EXHIBIT 10.6
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
THIS AGREEMENT FOR PURCHASE AND SALE OF ASSETS (this "Agreement") is
executed this 29th day of October, 1998 (the "Effective Date"), by and between
TEJAS SNACKS, L.P., a Texas limited partnership ("Seller"); XXXXX XXXX ("Xxxx");
XXX XXXXXX ("Xxxxxx"); and XXXXX BROTHERS, INC., a Delaware corporation ("Xxxxx
Brothers"), and/or nominee or assignee (collectively with Xxxxx Brothers,
"Buyer"). Kohl and Xxxxxx are sometimes referred to in this Agreement
collectively as the "Principals". Buyer, the Principals and Seller are sometimes
referred to in this Agreement collectively as the "Parties" or individually as a
"Party".
RECITALS:
A. Seller is engaged in the business of the manufacture, distribution
and sale of potato chips and other snack foods including, but without
limitation, "cheese curls" and tortilla chips, all under the so-called "Bob's
Texas Style Potato Chips" (and similar names herein described) tradename and
trade dress, primarily within the State of Texas (the "Business").
B. On or about March 25, 1997, Seller acquired certain of the assets of
Bob's Texas Style Potato Chips, Inc., a Texas corporation ("Bob's") and Tejas
Style Distributing, Inc., a Texas corporation ("Tejas Distributing",
collectively, with Xxxxxx Xxx ("Xxx") and Tejas Distributing, the "Prior
Owners") pursuant to that certain Agreement for Sale of all Assets ("Original
Sale Agreement"), undated, by and among the Prior Owners, on one hand, and
Seller, on the other hand. As consideration for such sale, among other things,
those parties executed, delivered and consummated the following:
(1) That certain Promissory Note, dated March 25, 1997
(the "Prior Owners' Note"), in the original principal
amount of $230,000.00; and
(2) Consulting arrangement and other obligations
(collectively, "Commission Claim") described in and
secured by that certain Security Agreement, dated
March, 1997 (the "Security Agreement").
C. Pursuant to that certain Agreement to Exchange Claims ("Claims
Agreement") dated June 24, 1998 by and among the Prior Owners, Seller and
D.T.M.E.S., Inc., a Texas corporation ("D.T.M.E.S."), the Prior Owners agreed to
either transfer and assign to Seller or its nominee, or discharge, waive, remise
and render null and void, at the option of Seller, all of the Prior Owners'
claims against Seller of any kind, type or nature (collectively, "Prior Owners'
Claims") including, without limitation, the Note and the Commission Claim, in
exchange for certain consideration to be delivered to Bob's, Tejas Distributing
and/or Rod, as more fully set forth in the Claims Agreement.
D. Seller desires to sell to Buyer and Buyer desires to purchase from
Seller, on the terms and subject to the conditions of this Agreement, all of the
assets and properties of Seller of any kind, type or nature, with the exception
only of those assets and properties described in Exhibit A (the "Excluded
Assets").
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AGREEMENTS:
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, conditions and agreements contained in this Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties agree as follows:
1. Purchase and Sale. Subject to the terms and conditions of this
Agreement and with the exception of the Excluded Assets, Seller agrees to sell,
convey, transfer, assign and deliver to Buyer, and Buyer agrees to purchase from
Seller on the Closing Date (as defined below), all of the assets and properties
of Seller of every kind, character and description, whether tangible,
intangible, personal or mixed, and wherever located, all of which are referred
to collectively in this Agreement as the "Assets". The Assets to be conveyed,
transferred, assigned and delivered as provided by this Agreement shall include,
without limitation, the following:
1.1 Inventory. All raw materials, work in process and finished
goods produced or used in the Business, wherever located ("Inventory");
1.2 Personal Property. All equipment, tools, machinery,
supplies, materials and other tangible personal property used in any manner in
connection with the Business, wherever located ("Personal Property"), including,
without limitation, the Personal Property described in Exhibit C attached to
this Agreement;
1.3 Contractual Rights. Any and all rights in any manner
related to the ownership or use of the Assets or to the ownership, operation or
conduct of the Business, rights in or claims under leases, permits, licenses,
purchase and sales orders, covenants not to compete, stock, stock rights, and
all other contracts of any nature whatsoever ("Contractual Rights"), including,
without limitation, the Contractual Rights described in Exhibit D attached to
this Agreement, but excluding all accounts receivable as of the Closing Date;
and
1.4 Intellectual Property. All of the following in any manner
related to the ownership, possession or use of the Assets or to the ownership,
operation or conduct of the Business ("Intellectual Property"), including,
without limitation, the Intellectual Property described in Exhibit E attached to
this Agreement and set forth immediately below;
(A) To the extent Seller has rights therein, all
trade names, including but not limited to "Tejas Snacks", "Tejas Distributing",
"Tejas Merchandising", "Bob's Texas Style Potato Chips", "Texas Style Potato
Chips", "Texas Style", "Longhorn Style", "Colorado Style" and all trade dress
(collectively, the "Trademarks"); and
(B) All know-how, confidential business information,
processes, drawings, formulae, customer lists, supplier and distribution lists,
price lists, customer files, computer programs, technical and engineering data,
trade information and marketing materials (collectively, the "Other Proprietary
Rights").
2. No Assumed Liabilities. This Agreement specifically excludes, and
Buyer does not under any circumstances agree to assume, any liabilities of
Seller. All obligations accruing to and existing on the Closing Date (as defined
below) are and shall remain the sole obligation and responsibility of Seller.
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3. Purchase Price.
3.1 Payment of the Purchase Price. The Purchase Price (herein
so called) shall be One Million Six Hundred Thirty Thousand and No/100 Dollars
($1,630,000.00), subject to adjustment and payable as set forth below:
3.1.1 Deposit. The total sum of Seventy Five Thousand
and No/100 Dollars ($75,000.00) (the "Deposit") shall be paid by check, wire
transfer or other form of funds as follows:
(1) Two Deposits of Twenty Five Thousand and
No/100 Dollars ($25,000.00), each were deposited by Buyer with Seller on or
about September 16, 1998 and on or about September 25, 1998. Seller acknowledges
that the same were or will be applied to the payment of any accounts payable
(collectively "Payables") of Seller in such order and with such priority as
Seller and Buyer may reasonably determine. If the Closing fails to occur for any
reason other than Buyer's breach hereof, the Deposit shall be returned to Buyer
in the method provided in the Production Agreement (as herein defined); and
(2) On or before October 15, 1998, Buyer
shall deposit with Seller an additional Twenty Five Thousand and No/100 Dollars
($25,000.00) and, if so deposited, such sum shall be applied at Closing to the
payment of any Payables of Seller in such order and with priority as Seller and
Buyer may reasonably determine. If the Closing fails to occur for any reason
other than Buyer's breach hereof, the Deposit shall be returned to Buyer in the
method provided in the Production Agreement;
3.1.2 SBA Loan. The sum of Five Hundred Eighty Five
Thousand and No/100 Dollars ($585,000.00), subject to adjustment as set forth
below, shall be paid by Buyer repaying, or causing to be repaid, on the Closing
Date (as defined below) the existing SBA Loan (herein so called) to Seller with
a principal balance in the approximate amount of Five Hundred Eighty Five
Thousand and No/100 Dollars ($585,000.00); the SBA Loan is evidenced by that
certain promissory note dated March 7, 1997, in the original principal amount of
Six Hundred Thousand and No/100 Dollars ($600,000.00);
3.1.3 Claim Agreement Obligations. The sum of Three
Hundred Forty Five Thousand and No/100 ($345,000.00) shall be paid by Buyer on
the Closing Date as follows:
(1) The sum of Two Hundred Forty Five
Thousand and No/100 Dollars ($245,000.00) shall be paid by cash, wire transfer
or other form of immediately available or same day funds on the Closing Date on
behalf of Seller to the Prior Owners in accordance with Section 4 of the Claims
Agreement and the instructions of the Prior Owners; and
(2) The sum of One Hundred Thousand and
No/100 Dollars ($100,000.00) shall be paid by Buyer issuing to the Prior Owners,
in accordance with Section 4 of the Claims Agreement and the instructions of the
Prior Owners, unregistered common stock of Xxxxx Brothers (the "Prior Owners'
Stock") with a value of One Hundred Thousand and No/100 Dollars ($100,000.00);
the value of such Prior Owners' Stock shall be determined in the manner set
forth below, as of 5:00 p.m. (MST) on the day immediately preceding the Closing
Date (the "Computation Date") and shall be
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delivered to the Prior Owners on the Closing Date, or as soon thereafter as is
reasonably practicable, given the requirements of Xxxxx Brothers' transfer agent
and the like.
3.1.4 Stock. The sum of Three Hundred Fifty Thousand
and No/100 Dollars ($350,000.00) shall be paid by Buyer issuing to Seller (or to
such of Seller's principals as Seller may reasonably direct, so long as such
direct issuance is approved, in its sole discretion, by securities counsel for
Buyer and said distributees execute such documents and certificates as may be
required by Buyer or its counsel in connection therewith) Four Hundred Thousand
(400,000) shares of unregistered common stock of Xxxxx Brothers (the "Stock")
with a stipulated value of Three Hundred Fifty Thousand and No/100 Dollars
($350,000.00). The certificates representing said Stock shall be delivered to
Seller on the Closing Date, or as soon thereafter as is reasonably practicable,
given the requirements of Xxxxx Brothers' transfer agent and the like.
Seller hereby acknowledges that the Stock will be
so-called "restricted" or "144" stock, and that the same will not be tradable or
transferable except in accordance with Securities and Exchange Commission Rule
144 in effect from time to time. The Stock will be so legended in accordance
with the legend set forth in Schedule 3.1.4 attached.
3.1.5 Balance of the Purchase Price. The sum of Two
Hundred Seventy Five Thousand and No/100 Dollars ($275,000.00), calculated by
applying all Deposits theretofore made by Buyer, shall be paid in cash by Buyer
at Closing and shall be applied by Seller to Payables in such order and with
such priority as Seller and Buyer may reasonably determine.
3.2 Deposit. Any Deposits made hereunder shall be utilized by
Seller to pay Payables and, at the request of Buyer, Seller shall provide to
Buyer reasonable evidence of the utilization of such monies. Deposits shall be
utilized and credited in accordance with the terms of this Agreement, but if
this Agreement fails to close through failure of a condition precedent, Deposits
shall be subject to recoupment by Buyer under the Production Agreement.
3.3 Adjustment of the Purchase Price .
3.3.1 SBA Loan Adjustment. The Purchase Price is
based on the assumption that the unpaid principal balance and accrued but unpaid
interest and penalties (if any) and all other sums owed under the SBA Loan as of
the Closing Date (collectively, the "SBA Loan Balance") is, or will be, Five
Hundred Eighty Five Thousand and No/100 Dollars ($585,000.00). In the event the
actual SBA Loan Balance on the Closing Date is less or more than such amount,
then the cash payable by Buyer at Closing pursuant to Section 3.1.5 above shall
be adjusted upward or downward by a like amount, but no adjustment shall be made
to the Purchase Price. Seller shall keep the SBA Loan in good standing, with all
required payments timely made, until the Closing.
3.4 Allocation of the Purchase Price. Buyer and Seller agree
to cooperate in connection with the preparation of Form 8594 attached hereto as
Exhibit F, and agree to report the allocation of the Purchase Price among the
four classes of assets (described in I.R.C. ss. 1060 and the regulations
thereunder) as follows, such figures being subject to pro rata adjustment at
Closing if the cash portion of the Purchase Price is adjusted because of
variations in the balance of the SBA Loan:
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Class I: $ 0.00
Class II: $ 0.00
Class III: $ 100,000.00
Class IV: $1,530,000.00
3.5 Payment of Taxes and Other Charges. Seller shall pay any
transaction privilege tax, use tax, excise tax or other transfer fee or tax
which may be imposed by any governmental agency with respect to the sale,
transfer, conveyance and assignment of the Assets pursuant to this Agreement.
4. Employment Agreement. Subject to the terms and conditions of this
Agreement, at the Closing, Buyer, on the one hand, and Kohl and Xxxxxx, on the
other, shall execute and deliver to each other two (2) original counterparts of
Employment Agreements (herein so called), each of which shall be dated as of the
Closing Date and in form and content identical to Exhibit G-1 and G-2. The
Employment Agreement shall provide for each Principal's employment with Buyer
for an initial one (1) year term commencing on the Closing Date, at a annual
salary of Eighty Thousand and No/100 Dollars ($80,000.00).
5. Conditions to Obligation of Buyer to Perform. The obligation of
Buyer to purchase the Assets at the Closing is subject to the satisfaction, on
or before the Closing Date, of all of the following conditions precedent, any or
all of which may be waived by Buyer by delivery to Seller of a written notice of
such waiver:
5.1 Representations and Warranties True on the Closing Date.
The representations and warranties of Seller contained in this Agreement, in the
Exhibits or in any certificate, document or statement delivered pursuant to the
provisions of this Agreement shall be true and correct on and as of the Closing
Date as though such representations and warranties were made on and as of the
Closing Date.
5.2 Compliance with Agreement. Seller and each of the
Principals shall have performed and complied with all agreements, covenants,
conditions and obligations required by this Agreement to be performed or
complied with by Seller and/or any one (1) or more of the Principals prior to or
on the Closing Date.
