hereto, until their successors
shall have been duly elected or until their earlier resignation or removal.
ARTICLE II
CONVERSION OF SHARES
2.1 Conversion of A&W Common Stock. At the Effective Time, by
virtue of the Merger and without any further action on the part of the
parties, each outstanding share of A&W Common Stock shall be converted into
26 shares of Epitope Common Stock. Each Shareholder shall receive the number
of shares of Epitope Common Stock set forth opposite his name below:
Number of Shares
of Epitope
Shareholder Common Stock
----------- ----------------
Xxxx X. Xxxxxx 208,000
Xxxx X. Xxxxxxxxxx 208,000
Xxxx X. Xxxxxxxxxx 52,000
Xxxxx Xxxxxx 52,000
2.2 Cancellation of Shares. Each share of A&W Common Stock
shall be canceled and cease to exist as of the Effective Time, and each A&W
Certificate previously representing any shares of A&W Common Stock shall
thereafter represent solely the right to receive the consideration provided
herein.
2.3 Epitope Sub Common Stock. At and after the Effective Time,
each share of common stock of Epitope Sub issued and outstanding immediately
prior to the Effective Time shall be converted, on a pro rata basis, into an
aggregate of 100 fully paid and nonassessable shares of capital stock of the
Surviving Corporation, no par value, which shares shall constitute all the
issued and outstanding capital stock of the Surviving Corporation at the
Effective Time.
2.4 Share Transfers. If any certificate representing shares of
Epitope Common Stock is to be issued in a name other than that in which the
surrendered A&W Certificate is registered, it shall be a condition of issuance
that the A&W Certificate shall be properly endorsed (or accompanied by an
appropriate instrument of transfer) and that the person requesting such
issuance shall pay to Epitope in advance any transfer or other taxes required
by reason of the issuance of the Epitope Common Stock certificate as
requested, or required for any other reason, or shall establish to the
satisfaction of Epitope that such tax has been paid or is not payable.
2.5 Missing Certificates. If any A&W Certificate has been lost,
stolen or destroyed, Epitope shall issue the shares of Epitope Common Stock
deliverable upon surrender of the missing certificate if the holder provides
an affidavit satisfactory to Epitope that the certificate has been lost,
stolen, or destroyed, and, if required by Epitope, posts a bond in such amount
as Epitope may determine is reasonably necessary as indemnity against any
claim that may be made against it with respect to the missing certificate.
ARTICLE III
CLOSING; OTHER ACTIONS
3.1 Closing. The closing of the transactions contemplated by
this agreement shall occur at a time and date mutually agreed upon by Epitope
and A&W, but in no event later than five business days after (a) the date
Epitope has renegotiated the terms of A&W's outstanding indebtedness to Xxxxx
Fargo Bank, National Association (the "A&W Bank Loan") so that the condition
set forth in Section 8.2(d) below has been satisfied, or (b) the date that the
Epitope Common Stock to be issued in the Merger has been approved for listing
on the AMEX so that the condition set forth in Section 8.1(f) has been
satisfied, whichever is later. Closing shall occur at such location as
Epitope and A&W shall mutually agree. Closing shall begin at such time, and
shall be conducted in such manner, as may be agreed by Epitope and A&W, and
shall continue until the Effective Time and until all actions required at
closing have been taken.
3.2 Actions at Closing. At closing, subject to satisfaction or
waiver of all conditions precedent set forth in this agreement:
(a) The Shareholders shall surrender the A&W Certificates
representing all of A&W's capital stock outstanding immediately
prior to the Effective Time to Epitope for cancellation at the
Effective Time.
(b) Epitope shall deliver to each Shareholder,
certificates for the shares of Epitope Common Stock to which the
Shareholder is entitled hereunder in connection with the Merger.
(c) A&W and Epitope Sub shall cause a copy of the
Agreement of Merger to be filed with the California Secretary and
shall cause all other actions to be taken required to consummate
the Merger.
(d) The parties shall each deliver the various other
documents that are described elsewhere in this agreement
evidencing satisfaction of the conditions to the Merger, and shall
take any other actions expressly required by this agreement, or
reasonably requested by any of them, at or before the Effective
Time in order to consummate the Merger.
3.3 Tax Clearance. As soon as practicable prior to the Closing,
A&W shall have obtained a certificate of tax clearance from the California
Franchise Tax Board and caused such certificate to be filed with the
California Secretary.
ARTICLE IV
DEFINITIONS
The following terms have the meanings given below or in the
sections indicated.
4.1 Agreement of Merger: Agreement of Merger, together with an
officer's certificate of approval, which will be filed with the California
Secretary at the Effective Time.
4.2 AMEX: The American Stock Exchange, Inc., or, if the Epitope
Common Stock ceases to be listed on the American Stock Exchange, Inc., the
securities exchange or national market system on which the Epitope Common
Stock is listed.
4.3 Affiliate: The persons and entities specified in the
definition of such term under Rule 405 of the Securities Act.
4.4 Associate: The persons and entities specified in the
definition of such term under Rule 405 of the Securities Act.
4.5 A&W Certificate: A certificate for A&W Common Stock
4.6 A&W Common Stock: Common stock, no par value, of A&W.
4.7 A&W Financial Statements: See Section 5.5.
4.8 California Secretary: The Secretary of State of the state
of California.
4.9 CERCLA: Comprehensive Environmental Response, Compensation,
and Liability Act of 1980.
4.10 Closing Date: The date of closing of the transactions
contemplated by this agreement.
4.11 Code: See Background.
4.12 Effective Time: The date and time when the Merger becomes
effective as a result of filing the Merger Agreement.
4.13 Employee Plans/Agreements: See Section 5.14.
4.14 Environmental Law: See Section 5.10.
4.15 Epitope Common Stock: Common stock, no par value, of
Epitope.
4.16 Epitope Financial Statements: See Section 6.6.
4.17 ERISA: See Section 5.14.
4.18 GAAP: See Section 5.5.
4.19 Governmental Entity: See Section 5.4.
4.20 Hazardous Substances: See Section 5.10.
4.21 Injunction: See Section 8.1.
4.22 Liens: See Section 5.11.
4.23 Merger: See Background.
4.24 Requisite Regulatory Approvals: See Section 8.1.
4.25 Securities Act: The Securities Act of 1933, as amended.
4.26 Surviving Corporation: A&W, as the surviving corporation in
the Merger.
4.27 Trade Rights: See Section 5.16.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF
A&W AND SHAREHOLDERS
Except as set forth in the A&W Disclosure Schedule attached as
Exhibit B, A&W and each Shareholder jointly and severally represent and
warrant to Epitope that:
5.1 Corporate Organization.
(a) A&W is a corporation duly organized and validly existing
under the laws of the state of California. A&W has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased
by it makes such licensing or qualification necessary, except where the
failure to be so licensed or qualified would not have a material adverse
effect on A&W. Copies of the Articles of Incorporation and Bylaws of A&W that
have previously been made available to Epitope are true, complete and correct
copies of such documents as in effect as of the date of this agreement.
(b) Except as set forth in the A&W Disclosure Schedule, A&W has
no subsidiaries and does not own an interest in any other corporation,
partnership or other organization, whether incorporated or unincorporated.
(c) A complete copy of A&W's minute book has been delivered to
Epitope. The minutes contained therein correctly reflect the corporate
actions of A&W's shareholders and its Board of Directors (including committees
of the Board of Directors of A&W) described therein.
5.2 Capitalization. The authorized capital stock of A&W
consists of 100,000 shares of A&W Common Stock. At the date of this
agreement, 20,000 shares of A&W Common Stock are outstanding, all of which are
owned by the Shareholders, free of Liens, as follows:
Xxxx X. Xxxxxx 8,000
Xxxx X. Xxxxxxxxxx 8,000
Xxxx X. Xxxxxxxxxx 2,000
Xxxxx Xxxxxx 2,000
All of the issued and outstanding shares of A&W capital stock have been duly
authorized and validly issued and are fully paid, nonassessable and free of
preemptive rights with no personal liability attaching to the ownership
thereof. A&W does not have and is not bound by any outstanding subscriptions,
options, warrants, calls, commitments or agreements of any character calling
for the purchase or issuance of any shares of A&W Common Stock or any other
equity securities of A&W or any securities representing the right to purchase
or otherwise receive any shares of A&W Common Stock or other such equity
securities.
5.3 Authority; No Violation.
(a) A&W has full corporate power and corporate authority to
execute and deliver this agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this agreement and the
consummation of the transactions contemplated hereby have been duly and
validly approved by the Board of Directors and Shareholders of A&W. No other
corporate proceedings on the part of A&W are necessary to approve this
agreement and to consummate the transactions contemplated hereby. This
agreement has been duly and validly executed and delivered by A&W and
(assuming due authorization, execution, and delivery by Epitope and Epitope
Sub) constitutes the valid and binding obligation of A&W, enforceable against
A&W in accordance with its terms, except as enforcement may be limited by
general principles of equity whether applied in a court of law or a court of
equity and by bankruptcy, insolvency and similar laws affecting creditors'
rights and remedies generally.
(b) Neither the execution and delivery of this agreement by A&W,
nor the consummation by A&W of the transactions contemplated hereby, nor
compliance by A&W with any of the terms or provisions hereof, will (i) violate
any provision of the Articles of Incorporation or Bylaws of A&W or
(ii) assuming that the consents and approvals referred to in Sections 5.4 and
6.5 are duly obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to A&W or
any of its properties or assets, or (y) violate, conflict with, result in a
breach of any provision of or the loss of any benefit under, constitute a
default (or an event that, with notice or lapse of time, or both, would
constitute a default) under, result in the termination of or a right of
termination or cancellation under, accelerate the performance required by, or
result in the creation of any lien, pledge, security interest, charge or other
encumbrance upon any of the properties or assets of A&W under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, deed
of trust, license, lease, agreement or other instrument or obligation to which
A&W is a party, or by which A&W or any of its properties or assets may be
bound or affected, except (in the case of clause (x) or (y) above) for such
violations, conflicts, breaches or defaults that, either individually or in
the aggregate, will not have or be reasonably likely to have a material
adverse effect on A&W.
5.4 Consents and Approvals. Except for (i) the filing of the
Certificate of Merger with the California Secretary pursuant to the CGCL,
(ii) such filings and approvals as are required to be made or obtained under
federal and state securities laws in connection with the issuance of the
shares of Epitope Common Stock pursuant to this agreement, and (iii) the
consents and approvals set forth in A&W Disclosure Schedule, no consents or
approvals of or filings or registrations with any court, administrative agency
or commission or other governmental authority or instrumentality (each a
"Governmental Entity") or of or with any third party are necessary in
connection with (x) the execution and delivery by A&W of this agreement and
(y) the consummation by A&W of the Merger and the other transactions
contemplated hereby.
5.5 Financial Statements. A&W has previously delivered to
Agritope copies of (a) the balance sheets of A&W as of February 28 for the
fiscal years 1996, 1995 and 1994, and the related consolidated statements of
income, changes in stockholders' equity and cash flows for the fiscal years
1996, 1995, and 1994, together with the related notes, in each case
accompanied by the audit report of Xxxxx & Xxxxxxxxxx, independent public
accountants, and (b) the audited balance sheets of A&W as of September 30,
1996, and the related audited statements of income, cash flows, and changes in
stockholders' equity for the [seven] months then ended (subparagraphs (a) and
(b) of 5.5 hereinafter collectively referred to as the "A&W Financial
Statements"). The A&W Financial Statements fairly present the results of the
consolidated operations and changes in stockholders' equity and financial
position of A&W for the respective fiscal periods or as of the respective
dates therein set forth. The A&W Financial Statements has been prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied during the periods involved, except in each case as indicated in such
statements or in the notes thereto.
5.6 Current Assets. Other than as disclosed in the A&W
Financial Statements:
(a) All accounts receivable of A&W represent arm's length sales
actually made in the ordinary course of business and are: (i) collectible (net
of the reserves shown on the books of A&W) in the ordinary course of business;
and (ii) subject to no counterclaim or setoff and are not in dispute.
(b) The inventories of A&W, including advances to growers, meet
A&W's quality standards, are usable and salable in the ordinary course of
business, have a net realizable value at least equal to the value shown on the
books of A&W, and are valued in accordance with GAAP at the lower of cost (on
a FIFO basis) or market.
(c) No write-down in inventory has been made or should have been
made pursuant to GAAP during the past two years.
5.7 Absence of Certain Changes. Since September 30, 1996, there
has not been:
(a) Any material adverse change in the financial
condition, assets, liabilities, business, prospects or operations
of A&W;
(b) Any loss, damage or destruction to the assets of A&W,
whether covered by insurance or not, which has or will have a
material adverse effect on the financial condition or the
business, prospects or results of operations of A&W;
(c) Any increase in the compensation, salaries or wages
payable or to become payable to any employee or agent of A&W
(including, without limitation, any increase or change pursuant to
any bonus, pension, profit sharing, retirement or other plan or
commitment), or any bonus or other employee benefit granted, made
or accrued;
(d) Any labor dispute or disturbance, other than routine
individual grievances which are not material to the business,
financial condition or results of operations of A&W;
(e) Any commitment or transaction by A&W (including,
without limitation, any capital expenditure) other than in the
ordinary course of business consistent with past practice, which
commitment or transaction resulted or will result in the
expenditure of funds in excess of $50,000;
(f) Any declaration, setting aside, or payment of any
dividend or any other distribution in respect of capital stock of
A&W; any redemption, purchase or other acquisition by A&W of any
capital stock of A&W, or any security relating thereto, or any
other payment to any shareholder of A&W as such a shareholder,
except that at any time prior to the Effective Time, A&W may
declare and pay a cash dividend not to exceed $1,325,000 to the
shareholders of A&W of record as of such declaration date;
(g) Any sale, lease, or other transfer or disposition of
any properties or assets of A&W, except for sales in the ordinary
course of business;
(h) Any indebtedness for borrowed money incurred, assumed,
or guaranteed by A&W other than in the ordinary course of
business;
(i) Any entering into, amendment, or termination by A&W of
any contract, or any waiver of material rights thereunder, other
than in the ordinary course of business;
(j) Any loan or advance or any grant of credit by A&W; or
(k) Any other event or condition specifically related to A&W not
in the ordinary course of business which could reasonably be expected to
have a material adverse effect on the financial condition, the business,
or the results of operations of A&W;
5.8 Absence of Undisclosed Liabilities. Except as and to the
extent specifically disclosed in the most recent balance sheet included in the
A&W Financial Statements, A&W does not have any liabilities, accrued,
contingent, or otherwise, other than commercial liabilities and obligations
incurred since the date of such balance sheet in the ordinary course of
business consistent with past practice, which individually or in the aggregate
would have a material adverse effect on the business, financial condition or
results of operation of A&W.
5.9 No Litigation. There is no action, claim, demand, citation,
summons, subpoena, suit, or arbitration proceeding, pending or to the best of
Shareholders' knowledge threatened against A&W, its directors (in such
capacity), its business, or any of its assets. The A&W Disclosure Schedule
identifies all actions, suits, proceedings, investigations and inquiries to
which A&W has been a party since January 1, 1991. Except as set forth in the
A&W Disclosure Schedule, neither A&W nor its business or assets is subject to
any judgment, order, writ or injunction of any arbitrator or Governmental
Entity.
5.10 Compliance With Laws.
(a) Except for failures to comply with the Laws, as hereinafter
defined, which either individually or in the aggregate would not have a
material adverse effect on the business, financial condition or results of
operations of A&W, A&W (including all of its operations, practices, properties
and assets) is in compliance with all applicable federal, state, local and
foreign laws, ordinances, orders, rules and regulations (collectively, "Laws")
including, without limitation, those applicable to discrimination in
employment, occupational safety and health, trade practices, environmental
protection, competition, pricing, product warranties, zoning, building,
sanitation, employment, retirement, labor relations, foreign corrupt
practices, import and export activities, and product advertising. A&W has not
received notice of any violation or alleged violation of any Laws. A&W is not
subject to liability for past or continuing violations of any Laws, which
liability would have a material adverse effect on the business, financial
condition, or results of operation of A&W. All reports and returns required
to be filed by A&W with any Governmental Entity have been filed, and were
accurate and complete except for such inaccuracies or omissions which either
individually or in the aggregate would not have a material adverse effect on
the business, financial condition, or results of operation of A&W.
(b) A&W has all material licenses, permits, approvals,
authorizations and consents of all Governmental Entities and all certification
organizations which are required for the conduct of its business (as presently
conducted). All licenses, permits, approvals, authorizations and consents
which A&W has obtained (the "Licenses") are in full force and effect. Except
for failures to comply with the Licenses which either individually or in the
aggregate would not have a material adverse effect on the business, financial
condition or results of operations of A&W, A&W is and has been in compliance
in all respects with the Licenses.
