STOCK PURCHASE AGREEMENT
AGREEMENT, dated as of June 26, 1997 by and among CONAGRA, INC., a
Delaware corporation ("Seller") and CENTRAL TRACTOR FARM & COUNTRY, INC., a
Delaware corporation ("Buyer").
RECITALS:
This Agreement is made with reference to the following facts and
circumstances:
(a) Country General, Inc., a Delaware corporation (the "Company"),
operates certain retail stores.
(b) Seller owns all of the issued and outstanding capital stock of
the Company.
(c) Seller desires to sell, and Buyer desires to purchase, all of
the issued and outstanding shares of capital stock of the
Company for the consideration and upon the terms and
conditions hereinafter set forth.
AGREEMENT:
In consideration of the foregoing recitals and in further
consideration of the mutual covenants and agreements hereinafter contained, the
parties hereto agree, subject to the terms and conditions hereinafter set forth,
as follows.
1. Sale and Purchase of Stock. Subject to the terms and conditions
contained herein, at Closing (as defined in Section 3), Seller will sell,
transfer, assign, convey and deliver to Buyer, and Buyer will purchase, accept
and acquire all of the issued and outstanding shares of capital stock of the
Company ("Purchased Stock") free and clear of all liens, claims, options charges
and encumbrances.
2. Purchase Price. The purchase price payable by Buyer for the
Purchased Stock (the "Purchase Price") shall be an amount equal to One Hundred
Thirty-
Five Million Dollars ($135,000,000) plus (or minus) the amount by which Invested
Capital (as defined in Section 4.1 below) is greater than (or less than) Ninety
Million Dollars ($90,000,000). One Hundred Thirty-Five Million Dollars
($135,000,000) of the Purchase Price (the "Estimated Amount") shall be paid by
wire transfer of immediately available funds on the Closing Date. The amount by
which the Purchase Price exceeds the Estimated Amount, if any, shall be paid by
Buyer on the Settlement Date (as defined in Section 4.2) or the amount by which
the Estimated Amount exceeds the Purchase Price, if any, shall be paid by Seller
on the Settlement Date. All payments shall be made by wire transfer of
immediately available funds.
3. Closing. Subject to the terms and conditions contained in this
Agreement, the closing of the transactions contemplated hereby (the "Closing")
will occur at the offices of Seller, on July 3, 1997 or at such other place or
time or on such other date as the parties hereto may mutually agree (the
"Closing Date"). Closing shall be effective as of the close of business on the
Closing Date (the "Effective Time").
3.1 Buyer's Obligation at Closing. At the Closing, Buyer shall:
3.1.1 Consideration. Pay to Seller the Estimated Amount by
wire transfer pursuant to instructions delivered by
Seller prior to Closing.
3.1.2 Legal Opinion. Cause to be delivered to Seller the
legal opinion of Xxxxxxxx & Worcester, LLP, counsel
for Buyer, in the form attached hereto as Exhibit
3.1.2.
3.1.3 Certificate. Execute and deliver the certificate
contemplated in Section 10.3.
3.1.4 Resolutions. Deliver resolutions of Buyer's board of
directors approving this Agreement and the
transactions contemplated hereby.
3.1.5 Letter of Credit. Deliver a standby letter of credit
in form and substance reasonably satisfactory to
Seller issued by Fleet National Bank conforming to
the terms outlined on Exhibit 3.1.5 hereto.
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3.1.6 Equipment Sublease. Execute and deliver the Equipment
Sublease in the form attached hereto as Exhibit 3.1.6
(the "Equipment Sublease".
3.2 Seller's Obligations at Closing. At the Closing, Seller shall:
3.2.1 Stock Certificates. Deliver to Buyer a certificate or
certificates representing all of the Purchased Stock
duly endorsed to the Buyer.
3.2.2 Legal Opinion. Cause to be delivered to Buyer the
legal opinion of XxXxxxx, North, Xxxxxx & Xxxxx,
P.C., counsel for Seller, in the form attached hereto
as Exhibit 3.2.2.
3.2.3 Certificate. Execute and deliver the certificate
contemplated in Section 9.3.
3.2.4 Resolutions. Deliver resolutions of Seller's board of
directors authorizing the transactions contemplated
under this Agreement.
3.2.5 Equipment Sublease. Execute and deliver the Equipment
Sublease.
3.2.6 Directors and Officers. Deliver resignations from the
directors and officers of the Company listed in
Exhibit 3.2.6.
4. Post Closing Matters.
4.1 Special Purpose Balance Sheet.
4.1.1 Preparation and Audit. As soon as practicable
following the Closing Date, Seller shall prepare, and
shall cause to be audited by Deloitte & Touche
("Deloitte") in accordance with Section 4.1.3 a
special purpose balance sheet of the Company as at
the Closing Date (the "Special Purpose Balance
Sheet").
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Seller shall prepare such Special Purpose Balance
Sheet in accordance with the "Applicable Accounting
Principles" (as defined in Section 4.1.2 below).
Buyer shall provide to Seller, and shall cause the
Company to provide to Seller and Deloitte, such
assistance and access to books and records as is
necessary to timely prepare, deliver and audit such
Special Purpose Balance Sheet including, but not
limited to, access to the Company's employees.
4.1.2 Applicable Accounting Principles. For purposes of
this Agreement, the phrase "Applicable Accounting
Principles" shall mean generally accepted accounting
principles applied in a manner consistent with the
accounting principles used in the preparation of, and
reflected in, the Audited Financial Statements (as
defined in Section 6.9), subject, however, to the
following:
(a) No accruals, reserves or provisions will be
included with respect to the Retained
Liabilities (as defined in Section 14.17
below).
(b) Inventory quantities will be based on the
physical inventory to be conducted pursuant
to the procedures set forth on Exhibit 4.1.2
hereto. Buyer shall pay for the cost of
inventory services expenses for this
physical inventory incurred from and after
June 21, 1997 other than Seller's cost of
participating in and observing such physical
inventory.
(c) Pursuant to and subject to Section 8.3
below, for purposes of the Final Special
Purpose Balance Sheet (as defined below),
all intercompany accounts shall be netted,
and the net amount shall be treated as part
of contributed capital.
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4.1.3 Deloitte Engagement and Audit. Deloitte shall be
engaged by Seller to audit the Special Purpose
Balance Sheet in accordance with generally accepted
auditing standards consistent with Deloitte's audit
of the Audited Financial Statements and to issue its
report in one of the forms attached hereto as Exhibit
4.1.3(A) (the "Report"). Seller shall retain, and pay
all fees and expenses of, Deloitte in connection with
the audit of the Special Purpose Balance Sheet.
4.1.4 Access. Each party shall make available all documents
or records reasonably requested by the other (or its
accountants) to permit the preparation, audit and
review of the Special Purpose Balance Sheet;
provided, however, that Buyer's access to Deloitte's
workpapers shall be pursuant and subject to the
letter attached as Exhibit 4.1.4 hereto.
4.1.5 Objections. Upon completion of its audit, Deloitte
shall deliver to Seller and Buyer a draft of the
Report together with the accompanying audited Special
Purpose Balance Sheet (herein collectively, the
"Preliminary Report"). Within twenty (20) business
days following receipt thereof, Buyer and Seller
shall submit to each other in writing any objections
that either may have as to whether the Preliminary
Report (i) was prepared in accordance with the
Applicable Accounting Principles or (ii) presents
fairly in all material respects the Invested Capital
of the Company as of June 21, 1997 in conformity with
the Applicable Accounting Principles. Such notice
shall specify in reasonable detail the nature and
basis of such objection. Buyer and Seller shall use
reasonable efforts to resolve such objections within
forty (40) business days following receipt of such
Preliminary Report; failing which, such objections
shall be submitted to a mutually acceptable
arbitrator for final and binding resolution. Each
party shall pay one-half (1/2) of the costs of the
dispute resolution, provided, that each party shall
pay the fees and expenses of its own counsel and
accountants.
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Upon the parties' failure to object to the
Preliminary Report on a timely basis, their agreed
resolution of objections, or the resolution of such
objections in accordance with this paragraph, Buyer
and Seller shall execute and deliver, or cause to be
executed and delivered, as the case may be, in
connection with the audit of the Special Purpose
Balance Sheet the representation letters
substantially in the form attached hereto as Exhibit
4.1.5(B) and Seller shall cause Deloitte to revise
the Special Purpose Balance Sheet as applicable, to
reflect such agreement or resolution in respect of
objections and to deliver the same, as revised,
accompanied by a signed Report (herein, the "Final
Special Purpose Balance Sheet").
4.1.6 Invested Capital. For purposes of this Agreement,
"Invested Capital" shall mean the Company's total
assets, less total liabilities, as of the Closing
Date, as reflected in the Final Special Purpose
Balance Sheet.
4.2 Settlement of Purchase Price. On the fifth business day
following delivery of the Final Special Purpose Balance Sheet
pursuant to Section 4.1 (the "Settlement Date"), Buyer shall
pay to Seller an amount equal to the excess of the Purchase
Price over the Estimated Amount, or Seller shall pay to Buyer
an amount equal to the excess of the Estimated Amount over the
Purchase Price, as the case may be, in either case with
interest at an annual rate of five and three-quarters percent
(5-3/4%) from the Closing Date to the date of payment. The
payment required to be made pursuant to this Section 4 shall
be made by wire transfer of immediately available funds.
4.3 Insurance Matters.
4.3.1 Coverage. Buyer acknowledges that, as of the
Effective Time, the Company's coverage by the
insurance policies and insurable risk programs
currently made available to the Company through
Seller shall be discontinued.
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4.3.2 Insurance Claims. Subject to the terms of this
Section 4.3.2, from and after Closing, Seller shall
pay and be responsible for, and shall indemnify Buyer
and the Company from and against, all claims
resulting from occurrences prior to Closing (whether
or not disclosed to or otherwise known by Buyer) that
are subject to coverage under Seller's existing
insurance programs, policies or agreements (all of
which are listed on the Disclosure Schedule),
including all claims falling within deductible or
self- insured retention. Without limiting the
foregoing, from and after Closing, the Company shall
be entitled to submit claims to Seller with respect
to which insurance coverage existed under insurance
policies maintained by Seller applicable to the
Company prior to Closing, which claims Seller shall
forward to its insurance carriers and administer on
behalf of the Company, and Buyer shall insure that
the Company does not submit claims directly to any
such insurance carrier. The indemnity provided for in
this Section 4.3.2 shall not be exclusive of the
general indemnity provided for in Section 12, shall
not be subject to the limitations in Section 12.5 and
shall be effective provided that the claim giving
rise to such indemnity was submitted by the Company
to Seller so as to allow the Seller sufficient time
to in turn submit such claims to its insurance
carriers and administrators within the applicable
time frame required under the applicable insurance
programs, policies or agreements to which such claim
relates.
4.3.3 Defense of Claims. Seller shall have the right to
control, at its own cost and expense, the defense of
any claim submitted to Seller pursuant to Section
4.3.2 above. Buyer and the Company (including the
Company's employees) shall fully cooperate with
Seller and its insurance carriers in connection with
such claims and the defense thereof, shall make all
records and personnel available at no cost to Seller
and its insurance carriers which are reasonably
necessary for handling such claims and defense and
shall not take any action detrimental to
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such defense. Settlement of any claim (including the
release of any parties to the claim) shall be subject
to the terms and conditions of the insurance
programs, policies or agreements applicable to such
claim and Seller shall have the same right to settle
any such claim as reflected in such programs,
policies or agreements.
