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Exhibit 2.4
STOCK PURCHASE AGREEMENT
dated as of December 22, 2000
among
GLACIER DISTRIBUTION COMPANY, INC.
and the
XXXXX FAMILY TRUST DATED FEBRUARY 2, 1999
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (the "Agreement") is entered into
as of December 22, 2000, by and among Glacier Distribution Company, Inc., a
Colorado corporation (the "Buyer"), and Xxxxxxx X. Xxxxx, Trustee of the XXXXX
FAMILY TRUST dated February 2, 1999 ("Seller"). Buyer and Seller are referred to
collectively herein as the "Parties" and individually as a "Party."
WITNESSETH:
A. Seller owns all of the issued and outstanding capital stock of
Southwest Traders Incorporated, a California corporation (the "Company").
B. This Agreement contemplates a transaction in which Buyer will
purchase from Seller, and Seller will sell to Buyer, all of the issued and
outstanding capital stock of the Company (the "Company Shares") in return for
the consideration described herein (the "Transaction").
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. DEFINITIONS.
"Actual Out of Pocket Expenses" shall mean legal expenses
incurred in the negotiation and preparation of this Agreement and its related
exhibits but not legal expenses associated with the preparation of any
registration statement or related documents.
"Adverse Consequences" means all actions, suits, proceedings,
hearings, investigations, charges, complaints, claims, demands, injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties, fines, costs,
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"Break Up Amount" has the meaning set forth in Section 10(c)
below.
"Buyer" has the meaning set forth in the preface above.
"Buyer's Disclosure Schedule" has the meaning set forth in
Section 3(b) below.
"Closing" has the meaning set forth in Section 2(c) below.
"Closing Date" has the meaning set forth in Section 2(c) below.
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"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preface above.
"Company Disclosure Schedule" has the meaning set forth in
Section 4 below.
"Company Share" means any share of the Common Stock, no par value
per share, of the Company.
"Confidential Information" shall have the meaning set forth in
the Confidentiality Agreement dated September 7, 2000 (the "Confidentiality
Agreement") between the Buyer and the Company.
"Environmental, Health, and Safety Requirements" shall mean all
federal, state, local regulations, ordinances and other provisions having the
force or effect of law, all judicial and administrative orders and
determinations, all contractual obligations and all common law concerning public
health and safety, worker health and safety, and pollution or protection of the
environment, including without limitation all those relating to the presence,
use, production, generation, handling, transportation, treatment, storage,
disposal, distribution, labeling, testing, processing, discharge, release,
threatened release, control, or cleanup of any hazardous materials, substances
or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, each as amended and as now or
hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Escrow Agent" has the meaning set forth in Section 10(c)(iii).
"Escrowed Property" has the meaning set forth in Section
10(c)(iii).
"Financial Statement" has the meaning set forth in Section 4(g)
below.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"Indemnified Party" has the meaning set forth in Section 8(d)
below.
"Indemnifying Party" has the meaning set forth in Section 8(d)
below.
"Intellectual Property" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and patent
disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations thereof, (b)
all trademarks, service marks, trade dress, logos, trade names, and corporate
names, together with all translations, adaptations, derivations, and
combinations thereof and including all goodwill associated therewith, and all
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applications, registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith, (d) all mask works and all applications,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments regarding the foregoing (in whatever form or medium).
"IPO" means the closing of a firm commitment underwritten initial
public offering pursuant to an effective registration statement under the
Securities Act, covering the offer and sale of common stock of Buyer with
aggregate gross cash proceeds from the offering to Buyer of not less than
$25,000,000, and including terms and conditions acceptable to Buyer.
"Knowledge" means actual knowledge without having conducted any
investigation. Statements "to the Knowledge of the Company" shall mean to the
Knowledge of the Xxxxxxx X. Xxxxx and Xxxxx Xxxxxxxxxx.
"Liability" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due), including any liability for Taxes.
"Material Adverse Information" has the meaning set forth in
Section 10(a)(iii).
"Most Recent Balance Sheet" means the balance sheet contained
within the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in
Section 4(g) below.
"Most Recent Fiscal Month End" has the meaning set forth in
Section 4(g) below.
"Most Recent Fiscal Year End" has the meaning set forth in
Section 4(g) below.
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice.
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Purchase Price" has the meaning set forth in Section 2(b) below.
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"Securities Act" means the Securities Act of 1933, as amended.
"Security Deposit" has the meaning set forth in Section
10(c)(iii).
"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than (a) mechanic's,
materialmen's, and similar liens, (b) liens for Taxes not yet due and payable or
for Taxes that the taxpayer is contesting in good faith through appropriate
proceedings, (c) purchase money liens and liens securing rental payments under
capital lease arrangements, and (d) other liens arising in the Ordinary Course
of Business and not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Seller's Disclosure Schedule" has the meaning set forth in
Section 3(a) below.
"Subsidiary" means any corporation with respect to which a
specified Person (or a Subsidiary thereof) owns a majority of the common stock
or has the power to vote or direct the voting of sufficient securities to elect
a majority of the directors.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax of any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 8(d)
below.
2. PURCHASE AND SALE OF COMPANY SHARES.
(a) Basic Transaction. On and subject to the terms and conditions
of this Agreement, Buyer agrees to purchase from Seller, and Seller agrees to
sell to Buyer, all of his Company Shares for the consideration specified below
in Section 2(b).
(b) Purchase Price. Buyer agrees to pay to Seller the purchase
price for the Company Shares (the "Purchase Price") by delivery of cash in an
amount equal to $14,000,000, $100,000 of which has been delivered to Seller as a
good faith non-returnable payment demonstrating Buyer's intent to complete the
Transaction and $13,900,000 of which shall be payable to the Seller at the
Closing by wire transfer to an account designated by Seller.
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(c) The Closing. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Xxxxxx Xxxxx
Xxxxx Xxxxxxxxx & Xxxxxx LLC in Denver, Colorado, commencing at 9:00 a.m. local
time on the next business day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as the
Buyer and the Seller may mutually determine (the "Closing Date").
(d) Deliveries at the Closing. At the Closing, (i) Seller will
deliver to Buyer the various certificates, instruments, and documents referred
to in Section 7(a) below, (ii) the Buyer will deliver to the Seller the various
certificates, instruments, and documents referred to in Section 7(b) below, and
(iii) the Buyer will deliver to Seller the consideration specified in Section
2(b) above.
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) Representations and Warranties of the Seller. Seller
represents and warrants to the Buyer that the statements contained in this
Section 3(a) are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date (as though made on the date
thereof and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 3(a)) with respect to himself, except as set
forth in the disclosure schedule delivered by Seller to Buyer on the date hereof
(the "Seller's Disclosure Schedule").
(i) Authorization of Transaction. Seller has full power and
authority to execute and deliver this Agreement and to perform
his obligations hereunder. This Agreement constitutes the valid
and legally binding obligation of Seller, enforceable in
accordance with its terms and conditions. The Seller need not
give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions
contemplated by this Agreement.
(ii) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental
agency, or court to which the Seller is subject or, or (B)
conflict with, result in a breach of, constitute a default under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or
other arrangement to which the Seller is a party or by which
Seller is bound or to which any of the Seller's assets are
subject.
(iii) Brokers' Fees. Seller has no Liability or obligation to pay
any fees or
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commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Buyer
could become liable or obligated.
(iv) Company Shares. Seller holds of record and owns beneficially
the number of Company Shares set forth next to his name in
Section 4(b) of the Company Disclosure Schedule, free and clear
of any restrictions on transfer (other than any restrictions
under the Securities Act and state securities laws), Taxes,
Security Interests, options, warrants, purchase rights,
contracts, commitments, claims, and demands. Seller is not a
party to any option, warrant, purchase right, or other contract
or commitment that could require Seller to sell, transfer, or
otherwise dispose of any capital stock of the Company (other than
this Agreement). Seller is not a party to any voting trust,
proxy, or other agreement or understanding with respect to the
voting of any capital stock of the Company.