(c) No material amount of any Hazardous Substance (as defined
below) has been discharged, released, used, or emitted into the air, water,
surface water, ground water, land surface or sub-surface strata from or upon
any facility of A&W or under the direction or control of any employee or agent
of A&W, except in accordance with applicable Environmental Law (as defined
below) in all material respects. For the purposes of this agreement,
"Hazardous Substance" means any substance, whether liquid, solid or gas,
listed, identified or designated as hazardous or toxic under any applicable
Environmental Law, (i) which, applying criteria specified by any applicable
Environmental Law, is hazardous or toxic, or (ii) the use or disposal of which
is regulated under any applicable Environmental Law. For the purposes of this
agreement, "Environmental Law" means any federal, state, provincial or local
statute, law, ordinance, rule, regulation, order, consent, decree, judicial or
administrative decision or directive of the United States or other
jurisdiction now existing relating to (A) pollution or protection of the
environment, including natural resources, (B) exposure of persons, including
employees, to hazardous substances or other products, materials or chemicals,
(C) protection of the public health or welfare from the effects of products,
by-products, waste, emissions, discharges or releases of chemical or other
substances from industrial or commercial activities, or (D) regulation of the
manufacture, use or introduction into commerce of substances, including
without limitation formulation, packaging, labeling, distribution,
transportation, handling, storage and disposal.
(d) A&W has not transported (directly or indirectly) any
Hazardous Substances to any location that is listed or proposed for listing
under CERCLA or on any similar state list, or is the subject of federal,
state, or local enforcement actions or investigations or remedial actions.
(e) A&W has provided to Epitope all information, including
without limitation, all studies, analyses, and test results in the possession,
custody, or control of A&W relating to properties owned or leased by A&W which
describe: (i) environmental conditions on, under or about such properties;
and (ii) Hazardous Substances used, managed, handled, transported, treated,
generated, stored or released by any person at any time on any such
properties.
5.11 Title to and Condition of Properties. Except as set forth
in the A&W Disclosure Schedule and in the A&W Financial Statements, A&W has
good and marketable title to all its material assets, free and clear of all
mortgages, liens (statutory or otherwise), security interests, claims,
pledges, equities, options, conditional sales contracts, assessments, levies,
easements, covenants, reservations, restrictions, exceptions, limitations,
charges or other encumbrances of any nature whatsoever (collectively,
"Liens"). All tangible assets of A&W are located at facilities owned or
leased by A&W and all tangible assets located at such facilities are either
owned or leased by A&W.
5.12 Insurance. The A&W Disclosure Schedule contains a correct
and complete list and a brief description of all policies of fire, liability,
product liability, workers compensation, health and other forms of insurance
presently in effect with respect to the business and properties of A&W. A&W
has delivered to Epitope complete and accurate copies of all policies of fire,
liability, product liability, workers compensation, health and other forms of
insurance presently in effect with respect to the business and properties of
A&W.
5.13 Contracts and Commitments.
(a) The A&W Disclosure Schedule contains a correct and complete
list and a brief description of all real and personal property leases to which
A&W is a party. A&W has delivered to Agritope complete and correct copies of
each lease, and all amendments thereto, listed on the A&W Disclosure Schedule.
(b) Except as set forth in the A&W Disclosure Schedule, A&W has
no agreement, understanding, contract, or commitment (written or oral) with
any Shareholder or relative of any Shareholder or any officer, employee or
agent of A&W.
(c) A&W is not a party to any collective bargaining agreement
with any union.
(d) Except as listed on the A&W Disclosure Schedule, A&W is not
obligated under any loan agreement, promissory note, letter of credit, or
other evidence of indebtedness as a signatory, guarantor, or otherwise.
(e) Except as listed on the A&W Disclosure Schedule, A&W has not
guaranteed the payment or performance of any person, firm or corporation,
agreed to indemnify any person (except as provided herein) or act as a surety,
or otherwise agreed to be contingently or secondarily liable for the
obligations of any person.
(f) A&W is not a party to nor is it bound by any agreement
requiring A&W to assign any interest in any trade secret or proprietary
information, or prohibiting or restricting A&W from competing in any business
or geographical area or soliciting customers or otherwise restricting it from
carrying on its business anywhere in the world.
(g) Except as listed on the A&W Disclosure Schedule, A&W has no
lease, license, contract or commitment of any nature involving consideration
or other expenditure in excess of $20,000, or involving performance over a
period of more than 180 days.
(h) A&W is not in default under any lease, agreement, contract
or commitment, the effect of which would have a material adverse effect on the
business, financial condition or results of operation of A&W, nor, to the best
of Shareholders' knowledge, has any event or omission occurred which through
the passage of time or the giving of notice, or both, would (x) constitute a
default thereunder or cause the acceleration of any of the obligations of A&W
or (y) result in the creation of any Lien on any of the assets owned, used or
occupied by A&W, the effect of either of which would have a material adverse
effect on the business, financial condition or results of operation of A&W.
To the best of Shareholders' knowledge, no third party is in default under any
lease, agreement, contract or commitment to which A&W is a party, which
failure to perform by the third party would have a material adverse effect on
the business, financial condition or results of operation of A&W, nor has any
event or omission occurred which, through the passage of time or the giving of
notice, or both, would constitute a default by a third party under a contract
or commitment to which A&W is a party which event or omission would give rise
to termination or right of termination thereof and the termination of which
would have a material adverse effect on the business, financial condition or
results of operation of A&W.
5.14 Employee Benefit Plans. The A&W Disclosure Schedule contains
a correct and complete list and a brief description of all pension, profit
sharing, retirement, bonus, executive or deferred compensation,
hospitalization and other fringe or employee benefit plans, programs and
arrangements, and any employment or consulting contracts, "golden parachutes,"
severance agreements or plans, vacation and sick leave plans including,
without limitation, all "employee benefit plans" (as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
all employee manuals, and all written or binding oral statements of policies,
practices or understandings relating to employment, which are provided to, are
provided for the benefit of, or relate to, any persons employed or formerly
employed by A&W. The items described in the foregoing sentence are
hereinafter sometimes referred to collectively as "Employee Plans/Agreements."
True and correct copies of all written Employee Plans/Agreements, including
all amendments thereto, have heretofore been provided to Epitope. A&W is in
compliance with and has made all payments due under all Employee
Plans/Agreements and, with respect to the Employee Plans/Agreements, A&W is in
compliance with all applicable federal and state laws and regulations, the
failure to comply with which would have a material adverse effect on the
business, financial condition or results of operation of A&W.
5.15 Employment Compensation. The A&W Disclosure Schedule
contains a correct and complete list and a brief description of all employees
to whom A&W is paying compensation; and in the case of salaried employees such
list identifies the current annual rate of compensation for each employee and
in the case of hourly or commission employees identifies certain reasonable
ranges of rates and the number of employees falling within each such range.
5.16 Patents, Trademarks, Etc.. The A&W Disclosure Schedule
contains a correct and complete list and a brief description of all United
States and foreign trademarks, service marks, trade names, brand names,
copyrights, including registrations and application, patent and patent
applications, and employee covenants and agreements respecting intellectual
property ("Trade Rights") in which A&W now has any interest, specifying
whether such Trade Rights are owned, controlled, used or held (under license
or otherwise) by A&W, and also indicating which of such Trade Rights are
registered. To the best of Shareholders' knowledge, all Trade Rights
registrations and all pending registrations and applications have been
properly made and filed and all annuity, maintenance, renewal and other fees
relating to registrations or applications are current. To the best of
Shareholders' knowledge, in order to conduct the business of A&W as such is
currently being conducted, A&W does not require any Trade Rights that it does
not already have. To the best of Shareholders' knowledge, A&W is not
infringing and has not infringed on any Trade Rights of another in the
operation of its business, nor is any other person infringing on the Trade
Rights of A&W. A&W has not granted any license or made any assignment of any
Trade Right and no other person has any right to use any Trade Right owned or
held by A&W. A&W does not pay any royalties or other consideration for the
right to use any Trade Rights of others. Shareholders are not aware of any
inquiries or investigations challenging or threatening to challenge the right,
title and interest of A&W with respect to its continued use and right to
preclude others from using any Trade Rights of A&W. A&W has not been
presented with claims nor served in any litigation challenging or threatening
to challenge the right, title and interest of A&W with respect to its
continued use and right to preclude others from using any Trade Rights of A&W.
To the best of Shareholders' knowledge, all Trade Rights of A&W are valid,
enforceable and in good standing, and there are no equitable defenses to
enforcement based on any act or omission of A&W.
5.17 Customers and Suppliers.
(a) The A&W Disclosure Schedule contains a correct and complete
list and a brief description of all the customers, including distributors, of
A&W for 1995 and the first nine months of 1996, and the dollar volume of
business done with each listed party during such periods. The Shareholders
have no knowledge or information of any facts indicating, nor any other reason
to believe, that any of the customers listed will not continue to be customers
of the businesses of A&W after the Effective Time at substantially the same
level of purchases.
(b) The A&W Disclosure Schedule contains a correct and complete
list and a brief description of all the suppliers to A&W for 1995 and the
first nine months of 1996. The Shareholders have no knowledge or information
of any facts indicating, nor any other reason to believe, that any of the
suppliers will not continue to be suppliers to A&W after the Closing Date and
will not continue to supply substantially the same quantity and quality of
goods at competitive prices.
(c) The A&W Disclosure Schedule contains a correct and complete
list and a brief description of all standard warranties of A&W for sales of
its products.
5.18 Tax Matters.
(a) A&W has filed all federal, state, and other tax returns
(including foreign and informational returns) of every nature required to be
filed by it and has paid all taxes (whether or not requiring the filing of
returns) including all deficiencies, assessments, additions to tax, penalties
and interest of which notice has been received, to the extent such taxes or
other amounts have become due. The information contained in such returns is
true and correct in all material respects. All tax liabilities have been
fully and properly reflected in the A&W Financial Statements. A&W's income
tax returns have not been examined by the Internal Revenue Service. There are
no outstanding agreements or waivers extending the statutory period of
limitation for any federal or state tax return of A&W for any period. A&W has
made all required deductions and payments and has properly prepared and
delivered all required documents in connection with the withholding of taxes
from the wages and other compensation of its employees. A&W has filed and
paid all sales/use tax returns for all states and foreign countries in which
it has responsibility to do so. The information contained in the sales/use
tax returns is true and correct in all material respects.
(b) The Shareholders jointly and severally agree to indemnify
Epitope and the Surviving Corporation for any tax liability of A&W
attributable to periods prior to the Effective Time in excess of the reserves
for taxes set forth in the A&W Financial Statements.
(c) With respect to claims resulting from or arising out of a
breach of the representations and warranties set forth in this Section 5.18,
due to the improper inclusion in income, the improper deduction from income,
or the improper taking of a credit against taxes of any amount in one or more
years, as a result of which A&W becomes entitled to exclude from income,
deduct from income, or receive a credit against taxes, as the case may be,
(the "Adjustments"), any such amount in any other taxable year or years of A&W
with respect to which (i) the applicable statute of limitations has not run
or, (ii) if such statute of limitations has run, Sections 1311 through 1314 of
the Code may be applied advantageously by A&W or Epitope, Epitope shall be
entitled to damages for such breach only to the extent of the net amount of
such claims after giving effect to the Adjustments and any penalty or interest
payments associated therewith.
5.19 Banks; Powers of Attorney. The A&W Disclosure Schedule
contains a correct and complete list showing:
(a) The name of each bank at which A&W has an account, a
line of credit, or a safe deposit box; the numbers of all bank
accounts and safe deposit boxes; and the name of each person
authorized to draw thereon or have access thereto; and
(b) The name of each person holding a power of attorney
from A&W and a summary of the terms thereof.
5.20 Adverse Conditions. There are no conditions known to any
Shareholder with respect to the markets, products, facilities, or personnel of
A&W which might have a material adverse effect on the business, financial
condition or results of operation of A&W other than such conditions as may
affect the produce industry as a whole.
5.21 Investment Representations.
(a) For a reasonable time before the execution of this
agreement, each Shareholder has been given the opportunity to ask questions
and receive answers concerning Epitope and Epitope Common Stock, and to obtain
any additional information that Epitope possesses or can acquire without
unreasonable effort or expense that is necessary to verify the accuracy of
information furnished to such Shareholder. Each Shareholder has received any
such additional information that such Shareholder has requested.
(b) Each Shareholder has sufficient knowledge and experience in
financial and business matters to be capable of evaluating the merits and
risks of an investment in the Epitope Common Stock and has the ability to bear
the economic risk of that investment.
(c) None of the Shareholders has relied on any representation of
Epitope regarding the value of Epitope Common Stock or A&W Common Stock. Each
Shareholder has made his own independent analysis of the value of Epitope
Common Stock, A&W Common Stock, and the consideration he is receiving in
connection with the Merger.
(d) Each Shareholder is acquiring the Epitope Common Stock for
such Shareholder's own account and not on behalf of any other person. Each
Shareholder is acquiring the Shares without a view to distribution and without
the intent to divide such Shareholder's participation with others by reselling
or otherwise distributing Epitope Common Stock, either directly or indirectly,
other than in compliance with applicable state and federal laws or
regulations.
(e) Each Shareholder has received a draft dated
November 1, 1996, of the registration statement on Form S-4 (the "S-4
Registration Statement") being prepared by Epitope for filing with the
Securities and Exchange Commission (the "SEC") under the Securities Act in
connection with the reclassification of the Epitope Common Stock into the
Medical Products Stock and Agritope Stock, which includes a copy of the
Company's September 30, 1996 year- end financial statements, which are in the
process of being audited. Each Shareholder understands that until the S-4 is
filed with the SEC, the information contained therein is nonpublic
information. Each Shareholder agrees not to use any such nonpublic
information in violation of any federal securities laws.
(f) Each Shareholder makes the warranties in this Section 5.21
only as to himself, and not with respect to any other Shareholder.
5.22 Nature of Shares. Each Shareholder is aware that:
(a) At the Effective Time, the Epitope Common Stock to be issued
in connection with the Merger will not be registered under federal securities
laws. Therefore, until the registration described in paragraph (b) below
becomes effective, such shares must be held, unless an exemption from
registration is available. The shares will bear substantially the following
legend until such time as Epitope's counsel advises that such legend is no
longer required:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER UNITED STATES FEDERAL OR STATE SECURITIES
LAWS. THEY MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED UNLESS THE TRANSACTION IS REGISTERED
OR UNLESS THE ISSUER IS FURNISHED A SATISFACTORY OPINION OF
COUNSEL THAT REGISTRATION IS NOT REQUIRED.
(b) The form of Registration Agreement (the "Registration
Agreement") attached as Exhibit C to this agreement provides for Epitope to
use good-faith efforts to register under the Securities Act the shares of
Epitope Common Stock received by the Shareholders in the Merger and to
maintain such registration effective for up to two years from the Effective
Time, subject to the terms and conditions set forth in the Registration
Agreement.
5.23 Broker's Fees. Neither A&W, its officers or directors, nor
any Shareholder has employed any broker or finder or incurred any liability
for any broker's fees, commissions or finder's fees in connection with any of
the transactions contemplated by this agreement.
5.24 Disclosure. To the best of Shareholders' knowledge, no
representation or warranty by the Shareholders in this agreement, nor any
statement, certificate, schedule or exhibit hereto furnished or to be
furnished by or on behalf of the Shareholders or A&W pursuant to this
agreement, nor any document or certificate delivered to Agritope pursuant to
this agreement or in connection with transactions contemplated hereby,
contains any untrue statement of material fact or omits or shall omit a
material fact necessary to make the statements contained therein not
misleading in light of the circumstances in which they are made.
5.25 Knowledge. Each Shareholder has been actively involved in
various aspects of the operation and management of A&W since its formation,
except for Xxxxx Xxxxxx who became a shareholder in 1992 and became actively
involved at such time. The use of the terms "to the best of Shareholders'
knowledge" or "to the Shareholders' knowledge" (and variants thereof) in this
agreement shall be deemed to include knowledge that each Shareholder as an
active participant in the day-to-day operations of A&W should have had.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF
EPITOPE
Except as set forth in the S-4 Registration Statement and the
reports and other documents on file with the SEC under the Securities Exchange
Act of 1934, Epitope hereby represents and warrants to A&W and each
Shareholder as follows:
6.1 Corporate Organization.
(a) Epitope is a corporation duly organized and validly existing
under the laws of the state of Oregon. Epitope Sub is a corporation duly
organized and validly existing under the laws of the state of California,
which is a wholly-owned subsidiary of Epitope and was formed solely for the
purpose of effecting the Merger. Epitope has the corporate power and
authority to own or lease all of its properties and assets and to carry on its
business as it is now being conducted, and is duly licensed or qualified to do
business in each jurisdiction in which the nature of the business conducted by
it or the character or location of the properties and assets owned or leased
by it makes such licensing or qualification necessary, except where the
failure to be so licensed or qualified would not have a material adverse
effect on it.