4.4 Trade Name. Seller specifically and exclusively retains, and
Buyer acknowledges that it will not acquire, and that the
Company does not own, any right, title or interest to the
trade name "ConAgra" (or derivations thereof) or to any logos
or trademarks related thereto. Buyer agrees that promptly
after Closing it will cause the Company to discontinue the use
of any advertising or other form of media that uses or
references any such names or logos. Buyer further agrees that
as soon as practicable, but in no event longer than six (6)
months after the Closing Date, it shall remove all signage
which refers to Seller, and take all such other action as may
be reasonably necessary to dissociate Seller with the
operations of the Company after Closing.
4.5 Record Retention. Except as set forth below, Buyer will cause
all books and records of the Company in respect of matters
prior to the Closing historically kept by the Company (the
"Records") to be retained for seven (7) years after Closing.
During such term, Buyer shall allow Seller and its
representatives access, subject in all respects to the terms
of Section 4.5.1 hereof, to inspect or copy such Records as
are reasonably related to Seller's business and affairs during
normal business hours on reasonable notice. In the event Buyer
intends to destroy any Records at the end of such seven (7)
year term, Buyer shall use reasonable efforts to first notify
Seller at which xxxx Xxxxxx shall have the right to remove the
Records at its own cost as are reasonably related to Seller's
business and affairs. The parties acknowledge that, in the
past, the Company has routinely disposed of certain Records on
a periodic basis and has not retained such Records for seven
(7) years. Notwithstanding the foregoing, the Company may
continue such routine periodic record destruction so long as
prior to such destruction the Company notifies Seller of the
nature of such destruction and permits Seller to remove
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and retain, subject in all respects to the terms of Section
4.5.1 hereof such Records at Seller's expense.
4.5.1 Confidentiality. All Records furnished by Buyer or
the Company (collectively, the "Provider") to Seller
pursuant to Section 4.5 of this Agreement, regardless
of the manner in which they are furnished, together
with analyses, compilations, studies or other
documents or records prepared by or on behalf of
Seller which contain or reflect or are generated from
such Records, regardless of whether explicitly
identified as confidential, shall be considered
"Confidential Information". Unless otherwise agreed
to in writing by the Provider, Seller agrees (a)
except as required by law, to keep all Confidential
Information confidential and not to disclose or
reveal any Confidential Information to any person
other than those employed by Seller or on its behalf
or on behalf of any Affiliate of Seller who are
actively and directly participating in review of the
Confidential Information or who otherwise need to
know the Confidential Information (the persons to
whom such disclosure is permissible being
collectively called "Representatives"), (b) to inform
its Representatives of the confidential nature of the
Confidential Information and to direct such
Representatives to be bound by these confidentiality
covenants, and (c) to use the Confidential
Information solely for the bona fide business
purposes of the Seller but not in any way to compete
with Buyer or the Company. Seller shall be
responsible for any breach of these confidentiality
covenants by its Representatives. In the event that
Seller or any of its Representatives are requested
pursuant to, or required by, applicable law or
regulation or by legal process to disclose any
Confidential Information, Seller will provide the
Provider with prompt notice of such requests to
enable Provider to seek an appropriate protective
order or other remedy. In the event that such
protective order or other remedy is not obtained,
Seller shall furnish only that portion of the
Confidential Information
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which, in the opinion of its counsel, Seller is
legally compelled to disclose, and Seller will use
reasonable efforts to obtain assurance that, if
possible, confidential treatment will be accorded the
Confidential Information. Seller agrees that the
Buyer or the Company shall be entitled to equitable
relief to enforce these confidentiality covenants.
4.6 Open Store Leases.
4.6.1 Exhibit 4.6.1 lists all leases of the Company's
facilities with respect to which a consent is
required to be obtained for any of (i) the assignment
to the Company of Seller's obligations as lessee, or
(ii) the consummation of the stock purchase
transaction contemplated by this Agreement. In case
of any such consents which have not been obtained as
of the Closing Date, the parties shall cooperate in
any commercially reasonable interim arrangement to
provide the essential benefits of any such leases to
Buyer without causing a declaration of default or
breach thereunder.
4.6.2 Seller shall use reasonable commercial efforts to
obtain at or prior to Closing the consents described
in Section 4.6.1 with respect to the leases listed on
Exhibit 4.6.1, provided, however, in no event shall
Seller be required to pay (and shall not commit the
Company to pay) any monies to any lessor or any third
party in order to obtain such consents.
4.6.3 Exhibit 4.6.3(A) lists all leases of the Company's
facilities in respect of which Seller has any
obligations either as a lessee or as a Guarantor of
the Company's obligations as lessee (the "Ongoing
Obligation Leases"). To the extent Seller has not
been released as of Closing from its direct or
indirect obligations under any Ongoing Obligation
Leases, Buyer agrees to use its reasonable commercial
efforts to obtain such releases. Notwithstanding the
foregoing, in no event shall Buyer be
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required to obtain any release that is conditioned
upon (i) an increase in rent or other lease terms
less favorable to the tenant than those in force as
of the date of this Agreement, or (ii) provision by
Buyer or any affiliate of Buyer of any guaranty of or
other security for the lessee's obligations. To the
extent Seller has not been released from liability
under any Ongoing Obligation Leases, Buyer shall
insure that neither the Buyer, the Company nor any
successor shall assign, sublease, exercise or obtain
any right to renew or extend such leases unless or
until either (i) Seller is released from liability
thereunder by the lessor, or (ii) Buyer delivers to
Seller a standby letter of credit in form and
substance reasonably satisfactory to Seller and in
accordance with Exhibit 4.6.3(B) securing the payment
of the base rent under such lease.
4.6.4 If Buyer is unable to obtain a release of Seller from
its obligations in respect of any Ongoing Obligation
Lease in accordance with Section 4.6.3, Buyer agrees
to indemnify and hold Seller harmless from and
against all liabilities or claims resulting from
Buyer's or the Company's failure after the Effective
Time to perform the lessee's obligations under any
such Ongoing Obligation Lease. If Seller is released
from liability under any Ongoing Obligation Lease, it
shall immediately assign such Lease to the Company or
Buyer.
4.7 Closed Store Leases. Attached hereto as Exhibit 4.7 is a list
of closed store locations leased by the Company ("Closed
Stores"). The parties agree that such leases shall be assigned
to Seller (unless such assignment is prohibited) and,
irrespective of whether assignment is permitted, Seller shall
be responsible for, and shall indemnify Buyer and Company from
and against, all obligations in respect of such leases without
regard to the provisions of Section 12.5. Seller may dispose
or otherwise deal with such leases (whether by way of
assignment, sublease or otherwise) and any and all income,
revenue or expense with respect thereto shall be for Seller's
account. Buyer shall reasonably cooperate with Seller with
respect to any such Closed Stores
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and the leases thereof, including executing any assignments,
subleases or other documents reasonably requested by Seller,
and including entering into any commercially reasonable
interim arrangements to provide the benefits of any such lease
to Seller or its assignee or sublessee without causing a
declaration of default or breach thereunder, provided,
however, any reasonable third party expenses incurred by Buyer
(including reasonable attorneys fees and expenses) in
cooperating with Seller with respect to any Closed Stores
shall be reimbursed by Seller.
4.8 Letters of Credit. Buyer acknowledges that, prior to Closing,
Seller may cause letters of credit to be issued supporting the
payment by the Company of the purchase price and related costs
of goods and inventory ("Seller LC's") and that Seller may
have a reimbursement obligation to issuing banks with respect
to such letters of credit. Notwithstanding anything in this
Agreement to the contrary, Buyer shall pay to Seller, or cause
to be paid to Seller, the amount drawn down after Closing on
any Seller LC. Such payment shall be made by wire transfer of
immediately available funds within one (1) business day
following each such draw down. On the close of the last
business day prior to the Closing Date, Seller shall orally
advise Buyer of the estimated amount of Seller LC's then
outstanding which have not yet been drawn upon (the "Estimated
LC Draw Liability"). At Closing, Buyer shall either pay Seller
in immediately available funds an amount equal to the
Estimated LC Draw Liability to be applied by Seller against
the amounts due by Buyer under this Section 4.8, or deliver to
Seller a standby letter of credit in an amount equal to the
Estimated LC Draw Liability (the "Draw LC") to secure timely
payment of Buyer's obligations as they become due hereunder.
The Draw LC shall be in such form and substance and from such
banks as are reasonably acceptable to Seller.
5. Employee Matters.
5.1 General. As of the Effective Time, Buyer will cause the
Company to provide each individual employed by the Company on
the Closing Date (including employees absent from work due to
short-term disability, sick leave or other permitted absences
but excluding individuals on long-term
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disability leave) ("Company Employees") with employment at
wages comparable to wages currently paid by the Company and
other benefits comparable to those provided to similarly
situated employees of Buyer, provided, however, Seller shall
retain responsibility to provide healthcare coverage for one
employee of the Company identified in Exhibit 5.1(A). Buyer
shall also provide to the Company Employees severance benefits
consistent with Buyer's current severance policy, a true and
correct copy of which is attached hereto as Exhibit 5.1(B)
(the "Buyer Severance Policy") resulting from the consummation
of the transactions contemplated herein or caused by any
action taken by Buyer or the Company from and after the
Effective Time and shall maintain Buyer's Severance Policy for
at least six (6) months after the Closing. Buyer shall treat
service with Seller or the Company as service with Buyer for
purposes of such Buyer Severance Policy. Without limiting the
foregoing, and notwithstanding anything in the Buyer Severance
Policy to the contrary, the Buyer agrees that the Company
Employees that are hourly personnel will be eligible for
severance under the Buyer Severance Policy. Notwithstanding
anything herein to the contrary, Buyer shall cause the Company
to (i) honor and be responsible for all vacation benefits that
the Company Employees are entitled to as of the Closing to the
extent accrued on the Final Special Purpose Balance Sheet and
(ii) pay to the Company Employees all bonuses and incentive
payments and benefits earned by the Company Employees through
the Closing Date to the extent accrued on the Final Special
Purpose Balance Sheet; provided, however, that any incentives,
bonuses, severance or termination pay or other benefits or
payments that are due or become due on or after the Closing to
two (2) senior executives of the Company identified on Exhibit
5.1(C) on account of agreements between such individual and
the Seller, shall not be accrued on the Final Special Purpose
Balance Sheet, and shall be the responsibility of Seller, and
Buyer shall be eligible for indemnification therefor pursuant
to Section 12.1 without regard to the provisions of Section
12.5. Buyer shall cause the Company to be responsible for any
and all liabilities, obligations and claims of any kind
arising out of employment (or termination of employment,
whether actual or constructive) of the Company Employees from
and after the Effective Time, including, but not limited to,
any severance (in accordance with Buyer's severance policy
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attached as Exhibit 5.1(B)), termination pay, or similar
obligations with respect to employees terminated from and
after the Effective Time or resulting from the consummation of
the transactions contemplated herein or resulting from the
change in any benefits provided to the Company Employees.
Seller shall be responsible for (i) any Company Employees who,
on the Closing Date, are receiving long-term disability
benefits, and (ii) any individuals formerly employed by the
Company who, on the Closing Date, have retired and are
receiving retiree health benefits.
5.1.1 Stay Bonuses. Each Company Employee who remains
employed with the Company or Buyer during the six (6)
month period immediately following the Closing Date
(or who are terminated without cause during such six
(6) month period) shall be entitled to a bonus (the
"Stay Bonus"), payable by the Company within one (1)
month of the end of such six (6) month period, equal
to three (3) months of such Company Employee's then
existing base salary. The Buyer shall cause the
Company to pay such amounts and Seller shall pay
Buyer an amount equal to one-half (1/2) of the amount
of such Stay Bonuses paid by the Company. Any Stay
Bonus paid to any Company Employees shall be in
addition to, and not in lieu of, any severance
payment required to be paid to such employees by
Buyer in accordance with Section 5.1.