(b) Representations and Warranties of the Buyer. Buyer represents
and warrants to Seller that the statements contained in this Section 3(b) are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made on the date thereof and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 3(b)), except as set forth in the disclosure schedule
delivered by Buyer to Seller on the date hereof (the "Buyer's Disclosure
Schedule").
(i) Organization of the Buyer. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws
of the jurisdiction of its incorporation.
(ii) Authorization of Transaction. The Buyer has full power and
authority to execute and deliver this Agreement and to perform
its obligations hereunder. This Agreement constitutes the valid
and legally binding obligation of Buyer, enforceable in
accordance with its terms and conditions. Buyer need not give any
notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in
order to consummate the transactions contemplated by this
Agreement. All corporate action on the part of the Buyer and its
officers, directors and stockholders necessary for the
authorization, execution, delivery and performance of all
obligations of the Buyer under the terms of this Agreement has
been made prior to the Closing.
(iii) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling,
charge, or other restriction of any government, governmental
agency, or court to which the Buyer is subject or any provision
of its Articles of Incorporation or Bylaws or (B) conflict with,
result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other
arrangement to which the Buyer is a party or by which it is bound
or to which any of its assets are subject.
(iv) Brokers' Fees. The Buyer has no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated
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by this Agreement for which Seller could become liable or
obligated.
(v) Investment. The Buyer is not acquiring the Company Shares
with a view to or for sale in connection with any distribution
thereof within the meaning of the Securities Act.
(vi) Access to Information. The Buyer has received or has had
full access to all the information it considers necessary or
appropriate to make an informed investment decision with respect
to the Company Shares to be purchased by the Buyer under this
Agreement. The Buyer has had an opportunity to ask questions and
receive answers from the Company and Seller regarding the Company
and to obtain information (to the extent the Company possessed
such information or could acquire it without unreasonable effort
or expense) necessary to verify any information furnished to the
Buyer.
4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY. The
Seller represents and warrants to the Buyer that the statements contained in
this Section 4 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made on the date
thereof and as though the Closing Date were substituted for the date of this
Agreement throughout this Section 4), except as set forth in the disclosure
schedule delivered by Seller to Buyer on the date hereof (the "Company
Disclosure Schedule"). The Company Disclosure Schedule will be arranged in
paragraphs corresponding to the lettered and numbered paragraphs contained in
this Section 4.
(a) Organization, Qualification, and Corporate Power. The Company
is a corporation duly organized, validly existing, and in good standing under
the laws of the jurisdiction of its incorporation. The Company is duly
authorized to conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required. The Company has full
corporate power and corporate authority to carry on the businesses in which it
is engaged and to own and use the properties owned and used by it. Section 4(a)
of the Company Disclosure Schedule lists the directors and officers of the
Company. Seller has delivered to Buyer correct and complete copies of the
Articles of Incorporation and Bylaws of the Company (as amended to date). The
minute books (containing the records of meetings of the stockholders, the board
of directors, and any committees of the board of directors), the stock
certificate books, and the stock record books of the Company are correct and
complete and have been delivered to Buyer. The Company is not in default under
or in violation of any provision of its Articles of Incorporation or Bylaws. Set
forth in the Company Disclosure Schedule is a list of all of the licenses and
permits currently possessed by the Company. The Company makes no representations
or warranties that it possesses all required licenses, permits or
authorizations.
(b) Capitalization. The entire authorized capital stock of the
Company consists of 150,000 Company Shares, of which 128,046 Company Shares are
issued and outstanding. All of the issued and outstanding Company Shares have
been duly authorized, are validly issued, fully paid, and nonassessable, and are
held of record by Seller. There are no outstanding or authorized options,
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that could require the Company to
issue, sell, or otherwise cause to become outstanding any of its capital stock.
There are no outstanding or authorized stock
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appreciation, phantom stock, profit participation, or similar rights with
respect to the Company. There are no voting trusts, proxies, or other agreements
or understandings with respect to the voting of the capital stock of the
Company.
(c) Noncontravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Company is subject or any provision
of the Articles of Incorporation or Bylaws of the Company or (ii) conflict with,
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license, instrument,
or other arrangement to which the Company is a party or by which it is bound or
to which any of its assets are subject (or result in the imposition of any
Security Interest upon any of its assets). The Company is not required to give
any notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(d) Brokers' Fees. The Company does not have any Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.
(e) Title to Assets. The Company has good and marketable title
to, or a valid leasehold interest in, the properties and assets used by it,
located on its premises, or shown on the Most Recent Balance Sheet or acquired
after the date thereof, free and clear of all Security Interests, except for
properties and assets disposed of in the Ordinary Course of Business since the
date of the Most Recent Balance Sheet.
(f) Subsidiaries. The Company does not have any subsidiaries or
affiliated entities.
(g) Financial Statements. Attached as Exhibit A to the Company
Disclosure Schedule are the following financial statements (collectively the
"Financial Statements"): (i) audited and unaudited balance sheets and statements
of income, changes in stockholders' equity, and cash flow as of and for the
fiscal years ended December 31, 1997, December 31, 1998, and December 31, 1999
(the latter shall be referred to as the "Most Recent Fiscal Year End") for the
Company; and (ii) unaudited balance sheets and statements of income, changes in
stockholders' equity, and cash flow (the "Most Recent Financial Statements") as
of and for the nine (9) months ended September 30, 2000 (the "Most Recent Fiscal
Month End") for the Company. The Financial Statements (including the notes
thereto) have been prepared in accordance with GAAP applied on a consistent
basis throughout the periods covered thereby, provided, however, Buyer is
relying on results and audit of the Company books and records as performed by
Buyer's accountants and consultants and the Company and Seller make no
representations or warranties as to the accuracy of any such audit or results.
(h) Events Subsequent to Most Recent Fiscal Month End. Since the
Most Recent
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Fiscal Month End, there has not been any material adverse change in the
business, financial condition, operations, results of operations, or future
prospects of the Company. Without limiting the generality of the foregoing,
since that date:
(i) the Company has not sold, leased, transferred,
or assigned any of its assets, tangible or intangible, other than
for a fair consideration in the Ordinary Course of Business;
(ii) the Company has not entered into any
agreement, contract, lease, or license (or series of related
agreements, contracts, leases, and licenses) either involving
more than $10,000 or outside the Ordinary Course of Business;
(iii) no party (including the Company) has
accelerated, terminated, modified, or cancelled any agreement,
contract, lease, or license (or series of related agreements,
contracts, leases, and licenses) involving more than $10,000 to
which the Company is a party or by which it is bound;
(iv) the Company has not imposed any Security
Interest upon any of its assets, tangible or intangible;
(v) the Company has not made any capital
expenditure (or series of related capital expenditures) either
involving more than $10,000 or outside the Ordinary Course of
Business;
(vi) the Company has not made any capital
investment in, any loan to, or any acquisition of the securities
or assets of, any other Person (or series of related capital
investments, loans, and acquisitions) either involving more than
$10,000 or outside the Ordinary Course of Business;
(vii) the Company has not issued any note, bond, or
other debt security or created, incurred, assumed, or guaranteed
any indebtedness for borrowed money or capitalized lease
obligation either involving more than $10,000 singly or $40,000
in the aggregate;
(viii) the Company has not delayed or postponed the
payment of accounts payable or other Liabilities outside the
Ordinary Course of Business, the payment of which is currently
outstanding;
(ix) the Company has not cancelled, compromised,
waived, or released any right or claim (or series of related
rights and claims) either involving more than $10,000 or outside
the Ordinary Course of Business;
(x) the Company has not granted any license or
sublicense of any rights under or with respect to any
Intellectual Property;
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(xi) there has been no change made or authorized
in the Articles of Incorporation or Bylaws of the Company;
(xii) the Company has not issued, sold, or
otherwise disposed of any of its capital stock, or granted any
options, warrants, or other rights to purchase or obtain
(including upon conversion, exchange, or exercise) any of its
capital stock;
(xiii) the Company has not declared, set aside, or
paid any dividend or made any distribution with respect to its
capital stock (whether in cash or in kind) or redeemed,
purchased, or otherwise acquired any of its capital stock;
(xiv) the Company has not experienced any damage,
destruction, or loss (whether or not covered by insurance) to its
property in excess of $10,000;
(xv) the Company has not made any loan to, or
entered into any other transaction with, any of its directors,
officers, and employees outside the Ordinary Course of Business;
(xvi) the Company has not entered into any
employment contract or collective bargaining agreement, written
or oral, or modified the terms of any existing such contract or
agreement;
(xvii) the Company has not granted any increase in
the base compensation of any of its directors, officers, and
employees outside the Ordinary Course of Business;
(xviii) the Company has not adopted, amended,
modified, or terminated any bonus, profit-sharing, incentive,
severance, or other plan, contract, or commitment for the benefit
of any of its directors, officers, or employees (or taken any
such action with respect to any other employee benefit plan);
(xix) the Company has not made any other change in
employment terms for any of its directors, officers, or employees
outside the Ordinary Course of Business;
(xx) the Company has not made or pledged to make
any charitable or other capital contribution outside the Ordinary
Course of Business;
(xxi) there has not been any other material
occurrence, event, incident, action, failure to act, or
transaction outside the Ordinary Course of Business involving the
Company; and
(xxii) the Company has not committed to any of the
foregoing.