6.2 Capitalization. The authorized capital stock of Epitope
consists of 30 million shares of Epitope Common Stock and 1 million shares of
preferred stock, $.01 par value. At the close of business on September 30,
1996, 12,937,383 shares of Epitope Common Stock and no shares of preferred
stock were outstanding. Rights to acquire Epitope Common Stock are also
outstanding under various employee benefit plans and agreements, and other
warrants to acquire Epitope Common Stock held by various investors,
consultants, and others, which if fully exercised would, as of such date,
result in 5,601,523 shares of Epitope Common Stock outstanding.
6.3 Validity of Shares. When issued in accordance with this
agreement, the Epitope Common Stock to be issued to the Shareholders in
connection with the Merger shall be validly issued, fully paid, and
nonassessable.
6.4 Authority; No Violation.
(a) Epitope and Epitope Sub each has full corporate power and
authority to execute and deliver this agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
agreement and the consummation of the transactions contemplated hereby have
been duly and validly approved by the Boards of Directors of Epitope and
Epitope Sub. Epitope has approved this agreement in its capacity as sole
shareholder of Epitope Sub. No other corporate proceedings on the part of
Agritope or Epitope Sub are necessary to approve this agreement and to
consummate the transactions contemplated hereby. This agreement has been duly
and validly executed and delivered by Epitope and Epitope Sub and (assuming
due authorization, execution, and delivery by A&W and the Shareholders)
constitutes valid and binding obligations of Epitope and Epitope Sub,
enforceable against Epitope and Epitope Sub in accordance with its terms,
except as enforcement may be limited by general principles of equity whether
applied in a court of law or a court of equity and by bankruptcy, insolvency
and similar laws affecting creditors' rights and remedies generally.
(b) Neither the execution and delivery of this agreement by
Epitope and Epitope Sub nor the consummation by Epitope and Epitope Sub of the
transactions contemplated hereby, nor compliance by Epitope and Epitope Sub
with any of the terms or provisions hereof, will (i) violate any provision of
the Articles of Incorporation or Bylaws of Epitope or Epitope Sub or
(ii) assuming that the consents and approvals referred to in Sections 5.4 and
6.5 are duly obtained, (x) violate any statute, code, ordinance, rule,
regulation, judgment, order, writ, decree or injunction applicable to Epitope
or Epitope Sub or any of their respective properties or assets, or
(y) violate, conflict with, result in a breach of any provision of or the loss
of any benefit under, constitute a default (or an event that, with notice or
lapse of time, or both, would constitute a default) under, result in the
termination of or a right of termination or cancellation under, accelerate the
performance required by, or result in the creation of any lien, pledge,
security interest, charge or other encumbrance upon any of the respective
properties or assets of Epitope or Epitope Sub under, any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of
trust, license, lease, agreement or other instrument or obligation to which
Epitope or Epitope Sub is a party, or by which they or any of their respective
properties or assets may be bound or affected, except (in the case of
clause (y) above) for such violations, conflicts, breaches or defaults that,
either individually or in the aggregate, will not have or be reasonably likely
to have a material adverse effect on Epitope or Epitope Sub.
6.5 Consents and Approvals. Except for (i) the filing of the
Merger Agreement with the California Secretary pursuant to the CGCL and
(ii) such filings and approvals as are required to be made or obtained under
federal or state securities laws in connection with the issuance of the shares
of Epitope Common Stock pursuant to this agreement, no consents or approvals
of or filings or registrations with any Governmental Entity or with any third
party are necessary in connection with (A) the execution and delivery by
Epitope or Epitope Sub of this agreement and (B) the consummation by Epitope
or Epitope Sub of the Merger and the other transactions contemplated hereby.
6.6 Financial Statements. Epitope has previously delivered to
A&W copies of the consolidated balance sheets of Epitope and its subsidiaries
as of September 30, for the fiscal years 1996, 1995, and 1994, and the related
consolidated statements of income, changes in stockholders' equity and cash
flows for the fiscal years 1996, 1995, 1994, and 1993, in each case
accompanied by the audit report of Price Waterhouse LLP, independent public
accountants, with respect to Epitope. The financial statements referred to in
this Section 6.6 including the related notes (the "Epitope Financial
Statements") fairly present the results of the consolidated operations and
changes in stockholders' equity and consolidated financial position of Epitope
and its subsidiaries for the respective fiscal periods or as of the respective
dates therein set forth; each of the Epitope Financial Statements has been
prepared in accordance with GAAP consistently applied during the periods
involved, except in each case as indicated in such statements or in the notes
thereto.
6.7 Absence of Certain Changes. Since September 30, 1996, there
has not been:
(a) any material adverse change in the financial
condition, assets, liabilities, business, prospects or operations
of Epitope;
(b) any loss, damage or destruction to the assets of
Epitope, whether covered by insurance or not, which has or will
have a material adverse effect on the financial condition or the
business, prospects or results of operations of Epitope;
(c) any material increase in the compensation, salaries or
wages payable or to become payable to any employee or agent of
Epitope or (including, without limitation, any material increase
or change pursuant to any bonus, pension, profit sharing,
retirement or other plan or commitment), or any bonus or other
employee benefit granted, made or accrued;
(d) any labor dispute or disturbance, other than routine
individual grievances which are not material to the business,
financial condition or results of operations of Epitope;
(e) any commitment or transaction by Epitope (including,
without limitation, any capital expenditure) other than in the
ordinary course of business consistent with past practice;
(f) any sale, lease, or other transfer or disposition of
any properties or assets of either Epitope, except for sales in
the ordinary course of business;
(g) any indebtedness for borrowed money incurred, assumed,
or guaranteed by Epitope other than in the ordinary course of
business;
(h) any entering into, amendment, or termination by either
Epitope of any contract, or any waiver of material rights
thereunder, other than in the ordinary course of business;
(i) any loan or advance or any grant of credit by Epitope
other than in the ordinary course of business; or
(j) any other event or condition specifically related to
Epitope not in the ordinary course of business which would have a
material adverse effect on the assets or the business of Epitope
taken as a whole.
6.8 Absence of Undisclosed Liabilities. Except as and to the
extent specifically disclosed in the most recent balance sheet included in the
Epitope Financial Statements, to the best of Epitope's knowledge, Epitope does
not have any liabilities, accrued, contingent, or otherwise, other than
commercial liabilities and obligations incurred since the date of such balance
sheet in the ordinary course of business consistent with past practice, none
of which has or will have a material adverse effect on the business, financial
condition or results of operations of Epitope taken as a whole.
6.9 No Litigation. There is no action, claim, demand, citation,
summons, subpoena, suit, arbitration proceeding, investigation, or inquiry
pending or threatened against Epitope, its directors (in such capacity), its
business, or any of its assets which if successfully concluded against it
would have a material adverse effect on the financial condition of its
business, prospects or results or operation.
6.10 Compliance With Laws.
(a) Except for failures to comply with the Laws, which either
individually or in the aggregate would not have a material adverse effect on
the business, financial condition or results of operations of Epitope,
Epitope is, in compliance with all Laws including, without limitation, those
applicable to federal and state securities laws and regulations,
discrimination in employment, occupational safety and health, trade practices,
environmental protection, competition, pricing, product warranties, zoning,
building, sanitation, employment, retirement, labor relations, foreign corrupt
practices, import and export activities, and product advertising. Epitope has
not received notice of any violation or alleged violation of any Laws. All
reports, specifically including but not limited to all filings with the SEC
and all returns required to be filed by Epitope with any Governmental Entity
have been filed, and were accurate and complete when filed in all material
respects.
(b) Epitope has all material Licenses which are required for the
conduct of its business (as presently conducted), and all such Licenses are in
full force and effect. Except for failures to comply with the Licenses which
either individually or in the aggregate would not have a material adverse
effect on the business, financial condition or results of operations of
Epitope, Epitope is and has been in compliance in all respects with the
Licenses.
(c) No material amount of any Hazardous Substance has been
discharged, released, used, or emitted into the air, water, surface water,
ground water, land surface or sub-surface strata from or upon any facility of
Epitope or under the direction or control of any employee or agent of Epitope,
except in accordance with applicable Environmental Law in all material
respects.
(d) Epitope has not transported (directly or indirectly) any
Hazardous Substances to any location that is listed or proposed for listing
under CERCLA or on any similar state list, or is the subject of federal,
state, or local enforcement actions or investigations or remedial actions.
(e) Epitope has provided to A&W all information, including
without limitation, all studies, analyses, and test results in the possession,
custody, or control of Epitope relating to properties owned or leased by
Epitope which describe: (i) environmental conditions on, under or about such
properties; and (ii) Hazardous Substances used, managed, handled, transported,
treated, generated, stored or released by any person at any time on any such
properties.
6.11 Title to and Condition of Properties. Except for those
exceptions to title which either individually or in the aggregate would not
have a material adverse effect on the business, financial condition or results
of operations of Epitope, Epitope has good and marketable title to all its
material assets, free and clear of all Liens. All tangible assets of Epitope
are located at facilities owned or leased by Epitope and all tangible assets
located at such facilities are either owned or leased by Epitope.
6.12 Patents, Trademarks, Etc.. To the best of Epitope's
knowledge, all Trade Rights registrations and all pending registrations and
applications have been properly made and filed and all annuity, maintenance,
renewal and other fees relating to registrations or applications are current.
To the best of Epitope's knowledge, in order to conduct the business of
Epitope as such is currently being conducted, Epitope does not require any
Trade Rights that it does not already have. To the best of Epitope's
knowledge, Epitope is not infringing and has not infringed on any Trade Rights
of another in the operation of its business, nor is any other person
infringing on the Trade Rights of Epitope. Epitope has not granted any
license or made any assignment of any Trade Right and no other person has any
right to use any Trade Right owned or held by Epitope. Epitope does not pay
any royalties or other consideration for the right to use any Trade Rights of
others. Epitope is not aware of any inquiries or investigations challenging
or threatening to challenge the right, title and interest of Epitope with
respect to its continued use and right to preclude others from using any Trade
Rights of Epitope. Epitope has not been presented with claims nor served in
any litigation challenging or threatening to challenge the right, title and
interest of Epitope with respect to its continued use and right to preclude
others from using any Trade Rights of Epitope. To the best of Epitope's
knowledge, all Trade Rights of Epitope are valid, enforceable and in good
standing, and there are no equitable defenses to enforcement based on any act
or omission of Epitope.
6.13 Adverse Conditions. There are no conditions known to
Epitope with respect to the markets, products, facilities, or personnel of
either Epitope or Agritope which would materially adversely affect its
business or prospects.
6.14 Broker's Fees. Except for Vector Securities International,
Inc., and fees payable to such entity (which will be paid by Epitope), neither
Epitope nor Epitope Sub nor any of their respective officers or directors has
employed any broker or finder or incurred any liability for any broker's fees,
commissions or finder's fees in connection with any of the transactions
contemplated by this agreement.
6.15 Disclosure. No representation or warranty by Epitope in
this agreement, nor any statement, certificate, schedule or exhibit hereto
furnished or to be furnished by or on behalf of Epitope or Epitope Sub
pursuant to this agreement, nor any document or certificate delivered to A&W
or the Shareholders pursuant to this agreement or in connection with
transactions contemplated hereby, contains or shall contain any untrue
statement of material fact or omits or shall omit a material fact necessary to
make the statements contained therein not misleading in light of the
circumstances under which they are made.
6.16 Definitions. Wherever in this Article VI, representations
and warranties are being given regarding Epitope, they shall also be deemed to
include Agritope, unless the context requires otherwise.
ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Actions in Connection with Merger. Each party shall use its
reasonable best efforts (a) to take, or cause to be taken, all actions
necessary, proper, or advisable to comply promptly with all legal requirements
which may be imposed on such party with respect to the Merger and, subject to
the conditions set forth in this agreement, to consummate the transactions
contemplated by this agreement, and (b) to obtain (and to cooperate with the
other parties to obtain) any consent, authorization, order or approval of, or
any exemption by, any Governmental Entity and any other third party which is
required to be obtained by any party in connection with the Merger and the
other transactions contemplated by this agreement.
7.2 Transition. Prior to the Effective Time, Epitope and A&W
shall consult with one another and cooperate as reasonably requested by
Epitope to facilitate the integration of their respective operations as
promptly as practicable after the Effective Time. Such cooperation shall
include (without limitation), if requested, communicating with employees,
consulting regarding material contracts, renewals, and capital commitments to
be entered into by A&W, making arrangements for employee training, and taking
action to facilitate an orderly conversion of accounting and data processing
operations to occur promptly following the Effective Time.
7.3 Further Assurances. From time to time after the Effective
Time, as and when requested by Epitope or the Surviving Corporation, the
Shareholders and the officers and directors of A&W last in office prior to the
Effective Time shall execute and deliver such deeds and other instruments of
transfer and shall take or cause to be taken such further actions as shall be
reasonably necessary in order to vest or perfect in the Surviving Corporation
or to confirm of record or otherwise to the Surviving Corporation, to the
extent such officers and directors have the power to do so, title to and
possession of all the properties, interests, assets, rights, privileges,
immunities, powers, franchises, and authorities of A&W.
7.4 Share Legend.
(a) When issued at or after the Effective Time, 15 percent
(78,000) of the shares of Epitope Common Stock to be received by the
Shareholders will not be subject to transfer without the prior written consent
of Epitope and the certificates representing such shares will bear the
following legend (in addition to the legend described in Section 5.22):
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
TRANSFERRED WITHOUT THE PRIOR WRITTEN CONSENT OF
EPITOPE, INC., PURSUANT TO THE TERMS OF AN ACQUISITION
AND MERGER AGREEMENT DATED NOVEMBER 6, 1996.
(b) In the event of a breach by the Shareholders of one or more
of the representations, warranties, or covenants contained herein, the
Shareholders will transfer to Epitope the number of shares of Epitope Common
Stock, valued at $13.50 per share, equal to the amount of damages suffered by
Epitope as a result of the breach, up to a maximum of 10 percent (52,000) of
the shares of Epitope Common Stock received by the Shareholders at the
Effective Time.
(c) In the event that during the period from the Effective Time
through the Expiration Date, A&W fails to collect from grower advances
outstanding as of the Effective Time an amount equal to the grower advances
reflected in A&W's financial statements as of the Effective Time, the
Shareholders will, in addition to the shares required to be transferred
pursuant to Section 7.4(b), transfer to Epitope the number of shares of
Epitope Common Stock, valued at $13.50 per share, equal to the difference
between (i) the amount of the grower advances collected during such period
from grower advances outstanding as of the Effective Time and (ii) the amount
of the grower advances reflected in the A&W financial statements as of the
Effective Time, up to a maximum of 5 percent (26,000) of the shares of Epitope
Common Stock received by the Shareholders at the Effective Time.
(d) The total aggregate amount of Epitope Common Stock subject
to transfer to Epitope pursuant to paragraphs (b) and (c) above is 15 percent
of the shares received by the Shareholders at the Effective Time (78,000
shares).
(e) The Shareholders' obligations to transfer shares of Epitope
Common Stock to Epitope pursuant to paragraphs (b) and (c) above will
terminate as follows:
(i) if, on the date the audit of Epitope's
September 30, 1997, financial statements is completed,
no claim in connection with breach of the
representations, warranties or covenants of the
Shareholders has been asserted and remains unresolved,
then the Shareholders' obligations to make transfers
pursuant to paragraph (b) will terminate; and
(ii) if, on the date one year after the
Effective Time, no claim in connection with a default
of any of A&W growers of the grower's obligations to
repay advances outstanding as of the Effective Time
has been asserted and is unresolved, then the
Shareholders' obligations to make transfers pursuant
to paragraph (c) shall terminate.
(f) The restrictions on transfer described in paragraph (a)
above will terminate, and the legend described in such paragraph may be
removed, at such time when the Shareholders' obligations pursuant to
paragraphs (b) and (c) have terminated as described in paragraph (e) above.
7.5 Rights of Access. A&W and the Shareholders covenant that
until the Effective Time, A&W will give Epitope and its representatives,
including its counsel and certified public accountants, full access during
normal business hours to all properties, documents, contracts, books and
records of A&W, including any information with respect to its business affairs
and properties as Epitope from time to time may reasonably request.
7.6 Corporate Records, Contracts, Etc. A&W and the Shareholders
covenant that from the date hereof through the Effective Time:
(a) A&W will promptly furnish Epitope complete and accurate
copies of minutes of any meetings of the directors or shareholders of A&W held
after the date of this agreement and of any resolutions adopted by such
directors or shareholders pursuant to written consents after such date.
(B) A&W will promptly make available to Epitope complete and
accurate copies of all contracts and agreements involving an amount in excess
of $5,000 entered into by A&W or after the date hereof.