5.2 Pension Plan. As of the Closing Date, Company Employees shall
cease to actively participate in the ConAgra Pension Plan for
Salaried Employees (the "Pension Plan") and will receive no
further benefit accruals under the Pension Plan. Seller shall
retain all assets and liabilities relating to the Pension
Plan, and the participation by the Company Employees
thereunder. Service, compensation and other items related to
the computation of Pension Plan benefits with respect to
Company Employees for periods after the Closing Date shall not
be considered for purposes of the Pension Plan.
5.3 401(k) Plans. As of the Closing Date, Company Employees shall
cease to actively participate in the ConAgra Retirement Income
Savings Plan (the
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"401(k) Plan") and no further contributions shall be made to
the 401(k) Plan for the benefit of Company Employees. As of
the Closing Date, the interests of the Company Employees in
the 401(k) Plan shall be one hundred percent (100%) vested and
shall be fully nonforfeitable, except that the interests of
the Company Employees shall not vest in any "special
contributions" made by the Company or on the Company's behalf
to the 401(k) Plan. Seller shall retain all assets and
liabilities relating to the 401(k) Plan, and the participation
by the Company Employees thereunder. The Retained Liabilities
include all obligations relating to the vesting or non-vesting
of the special contribution.
5.4 Welfare Plans. The parties acknowledge that the Company
Employees participate in Seller's welfare benefit plans and
programs. As of the Closing Date, Company Employees shall
cease to participate in such welfare plans and programs.
5.5 Seller Acknowledgment of Responsibility with Respect to
Employee Plans. Seller agrees to accept all past, present and
future liabilities and responsibilities as plan sponsor,
within the meaning ofss. 3(16)(B) of ERISA, of any Employee
Plan (as defined in Section 6.21), including without limit the
Pension Plan, the 401(k) Plan, and all welfare benefit plans
and programs referred to in Section 5.4. Seller agrees that
Buyer shall have no liability for any period with respect to
any such Employee Plans, and any cost, expense or liability
that may be incurred by Buyer or the Company in connection
with any such Employee Plan shall be subject to
indemnification pursuant to Section 12.1.
5.6 WARN. Buyer shall be responsible for, and shall indemnify and
hold Seller harmless against and in respect of any liability,
loss, claim damage or deficiency that arises pursuant to the
Worker Adjustment and Retraining Notification Act (29 U.S.C.
Sections 2101-2109) or any similar state or local laws or
ordinances on account of, or in connection with, any action
taken by Buyer or the Company from and after the Effective
Time.
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5.7 Buyer Plans. Subject to the rules for qualification of plans
under ss. 401(a) of the Code, Buyer agrees to grant, and shall
cause its ERISA Affiliates (as defined in Section 6.21) to
grant, credit to Company Employees for service accrued by such
Company Employees as employees of the Company, Seller, or
their ERISA Affiliates, for purposes of calculating
eligibility and vesting service under any benefit plan
(including the Buyer Severance Policy) provided to Company
Employees of which Buyer or any of its ERISA Affiliates is the
sponsor, after Closing. Buyer shall waive all preexisting
condition requirements, eligibility requirements, waiting
period requirement and any similar provision for all Company
Employees that are covered by the Seller's health care plan as
of the Closing other than known preexisting conditions which
were excluded by the Seller's health care plan, and shall
provide such health care coverage effective as of the Closing
without the application of any eligibility period for
coverage. Buyer shall credit all payments made by Company
Employees toward deductible, co-payment, and out-of-pocket
limits under the Seller's health care plan for the plan year
which includes the Closing as if such payments had been made
for similar purposes under Buyer's health care plan during the
plan year which includes the Closing, with respect to
employees employed by Buyer as of the Closing.
5.8 Cooperation. The parties shall cooperate with each other to
provide any information, filings or notices as appropriate
with respect to this Section 5. Buyer shall assist in
providing any information, filings or notices (including the
notice required by Section 204(h) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) as needed
to cease the benefit accruals.
5.9 COBRA. Seller will be responsible for all COBRA obligations,
costs and expenses relating to employees of the Company who
terminate employment with the Company prior to the Effective
Time, and Buyer and the Company will be responsible for all
COBRA obligations, costs and expenses relating to employees of
the Company who terminate employment with the Company from and
after the Effective Time.
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6. Representations and Warranties of Seller. Seller hereby represents
and warrants to and with Buyer as set forth below. Such representations and
warranties are made subject to certain exceptions and qualifications set forth
in the Seller Disclosure Schedule dated as of the date hereof and delivered as a
separate document and incorporated in this Agreement by reference (the
"Disclosure Schedule") The representation(s) and warranty(ies) to which each
such exception or qualification relates is(are) specifically identified (by
cross-reference or otherwise) in the Disclosure Schedule unless the
applicability of such exception is apparent on its face.
6.1 Organization, Good Standing and Corporate Power. Each of
Seller and the Company is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware and the Company has the corporate power to
own, operate and lease its properties and to carry on its
business as now being conducted. The Company is qualified to
conduct its business and is in good standing in all
jurisdictions in which such qualification or authorization is
required, except for those jurisdictions in which failure to
be so qualified or authorized would not have a material
adverse effect on the business or operations of the Company.
6.2 Articles and By-Laws. Seller has previously furnished to Buyer
complete and correct copies of (a) the Certificate of
Incorporation of the Company as amended to the date furnished,
certified by the Secretary of State of Delaware, (b) the
By-Laws of the Company as in effect on the date furnished,
certified by the Secretary of the Company, and (c) the minute
books of the Company. Such Certificate of Incorporation and
By-Laws have not been further amended and are in full force
and effect, and the Company is not in violation of any
provisions thereof.
6.3 Corporate Authorization; Binding Effect. Seller has full power
and authority to execute this Agreement and to perform its
obligations hereunder. This Agreement and the consummation of
the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the
part of Seller and constitutes the legal, valid and binding
obligation of Seller enforceable in accordance with its terms.
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6.4 Effect of Agreement. The execution, delivery and performance
of this Agreement and the consummation of the transactions
contemplated hereby will not, with or without the giving of
notice or the lapse of time or both, (a) violate any provision
of law, statute, rule or regulation to which Seller or the
Company is subject, (b) violate any judgment, order, writ or
decree of any court applicable to Seller or the Company; or
(c) except as set forth in the Disclosure Schedule, result in
the breach of, or conflict with, any term, covenant or
condition of, result in or permit the modification or
termination of, constitute a default under, or result in the
creation or imposition of any lien, security interest or
encumbrance upon any of the Company's assets pursuant to,
Seller's or the Company's certificate of incorporation,
by-laws, or any Material Contract (as defined in Section 6.18
below), or any Permits listed in the Disclosure Schedule to
which Seller or the Company is a party.
6.5 No Government Authorization Required. Except for compliance
with the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended (the "HSR Act"), and except for any filings or
consents required in connection with any permits, licenses or
approvals held or utilized by or for the benefit of the
Company which are listed in the Disclosure Schedule, no
consent, authorization or approval of, or exemption by, or
filings with, any governmental, public or self-regulatory body
or authority is required in connection with the execution,
delivery and performance of this Agreement by Seller.
6.6 No Options, Warrants, Rights. The Company has no outstanding
or authorized options, warrants, rights or any other
agreements of any character obligating it to issue any shares
of its capital stock or any securities convertible into or
evidencing the right to purchase any shares of its capital
stock. Neither Seller nor the Company is a party to any
agreements, arrangements or understandings with respect to the
voting, transfer or assignment of, or obligating the Company
to repurchase, redeem or otherwise acquire, the Purchased
Stock.
6.7 Title to Company Shares. Seller is the lawful and equitable
owner of all of the shares of Purchased Stock, free and clear
of all liens, claims, options,
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charges and encumbrances. The shares of Purchased Stock
constitute all of the authorized, issued and outstanding
shares of capital stock of the Company. All of the shares of
the Purchased Stock have been duly authorized and validly
issued, and are fully paid and non-assessable.
6.8 No Subsidiaries. The Company does not control or own any
equity interest in any corporation, partnership, limited
liability company or other entity (whether as direct
subsidiaries or through intervening subsidiaries).
6.9 Financial Statements. Seller has heretofore delivered to Buyer
copies of the audited balance sheets of the Company as of May
29, 1994, May 28, 1995 and May 26, 1996, and the related
statements of income, stockholders equity and cash flows for
the years then ended and shall, prior to Closing, deliver to
Buyer copies of the audited balance sheet of the Company as of
May 25, 1997 and the related statement of income, stockholders
equity and cash flow for the year then ended (collectively,
the "Audited Financial Statements"). The Audited Financial
Statements have been or will be prepared in accordance with
generally accepted accounting principles applied on a
consistent basis throughout the periods covered thereby and
present fairly in all material respects the financial position
of the Company as of their respective dates, and the results
of its operations and its cash flows as at the dates and for
the years then ended. Seller also has heretofore delivered to
Buyer unaudited, year-to-date balance sheet and statement of
income of the Company for the twelve (12) months ended May 25,
1997 (the "Interim Financials"). Except as set forth in
Section 6.9 of the Disclosure Schedule, the Interim Financials
were prepared in accordance with generally accepted accounting
principles applied on a basis consistent with the Audited
Financial Statements, and present fairly in all material
respects the financial position of the Company for that period
subject, however, to normal year-end adjustments (which will
not be material) and subject to the omission of footnotes and
statements of cash flow and stockholder's equity. To Seller's
knowledge, the Company does not have any liability required by
generally accepted accounting principles to be accrued on the
balance sheet or reflected in the notes thereto, except for
(i) liabilities set forth in the Audited Financial Statements
or in the Interim Financials or the notes thereto, (ii)
liabilities
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which have arisen after May 25, 1997 in the ordinary course of
business (none of which relates to any breach of contract,
breach of warranty, tort, infringement, or violation of law or
arose out of any charge, complaint, action, suit, proceeding,
hearing, investigation, claim, or demand), and (iii)
liabilities disclosed in the Disclosure Schedule. Seller also
agrees to provide Buyer with a copy of the Company's audited
financial statements for the fiscal year ended May 25, 1997 as
soon as such audited financial statements are available.
6.10 Conduct of Business Since May 26, 1996. Since May 26, 1996 and
except as set forth in the Disclosure Schedule:
6.10.1 The Company has conducted its operations in all
material respects in the ordinary course of business
consistent with past practices.
6.10.2 Other than personal property or inventory purchased,
sold, leased or consumed in the ordinary course of
business, the Company has not purchased, sold,
leased, mortgaged, pledged or otherwise acquired or
disposed of any material properties or assets other
than the Company's closing of certain store locations
listed in the Disclosure Schedule.
6.10.3 The Company has not declared or paid any dividend on,
or made any other distribution or payment (whether
cash or in kind) in respect of or in redemption of,
any shares of stock or other securities other than
through settlement of intercompany accounts in the
ordinary course consistent with past practices which,
for purposes of this Section 6.10.3, shall not be
deemed a declaration or payment of dividend or other
distribution or payment in respect of shares of
stock.
6.10.4 Other than the incentives listed in the Disclosure
Schedule, the Company has not entered into or amended
any written employment agreement and, except in the
ordinary course of
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business or as required by any written employment
agreement, there has been no increase or other change
made in the rate or nature of the compensation,
including wages, salaries and bonuses, which has been
paid, or will be paid or payable, by the Company to
any of its directors, officers or employees.
6.10.5 There has been no material change by the Company in
any method of accounting or accounting practice,
whether Tax (as such term is defined in Section
6.11.3) or otherwise.
6.10.6 There has been no material adverse change in the
financial condition, results of operations or
business (financial or otherwise) of the Company.
6.10.7 There has been no damage, destruction or other
casualty loss to or forfeiture of any material
property or assets of (or used by the Company in the
business of) the Company, whether or not covered by
insurance.