(i) Undisclosed Liabilities. The Company does not have any
Liability (and to the Knowledge of the Company, there is no basis for any
present or future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against the Company giving rise to
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any Liability), except for (i) Liabilities set forth on the face of the Most
Recent Balance Sheet (rather than in any notes thereto) and (ii) Liabilities
which have arisen after the Most Recent Fiscal Month End in the Ordinary Course
of Business (none of which results from, arises out of, relates to, is in the
nature of, or was caused by any breach of contract, breach of warranty, tort,
infringement, or violation of law).
(j) Legal Compliance. To Knowledge of the Company, the Company
has with all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
federal, state, local, and foreign governments (and all agencies thereof), and
no action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them alleging any
failure so to comply; provided, however, the Company makes no representation or
warranty that it possesses all required licenses or permits, or authorizations.
(k) Tax Matters.
(i) The Company has filed Tax Returns with the
taxing authorities set forth in the Company Disclosure Schedule.
All such Tax Returns were correct and complete in all respects.
All Taxes owed by the Company shown on any Tax Return have been
paid. The Company is not currently the beneficiary of any
extension of time within which to file any Tax Return. To the
Knowledge of the Company, no claim has ever been made by an
authority in a jurisdiction where the Company does not file Tax
Returns that it is or may be subject to taxation by that
jurisdiction. There are no Security Interests on any of the
assets of the Company that arose in connection with any failure
(or alleged failure) to pay any Tax.
(ii) The Company has withheld and paid all Taxes
required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor,
creditor, or stockholder.
(iii) The Company (and any predecessor of Company)
has been a validly electing S corporation within the meaning of
Code Sections 1361 and 1362 at all times since 1986 and the
Company will be an S corporation up to and including the Closing
Date.
(iv) The Company will not be liable for any Tax
under Code Section 1374 in connection with the deemed sale of the
Company's assets caused by the Code Section 338(h)(10) election.
The Company has not, in the past 10 years, (A) acquired assets
from another corporation in a transaction in which the Company's
Tax basis for the acquired assets was determined, in whole or in
part, by reference to the Tax basis of the acquired assets (or
any other property) in the hands of the transferor.
(l) Real Property.
(i) The Company owns no Real Property.
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(ii) Section 4(1)(ii) of the Company Disclosure Schedule
lists and describes briefly all real property leased or subleased
to the Company. The Seller has delivered to the Buyer correct and
complete copies of the leases and subleases listed in Section
4(1)(ii) of the Company Disclosure Schedule (as amended to date).
To the Knowledge of Seller, each lease and sublease listed in
Section 4(1)(ii) of the Company Disclosure Schedule is legal,
valid, binding, enforceable, and in full force and effect, except
where the illegality, invalidity, nonbinding nature,
unenforceability, or ineffectiveness would not have a material
adverse effect on the financial condition of the Company.
(m) Intellectual Property.
(i) To the Knowledge of the Company, the Company owns or has
the right to use pursuant to license, sublicense, agreement, or
permission all Intellectual Property necessary or desirable for
the operation of the business of the Company as presently
conducted. Each item of Intellectual Property owned or used by
the Company immediately prior to the Closing hereunder will be
owned or available for use by the Company on identical terms and
conditions immediately subsequent to the Closing hereunder.
(ii) To the Knowledge of the Company, the Company has not
interfered with, infringed upon, misappropriated, or otherwise
come into conflict with any Intellectual Property rights of third
parties, and the Company has not ever received any charge,
complaint, claim, demand, or notice alleging any such
interference, infringement, misappropriation, or violation
(including any claim that the Company must license or refrain
from using any Intellectual Property rights of any third party).
To the Knowledge of the Company, no third party has interfered
with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of the Company.
(n) Tangible Assets. The Company owns or leases all buildings,
machinery, equipment, and other tangible assets necessary for the conduct of its
business as presently conducted. Seller and the Company make no representation
or warranty of any nature whatsoever as to the condition of the tangible assets
other as set forth herein and specifically disclaim any implied warranties,
including, but not limited to, warranties of merchantability or fitness or
purpose. All tangible assets are "as is with all faults".
(o) Inventory. The inventory of the Company consists of raw
goods, materials and supplies, manufactured and purchased goods, goods in
process, and finished goods, subject only to the reserve for inventory write
down set forth on the face of the Most Recent Balance Sheet as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of the Company. Seller and the Company make no representation or
warranty of any nature whatsoever as to the condition of the inventory other as
set forth herein and specifically disclaim any implied warranties, including,
but not limited to, warranties of merchantability or fitness.
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(p) Contracts. Section 4(p) of the Company Disclosure Schedule
lists the following contracts and other agreements to which the Company is a
party:
(i) any agreement (or group of related agreements)
for the lease of personal property to or from any Person
providing for lease payments in excess of $10,000 per annum;
(ii) any agreement (or group of related agreements) for
the purchase or sale of raw materials, commodities, supplies,
products, or other personal property, or for the furnishing or
receipt of services, the performance of which will extend over a
period of more than one year, result in a loss to the Company, or
involve consideration in excess of $10,000;
(iii) any agreement concerning a partnership or joint
venture;
(vi) any agreement (or group of related agreements)
under which it has created, incurred, assumed, or guaranteed any
indebtedness for borrowed money, or any capitalized lease
obligation, in excess of $10,000 or under which it has imposed a
Security Interest on any of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or
noncompetition;
(vi) any agreement between Seller and his Affiliates
(other than the Company);
(vii) any profit sharing, stock option, stock purchase,
stock appreciation, deferred compensation, severance, or other
plan or arrangement for the benefit of its current or former
directors, officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual
on a full-time, part-time, consulting, or other basis providing
annual compensation in excess of $50,000 or providing severance
benefits;
(x) any agreement under which it has advanced or loaned
any amount to any of its directors, officers, and employees;
(xi) any agreement under which the consequences of a
default or termination could have a material adverse effect on
the business, financial condition, operations, results of
operations, or future prospects of the Company; or
(xii) any other agreement (or group of related
agreements) the performance of which involves consideration in
excess of $10,000.
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The Seller has delivered to Buyer a correct and complete copy of each written
agreement listed in Section 4(p) of the Company Disclosure Schedule (as amended
to date) and a written summary setting forth the terms and conditions of each
oral agreement referred to in Section 4(p) of the Company Disclosure Schedule.
With respect to each such agreement: (A) to the Knowledge of the Company, the
agreement is legal, valid, binding, enforceable, and in full force and effect;
(B) the agreement will continue to be legal, valid, binding, enforceable, and in
full force and effect on identical terms following the consummation of the
transactions contemplated hereby; (C) neither the Company, nor to the Knowledge
of the Company, any other party, is in breach or default, and no event has
occurred which with notice or lapse of time would constitute a breach or
default, or permit termination, modification, or acceleration, under the
agreement; and (D) the Company has not and to the Knowledge of the Company, no
other party has repudiated any provision of the agreement.