(C) A&W will identify to Epitope on a monthly basis, and
otherwise from time to time as Epitope may reasonably request, any actual or
potential adverse developments concerning the business of A&W and will provide
Epitope with such information regarding such matters as Epitope may reasonably
request.
7.7 Current Financial Information. A&W and the Shareholders
covenant that pending the Effective Time, A&W shall promptly provide Epitope
copies of all regularly prepared monthly financial statements or reports of
A&W for the months ending between the date of this agreement and the Effective
Time. Such financial statements or reports shall be verified by the Chief
Financial Officer of A&W and will be prepared in accordance with generally
accepted accounting principles consistently applied, except for normal
recurring year-end adjustments, which will not be material and that statements
of cash flows, statements of changes in shareholders' equity and footnotes may
be omitted.
7.8 Certain Forbearances by A&W. A&W and the Shareholders
covenant that without the prior written consent of Epitope, A&W shall not on
or after the date of this agreement:
(a) other than borrowings under its usual credit line in
the ordinary course of business consistent with past practice,
incur any indebtedness for borrowed money, assume, guarantee,
endorse or otherwise as an accommodation become responsible for
the obligations of any other individual, corporation or other
entity, or make any loan or advance;
(b) adjust, split, combine, or reclassify any capital
stock; make, declare or pay any dividend (other than the Permitted
Dividend) or make any other distribution on, or directly or
indirectly redeem, purchase or otherwise acquire, any shares of
its capital stock or any securities or obligations, convertible
into or exchangeable for any shares of its capital stock, or grant
or issue any stock appreciation rights or grant or issue to any
individual, corporation or other entity any right to acquire any
shares of its capital stock; or issue any additional shares of
capital stock or securities or obligations convertible into or
exchangeable for shares of its capital stock;
(c) sell, transfer, mortgage, encumber or otherwise
dispose of any of its properties or assets to any individual,
corporation or other entity, except sales of inventory in the
ordinary course of business consistent with past practice or
pursuant to contracts or agreements in force at the date of this
agreement or cancel, release or assign any indebtedness to any
such person or any claims held by any such person;
(d) make any material investment either by purchase of
stock or securities, contributions to capital, property transfers,
or purchase of any property or assets of any other individual,
corporation or other entity;
(e) enter into any contract or agreement that involves an
amount in excess of $5,000 (except sales of inventory in the
ordinary course of business) or that will have a term in excess of
180 days or terminate or materially modify any contract or
agreement that involves an amount in excess of $5,000 or that has
a remaining term in excess of 180 days, or commit to any capital
expenditure, or make any capital expenditure not committed to
prior to the date of this agreement, in excess of $5,000;
(f) increase in any manner the compensation or fringe
benefits of any of its employees other than regularly scheduled
increases for non-managerial employees in the ordinary course of
business consistent with past practice or pay any pension or
retirement allowance not required by any existing plan or
agreement to any such employees or become a party to, amend or
commit itself to any pension, retirement, profit-sharing or
welfare benefit plan or agreement or employment agreement with or
for the benefit of any employee, other than amendments required to
comply with applicable legal requirements, or accelerate the
vesting of any stock options or other stock-based compensation;
(g) solicit, encourage or authorize any individual,
corporation or other entity to solicit from any third party any
inquiries or proposals relating to the disposition of its business
or assets, or the acquisition of its voting securities, or the
merger of it with any corporation or other entity other than as
provided by this agreement (and A&W shall promptly notify Epitope
of all of the relevant details relating to all inquiries and
proposals which it may receive relating to any of such matters) or
participate in any negotiations concerning or otherwise facilitate
any such transaction;
(h) settle any claim, action or proceeding involving
material money damages, except in the ordinary course of business
consistent with past practice;
(i) take any action that would prevent or impede the
Merger from qualifying as a reorganization within the meaning of
Section 368 of the Code;
(j) amend its certificate of incorporation or its bylaws;
(k) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties
set forth in this agreement being or becoming untrue in any
material respect at any time prior to the Effective Time, or in
any of the conditions to the Merger set forth in Article VIII not
being satisfied or in a violation of any provision of this
agreement, except, in every case, as may be required by applicable
law;
(l) take any action that would adversely affect or delay
its ability to obtain any necessary approvals of any Governmental
Entity or other governmental authority required for the
transactions contemplated hereby or to perform its covenants and
agreements under this agreement; or
(m) agree to, or make any commitment to, take any of the
actions prohibited by this Section 7.8.
7.9 Certain Forbearances by Epitope.
During the period from the date of this agreement to the Effective
Time, except as expressly contemplated or permitted by this Agreement, Epitope
shall not, without the prior written consent of A&W:
(a) take any action that would prevent or impede the
Merger from qualifying as a reorganization within the meaning of
Section 368 of the Code;
(b) take any action that is intended or may reasonably be
expected to result in any of its representations and warranties
set forth in this agreement being or becoming untrue in any
material respect at any time prior to the Effective Time, or in
any of the conditions of the Merger set forth in Article VIII not
being satisfied or in a violation of any provision of this
agreement, except, in every case, as may be required by applicable
law;
(c) take any action that would adversely affect or delay
its ability to obtain any necessary approvals of any Governmental
Entity or other governmental authority required for the
transactions contemplated hereby or to perform its covenants and
agreements under this agreement; or
(d) agree to, or make any commitment to, take any of the
actions prohibited by this Section 7.9.
7.10 Preservation of Business. A&W and the Shareholders covenant
that pending the Effective Time, A&W:
(a) will carry on its business and manage its assets and
properties diligently and substantially in the same manner heretofore;
(b) will continue to adhere to its existing policies and
practices concerning the conduct of its business;
(c) will use its best efforts to preserve its business
organization intact, to keep available its present employees, and to preserve
its present relationships with growers, providers, customers, and others
having business dealings with it; and
(d) will use its best efforts not to do or fail to do anything
that will cause breach of or a default in any contract, agreement, commitment
or obligation to which it is a party or by which it may be bound.
7.11 Scheduled A&W Debt. Schedule 7.11 attached hereto contains
a list of all A&W indebtedness outstanding as of the date of this agreement
(the "Scheduled A&W Debt"), including notes dated September 30, 1996, payable
to the Shareholders in the aggregate amount of $902,160 (the "Shareholder
Notes"). Immediately after the Effective Time, Epitope shall cause the
Surviving Corporation to pay to the Shareholders an aggregate amount of
$357,160 in partial satisfaction of the Shareholder Notes. Thereafter,
Epitope shall cause the Surviving Corporation to pay the Scheduled A&W Debt in
accordance with its terms.
7.12 Noncompetition Agreement.
(a) Each Shareholder acknowledges that by virtue of his
position with A&W he has developed considerable expertise in the
business operations of A&W and has had access to extensive
confidential information with respect to A&W. Each Shareholder
recognizes that Epitope and A&W would be irreparably damaged if
such Shareholder were to enter into an activity competing with
A&W's business in violation of the terms of this Section 7.12 or
if such Shareholder were to disclose or make unauthorized use of
any confidential information concerning the business of A&W.
Accordingly, each Shareholder expressly acknowledges that he is
voluntarily entering into this noncompetition agreement and that
the terms and conditions of this Section 7.12 are fair and
reasonable to such Shareholder in all respects.
(b) For five (5) years following the Effective Date (the
"Noncompetition Period"), the Shareholders shall not, directly or
indirectly, without the prior written consent of Epitope, (i) own,
manage, control, finance or participate in the ownership,
management, control or financing of, or be connected as an
officer, director, key employee, partner, principal, agent,
representative, consultant, licensor, licensee or otherwise with,
any business or enterprise engaged in any business which is
competitive with the business of A&W, Epitope, or any Affiliate of
Epitope, within each of the geographical units which are listed in
Schedule 7.12 hereto (the "Territory"), or (ii) engage in any
other manner, within the Territory, in any business which is
competitive with the business of A&W, Epitope, or any Affiliate of
Epitope. Notwithstanding the above, the Shareholders shall not be
deemed to be engaged directly or indirectly in any business in
contravention of subparagraphs (i) or (ii) above, if (x) the
Shareholder participates in any such business solely as a passive
investor in up to 1% of the equity securities of a company or
partnership, the securities of which are publicly traded, or
(y) the Shareholder is employed by a business or enterprise that
is engaged primarily in a business other than the business of A&W,
Epitope, or any Affiliate of Epitope and such Shareholder does not
apply his expertise at such business or enterprise to that part of
such business or enterprise that is or could be competitive with
the business of A&W, Epitope, or any Affiliate of Epitope.
(c) The covenants of the Shareholders set forth in this
Section 7.14 shall be construed as independent of any other
agreement or arrangement between the Shareholders, on the one
hand, and A&W or Epitope or any of their Affiliates, on the other,
and the existence of any claim or cause of action by the
Shareholders against A&W or Epitope or any of their Affiliates
shall not constitute a defense to the enforcement of such
covenants against the Shareholders.
(d) Each Shareholder acknowledges that damages alone will
not be an adequate remedy for any breach by the Shareholder of the
covenants set forth in this Section 7.12 and that the other
parties hereto, in addition to any other remedies that they may
have, shall be entitled, as a matter of right, to injunctive
relief, including specific performance, in any court of competent
jurisdiction with respect to any actual or threatened breach by
the Shareholder of any of said covenants.
7.13 Knowledge of Epitope. The liability of the Shareholders for
any breach of the representations, warranties, or covenants contained herein
shall not be affected or limited by any knowledge or imputed knowledge that
Epitope has as of the date hereof or the Effective Time, except for knowledge
of the information expressly set forth on the A&W Disclosure Schedule.
7.14 Materiality. The terms "material" and "material adverse
effect" as used in this agreement shall mean any single condition or effect
with a financial impact exceeding $20,000 or which when aggregated with other
conditions or effects has a financial impact exceeding $100,000 in the
aggregate.
7.15 Limitation of Liability. The liability of each of the
Shareholders for damages resulting from a breach of the representations,
covenants, or warranties set forth in this agreement or from an
indemnification claim under Section 5.18(b) shall be limited to a percent of
the total damages that is equal to the percent of shares of A&W Common Stock
that the Shareholder owns as of the date of this agreement.
ARTICLE VIII
CONDITIONS PRECEDENT
8.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) All regulatory approvals required to consummate the
transactions contemplated hereby ("Requisite Regulatory
Approvals") shall have been obtained without the imposition of any
conditions that are in Epitope's reasonable judgment unduly
burdensome and shall remain in full force and effect, and all
other material consents or approvals of any third party required
in connection with the consummation of the Merger as set forth in
the A&W Disclosure Schedule or Epitope Disclosure Schedule shall
have been obtained.
(b) No order, injunction or decree issued by any court or
agency of competent jurisdiction or other legal restraint or
prohibition (an "Injunction") preventing the consummation of the
Merger or any of the other transactions contemplated by this
agreement shall be in effect. No statute, rule, regulation,
order, injunction or decree shall have been enacted, entered,
promulgated or enforced by any Governmental Entity which
prohibits, restricts or makes illegal consummation of the Merger.
(c) Epitope shall have received an opinion of KPMG Peat
Marwick LLP, and A&W shall have received an opinion of Xxxxx and
Xxxxxxxxxx, in form and substance reasonably satisfactory to
Epitope and A&W, respectively, dated as of the Effective Time,
substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion which
are consistent with the state of facts existing at the Effective
Time, the Merger will be treated for federal income tax purposes
as part of a reorganization within the meaning of Section 368 of
the Code and that accordingly:
(i) no gain or loss will be recognized by
Epitope, Epitope Sub or A&W as a result of the Merger;
(ii) no gain or loss will be recognized by the
Shareholders with respect to the receipt of Epitope
Common Stock pursuant to the Merger; and
(iii) the tax basis of the Epitope Common Stock
received by the Shareholders in the Merger will be the
same as the tax basis of the A&W Stock surrendered in
exchange therefor.
In rendering such opinions, the accountants may require and
rely upon representations contained in certificates of officers of
Epitope, A&W and others. The opinion of KPMG Peat Marwick LLP
will not be provided to, or be relied upon by, parties other than
Epitope.
(d) The Surviving Corporation shall have entered into employment
agreements with each of the Shareholders substantially the same as the form
attached as Exhibit D.
(e) The Epitope Common Stock issued in the Merger shall have
been approved for listing by the AMEX upon official notice of issuance.
(f) The appropriate parties shall have executed an Agreement of
Merger in form sufficient for filing with the California Secretary.
8.2 Conditions to Obligations of Epitope and Epitope Sub. The
obligation of Epitope and Epitope Sub to effect the Merger is also subject to
the satisfaction or waiver by Epitope, at or prior to the Effective Time of
the following conditions:
(a) The representations and warranties of A&W and the
Shareholders set forth in this agreement shall be true and correct
in all material respects as of the Closing Date as though made on
and as of the Closing Date. Epitope shall have received a
certificate signed by each Shareholder and signed on behalf of A&W
by the Chief Executive Officer and Chief Financial Officer of A&W
to the foregoing effect.
(b) A&W and the Shareholders shall have performed in all
material respects all obligations required to be performed by them
under this agreement at or prior to the Closing Date, and Agritope
shall have received a certificate signed on behalf of A&W by the
Chief Executive Officer and the Chief Financial Officer of A&W and
by each of the Shareholders to such effect.
(c) Epitope shall have received a satisfactory opinion of
its counsel, Miller, Nash, Wiener, Hager & Xxxxxxx LLP, in form
and substance reasonably satisfactory to Epitope, to the effect
that the issuance of shares of Epitope Common Stock in the Merger
does not require registration under the Securities Act. Such
counsel may rely upon certificates of the parties and upon the
representations and warranties of the parties in this agreement
and any document or agreement referred to in this agreement or
delivered in connection with the transactions contemplated hereby.
The opinion of Miller, Nash, Wiener, Hager & Xxxxxxx LLP will not
be provided to, or be relied upon by, parties other than Agritope
and Epitope.
(d) Epitope shall have completed renegotiation of A&W's
indebtedness to Xxxxx Fargo Bank, National Association.
(e) Epitope shall have received the written resignations
of all the directors and officers of A&W, effective as of the
Effective Time.
(f) Epitope shall have received a satisfactory opinion
from Xxxxx, Wegis, DeNatale, Xxxxxxx & Xxxx, LLP, counsel to A&W.
(g) The Shareholders shall have surrendered to Epitope the
A&W Certificates representing all the outstanding shares of A&W
capital stock for cancellation.
(h) Each Shareholder shall have executed and delivered to
Epitope a letter confirming that he does not intend to sell the
Epitope Common Stock he receives pursuant to this agreement, in
order to comply with requirements for treating the Merger as a
pooling of interests.
(i) During the period from the date of this agreement to
the Effective time, there shall not have been any material adverse
change (or development involving a prospective material adverse
change in the business operations, earnings, assets, properties or
condition (financial or otherwise) of A&W and there shall not have
been any material loss involving or damage to any of its
properties or assets, and Epitope shall have received a
certificate dated the Effective Time to such effect signed by A&W
and each of the Shareholders, to their best knowledge.
(j) Epitope shall have received such other evidence of the
accuracy of A&W's and the Shareholder's representations and
warranties, of compliance with A&W's and the Shareholder's
covenants and of the satisfaction of the foregoing conditions as
may be reasonably requested by Epitope.
(k) Epitope shall have received an opinion from Price
Waterhouse LLP, to the effect that Epitope may account for the
Merger as a pooling of interests.
(l) Epitope shall have completed renegotiation of A&W's
lease dated August 1, 1991, with Xxxxxxxxxx & Xxxxxx.
(m) Xxxx X. Xxxxxxxxxx shall have transferred his interest
in Xxxxxx x Xxxxxxxxxx de Mexico to A&W.
8.3 Conditions to Obligations of A&W. The obligation of A&W to
effect the Merger is also subject to the satisfaction or waiver by A&W at or
prior to the Effective Time of the following conditions:
(a) The representations and warranties of Epitope set
forth in this agreement are true and correct as of the Closing
Date as though made on and as of the Closing Date. A&W shall have
received certificates signed on behalf of Epitope by an executive
officer to the foregoing effect.
(b) Epitope shall have performed in all material respects
all obligations required to be performed by it under this
agreement at or prior to the Closing Date, and A&W shall have
received certificates signed on behalf of Epitope by an executive
officer to such effect.
(c) The Shareholders shall have received a satisfactory
opinion from Miller, Nash, Wiener, Hager & Xxxxxxx, LLP, counsel
to Epitope.
(d) Epitope shall have prepared and signed the written
instructions to its transfer agent described in Section 3.2(b)
above.
(e) A&W and the Shareholders shall have received such
other evidence of the accuracy of Epitope's representations and
warranties, of compliance with its covenants and of satisfaction
of the foregoing conditions as A&W may reasonably request.
ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination. This agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the matters
presented in connection with the Merger by the shareholders of A&W:
(a) By mutual consent of Epitope and A&W in a written
instrument, if the Board of Directors of each so determines.
(b) By either Epitope or A&W (i) if any Governmental
Entity which must grant a Requisite Regulatory Approval has denied
approval and such denial has become final and nonappealable or
(ii) any Governmental Entity of competent jurisdiction shall have
issued an order enjoining or otherwise prohibiting the
consummation of the transactions contemplated by this agreement.
(c) By any party if the Merger shall not have been
consummated on or before February 1, 1997, unless the failure of
the Merger to occur by such date shall be due to the breach by the
party seeking to terminate this agreement of any representation,
warranty, covenant, or other agreement of such party set forth
herein.
(d) By either Epitope or A&W (provided that the
terminating party (or, with respect to A&W, the Shareholders) is
not then in material breach of any representation, warranty,
covenant or other agreement contained herein) if there shall have
been a material breach of any of the covenants or agreements or
any of the representations or warranties set forth in this
agreement on the part of the other party (or, with respect to A&W,
the Shareholders) which breach is not cured within forty-five
(45) days following written notice to the party committing such
breach, or which breach, by its nature, cannot be cured prior to
the Effective Time.
9.2 Effect of Termination. In the event of termination of this
agreement as provided in Section 9.1, this agreement shall forthwith become
void and have no effect, and none of the parties shall have any liability of
any nature whatsoever hereunder, except (i) Sections 9.2, 10.1 (but only with
respect to termination under Section 9.1(d)), and 10.2 shall survive any
termination of this agreement, and (ii) notwithstanding anything to the
contrary contained in this agreement, no party shall be relieved or released
from any liabilities or damages arising out of its intentional or willful
breach of any provision of this agreement.
9.3 Extension; Waiver. At any time prior to the Effective Time,
Epitope and A&W may, to the extent legally allowed, (a) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, and (c) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in a written instrument signed on behalf of such
party, but such extension or waiver or failure to insist on strict compliance
with an obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
ARTICLE X
GENERAL PROVISIONS
10.1 Survival of Representations, Warranties, and Agreements.
The representations, warranties, covenants, and agreements in this agreement
(other than the agreements set forth in Section 7.12 which shall survive as
set forth therein), including any rights arising out of any breach of such
representations, warranties, covenants, and agreements, shall survive until
the later of (a) the date the audit of Epitope's September 30, 1997, financial
statements is completed or (b) the date one year after the Effective Time (the
"Expiration Date"). Notwithstanding the foregoing sentence, the Shareholders
agree to pay over to A&W any refund of taxes plus accrued interest which they
may receive (either before or after the Expiration Date) from the Internal
Revenue Service and/or the State of California attributable to a determination
by the Internal Revenue Service or the California Franchise Tax Board that the
A&W status as an "S corporation" as that term is defined in Section 1361(a)(1)
of the Internal Revenue Code of 1986 or the analogous section of the
California Revenue and Taxation Code, was terminated during a period of time
beginning December 21, 1995 and ending April 30, 1996.
10.2 Expenses. Epitope shall pay the fees for accounting
services performed by Xxxxx & Xxxxxxxxxx in connection with the Merger and
shall pay one-half of the fees for legal services performed by Xxxxx, Wegis,
DeNatale, Xxxxxxx & Xxxx, LLP, in connection with the Merger. All other costs
and expenses incurred in connection with this agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense.
10.3 Notices. All notices under this agreement shall be in
writing and shall be deemed given when delivered personally, when sent by fax
(with prompt confirmation by mail), four business days after mailed by
certified mail (return receipt requested), or one business day after being
sent by a recognized overnight courier, to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
If to Agritope, Epitope, Epitope Sub, or the Surviving
Corporation, to:
Epitope, Inc.
0000 X.X. Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: President
with copies to:
Miller, Nash, Wiener, Hager & Xxxxxxx LLP
3500 U. S. Bancorp Tower
000 X.X. Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Xx., P.C.
If to A&W before the Effective Time, to:
Xxxxxx & Xxxxxxxxxx Sales, Co.
0000 Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: President
with copies to:
Xxxxx, Wegis, DeNatale, Xxxxxxx & Xxxx, LLP
X.X. Xxx 00000
Xxxxxxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
If to a Shareholder, to the address set forth in the shareholder
records of A&W, or after the Effective Time, the Surviving Corporation.
10.4 Interpretation. When a reference is made in this agreement
to Sections, Exhibits, or Schedules, such reference shall be to a Section of
or Exhibit or Schedule to this agreement unless otherwise indicated. The
table of contents and headings contained in this agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this agreement. Whenever the words "include," "includes," and "including" are
used in this agreement, they shall be deemed to be followed by the words
"without limitation." No provision of this agreement shall be construed to
require any person to take any action that would violate any applicable law,
rule, or regulation.
10.5 Counterparts. This agreement may be executed in
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when counterparts have been signed by each of the
parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart. Facsimile transmission of a
signed original shall have the same effect as delivery of the original.
10.6 Entire Agreement. This agreement (including the documents
and the instruments referred to herein) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof other than the
agreements specifically referred to herein.
10.7 Governing Law. This agreement shall be governed and
construed in accordance with the laws of the State of California, without
regard to any applicable conflicts of law rules thereof.
10.8 Severability. Any term or provision of this agreement that
is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining
terms and provisions of this agreement or affecting the validity or
enforceability of any of the terms or provision of this agreement in any other
jurisdiction. If any provision of this agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
10.9 Publicity. Except as otherwise required by applicable law
or the rules of AMEX, neither Epitope, A&W, nor any Shareholder shall issue or
cause the publication of any press release or other public announcement with
respect to, or otherwise make any public statement concerning, the
transactions contemplated by this agreement without the consent of the other
parties, which consent shall not be unreasonably withheld.
10.10 Assignment. Neither this agreement nor any of the rights,
interests, or obligations shall be assigned by any of the parties hereto
without the prior written consent of the other parties. Subject to the
preceding sentence, this agreement will be binding upon, inure to the benefit
of, and be enforceable by the parties and their respective successors and
assigns. This agreement (including the documents and instruments referred to
herein) is not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder.
10.11 Attorney Fees. In the event any party shall seek
enforcement of any covenant, warranty, indemnity, or other term or provision
of this agreement, the party that prevails in such enforcement proceeding
shall be entitled to recover such reasonable costs and attorney fees which
shall be determined by the arbitrator or court (including any appellate
court).
10.12 Dispute Resolution.
(a) Any dispute arising in connection with this agreement
shall be finally settled by arbitration referred to and conducted
in accordance with the JAMS/Endispute Streamlined or Comprehensive
Arbitration Rules and Procedures (the "JAMS Rules"), except as
such rules may conflict with the provisions of this Section 10.12
in which event the provisions of this Section 10.12 shall control.
Any party may be represented by counsel therein. Any such
arbitration shall be conducted by a panel of one or more
arbitrators selected in accordance with the JAMS Rules. The
arbitration shall be conducted in English in Los Angeles,
California.
(b) Any decision or award of the arbitral tribunal shall
be final and binding upon the parties to the arbitration
proceeding. The arbitral tribunal's decision shall include a
reasonably detailed statement of the basis for the decision and
computation of the award, if any. The parties waive any rights to
appeal such award to or have it reviewed by any court or tribunal.
The parties further agree to exclude any right of application or
appeal to any court in connection with any question of law arising
in the course of the arbitration. The award may be enforced
against the parties to the arbitration proceeding or their assets
wherever they may be found. Judgment upon the award may be
entered in any court having jurisdiction thereof or an application
may be made to such court for judicial acceptance of the award and
an order of enforcement, as the case may be.
(c) Except as the arbitral tribunal may otherwise
determine in its discretion, a party substantially prevailing in
the arbitration shall be entitled to recover its attorney fees and
costs, including the costs and expenses of its witnesses, and the
other parties shall pay the fees, costs and expenses of the
arbitral tribunal and the administering and appointing authority.
The parties have executed this agreement as of the date stated
above.
EPITOPE, INC.
Attest: Xxxxxxx X. Xxxxxx By: Xxxxx X. Xxxxx
Title: President/CEO
THAMSCOE, INC.
Attest: Xxxxxxx X. Xxxxxx By: Xxxxxx X. Xxxxx
Title: Chairman
XXXXXX & XXXXXXXXXX SALES, CO.
Attest: Illegible By: Xxxx Xxxxxxxxxx
Title: President/CEO
Shareholders:
Xxxx X. Xxxxxx Xxxxx Xxxxxx
Xxxx X. Xxxxxxxxxx Xxxx X. Xxxxxxxxxx
The terms of this agreement are agreed to and acknowledged by:
EXHIBIT A
Officers and Directors of
Surviving Corporation
Officers:
Xxxxxx X. Xxxxx, Ph.D. - Chairman of the Board
Xxxx X. Xxxxxxxxxx - President and Chief Executive
Officer
Xxxx X. Xxxxxx - Executive Vice President
Xxxxxxx X. Xxxxxx - Executive Vice President and Chief
Financial Officer
Xxxxxxx Xxxxxx - Vice President - Business
Development
Xxxx X. Xxxxxxxxxx - Vice President - Operations
Xxxxx Xxxxxx - Vice President - Sales
Directors:
Xxxxxx X. Xxxxx, Ph.X.
Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxxxx Xxxxxx
Xxxx X. Xxxxxxxxxx
Xxxx X. Xxxxxx
EXHIBIT "B"
A&W DISCLOSURE SCHEDULE
1. Paragraph 5.1
(a) Please see the attached copies of A&W Articles of Incorporation and
Bylaws attached hereto at Tab 5.1, Exhibit A.
(b) A&W has an interest in the following entities:
1) A&W has a limited partnership interest in the Triple "B"
Ranch, Ltd. See the attached copy of the Limited Partnership
Agreement of Triple B Ranch Ltd., at Tab 5.1, Exhibit B.
2) A&W is a Class "D" Member of Georgian Wines, L.L.C., in the
Republic of Georgia. See copy of the Limited Liability
Company Agreement of Georgian Wines, L.L.C. at Tab 5.1,
Exhibit B.
3) A&W owns a 1/3 interest in Superior Tomatoes Associates,
L.L.C. See copies of the Superior Tomato Associates, L.L.C.
Operating Agreement and the Development and Marketing
Agreement, attached hereto at Tab 5.1, Exhibit B.
4) A&W has recurring joint venture agreements with produce
growers in the ordinary course of business. Attached hereto
at Tab 5.1, Exhibit B, is a copy of the standard form
agreement entered into between these growers and A&W.
5) A&W has a 1/3 interest in the Key Farm, a joint venture
formed for the purpose of growing grapes in a vineyard near
Bakersfield, CA. Attached hereto at Tab 5.1, Exhibit B, are
copies of the Agricultural Lease for the land on which the
vineyard is located and the Agreement for the joint venture.
6) A&W has a 99% interest in Xxxxxx x Xxxxxxxxxx de Mexico.
Xxxxxx x Xxxxxxxxxx de Mexico has a fifty (50%) interest in
Arrendadora Allejandra, a Mexican corporation. Attached
hereto at Tab 5.1, Exhibit B, are copies of the
incorporation documents of both corporations.
With the exceptions of those interests noted above, A&W has no
subsidiaries and does not own an interest in any other corporation,
partnership or other organization, whether incorporated or unincorporated.
(c) Please see complete copy of the corporate minute book of A&W
attached hereto at Tab 5.1, Exhibit C.
2. Paragraph 5.2
No Disclosure
3. Paragraph 5.3
No Disclosure
4. Paragraph 5.4
No Disclosure
5. Paragraph 5.5
Please see complete copies of audited financial statements of A&W for
years 1994/1995 and 1995/1996; and copies of the unaudited Balance Sheet,
Profit and Loss Statement, and Statements of Cash Flows for month ended
June 1996, attached hereto at Tab 5.5, Exhibit A.
Paragraph 5.6
A&W is currently involved in the following transactions which, by virtue
of the relationship between the parties, may not be considered arm's length:
1) A&W leases a warehouse and office facility, located at 0000
Xxxxxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx, from Xxxxxxxxxx & Xxxxxx
under an agreement that expires in 2001, with an option to extend
the lease for another five years, with an annual rent of $132,000.
See a copy of the lease attached hereto at Tab 5.13, Exhibit B.
2) The Shareholders have an interest in Badiego, Inc., which owns
land near Kingsburg, California leased to a Xxxxxxx Farms, which
has a marketing agreement to market its products through A&W. The
Shareholders have the following interests in Badiego, Inc.:
a) Xxxx and Xxxxxxxx Xxxxxx 2.7%
b) Xxxx X. and Xxxxxx Xxxxxxxxxx 2.7%
c) Xxxx X. and Xxxxxxxxx Xxxxxxxxxx 3.06%
d) Xxxxx and Xxxx Xxxxxx .67%
Attached hereto at Tab 5.13, Exhibit A, are copies of the
marketing agreement between Xxxxxxx Farms and A&W and the Purchase and Sale
Agreement in which Xxxxxx & Xxxxxxxxxx Sales Co, Inc., acted as agent for
Badiego, Inc.
3) A&W has a one-third interest in Key Farm, a joint venture which
operates a grape vineyard in the Bakersfield area. One-third of
the joint venture is owned by Xxxxx Xxxxxx, the son of Shareholder
Xxxx Xxxxxx; the remaining one-third is owned by Xxxxxxxxx
Xxxxxxx. A&W markets the grapes produced by Key Farms. Attached
hereto at Tab 5.1, Exhibit B, is a copy of the lease concerning
the land on which the vineyard is operated, the Agreement, and the
marketing agreement between Xxxxxxx Farming Company and A&W.
With the exceptions noted above, all accounts receivable and other
transactions currently in effect were arm's length transactions.
7. Paragraph 5.7
No Disclosure
8. Paragraph 5.8
No Disclosure
9. Paragraph 5.9
A&W is involved in the following actual or potential litigation:
1) Magio v. Xxxxxx & Xxxxxxxxxx Sales Co., Inc. Xxxx Xxx Xxxxx is the
owner of a warehouse which had been subleased by A&W for a period
of two months. Magio foreclosed on the lessor and demanded A&W
vacate the premises. Because the building was being used for
storing tomatoes, and A&W had a two month lease in effect, A&W
refused. Magio has filed suit against A&W for trespass and
illegal possession of the building. Magio has sued for damages
including lost profits. The matter is pending but A&W's counsel
does not believe the case will have a material adverse effect on
A&W. A&W previously forwarded to Epitope a letter from A&W's
counsel on this matter regarding this litigation.
2) During October, 1996, A&W employees have been involved in two
employment-related accidents involving A&W vehicles for which the
employees were at fault. Both accidents were minor in nature and
A&W has tendered the matters to its insurer. The claims are
pending.
With the exceptions noted above, no action is pending or threatened
against A&W as set forth in Section 5.9 of the Merger Agreement.
Please see a summary of all actions, suits, inquiries, proceedings, or
investigations and inquiries to which A&W has been a party since 1991,
attached hereto at Tab 5.9, Exhibit A. With the exception of an investigation
by OSHA and the resulting fine, the documentation for which has been
previously provided to Epitope and its counsel, no other governmental
inquiries, actions, suits, proceedings, or investigations were initiated
against A&W since 1991.
10. Paragraph 5.10
No Disclosure
11. Paragraph 5.11
A&W property is currently subject to the following Liens as defined in
Section 5.11:
1) Ford Motor Credit ("F.M.C.") has a purchase money security
interest in a 1996 Ford Crown Victoria purchased by A&W in 1996
from Xxx Xxxxx Ford. Attached hereto at Tab 5.13, Exhibit E, is a
copy of the retail installment agreement between F.M.C. and A&W.
2) General Motors Accounting Corporation ("G.M.A.C.") has a purchase
money security interest in a 1995 Chevrolet Tahoe purchased by A&W
on or about March 25, 1995 from Xxxxxxx Chevrolet. Attached
hereto at Tab 5.13, Exhibit F, is a copy of the retail installment
agreement between G.M.A.C. and A&W.
3) F.M.C. has a purchase money security interest in a 1995 Ford F150
purchased by A&W on or about December 2, 1995, from Dixon Ford
Isuzu. Attached hereto at Tab 5.13, Exhibit G, is a copy of the
retail installment agreement between F.M.C. and A&W.
4) Toyota Motor Credit Corporation has a security interest as lessor
of two (2) forklifts leased by A&W on or about June 1, 1995.
Attached hereto at Tab 5.13, Exhibit D, are copies of the retail
installment agreement between Toyota Motor Credit Corporation and
A&W.
5) Associates Commercial Corporation has a security interest in a
Piper airplane under a promissory note between Associates and A&W.