5.3 Opinion of Seller's Counsel. Buyer shall have received an
opinion of counsel for Seller, addressed to Buyer and Buyer's lender(s)
("Lender"), in form and substance reasonably satisfactory to Buyer and its
counsel to the effect that:
(A) Seller is a Texas limited partnership, duly
organized and validly existing and has the requisite partnership power and
partnership authority: (a) to own, lease and operate its properties; (b) to
carry on the Business in the places where and in the manner in which it is
presently being conducted; and (c) to consummate the transactions contemplated
by, and to perform its obligations under, this Agreement. The execution and
delivery of this Agreement, the consummation of the transactions contemplated
by, and the performance of the obligations under, this Agreement have been duly
authorized by the partners of Seller and no other partnership proceedings on the
part of Seller are necessary in connection therewith.
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(B) Although acknowledging that Texas law does not
apply to this Agreement or to any of the documents described herein, but
assuming, without justifying said assumption, that Texas law governed this
Agreement and said other documents, this Agreement would constitute, and each
other agreement or instrument to be executed and delivered by Seller pursuant to
the terms of this Agreement would constitute, a legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with their
respective terms, and when the Assignment Documents (as defined below) are
executed, delivered and/or recorded and/or filed, as appropriate, title to the
Assets will be vested in Buyer, to such counsel's knowledge and based upon a UCC
search provided by Buyer, free and clear of all liens and encumbrances except as
are set forth in said opinion.
(C) Neither the execution and delivery of this
Agreement by Seller nor the consummation of the transactions contemplated by,
nor the performance of Seller's obligations under, this Agreement will: (a)
violate any provisions of the Partnership Agreement of Seller; (b) violate any
statute, code, ordinance, rule or regulation of the State of Texas applicable to
Seller, the Assets or the operation and conduct of the Business; (c) to said
counsel's knowledge, violate any judgment, order, writ, decree, injunction or
award of any court, arbitrator, mediator, government or governmental agency or
instrumentality to which Seller is a party or by which Seller or the Assets are
bound; (d) to said counsel's knowledge, violate, breach, conflict with,
constitute a default under, result in the termination of or accelerate the
performance required by, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Seller is a party or by which Seller or the
Assets are bound; or (e) result in the creation of any lien, security interest,
charge or other encumbrance upon any of the Assets.
(D) To said counsel's knowledge, there is no pending
or threatened litigation or other legal proceeding against Seller or affecting
the Assets or the operation or conduct of the Business or challenging the
validity or propriety of or seeking to enjoin or to set aside the transactions
contemplated by this Agreement.
(E) No consent, approval, authorization or other
action by, or filing with, any federal, state or local governmental agency or
instrumentality is required in connection with the execution and delivery by
Seller of this Agreement, the consummation by Seller of the transactions
contemplated by, or the performance of Seller's obligations under, this
Agreement.
5.4 Approval of Documentation. The form and substance of all
certificates, instruments, opinions and other documents delivered to Buyer under
this Agreement and required to carry out this Agreement, shall be reasonably
approved by counsel for Buyer.
5.5 Third Party Consents; SBA and Rod Performances. Buyer
shall have received evidence that all consents, waivers, permits, approvals and
authorizations which are required by the transactions contemplated by this
Agreement and have been made and/or obtained, if any. The SBA shall be in a
position to accept prepayment of the SBA Loan as set forth in Section 3.1.2
above, and all parties to the Claims Agreement shall be in a position to, and
shall, close the transactions contemplated thereby.
5.6 Transfer of Licenses; Assignment of Warranties. Seller
shall have transferred or assigned to Buyer on or before the Closing Date: (a)
all licenses, permits, franchises, certificates and authorizations, if any,
which are required or necessary to enable Buyer to operate and conduct the
Business
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in the manner in which Seller operates and conducts the Business; and (b) any
and all warranties covering or affecting the Personal Property and/or Inventory.
5.7 [RESERVED]
5.8 Failure of Conditions. Seller agrees to use commercially
reasonable efforts to satisfy the conditions set forth in this Section 5. If
Seller should be unable to satisfy any condition or conditions set forth in this
Section 5, Seller shall notify Buyer, and Buyer, by written notice to Seller to
be given prior to the Closing, shall either: (i) waive such condition or
conditions and proceed to close; or (ii) cancel this Agreement. If Buyer elects
to cancel this Agreement pursuant to the foregoing provisions of this Section 5,
and the failure of condition is not due to Seller's breach hereunder, the
provisions of the Production Agreement dealing with return of the Deposit shall
immediately become effective, Buyer shall have returned to it all other
documents Buyer either deposited with, or delivered to, Seller and thereupon
this Agreement shall be deemed null and void and neither Party shall have any
further obligation or liability under this Agreement, except as otherwise
expressly provided in this Agreement. If Buyer's cancellation is due to Seller's
breach hereunder, Seller shall immediately repay to Buyer all of the Deposit
theretofore made by Buyer and the balance of the provisions of the immediately
succeeding sentence shall also be in full force and effect without Buyer,
however, waiving any rights it may otherwise have at law or in equity on account
of Seller's breach hereunder.
6. Conditions to Obligation of Seller to Perform. The obligation of
Seller to sell the Assets at the Closing is subject to the satisfaction, on or
before the Closing Date, of all of the following conditions precedent, any or
all of which may be waived by Seller by delivery to Buyer of a written notice of
such waiver:
6.1 Representations and Warranties True on the Closing Date.
The representations and warranties of Buyer contained in this Agreement, in the
Exhibits or in any certificate, document or statement delivered pursuant to the
provisions of this Agreement shall be true and correct on and as of the Closing
Date as though such representations and warranties were made on and as of the
Closing Date.
6.2 Compliance with Agreement. Buyer shall have performed and
complied with all agreements, covenants, conditions and obligations required by
this Agreement to be performed or complied with by Buyer prior to or on the
Closing Date.
6.3 Opinion of Buyer's Counsel. Seller shall have received an
opinion of counsel for Buyer, addressed to Seller, in form and substance
reasonably satisfactory to Seller and its counsel to the effect that:
(A) Buyer is an Arizona corporation, duly organized,
validly existing, in good standing and has the requisite corporate power and
corporate authority to consummate the transactions contemplated by, and to
perform its obligations under, this Agreement. The execution and delivery of
this Agreement, the consummation of the transactions contemplated by, and the
performance of the obligations under, this Agreement have been duly authorized
by requisite corporate action on the part of Buyer.
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(B) This Agreement constitutes, and each other
agreement or instrument to be executed and delivered by Buyer pursuant to the
terms of this Agreement constitutes, a legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with their respective terms.
(C) Neither the execution and delivery of this
Agreement by Buyer nor the consummation of the transactions contemplated by, nor
the performance of Buyer's obligations under, this Agreement will: (a) violate
any provisions of the Articles or Bylaws of Buyer; (b) violate any statute,
code, ordinance, rule or regulation of the State of Arizona applicable to Buyer;
(c) to said counsel's knowledge, violate any judgment, order, writ, decree,
injunction or award of any court, arbitrator, mediator, government or
governmental agency or instrumentality to which Buyer is a party or by which
Buyer is bound; and (d) to said counsel's knowledge, violate, breach, conflict
with, constitute a default under, result in the termination of or accelerate the
performance required by, any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, deed of trust, license, lease, agreement or other
instrument or obligation to which Buyer is a party or by which Buyer is bound.
(D) To said counsel's knowledge, there is no pending
or threatened litigation or other legal proceeding against Buyer or affecting
the Assets or the operation or conduct of the Business or challenging the
validity or propriety of or seeking to enjoin or to set aside the transactions
contemplated by this Agreement, except as set forth in Xxxxx Brothers' public
filings, reports and/or announcements and in so-called "audit letters" from such
counsel to auditors of Xxxxx Brothers, the content of which letters need not be
disclosed to Seller.
(E) No consent, approval, authorization or other
action by, or filing with, any federal, state or local governmental agency or
instrumentality is required in connection with the execution and delivery by
Buyer of this Agreement, the consummation by Buyer of the transactions
contemplated by, or the performance of Buyer's obligations under, this
Agreement; provided, however, that counsel need not opine to securities issues
or to issues of Texas law, but only to Arizona law and Delaware corporate law.
6.4 Approval of Documentation. The form and substance of all
certificates, instruments, opinions and other documents delivered to Seller
under this Agreement and required to carry out this Agreement, shall be
reasonably approved by counsel for Seller.
6.5 Failure of Condition. Buyer agrees to use its best efforts
to satisfy the conditions set forth in this Section 6. If Buyer should be unable
to satisfy any condition or conditions set forth in this Section 6, Buyer shall
notify Seller, and Seller, by written notice Buyer to be given prior to the
Closing, shall either: (i) waive such condition or conditions and proceed to
close; or (ii) cancel this Agreement. If Seller elects to cancel this Agreement
pursuant to the foregoing provisions of this Section 6, the provisions of the
Production Agreement shall immediately become effective and the Deposit shall be
returned to Buyer pursuant to the performance of the Production Agreement, and
thereupon this Agreement shall be deemed null and void and neither Party shall
have any further obligation or liability under this Agreement, except as
otherwise expressly provided in this Agreement.
7. Representations and Warranties of Seller. Seller represents and
warrants to Buyer that, as of the date of this Agreement and as of the Closing
Date:
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7.1 Organization and Standing. Seller is a limited
partnership, duly organized and validly existing under the laws of the State of
Texas. Seller has the requisite partnership power and authority to own, lease
and operate its properties and is duly authorized and licensed to carry on the
Business in the places where and in the manner in which the Business is
presently being conducted. Attached hereto as Schedule 7.1 is a list of the
names and addresses of each person who, directly or indirectly, is a beneficial
owner of a general partnership interest, limited partnership interest or other
equity interest in Seller, along with a description of such person's beneficial
interest.
7.2 Capacity. Seller has full partnership power and Seller has
full legal capacity and authority to execute and deliver this Agreement, to
consummate the transactions contemplated by, and to perform their respective
obligations under this Agreement. The execution and delivery of, the
consummation of the transactions contemplated by, and the performance of
Seller's obligations under, this Agreement have been duly authorized by the
partners of Seller and no other partnership proceedings on the part of Seller
are necessary in connection therewith. This Agreement constitutes, and each
other agreement or instrument to be executed and delivered by Seller and the
Principals shall constitute, the valid and binding obligation of Seller and the
Principals, enforceable against Seller and the Principals, respectively, in
accordance with their respective terms.
7.3 Authority. Neither the execution and delivery of this
Agreement by Seller, the consummation by Seller and the Principals of the
transactions contemplated by, nor the performance of Seller's obligations under,
this Agreement will: (a) violate any provisions of the Partnership Agreement of
Seller; (b) violate any statute, code, ordinance, rule or regulation of any
jurisdiction applicable to Seller or the Assets; (c) violate any judgment,
order, writ, decree, injunction or award of any court, arbitrator, mediator,
government or governmental agency or instrumentality, which is binding upon
Seller or which would have an adverse effect on the Assets or the operation and
conduct of the Business; or (d) violate, breach, conflict with, constitute a
default under (whether with or without notice or lapse of time, or both), result
in termination of or accelerate the performance required by any of the terms,
conditions or provisions of any note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Seller
and/or one (1) or more of the Principals is a party or by which one (1) or more
of them, the Assets or the Business is bound.
7.4 Consents. No consent, approval, filing or registration
with or by any governmental agency or instrumentality or any other person or
entity is necessary in connection with the execution and delivery by Seller of
this Agreement, the consummation by Seller and the Principals of the
transactions contemplated by, or the performance of Seller's obligations under,
this Agreement.
7.5 Absence of Defaults. Except for certain Payables of Seller
which are past due (all of Seller's Payables being set forth on Schedule 7.5
hereto), Seller is not in default under, or in violation of, any provision of
its Partnership Agreement or under any indenture, mortgage, deed of trust, loan
agreement or similar debt instrument, or any other agreement to which Seller is
a party or by which Seller is bound or to which any of its properties is
subject, nor does there exist any fact, circumstance or event that has occurred
which, upon notice, lapse of time or both, would constitute such a default or
violation. Neither Seller nor the Assets are in violation of any statute, rule,
regulation or order of any court or Federal, state or local governmental agency
or instrumentality having jurisdiction over Seller, any of the Assets or any of
Seller's properties.
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7.6 Financial Statements. Within ten (10) days of the
Effective Date, Seller shall deliver to Buyer: (a) statements of Seller's income
and expenses for the twelve (12) months ended December 31, 1997, and the balance
sheets of Seller as of such date, prepared by Seller; (b) unaudited statements
of Seller's income and expenses for the six (6) month period ended June 30, 1998
and the balance sheet of Seller as of such date; (c) unaudited statements of
income and expenses for the monthly periods ended July 31, 1998 and August 31,
1998, each of items (b) and (c) immediately preceding being certified as being
accurate and complete by the Chief Financial Officer of Seller (collectively
referred to as "Financial Statements"); and (d) Seller shall give access to
Buyer or Buyer's representatives to all other financial information related to
Seller. The Financial Statements do not contain any untrue statement of material
fact or omit to state any material fact necessary to make the statements or
information in them not misleading. The Financial Statements have been prepared
in accordance with generally accepted accounting principles applied consistently
by Seller throughout the periods indicated and present fairly the financial
position and results of operations of Seller as of the dates and for the periods
represented. Seller is solvent from a balance sheet standpoint and, assuming
Closing and application of the Purchase Price in the manner set forth herein,
will not be rendered insolvent by the consummation of the transactions
contemplated by this Agreement.