(q) Notes and Accounts Receivable. All notes and accounts
receivable of the Company are reflected properly on its books and records, are
valid receivables subject to no setoffs or counterclaims, are current and
collectible, and will be collected in accordance with their terms at their
recorded amounts, subject only to the reserve for bad debts set forth on the
face of the Most Recent Balance Sheet as adjusted for the passage of time
through the Closing Date in accordance with the past custom and practice of the
Company.
(r) Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of the Company.
(s) Insurance. Section 4(s) of the Company Disclosure Schedule
sets forth the following information with respect to each insurance policy
(including policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which the Company is,
or during the past five years, has been, a party, a named insured, or otherwise
the beneficiary of coverage:
(i) the name, address, and telephone number of the
agent;
(ii) the name of the insurer, the name of the
policyholder, and the name of each covered insured;
(iii) the policy number and the period of coverage; and
(iv) the scope (including an indication of whether the
coverage is on a claims made, occurrence, or other basis) and
amount of coverage.
With respect to each such insurance policy: (A) to the Knowledge of the Company,
the policy is legal, valid, binding, enforceable, and in full force and effect;
(B) to the Knowledge of the Company, the policy will continue to be legal,
valid, binding, enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby; (C) neither
the Company, nor to the Knowledge of the Company, any other party to the policy
is in breach or default (including with respect to the payment of premiums or
the giving of notices),
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and, to the Knowledge of the Company, no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; and (D) the
Company has not and to the Knowledge of the Company, no other party to the
policy has repudiated any provision thereof. Section 4(s) of the Company
Disclosure Schedule describes any self-insurance arrangements affecting the
Company.
(t) Litigation. Section 4(t) of the Company Disclosure Schedule
sets forth each instance in which the Company (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party or, to
the Knowledge of the Company, is threatened to be made a party to any action,
suit, proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator. None of the actions, suits, proceedings,
hearings, and investigations set forth in Section 4(t) of the Company Disclosure
Schedule could result in any material adverse change in the business, financial
condition, operations, results of operations, or future prospects of the
Company. Neither Seller nor the directors and officers (and employees with
responsibility for litigation matters) of the Company have any reason to believe
that any such action, suit, proceeding, hearing, or investigation may be brought
or threatened against the Company.
(u) Return Policies. Set forth in the Company Disclosure Schedule
are the return policies of the Company.
(v) Product Liability. The Company does not have any Liability
(and, to the Knowledge of the Company, there is no basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand giving rise to any Liability) arising out of any injury to
individuals or property as a result of the ownership, possession, or use of any
product manufactured, sold, leased, or delivered by the Company.
(w) Employees. To the Knowledge of the Company and Xxxxx Xxxxxx,
no executive, key employee, or group of employees has any plans to terminate
employment with the Company. The Company is not a party to or bound by any
collective bargaining agreement, nor has it experienced any strikes, grievances,
claims of unfair labor practices, or other collective bargaining disputes. To
the Knowledge of the Company, the Company has not committed any unfair labor
practice. Neither the Company nor Xxxxx Xxxxxx have any Knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of the Company.
(x) Employee Benefits. To the Knowledge of the Company, each
employee compensation arrangement (and each related trust, insurance contract,
or fund) complies in form and in operation in all material respects with the
applicable requirements of ERISA, the Code and other applicable laws, rules and
regulations.
(y) Guaranties. The Company is not a guarantor or otherwise
liable for any Liability or obligation (including indebtedness) of any other
Person.
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(z) Environmental, Health, and Safety Matters.
(i) To the Knowledge of the Company, the Company has
complied and is in compliance with all Environmental, Health, and
Safety Requirements.
(ii) The Company has not received any written or oral
notice, report or other information regarding any actual or
alleged violation of Environmental, Health, and Safety
Requirements, or any liabilities or potential liabilities
(whether accrued, absolute, contingent, unliquidated or
otherwise), including any investigatory, remedial or corrective
obligations, relating to any of them or its facilities arising
under the Environmental, Health, and Safety Requirements.
(iii) To the Knowledge of the Company, none of the
following exists at any property or facility owned or operated by
the Company: (1) underground storage tanks, (2)
asbestos-containing material in any form or condition, (3)
materials or equipment containing polychlorinated biphenyls, or
(4) landfills, surface impoundments, or disposal areas.
(iv) The Company has not treated, stored, disposed of,
arranged for or permitted the disposal of, transported, handled,
or released any hazardous substance, or owned or operated any
property or facility (and no such property or facility is
contaminated by any such substance) in a manner that has given or
would give rise to liabilities, including any liability for
response costs, corrective action costs, personal injury,
property damage, natural resources damages or attorney fees,
pursuant to Environmental, Health, and Safety Requirements.
(v) To the Knowledge of the Company, no facts, events or
conditions relating to the past or present facilities, properties
or operations of the Company, or any of its predecessors or
Affiliates, will prevent, hinder or limit continued compliance
with any of the Environmental, Health, and Safety Requirements,
give rise to any investigatory, remedial or corrective
obligations pursuant to the Environmental, Health, and Safety
Requirements, or give rise to any other liabilities (whether
accrued, absolute, contingent, unliquidated or otherwise)
pursuant to the Environmental, Health, and Safety Requirements,
including without limitation any relating to onsite or offsite
releases or threatened releases of hazardous materials,
substances or wastes, personal injury, property damage or natural
resources damage.
(aa) Certain Business Relationships with the Company. Other than
employment relationships, the ownership of certain premises identified on
Seller's Disclosure Schedule that are owned by Seller and leased to the Company
and certain royalties paid by vendors to Xx. Xxxxxxx X. Xxxxx ("Xxxxx"), an
individual, neither Seller nor his Affiliates have been involved in any business
arrangement or relationship with the Company within the past 12 months, and
neither Seller nor his Affiliates own any asset, tangible or intangible, which
is used in the business of the Company.
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(bb) Disclosure. The representations and warranties contained in
this Section 4 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 4 not misleading.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with
respect to the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its best efforts to
take all action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including obtaining all required consents and satisfaction of the closing
conditions set forth in Section 7 below).
(b) Operation of Business. Seller will not cause or permit the
Company to engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business. Without limiting the
generality of the foregoing, the Seller will not cause or permit the Company to
declare, set aside, or pay any dividend or make any distribution with respect to
its capital stock or redeem, purchase, or otherwise acquire any of its capital
stock, or otherwise engage in any practice, take any action, or enter into any
transaction of the sort described in Section 4(h) above.
(c) Preservation of Business. Seller will use its reasonable best
efforts to cause the Company to keep its business and properties intact,
including its present operations, physical facilities, working conditions, and
relationships with lessors, licensors, suppliers, customers, and employees.
(d) Notice of Developments. Seller will give prompt written
notice to the Buyer of any material adverse development causing a breach of any
of the representations and warranties in Section 4 above. Each Party will give
prompt written notice to the others of any material adverse development causing
a breach of any of his or its own representations and warranties in Section 3
above. No disclosure by any Party pursuant to this Section 5(d), however, shall
be deemed to amend or supplement the Seller's Disclosure Schedule, the Buyer's
Disclosure Schedule, or the Company Disclosure Schedule or to prevent or cure
any misrepresentation, breach of warranty, or breach of covenant.
(e) Exclusivity. Prior to March 31, 2001, Seller will not (and
Seller will not cause or permit the Company to) (i) solicit, initiate, or
encourage the submission of any proposal or offer from any Person relating to
the acquisition of any capital stock or other voting securities, or any
substantial portion of the assets, of the Company (including any acquisition
structured as a merger, consolidation, or share exchange) or (ii) participate in
any discussions or negotiations regarding, furnish any information with respect
to, assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. Seller will not vote
his Company Shares in favor of any such acquisition. The Seller will notify
Buyer immediately if any Person makes any proposal, offer, inquiry, or contact
with respect to any of the foregoing.