6.10.8 The Company has not engaged in any transactions with
its affiliates except in the ordinary course of
business.
6.10.9 The Company has not incurred or assumed any debt,
obligation (including capitalized lease obligations)
or liability for borrowed money, or made any
commitment to do any of the foregoing, or issued any
debt securities or assumed, guaranteed, endorsed or
otherwise as an accommodation become responsible for
liabilities of any other person.
6.10.10 The Company has not agreed to take any actions
inconsistent with or in contravention of the
foregoing representations in this Section 6.10.
The provisions of this Section 6.10 shall not apply to
environmental matters which are solely addressed in Section
6.22 below.
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6.11 Non-Income Taxes and Non-Income Tax Returns.
6.11.1 General Tax Representations.
(i) The Company has duly filed all federal,
state, local and foreign Non-Income Tax (as
defined below) returns required to be filed
by it for all Pre-Closing Periods, and the
Company has duly paid or made provision in
accordance with generally accepted
accounting principles for the payment of all
Non- Income Taxes which are due and payable
pursuant to such returns or pursuant to any
assessment with respect to Non-Income Taxes
in such jurisdictions for such periods,
whether or not in connection with such
returns;
(ii) The provisions for Non-Income Taxes
reflected on the Final Special Purpose
Balance Sheet of the Company will be
established in accordance with Applicable
Accounting Principles;
(iii) There are no pending examinations or claims
asserted for Non-Income Taxes of the Company
or outstanding agreements or waivers
extending the statutory period of limitation
applicable to any Non-Income Tax return of
the Company for any period or any pending
Non-Income Tax litigation or proceedings of
the Company;
(iv) The Company has not filed either a consent
to the application of Section 341(f) of the
Code (as defined below) or an election to be
treated as a small business corporation
under Subchapter S of the Code;
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(v) The Company has complied in all material
respects for all prior periods with the
payroll Tax and withholding provisions of
all applicable federal, state, local and
other laws;
(vi) There are no liens on any of the assets of
any of the Company that arose in connection
with any failure (or alleged failure) to pay
any Non-Income Tax except for liens for
Non-Income Taxes that are not delinquent or
are being contested in good faith and for
which provision in accordance with
Applicable Accounting Principles has been
made;
(vii) The Company has made no payments, is not
obligated to make any payments, and is not a
party to any agreement that under certain
circumstances could obligate it to make any
payments, that will not be deductible under
Code Section 28OG; and
(viii) The Seller is a United States Person as
defined in Section 7701(a)(30) of the Code.
6.11.2 Taxes Since May 26, 1996. Since May 26, 1996, the
Company has not incurred any material Non-Income Tax
liability other than Non-Income Taxes incurred in the
ordinary and regular course of its business.
6.11.3 Definitions. For purposes of this Agreement, (i) the
term "Tax" or "Taxes" shall mean all taxes, charges,
fees, levies, withholdings or other assessments of
any kind whatsoever, including, without limitation,
income, gross receipts, excise, property, sales, use,
license, payroll, franchise, withholding, social
security (or similar), unemployment, value added,
duties, business occupation, transfer and recording
taxes, fees and charges, imposed by the United
States, or any state, local or
-23-
foreign authority, government or subdivision or
agency thereof whether computed on a consolidated,
unitary, combined, separate or any other basis; and
such term shall include any and all interest,
penalties and additions to tax, as well as any
primary or secondary liability for taxes; (ii) the
term "tax return" shall mean any report, return or
other document or information required by law to be
supplied to a taxing authority in connection with
Taxes; (iii) the term "Pre-Closing Period" shall mean
any Tax period that ends on or before the Closing
Date, and, with respect to any Tax period beginning
on or before and ending after the Closing Date, shall
mean the portion of such Tax period ending on the
Closing Date; (iv) the term "Income Taxes" shall mean
all federal, state, local, foreign and other
governmental Taxes imposed on or with respect to
gross or net income (whether denominated as income
taxes, franchise taxes or otherwise, but not
including any such Tax which is the equivalent of a
sales, use, gains, documentary, registration, value
added, transaction, transfer, or similar Taxes)); (v)
the term "Non-Income Taxes" shall mean all Taxes
other than Income Taxes; and (vi) the term "Code"
means the Internal Revenue Code of 1986, as amended.
6.12 Properties. The Disclosure Schedule sets forth the following
information as of the dates noted:
6.12.1 A list of all real estate owned (the "Owned Real
Property") or leased (the "Leased Real Property") by
the Company (or leased by Seller or any of its
affiliates and used by the Company) as of the date
hereof (collectively, the "Real Property"), which
list represents all Real Property used by the Company
in the conduct of its business.
6.12.2 A list of all equipment leases related to equipment
or vehicles leased or used by the Company which
require annual rental payments in excess of Twenty
Five Thousand Dollars ($25,000).
-24-
The Company has good and insurable fee simple title
to all Owned Real Property and good title to all
personal property owned by the Company, and the
Company has valid leasehold interests in all Leased
Real Property and leased personal property reflected
as being leased by the Company in the Disclosure
Schedule, except such as shall have been disposed of
in the ordinary course of business since the dates
set forth above. The properties and assets owned by
the Company are subject to no liens, mortgages,
pledges, encumbrances or charges of any kind except
(i) liens for real property taxes not delinquent or
being contested in good faith and for which adequate
provision has been made, which contested taxes are
listed in the Disclosure Schedule, (ii) statutory
mechanics and material man's liens on the real estate
for work or goods supplied thereto in the ordinary
course of business, (iii) liens, covenants,
restrictions, easements and encumbrances disclosed in
the title insurance policies previously provided by
Seller to Buyer, and (iv) such other exceptions as
are disclosed in the Disclosure Schedule. The
buildings and improvements owned by the Company do
not encroach on any property not owned or controlled
by the Company so as to materially interfere with the
Company's ability to conduct its business on such
property in a manner consistent with the business
conducted by the Company thereon prior to the Closing
Date. Neither Seller nor the Company has received any
written notice from any public authority having
jurisdiction over such matters that there is
currently existing any material violation of any
building code, zoning ordinance or similar laws or
regulations pertaining to Owned Real Property or
Leased Real Property or improvements owned or used by
the Company. The Seller has furnished to Buyer copies
of all leases with respect to the Leased Real
Property. Except as disclosed in the Disclosure
Schedule, no lease with respect to the Leased Real
Property has a provision for an increase in rent or
the imposition of other terms more
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burdensome to the tenant that has been or will be
triggered by consummation of the transactions
contemplated herein.
6.13 Licenses, Permits and Orders. The Company has all material
registrations, approvals, licenses and other permits
(collectively, the "Permits") which are necessary for the
operation of its business as now being conducted, and all such
Permits are listed in the Disclosure Schedule. The Company is
not in breach or operating in violation of any such Permits,
where such breach or violation would have an adverse effect on
the Company.
6.14 Directors, Officers and Bank Accounts. The Disclosure Schedule
contains a complete and accurate list of all officers and
directors of the Company. The Disclosure Schedule also sets
forth the name of each bank in which the Company has an
account or safety deposit box, together with the account
numbers and the persons authorized to draw thereon.
6.15 Litigation. The Disclosure Schedule sets forth each instance
in which the Company (i) is subject to any unsatisfied
judgment, order, decree, stipulation, injunction, or charge or
(ii) is a party or, to the knowledge of the Seller, is
threatened to be made a party to any charge, complaint,
action, suit, proceeding or investigation of or in any court
or quasi-judicial or administrative agency of any federal,
state, local or foreign jurisdiction or before any arbitrator.
The provisions of this Section 6.15 shall not apply to
environmental matters which are solely addressed in Section
6.22 below.
6.16 Intellectual Property.
6.16.1 For purposes of this Agreement, the term
"Intellectual Property" shall mean:
(a) The name "Country General", and all
fictional business names, trading names,
registered and unregistered trademarks,
service marks, and applications
(collectively, the "Trademarks").
-26-
(b) All distinctive exterior and interior design
and appearance (including color scheme and
building material and layout), menus, style
of service, uniform, distinctive decorative
accessories and other trade dress associated
with the business of the Company
(collectively, the "Trade Dress");
(c) All patents, patent applications, and
inventions and discoveries that may be
patentable (collectively, "Patents");
(d) All copyrights in both published works and
unpublished works (collectively,
"Copyrights"); and
(e) All know-how trade secrets, confidential
information, customer lists, software,
technical information, data, process
technology, plans, drawings, and blue prints
(collectively, "Trade Secrets");
in each case, owned, used, or licensed by the Company
as licensee or licensor.
6.16.2 To Seller's knowledge, the Company has adequate and
sufficient rights in all Intellectual Property
necessary for the operation of the business of the
Company as presently conducted in the United States,
and each item of Intellectual Property owned or used
by the Company immediately prior to the Closing
hereunder will be owned or available for use by the
Company on identical terms and conditions immediately
subsequent to the Closing hereunder.
6.16.3 The Disclosure Schedule hereto contains a complete
and accurate list and summary description, including
any royalties paid or received by the Company, of all
contractual obligations
-27-
relating to the Company's right to ownership and use
of the Intellectual Property to which the Company is
a party or by which the Company is bound, except for
perpetual, paid-up licenses for commonly available
software programs with a value of less than $10,000
under which the Company is the licensee. There are no
outstanding and, to the knowledge of the Seller no
threatened dispute or disagreement with respect to
any such agreement.
6.16.4 The Disclosure Schedule contains a complete and
accurate list of all federal registrations of
trademarks and trade names owned by the Company (the
"Registrations"). Except as set forth in such
Disclosure Schedule:
(a) The Company is the owner of all right,
title, and interest in and to each of the
Registrations, free and clear of all liens
and encumbrances;
(b) All Registrations are currently in
compliance with all formal legal
requirements (including the timely
post-registration filing of affidavits of
use and incontestability and renewal
applications);
(c) No Registration has been or is now involved
in any opposition, invalidation, or
cancellation and, to the knowledge of the
Seller, no such action is threatened with
respect to any of the Registrations;
(d) Except as set forth in the Disclosure
Schedule, none of the Trademarks noted in
the Disclosure Schedule as "Material
Trademarks" (the "Material Trademark") as
currently used by the Company at the
locations currently used by the Company
infringes or is alleged to infringe any
trade name, trademark, or service xxxx of
any third party which
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would have a material adverse effect on the
business and operation of the Company as
currently conducted.
6.16.5 The Company has no Patents.
6.16.6 The Company has no Copyright registrations.
6.17 Compliance with Laws. The Company is now and has been for the
last five (5) years in material compliance with all applicable
federal, foreign, state and local laws, ordinances, rules and
regulations. The Disclosure Schedule sets forth for the past
twelve (12) months, in respect to the Company, all material
investigations, inspections or citations under any health,
safety or other applicable laws and regulations and under any
other federal, state or local laws or regulations, together
with the results thereof and a brief description of all
corrective or other action taken with respect thereto. The
Company has no knowledge of any pending or threatened
governmental investigations, inspections or citations relating
to its business or operations. The provisions of this Section
6.17 shall not apply to environmental matters which are solely
addressed in Section 6.22 below.
6.18 List of Contracts and Other Data. The Disclosure Schedule sets
forth a listing of all contracts (including licenses, leases,
indentures, guaranty and indemnification agreements, loan
agreements, sales agency, broker and dealer agreements,
noncompete, employment and consulting agreements) to which the
Company is a party, except (i) open purchase orders entered
into in the ordinary course of business, (ii) cooperative
advertising contracts entered into in the ordinary course of
business, (iii) any contract (other than a noncompetition
agreement) which involves an aggregate expenditure after the
date of this Agreement of less than Fifty Thousand Dollars
($50,000), and (iv) any contract that may be terminated by the
Company on no more than ninety (90) days notice without
penalty (collectively, the "Material Contracts"). The
Disclosure Schedule also sets forth a listing of the Company's
largest ten (10) suppliers during its fiscal year ended May
25, 1997.