7.7 Liabilities, Labor Issues, etc. Except as set forth in the
Financial Statements, Seller has no material liabilities or obligations of any
kind, type or nature, contingent or fixed, or accrued or to accrue. Without
limiting the foregoing, Seller is not a party to any collective bargaining
agreement, profit sharing or pension agreement or plan or any other item which,
under any circumstances, could bind either Buyer, any of the Assets or the
Business after the Closing. Seller has enjoyed and continues to enjoy good
relations with its labor force and Seller will cooperate with Buyer in all
reasonable manners to endeavor to cause such of Seller's existing employees, as
Buyer may request, to continue their employment with Buyer after the Closing.
Except as set forth on Schedule 7.7, Seller is not indebted or obligated to any
of its officers, directors or employees in any manner.
7.8 Capital Structure. The capital structure of Seller
consists solely of a one percent (1%) partnership interest held by its general
partner and a ninety nine percent (99%) partnership interest held by its limited
partners, all of which are held as set forth in the Financial Statements. All of
such units have been validly issued and are fully paid and non-assessable.
Seller has granted no other equity interests, options, rights or other items of
any kind, type or nature convertible into units to any other person or entity.
7.9 Absence of Specified Changes. From August 31, 1998, there
has not been any:
(A) Transaction by Seller except in the ordinary
course of business;
(B) Material adverse change in the Assets, the
financial condition, liabilities, business, operations or prospects of Seller;
(C) Destruction, damage to or loss of any of the
Assets (whether or not covered by insurance) that materially and adversely
affects the financial condition, business, operations or prospects of Seller or
the Business;
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(D) Loss of employees, suppliers or customers or
other event or condition of any character materially and adversely affecting the
Assets or the financial condition, business or prospects of Seller or the
Business, except for the Resignation (herein so called) of Xxxx Xxxxx ("Peeks")
during September, 1998, relating to which, or to his employment with Seller,
Peeks has no known claim against Seller;
(E) Change in accounting methods or practices
(including, without limitation, any change in depreciation or amortization
policies or rates) by Seller;
(F) Except for ordinary and normal depreciation taken
in accordance with generally accepted accounting principals, revaluation by
Seller of any of the Assets;
(G) Except as set forth on Schedule 7.9, increase in
the salary or other compensation payable, or to become payable, by Seller to any
of its officers, directors or employees, or any declaration, payment, commitment
or obligation of any kind for the payment by Seller of a bonus or other
additional salary or compensation to any such person;
(H) Acquisition or disposition of any of the Assets,
except in the ordinary course of business;
(I) Amendment or termination of any contract,
agreement or license to which Seller is a party, except in the ordinary course
of business;
(J) Loan by Seller to any person or entity, or
guaranty by Seller of any loan or any other obligation or liability of any kind,
type or nature of any third party;
(K) Mortgage, pledge, security interest, lien or
other encumbrance of any of the Assets;
(L) Waiver or release of any right or claim of
Seller, except in the ordinary course of business;
(M) Other event or condition of any character that
has or might have a materially adverse effect on the Assets or the financial
condition, business or prospects of Seller or the Business;
(N) Incurrence of any liability or obligation
(whether absolute, accrued or contingent) affecting Seller or the Business,
except in the ordinary course of business which, from August 31, 1998, through
Closing, shall not exceed, in the aggregate, $25,000.00, or as to any individual
liability or obligation, $25,000.00;
(O) Distribution on account of any class of stock or
other equity security, including without limitation, any dividend or redemption;
or
(P) Agreement by Seller to do any of the things
described in the preceding Subsections A. through O., inclusive.
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7.10 Litigation and Claims. Except as set forth on Schedule
7.10 attached, Seller is not a party to any, and there is no pending or
threatened, suit, action, arbitration, legal, administrative or other proceeding
or governmental investigation against Seller or affecting the Assets, the
operation and conduct of the Business or its prospects, or challenging the
validity or propriety of, or seeking to enjoin or to set aside the transactions
contemplated by, this Agreement. To the best of Seller's knowledge, there is no
basis for the assertion of any proceeding, claim, action or governmental
investigation. Seller is not a party to any judgment or decree, nor is Seller in
default with respect to any order, writ, injunction or decree of any Federal,
state, local or foreign court, department, agency or instrumentality which will,
or is likely to, affect the Assets, Seller's title to the Assets, the ability of
Seller to perform its obligations under this Agreement or the Business or
prospects of Seller.
7.11 Compliance with Laws. To the best of Seller's knowledge,
Seller is in compliance with, and is not in default under, any applicable
federal, state and local statutes, regulations, ordinances, zoning laws,
engineering standards, safety standards, environmental standards and any other
applicable law (collectively, "Laws") in connection with the ownership and use
of the Assets or the conduct and operation of the Business. Seller holds all
required franchises, permits, licenses, certificates and authorizations
(collectively, "Permits") necessary or appropriate in connection with the
ownership and use of the Assets and the conduct and operation of the Business
and all of said items are current and valid as of the Effective Date.
7.12 Inventory. The portion of the Inventory consisting of
food items ("Food Inventory") now, and on the Closing Date will, consists of
items of a quality usable and saleable in the usual and ordinary course of the
Business and does not and will not include obsolete or damaged items. Unless
otherwise requested by Buyer, all Inventory will be transferred to Buyer at
Closing.
7.13 Personal Property. All items of Personal Property
described in Exhibit C are in the possession of Seller and Seller has or will
have good and clear title to same. Seller will deliver to Buyer, immediately
after execution hereof, documentation acceptable to Buyer indicating that Seller
purchased all items of Personal Property and Intellectual Property (described
immediately below) from Prior Owners; such documentation shall include
appropriate and acceptable instruments of assignment to Seller. Seller
represents and warrants that D.T.M.E.S. has no claim or any ownership interest
in or to any Asset to be conveyed or transferred hereunder or, if it does,
Seller shall cause D.T.M.E.S. to execute all documents of conveyance set forth
herein as to any Asset in which D.T.M.E.S. claims or may claim to have an
interest. If requested by Buyer, Seller shall cause D.T.M.E.S. to execute
appropriate instruments of quit-claim as to all of the Assets at the Closing.
All items of Personal Property shall be conveyed "AS-IS" and "WHERE-IS" and
without any representation or warranty to as their physical condition including,
without limitation, ANY WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A
PARTICULAR PURPOSE. The foregoing shall not impair Seller's warranty of title
thereto.
7.14 Intellectual Property.
(A) Except for liens to be extinguished at Closing,
Seller owns and possesses all right, title and interest in and to the
Intellectual Property, free and clear of all liens, security interests and
encumbrances and no claim has been made or threatened by any third party against
Seller contesting the validity, enforceability, use or ownership of the
Intellectual Property;
15
(B) To the best of Seller's knowledge, there is no
infringement of, misappropriation by or conflict with any third party with
respect to the Intellectual Property (a "Third Party Infringement");
(C) To the best of Seller's knowledge, Seller has not
infringed, misappropriated or otherwise engaged in any conduct which conflicted
with any proprietary rights of any third parties in or to the Intellectual
Property, nor will any infringement, misappropriation or conflict occur as a
result of the continued operation of the Business as it is presently conducted
(a "Seller Infringement");
(D) Except as set forth in the Production Agreement,
Seller has not granted to any third party any license, right or other interest
in the Intellectual Property; and
(E) Seller believes it has, or will at Closing have,
taken commercially reasonable actions to protect its rights with respect to the
Intellectual Property, and will continue to preserve and protect its rights in
the Intellectual Property prior to the Closing, all as set forth on Schedule
7.14. Without limiting the generality of the foregoing, Seller has, or will at
Closing have, registered (collectively, "Registration") the Intellectual
Property including, without limitation, the Trademarks with the federal and
state authorities, and all of such Trademarks are believed, in good faith, by
Seller to be in good standing and not infringed, all as set forth on Schedule
7.14. At the Closing, Seller shall take all steps and execute all documents
reasonably requested or required by Buyer to transfer all of the Intellectual
Property to Buyer.
7.15 Title to Assets. Seller has good and marketable title to
the Assets, free and clear of all liens, pledges, charges, security interests,
encumbrances, claims, conditional sales agreements, licenses, covenants,
conditions, restrictions on transfer, or other restrictions or other rights of
third parties, except as disclosed in Exhibit C. All such liens and encumbrances
disclosed on Exhibit C shall be released on or before the Closing Date. No
partner, contractor or employee of Seller owns or has any interest, directly or
indirectly, in any of the Assets.
7.16 Suppliers and Customers. Exhibit H contains a list of
Seller's customers purchasing more than $10,000.00 from Seller in goods or
services in the last twelve (12) months during the twelve-month period
immediately preceding the Effective Date. Except as described in Exhibit H,
Seller has not made and shall not make any commitment to any such customer or to
any employee, agent or representative of such customer to provide any special
discount, allowance or other accommodation to the customer. Except as further
set forth in Exhibit H, Seller has no information and is aware of no facts
indicating that any of the suppliers or customers listed in Exhibit H intend to
cease doing business with Seller or to materially alter the amount of business
that they are presently doing with Seller. Seller shall, post-Closing, cooperate
with Buyer in effecting an orderly transition of the suppliers and customers to
Buyer and shall take all steps as are requested by Buyer (including, without
limitation, executing letters of recommendation, transfer and the like) in order
to effect such a transition if the Closing occurs.
7.17 Insurance Policies and Coverages. Exhibit I is a list of
and brief description of all insurance polices (including policy amounts) which
provide coverage to Seller, including without limitation, product liability,
general liability, fire insurance policies on or covering the Business and on or
covering each item of Inventory and Personal Property. To the best knowledge of
Seller, Seller's insurance coverages are adequate for the conduct of the
Business. Seller's product and general liability
16
coverages include both "premises and operations" coverage and "products and
completed operations" coverage, and such insurance is written on an "occurrence"
form policy. Seller has not received notice of termination of any policy and
there are no facts or conditions which, with notice or lapse of time, or both,
could result in a termination of any of the policies. The insurance policies
listed in Exhibit I will be continued in full force and effect until the Closing
Date. There has been no rating termination or refusal to issue insurance
involving any aspect of the Business, including without limitation, for products
liability in any manner pertaining to the Inventory and/or the items sold by the
Business.
7.18 Contractual Rights. Exhibit D is a list of all written
contracts to which Seller is a party. No contract, agreement or other obligation
of Seller shall bind or affect the Assets or Buyer after the Closing, unless
Buyer specifically assumes the same pursuant to the terms hereof. The parties
understand that Buyer does not intend to assume any Contracts with Seller
post-Closing, except as otherwise set forth herein.
7.19 Brokers. No broker or finder has acted for Seller in
connection with this Agreement or the transactions contemplated hereby and no
broker or finder is entitled to any brokerage commissions, finder's fee or other
compensation based on agreements or arrangements made by Seller.
7.20 Full Disclosure. The representations, warranties and
statements of Seller in this Agreement, in any Exhibit or in any certificate or
other document furnished by Seller to Buyer pursuant to, or in furtherance of,
this Agreement, are complete, current and accurate, do not contain or will not
contain any untrue statement of material fact, and do not omit or will not omit
to state any material fact necessary to make each representation, warranty or
statement accurate and not misleading in any material respect. Certificates or
documents furnished by either Principal to Seller in the context of this
transaction and which relate to Buyer shall be deemed to have been furnished by
Seller for purposes of this Section 7.20. Seller has, and prior to Closing shall
have, provided to Buyer, in writing, any information necessary to ensure that
the representations, warranties, or statements made to Buyer are complete,
current and accurate and are not misleading in any material respect.
7.21 Certain Definition. When used in this Section 7, the word
"material" (and grammatical variants thereof) shall mean and refer to any item,
act, omission or occurrence which, individually, or in the aggregate, would or
could lead to a claim against Seller or the Assets, or any of them, of greater
than $10,000.00.
8. Representations and Warranties of Buyer. Buyer represents and
warrants to Seller that, as of the date of this Agreement and as of the Closing
Date:
8.1 Organization and Standing. Xxxxx Brothers is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Buyer has the requisite corporate power and corporate
authority to own, lease and operate its properties and is duly authorized and
licensed to carry on the business in the places where and in the manner in which
such business is presently being conducted.
8.2 Capacity. Buyer has full corporate power, legal capacity
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated by, and the performance of the obligations under, this
Agreement. The execution and delivery of this Agreement, the consummation
17
of the transactions contemplated by, and the performance of the obligations
under, this Agreement have been duly authorized by the Board of Directors of
Buyer and no other corporate proceedings on the part of Buyer are necessary in
connection therewith. This Agreement constitutes, and each other agreement or
instrument to be executed and delivered by Buyer pursuant to this Agreement will
constitute, valid and binding obligations of the Buyer, enforceable against
Buyer in accordance with their respective terms.
8.3 Authority. Neither the execution and delivery of this
Agreement by Buyer, the consummation of the transactions contemplated by, nor
the performance of Buyer's obligations under, this Agreement will: (a) violate
any provision of the Articles of Incorporation or Bylaws of Buyer; (b) violate
any statute, code, ordinance, rule or regulation of any jurisdiction applicable
to Buyer or to its properties or assets; (c) violate any judgment, order, writ,
decree, injunction or award of any court, arbitrator, mediator, government or
governmental agency or instrumentality which is binding upon Buyer or which
would have an adverse effect on its properties or assets; or (d) violate,
breach, conflict with, constitute a default under or result in termination of or
accelerate the performance required by any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Buyer is a party or
by which Buyer or any of its properties or assets is bound.
8.4 Consents. No consents, approvals, filings or registrations
with or by any governmental agency or instrumentality or any other person or
entity are necessary in connection with the execution and delivery by Buyer of
this Agreement, the consummation by Buyer of the transactions contemplated by,
or the performance of Buyer's obligations under, this Agreement.