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(f) Access. Seller will permit, and the Seller will cause the
Company to permit, information regarding the Company, including audited
financial statements of the Company and such other descriptions of the Company
and its business as Buyer shall deem necessary, to be included in the
registration statement filed by Buyer in conjunction with the IPO.
(g) Debt Repayment. Seller shall pay in full all indebtedness
Seller may owe to the Company.
(h) Right to Amend Disclosure Schedule. The Seller, Company and
Buyer shall each have the right at any time up to five (5) days prior to the
Closing to update their respective disclosure schedules.
(i) Right of Seller to Withdraw Cash from the Company Prior to
the Closing. Buyer acknowledges that the Company is a Sub S Corporation and the
Company distributes substantially all of the income of the Company to Seller and
Seller pays income tax on the distributed income. Buyer further acknowledges
that the Company shall continue to distribute substantially all income and cash
the Company to Seller prior to the Closing and (i) Buyer agrees to such
distribution and (ii) no such distribution shall constitute a breach of
representation or warranty of the Company or Seller. In addition, Buyer agrees
that the Company may distribute the Jamba stock warrants owned by the Company to
certain employees prior to the Closing.
6. POST-CLOSING COVENANTS. The Parties agree as follows with
respect to the period following the Closing.
(a) General. In case at any time after the Closing any further
action is necessary to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party may reasonably
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 8 below).
The Seller acknowledges and agrees that from and after the Closing the Buyer
will be entitled to possession of all documents, books, records (including Tax
records), agreements, and financial data of any sort relating to the Company.
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Company, each of the other Parties will
cooperate with him or it and his or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be necessary in connection with the contest or defense, all
at the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Section 8 below).
(c) Transition. Seller will not take any action that is designed
or intended to have the
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effect of discouraging any lessor, licensor, customer, supplier, or other
business associate of the Company from maintaining the same business
relationships with the Company after the Closing as it maintained with the
Company prior to the Closing. Seller will refer all customer inquiries relating
to the business of the Company to the Buyer from and after the Closing.
(d) Confidentiality. Seller will treat and hold as such all of
the Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver promptly to
the Buyer or destroy, at the request and option of Buyer, all tangible
embodiments (and all copies) of the Confidential Information which are in his
possession. In the event that Seller is requested or required (by oral question
or request for information or documents in any legal proceeding, interrogatory,
subpoena, civil investigative demand, or similar process) to disclose any
Confidential Information, Seller will notify the Buyer promptly of the request
or requirement so that the Buyer may seek an appropriate protective order or
waive compliance with the provisions of this Section 6(d). If, in the absence of
a protective order or the receipt of a waiver hereunder, Seller is, on the
advice of counsel, compelled to disclose any Confidential Information to any
tribunal or else stand liable for contempt, Seller may disclose the Confidential
Information to the tribunal; provided, however, that Seller shall use his best
efforts to obtain, at the request of the Buyer, an order or other assurance that
confidential treatment will be accorded to such portion of the Confidential
Information required to be disclosed as the Buyer shall designate. The foregoing
provisions shall not apply to any Confidential Information which is generally
available to the public immediately prior to the time of disclosure.
7. CONDITIONS TO OBLIGATION TO CLOSE.
(a) Conditions to Obligation of the Buyer. The obligation of the
Buyer to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in
Section 3(a) and Section 4 above shall be true and correct in all
material respects at and as of the Closing Date;
(ii) Seller shall have performed and complied with all
of his covenants hereunder in all material respects through the
Closing;
(iii) Seller and the Company shall have procured all
third party consents, authorizations, approvals and releases, if
any, necessary to consummate the transactions contemplated by
this Agreement;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this
Agreement, (B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation, (C) affect
adversely the right of the
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Buyer to own the Company Shares and to control the Company, or
(D) affect adversely the right of the Company to own its assets
and to operate its business (and no such injunction, judgment,
order, decree, ruling, or charge shall be in effect);
(v) Seller shall have delivered to Buyer a certificate
to the effect that each of the conditions specified above in
Section 7(a)(i)-(iv) is satisfied in all respects;
(vi) Seller shall have entered into and delivered to
Buyer the employment agreement in the form set forth in Exhibit A
attached hereto, together with all other agreements contemplated
therein (the "Employment Agreement");
(vii) Seller shall have entered into and delivered to
Buyer the noncompete agreement in the form set forth in Exhibit B
attached hereto, together with all other agreements contemplated
therein (the "Noncompete Agreement");
(viii) Buyer shall received from counsel to the Seller
an opinion reasonably acceptable to Buyer and its counsel,
addressed to Buyer, and dated as of the Closing Date,
substantially in the form attached hereto as Exhibit C;
(ix) Seller shall have entered into and delivered to
Buyer three (3) leases or amendments to existing leases for the
Company's operating premises incorporating the terms set forth in
Exhibit D attached hereto (the "Leases");
(x) All of the specified parties thereto shall have
executed and delivered the Escrow Agreement;
(xi) Buyer shall have received the resignations,
effective as of the Closing, of each director and officer of the
Company other than those whom the Buyer shall have specified in
writing at least five business days prior to the Closing;
(xii) Seller shall have delivered to Buyer a certificate
from the Company's chief financial officer that, as of the
Closing Date, the current ratio and net worth of the Company
shall be equal to or greater than 95% of the average current
ratio and net worth of the Company, determined on a quarterly
basis, for the three years immediately preceding the Closing
Date.
(xiii) All actions to be taken by Seller in connection
with the consummation of the transactions contemplated hereby and
all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to the Buyer; and
(xiv) Buyer shall have completed the IPO, or arranged
other financing, in either event, on terms acceptable to Buyer
with sufficient proceeds to complete the transactions
contemplated by this Agreement.
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(xv) The Company shall have a net worth of no less than
One Million One Hundred Fifteen Thousand Dollars ($1,115,000). In
computing the net worth for purposes of this subsection, legal
fees paid by the Company up to the limit set forth in Section
11(k) shall be included in determining the net worth of the
Company.
Buyer may waive any condition specified in this Section 7(a) if it executes a
writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions to be performed by him in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in
Section 3(b) above shall be true and correct in all material
respects at and as of the Closing Date;
(ii) the Buyer shall have performed and complied with
all of its covenants hereunder in all material respects through
the Closing;
(iii) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this
Agreement or (B) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation (and no
such injunction, judgment, order, decree, ruling, or charge shall
be in effect);
(iv) the Buyer shall have delivered to the Seller a
certificate to the effect that each of the conditions specified
above in Section 7(b)(i)-(iii) is satisfied in all respects;
(v) the Buyer shall have entered into and delivered to
Seller the Employment Agreement;
(vi) the Buyer shall have entered into and delivered to
Seller the Noncompetition Agreement;
(vii) the Buyer shall have entered into and delivered to
Seller the Leases;
(viii) all of the specified parties thereto shall have
executed and delivered the Escrow Agreement;
(ix) all actions to be taken by the Buyer in connection
with the consummation of the transactions contemplated hereby and
all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby will be
reasonably satisfactory in form and substance to the Seller;
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(x) Buyer shall have obtained the release of Xxxxx from
any and all personal guarantees given by Xxxxx for the benefit of
the Company including but not limited to those obligations set
forth in Exhibit E;
(xi) Treating Seller's sale of the Company Shares as a
sale of assets under Section 338h(10) shall not result in any
greater state or federal income tax liability to Seller than if
the Transaction had been structured as a sale of Seller's Company
Shares;
(xii) Buyer shall have delivered to Seller a deposit of
$150,000 to secure Buyer's payment of the Break Up Amount as set
forth in Section 10(c)(iii);
(xiii) Buyer shall have granted to Xxxxx stock options
pursuant to the stock option agreement attached as Exhibit F; and
(xiv) Buyer shall have offered employment to Xxxxx
Xxxxxxxxxx and Xxxx Xxxxx with compensation terms no less than
currently in place, and such individuals will also have the
opportunity to participate in the Buyer's stock option plan after
beginning their employment.