-29-
(i) All Material Contracts are in full force and effect
and are valid and binding on and enforceable against
the Company and, to the Seller's knowledge, the other
parties thereto;
(ii) Neither the Company nor, to Seller's knowledge, any
other party to any Material Contract is in breach of
any provision of, in violation of, or in default
under the terms of any Material Contract;
(iii) No event has occurred which, after the giving of
notice or passage of time or otherwise, would
constitute a breach or default or permit termination,
modification or acceleration, under of any Material
Contract by the Company or, to Seller's knowledge, by
any other party;
(iv) Seller has made available to Buyer accurate and
complete copies of each Material Contract;
(v) Except as set forth in the Disclosure Schedule, the
consummation of the transactions contemplated hereby
will not contravene or constitute a default under or
require consent or result in termination or
impairment of any Material Contract.
6.19 Related Party Transactions. The Disclosure Schedule sets forth
a description of all significant services provided by Seller
to the Company, as well as transactions between the Company on
one hand, and Seller or its other subsidiaries or affiliates
on the other, except for those services or transactions
occurring in the ordinary course of business on an arms'
length basis.
6.20 Labor Relations. The Company is not a party to or bound by any
collective bargaining agreement. There are no material
controversies pending or, to the knowledge of Seller,
threatened between the Company and any of its employees.
Except as set forth in the Disclosure Schedule, there are no
-30-
claims pending or, to Seller's knowledge, threatened against
the Company in respect to any unfair labor practices or age,
sex, religion or national origin discrimination complaints
before any federal, state or local board, department,
commission or agency. There are no existing or, to the
knowledge of Seller, threatened labor strikes or material
disputes or grievances affecting the Company. There are no
pending or, to the knowledge of Seller, threatened
representation questions respecting the employees of the
Company and there are no pending or, to the knowledge of
Seller, threatened arbitration proceedings arising out of or
under any union contract. Except as set forth in the
Disclosure Schedule, the Company has complied in all material
respects with all federal, state and local laws relating to
employment, wages, hours, working conditions, collective
bargaining and the payment of social security, unemployment
and similar taxes, and the Company is not liable for any
arrears of wages or any taxes or penalties for failure to
comply with any of the foregoing; and there are no
proceedings, investigations or citations pending before any
court, governmental agency or instrumentality or arbitrator
relating to any failure to comply therewith.
6.21 Employee Plans. For purposes of this Section 6.21, the term
"Employee Plan" includes all pension, retirement, disability,
medical, dental or other health insurance plans, life
insurance or other death benefit plans, profit sharing,
deferred compensation, stock option, bonus or other incentive
plans, vacation benefit plans, severance plans or other
employee benefit plans or arrangements, including, without
limitation, any "pension plan" ("Pension Plan") as defined in
Section 3(2) of ERISA, and any "welfare plan", as defined in
Section 3(1) of ERISA, whether or not any of the foregoing is
funded, (a) to which the Company, any ERISA Affiliate or any
Subsidiary is a party or by which it is bound; or (b) with
respect to which the Company has made any payments or
contributions; or (c) to which the Company may otherwise have
any liability. "Employee Plan" shall not include any
government sponsored employee benefit arrangements. "ERISA
Affiliate" means any such person (as defined in Section 3(9)
of ERISA) which, together with the Company and any subsidiary
would be deemed to be a single employer within the meaning of
Section 414(b), (c), (m) or (o) of the Code.
-31-
6.21.1 Except as set forth in the Disclosure Schedule, there
are no Employee Plans relating to any present Company
Employees.
6.21.2 The Company, each Employee Plan, and the
administrator and fiduciaries of each Employee Plan
have complied in all material respects with all
applicable legal requirements governing each Employee
Plan. No material lawsuits or complaints to, or by,
any person or government entity, are pending or, to
Seller's knowledge, threatened with respect to any
Employee Plan.
6.21.3 Neither the Company, any Employee Plan, nor any
administrator or fiduciary of any Employee Plan has
taken any action, or failed to take any action, that
could subject it or him or her or any other person to
any material liability for any excise tax or for
breach of fiduciary duty with respect to or in
connection with any Employee Plan.
6.21.4 Neither the Company, any Employee Plan, any
administrator or fiduciary of any Employee Plan nor
any other person has any material liability to any
plan participant, beneficiary or other person under
any provision of ERISA or any other applicable law by
reason of any payment of benefits or other amounts or
failure to pay benefits or any other amounts, or by
reason of any credit or failure to give credit for
any benefits or rights (such as, but not limited to,
vesting rights) with respect to benefits under or in
connection with any Employee Plan. The Company is
not, to any material extent, in arrears with respect
to any contributions under any Employee Plan. No
reportable event, as defined under Title IV of ERISA,
will occur as a result of the transactions
contemplated by this Agreement.
6.21.5 Each funded Employee Plan that is a Pension Plan is
qualified under Section 401(a) of the Code, and the
trust or trusts maintained in connection with such
Employee Plan is or are exempt from tax under Section
501 (a) of the Code. A
-32-
favorable IRS determination letter as to the
qualification under the Code has been received for
each such trust.
6.21.6 The Company is not now, nor has it been during the
past five (5) year period, a participating employer
in a multiemployer plan (as defined in Section 3(37)
of ERISA).
6.21.7 None of the Pension Plans has incurred an
"accumulated funding deficiency" as defined in
Section 412 of the Code.
6.21.8 No liability under Subtitle C or D of Title IV of
ERISA has been or is expected to be incurred by the
Company with respect to any ongoing, frozen or
terminated "single employer plan", within the meaning
of Section 4001(a)(15) of ERISA.
6.21.9 All accrued obligations of the Company for payments
by it to by trust or other funds or to any
governmental or administrative agency, with respect
to pension benefits, unemployment compensation
benefits, social security benefits or any other
benefits for employees of the Company have been paid
or adequate accruals therefor have been made in the
Audited Financial Statements, and none of the
foregoing has been rendered not due by reason of any
extension, whether at the request of the Company or
otherwise.
6.21.10 Except as set forth in the Disclosure Schedule, all
obligations of the Company for salaries, vacation and
holiday pay, bonuses and other forms of compensation
which were payable to its officers, directors or
other employees have been paid or adequate accruals
therefor have been made in the Audited Financial
Statements.
6.21.11 The Company is in compliance with the requirements of
Sections 162(k) (to the extent applicable prior to
its amendment
-33-
by the Technical and Miscellaneous Revenue Act of
1988) and 4980B of the Code and Section 601 of ERISA.
6.22 Environmental.
6.22.1 The Disclosure Schedule lists all charges,
complaints, actions, suits, proceedings, hearings,
investigations, claims, demands, or notices which, to
the knowledge of Seller, have been filed, commenced
or threatened against the Company under any
Environmental Laws.
6.22.2 There has been no disposal, release, burial, or
placement of Hazardous Materials by any of the
Company and its affiliates which could reasonably be
expected to result or has resulted in contamination
of or beneath any Leased Real Property or any
properties or facilities formerly leased, operated or
occupied by any of the Company and its affiliates at
any time since its organization which requires or
will require clean-up or remediation under
Environmental Laws; provided, however, no
representation or warranty is made, or shall be
deemed made, with respect to any underground storage
tanks ("UST's") located on any such properties or any
release from any such UST's. No pollutant,
contaminant, or chemical, industrial, hazardous, or
toxic material or waste ever has been buried, stored,
spilled, leaked, discharged, emitted, or released by
the Company on any Leased Real Property or any real
property that the Company formerly leased which
requires or will require clean-up or remediation
under Environmental Laws; provided, however, no
representation or warranty is made, or shall be
deemed made, with respect to any UST's located on any
such properties or any release from any such UST's.
6.22.3 There is no basis for any present or future charge,
complaint, action, suit, proceeding, investigation,
claim, or demand against the Company giving rise to
any liability under any
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Environmental Laws related to any Owned Real Property
or any properties or facilities formerly owned by any
of the Company and its affiliates or to any past or
present operations conducted thereon (whether or not
conducted by any of the Company and its affiliates).
There has been no disposal, release, burial, or
placement of Hazardous Materials (whether or not by
any of the Company and its affiliates) which could
reasonably be expected to result or has resulted in
contamination of or beneath any Owned Real Property
or any properties or facilities formerly owned by any
of the Company and its affiliates at any time since
its organization which requires or will require
clean-up or remediation under Environmental Laws;
provided, however, no representation or warranty is
made, or shall be deemed made, with respect to any
UST's located on any such properties or any release
from any such UST's. No pollutant, contaminant, or
chemical, industrial, hazardous, or toxic material or
waste ever has been buried, stored, spilled, leaked,
discharged, emitted, or released on any Owned Real
Property or any real property that the Company
formerly owned that requires or will require clean-up
or remediation under Environmental Laws; provided,
however, no representation or warranty is made, or
shall be deemed made, with respect to any UST's
located on any such properties or any release from
any such UST's. All properties and equipment
currently or formerly owned by the Company have been
free of asbestos, PCB's, methylene chloride,
trichloroethylene, 1,2 trans-dichloroethylene,
dioxins, dibenzofurans, and Extremely Hazardous
Substances in quantities or conditions which requires
or will require clean-up or remediation under
Environmental Laws; provided, however, no
representation or warranty is made, or shall be
deemed made, with respect to any UST's located on any
such properties or any release from any such UST's.
All product labeling of the Company has been in
conformity with applicable laws (including rules and
regulations thereunder).
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6.22.4 For purposes of this Section 6.22:
(a) "Environmental Laws" shall mean any
presently existing federal, state, local or
foreign law, statute, ordinance, rule,
regulation, consent, judgment, order or
permit pertaining to the environment,
natural resources or Hazardous Materials.
(b) "Extremely Hazardous Substances" has the
meaning set forth in Section 302 of the
Emergency Planning and Community
Right-to-Know Act of 1986, as amended.
(c) "Hazardous Materials" shall mean any
substance or material (a) the presence of
which requires investigation, removal or
remediation under any Environmental Law or
(b) that is defined as a "hazardous waste",
"hazardous material" or "hazardous
substance" under any Environmental Law
including but not limited to the Resource
Conservation and Recovery Act of 1976, 42
U.S.C. ss.6091 et. seq., as amended, and the
rules and regulations promulgated thereunder
and the Comprehensive Environmental
Response, Compensation and Liability Act of
1980, 42 U.S.C. 9601 et. seq., as amended,
and the rules and regulations promulgated
thereunder ("CERCLA" or "Superfund").
6.22.5 Underground Storage Tanks. Notwithstanding the
foregoing provisions of this Section 6.22, no part of
Section 6.22.1 through 6.22.4 shall apply to, nor
shall be deemed to apply to, any underground storage
tanks which currently exist or previously existed on
any real property that the Company or any of its
affiliates owns, leases or operates, or has ever
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owned, leased or operated, in connection with the
Company's business and operations. The parties'
entire rights, obligations, undertakings and
agreements relating to all such underground storage
tanks are set forth in Section 8.4.1 below.
6.22.6 Environmental Disclaimer. Except as set forth in
Section 8.7 below, the parties hereto specifically
acknowledge and agree that Seller shall have no
liability whatsoever for any environmental matters on
or from any Leased Real Property, or any properties
or facilities formerly leased, operated or occupied
at any time by any of the Company and its affiliates
(not to include, however, any Owned Real Property or
properties or facilities formerly owned by any of the
Company and its affiliates at any time since its
organization), which resulted from the acts or
omissions of any party other than the Company and its
affiliates. In addition, the parties hereto
specifically acknowledge and agree that Seller shall
have no liability with respect to any underground
storage tanks which exist or previously existed on
any real property that the Company or any of its
affiliates owns, leases or operates, or has ever
owned, leased or operated, in connection with the
Company's business and operations, nor any liability
for any releases from any such underground storage
tank, except and only to the extent set forth in
Section 8.4.1 below.