Attached hereto at Tab 5.13, Exhibit H, are copies of the
promissory note and accompanying documents.
6) Xxxxx Fargo Bank has a security interest in a sixty (60) acre
ranch located in Tulare County, California, to secure a loan in
the amount of $253,500, the current balance of which is $202,800.
12. Paragraph 5.12
See a complete list of all insurance policies of A&W along with copies
of each policy, at Tab 5.12, Exhibit A.
13. Paragraph 5.13
(a) Real and personal property leases:
(1) Month-to-month lease between X.X. Xxxxx & Co. and A&W for
the office building located at 0000 Xxxxx Xxxxx, Xxxxx 0,
Xxxxxxxxxxx, Xxxxxxxxxx. See lease agreements attached
hereto at Tab 5.13, Exhibit A.
(2) Ten-year lease between Xxxxxxxxxx and Xxxxxx and A&W for
real property located at 0000 Xxxxxxx Xxxxx, Xxx Xxxxx,
Xxxxxxxxxx. See lease agreement attached hereto at Tab 5.13,
Exhibit B.
(3) Letter agreement for lease of real property located at 000
Xxxxxxxx Xxxxxx, Xxx Xxxxx, Xxxxxxxxxx. The current rent is
$5400 payable monthly. See attached letters outlining terms
of agreement attached hereto at Tab 5.13, Exhibit C.
(4) A&W is the lessee in two (2) lease agreements with Toyota
Motor Credit Corporation for the lease of two (2) gas-
powered forklifts. See copies of leases attached hereto at
Tab 5.13, Exhibit D.
(b) The Shareholders and A&W have entered into a Buy-Sell Agreement.
By agreement of the Shareholders and A&W, the Buy-Sell Agreement will
terminate upon the signing of the Merger Agreement.
(c) No Disclosure.
(d) (1) A&W is obligated to F.M.C. under a retail installment
contract for the purchase of a 1996 Ford Crown Victoria from
Xxx Xxxxx Ford. See copy of the Vehicle Retail Installment
Contract attached hereto at Tab 5.13, Exhibit E.
(2) A&W is obligated to G.M.A.C. under a retail installment
contract for the purchase of a 1995 Chevrolet Tahoe from
Xxxxxxx Chevrolet. See copy of contract attached hereto at
Tab 5.13, Exhibit F.
(3) A&W is obligated to F.M.C. under a retail installment
contract for the purchase of a 1995 Ford F150 from Dixon
Ford Isuzu. See contract attached hereto at Tab 5.13,
Exhibit G.
(4) A&W is obligated to Associates Commercial Corporation under
a promissory note for the purchase of a Piper aircraft. See
copies of the promissory note and related documents attached
hereto at Tab 5.13, Exhibit H.
(5) A&W is obligated to Xxxxx Fargo Bank under a Credit
Agreement dated August 5, 1996, for a line of credit up to
6.5 million. See copy of the Credit Agreement attached
hereto at Tab 5.13, Exhibit I.
(6) A&W is obligated to Xxxxxxx Xxxxx on a note dated April 1,
1996, in the amount of $100,000.00, for a one year term
bearing interest at the rate of 10% See a copy of the
unexecuted note attached hereto at Tab 5.13, Exhibit J.
(7) A&W has notes payable to the Shareholders that are
subordinated to the claims of the bank. The notes are due
on demand and bear an interest rate of 10 percent. See
copies of the Shareholder notes, attached hereto at Tab
5.13, Exhibit K.
(e) No Disclosure.
(f) No Disclosure.
(g) See Section 5.13(a), above.
(h) No Disclosure.
14. Paragraph 5.14
No Disclosure
See copies of A&W retirement plan, employee health insurance benefits,
paid holiday policy, sick pay policy, bereavement leave policy, and vacation
pay policy attached hereto at Tab 5.14, Exhibit A.
15. Paragraph 5.15
No Disclosure
See a list of each employee and related information attached hereto at
Tab 5.15, Exhibit A.
16. Paragraph 5.16
No Disclosure
A&W possesses a trademark on the term "Limited Edition" with respect to
tomatoes. With this exception, A&W owns no Trade Rights as that term is
defined in Section 5.16 of the Merger Agreement.
17. Paragraph 5.17
(a) See a complete list of A&W Customers/Growers,related Grower Sales
Reports, G/P and G/R Reports, and list of grower advances for the
past 5 years attached hereto at Tab 5.17, Exhibit A.
(b) See a complete list of A&W vendors, as of October 1996, attached
hereto at Tab 5.17, Exhibit B.
(c) A&W has no standard warranties for its products.
18. Paragraph 5.18
A&W's 1992 tax returns were audited by the Internal Revenue Service. As
the audit report at Tab 5.18, Exhibit A, reveals no discrepancies were
discovered during the audit.
19. Paragraph 5.19
No Disclosure
(a) See list of A&W bank accounts attached hereto at Tab 5.19, Exhibit
A. For bank line of credit see Tab 5.13, Exhibit I, herein.
(b) No powers of attorney previously granted by A&W are currently in
force.
20. Paragraph 5.20
No Disclosure
21. Paragraph 5.21
No Disclosure
22. Paragraph 5.22
No Disclosure
23. Paragraph 5.23
No Disclosure
24. Paragraph 5.24
No Disclosure
25. Misc.
(a) At Tab Misc., Exhibit A, see list of personal property of A&W.
(b) At Tab Misc., Exhibit B, see Grant Deed to real property known as
"Xxxxxx Ranch."
FIRST ADDENDUM TO EXHIBIT "A" OF THE A&W DISCLOSURE SCHEDULE
26. Paragraph 5.11
The following A&W property is subject to a Lien as defined in Section
5.11 of the Merger Agreement:
1) A 1993 Mercury Sable is subject to a purchase money security
interest in favor of the seller.
27. Paragraph 5.13
(a) Real and personal property leases:
(1) A&W is the lessee in a third lease agreement with Toyota Motor
Credit Corporation for the lease of a forklift.
(d) Contracts:
(1) A&W is obligated under a retail installment contract for the
purchase of a 1993 Mercury Sable. The balance remaining on this obligation is
$1,024.00. See a copy of the retail installment contract at Tab 5.13, Exhibit
L.
SECOND ADDENDUM TO EXHIBIT "B" OF THE A&W MERGER AGREEMENT
29. Paragraph 5.11
Weyerhaeuser Company has a security interest in one Tri-Pak Cherry and
Roma tomato machine #D-111495JWFO2 purchased by A&W in 1996 from Weyerhaeuser.
Attached hereto as Tab 5.13, Exhibit M, is a copy of the Conditional Purchase
and Sale Agreement and related bailment of the equipment to Xx. Xxxxxxxx
Xxxxxxxx. The attached copy of the Conditional Purchase and Sale Agreement is
not executed, but the executed document is the same as this attached
unexecuted copy.
30. Paragraph 5.13
(d) Contracts:
A&W is obligated under a Conditional Purchase and Sale Agreement
with the Weyerhaeuser Company as described in Paragraph 29, above.
EXHIBIT C
REGISTRATION AGREEMENT
THIS REGISTRATION AGREEMENT (this "Agreement") is made and entered
into as of ______________, 1996, by and among Epitope, Inc., an Oregon
corporation (the "Company") and the undersigned shareholders of Xxxxxx &
Xxxxxxxxxx Sales, Co., a California corporation ("A&W"). The shareholders are
all the shareholders of A&W.
The parties hereby agree as follows:
RECITALS
A. The Company has acquired A&W by means of the merger of a
wholly owned subsidiary of the Company (the "Merger Corp.") with and into A&W
(the "Merger") pursuant to Acquisition and Merger Agreement dated
______________, 1996 (the "Acquisition Agreement"), among the Company, A&W,
the Shareholders, and Merger Corp.
B. The Shareholders received shares of the Company's common
stock, no par value (the "Common Stock"), in exchange for their shares of A&W
common stock pursuant to the Merger.
C. The Acquisition Agreement requires the Company to use its
best efforts to register the Acquisition Shares pursuant to this Agreement.
Article I
Definitions
Section 1. Certain Definitions. In addition to terms defined
elsewhere in this Agreement, the following terms have the meanings indicated
below:
(a) "1933 Act" means the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be
in effect from time to time.
(b) "1934 Act" means the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be
in effect from time to time.
(c) "Acquisition Shares" means (i) the initial shares of
Common Stock received by the Shareholders in the Merger, and
(ii) any additional shares of Common Stock issued with respect to
Acquisition Shares upon any stock split, stock dividend,
reorganization, recapitalization, or similar event.
(d) "Business Day" means any day other than a Saturday,
Sunday, or public holiday under the laws of the State of
California.
(e) "Commission" means the Securities and Exchange
Commission, or any other federal agency then administering the
1993 Act.
(f) "Holder" means a person or entity that owns
Acquisition Shares.
(g) "Losses" means all losses, claims, damages, or
liabilities and reasonable expenses related thereto.
Article II
Registration of Acquisition Shares
Section 2.1 Obligation to Register. Subject to Sections 2.2 and
2.3, as soon as reasonably practicable after the Effective Time (as defined in
the Acquisition Agreement), but in no event more than four months after the
Effective Time, the Company shall use its best efforts to promptly register
under the 1933 Act all the Acquisition Shares (the "Required Registration").
Section 2.2 Limitations on Obligation to Register. The Company's
obligation to register the Acquisition Shares pursuant to Section 2.1 is
subject to the following limitations:
(a) The Company shall be obligated to register the
Acquisition Shares only once; provided, however, that if one or
more separate registration statements are required to register
Acquisition Shares described in Section 1(c)(ii) above, the
Company's obligation to effect the Required Registration hereunder
shall include filing and maintaining the effectiveness in
accordance with the terms of this Agreement each such additional
registration statement.
(b) The Company shall not be obligated to register any
shares of Common Stock held by a Holder other than the Acquisition
Shares, and no such other shares of Common Stock shall be included
in the registration statement filed by the Company with the
Commission pursuant to this Agreement without the Company's
consent, which may be withheld for any reason.
(c) There shall be available for use by the Company in
effecting the Required Registration Form S-3 or a comparable
simplified form of registration statement.
(d) The Holders shall cooperate with the Company in
effecting the Required Registration of their respective
Acquisition Shares.
2.3 Registration Procedures. Until such time as the Company's
obligations under Article II terminate pursuant to Article III, the Company
shall:
(a) Prepare and file a registration statement with the
Commission with respect to the Acquisition Shares within the
period specified in Section 2.1 and use its best efforts to cause
such registration statement to become effective.
(b) Prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such
registration statement effective during the period ending two
years after the Effective Time.
(c) Furnish to the Holders such number of copies of the
registration statement, the prospectus forming a part of the
registration statement (including each preliminary prospectus and
prospectus supplement), and such other documents as the Holders
may reasonably request in order to facilitate the distribution of
the Acquisition Shares.
(d) Unless such laws are preempted by federal law, use its
best efforts to register, qualify, or obtain an exemption for
distribution of the Acquisition Shares under the securities or
blue sky laws of each jurisdiction that a Holder reasonably
requests; provided that the Company shall not be obligated to
qualify to do business in any jurisdiction where it is not now so
qualified or to take any action which would subject it to the
service of process in suits other than those arising out of the
offer or sale of the securities covered by such registration
statement in any jurisdictions where it is not now so subject.
(e) Use reasonable efforts to timely notify the Holders, at
any time when a prospectus relating to the Acquisition Shares is
required to be delivered under the 1933 Act, of the happening of
any event as a result of which the prospectus forming a part of
the registration statement, as then in effect, includes an untrue
statement of material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then
existing and, at the request of the Holders, shall, subject to
Section 2.3(f), promptly prepare and file with the Commission any
supplement to or any amendment of such prospectus that may be
necessary so that such prospectus shall not include any untrue
statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then
existing. Upon receipt of such notice from the Company, the
Holders shall not effect or attempt to effect any sales of
Acquisition Shares until the Company has filed such supplement
with the Commission or such amendment has been declared effective
by the Commission. The Company shall furnish a reasonable number
of copies of any such supplement or amendment to the Holders.
(f) If, because of a proposed material acquisition or any
other material event, the board of directors of the Company
determines that the filing or effectiveness of a supplement or
amendment to the prospectus pursuant to Section 2.3(e) would be
detrimental to the Company, the Company may defer such filing or
effectiveness for a period of up to 90 days after such filing or
effectiveness would otherwise ordinarily have occurred. For the
purposes of the preceding sentence, it shall be presumed that a
supplement or amendment to the prospectus would ordinarily be
filed 10 days after notice referred to in Section 2.3(e), and that
any amendment to the prospectus would ordinarily become effective
seven days after filing.
(g) Notify the Holders promptly if the Company shall
receive notice that the registration statement or any supplement
or amendment thereto has become effective, the registration
statement is required to be amended or supplemented, or any stop
order with respect thereto has been issued.
(h) Cooperate in furnishing or causing to be furnished such
opinions, certificates, and other documents as are normal or customary
in offerings of securities including, if the Holders offer their
Acquisition Shares in an underwritten public offering, entering into a
underwriting agreement in customary form with the managing underwriter
and the Holders.
2.4 Expenses. Except as provided below, the Company shall be
responsible for all out-of-pocket expenses incurred by the Company in
effecting the Required Registration and keeping the registration statement
filed with the Commission thereunder effective (including filing supplements
and amendments thereto as provided above), all registration and filing fees,
printing expenses, expenses of complying with state securities laws reasonably
required by Holder to sell such Holder's Acquisition Shares, if any, fees and
disbursements of counsel for the Company, and accountants' fees and expenses
incident to or required by any such registration; provided, that if the
Acquisition Shares are sold in an underwritten public offering, the Holders
shall bear printing costs. In addition, each Holder shall be responsible for
(a) all fees and disbursements of such Holder's counsel, and (b) any brokers'
commissions, underwriting discounts, and other selling expenses with respect
to the Acquisition Shares sold by such Holder.
Article III
Termination of Registration Obligations
The Company's obligations under Article II above shall terminate
on the earliest to occur of the following:
(a) Two years shall have expired from the Effective Time.
(b) All the Holders shall have disposed of all of their
Acquisition Shares registered pursuant to a registration statement
filed by the Company hereunder that has been declared effective by
the Commission.
(c) In the opinion of counsel to the Company, reasonably
satisfactory to the Holders, disposition of the Acquisition Shares
no longer requires registration of such shares under the 1933 Act.
(d) All the Holders agree in writing to terminate such
obligations.
Article IV
Indemnification
4.1 Indemnification by the Company. In the event that a Holder
sells any Acquisition Shares pursuant to a registration statement filed by the
Company hereunder, the Company hereby agrees to indemnify and hold harmless
each such Holder and each other person, if any, who controls such Holder
(within the meaning of the 1933 Act), and each other person (including each
underwriter, and each other person, if any, who controls such underwriter) who
participates in such distribution of Acquisition Shares against any Losses,
joint or several, to which such Holder, controlling person, or participating
person may become subject under the 1933 Act or otherwise, insofar as such
Losses (or proceedings in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained,
on the effective date thereof, in the registration statement under which such
offering of such Acquisition Shares was registered under the 1933 Act, in any
preliminary prospectus or final prospectus contained therein, or in any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, and will reimburse
such Holder and each such controlling person or participating person for any
legal or other expenses reasonably incurred by such Holder, controlling
person, or participating person in connection with investigating or defending
any such Loss; provided, that the Company will not be liable in any such case
to the extent that any such Loss arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
such registration statement, such preliminary or final prospectus, or such
amendment or supplement in reliance upon and in conformity with written
information furnished by such Holder, controlling person, or participating
person, as the case may be, specifically for use in the preparation thereof.
If requested, the Company shall also indemnify underwriters, selling brokers,
dealer managers, and similar securities industry professionals participating
in the distribution, their officers, directors, agents, and employees, and
each person who controls such persons (within the meaning of Section 15 of the
1933 Act or Section 20 of the 0000 Xxx) to the same extent as provided above
with respect to the indemnification of Holders.
4.2 Indemnification by Holders. In the event that a Holder sells
any Acquisition Shares pursuant to a registration statement filed by the
Company hereunder, each such Holder hereby severally agrees to indemnify and
hold harmless the Company and each other Holder, each other person, if any,
who controls the Company or such other Holder within the meaning of the
1933 Act, and each other person (including each underwriter, and each other
person, if any, who controls such underwriter) who participates in such
offering against any Losses, joint or several, to which the Company or such
other Holder, controlling person, or participating person may become subject
under the 1933 Act or otherwise, insofar as such Losses (or proceedings in
respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of any material fact contained, on the effective date
thereof, in the registration statement under which such offering of such
Acquisition Shares was registered under the 1933 Act, in any preliminary
prospectus or final prospectus contained therein, or in any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein, in light of the circumstances under which they were
made, a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Company, such other
Holder, and each such controlling person or participating person for any legal
or other expenses reasonably incurred by the Company, such other Holder, or
such controlling person or participating person in connection with
investigating or defending any such Loss or proceeding; provided, that such
Holder will be liable in any such case to the extent, and only to the extent,
that any such Loss arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, such preliminary or final prospectus, or such
amendment or supplement in reliance upon and in conformity with written
information furnished by such Holder specifically for use in the preparation
thereof. The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers, and similar securities
industry professionals participating in the distribution to the same extent as
provided above with respect to information so furnished in writing by such
persons specifically for inclusion in any registration statement or
prospectus.