Seller may waive any condition specified in this Section 7(b) if Seller executes
a writing so stating at or prior to the Closing.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this Agreement shall
survive the Closing hereunder (even if the damaged Party knew or had reason to
know of any misrepresentation or breach of warranty or covenant at the time of
Closing) and continue in full force and effect for a period of eighteen (18)
months thereafter.
(b) Indemnification Provisions for Benefit of the Buyer. In the
event Seller breaches any of his representations, warranties, or covenants
contained herein, and, provided that the Buyer makes a written claim for
indemnification against Seller within the survival period, then Seller agrees to
indemnify the Buyer from and against the entirety of any Adverse Consequences
the Buyer may suffer through and after the date of the claim for indemnification
(including any Adverse Consequences the Buyer may suffer after the end of any
applicable survival period) resulting from, arising out of, relating to, in the
nature of, or caused by the breach; provided, however, that (i) Seller shall not
have any obligation to indemnify the Buyer from and against any such Adverse
Consequences until the aggregate amount of such Adverse Consequences exceed Fity
Thousand Dollars ($50,000); and (ii) under no circumstances shall the Seller
have any obligation to indemnify Buyer for Adverse Consequences in the aggregate
excess of One Million Four Hundred Thousand Dollars ($1,400,000).
(c) Indemnification Provisions for Benefit of the Seller. In the
event the Buyer breaches
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any of its representations, warranties, or covenants contained herein, and,
provided that Seller makes a written claim for indemnification against the Buyer
within the survival period, then the Buyer agrees to indemnify Seller from and
against the entirety of any Adverse Consequences Seller may suffer through and
after the date of the claim for indemnification (including any Adverse
Consequences Seller may suffer after the end of any applicable survival period)
resulting from, arising out of, relating to, in the nature of, or caused by the
breach; provided, however, that the(I) Buyer shall not have any obligation to
indemnify the Seller from and against any such Adverse Consequences until the
aggregate amount of such Adverse Consequences exceeds $50,000; and (ii) under no
circumstances shall Buyer have any obligation to indemnify Seller for Adverse
Consequences in the aggregate excess of One Million Four Hundred Thousand
Dollars ($1,400,000). Notwithstanding the foregoing, Buyer shall cause the
Company to indemnify and hold harmless Xxxxx from any and all expenses and
liabilities arising under any and all obligations and individual liabilities
incurred by Xxxxx in connection with any personal guarantees entered into by
Xxxxx on behalf of the Company as set forth in Section 7(b)(xi).
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party
Claim") which may give rise to a claim for indemnification
against any other Party (the "Indemnifying Party") under this
Section 8, then the Indemnified Party shall promptly notify the
Indemnifying Party thereof in writing; provided, however, that no
delay on the part of the Indemnified Party in notifying the
Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the
Indemnifying Party is prejudiced thereby.
(ii) The Indemnifying Party will have the right to
defend the Indemnified Party against the Third Party Claim with
counsel of its choice reasonably satisfactory to the Indemnified
Party so long as the Indemnifying Party notifies the Indemnified
Party in writing within 15 days after the Indemnified Party has
given notice of the Third Party Claim that the Indemnifying Party
will indemnify the Indemnified Party from and against the
entirety of any Adverse Consequences the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature
of, or caused by the Third Party Claim.
(iii) So long as the Indemnifying Party is conducting
the defense of the Third Party Claim in accordance with Section
8(d)(ii) above, (A) the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the
defense of the Third Party Claim, (B) the Indemnified Party will
not consent to the entry of any judgment or enter into any
settlement with respect to the Third Party Claim without the
prior written consent of the Indemnifying Party (not to be
unreasonably withheld), and (C) the Indemnifying Party will not
consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written
consent of the Indemnified Party (not to be unreasonably
withheld).
(e) Other Indemnification Provisions. Subject to the limitation
on liability set forth in Section 8(b) and 8(c), the foregoing indemnification
provisions are in addition to, and not in
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derogation of, any statutory, equitable, or common law remedy (including without
limitation any such remedy arising under Environmental, Health, and Safety
Requirements) any Party may have with respect to the Company or the transactions
contemplated by this Agreement. Seller hereby agrees that he will not make any
claim for indemnification against the Company by reason of the fact that he was
a director, officer, employee, or agent of any such entity or was serving at the
request of any such entity as a partner, trustee, director, officer, employee,
or agent of another entity (whether such claim is for judgments, damages,
penalties, fines, costs, amounts paid in settlement, losses, expenses, or
otherwise and whether such claim is pursuant to any statute, charter document,
bylaw, agreement, or otherwise) with respect to any action, suit, proceeding,
complaint, claim, or demand brought by the Buyer against Seller (whether such
action, suit, proceeding, complaint, claim, or demand is pursuant to this
Agreement, applicable law, or otherwise).
(f) Method of Resolving Claims. Any indemnification claims made
pursuant to Sections 8(b) or 8(c) above shall be resolved pursuant to
arbitration as set forth in Section 11(p).
(g) Reduction of Adverse Consequences. Any Adverse Consequences
suffered by a party shall be reduced by the amount of any insurance recovery
attributable to the Adverse Consequences and the tax benefit associated with
such Adverse Consequences.
(h) Break Up Amount. Notwithstanding the foregoing, nothing in
this Section 8 shall limit the recovery of the Break Up Amount pursuant to
Section 10(c) hereafter.
9. TAX MATTERS. The following provisions shall govern the
allocation of responsibility as between Buyer and Seller for certain tax matters
following the Closing Date:
(a) Section 338(h)(10) Election. At the Buyer's option, the
Company and Seller will join with Buyer in making an election under Code Section
338(h)(10) of the Code (and any corresponding election under state, local, and
foreign tax law) with respect to the purchase and sale of the stock of Company
hereunder (a "Section 338(h)(10) Election"). Seller will include any income,
gain, loss, deduction, or other tax item resulting from the Section 338(h)(10)
Election on his Tax Returns to the extent required by applicable law. Seller
shall also pay any Tax imposed on Company attributable to the making of the
Section 338(h)(10) Election, including, but not limited to, (i) any Tax imposed
under Code Section 1374, (ii) any tax imposed under Reg.
Section 1.338(h)(10)-1(e)(5), or (iii) any state, local or foreign Tax imposed
on Company's gain, and Seller shall indemnify Buyer and the Company against any
Adverse Consequences arising out of any failure to pay any such Taxes.
(b) Allocation of Purchase Price. Buyer, Company and Seller will
cooperate in allocating the Purchase Price and the liabilities among the assets
of the Company for all purposes (including Tax and financial accounting) prior
to Closing. Buyer, Company and Seller will file all Tax Returns (including
amended returns and claims for refund) and information reports in a manner
consistent with such allocation.
(c) Tax Periods Ending on or Before the Closing Date. Buyer shall
prepare or cause to be
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prepared and file or cause to be filed all Tax Returns for the Company for all
periods ending on or prior to the Closing Date which are filed after the Closing
Date. Buyer shall permit Seller to review and comment on each such Tax Return
described in the preceding sentence prior to filing. To the extent permitted by
applicable law, Seller shall include any income, gain, loss, deduction or other
tax items for such periods on his Tax Return in a manner consistent with the
Schedule K-1s furnished by the Company to the Seller for such periods. Seller
shall reimburse Buyer for Taxes of the Company with respect to such periods
within fifteen (15) days after payment by Buyer or the Company of such Taxes to
the extent such Taxes are not reflected in the reserve for Tax Liability (rather
than any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) shown on the face of the Most Recent Balance Sheet.