8.5 Brokers. Except for brokerage or consulting fees due
Everen Securities, Inc. of which Buyer has heretofore made Seller aware and
which Buyer shall defray in their entireties, no broker or finder has acted for
Buyer in connection with this Agreement or the transactions contemplated hereby
and no broker or finder is entitled to any brokerage commissions, finder's fee
or other compensation based on agreements or arrangements made by Buyer.
9. Covenants of Seller. Seller covenants and agrees as follows:
9.1 Right of Inspection. From the Effective Date through the
Closing Date, Seller shall permit Buyer and its authorized representatives to
have full access to Seller's properties during regular business hours, shall
make its employees and authorized representatives available to confer with Buyer
and its authorized representatives and shall make available to Buyer and its
authorized representatives all books, papers and records relating to the Assets,
the Business or the obligations and liabilities of Seller relating thereto which
may be reasonably requested by Buyer, including, but not limited to, all books
of account (including the general ledger), tax records, organizational
documents, contracts and agreements, filings with any regulatory authority, any
financial operating data and any other business information relating to Seller's
business activities or prospects as Buyer may from time to time request. No such
investigation by Buyer shall affect the representations, statements and
warranties of Seller and each such representation, statement and warranty shall
survive any such investigation.
9.2 Conduct of Business. From the Effective Date until the
Closing Date:
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(A) Except as provided below, Seller shall conduct
the Business and shall engage in transactions only in the usual and ordinary
course of business and in a commercially reasonable manner and will do so
diligently and in substantially the same manner as it has previously. Seller
will use all commercially reasonable efforts to preserve its business
organization intact and to preserve all present relationships of Seller with,
and the goodwill of, suppliers, customers, and others having a business
relationship with Seller. Seller further agrees to protect the Assets and to
maintain the Inventory and Personal Property in the ordinary course of business
until Closing.
(B) Seller will not, except in the usual and ordinary
course of business or as otherwise consented to or approved by Buyer in writing,
or as permitted or required by this Agreement: (a) institute any method of
manufacture, purchase, sale, lease, management, accounting or operation that
will vary from those methods used by Seller as of the Effective Date; (b) cancel
any existing policy of insurance; (c) enter into any new contract, commitment or
other transaction not in the usual and ordinary course of business and, if in
the usual and ordinary course of business, not in an amount exceeding $25,000.00
per transaction or $25,000.00 in the aggregate; (d) make any capital
expenditures in an amount exceeding $5,000.00 for any single item or $5,000.00
in the aggregate, or enter into any lease of capital equipment or property which
has a term exceeding thirty (30) days or under which the annual lease charge is
in excess of $2,000.00; (e) sell, dispose of or encumber any of the Assets; (f)
incur any new indebtedness or other liabilities other than in the usual and
ordinary course of business, and, if in the usual and ordinary course of
business, not in an amount exceeding $25,000.00 per transaction or $25,000.00 in
the aggregate; (g) waive or compromise any right or claim or cancel, without
full payment, any note, loan or other obligation owing to Seller; (h) modify,
amend, cancel, renew or terminate any Contract listed in Exhibits C and D; (i)
take any action or fail to take any action which would cause any of Seller's and
Principals' representations in this Agreement to be untrue as of the Closing
Date; or (j) enter into any agreement obligating Seller to do any of the
foregoing prohibited acts.
(C) Seller shall maintain its partnership existence
and powers and will not dissolve or liquidate.
(D) Seller will not do any act or omit to do any act
that will cause a breach or default of any contract, obligation, lease, license
or other agreement to which Seller is a party or which affects the Assets,
Seller's title to the Assets or the operation and conduct of the Business.
Notwithstanding the foregoing, immediately upon the execution and delivery
hereof, Seller shall, in accordance with the provisions of Exhibit J hereto,
transfer all of Seller's production requirements to Buyer. Said Production
requirements shall continue to be serviced by Buyer until either the Closing or
the failure of a condition to Closing hereunder, whereupon, except for the
business of Xxxxx (as herein defined as respects Deposits to be returned to
Buyer), Buyer shall reasonably cooperate with Seller to retransfer said
production business to Seller.
9.3 Local Law Issues. Seller represents that Texas has
repealed its so-called "bulk transfer act" and therefore no compliance is
necessary therewith. Seller also believes that no sales, transaction privilege
or similar tax will be due with regard to the transactions contemplated hereby,
but if any such tax is payable, Seller shall be entirely responsible for same
and Buyer shall have no responsibility therefor.
19
Seller also represents to Buyer that Seller does not
pay any tax at the entity level, except for ad valorem real and personal
property taxes including, without limitation, income or transaction privilege or
sales taxes and therefore no liens or obligations relating to said taxes will
bind or effect the Assets or Buyer post-Closing. Seller will, at or prior to
Closing, pay all personal property taxes relating to any of the Assets
transferred hereby and exhibit to Buyer reasonable evidence of receipts
therefor. Seller shall be responsible, and shall timely pay and exhibit receipts
to Buyer, for all 1998 personal property taxes relating to the Assets.
9.4 Consents. Seller shall obtain any and all necessary
consents, waivers, permits, approvals and authorizations of, and complete any
and all filings or registrations with, all Federal, state and local governmental
bodies which are necessary to consummate the transactions contemplated by this
Agreement or to permit Buyer to continue the Business after the Closing Date.
Seller shall obtain any and all consents, waivers, approvals or authorizations
of all other persons or entities as may be required for the sale, assignment and
transfer to Buyer of the Assets.
9.5 Cooperation. Seller agrees to take, or cause to be taken,
all action and to do, or cause to be done, all things necessary, proper or
advisable to consummate the transactions contemplated by, and to perform its
obligations under, this Agreement.
9.6 Disclosure of Changes. Seller will promptly notify Buyer
in writing of: (a) the commencement or threat of any threatened lawsuit or claim
against Seller or affecting the Assets, the operation and conduct of the
Business or its prospects or challenging the validity or propriety of, or
seeking to enjoin or to set aside the transactions contemplated by, this
Agreement; (b) any adverse change in the financial condition of Seller or the
Business; or (c) any change in any representations or warranties of Seller set
forth in this Agreement or in any Exhibit, certificate or other documents
delivered to Buyer by Seller pursuant to this Agreement.
9.7 Restrictive Covenants.
9.7.1 Restricted Activities. Principals and Seller
covenant and agree as follows:
(A) For a period of five (5) years from and
after: i) the Closing Date, as to Seller; and, ii) their respective terminations
of employment, as to the Principals (collectively, the "Time Limit"), neither
the Principals nor Seller will compete with the Business, or directly or
indirectly own any interest in, operate, manage or control in any manner any
entity which competes with the Business in the State of Texas. The foregoing
provision, however, shall not prohibit Seller and/or Principals from investing
in securities of any corporation whose securities are listed on a national
securities exchange or traded in the over the counter market if Seller and the
Principals shall collectively be the owner(s), beneficially or of record, of
less than one percent (1%) of any class of the stock of such corporation.
(B) Neither the Principals nor Seller shall,
for the duration of the Time Limit: (a) directly or indirectly solicit or
service in any way, on behalf of themselves or on behalf of or in conjunction
with others, any customer, distributor, manufacturer's representative or client
or in any other way seek to induce the discontinuance of any business
relationship between the Business and said customers or clients; or (b) directly
or indirectly solicit, on behalf of themselves or on behalf of or in
20
conjunction with others, any employee or supplier of Buyer to terminate his or
her employment or other relationship with Buyer.
(C) Neither the Principals nor Seller will,
for the duration of the Time Limit, without authorization of Buyer, use for
themselves or for any person or corporation or other entity, or disclose to any
entity which competes with the Business, any confidential information concerning
the suppliers and customers of the Business. Confidential information shall mean
information available to Seller and/or the Principals as a consequence of their
respective ownership, use or control of the Assets and the operation of the
Business and not otherwise generally known in the industry.
9.7.2 Reasonable Restrictions. Seller and the
Principals acknowledge and agree that the duration and geographical limits of
the restrictions set forth in this Section 9.7 have been reviewed by Seller's
and Principals' legal counsel and specifically discussed and negotiated and are
reasonable in view of all the facts and circumstances known to Seller and
Principals.
9.7.3 Material Minimum. Seller and the Principals
acknowledge and agree that the duration of time and geographical restrictions
set forth in this Section 9.7 are reasonably necessary to protect the Assets and
interests transferred pursuant to this Agreement, that any violation of such
restrictions would cause Buyer substantial injury and that Buyer would not have
entered into this Agreement without Seller's and the Principals' agreements to
be bound by such restrictions.
9.7.4 Enforcement of Restrictions. Seller and the
Principals further acknowledge and agree that an action for damages would not
provide full and adequate compensation in the event of a violation of such
restrictions. Therefore, in the event of any violation of such restrictions by
Seller and/or the Principals, Buyer shall be entitled, in addition to any other
remedy, to preliminary and permanent injunctive relief.
9.7.5 Severability of Initial Provisions. If a court
in any jurisdiction should conclude that the foregoing covenants are
unenforceable according to their terms either because of their duration or the
geographic area covered, the Parties agree that a court of competent
jurisdiction shall reduce such duration or geographic area, insofar as that
jurisdiction only is concerned, so that the resulting duration and geographic
area shall be the maximum that such court shall conclude is enforceable in that
jurisdiction, which reduction shall be performed as follows: in the case of
duration, the duration shall be reduced by one (1) month at a time until it
shall be the maximum enforceable duration; and in the case of geographic area,
such area shall be reduced by eliminating individual counties within states one
(1) at a time therefrom until such area shall be the maximum enforceable
geographical coverage. The Parties acknowledge that the remedies of specific
performance and/or injunctive relief shall be available and proper in the event
of the actual or imminent refusal or failure of Seller or the Principals to
perform their respective obligations under this Agreement.
9.8 Information. Seller shall deliver the following materials
to Buyer not less than five (5) days prior to the Closing Date (and, if prior to
the Closing Date Seller receives or discovers any additional materials required
to be delivered to Buyer, as soon as reasonably possible after such receipt or
discovery):
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(A) Copies of all contracts and leases set forth in
Exhibits C and D, together with all modifications and amendments thereto;
(B) Copies of all security interests, mortgages,
pledge agreements, conditional sales contracts, financing statements or other
documents or instruments evidencing any security interests, liens, charges,
claims, encumbrances or other interest in any part of the Assets, together with
a listing of the current amount of indebtedness secured by each such document or
instrument;
(C) Copies of all relevant court, administrative,
arbitral and governmental papers and all other documents relating to the matters
set forth in Section 6.10, if any;
(D) Copies of all insurance policies listed in
Exhibit I; and
(E) Copies of such other materials as may be
reasonably requested by Buyer.
9.9 Securities Issues. Each of Seller, Kohl and Xxxxxx hereby
acknowledges that Buyer will be relying upon exemptions from the registration
requirements of the Securities Act of 1933, as amended (the "1933 Act"), and The
Securities Act of 1957 of Texas (the "Texas Act") in connection with the
issuance of the Stock to Seller. Each of Seller, Kohl and Xxxxxx further
acknowledges that the availability of the exemption under the Texas Act is
dependent upon a number of factors, including, without limitation: the receipt
by Seller of certain information regarding Buyer; whether Seller is a
"sophisticated investor" (as such term is used in the rules promulgated under
the Texas Act); and the imposition on Seller of certain restrictions on the
resale or transfer of the Stock. In connection with establishing the
applicability of the above-mentioned exemptions, each of Seller, Kohl and Xxxxxx
represents and warrants to, and agrees with, Buyer as follows:
(A) The total value of the Stock will not exceed
twenty percent (20%) of Seller's net worth at the time of issuance of the Stock
by Buyer to Seller. Seller has no need for liquidity in the Stock and Seller can
afford to lose its entire investment in the Stock.
(B) The principals of Seller have such knowledge of
finance, securities and/or investments, generally, as well as experience and
skill in investments based upon actual participation, that they are capable of
evaluating the merits and risks of the issuance of the Stock to Seller, and such
persons do not require a purchaser representative to assist in any such
evaluation.