4.3 Indemnification Proceedings. If any action or proceeding
(including any governmental investigation or inquiry) shall be brought or any
claim shall be asserted against any person entitled to indemnity hereunder (an
"indemnified party"), such indemnified party shall promptly notify the party
from which such indemnity is sought (the "indemnifying party") in writing, and
the indemnifying party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the indemnified party and the
payment of all fees and expenses incurred in connection with the defense
thereof. Any such indemnified party shall have the right to employ separate
counsel in any such action, claim, or proceeding and to participate in the
defense thereof, but the fees and expenses of such separate counsel shall be
borne by such indemnified party unless (a) the indemnifying party has agreed
to pay such fees and expenses, (b) the indemnifying party shall have failed to
promptly assume the defense of such action, claim, or proceeding, or (c) the
named parties to any such action, claim, or proceeding (including any
impleaded parties) include both such indemnified party and the indemnifying
party, and such indemnified party shall have been advised by counsel that
there may be one or more legal defenses available to it which are different
from or in addition to those available to the indemnifying party and that the
assertion of such defenses would create a conflict of interest such that
counsel employed by the indemnifying party could not faithfully represent the
indemnified party (in which case, if such indemnified party notifies the
indemnifying party in writing that it elects to employ separate counsel at the
expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of such action, claim, or proceeding on behalf of
such indemnified party, it being understood, however, that the indemnifying
party shall not, in connection with any one such action, claim, or proceeding
or separate but substantially similar or related actions, claims or
proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses
of more than one separate firm of attorneys (together with appropriate local
counsel) at any time for all such indemnified parties, unless in the
reasonable judgment of such indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such action, claim, or proceeding, in which event the indemnifying
party shall be obligated to pay the fees and expenses of such additional
counsel). The indemnifying party shall not be liable for any settlement of
any such action or proceeding effected without such party's written consent,
which will not be unreasonably withheld.
4.4 Contribution.
(a) If the indemnification provided for in this Agreement
under Sections 4.1 or 4.2 is unavailable to an indemnified party
(other than by reason of exceptions provided in those sections) in
respect of any Losses, then each applicable indemnifying party in
lieu of indemnifying such indemnified party shall contribute to
the amount paid or payable by such indemnified party as a result
of such Losses, in such proportion as is appropriate to reflect
the relative fault of the indemnifying party and indemnified
parties in connection with the actions, statements, or omissions
which resulted in such Losses as well as any other relevant
equitable considerations. The relative fault of such indemnifying
party and the indemnified party shall be determined by reference
to, among other things, whether any action in question, including
any untrue statement or alleged untrue statement of a material
fact or omission or alleged omission of a material fact, has been
taken or made by, or relates to information supplied by, such
indemnifying party or indemnified party, and the parties' relative
intent, knowledge, access to information, and opportunity to
correct or prevent such action, statement, or omission. The
amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in
Section 4.3, any legal or other fees or expenses reasonably
incurred by such party in connection with any action, suit, claim,
investigation, or proceeding.
(b) The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 4.4 were
determined by pro rata allocation or by any other method of
allocation which does not take into account the equitable
considerations referred to in the immediately preceding
paragraph (a). Notwithstanding the provisions of this
Section 4.4, (i) an indemnifying party which is a selling Holder
shall not be required to contribute any amount in excess of the
amount by which the total price at which the Acquisition Shares
sold by such indemnifying party were offered to the public exceeds
the amount of any damages which such indemnifying party has
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission, and (ii) no
provision of this Section 4.4 shall be deemed to create joint, as
opposed to several, liability on the part of an indemnifying party
under Section 4.2. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
0000 Xxx) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
Article V
Obligations of Holders
5.1 Required Information. In the event that a Holder intends to
dispose of any Acquisition Shares pursuant to a registration statement filed
by the Company pursuant to this Agreement, it shall be a condition precedent
to the Company's obligations hereunder to take any further action with respect
thereto that such Holder shall have furnished the Company with written notice
of the Holder's intent to effect such distribution together with such
information regarding the Holder, the intended method of disposition, the
number of Acquisition Shares involved, and any other information reasonably
requested by the Company in order for the Company to perform its obligations
under this Agreement.
5.2 Limitations on Certain Transactions. Each Shareholder
agrees not to dispose of any Acquisition Shares (whether by sale, pledge,
transfer, or otherwise), except (a) pursuant to a registration statement filed
under the 1933 Act by the Company pursuant to this Agreement and declared
effective by the Commission, or (b) in a transaction that is exempt from
registration under the 1933 Act; provided, that with respect to a transaction
described in clause (b), the Holder has provided the Company with an opinion
of qualified counsel, in form and substance reasonably satisfactory to the
Company, to the effect that such registration is not required. To the extent
Acquisition Shares are transferred to a person or entity that is not a party
to this Agreement pursuant to a transaction described in clause (b), such
person shall be bound by the requirements of this Article V with respect to
subsequent transfers of the Acquisition Shares owned by such Holder to the
same extent as if such Holder were a signatory hereto, except that a Holder
who acquires Acquisition Shares in a transaction under Commission Rule 144 (or
any other rule or regulation) such that such Holder may resell such shares
without registration under the 1933 Act shall not be so bound.
Article VI
Representations, Warranties, and Covenants of Company
The Company represents, warrants, and covenants to the Holders as
follows:
6.1 Availability of Form S-3. At the date of this Agreement,
the Company is entitled to use Form S-3 to register the Acquisition Shares
under the 0000 Xxx.
6.2 Reports Under 1934 Act. With a view to making available to
Holders the benefits of Rule 144 promulgated under the 1933 Act any other
rule or regulation of the Commission that may at any time permit a Holder to
sell Acquisition Shares to the public without registration, the Company agrees
during the period ending on the earlier of (a) three years after the Effective
Time, and (b) such time as all the Holders shall have disposed of all their
Acquisition Shares registered pursuant to a registration statement filed by
the Company hereunder that has been declared effective by the Commission or in
such other manner that the tranferees can transfer their shares under
Section 4(1) of the 1933 Act, the Company will:
(i) make an keep public information available, as those terms are
understood and defined in Rule 144;
(ii) file with the Commission in a timely manner all reports and
other documents required of the Company under the 1933 Act and the 1934
Act; and
(iii) furnish to any Holder so long as such Holder owns any
Acquisition Shares forthwith upon request a written statement by the
Company that it has complied with the reporting requirements of
Rule 144, the 1933 Act, and the 1934 Act; a copy of the most recent
annual or quarterly report of the Company; and such other reports and
documents so filed by the Company and other information in the
possession of or reasonably obtainable by the Company as may be
reasonably requested for the purpose of availing any Holder of any rule
or regulation of the Commission permitting the selling of Acquisition
Shares without registration.
6.3 Accuracy. Each filing referred to in Section 6.2(ii) above
at the time filed, will not contain any untrue statement of material fact or
omit to state a material fact necessary to make the statements contained
therein not misleading in light of the circumstances under which they were
made.
Article VII
Miscellaneous
7.1 Notices.
(a) Any and all notices or any other communication
provided for herein shall be given in writing and shall be
delivered personally (including delivery by courier), by
registered or certified mail, addressed, as set forth below, or by
confirmed facsimile.
To Company:
Epitope, Inc.
0000 X.X. Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: President
with a copy to:
Miller, Nash, Wiener, Hager & Xxxxxxx LLP
3500 U. S. Bancorp Tower
000 X.X. Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Xx.
To a Holder:
At the address indicated for such Holder on the records of the
Company or to such other address as may be designated in writing
by any such party.
(b) Except as otherwise provided in this Agreement, each
such notice shall be effective as of the date personally delivered
or confirmed facsimile is sent or, if mailed, as of the earlier of
the date of delivery or the date which is three Business Days
after it is mailed in any post office or branch post office
regularly maintained by the United States Postal Service.
7.2 Amendment. No change in or modification of this Agreement
shall be valid unless the same shall be in writing and signed by the Company
and all the Holders.
7.3 Waiver. No failure or delay on the part of the parties or
any of them in exercising any right, power, or privilege hereunder, nor any
course of dealing among the parties or any of them, shall operate as a waiver
of any such right, power, or privilege nor shall any single or partial
exercise of any such right, power, or privilege preclude the simultaneous or
later exercise of any other right, power, or privilege. The rights and
remedies herein expressly provided are cumulative and are not exclusive of any
rights or remedies which the parties or any of them would otherwise have. No
notice to or demand on the Company in any case shall entitle the Company to
any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of the other parties or any of them to take
any other or further action in any circumstances without notice or demand.
7.4 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
7.5 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the State of
California without regard to principles of conflict of laws.
7.6 Benefit and Binding Effect. This Agreement shall be binding
upon and inure to the benefit of the parties and their executors,
administrators, personal representatives, heirs, successors, and assigns.
7.7 Severability. In the event that any part of this Agreement
shall be held to be invalid or unenforceable, the remaining parts hereof shall
nevertheless continue to be valid and enforceable as though the invalid
portions were not a part hereof.
7.8 Headings. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
7.9 Attorney Fees. In any action or proceeding brought to
enforce any provision of this Agreement, or where any provision hereof is
validly asserted as a defense, the successful party shall be entitled to
recover reasonable attorneys fees (including any fees incurred in any appeal)
in addition to its costs and expenses and any other available remedy.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
The Company: EPITOPE, INC.
By
President
The Shareholders:
By By
Xxxx X. Xxxxxxxxxx Xxxxx Xxxxxx
The Xxxx X. and Xxxxxxxx X. The Xxxx Xxxxxxxxxx and Xxxx
Xxxxxx 1990 Revocable Living Xxxxxxxxxx Family Trust
Trust dated June 28, 1990
By By
Xxxx X. Xxxxxx, Trustee Xxxx Xxxxxx Xxxxxxxxxx, Xx., Trustee
By By
Xxxxxxxx X. Xxxxxx, Trustee Xxxx Xxxxxxx Xxxxxxxxxx, Trustee
E M P L O Y M E N T A G R E E M E N T
This Agreement, dated as of [November 1, 1996], is between Xxxxxx &
Xxxxxxxxxx, Inc., a California corporation ("A&W"), and [Xxxx X. Xxxxxxxxxx]
("Employee").
RECITALS
A. A&W desires to obtain the services of Employee and Employee desires to
secure employment from A&W upon the following terms and conditions.
B. A&W considers the services of Employee to be provided under this
Agreement to be unique, extraordinary, and of intellectual character.
C. A&W is a subsidiary of Epitope, Inc. ("Epitope"), an Oregon corporation.
Epitope, its direct and indirect subsidiaries (whether majority or
wholly owned by Epitope), any other entity controlling, controlled by,
or under common control with Epitope, and any joint venture in which any
of the foregoing has an interest are referred to collectively herein as
the "the Company."
D. The Company has spent significant time, effort, and money to develop
Proprietary Information (as defined below), which the Company considers
vital to its business and goodwill. Certain Proprietary Information
will necessarily be communicated to or acquired by Employee in the
course of his employment with A&W, and A&W desires to obtain the
services of Employee, only if, in doing so, it can protect the
Proprietary Information and goodwill.
AGREEMENT
The parties therefore agree as follows:
1. Period of Employment. A&W employs Employee to render services to A&W as
[President], with the duties and responsibilities described in Section 2, for
the period (the "Period of Employment") commencing on the date of this
Agreement and ending upon the earlier of (i) [October 30, 1999] (the
"Termination Date") or (ii) the date upon which the Period of Employment is
terminated in accordance with Section 4.
2. Position and Responsibilities.
(a) Position. Employee accepts employment with A&W as [President] and
shall perform all services appropriate to that position, as well as such other
services as may be assigned by the [Board of Directors] of A&W. Employee
shall devote his best efforts and full-time attention to the performance of
his duties. Employee shall be subject to the direction of the [Board of
Directors] of A&W, who shall retain full control of the means and methods by
which he performs the above services and of the place(s) at which all services
are rendered. Employee shall report to the [Board of Directors] of A&W.
Employee shall be expected to travel if necessary or advisable in order to
meet the obligations of his position.
(b) Other Activity. Except with the prior written consent of A&W,
Employee shall not during the Period of Employment (i) accept any other
employment; or (ii) engage, directly or indirectly, in any other business,
commercial, or professional activity (whether or not pursued for pecuniary
advantage) that is or may be competitive with the business of the Company,
that might create a conflict of interest with the Company, or that otherwise
might interfere with the business of the Company.
3. Compensation and Benefits.
(a) Compensation. In consideration of the services to be rendered
under this Agreement, A&W shall pay Employee no less than
________________________ [$________] per month, payable monthly during the
Period of Employment in accordance with A&W's usual payroll procedures. A&W
shall review Employee's compensation annually in accordance with A&W's usual
procedure for adjusting salaries for similarly situated employees. All
amounts to be paid to Employee under this Agreement shall be less withholdings
required by law and other customary payroll deductions.
(b) Benefits. Employee shall be entitled to vacation leave in
accordance with A&W's standard policies. As Employee becomes eligible
therefor, Employee shall have the right to participate in and to receive
benefits from all present and future benefit plans specified in A&W's policies
and generally made available to similarly situated employees of A&W. The
amount and extent of benefits to which Employee is entitled shall be governed
by the specific benefit plan. Nothing in this Agreement shall prevent A&W
from changing or eliminating any benefit during the Period of Employment as
A&W, in its sole discretion, may deem necessary or desirable. No statement
concerning benefits or compensation to which Employee is entitled shall alter
in any way the term of this Agreement, any renewal thereof, or its
termination. .
(c) Expenses. A&W shall reimburse Employee for reasonable travel and
other business expenses incurred by Employee in performing his duties, in
accordance with A&W's standard policies.
4. Termination of Employment.
(a) By Death. The Period of Employment shall terminate automatically
upon the death of Employee. A&W shall pay to Employee's beneficiaries or
estate, as appropriate, any compensation then due and owing. Thereafter, all
obligations of A&W under this Agreement shall cease. Nothing in this Section
shall affect any entitlement of Employee's heirs to the benefits of any life
insurance plan or other applicable benefits.
(b) By Disability. If, by reason of any physical or mental
incapacity, Employee has been or will be prevented from properly performing
his duties under the Agreement for more than ninety (90) consecutive days,
then, to the extent permitted by law, A&W may terminate the Period of
Employment upon two (2) weeks' advance written notice. A&W shall pay Employee
all compensation to which he is entitled through the last business day of the
notice period; thereafter, all obligations of A&W under this Agreement shall
cease. Nothing in this Section shall affect Employee's rights under any
applicable A&W disability plan.
(c) By Employer For Cause. At any time, A&W may terminate Employee
for Cause (as defined below) on immediate notice. A&W shall pay Employee all
compensation then due and owing; thereafter, all A&W's obligations under this
Agreement shall cease. Termination shall be for "Cause" if Employee:
(i) acts in bad faith and to the detriment of A&W; (ii) refuses or fails to
act in accordance with any specific direction or order of A&W; (iii) exhibits
in regard to his employment unfitness or unavailability for service,
unsatisfactory performance, misconduct, dishonesty, habitual neglect, or
incompetence; (iv) is convicted of a crime involving dishonesty, breach of
trust, or physical or emotional harm to any person; (v) is selected for layoff
pursuant to a bona fide reduction-in-force; or (vi) breaches any material term
of this Agreement. If termination is due to Employee's disability, subsection
4(b) above shall control, and not this subsection on termination for cause.
(d) By Employee for Good Reason. Employee may terminate, without
liability, the Period of Employment for Good Reason (as defined below),
provided Employee gives A&W thirty (30) days' advance written notice of the
reason for termination and his intent to terminate the Agreement. During this
period, A&W shall have an opportunity to correct the condition constituting
Good Reason. If the condition is remedied within this period, Employee's
notice to terminate shall be rescinded automatically; if not remedied,
termination shall become effective upon expiration of the above notice period.
In this event, A&W shall pay Employee all compensation due and owing through
the last day actually worked; thereafter all A&W's obligations under this
Agreement shall cease. A&W shall also have the option, in its complete
discretion, to make Employee's termination effective at any time prior to the
end of the notice period, provided that A&W pays Employee all compensation due
and owing through the balance of the notice period (not to exceed thirty
(30) days). Employee shall be entitled to exercise his right to terminate the
Agreement for Good Reason only if he gives the required notice not more than
forty-five (45) days after the occurrence of the event that is the basis for
the Good Reason.