6.23 Brokers and Finders. Seller has not employed any investment
banker, broker or finder or incurred any liability for any
brokerage fees, commissions or finders fees in connection with
the transactions contemplated by this Agreement.
6.24 Inventory. The Company's inventory is owned free and clear of
any liens or security interests, was purchased in the ordinary
course of business in a manner consistent with its normal
inventory practices, and is reflected on the Audited Financial
Statements and the Interim Financials at cost as computed
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in accordance with generally accepted accounting principles,
consistently applied.
6.25 Assets of the Business. The assets owned or leased by the
Company as of the Closing Date will constitute all of the
assets held for use or used for the conduct of the Company's
business, and the sale of the Purchased Stock by Seller to
Buyer will effectively convey the business to Buyer, including
all tangible and intangible assets and goodwill relating to
the business, as will be reflected in the Final Special
Purpose Balance Sheet.
6.26 Insurance. The Disclosure Schedule sets forth the scope of
coverage with respect to each insurance policy (including
policies providing property, casualty liability, and workers'
compensation coverage and bond and surety arrangements) to
which the Company is currently a party, a named insured, or
otherwise the beneficiary of coverage. Seller has also
provided Buyer (or its representatives) with a copy of the
Company's worker's compensation history. With respect to each
such insurance policy: (A) the policy is legal, valid,
binding, and enforceable and in full force and effect; and (B)
neither the Company nor any other party to the policy is in
breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred
which, with notice or the lapse of time, would constitute such
a breach or default or permit termination, modification, or
acceleration, under the policy.
6.27 Disclosure. To Seller's knowledge, the representations and
warranties contained in this Section 6 and the Disclosure
Schedule do not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to
make the statements and information contained in this Section
6 not misleading in any material respect in light of the
circumstance in which made.
7. Representations and Warranties of Buyer. Buyer represents, warrants
and covenants to and with Seller as follows:
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7.1 Organization, Power. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware and has the corporate power to own, operate
and lease its properties and to carry on its business as now
being conducted.
7.2 Corporate Authorization; Binding Effect. Buyer has full power
and authority to execute this Agreement and to perform its
obligations hereunder. This Agreement and the consummation of
the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action on the
part of Buyer and constitutes the legal, valid and binding
obligation of Buyer enforceable in accordance with its terms.
7.3 No Government Authorization Required. Except for compliance
with the HSR Act, no consent, authorization or approval of, or
exemption by, or filing with, any governmental, public or
self-regulatory body or authority is required in connection
with the execution, delivery and performance of this Agreement
by Buyer.
7.4 Brokers and Finders. Except in respect of SBC Warburg Inc.
(whose fees shall be paid by Buyer), Buyer has not employed
any investment banker, broker or finder or incurred any
liability for any brokerage fees, commissions or finders fees
in connection with the transactions contemplated by this
Agreement.
7.5 Effect of Agreement. The execution, delivery and performance
of this Agreement and the consummation of the transactions
contemplated hereby will not, with or without the giving of
notice or the lapse of time or both, (a) violate any provision
of law, statute, rule or regulation to which Buyer is subject,
(b) violate any judgment, order, writ or decree of any court
applicable to Buyer; or (c) result in the breach of, or
conflict with, any term, covenant or condition of, result in
the modification or termination of, or constitute a default
under, any corporate charter, by-law, material contract or
other material agreement to which Buyer is a party.
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7.6 Financing. Buyer has adequate financing and/or financing
commitments attached as Exhibit 7.6 as may be necessary to pay
the Purchase Price and to otherwise fulfill its financial
obligations set forth in this Agreement. The transactions
contemplated herein are not contingent upon Buyer's ability to
obtain financing from any third party other than receipt of
funding under such financing commitments.
7.7 Terms of Sale. Buyer acknowledges that EXCEPT AS OTHERWISE
SPECIFICALLY SET FORTH IN THIS AGREEMENT, THE COMPANY IS BEING
SOLD TO BUYER ON AN "AS IS, WHERE IS" BASIS WITHOUT ANY
REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, OTHER THAN
THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET FORTH IN THIS
AGREEMENT.
8. Covenants.
8.1 Covenants of Seller.
8.1.1 Conduct of Business. During the period from June 21,
1997 to the date hereof the Company has conducted and
operated its business in the usual and ordinary
course and, during the period from the date hereof to
the Closing Date, Seller shall cause the Company to
conduct and operate its business in the usual and
ordinary course and shall not, without the prior
written consent of Buyer:
(a) Except in the ordinary course of business or
as required by the terms of any written
employment agreement, increase the
compensation of any employee's pay or agree
to pay a pension, retirement allowance or
other employee benefit to any employees not
required by any existing plan, agreement or
arrangement to any such person;
-40-
(b) Execute any material agreement the terms of
which would be violated or adversely
affected by the consummation of the
transactions contemplated by this Agreement;
(c) Agree to become subject to any liability or
obligation, except liabilities and
obligations incurred in the ordinary course
of business consistent with past practices;
(d) Enter into, accelerate, modify or terminate
any Material Contract (or any series of
related contracts, leases, subleases,
licenses and sublicenses involving more than
$50,000 in the aggregate), other than in the
ordinary course of business consistent with
past practices or modify or terminate any
policy of insurance listed in the Disclosure
Schedule;
(e) Close any store, sell, abandon or otherwise
dispose of, or pledge, mortgage or otherwise
encumber any of the assets, tangible or
intangible, of the Company, other than the
sale or disposal of assets in the ordinary
course of business;
(f) Amend any charter documents or by-laws or
take any action with respect to any such
amendment;
(g) Enter into any material employment contract
or any collective bargaining agreement or
other agreement with any labor union or
similar association representing any
employees or modify in any material respects
the terms of any existing contract or
agreement;
-41-
(h) Except as otherwise contemplated herein,
declare or make any dividend payment or
distribution to any shareholder, or
purchase, redeem or otherwise acquire, any
shares of Purchased Stock other than through
settlement of intercompany accounts in the
ordinary course, consistent with past
practices which, for purposes of this
Section 8.1.1(h), shall not be deemed a
declaration or payment of dividend or other
distribution or payment; or
(i) Merge or consolidate with any other
corporation or acquire or agree to acquire
any stock or substantially all of the assets
of any other person, firm, association,
corporation or other business organization;
(j) Make any capital expenditure (or series of
related capital expenditures) involving more
than $400,000 in the aggregate;
(k) Make any capital investment in any loan to,
or any acquisition of the securities or
assets of any other person (or series of
related capital investments, loans and
acquisitions) either involving more than
$50,000 or outside the ordinary course of
business;
(l) Delay or postpone the payment of accounts
payable and other liabilities or accelerate
receivables or liquidate inventories except
in the normal course of business;
(m) Cancel, compromise, waive, or release any
right or claim (or series of related rights
and claims) involving more than $50,000;
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(n) Grant any license or sublicense of any
rights under or with respect to any
intellectual property;
(o) Issue, sell, or otherwise dispose of any of
its capital stock, or grant any options,
warrants, or other rights to purchase or
obtain (including upon conversion or
exercise) any of its capital stock;
(p) Make any loan to, or enter into any other
transaction with, any of its directors,
officers, and employees outside the ordinary
course of business (other than as otherwise
provided for or referenced elsewhere in this
Agreement);
(q) Adopt any (A) bonus, (B) profit-sharing, (C)
incentive compensation, (D) pension, (E)
retirement, (F) medical, hospitalization,
life or other insurance, (G) severance or,
(H) other plan, contract, or commitment for
any of its directors, officers, and
employees, or modify or terminate any
existing such plan, contract, or commitment;
(r) Make or pledge to make any charitable or
other capital contribution outside the
ordinary course of business;
(s) Enter into any commitment to do any of the
foregoing.
8.1.2 Preservation of Business. From the date hereof
through the Closing Date, the Company shall use all
reasonable efforts to preserve intact the business
organization of the Company, to keep available the
services of the present officers and key employees
thereof, and to preserve the good will of those
having business relationships with the Company.
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8.1.3 Information and Access. From the date hereof through
the Closing Date, Seller and the Company shall give
Buyer and its counsel, accountants and other
representatives access during normal business hours
to all properties, books, contracts, documents and
records, with respect to the affairs of the Company
as Buyer may reasonably request at such times and in
such manner as will not disrupt or interfere with the
conduct of the Company's business. All such
information shall be held confidential by Buyer
pursuant to the terms of that certain confidentiality
agreement dated May 2, 1997 between Seller and Buyer
and dated November 17, 1996 between Seller and
certain affiliates of Buyer (collectively, the
"Confidentiality Agreement"). During such time,
Seller will endeavor to give prompt notice to Buyer
of any event which would make a representation or
warranty untrue in any material respects or make it
unable to comply with a covenant herein. As soon as
practicable after Closing, Seller shall deliver to
Buyer copies of the financial, accounting and other
information and data maintained by and available to
Seller with respect to the Company which is listed on
Exhibit 8.1.3, and from and after the Closing Seller
shall give Buyer and its representatives access to
such information and data during normal business
hours. Following the Closing, the Seller will hold,
and will cause its affiliates to hold, and will cause
their respective employees, representatives,
consultants and advisors to hold, in strict
confidence, unless compelled to disclose by judicial
or administrative process, or, in the written opinion
of its counsel, a copy of which will be promptly
furnished to the Buyer, by other requirements of law,
all documents and information concerning the Company
or any of its subsidiaries (except to the extent that
such information is in the public domain through no
fault of the Buyer or its Affiliates). If the Seller
shall be required to make disclosure of any such
information by operation of the law, the Seller shall
give the Buyer prior written notice of the making of
such disclosure and shall use all
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reasonable efforts to afford the Buyer an opportunity
to contest the making of such disclosure.
8.1.4 Transition Services. From and after the Closing Date,
the Seller will provide certain services for the
Company on a transition basis pursuant to the terms
of the Transition Services Agreement attached hereto
as Exhibit 8.1.4 (the "Transition Services
Agreement").
8.1.5 Exclusivity. The Seller will not (and the Seller will
not cause or permit any of the Company and its
Subsidiaries to) (a) solicit, initiate, or encourage
the submission of any proposal or offer from any
Person relating to any (i) liquidation, dissolution
or recapitalization, (ii) merger or consolidation,
(iii) acquisition or purchase of securities or
assets, or (iv) similar transaction or business
combination involving any of the Company and its
Subsidiaries, or (b) participate in any discussions
or negotiations regarding, furnish any information
with respect to, assist or participate in, or
facilitate in any other manner any effort or attempt
by any Person to do or seek any of the foregoing;
including, without limitation, providing any
confidential or proprietary business or financial
information concerning the Company to any third
party, irrespective of whether such information is,
subject to a confidentiality agreement executed by
such third party. The Seller will notify the Buyer
immediately if any Person makes any proposal, offer,
inquiry, or contact with respect to any of the
foregoing.
8.2 Topping Fees, Etc. The Seller shall pay, and shall hold the
Buyer harmless and indemnify it with respect to any liability
for, any topping fees, break-up fees or similar or related
fees arising in connection with previous offers or agreements,
if any, to acquire any capital stock or other interest in or
assets of the Company or its Subsidiaries.