(C) The Stock is being acquired by Seller for its own
account for purposes of investment and not "with a view to" the "distribution"
thereof, as such terms are used in the 1933 Act, and the rules and regulations
thereunder;
(D) Seller acknowledges that the Stock constitutes
"restricted securities" under federal and state securities laws insofar as it
has not been registered under the 1933 Act or the securities laws of any other
jurisdiction, that it may not be resold or transferred without compliance with
the registration or qualification provisions of the 1933 Act or applicable
federal and state securities laws or an opinion of counsel that an exemption
from such registration and qualification requirements is available. Each of
Seller, Kohl and Xxxxxx is familiar with Rule 144 promulgated under the 1933
Act, as presently in effect, and the resale limitations imposed thereby and by
the 1933 Act;
22
(E) Seller, Kohl and Xxxxxx acknowledge that any
certificate or certificates representing the Stock that are issued by Buyer will
bear the following legend or a legend similar thereto:
THE STOCK REPRESENTED BY THIS CERTIFICATE HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR UNDER ANY STATE SECURITIES LAWS. SUCH
STOCK HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY
AND NOT WITH A VIEW TO THE DISTRIBUTION THEREOF. SUCH
STOCK MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT AND
COMPLIANCE WITH THE REQUIREMENTS OF ANY APPLICABLE
STATE SECURITIES LAWS OR AN OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION THAT SUCH
REGISTRATION AND/OR COMPLIANCE IS NOT REQUIRED;
(F) Each of Seller, Kohl and Xxxxxx has the requisite
knowledge and experience in financial and business matters, including
investments of this type, to be capable of evaluating the merits and risks of an
investment in the Stock and of making an informed investment decision with
respect thereto. Seller is able to: (i) bear the economic risk of its investment
in the Stock; (ii) hold the Stock for an indefinite period of time; and (iii)
afford a complete loss of its investment;
(G) Seller has received from Buyer, and each of Kohl
and Xxxxxx has reviewed, recent reports filed by Buyer with the Securities and
Exchange Commission (the "Commission") pursuant to the Securities Exchange Act
of 1934, as amended, recent press releases issued by Buyer and a Registration
Statement on Form S-3 (the "Form S-3") recently filed by Buyer with the
Commission pursuant to the 1933 Act (including, without limitation, the "Risk
Factors" sections contained in Buyer's Annual Report on Form 10-KSB for the
fiscal year ended December 31, 1998 and the Form S-3) (such recent reports,
press releases and the Form S-3 being hereinafter collectively referred to as
the "Disclosure Documents"), and has reviewed such additional documentation and
information and has conducted such research regarding Buyer as each such person
has deemed prudent and necessary in connection with the acquisition of a portion
of the Stock by Seller. Based upon such review and research, each such person
believes that he or she is fully aware of the current condition (financial and
otherwise) and prospects of Buyer. Seller, Kohl and Xxxxxx have obtained
sufficient information to evaluate the merits and risks of Seller's acquisition
of the Stock and to make an informed investment decision; and
(H) All documents, records and other information
relating to Buyer that have been requested by Seller, Kohl and Xxxxxx and that
are considered by such persons to be material in making a decision to acquire
the Stock, have been delivered or made available to them, and Seller's, Kohl's
and Xxxxxx'x investment decision is based upon his or its own investigation and
analysis and not the representations or inducements of Buyer or any party or
parties acting on its behalf.
Prior to the Closing date: (i) Seller shall deliver to each general and limited
partner of Seller a copy of the Disclosure Documents delivered by Buyer to
Seller; and (ii) Seller shall obtain and deliver to Buyer a
23
Certificate from Seller and a Purchaser Representative Certificate in the
respective forms attached hereto as Exhibit 9.9.
Seller, Kohl and Xxxxxx understand that Buyer will rely on the representations
and warranties contained in this Section 9.9 and in the Certificates delivered
to Buyer pursuant to the previous paragraph in connection with the issuance of
the Stock.
Seller shall obtain from Prior Owners, as a condition to Closing, similar
statements and/or certificates as required by securities counsel for Buyer.
9.10 Payables. Seller agrees to deliver to Buyer on, or within
thirty (30) days after, the Closing Date an itemization of all Payables which
Seller is paying with the Deposit and with the Cash Payment and copies of
cancelled checks or other evidence reasonably satisfactory to Buyer of such
payments.
10. Closing Date. The "Closing Date" or "Closing" shall occur on or
prior to November 15, 1998 (or earlier if Buyer so notifies Seller in writing at
least two (2) business days prior to the accelerated Closing Date) and shall
take place either at Buyer's principal place of business in Goodyear, Arizona,
or at the principal offices of Buyer's or Lender's counsel in Phoenix, Arizona,
or at such other time and place as the Parties may agree in writing.
11. Obligations at Closing.
11.1 Seller's Obligations at Closing. At the Closing, Seller
shall deliver or cause to be delivered to Buyer the following:
(A) All instruments of transfer (collectively, the
"Assignment Documents"), properly executed by Seller and acknowledged, including
but not limited to a xxxx of sale, deeds and assignments, transferring and
assigning to Buyer all of Seller's right, title and interest in and to the
Assets, including, but not necessarily limited to, the following:
(1) General Warranty Xxxx of Sale in a form
substantially identical to Exhibit K; and
(2) General Warranty Assignment in a form
substantially identical to Exhibit L;
(B) All instruments evidencing any and all consents,
waivers, permits, approvals, authorizations, filings or registrations as
provided for in Sections 5.9, 7.2, 7.3 and 7.4;
(C) The opinion of Seller's counsel as provided in
Section 5.7;
(D) Certified resolutions of Seller's partners
authorizing the execution and performance of this Agreement and all actions
taken by Seller in furtherance of this Agreement pursuant to Section 7.2;
24
(E) The certificate, in the form of Exhibit M
("Seller's Closing Certificate"), executed by Seller, dated as of the Closing
Date, certifying that the representations and warranties of Seller in this
Agreement are true and correct on the Closing Date, as though each such
representation and warranty had been made on the Closing Date; and
(F) The list and evidence of payment as provided in
Section 9.10, which may be delivered post-Closing in accordance with Section
9.10.
11.2 Buyer's Obligations at Closing. On the Closing Date,
Buyer shall deliver, or cause to be delivered, the following:
(A) The payment to be delivered to the Prior Owners
as provided in Section 3.1.3(1);
(B) All cash to be applied to Payables and to repay
the SBA Loan as contemplated hereby;
(C) The Stock to be delivered to the Prior Owners as
provided in Section 3.1.3(2);
(D) The Stock to be delivered as provided in Section
3.1.4; a portion of said Stock shall be delivered into the Escrow (as herein
defined);
(E) The opinion of Buyer's counsel as provided in
Section 6.3;
(F) Two (2) original counterparts of each of the
Employment Agreements executed by Buyer, one (1) counterpart of each Employment
Agreement to be delivered to the Principal which is a party to such Employment
Agreement;
(G) Certified resolutions of Buyer's Board of
Directors authorizing the execution and performance of this Agreement and the
execution and delivery of the Employment Agreements contemplated by this
Agreement and all actions taken by Buyer in furtherance of this Agreement
pursuant to Section 8.3; and
(H) A certificate, in the form of Exhibit N attached,
executed by the President and Secretary of Buyer, dated as of the Closing Date,
certifying that the representations and warranties of Buyer in this Agreement
are true and correct on the Closing Date, as though each such representation and
warranty had been made on the Closing Date.
11.3 Obligations of Principals; Limited Warranty as to Claims.
On the Closing Date, the Principals shall deliver or cause to be delivered to
Buyer two (2) original counterparts of each Employment Agreement, each executed
by the Principal who is a party to such Employment Agreement, with one (1)
counterpart of each Employment Agreement to be delivered to Buyer.
The Principals represent and warrant to Buyer that the Principals have no claim
against Seller or any of the Assets, nor do they hold any interest therein
except as specifically disclosed herein or as may arise
25
pursuant to this Agreement, the Employment Agreements or the Production
Agreement and, if requested by Buyer, the Principals will execute appropriate
releases and quit-claim instruments at Closing to confirm the foregoing.
12. Obligations After Closing.
12.1 Change of Corporate Name; License. Seller agrees that
immediately after the Closing Date it will take all action required to change
its corporate name to eliminate the term "Tejas Snacks". Seller shall also, and
do hereby, agree that for an unlimited period after the Closing Date, Buyer or
its successors and assigns shall have an exclusive license to utilize the term
"Tejas Snacks" (or any reasonable variant of such name) in connection with the
distribution and sale of potato chip and/or other snack food products now or
heretofore distributed by Seller shall, at the request of Buyer, execute all
reasonable documentation necessary to evidence the foregoing license, which
shall be deemed fully-paid and irrevocable upon consummation of the transactions
contemplated by this Agreement
12.2 Indemnification.
(A) SELLER AGREES TO PAY, DEFEND, INDEMNIFY AND HOLD
BUYER HARMLESS FOR, FROM, OF AND AGAINST ANY AND ALL CLAIMS, LOSSES, EXPENSES,
DAMAGES, OBLIGATIONS, DEFICIENCIES OR LIABILITIES OF ANY KIND, TYPE OR NATURE,
INCLUDING, WITHOUT LIMITATION, COSTS OF INVESTIGATION, INTEREST, PENALTIES,
REASONABLE ATTORNEYS' AND EXPERT WITNESS' FEES AND ANY AND ALL COSTS, EXPENSES
AND FEES INCIDENT TO ANY SUIT, ACTION OR PROCEEDING INCURRED OR SUSTAINED BY
BUYER WHICH ARISE OUT OF, RESULT FROM OR ARE IN ANY WAY RELATED TO: (A) SELLER'S
BREACH OF ANY REPRESENTATION, WARRANTY OR COVENANT CONTAINED IN THIS AGREEMENT
OR IN ANY OTHER INSTRUMENT OR DOCUMENT EXECUTED AND DELIVERED BY SELLER IN
CONNECTION WITH THIS AGREEMENT; (B) ANY AND ALL LIABILITIES OR OBLIGATIONS
RELATING TO THE OPERATION OF THE BUSINESS AND/OR THE ASSETS ON OR PRIOR TO THE
CLOSING DATE, INCLUDING, WITHOUT LIMITATION, ALL TAX LIABILITIES, LIABILITIES
FOR BREACH OF CONTRACT, PRODUCT LIABILITIES, LIABILITIES ARISING IN TORT,
LIABILITIES FOR MATERIALS SOLD OR SERVICES RENDERED AND LIABILITIES TO ANY
CREDITORS; (C) ANY AND ALL LIABILITIES OR OBLIGATIONS, INCLUDING CLAIMS BY THIRD
PARTIES, RELATING TO THE NON-COMPLIANCE OF SELLER, ITS BUSINESS OR ANY OF THE
ASSETS WITH, OR ANY DEFAULT UNDER, LAWS; (D) THE FAILURE OF SELLER OR THE ASSETS
TO HOLD OR HAVE AVAILABLE ALL NECESSARY PERMITS; (E) THE EXISTENCE OF A THIRD
PARTY INFRINGEMENT OR A SELLER INFRINGEMENT; (F) ANY CLAIMS MADE BY PEEKS
ARISING OUT OF HIS EMPLOYMENT OR THE RESIGNATION; (G) ANY FAILURE TO EFFECT ANY
REGISTRATION; (H) A PENDING INVESTIGATION BY THE TEXAS ATTORNEY GENERAL'S OFFICE
(OR OTHER STATE OR LOCAL BODY) RELATING TO THE PRIOR USE OF ALLEGEDLY IMPROPER
PACKAGING OR MARKING MATERIALS RESPECTING PRODUCTS HERETOFORE SOLD OR DELIVERED
BY SELLER OR ITS PREDECESSOR; OR (I) ANY CLAIM BY ANY THIRD PARTY CREDITOR OF
SELLER, OR ANY TRUSTEE IN BANKRUPTCY OF SELLER OR SIMILAR PERSON OR ENTITY MADE
AGAINST THE ASSETS OR BUYER ARISING OUT OF OR IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED HEREBY, WHETHER OR NOT ANY OF THE FOREGOING ITEMS SET
FORTH IN
26
CLAUSES (C), (D), (E), (F), (G) OR (H) IMMEDIATELY ABOVE ARE KNOWN TO SELLER AT
CLOSING.
(B) BUYER AGREES TO PAY, DEFEND, INDEMNIFY AND HOLD
SELLER HARMLESS FOR, FROM, OF AND AGAINST ANY AND ALL CLAIMS, LOSSES, EXPENSES,
DAMAGES, OBLIGATIONS, DEFICIENCIES OR LIABILITIES OF ANY KIND, TYPE OR NATURE,
INCLUDING, WITHOUT LIMITATION, COSTS OF INVESTIGATION, INTEREST, PENALTIES,
REASONABLE ATTORNEYS' AND EXPERT WITNESS' FEES AND ANY AND ALL COSTS, EXPENSES
AND FEES INCIDENT TO ANY SUIT, ACTION OR PROCEEDING INCURRED OR SUSTAINED BY
SELLER WHICH ARISE OUT OF, RESULT FROM OR ARE IN ANY WAY RELATED TO: (A) BUYER'S
BREACH OF ANY REPRESENTATION, WARRANTY OR COVENANT CONTAINED IN THIS AGREEMENT
OR IN ANY OTHER INSTRUMENT OR DOCUMENT EXECUTED AND DELIVERED BY BUYER IN
CONNECTION WITH THIS AGREEMENT; OR (B) ANY AND ALL LIABILITIES OR OBLIGATIONS
RELATING TO THE OPERATION OF THE BUSINESS AND/OR THE ASSETS AFTER THE CLOSING
DATE, INCLUDING, WITHOUT LIMITATION, ALL TAX LIABILITIES, LIABILITIES FOR BREACH
OF CONTRACT, PRODUCT LIABILITIES, LIABILITIES ARISING IN TORT LIABILITIES FOR
MATERIALS SOLD OR SERVICES RENDERED AND LIABILITIES TO ANY CREDITORS.
(C) Buyer and Seller agree that, upon receipt by
either Party of a third-party claim in respect of which indemnity may be sought
under this Section 12.2, said party (the "Claimant") shall give written notice
within thirty (30) days of such claim (the "Notice of Claim") to the party from
whom indemnification may be sought hereunder (the "Indemnitor"). No
indemnification under this Section 12.2 shall be available to any party who
fails to give the required Notice of Claim within thirty (30) days if the party
to whom such notice should have been given was unaware of the claim and was
prejudiced by the failure to receive the Notice of Claim in a timely manner. The
Indemnitor shall be entitled at its own expense to participate in the defense of
any claim or action against the Claimant. The Indemnitor shall have the right to
assume the entire defense of such claim, provided that: (a) Indemnitor gives
written notice of its desire to defend such claim (the "Notice of Defense") to
the Claimant within fifteen (15) days after Indemnitor's receipt of the Notice
of Claim; (b) Indemnitor's defense of such claim shall be without cost of
Claimant or prejudice to Claimant's rights under this Section 12.2; (c) counsel
chosen by Indemnitor to defend such claim shall be reasonably acceptable to
Claimant; (d) the Indemnitor shall bear all costs and expenses in connection
with the defense of such claim; (e) Claimant shall have the right, at Claimant's
expense, to have Claimant's counsel participate in the defense of such claim;
and (f) Claimant shall have the right to receive periodic reports from
Indemnitor and Indemnitor's counsel with respect to the status and details of
the defense of such claim and shall have the right to make direct inquiries to
Indemnitor's counsel in this regard. Solely for the purpose of subparagraph (f)
above, Indemnitor shall waive its attorney-client privilege.