(e) "Good Reason" Defined. Termination shall be for "Good Reason" if:
(i) there is a material and adverse change in Employee's position, duties,
responsibilities, or status with A&W; (ii) there is a reduction in Employee's
salary then in effect, other than a reduction comparable to reductions
generally applicable to similarly situated employees of A&W; (iii) there is a
material reduction in Employee's benefits, other than a reduction comparable
to reductions generally applicable to similarly situated employees of A&W; or
(iv) A&W materially breaches this Agreement. Employee shall not be entitled
to terminate this Agreement for Good Reason if an event occurs that would
otherwise constitute Good Reason, but results from a change in A&W's status as
defined in the next subsection.
(f) Change in Employer Status. To the extent permitted by law, A&W,
in its sole discretion, may terminate the Period of Employment (in which case
all A&W's obligations under this Agreement shall cease after payment of all
compensation due and owing) upon any formal action of A&W's management to
terminate A&W's existence or otherwise wind up its affairs, to sell all or
substantially all of its assets, or to merge with or into another entity.
(g) Termination Obligations.
(i) Employee acknowledges and agrees that all personal property,
including, without limitation, all tangible Proprietary Information (as
defined below), books, manuals, records, reports, notes, contracts, lists,
documents, computer disks (or other computer-generated files, data, or
information), materials, or copies thereof, created on any medium and
furnished to, obtained by, or prepared by Employee in the course of or
incident to his employment, and all equipment and property furnished to
Employee in the course of his employment, belong to A&W and shall be returned
promptly to A&W upon termination of the Period of Employment.
(ii) All benefits to which Employee is otherwise entitled shall
cease upon Employee's termination, unless explicitly continued either under
this Agreement, under any specific written policy or benefit plan of A&W, or
as otherwise required by law.
(iii) Upon termination of the Period of Employment, Employee shall
be deemed to have resigned from all offices and directorships then held with
A&W or any other member of the Company.
(iv) Employee's obligations under this subsection on Termination
Obligations, Section 5 on Proprietary Information, and Section 6 on Inventions
shall survive the termination of the Period of Employment and the expiration
of this Agreement.
(v) Following any termination of the Period of Employment,
Employee shall fully cooperate with A&W in all matters relating to the winding
up of pending work on behalf of A&W and the orderly transfer of work to other
employees of A&W.
5. Proprietary Information.
(a) Defined. Proprietary Information is all information in any form,
tangible or intangible, pertaining in any manner to the business of the
Company or the employees, clients, consultants, or business associates of the
Company, which was produced by any employee of the Company in the course of
his or her employment or otherwise produced or acquired by or on behalf of the
Company, which derives independent economic value, actual or potential, from
not being generally known to the public who can obtain economic value from its
disclosure or use and is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy. All Proprietary Information not
generally known outside of the Company, and all Proprietary Information so
known only through improper means, is "Confidential Information." Employee
must consult and follow any A&W procedures instituted to identify and protect
certain types of Confidential Information, which are considered by A&W to be
safeguards in addition to the protection provided by this Agreement. Nothing
contained in those procedures or in this Agreement is intended to limit the
effect of the other.
(b) General Restrictions on Use. During the Period of Employment,
Employee shall use Proprietary Information, and shall disclose Confidential
Information, only for the benefit of A&W and as is necessary to carry out his
responsibilities under this Agreement. Following termination, Employee shall
neither, directly or indirectly, use any Proprietary Information nor disclose
any Confidential Information, except as expressly and specifically authorized
in writing by A&W. The publication of any Proprietary Information through
literature or speeches must be approved in advance in writing by A&W.
(c) Third Party Information. Employee acknowledges that the Company
may receive from third parties their confidential information subject to a
duty to maintain the confidentiality of such information and to use it only
for certain limited purposes. Employee agrees that he owes the Company and
such third parties, during the Period of Employment and thereafter, a duty to
hold all such confidential information in the strictest confidence and not to
disclose or use it except as necessary to perform his obligations hereunder
and as is consistent with any confidentiality agreement with such third
parties.
6. Inventions.
(a) Defined. The term "Inventions" includes any and all ideas,
processes, inventions, technology, computer hardware or software, formulas,
discoveries, patents, products, trademarks, service marks, original works of
authorship, designs, copyrights, and all improvements, know-how, rights, and
claims related to the foregoing. Any Inventions that are conceived,
developed, or reduced to practice by Employee, alone or with others, after the
date of this Agreement shall be deemed "Work-Related Inventions," except to
the extent that California Labor Code Section 2870 lawfully prohibits the
assignment of rights in such Inventions.
(b) Statutory Notice. Employee acknowledges that the definition of
Work-Related Inventions includes only those Inventions that may be lawfully
assigned pursuant to California Labor Code Section 2870, which provides:
"(a) Any provision in an employment agreement which provides that
an employee shall assign, or offer to assign, any of his or her rights
in an invention to his or her employer shall not apply to an invention
that the employee developed entirely on his or her own time without
using the employer's equipment, supplies, facilities, or trade secret
information except for those inventions that either:
"(1) Relate at the time of conception or reduction to
practice of the invention to the employer's business, or actual or
demonstrably anticipated research or development of the employer; or
"(2) Result from any work performed by the employee for the
employer.
"(b) To the extent a provision in an employment agreement
purports to require an employee to assign an invention otherwise
excluded from being required to be assigned under subdivision (a), the
provision is against the public policy of this state and is
unenforceable."
Nothing in this Agreement is intended to expand the scope of protection
provided Employee by Sections 2870 through 2872 of the California Labor Code.
(c) Disclosure. Employee agrees to maintain adequate and current
written records on the development of all Inventions and to disclose promptly
to A&W all Work-Related Inventions and relevant records, which records will
remain the sole property of A&W. Employee further agrees that all information
and records pertaining to any Invention that Employee does not believe to be a
Work-Related Invention, but that is conceived, developed, or reduced to
practice by Employee (alone or with others) during the Period of Employment
(or during the post-employment period set forth in Section 6(f) below), shall
be disclosed promptly to A&W (such disclosure to be received in confidence).
A&W shall examine the information disclosed to determine if in fact the
Invention is a Work-Related Invention subject to this Agreement.
(d) Assignment. Employee agrees to assign to A&W, and hereby does
assign to A&W, his entire right, title, and interest throughout the United
States and in all foreign countries, free and clear of all liens and
encumbrances, in and to each Work-Related Invention, which shall be the sole
property of A&W, whether or not patentable. In the event any Work-Related
Invention shall be deemed by A&W to be patentable or otherwise registerable,
Employee shall assist A&W (at its expense) in obtaining letters patent or
other applicable registrations thereon and shall execute all documents and do
all other things necessary or proper (including testifying at A&W's expense)
to vest in A&W, or any entity or person specified by A&W, full title or
interest therein. Employee shall also take any action necessary or advisable
in connection with any continuations, renewals, or reissues thereof or in
connection with any related proceedings or litigation. Should A&W be unable
to secure Employee's signature on any document necessary to apply for,
prosecute, obtain, or enforce any patent, copyright, or other right or
protection relating to any Work-Related Invention, whether due to Employee's
mental or physical incapacity or any other cause, Employee irrevocably
designates and appoints A&W and each of its duly authorized officers and
agents as Employee's agent and attorney in fact, to act for and in Employee's
behalf and stead and to execute and file any such document, and to do all
other lawfully permitted acts to further the prosecution, issuance, and
enforcement of patents, copyrights, or other rights or protections with the
same force and effect as if executed, delivered, and done by Employee.
(e) Exclusions. Employee represents that there are no Inventions that
he desires to exclude from the operation of this Agreement. Employee is not a
party to any existing contract in conflict with this Agreement or contract to
assign Inventions to any other party.
(f) Post-Termination Period. Because of the difficulty of
establishing when any Invention is first conceived or developed by Employee,
or whether it results from access to Confidential Information or the Company's
equipment, supplies, facilities, or data, Employee agrees that any Invention
shall be presumed to be a Work-Related Invention, if reduced to practice by
Employee or with the aid of Employee within one (1) year after termination of
the Period of Employment. Employee can rebut the above presumption if he
proves that the Invention (i) was developed entirely on Employee's own time
without using the Company's equipment, supplies, facilities, or trade secret
information; (ii) was not conceived or reduced to practice during the Period
of Employment, or, if conceived or reduced to practice during the Period of
Employment, did not, at the time of conception or reduction to practice,
relate to the Company's business or actual or demonstrably anticipated
research or development; and (iii) did not result from any work performed by
Employee for the Company.
7. Arbitration.
(a) Arbitrable Claims. All disputes between Employee (and his
successors and permitted assigns) and A&W (and the Company and the
shareholders, directors, officers, employees, agents, successors, attorneys,
and assigns of each) relating in any manner whatsoever to the employment or
termination of Employee, including without limitation, all disputes arising
under this Agreement ("Arbitrable Claims") shall be resolved by arbitration.
Arbitrable Claims shall include, but are not limited to, contract (express or
implied) and tort claims of all kinds, as well as all claims based on any
federal, state, or local law, statute, regulation, or ordinance, excepting
only claims under applicable workers' compensation law. Arbitration shall be
final and binding upon the parties and shall be the exclusive remedy for all
Arbitrable Claims, except that A&W may, at its option, seek injunctive relief
and damages in court for any breach of Section 5 or 6 of this Agreement.
(b) Procedure. Arbitration of Arbitrable Claims shall be in
accordance with the Rules and Procedures for Mediation/Arbitration of
Employment Disputes of JAMS/Endispute ("JAMS Rules"), except as provided
otherwise in this Agreement. Arbitration shall be initiated by providing
written notice to the other party with a statement of the claim(s) asserted
and the facts upon which the claim(s) are based. In any arbitration, the
burden of proof shall be allocated as provided by applicable law. Either
party may bring an action in court to compel arbitration under this Agreement
and to enforce an arbitration award.
(c) Arbitrator Selection and Authority. All disputes involving
Arbitrable Claims shall be decided by a single arbitrator. The arbitrator
shall be selected in accordance with the JAMS Rules. The arbitrator shall
have the authority to award equitable relief, damages, costs, and fees as
provided by law for the particular claim(s) asserted, except that the
arbitrator shall have no authority to award punitive damages. The fees of the
arbitrator shall be paid by the losing party, as identified by the arbitrator.
The arbitrator shall have exclusive authority to resolve all Arbitrable
Claims, including, but not limited to, any claim that all or any part of this
Agreement is void or unenforceable.
(d) Confidentiality. All proceedings in connection with any
Arbitrable Claim shall be confidential and shall not be disclosed to any
person other than the parties to the proceeding, their counsel and experts,
the arbitrator, and, if involved, the court and court staff. All documents
filed with the arbitrator or with a court shall be filed under seal. The
parties shall stipulate to all arbitration and court orders necessary to
effectuate fully the provisions of this subsection concerning confidentiality.
(e) Continuing Obligations. The rights and obligations of Employee
and A&W set forth in this Section 7 shall survive the termination of
Employee's employment and the expiration of this Agreement.
8. Notices. All notices under this agreement shall be in writing and shall
be deemed given when delivered personally, when sent by fax (with prompt
confirmation by mail), four business days after mailed by certified mail
(return receipt requested), or one business day after being sent by a
recognized overnight courier, to the parties at the following addresses (or at
such other address for a party as shall be specified by like notice):
If to A&W, to:
Xxxxxx & Xxxxxxxxxx, Inc.
c/o Epitope, Inc.
0000 X.X. Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Ph.D.
If to Employee, to:
[Xxxx X. Xxxxxxxxxx]
_________________________________
_________________________________
_________________________________
9. Action by A&W. All actions required or permitted to be taken under this
Agreement by A&W, including without limitation, exercise of discretion,
consents, waivers, and amendments to this Agreement, shall be made and
authorized only by the Chairman of the Board of Directors or by his or her
representative specifically authorized to act under this Agreement, unless
Employee holds that position, in which case an officer designated by the Board
of Directors shall have such authority.
10. Entire Agreement. This Agreement is intended to be the final, complete,
and exclusive statement of the terms of Employee's employment by A&W. This
Agreement may not be contradicted by evidence of any prior or contemporaneous
agreement. To the extent that policies and procedures of A&W apply to
Employee and are inconsistent with the terms of this Agreement, the provisions
of this Agreement shall control.
11. Amendments; Waivers. This Agreement may not be modified or amended
except by an instrument in writing, signed by Employee and by A&W. No failure
to exercise and no delay in exercising any right, remedy, or power under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, remedy, or power under this Agreement preclude any
other or further exercise thereof, or the exercise of any other right, remedy,
or power provided herein or by law or in equity.
12. Assignment; Successors and Assigns. Employee may not assign any rights
or delegate any obligations under this Agreement. Any purported assignment or
delegation shall be null and void. Nothing in this Agreement shall prevent
the consolidation of A&W with, or its merger into, any other entity, or the
sale by A&W of all or substantially all of its assets, or the otherwise lawful
assignment by A&W of any rights or obligations under this Agreement. Subject
to the foregoing, this Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective heirs, legal representatives,
successors, and permitted assigns, and shall not benefit any person or entity
other than those enumerated above.
13. Severability; Enforcement. It is the intention of the parties that the
covenants contained in Section 5 on Proprietary Information and Section 6 on
Inventions shall be enforced to the greatest extent in time, area, and degree
of participation that is permitted by the law of the jurisdiction whose law is
found to be applicable to any acts allegedly in breach of these covenants.
Notwithstanding any governing law provision in this Agreement, the parties
intend that the foregoing covenants shall be governed by and construed
according to the law of the jurisdiction (from among those jurisdictions
arguably applicable to this Agreement and those in which a breach of this
Agreement is alleged to have occurred or to be threatened) which best gives
them effect. If any provision of this Agreement, or the application thereof
to any person, place, or circumstance, shall be held by an arbitrator or a
court of competent jurisdiction to be invalid, unenforceable, or void, such
provision shall be enforced to the greatest extent permitted by law, and the
remainder of this Agreement and such provisions as applied to other persons,
places, and circumstances shall remain in full force and effect.
14. Attorneys' Fees and Costs. In any legal action, arbitration, or other
proceeding brought to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to recover reasonable attorney fees and
costs.
15. Governing Law. This Agreement shall be governed by and construed in
accordance with the law of the State of California.
16. Employee Acknowledgment. Employee acknowledges that he has had the
opportunity to consult legal counsel in regard to this Agreement, that he has
read and understands the Agreement, that he is fully aware of its legal effect
(including notice of his statutory rights under Section 2870 of the California
Labor Code, as set forth in Section 6 on Inventions), and that he has entered
into it freely and voluntarily and based on his own judgment and not based on
any representations or promises other than those contained in this Agreement.
The parties have duly executed this Agreement as of the date first written
above.
Xxxxxx & Xxxxxxxxxx, Inc.
By:
[Xxxx X. Xxxxxxxxxx] Chairman of the Board
SCHEUDLE 7.11
Debt Outstanding as 11/5/96
Xxxxxx & Xxxxxxxxxx Sales Co., Inc.
Outstanding Debt as 11/05/96
Description of loan
1993 Merc Sable 1,024 36 months at 7.92%
Xxxxxxx Xxxxx Note 100,000 Prime rate due in October 1997
WFB Credit Line 5,300,000 Prime + .5% signed till 8/97
Aircraft 258,790 5 year loan at 6,959/month w/a balloon
of $218,000 due in 6/97 (int at 9,25%)
WFB Xxxxxx Note 202,800 5 year loan at prime + .5% w/an annual
payment of $16,900 in March & a balloon
due in 3/98
1996 Tahoe 10,350 36 month at 9.5%
1996 Crown Victoria 12,491
Toyota Forklift #1 8,023 36 month at 5.575%
Toyota Forklift #2 8,760 36 month at 5.9%
Toyota Forkilft #3 7,980 36 month at 9.65%
Ford F150 5,722 37 month at 9.75%
WEYERHAEUSER MACHINE 958,717 Monthly payment equals $20,488.03 or
136,586 trays at S.15
Subordinated notes
Xxxx X. Xxxxxxxxxx 410,897 Demand Notes w/Interest paid monthly
(interest at 10%)
Xxxx W. Xxxxxx 410,897 Demand Notes w/Interest paid monthly
(interest at 10%)
Xxxx X. Xxxxxxxxxx 40,183 Demand Notes w/Interest paid monthly
(interest at 10%)
Accounts Payable 700,229 Balance as of 11/05/96, note amounts
subject to change
Grower Payables 607,750 Balance as of 11/05/96, note amounts
subject to change
SCHEDULE 7.12
Noncompetition Territory
North America