(d) Tax Periods Beginning Before and Ending After the Closing
Date. Buyer shall prepare or cause to be prepared and file or cause to be filed
any Tax Returns of the Company for Tax periods which begin before the Closing
Date and end after the Closing Date. Seller shall pay to Buyer within fifteen
(15) days after the date on which Taxes are paid with respect to such periods an
amount equal to the portion of such Taxes which relates to the portion of such
Taxable period ending on the Closing Date to the extent such Taxes are not
reflected in the reserve for Tax Liability (rather than any reserve for deferred
Taxes established to reflect timing differences between book and Tax income)
shown on the face of the Most Recent Balance Sheet. For purposes of this
Section, in the case of any Taxes that are imposed on a periodic basis and are
payable for a Taxable period that includes (but does not end on) the Closing
Date, the portion of such Tax which relates to the portion of such Taxable
period ending on the Closing Date shall in the case of any Taxes other than
Taxes based upon or related to income or receipts, be deemed to be the amount of
such Tax for the entire Taxable period multiplied by a fraction the numerator of
which is the number of days in the Taxable period ending on the Closing Date and
the denominator of which is the number of days in the entire Taxable period. Any
credits relating to a Taxable period that begins before and ends after the
Closing Date shall be taken into account as though the relevant Taxable period
ended on the Closing Date. All determinations necessary to give effect to the
foregoing allocations shall be made in a manner consistent with prior practice
of the Company. To the extent permitted by applicable law, Seller shall include
any income, gain, loss, deduction or other tax items for such periods on his Tax
Return in a manner consistent with the Schedule K-1s furnished by the Company to
the Seller for such period.
(e) Cooperation on Tax Matters.
(i) Buyer, the Company and Seller shall cooperate fully,
as and to the extent reasonably requested by any other Party, in
connection with the filing of Tax Returns pursuant to this
Section and any audit, litigation or other proceeding with
respect to Taxes. Such cooperation shall include the retention
and (upon the other Party's request) the provision of records and
information which are reasonably relevant to any such audit,
litigation or other proceeding and making employees available on
a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. The Company and
Seller agree (A) to retain all books and records with respect to
Tax matters pertinent to the Company relating to any taxable
period beginning
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before the Closing Date until the expiration of the statute of
limitations (and, to the extent notified by Buyer or Seller, any
extensions thereof) of the respective taxable periods, and to
abide by all record retention agreements entered into with any
taxing authority, and (B) to give the other Party reasonable
written notice prior to transferring, destroying or discarding
any such books and records and, if the other Party so requests,
the Company or Seller, as the case may be, shall allow the other
Party to take possession of such books and records.
(ii) Buyer and Seller further agree, upon request, to
use their best efforts to obtain any certificate or other
document from any governmental authority or any other Person as
may be necessary to mitigate, reduce or eliminate any Tax that
could be imposed (including, but not limited to, with respect to
the transactions contemplated hereby).
(f) Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be paid by Buyer when
due, and Seller will, at his own expense, file all necessary Tax Returns and
other documentation with respect to all such transfer, documentary, sales, use,
stamp, registration and other Taxes and fees, and, if required by applicable
law, Buyer will, and will cause its affiliates to, join in the execution of any
such Tax Returns and other documentation.
10. TERMINATION.
(a) Termination of Agreement. The Parties may terminate this
Agreement as provided below:
(i) Buyer and Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) Buyer may terminate this Agreement by giving
written notice to the Seller at any time prior to the Closing (A)
in the event Seller has breached any representation, warranty, or
covenant contained in this Agreement in any material respect, the
Buyer has notified the Seller of the breach, and the breach has
continued without cure for a period of fifteen (15) days after
the notice of breach or (B) if the Closing shall not have
occurred on or before March 31, 2001, by reason of the failure of
any condition precedent under Section 7(a) hereof (unless the
failure results primarily from the Buyer itself breaching any
representation, warranty, or covenant contained in this
Agreement); and
(iii) Buyer may terminate this agreement for "Material
Adverse Information" (as defined below) contained in an updated
Company Disclosure Schedule ("Updated Company Disclosure
Schedule) delivered to Buyer pursuant to Section 5(h) above
subsequent to the execution of this Agreement as follows: As soon
as practicable and in any event not later than 5:00 p.m. Pacific
Daylight Time on the third business day following the delivery of
an Updated Company Disclosure Schedule by the Company, Buyer
shall give Seller notice if, on the basis of any Material Adverse
Information
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contained in the Updated Company Disclosure Schedule, Buyer has
decided that it wishes to terminate this Agreement. Such notice
shall specify the Material Adverse Information contained in the
Updated Company Disclosure Schedule, that is the basis for such
decision. The parties shall thereafter review with each other
such Material Adverse Information, and if the Buyer does not
withdraw such notice in writing prior to the Closing, all further
obligations of the parties under this Agreement shall terminate.
If Buyer does not advise Seller within third business days after
receipt of such Updated Company Disclosure Schedule that Buyer
believes such Updated Company Disclosure Schedule contains
Material Adverse Information, Buyer shall be deemed to have
accepted such Updated Company Disclosure Schedule. Thereupon, the
Parties shall proceed with the consummation of the Transaction in
accordance with the terms of this Agreement. For purposes of this
Section 10(a), "Material Adverse Information" shall mean
information concerning the Company relating to (x) litigation,
including asserted written claims or demands against the Company,
where the reasonably determined liability of the Company is
likely to result in injunctive relief or which will materially
impair the operations or financial condition of the Company, or
(y) the occurrence of any other event or series of events
affecting the Company, the collective and aggregate adverse
impact of which has or will have a materially adverse effect on
the Company, or that the consummation of the Transaction will or
is likely to result in a material adverse consequence to either
the Company or the Buyer. Notwithstanding the foregoing, a
termination pursuant to this Section 10(a)(iii) shall not trigger
any obligation of Seller to pay to Buyer a Break Up Amount
pursuant to Section 10(c)(ii).
(iv) Seller may terminate this Agreement by giving
written notice to the Buyer at any time prior to the Closing (A)
in the event the Buyer has breached any representation, warranty,
or covenant contained in this Agreement in any material respect,
Seller has notified the Buyer of the breach, and the breach has
continued without cure for a period of fifteen (15) days after
the notice of breach or (B) if the Closing shall not have
occurred on or before March 31, 2001, by reason of the failure of
any condition precedent under Section 7(b) hereof (unless the
failure results primarily from Seller himself breaching any
representation, warranty, or covenant contained in this
Agreement).
(b) Effect of Termination. Except as set forth in Section 10(c)
below, if any Party terminates this Agreement pursuant to Section 10(a) above,
all rights and obligations of the Parties hereunder shall terminate without any
Liability of any Party to any other Party.
(c) Break Up Fee. Should the Closing not occur the Parties agree
that either party will reimburse the other for up to $150,000 of Actual Out of
Pocket Expenses (the "Break Up Amount") incurred in connection with the Closing
under the following circumstances:
(i) The Break Up Amount will be payable by the
Buyer to the Seller if the Buyer is unable to complete the Transaction on or
before March 31, 2001 for any reason other than (a) the occurrence of a material
adverse change in the financial condition or operations of the Company, or (b)
Seller's failure to satisfy the conditions to closing set forth Section 7(a).
For purposes of this Section 10(b), the term "material adverse change" shall
mean (W) any decline in
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the Company's revenues of 10% or more when compared to the same period during
the prior year, (X) the loss by the Company of any customer which would have the
effect, on an annualized basis, of reducing revenues by 10% or more, (Y) the
failure of the Company to have a net worth of at least One Million One Hundred
Fifteen Thousand Dollars ($1,115,000) at the Closing (in computing net worth for
purposes of this subsection, legal fees paid by the Company up to the limit set
forth in Section 11(k) shall be included in determining the net worth of the
Company), or (Z) Xxxxx'x death or incapacity.
(ii) The Break Up Amount will be payable by the
Seller to the Buyer if, after being notified by Buyer that Buyer has received a
firm commitment underwriting in writing for an IPO, from an experienced and
reputable underwriter for an IPO which will generate funds sufficient to close
the Transaction or Buyer has received a written commitment from other sources to
finance sufficient to close the Transaction, Seller are unable to complete the
Transaction for any reason, other than the Buyer's failure to satisfy the
conditions to closing set forth in the Section 7(b) or Buyer's decision not to
proceed with the Transaction because of a "material adverse change".