12.3 [RESERVED]
12.4 Office Space. Buyer shall have the right, for a
reasonable time post-Closing, to utilize, on a rent-free basis, existing office
facilities and areas within the building currently occupied by a majority of the
business of Seller. Buyer and Seller understand that the Principals will utilize
this office space, rent free, until substitute office space can be obtained and
built out on lease terms satisfactory to Buyer.
27
12.5 Transition. Seller shall use commercially reasonable
efforts to maintain the goodwill of the Seller's suppliers, employees,
contractors, customers and Business, and shall otherwise cooperate with Buyer to
effectuate a smooth and orderly transition in the operation and conduct of the
Business following the Closing Date. Without limiting the foregoing, Buyer is
immediately permitted to interview Seller's employees and solicit employment
post-Closing. If at least fifty percent (50%) of the employees of Seller which
are offered post-Closing employment by Buyer do not accept, Buyer shall have the
option of cancelling this Agreement due to a failure of a condition precedent.
28
13. Remedies Prior to or on Closing.
13.1 Remedies Prior to or on Closing.
13.1.1 Remedies of Buyer Prior to or on Closing. In
the event of any breach or default of any warranty, covenant, agreement,
condition or other obligation of Seller under this Agreement, Buyer may at its
option, and without prejudice to any other rights or remedies provided under
this Agreement for any such breach or default, terminate this Agreement by
delivering written notice of termination to Seller on or before the Closing
Date. The notice shall specify with particularity the breach or default on which
the notice is based. Notwithstanding the foregoing, the Parties acknowledge that
the Assets are unique and that, in the event of a breach or default by Seller
under this Agreement, it would be extremely impracticable to measure monetary
damages and such damages would be an inadequate remedy for Buyer. Therefore, in
the event of any such breach or default, Buyer may, at its option, xxx for
specific performance. Buyer's other option in the event of breach by Seller
under this Agreement shall be to bring an action against Seller to recover
Buyer's reasonable attorneys' fees, together with all other expenses incurred,
expended and/or paid by Buyer in connection with the transactions contemplated
by this Agreement, including, without limitation, financing costs, investigation
costs, travel costs, reimbursement for experts' fees and other fees. Without
limiting the generality of the foregoing, if Seller refuses to close and Buyer
is ready, willing and able to close and has fulfilled all conditions hereunder,
Seller shall pay to Buyer the sum of Seven Hundred Fifty Thousand and No/100
Dollars ($750,000.00) as and for liquidated damages and not as a penalty and as
a so-called "break up fee". Buyer and Seller acknowledge that the foregoing is a
reasonable liquidated damage in that Buyer's damages at the time and place of
breach would be difficult, because of their nature of future profitability, to
ascertain with precision, but that the foregoing represents a reasonable
liquidated damage in the estimation of the Parties at this date. Notwithstanding
the foregoing, it is specifically agreed that the liquidated damage remedy set
forth above is declared to be severable specifically from the balance of this
Agreement.
13.1.2 Remedies of Seller Prior to or on Closing. In
the event of any breach or default of any warranty, covenant, agreement,
condition or other obligation of Buyer under this Agreement, Seller's sole and
exclusive remedy shall be to terminate this Agreement by delivering written
notice of termination to Buyer on or before the Closing Date. The notice shall
specify with particularity the breach or default on which the notice is based.
Further, in the event of such a breach by Buyer, Seller shall be entitled to
retain the Deposit (together with interest accrued thereon) as and for
liquidated damages (and not as a penalty) arising out of Buyer's breach.
13.1.3 Termination. In the event of termination of
this Agreement by either Buyer or Seller as provided in this Section 13.1, this
Agreement shall become null and void, other than Section 12.2 above, which shall
remain in full force and effect. Upon termination, Buyer shall deliver to Seller
and Seller shall deliver to Buyer any and all documentation provided by each
Party to the other pursuant to the terms of this Agreement.
13.2 Remedies Subsequent to Closing. In the event of any
breach or default of any warranty, covenant, agreement, condition or other
obligation by any Party post-Closing, the non-defaulting Party may pursue
whatever rights and remedies are available to such Party at law or in equity,
including without limitation, the rights and remedies provided in this
Agreement.
29
14. Nondisclosure. No Party will disclose the existence or contents of
this Agreement or any of the discussions or communications regarding the
transactions contemplated by this Agreement to any third persons without the
prior written consent of the other Party or Parties, except as required by
applicable law; provided, however, that disclosures shall be permitted without
the prior written consent of the other Party or Parties: (i) to Seller's and
Buyer's respective partners, directors, shareholders, key employees, attorneys,
accountants and lenders; (ii) to agents and advisors of Seller or Buyer who may
be retained to render services in connection with the transactions contemplated
by this Agreement; and (iii) to all persons from whom consents, approvals or
amendments are required for the consummation of the transactions contemplated by
this Agreement. Notwithstanding the foregoing, Seller recognizes the "public"
status of Buyer and any public filings and/or statements made or caused to be
made by Buyer shall be an exception to the foregoing.
15. General Provisions.
15.1 Publicity. All notices to third parties and all other
publicity concerning the transactions contemplated by this Agreement shall be
jointly planned and coordinated by and between Buyer and Seller. Neither Buyer
nor Seller shall act unilaterally in this regard without the prior written
approval of the other Party; however, this approval shall not be unreasonably
withheld or delayed. Notwithstanding the foregoing, Seller recognizes the
"public" status of Buyer and any public filings and/or statements made or caused
to be made by Buyer shall be an exception to the foregoing.
15.2 Expenses. Except as otherwise specifically provided, each
Party shall be responsible for its own fees, costs and other expenses incurred
in negotiating and preparing, and in closing and carrying out the transactions
contemplated by, this Agreement.
15.3 Survival of Representations, Warranties and Covenants.
The respective representations, warranties and covenants of Buyer and Seller
made in this Agreement or in any certificate or other document delivered
pursuant to this Agreement, including without limitation the obligations of
indemnity under this Agreement, shall survive the Closing Date and the
consummation of the transactions contemplated by this Agreement, until the
applicable statute of limitations has run, notwithstanding any examination made
by or for the Party to whom such representations, warranties or covenants were
made, the knowledge of any officers, directors, shareholders, employees or
agents of the Party, or the acceptance of any certificate or opinion.
15.4 Notices. All notices, requests, demands and other
communications required under this Agreement shall be in writing and shall be
deemed duly given and received: (i) if personally delivered, on the date of
delivery, (ii) if mailed, three (3) days after deposit in the United States
Mail, registered or certified, return receipt requested, postage prepaid and
addressed as provided below, (iii) if by a courier delivery service providing
overnight or "next-day" delivery, on the next business day after deposit with
such service, addressed as follows:
30
If to Seller: Tejas Snacks, L.P.
Attn: Xx. Xxx Xxxxxx
Xxxxx 0, Xxx 00X
Xxxxxxxxxx, Xxxxx 00000
With copy to: Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Attn: Xxxxxxx X. Xxxxxx, Esq.
0000 Xxxx Xxx Xxxx., #000
Xxxxxxx, Xxxxx 00000
If to Buyer: Xxxxx Brothers, Inc.
Attn: Xx. Xxxx Xxxxx
0000 Xxxxx Xx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
With copy to: Mariscal, Weeks, XxXxxxxx & Xxxxxxxxxxx, P.A.
Attn: Xxxx X. Xxxxx, Esq.
0000 Xxxxx Xxxxxxx Xxx., #000
Xxxxxxx, Xxxxxxx 00000
Any Party may change its above-designated address by giving the other Party
written notice of such change in the manner set forth herein.
15.5 Headings. Headings contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit, extend or
describe the scope of this Agreement or any of its provisions.
15.6 Entire Agreement; Modification. Except as set forth
below, this Agreement constitutes the entire agreement among the Parties and
supersedes all prior and contemporaneous agreements and undertakings of the
Parties with respect to its subject matter, including, but not limited to, that
certain Letter of Intent between Buyer and Seller, dated September 16, 1998.
Notwithstanding the foregoing, that certain Production Agreement (herein so
called), between Buyer and Seller, dated September 16, 1998, shall survive any
termination of this Agreement and is specifically deemed not to be integrated
herein. Said Production Agreement shall remain a fully binding agreement between
the parties in accordance with its terms. Said Production Agreement deals with,
among other things, Buyer distributing certain snack food product to Xxxxx
Distributing ("Xxxxx") in recoupment of certain Deposit monies which may be
repayable from Seller to Buyer hereunder if the transactions contemplated hereby
do not close. No supplement, modification or amendment of this Agreement shall
be binding and enforceable unless executed in writing by the Parties.
15.7 Waiver. No waiver of any of the provisions of this
Agreement shall be deemed, or shall constitute, a waiver of any other provision
of this Agreement (whether or not similar) nor shall such waiver constitute a
continuing waiver, and no waiver shall be binding unless executed in writing by
the Party making the waiver.
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15.8 Exhibits and Recitals. The Exhibits attached to this
Agreement and the Recitals set forth above are hereby incorporated into and made
a part of this Agreement.
15.9 Counterparts; Facsimile Signatures. This Agreement may be
executed in several counterparts, and all so executed shall constitute one
agreement, binding on all of the Parties. The Parties agree that this Agreement
may be transmitted between them via facsimile. The Parties intend that the faxed
signatures constitute original signatures and that a faxed agreement containing
the signatures (original or faxed) of all the Parties is binding upon the
Parties.
15.10 Governing Law; Jurisdiction. Except as expressly
provided herein, this Agreement shall be construed in accordance with, and
governed by, the laws of the State of Arizona, without regard to the application
of conflicts of law principles. Except in respect of an action commenced by a
third party in another jurisdiction, the Parties agree that any legal suit,
action or proceeding arising out of or relating to this Agreement must be
instituted in a State or Federal court in the City of Phoenix, Maricopa County,
State of Arizona, and they hereby irrevocably submit to the jurisdiction of any
such court. No party shall raise a defense of jurisdiction, venue or forum
non-convenience to any action venued in any of those courts. No action shall be
commenced elsewhere.
15.11 Attorneys' Fees. In the event an action or suit is
brought by any Party to enforce the terms of this Agreement, the prevailing
Party shall be entitled to the payment of its reasonable attorneys' fees and
costs, as determined by the judge of the court.
15.12 Parties in Interest. Except as expressly provided below,
nothing in this Agreement is intended to confer upon any person other than the
Parties, their respective heirs, representatives, successors and permitted
assigns, any rights or remedies under or by reason of this Agreement, nor is
anything in this Agreement intended to relieve or discharge the liability of any
Party, nor shall any provision of this Agreement give any entity any right of
subrogation against or action over or against any Party.
Lender shall be a third party beneficiary of all of
the representations, warranties and agreements of Seller made herein, Seller
acknowledging that, in order to supply part of the purchase money hereunder,
Lender is making a loan to Buyer secured by, among other things, a collateral
assignment of Buyer's interest hereunder. Therefore, if Lender succeeds to
Buyer's position hereunder, Seller shall recognize Lender for all purposes
hereunder and shall perform the representations, warranties, covenants and
agreements herein contained and which survive the Closing to Lender in that
instance. Seller shall, from time to time, execute such documents as may be
reasonably requested by Lender or Buyer in order to evidence such an item
including, without limitation, estoppel certificates and recognition agreements.
15.13 Successors in Interest. Except as otherwise provided
herein, all provisions of this Agreement shall be binding upon, inure to the
benefit of, and be enforceable by and against the respective heirs, executors,
administrators, personal representatives, successors and assigns of any of the
Parties.
15.14 Severability. The invalidity or unenforceability of all
or any part of any particular provision of this Agreement shall not affect the
other provisions hereof and this Agreement shall be continued in all respects as
if such invalid or unenforceable provision were omitted.
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15.15 Risk of Loss. Seller shall bear all risk of loss with
respect to the Assets arising on or prior to the Closing Date. In the event that
all or any part of the Assets are damaged or destroyed by fire, windstorm, flood
or any other casualty on or prior to the Closing Date (whether or not insured),
Seller shall immediately notify Buyer of such damage or destruction. In such
event, Seller and Buyer agree as follows:
(A) If the amount of the casualty loss is less than
Ten Thousand and No/100 Dollars ($10,000.00), the Purchase Price shall be
reduced by the amount of the casualty loss, and Seller shall retain the right to
receive proceeds of any insurance policies which cover any such loss.