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8.3 Intercompany Debt. Immediately prior to the Effective Time,
the Seller will endeavor, and will endeavor to cause each of
its Affiliates to (a) adjust the capital of the Company and
its Subsidiaries to reflect the net amount of all then
outstanding indebtedness and liabilities owed by the Company
or any Subsidiary to the Seller or any Affiliate thereof less
any outstanding indebtedness and liabilities owed by the
Seller or any affiliate thereof to the Company as equity.
Notwithstanding the foregoing, the parties acknowledge and
agree that certain amounts may inadvertently remain owing by
the Company to Seller and reflected as accounts payable on the
Final Special Purpose Balance Sheet and that certain amounts
may inadvertently remain owing by the Seller to the Company
and reflected as accounts receivable on the Final Special
Purpose Balance Sheet. Buyer shall cause the Company to repay
to Seller in the ordinary course of business all such accounts
payable owing to Seller as reflected on the Final Special
Purpose Balance Sheet and Seller shall repay to Buyer in the
ordinary course of business all such accounts receivable owing
from Seller as reflected on the Final Special Purpose Balance
Sheet.
8.4 Covenants of Buyer.
8.4.1 Underground Storage Tanks. The Disclosure Schedule
lists Seller's Real Property locations where
underground storage tanks are known to exist, which
of the locations have been upgraded by Seller under
its ongoing UST compliance program as described in
the Disclosure Schedule (the "Compliance Program"),
and which locations remain to be upgraded pursuant to
the Compliance Program. Seller shall be responsible
for those environmental matters relating to the
Company's UST's which are expressly set forth on
Exhibit 8.4.1(A) attached hereto and except as set
forth below Buyer shall be responsible for and shall
and hereby agrees to indemnify and hold Seller
harmless from and against any obligation, expense,
liability (including penalties, fines and attorney's
fees), or demand for same relating to all other
environmental matters arising in connection with all
other UST's located on any property owned
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or leased by the Company. Exhibit 8.4.1(B) sets forth
a listing of twenty nine (29) Company stores located
on Owned Real Property and ten (10) Company stores
located on Leased Real Property. Within the sixty
(60) day period following Closing, Buyer shall have
the right to contact in writing the applicable state
environmental agency responsible for UST's in each
state where a Company store set forth on Exhibit
8.4.1(B) is located for the sole purpose of obtaining
a copy of whatever existing documents such state
agency may have in its files relating to UST's at the
Company store listed on Exhibit 8.4.1(B). Such
contact shall be a letter in form and substance
mutually acceptable to the parties and such follow-up
contact consistent with such letter. Buyer shall use
its reasonable commercial efforts to obtain the
requested information from the state agencies
contacted by it as quickly and expeditiously as
possible following Closing. Copies of responses
received from such agencies shall be immediately
forwarded to Seller, and in all events Buyer shall
update Seller at least every two (2) weeks as to the
status of responses it has received or has failed to
receive from such state agencies until such time as
Seller has no more liability with respect to any USTs
at the Company stores listed on Exhibit 8.4.1(B). If
the information received by Buyer from such state
agency indicates no environmental issue resulting
from or relating to such UST in violation of
Environmental Laws, Seller's obligation with respect
to such UST shall immediately terminate. As to UST's
at a Company store on Owned Real Property, or as to
UST's currently used by the Company at a store
located on Leased Real Property, if the information
received by Buyer from such state agency indicates an
environmental issue resulting from or relating to
such UST in violation of Environmental Laws, Buyer
shall advise Seller in writing and Seller shall, as
soon as reasonably practical, investigate such issue
and remedy such environmental issue consistently with
Environmental Laws, to the extent not previously done
so. Any remedial action taken by Seller
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pursuant to this Section shall be consistent with the
prior remedial actions taken by the Company, but in
all events consistent with and in compliance with
Environmental Laws. For purposes of this Section
8.4.1, the term "UST" or "underground storage tank"
shall have the same meaning given to that term or a
substantially similar term in any applicable law or
regulation.
8.5 Additional Agreements. Each of the parties hereto agrees to
use its best efforts to take, or cause to be taken, all action
and to do, or cause to be done, all reasonable things
necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions
contemplated by this Agreement, including using its best
efforts to satisfy the conditions precedent to the obligations
of the other parties hereto, to obtain all necessary waivers,
consents and approvals required in connection with the
transactions contemplated hereby, to effect all necessary
registrations and filings (including, but not limited to,
filings under the HSR Act).
8.6 Company Accounts Receivable. One hundred twenty (120) days
after Closing, Seller shall pay to the Company an amount equal
to one-half (1/2) of the total "Uncollected Receivables" (as
defined below) and the Basket Amount described in Section
12.5.2 shall be reduced as set forth in Section 12.5.2. The
phrase "Uncollected Receivables" shall mean the Company's
receivables as reflected on the Final Special Purpose Balance
Sheet that remain uncollected as of one hundred fifteen (115)
days after Closing, less the allowance for doubtful accounts
reflected on the Final Special Purpose Balance Sheet. If any
of the Uncollected Receivables are later collected by Buyer
and/or the Company, the Company shall immediately remit to
Seller one-half (1/2) of the amount of such collected
Uncollected Receivable and the remaining one-half (1/2) of
such collected Uncollected Receivable shall be added to the
Basket Amount under Section 12.5.2 below.
8.7 Columbus, Nebraska Leased Real Property. The parties
acknowledge that Seller has indicated that, approximately
eight (8) years ago, a petroleum spill on property adjacent to
the Columbus Leased Real Property (which adjacent
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property is currently owned by Xxxxxxx Xxxxxxxxx, 00
Xxxxxxxxx, Xxxxxxxxxxxxx, Xxxxxxxxxx), was reported to the
State of Nebraska (the "Spill"). The party responsible for the
Spill was identified by the State of Nebraska as Xxxxxxx Oil
Co. of Cuba, Kansas. In connection with such Spill, a
monitoring well has been placed on the Columbus Leased Real
Property. In the event Buyer or the Company is required to
remedy any contamination at the Columbus Leased Real Property
resulting from the Spill, Seller shall arrange for, and pay
the cost of, remediating such contamination under
Environmental Laws. Seller's liability under this Section 8.7
shall terminate on the earlier of (i) July 1, 2000 (unless,
prior to that time, Buyer receives, and provides to Seller a
copy of, notice from a third party claiming that Buyer or the
Company is required to remedy such contamination), or (ii)
action or communication from state officials that the matter
is closed or requires no further action. Seller agrees to
remedy such contamination as expeditiously as practical under
the then existing circumstances. Buyer shall cooperate, and
shall cause Company to cooperate with Seller in all reasonable
respects with regard to Seller's obligations under this
Section 8.7, to include assisting Seller in asserting and
participating as a party in any claims, demands, or actions
against any responsible party, to include the current and/or
past owner or operator of the property adjacent to the
Columbus Leased Real Property including, Xx. Xxxxxx, K-Mart,
Xxxxxxx Xxxxxxxxx and/or Xxxxxxx Oil Co., for the purpose of
collecting the cost and expense incurred in connection with
remedying environmental problems addressed in this Section
8.7. Reasonable third party expenses (including reasonable
attorney's fees) incurred by Buyer in so cooperating with
Seller shall be paid by Seller. To the extent any federal or
state fund is available to reimburse Seller for the work
contemplated herein, Seller shall be entitled to all
recoveries from such funds, and the Buyer's and Company's
duties to cooperate extend to any application or claim Seller
makes against such funds.
9. Conditions Precedent to Obligations of Buyer. The obligation of
Buyer to consummate the transactions contemplated herein is subject to the
satisfaction, at or prior to the Closing Date, of all of the following
conditions:
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9.1 Accuracy of Representations and Warranties. The
representations and warranties of Seller contained in this
Agreement shall have been true in all material respects when
made and, in addition, shall be true in all material respects
on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date.
9.2 Performance of Agreements. Seller shall have performed all
material obligations and complied, in all material respects,
with all covenants and conditions contained in this Agreement
to be performed and complied with by it at or prior to the
Closing Date.
9.3 Certificate. At the Closing, Seller shall have delivered to
Buyer an officer's certificate, dated as of the Closing Date
stating that Seller has fulfilled the obligations set forth in
Sections 9.1 and 9.2.
9.4 HSR Act. All applicable waiting periods specified in the HSR
Act shall have expired.
9.5 Consents. The Seller shall have procured landlord consents
relating to the change of control of the Company or any
subsequent merger transaction involving the Company after
Closing with respect to the store leases at Douglas, Cheyenne,
Ogallala, Casper, Montrose and Loveland as well as consents
from the lessors under the Equipment Sublease.
9.6 No Litigation, Etc. No action, suit, or proceeding shall be
pending before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction
wherein any unfavorable judgment, order, decree, stipulation,
injunction, or charge would (A) prevent consummation of the
purchase and sale of the Purchased Stock contemplated by this
Agreement, (B) cause the purchase and sale of the Purchased
Stock contemplated by this Agreement to be rescinded following
consummation, or (C) materially and adversely affect the right
of Buyer to own, operate, or control the Purchased Stock or
the Company (and no such judgment, order, decree, stipulation,
injunction, or charge shall be in effect).
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9.7 Ancillary Agreements. The Seller shall have entered into the
non competition agreement in form attached hereto as Exhibit
9.7, the Transition Services Agreement and the Equipment
Sublease.
9.8 Financial Statements. Seller shall have delivered to Buyer
copies of the audited balance sheet of the Company as of May
25, 1997 and the related statements of income, stockholders
equity and cash flow for the year then ended.
10. Conditions Precedent to Obligations of Seller. The obligation of
Seller to consummate the transactions contemplated herein is subject to the
satisfaction, at or prior to the Closing Date, of all of the following
conditions:
10.1 Accuracy of Representations and Warranties. The
representations and warranties of Buyer contained in this
Agreement shall have been true in all material respects when
made and, in addition, shall be true in all material respects
on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date.
10.2 Performance of Agreements. Buyer shall have performed all
material obligations and complied, in all material respects,
with all covenants and conditions contained in this Agreement
to be performed and complied with by it at or prior to the
Closing Date.
10.3 Certificate. At the Closing, Buyer shall have delivered to
Seller an officer's certificate, dated as of the Closing Date,
stating that Buyer has fulfilled the obligations set forth in
Sections 10.1 and 10.2.
10.4 HSR Act. All applicable waiting periods specified in the HSR
Act shall have expired.
10.5 No Litigation, Etc. No action, suit, or proceeding shall be
pending before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction
wherein any unfavorable judgment, order, decree, stipulation,
injunction, or charge would (A) prevent consummation
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of the purchase and sale of the Purchased Stock contemplated
by this Agreement, or (B) cause the purchase and sale of the
Purchased Stock contemplated by this Agreement to be rescinded
following consummation.
10.6 Buyer Letters of Credit. Buyer shall have delivered the letter
of credit required under Section 3.1.5 above.
10.7 Equipment Sublease. Buyer shall have entered into the
Equipment Sublease.
11. Termination.
11.1 Events of Termination. The transactions contemplated by this
Agreement may be terminated on or before the Closing Date as
follows:
11.1.1 Mutual Agreement. By mutual written agreement of
Seller and Buyer.
11.1.2 Court Order. By Buyer or Seller if any court of
competent jurisdiction shall have issued an order,
decree or ruling restraining, enjoining or otherwise
prohibiting the consummation of the transactions
contemplated by this Agreement and such order shall
have become final and nonappealable.
11.1.3 Conditions to Close. By Buyer or Seller if any
condition precedent to its obligation to close has
not occurred as of the Closing Date, unless the party
seeking to terminate has failed to observe any
covenant, agreement or condition precedent to be
observed or performed by such party on or before the
Closing Date.
11.1.4 Failure to Close. After July 3, 1997 by either Buyer
or Seller if the Closing has not occurred for any
reason other than a breach of this Agreement by the
terminating party.