(iii) To secure Buyer's payment of the break up
fee, upon execution of this Agreement, Buyer shall deposit $150,000 ("Escrowed
Property") into an account at First National Bank ("Escrow Agent"). Escrow Agent
shall be issued joint written instructions in the form of Exhibit G governing
the payment of any Break Up Amount due Seller from the Escrow Property.
(iv) Nothwithstanding any claim for
indemnification under Section 8 above, the maximum liability of each party for
failure to complete the Transaction under this Section 10(c) shall be as
follows: (i) for a failure to complete the Transaction by the Buyer under
Paragraph 10(c)(i), the Break Up Amount and (ii) for a failure to complete the
Acquisition by the Seller under Paragraph 10(c)(ii), the Break Up Amount plus
One Hundred thousand Dollars ($100,000).
BOTH PARTIES AGREE THAT BY INITIALING THIS PROVISION THAT IT
WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT TO FIX THE ACTUAL DAMAGES TO SELLER
OR BUYER RESULTING FROM FAILURE TO CONSUMMATE THE TRANSACTION. THEREFORE, BUYER
AND SELLER AGREE THAT, PURSUANT TO CALIFORNIA CIVIL CODE Sections 1671 AND
1677, THE MAXIMUM LIABILITY OF BUYER OR SELLER FOR FAILURE TO CONSUMMATE THE
TRANSACTION SHALL BE AS SET FORTH IN THIS PARAGRAPH 10(c)(iv). THIS AMOUNT
REPRESENTS A REASONABLE ESTIMATE UNDER THE CIRCUMSTANCES EXISTING AT THE TIME OF
EXECUTION OF THIS AGREEMENT, OF THE DAMAGES THAT EITHER BUYER OR SELLER WOULD
INCUR AS A RESULT OF A DEFAULT BY EITHER PARTY UNDER THIS AGREEMENT.
Seller __________________________ Buyer ______________________________
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11. MISCELLANEOUS.
(a) Press Releases and Public Announcements. No Party shall issue
any press release or make any public announcement relating to the subject matter
of this Agreement without the prior written approval of the Buyer and the
Seller; provided, however, that Buyer shall be permitted to disclose such
matters as are required by applicable law in connection with the preparation and
filing of any registration statement under the Securities Act of 1933, as
amended, and provided further, that any Party may make any public disclosure it
believes in good faith is required by applicable law.
(b) No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents
referred to herein), the Confidentiality Agreement and the First Amendment to
Confidentiality Agreement dated November 6, 2000 between the Company and the
Buyer constitute the entire agreement among the Parties and supersedes any prior
understandings, agreements, or representations by or among the Parties, written
or oral, to the extent they related in any way to the subject matter hereof.
(d) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of his or its rights, interests, or obligations hereunder without the prior
written approval of the Buyer and Seller; provided, however, that the Buyer may
(i) assign any or all of its rights and interests hereunder to one or more of
its Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the Buyer nonetheless shall
remain responsible for the performance of all of its obligations hereunder).
(e) Counterparts; Execution. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original but all of
which together will constitute one and the same instrument. The Parties shall be
entitled to rely on delivery by facsimile machine of an executed copy of this
Agreement and acceptance of such facsimile signatures shall be equally effective
to create a valid and binding agreement between the Parties in accordance with
the terms hereof.
(f) Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, claims, certificates, requests, demands
and other communications hereunder shall be in writing and shall be deemed to
have been duly given if personally delivered or if sent by nationally recognized
overnight courier, by telecopy, or by registered or certified mail, return
receipt requested and postage prepaid, addressed as follows:
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If to Seller: With a copy to:
Mr. Xxx Xxxxx, Trustee Xxxx Xxxxxxx Xxxxxxxx & Scripps, LLP
00000 Xxxxxxx Xxxxx 000 X. Xxxxxxxx, Xxxxx 0000
Xxxxxxxx, XX 00000 Xxx Xxxxx, XX 00000
Attn: G. Xxxxxx Xxxxxxx, Esq.
Facsimile: (000) 000-0000
If to Buyer: With a copy to:
Glacier Distribution Company, Inc. Xxxxxx Xxxxx Xxxxx Xxxxxxxxx & Xxxxxx LLC
0000 00xx Xxxxxx, Xxxxx 000 0000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000 Xxxxxx, Xxxxxxxx 00000
Attn: Xxx Xxxxx Attn: Xxxxxxx X. Xxxx, Esq.
Facsimile: (000) 000-0000 Facsimile: (000) 000-0000
Or to such other address as the Party to whom notice is to be given may have
furnished to the other Parties in writing in accordance herewith. Any such
notice or communication shall be deemed to have been received (a) in the case of
personal delivery, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next business day after the date
when sent, (c) in the case of telecopy transmission, when received, and (d) in
the case of mailing, on the third business day following that on which the piece
of mail containing such communication is posted.
(h) Governing Law. This Agreement is made and shall be governed
by, and construed and enforced in accordance with, the internal laws of the
State of California, without regard to the conflict of laws principles thereof,
as the same apply to agreements executed solely by residents of California and
wholly to be performed within California.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by Buyer
and Seller. No waiver by any Party of any default, misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
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(k) Expenses. The Company shall reimburse Seller for all legal
fees incurred by Seller in connection with the transactions contemplated by this
Agreement up to an aggregate amount of $150,000. Buyer shall also reimburse
Seller and/or the Company for any legal or accounting fees incurred as a result
of the Company's participation in the IPO. Other than as expressly set forth in
this Section 11(k), each of the Parties and the Company will bear his or its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby.
(l) Construction. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. All references herein to the masculine gender are
deemed to include the feminine gender.
(m) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(n) Specific Performance. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the event any of
the provisions of this Agreement are not performed in accordance with their
specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the other Parties shall be entitled to an injunction or injunctions
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any action
instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter (subject to the provisions set
forth in Section 11(p) below), in addition to any other remedy to which they may
be entitled, at law or in equity.
(o) Submission to Jurisdiction. Each of the Parties submits to
the jurisdiction of any state or federal court sitting in San Diego County,
California, in any action or proceeding arising out of or relating to
enforcement of this Agreement, agrees that all claims in respect of the action
or proceeding may be heard and determined in any such court, and agrees not to
bring any action or proceeding arising out of or relating to enforcement of this
Agreement in any other court. Each of the Parties waives any defense of
inconvenient forum to the maintenance of any action or proceeding so brought and
waives any bond, surety, or other security that might be required of any other
Party with respect thereto.
(p) Xxxxxxxxxxx.Xx the event of any dispute concerning or arising
out of this Agreement, such dispute shall be submitted by the Parties to
arbitration. Arbitration proceedings may be commenced by either party giving the
other party written notice thereof and proceeding thereafter in accordance with
the rules and procedures of the American Arbitration Association. Any such
arbitration shall take place before a single arbitrator only in San Diego,
California. Any such arbitration shall be governed by and subject to the
applicable laws of the State of California (including the discovery provisions
of the California Civil Code and the California Code of Civil Procedure,
including specifically Section 1283.05 of the California Code of Civil
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Procedure), and the then prevailing rules of the American Arbitration
Association. The arbitrator's award in any such arbitration shall be final and
binding, and a judgment upon such award may be enforced by any court of
competent jurisdiction
*****
IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement as of the date first above written.
BUYER:
GLACIER DISTRIBUTION COMPANY, INC.
By: /s/ Xxx X. Xxxxx
--------------------------
Name: Xxx X. Xxxxx
Title: C.E.O.
SELLER:
XXXXX FAMILY TRUST dated February 2, 1999
/s/ Xxxxxxx X. Xxxxx
----------------------------------------
Xxxxxxx X. Xxxxx, Trustee
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TABLE OF CONTENTS
Exhibit A -- Employment Agreement
Exhibit B -- Noncompete Agreement
Exhibit C -- Opinion of Counsel to Seller
Exhibit D -- Summary of Amendments to Three Leases
Exhibit E -- Guarantied Obligations
Exhibit F -- Stock Option Agreement
Exhibit G -- Escrow Agreement
Seller's Disclosure Schedule - None
Buyer's Disclosure Schedule - None
Company Disclosure Schedule
1