(B) If the amount of the casualty loss is Ten
Thousand and No/100 Dollars ($10,000.00) or more, Buyer shall have the option
to: (a) terminate this Agreement by written notice to Seller, in which case the
Parties shall have no further obligations under this Agreement; or (b) continue
to proceed with the transactions contemplated by this Agreement. If the Buyer
elects to continue to proceed with the transactions contemplated under this
Agreement: (1) all insurance proceeds collectible by reason of such casualty
loss shall be deemed to have been absolutely and irrevocably assigned to, and
shall be payable directly to, Buyer; (2) Seller shall deliver to Buyer, on or
before the Closing Date, a duly executed assignment of all insurance proceeds,
in form and substance acceptance to Buyer; (3) Buyer shall have the right to
conduct all settlement proceedings with respect to such insurance claims; and
(4) Buyer shall have the right and option to extend the Closing Date for a
period of up to sixty (60) days from the date of such casualty loss.
15.16 Further Documentation. Each Party will execute and
deliver such further instruments and documents and do such further acts and
things as may be required to carry out the intent and purpose of this Agreement.
15.17 Interpretation. The Parties agree that each Party and
its counsel have reviewed this Agreement and that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not apply to the interpretation of this Agreement.
15.18 [RESERVED]
15.19 Stock Escrow; Proceeds Assignment. At Closing, Buyer and
Seller shall establish, pursuant to a form of Stock Escrow Agreement (the
"Escrow Agreement"), a copy of which is attached hereto as Exhibit O, an Escrow
(the "Escrow") wherein Two Hundred Sixty Seven Thousand One Hundred Forty Three
(267,143) Shares of Stock shall be deposited at Closing. The Stock shall remain
in the Escrow for a period of one (1) year as security for the post-Closing
obligations of Seller hereunder including, without limitation, any breach of the
truth and correctness of Seller's representations and warranties hereunder
and/or Seller's performance of its obligations of indemnity hereunder. Buyer and
Seller acknowledge that the Stock, as so escrowed, is, in part, a substitute for
the Principals having no liability for Seller's representations and warranties
hereunder. Therefore, among other things, in the event of any such breach by
Seller hereunder, Buyer may, as Buyer shall choose, either enforce its remedies
against the Stock or against Seller or Seller's other assets, the parties
acknowledging that the Stock, as so escrowed, shall not be Buyer's sole remedy
nor the sole source of assets against which Buyer may pursue claims, but stands
as additional security therefore. Release of the Stock from said Escrow, at the
end
33
of the term thereof, shall not otherwise release Seller from any of its
obligations hereunder, to the extent not theretofore released by the terms
hereof.
15.20 Nomination and Assignment. Buyer shall have the ability,
without the need to obtain the consent of Seller (as shall Buyer's assignee or
nominee), to nominate or assign all or any portion of Buyer's rights under this
Agreement to any person and/or entity which is an Affiliate (as defined below)
of Buyer for any consideration deemed acceptable to Buyer in its sole
discretion. In the event of such nomination and/or assignment, Buyer shall be
released from all of its obligations under this Agreement so long as said
nominee or assignee of Buyer assumes, in writing reasonably satisfactory to
Buyer and Seller, all of Buyer's obligations under this Agreement, whereupon
such substitute or assignee Buyer shall be deemed the "Buyer" under this
Agreement for all purposes. The term "Affiliate", as applied to any person,
means any person directly or indirectly controlling, controlled by, or under
common control with, that person or a blood relative or spouse of such person,
if such person is a natural person. For the purposes of this definition,
"control" (including with correlative meaning, the terms "controlling,"
"controlled by" and "under common control"), as applied to any person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of that person, whether through the
ownership of voting securities, by contract or otherwise, and "person" means and
includes natural persons, corporations, limited partnerships, general
partnerships, joint stock companies, joint ventures, associations, companies,
trusts, land trusts, business trusts or other organizations, whether or not
legal entities.
15.21 Non-Foreign Status. At the Closing, Seller shall deliver
to Buyer a so-called "IRC Section 1445" affidavit establishing Seller's
non-foreign status.
15.22 Exhibits and Schedules. This Agreement may be executed
without all of the Exhibits and Schedules attached. The Parties shall, on or
before November 6, 1998, diligently endeavor to complete said Exhibits and
Schedules. The approval of both Parties of all of such Exhibits and Schedules
shall be a condition precedent to the obligations of the Parties hereunder. If
the Parties are unable to complete said Exhibits and Schedules to their mutual
reasonable satisfaction with said time, this Agreement shall be cancelled, the
Production Agreement shall be in full force and effect as to recoupment by Buyer
of the Deposits and neither Party shall have further liability to the other
hereunder.
. . .
. . .
. . .
34
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
day and year first set forth above.
SELLER: TEJAS SNACKS, L.P., a
Texas limited partnership
By:__________________________________________
Its:____________________________________
BUYER: XXXXX BROTHERS, INC.,
a Delaware corporation
By:__________________________________________
Its:____________________________________
PRINCIPALS:
_____________________________________________
Xxxxx Xxxx
_____________________________________________
Xxx Xxxxxx
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LIST OF EXHIBITS
Exhibit A - Excluded Assets
Exhibit B - RESERVED
Exhibit C - List of Personal Property
Exhibit D - Contractual Rights
Exhibit E - Intellectual Property
Exhibit F - Allocation of Purchase Price
Exhibits G-1 and G-2 - Employment Agreements
Exhibit H - List of Suppliers and Customers
Exhibit I - Description of Insurance Policies
Exhibit J - Production Requirements
Exhibit K - General Warranty Xxxx of Sale
Exhibit L - General Warranty Assignment
Exhibit M - Seller's Closing Certificate
Exhibit N - Buyer's Closing Certificate
Exhibit O - Stock Escrow Agreement
LIST OF SCHEDULES
Schedule 3.1.4 - Stock Legend
Schedule 7.1 - List of Equity Holders of Seller
Schedule 7.5 - Existing Payables
Schedule 7.7 - "Insider" Indebtedness and Obligations
Schedule 7.9 - Interim Personnel Matters
Schedule 7.10 - Litigation and Claims
Schedule 7.14 - Intellectual Property Filings, Etc.
Schedule 7.17 - Insurance Coverage Refusals
Schedule 9.9 - Securities Representative Certificate
36
Exhibit O
STOCK ESCROW AGREEMENT
This Stock Escrow Agreement (this "Agreement) is made and entered into
as of the _____ day of November, 1998, by and among TEJAS PB DISTRIBUTING, INC.,
an Arizona corporation ("Buyer"), TEJAS SNACKS, LP, a Texas limited partnership
("Seller"), and Everen Securities, Inc. (the "Escrow Agent").
WITNESSETH:
WHEREAS, Buyer and Seller are parties to a certain Agreement for
Purchase and Sale of Assets, dated as of November ____, 1998 (the "Purchase
Agreement"), pursuant to which Buyer has agreed to deliver to the Escrow Agent a
certificate or certificates, registered in the name of Seller, representing Two
Hundred Sixty Seven Thousand One Hundred Forty Three (267,143) shares of the
common stock, par value of $.01 (one cent) per share, of Xxxxx Brothers, Inc., a
Delaware corporation (the "Xxxxx Brothers Securities") (such Xxxxx Brothers
Securities and any distributions or dividends with respect thereto, together
with any interest or other income earned from investment of any such dividends,
being referred to herein as the "Escrow Sum"), such Escrow Sum to be held by the
Escrow Agent, and released to Seller and/or Buyer, under the conditions and in
accordance with the terms hereof.
AGREEMENTS:
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I: ESCROW AGENT
I.1 Appointment. The Escrow Agent is hereby appointed depositary and
escrow agent for Buyer and Seller with respect to the Escrow Sum. Escrow Agent
is also constituted an agent of Buyer to hold the Xxxxx Brothers Securities in
escrow and in pledge for the benefit of Buyer. Seller hereby grants a security
interest in and to, and pledges, the Escrow Sum to Buyer to secure the
obligations of Seller under and pursuant to the Purchase Agreement, including,
without limitation, the obligations of Seller referenced in Section 3.1 below,
and Escrow Agent hereby accepts such designation as Buyer's agent for that
purpose.
I.2 Binding Obligations. Except for this Agreement, the Escrow Agent is
not a party to, nor is it bound by, any agreement between Buyer and Seller.
Reference in this Agreement to other documents or instruments is for
identification purposes only, and such reference shall not modify or affect the
terms hereof or cause such documents or instruments to be deemed incorporated
herein. The only duties and responsibilities of the Escrow Agent shall be to
hold the Escrow Sum as Escrow Agent according to the provisions of this
Agreement and to dispose of and deliver the Escrow Sum as provided in this
Agreement.
I.3 Acts of Escrow Agent. The Escrow Agent's sole responsibilities
shall be for the safekeeping and investment of the Escrow Sum and the
disbursement of the Escrow Sum and interest
37
thereon in accordance with this Agreement. The Escrow Agent's authority is
limited to the express provisions of this Agreement, and the Escrow Agent shall
not have any duties other than those expressly set forth herein. The Escrow
Agent has no duty to determine or inquire into any happening or occurrence or
any performance or failure of performance of Buyer or Seller or any other party
with respect to their agreements or arrangements with each other or with any
other party other than those imposed by this Agreement or any other agreement to
which the Escrow Agent is a party in connection herewith. The Escrow Agent shall
not be liable for anything which it may do or refrain from doing in connection
with this Agreement, except its own negligence or misconduct or any failure to
carry out its duties under this Agreement. The Escrow Agent may confer with
legal counsel of its own choosing in the event of any dispute or question as to
the construction of any of the provisions hereof, or its duties hereunder, and
it shall incur no liability and shall be fully protected in acting in reasonable
reliance upon the opinions of such counsel. The Escrow Agent may rely and shall
be protected in acting upon any documents which may be submitted to it in
connection with its duties hereunder and which he reasonably believes to be
genuine and to have been signed or presented by the proper party or parties, and
the Escrow Agent shall have no liability or responsibility with respect to the
form of execution or validity thereof except as otherwise herein specifically
set forth. The Escrow Agent is hereby expressly authorized to comply with and
obey any and all orders, judgments, or decrees of any court relating to this
Agreement, the Escrow Sum, or the relationship between Buyer and Seller, and in
case the Escrow Agent obeys or complies with any such order, judgment, or decree
of any court, it shall not be liable to either Buyer or Seller, or to any other
person, by reason of such compliance, notwithstanding any such order, judgment,
or decree being subsequently reversed, modified, annulled, set aside, or
vacated, or found to have been entered without jurisdiction. Buyer and Seller
agree jointly and severally to indemnify the Escrow Agent against any expenses
or liabilities, claims, losses, or damages incurred by the Escrow Agent that may
arise out of or in connection with the Escrow Agent's acting as Escrow Agent
under and in strict compliance with the terms of this Agreement or as a result
of any litigation or threat of any litigation in connection herewith or
performance in accordance herewith, except in those instances where the Escrow
Agent has been guilty of negligence or other misconduct or has otherwise acted
inconsistently with the terms of this Agreement or inconsistently with the
obligations imposed upon the Escrow Agent by law.
I.4 Adverse Claims or Demands. In the event of any disagreement
resulting in adverse or conflicting claims or demands being made in connection
with the subject matter of this Agreement or upon the Escrow Agent, causing the
Escrow Agent to have doubt as to what action it should take hereunder, or in the
event that the Escrow Agent, in good faith, otherwise has doubt as to what
action it should take hereunder, the Escrow Agent may, at its option and in its
discretion, petition any court of competent jurisdiction in the State of
Arizona, for instructions or interplead the funds or assets so held into such
court. The parties agree to the jurisdiction of such court, waive personal
service of process, and agree that service of process by certified or registered
mail, return receipt requested, to the address set forth in Section 5.1 hereof
shall constitute adequate service. The parties hereby agree to indemnify and
hold the Escrow Agent harmless from any liability or losses occasioned by such
interpleader action or request for instructions and to pay any and all of its
costs, expenses, and attorney's fees incurred in any such action and agree that
on upon entry of an order permitting interpleader and full compliance therewith,
the Escrow Agent, its servants, agents, employees, or officers will be relieved
of further liability.
I.5 Litigation. The Escrow Agent shall not be required to institute
legal proceedings of any kind. In the event litigation is instituted by Buyer
against Seller or by Seller against Buyer that: (a) requires additional duties
of the Escrow Agent; (b) requires court appearances by or on behalf of the
38
Escrow Agent; or (c) requires the Escrow Agent to incur expenses or make
disbursements in the resolution of contested claims against the Escrow Sum, then
the Escrow Agent shall be entitled to reimbursement for any reasonable expenses
or disbursements, and such reimbursement shall include, but not be limited to,
the actual cost of legal services if the Escrow Agent deems it necessary to
retain an attorney.
I.6 Fees. The fees and expenses of the Escrow Agent shall be paid
one-half (1/2) by Buyer and one-half (1/2) by Seller from funds other than the
Escrow Sum.
ARTICLE II: DELIVERY OF SECURITIES
The Escrow Agent hereby acknowledges receipt of the Xxxxx Brothers
Securities from Buyer. The Escrow Agent further acknowledges its acceptance of
the authorization herein conferred and agrees to carry out and perform the
duties contained herein pursuant to the provisions of this Agreement.
ARTICLE III: RELEASE OF FUNDS
III.1 Release of Escrow Sum to Buyer. (A) If any time prior to November
3, 1999, Buyer learns of facts which lead Buyer to conclude that it may suffer a
loss for which Seller may be liable pursuant to the provisions of Sections 12.2
or 13.2 of the Purchase Agreement, then Buyer shall promptly advise the Escrow
Agent and Seller of such claim ("Claim") by delivering written notice thereof
(the "Notice of Claim") to the Escrow Agent and Seller. The Notice of Claim: (i)
shall state the claimed nature of Seller's alleged liability; and (ii) shall
state the maximum amount of the payment that Buyer claims it is entitled to
receive from the Escrow Sum. Seller shall have thirty (30) days after receipt of
the Notice of Claim in which to advise the Escrow Agent and Buyer that it
disputes the Claim by delivering written notice of Seller's dispute ("the Notice
of Dispute") to the Escrow Agent and to Buyer. The Notice of Dispute may contest
all or any portion of the Notice of Claim based on a dispute concerning the
existence of a Claim, Seller's liability or the estimated amount of the alleged
loss.
(B) If Seller fails to deliver a Notice of Dispute within such
thirty (30) day period, Seller shall be deemed to have acknowledged that Buyer
is entitled to payment as set forth in the Notice of Claim and shall be deemed
to have directed the Escrow Agent to disburse such payment (the "Claim Payment")
to Buyer in accordance with the provisions of Section 3.4. In the event Seller
timely delivers the Notice of Dispute, then the matter shall be determined in
accordance with Section 5.9 of this Agreement. In the event a Notice of Dispute
is timely delivered, then the undisputed portion of the Claim, if any (the
"Undisputed Claim Payment"), shall be promptly disbursed to Buyer in accordance
with the provisions of Section 3.4, and only the sum that is subject to a
dispute shall be held by the Escrow Agent until the Claim is resolved; provided,
however, that any Claim which is based upon the assertion or threat of a third
party claim against Buyer shall be conclusively deemed to be resolved four (4)
years after the Notice of Claim is delivered unless litigation, arbitration,
assessment, or some other formal proceeding is commenced against Buyer within
that four (4) year period. If such a formal proceeding is not commenced within
the four (4) year period, then the Claim shall be deemed abandoned and of no
further force and effect for purposes of this Agreement. In the event a formal
proceeding is commenced within the four (4) year period, then the resolution of
the Claim will occur only upon the resolution of such proceeding and any related
appellate proceedings.
39
(C) Subject to Seller's right to dispute a Claim as set forth
above, once a Notice of Claim is delivered to the Escrow Agent, the Escrow Agent
shall not permit the Escrow Sum to be reduced by disbursement to Seller pursuant
to Section 3.2 to an amount which is less than the amount of the Claim (the
Xxxxx Brothers Securities then held by the Escrow Agent being valued for the
purpose of any such determination based on the closing price per share of Xxxxx
Brothers, Inc. stock on the last trading day before the date for which the
valuation is being determined, as reported in the Wall Street Journal (the
"Valuation Price")). Furthermore, if the amount of any Claim or the aggregate
amount of any Claims should ever exceed the amount of the Escrow Sum (the Xxxxx
Brothers Securities then held by the Escrow Agent being valued for such purposes
based on the Valuation Price), then no portion of the Escrow Sum shall be
disbursed pursuant to Section 3.2 during such time that such a deficit exists.
III.2 Release of Remainder of Escrow Sum. On November 4, 1999, the
Escrow Agent shall irrevocably and unconditionally disburse to Seller the Escrow
Sum in excess of the amount of any Claims previously paid pursuant to the terms
of this Agreement and the Purchase Agreement and of the amount of any then
existing Claim or Claims. The remainder of the Escrow Sum, if any, shall be
irrevocably and unconditionally disbursed to Seller (or Buyer, if appropriate),
in one or more disbursements, upon final resolution of all Claims involving such
funds.
III.3 Delivery. Unless delivery is made in person at the Escrow Agent's
office or unless the Escrow Agent is properly instructed in writing by Buyer or
Seller, as the case may be, to make delivery in such other manner, the Escrow
Agent shall be deemed to have properly delivered to Buyer or Seller, as the case
may be, such funds as Buyer or Seller is entitled to receive, upon placing the
same in the United States Mail in a suitable package or envelope, registered or
certified mail, return receipt requested, postage prepaid, addressed to the
address referred to in Section 5.1 hereof or such other address as may be
furnished to the Escrow Agent in writing.
III.4 Treatment of Xxxxx Brothers Securities. In the event that the
Escrow Agent is required to make a Claim Payment or an Undisputed Claim Payment
pursuant to the provisions of Section 3.1 at a time when a portion of the Escrow
Sum is composed of Xxxxx Brothers Securities, the Escrow Agent shall: (i) first,
transfer to Buyer such number of shares of the Xxxxx Brothers Securities as
shall be necessary to satisfy the amount of such Claim Payment or Undisputed
Claim Payment (such Xxxxx Brothers Securities being valued for such purposes
based on the Valuation Price on the date transferred); and (ii) then, if any
balance remains to be paid, disburse to Buyer an appropriate portion of the
Escrow Sum not represented by Xxxxx Brothers Securities.
ARTICLE IV: INVESTMENT AND INTEREST
IV.1 Investment. At Seller's written direction and with Buyer's
countersignature, the Escrow Agent shall invest the Escrow Sum (other than the
Xxxxx Brothers Securities) in interest-bearing, federally insured bank accounts,
money market funds or instruments, government securities, financial institution
obligations, or similar instruments. All investments in obligations which are
not direct obligations of the United States must be rated AI or PI by Xxxxx'x or
Standard & Poor's, and must have a maturity of one (1) year or less. The Escrow
Agent shall not be liable to Buyer or Seller for any claim related to the
investment or management of the Escrow Sum, provided that the Escrow Agent
compiles strictly with the provisions of this Section 4.1 and Section 4.3.
Disbursement by the Escrow Agent of the Escrow Sum shall be made in accordance
with and at the time or times specified in Sections 3.1 and 3.2 of this
Agreement.
40
IV.2 Interest and Other Income. Any distributions or dividends with
respect to the Xxxxx Brothers Securities or any other investments or instruments
held in escrow from time to time, together with the proceeds of any sale,
transfer, or other disposition thereof and any interest or other income earned
from investment of any such proceeds, during the period of these escrow
arrangements shall accrue and be held by the Escrow Agent as part of the Escrow
Sum.
IV.3 Investment Instructions. Seller shall direct the Escrow Agent
regarding the investment of the Escrow Sum pursuant to Section 4.1. Seller and
Buyer, and not Escrow Agent, shall be solely responsible for following the
guidelines for investments set forth in Section 4.1, including, without
limitation, investigating and satisfying themselves regarding the liquidity of
the firms and/or institutions with which the Escrow Sum is to be placed. Seller
shall deliver to Escrow Agent the name(s), address(es), and contact person(s) of
the firm(s) and/or banking institution(s) with which the Escrow Sum is to be
placed, together with a description of the type of investment to be made. Unless
otherwise explicitly stated by Seller in the written instructions to Escrow
Agent, at no time will any investment of the Escrow Sum or any portion thereof
(other than the Xxxxx Brothers Securities and any direct obligation of the
United States) exceed one (1) year in duration, nor will any such investment be
subject to automatic renewal.
ARTICLE V: MISCELLANEOUS
V.1 Notices. Any notice or consent pursuant to or in connection with
this Agreement shall be in writing and shaLl be deemed to be delivered (a) upon
receipt, if personally delivered or delivered by reputable overnight courier, or
(b) at the close of business on the second business day next following the day
when placed in the United States mail postage prepaid, certified or registered,
addressed to the appropriate party or par-ties, at the address stated below (or
at such other address as such party may designate by written notice to all other
parties), with a copy thereof sent to the persons indicated:
If to Seller: Tejas Snacks, L.P.
Attn: Xx. Xxx Xxxxxx
Xxxxx 0, Xxx 00X
Xxxxxxxxxx, Xxxxx 00000
With copy to: Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Attn: Xxxxxxx X. Xxxxxx, Esq.
0000 Xxxx Xxx Xxxx., #000
Xxxxxxx, Xxxxx 00000
If to Buyer: Xxxxx Brothers, Inc.
Attn: Xx. Xxxx Xxxxx
0000 Xxxxx Xx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
With copy to: Mariscal, Weeks, XxXxxxxx & Xxxxxxxxxxx, P.A.
Attn: Xxxx X. Xxxxx, Esq.
0000 Xxxxx Xxxxxxx Xxx., #000
Xxxxxxx, Xxxxxxx 00000
41
If to Escrow Agent: Everen Securities, Inc.
Attn. Xx. Xxxxx X. Xxxx, Managing Director
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000-0000
V.2 Entire Agreement, Amendment. Except as otherwise expressly set
forth herein, this Agreement contains the entire agreement among the parties
with respect to the subject matter hereof, and no representations, inducements,
promises, or agreements, oral or otherwise, not embodied herein shall be of any
force or effect. This Agreement may be amended, modified, or supplemented, and
waivers or consents to departures from the provisions hereof may be given, only
pursuant to a written instrument signed by Buyer and Seller, and, if, but only
if, the rights and responsibilities of the Escrow Agent are modified by such
amendment, modification, or supplement, by the Escrow Agent.
V.3 Parties Bound. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective successors, assigns,
and other legal representatives.
V.4 Multiple Counterparts. This Agreement may be executed in a number
of identical counterparts and it shall not be necessary for each of the parties
to execute each of such counterparts, but when all of the parties have executed
and delivered one or more of such counterparts, the several parts, when taken
together, shall be deemed to constitute one and the same instrument, enforceable
against each in accordance with its terms. In making proof of this Agreement, it
shall not be necessary to produce or account for more than one such counterpart
executed by the party against whom enforcement of this Agreement is sought.
V.5 Headings. The headings in tills Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
V.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Arizona, without regard to principles
of conflicts or choice of law. Any action or arbitration brought to enforce or
construe this Agreement or to declare the rights of the parties shall be
commenced and maintained in an appropriate state or federal court or before an
appropriate arbitrator in Phoenix, Arizona, and each party irrevocably consents
to exclusive jurisdiction and venue in such forum for such purposes.
V.7 Severability. If any provision of this Agreement is held to be
illegal invalid, or unenforceable under present or future laws effective during
the term of this Agreement, such provision shall be fully severable; this
Agreement shall be construed and enforced as if such illegal, invalid, or
unenforceable provision had never comprised a part of this Agreement; and the
remaining provisions of this Agreement shall remain in full force and effect and
shall not be affected by the illegal, invalid, or unenforceable provision or by
its severance from this Agreement. Furthermore, in lieu of each such illegal,
invalid, or unenforceable provision, there shall be added automatically as a
part of this Agreement a provision as similar in terms to such illegal, invalid,
or unenforceable provision as may be possible and be legal, valid, and
enforceable, and this Agreement shall be reformed accordingly.
42
V.8 Legal Fees and Costs. In the event Buyer or Seller elects to incur
legal expenses in connection with any arbitration or litigation to enforce or
interpret any provision of this Agreement or to declare the rights of the
parties under this Agreement, the prevailing party will be entitled to recover
such legal expenses, including attorney's fees, expert witness fees, paralegal
expenses, costs and necessary disbursements, in addition to any other relief to
which such party shall be entitled.
V.9 Arbitration. In the event of a dispute between Buyer and Seller
arising out of or related to this Agreement, Buyer and Seller agree to utilize
the procedures specified in Section 15.18 of the Purchase Agreement to resolve
such dispute.
V.10 Resignation and Termination. The Escrow Agent may resign as such
by delivering written notice to that effect at least sixty (60) days prior to
the effective date of such resignation to Seller and Buyer. Upon expiration of
such sixty (60) day notice period, the Escrow Agent may deliver the portion of
the Escrow Sum remaining it its possession to any successor Escrow Agent
appointed by Seller and Buyer pursuant to this Section 5.10, or if no successor
Escrow Agent has been appointed, to any court of competent jurisdiction in
Phoenix, Arizona, or in accordance with the joint written instructions of Buyer
and Seller. Seller and Buyer, acting jointly, may terminate the Escrow Agent
from its position as such by delivering to the Escrow Agent written notice to
that effect executed by Seller and Buyer at least thirty (30) days prior to the
effective date of such termination. In the event of such resignation or
termination of the Escrow Agent, a successor Escrow Agent shall be appointed by
mutual agreement between Seller and Buyer, and the Escrow Agent shall deliver
the portion of the Escrow Sum remaining in its possession to such successor
escrow agent. From and after the appointment of a successor Escrow Agent
pursuant to this Section 5.10, all references herein to the Escrow Agent shall
be deemed to be to such successor Escrow Agent. The delivery by the Escrow Agent
of the Escrow Sum hereunder in accordance with the provisions of this Section
5.10 shall constitute a full and sufficient discharge and acquittance of the
Escrow Agent in respect to such sums delivered, and the Escrow Agent shall be
entitled to receive releases and discharges therefor. The indemnities in favor
of the Escrow Agent contained in this Agreement and the obligations of Buyer and
Seller under Section 1.6 hereof shall survive for the benefit of the Escrow
Agent after any resignation or termination.
V.11 Non-Assignment. The duties, responsibilities, interests, and
rights of the parses under this Agreement are non-transferable and nonassignable
(without the express written consent of Buyer and Seller), and any purported or
attempted transfer or assignment in violation of this provision shall be void
and shall vest no rights in the purported transferee or assignee.
IN WITNESS THEREOF, the parties hereto have executed this Agreement as
of the date first above written.
SELLER: TEJAS SNACKS, L.P., a Texas limited partnership
By: D.T.M.E.S., a Texas corporation, its duly
authorized General Partner
By:____________________________________
Xxx Xxxxxx, President
43
BUYER: TEJAS PB DISTRIBUTING, INC., an Arizona
corporation
By:____________________________________
Xxxxxx X. Xxxxxx, Vice President
and Chief Financial Officer
ESCROW AGENT: Everen Securities, Inc.
By:_______________________________________
Xxxxx X. Xxxx, Managing Director
44