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11.2 Procedure or Effect of Termination. In the event of
termination of this Agreement and the abandonment of the
transactions contemplated hereby pursuant to this Section 11,
the terminating party shall forthwith give written notice
thereof to the other party and this Agreement shall terminate
and the transactions contemplated hereby shall be abandoned,
without further action by any of the parties hereto. If this
Agreement is terminated as provided herein, then no party
hereto nor any of its directors, officers or affiliates shall
have any liability or further obligation to the other party or
any of its directors, officers or affiliates pursuant to this
Agreement except as stated in this Section 11.2 and in the
Confidentiality Agreement, each of which shall survive such
termination, and except that nothing herein shall relieve any
party from liability for any breach of this Agreement.
12. General Indemnity.
12.1 Indemnification of Buyer by Seller. Seller shall indemnify and
hold Buyer and, after Closing, the Company and their
respective officers, directors, employees, and Affiliates
harmless against and in respect of the following matters to
the extent of any excess of applicable accruals set forth on
the Final Special Purpose Balance Sheet to which any such
liability, loss, claim, damage or deficiency relates:
12.1.1 Any liability, loss, claim, damage or deficiency
proximately resulting from (a) any misrepresentation,
breach of warranty on the part of Seller under this
Agreement, or from any misrepresentation in or
omission from any certificate or other instrument
furnished or to be furnished to Buyer hereunder or
(b) nonfulfillment of any covenant or agreement on
the part of Seller under this Agreement (including,
without limitation, Seller's agreements to assume and
hold Buyer and the Company harmless from the Retained
Liabilities).
12.1.2 All other actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses incident
to the foregoing,
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including, without limitation, attorneys' fees and
other out-of-pocket expenses.
12.2 Indemnification of Seller by Buyer. Buyer shall, and after
Closing shall cause the Company to, indemnify and hold Seller
and its officers, directors, employees and Affiliates harmless
against and in respect of:
12.2.1 Any liability, loss, claim, damage or deficiency
proximately resulting from (a) any misrepresentation
or breach of warranty on the part of Buyer under this
Agreement, or from any misrepresentation in or
omission from any certificate or other instrument
furnished or to be furnished to Seller hereunder, or
(b) nonfulfillment of any covenant or agreement on
the part of Buyer under this Agreement; and
12.2.2 All other actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses incident
to the foregoing, including, without limitation,
attorneys' fees and other out-of-pocket expenses.
12.3 Notice of Claims. The party seeking indemnification
("Indemnified Party") agrees to give the other party (the
"Indemnitor") notice of any and all claims asserted against
the Indemnified Party for which indemnification is or may be
sought under this Section 12. Such notice shall be given
within a reasonable time after receipt of written notice of
such claim by the Indemnified Party. Failure to give such
notice shall not abrogate or diminish the Indemnitor's
obligation under this Section 12 if the Indemnitor has or
receives knowledge of the existence of any such claim by any
other means or unless (and then solely to the extent) such
failure prejudices the Indemnitor's ability to defend such
claim.
12.4 Defense of Claim. In any litigation, administrative
proceeding, negotiation or arbitration pertaining to any claim
for which indemnification is sought under this Section 12, the
Indemnitor shall have the right to select legal counsel
reasonably satisfactory to the Indemnified Party to represent
the
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Indemnitor and the Indemnified Party and to otherwise control
such litigation, proceedings, negotiations and arbitration,
provided, that the Indemnified Party may participate in any
such litigation, administrative proceeding, negotiation or
arbitration at its sole cost and expense. The Indemnitor will
not consent to the entry of any judgment with respect to the
matter, or any settlement which does not include a provision
whereby the plaintiff or claimant in the matter releases the
Indemnified Party from all liability with respect thereto,
without the written consent of the Indemnified Party, not to
be withheld unreasonably; provided, however, that the written
consent of the Indemnified Party shall not be required to the
extent that, as to the matters not covered by a release, the
Indemnified Party is still entitled to indemnification under
this Section 12. If the Indemnitor shall, within a reasonable
time after notice, fail to defend, the Indemnified Party shall
have the right, but not the obligation, to undertake the
defense of and to compromise or settle the claim or other
matter on behalf, for the account, and at the risk of the
Indemnitor. The Indemnified Party shall cooperate in all
reasonable respects with the Indemnitor and its counsel in
defending any claims and shall not take any action which is
reasonably likely to be detrimental to such defense.
12.5 Qualifications.
12.5.1 Cap. Except as provided below, the maximum aggregate
liability of Seller under Section 12.1.1(a) shall be
Fifteen Million Dollars ($15,000,000). The limitation
herein shall not apply to claims relating to breaches
of Sections 6.3 and 6.7 above. Notwithstanding the
foregoing, the maximum aggregate liability of Seller
under Section 12.1.1(a) for all environmental matters
of any nature whatsoever (except to the extent any
environmental matter is included as part of the
Retained Liabilities) shall be Five Million Dollars
($5,000,000).
12.5.2 Basket. Except as provided below, Buyer shall not be
entitled to indemnification under Section 12.1.1(a)
unless, and only to the extent that, the amount of
all losses, costs, expenses and
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damages suffered or incurred by Buyer for which Buyer
is indemnified under such Section exceeds the "Basket
Amount" (as defined below) in the aggregate for all
claims for which indemnity is sought under such
Section; Buyer shall not be entitled to
indemnification under Section 12.1.1(a) for breaches
of Section 6.22 unless, and only to the extent that,
as to any store location, the aggregate amount of
such losses, costs, expenses and damages resulting
from breaches of Section 6.22 for such location
during any twelve (12) month period commencing on the
Closing Date exceeds Ten Thousand Dollars ($10,000),
and the aggregate amount of such losses, costs,
expenses and damages in excess of Ten Thousand
Dollars ($10,000) shall be subject to the Basket
Amount. The limitation herein shall not apply to
breaches of Sections 6.3 and 6.7 above. The phrase
"Basket Amount" shall mean (i) One Million Dollars
($1,000,000), less (ii) the amount, if any, paid by
Seller to the Company pursuant to Section 8.6, and/or
plus the amount of any collected Uncollected
Receivable paid to Seller.
12.5.3 Sole Remedy. Each party agrees, except in respect to
Sections 4.2, 4.3, 4.7, 5.5, 5.9 and 13, that its
sole remedy (other than applicable equitable remedies
with respect to obligations under this Agreement)
after Closing, in respect to breach of warranty,
representation or covenant by the other party
hereunder shall be limited to indemnification
pursuant to this Section 12 and that, in particular,
other than to the extent contemplated by such
indemnification rights neither Buyer nor the Company
shall exercise any rights or remedies against Seller
under or pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act, as amended
by the Superfund Amendments and Reauthorization Act,
or any subsequent amendment of either law, or any
state or local equivalent of such laws.
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12.5.4 Net Recovery. The amount to which an Indemnified
Party may become entitled hereunder shall be net of
any recovery (whether by way of payment, discount,
credit, set off, tax benefit, counterclaim or
otherwise) received from a third party (including any
insurer or taxation authority) in respect of such
claim. The amount of any such recovery, less all
reasonable costs, charges and expenses incurred by
the Indemnified Party in obtaining such recovery from
the third party, shall be repaid by the Indemnified
Party to the Indemnitor promptly upon the receipt
thereof from the third party.
12.5.5 Mitigation. Buyer will use commercially reasonable
efforts to mitigate the losses, costs, expenses and
damages to which it may become entitled to
indemnification hereunder.
12.5.6 Limitation of Damages. Except in the case of the
indemnifying party's intentional fraud, the
indemnified party shall not be entitled to recover
hereunder punitive or exemplary damages (except to
the extent the indemnified matter requires the
indemnified party to pay such damages to a third
party). In addition, Seller shall not be responsible
for lost profits or business interruption caused by
Seller's performance of its environmental remediation
covenants in compliance with the terms of this
Agreement or caused by the facts or circumstances
giving rise to such remediation obligation.
13. Special Tax Indemnity.
13.1 Transfer Taxes. All liability for any transfer, documentary,
sales, use, stamp, registration, value added and other such
non-Income Taxes and fees (including, without limitation, any
penalties and interest) incurred in connection with this
Agreement (including, without limitation, any real property
transfer Tax and any similar Tax) ("Transfer Taxes") shall be
paid by Buyer. Buyer shall file all necessary Tax Returns and
other
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documentation with respect to all such Transfer Taxes and fees
(with the expenses of such filings to be borne equally by the
parties).
13.2 Tax Sharing Agreements. Any Tax sharing or other allocation
agreement with respect to Taxes to which the Company is a
party is hereby terminated as of the Closing Date and shall
have no further effect for any taxable period (whether the
current year, a future year or a past year). This Section 13
and Section 6.11 above shall control all of the parties'
respective obligations for Taxes affecting the Company and
supersedes any and all prior agreements, contracts or
understandings regarding the Company's Taxes.
13.3 Section 338(h)(10) Election. Seller agrees that it will, and
will, with Buyer's cooperation, cause the Company to, make an
election or join in making an election under Section
338(h)(10) of the Code, to treat the sale of the Purchased
Stock as a sale of all the assets of the Company for federal
Income Tax purposes and an election under the statutes of such
states as permit an equivalent election to treat the sale of
the Purchased Stock as a sale of all its assets as provided by
such states' applicable laws for state Income Tax purposes.
The Seller agrees that it will, and that it will, with Buyer's
cooperation, cause the Company to, comply with all of the
requirements and conditions of Section 338(h)(10) of the Code
and the treasury regulations thereunder and all other
applicable Code Sections and treasury regulations relating
thereto, including without limitation the execution and timely
filing of Form 8023A entitled "Corporate Qualified Stock
Purchase Election" or any successor form of similar import,
and any forms required to effectuate similar elections for
state income tax purposes. The parties agree that the Purchase
Price shall be allocated to the assets of the Company in
accordance with Exhibit 13.3 hereto. Each party covenants to
report a gain, loss or cost basis, as the case may be, in a
manner consistent with Exhibit 13.3 for federal and state
Income Tax purposes. The parties shall exchange mutually
acceptable IRS Forms 8594 reflecting such allocations which
shall be filed with the IRS and any applicable state or local
tax authorities. Buyer will promptly notify Seller in the
event the IRS challenges, or threatens to challenge, such
allocations. Buyer shall cause the Company after the Closing
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Date to cooperate with Seller in the timely and proper filing
of all applicable federal and state elections required to be
filed under this Section.
13.4 Tax Returns.
13.4.1 Income Tax Returns. Buyer shall cause the Company to
consent to join, for all Pre-Closing Periods for
which the Company is eligible to do so, in any
consolidated or combined federal, state, local or
foreign Income Tax Returns. Seller shall cause to be
prepared and timely filed any and all consolidated or
combined federal, state or local Income Tax Returns
as well as any separate federal, state, local or
foreign Income Tax Returns for the Company for all
Tax periods of the Company ending on or before the
Closing Date, which Tax Returns shall be prepared in
all material respects in a manner consistent with the
prior practice of the Company and the Seller. Buyer
shall cause to be prepared and timely filed any and
all Income Tax Returns for Tax periods of the Company
ending after the Closing Date. The parties agree to
cooperate with each other and each other's affiliates
in the preparation of the portions of such returns
pertaining to the Company. The parties shall be
entitled to utilize the services of the personnel who
would have been responsible for preparing such
returns as they relate to the Company, to the extent
reasonably necessary in preparing said returns on a
timely basis. The parties shall also provide each
other with full access to applicable records to
enable the preparation of said returns. Seller shall
pay on a timely basis all Income Taxes in respect to
the Pre-Closing Period shown as due on such returns.
Buyer shall pay on a timely basis all Income Taxes in
respect to tax periods ending after the Closing Date,
as shown on such returns. The parties shall make
available to each other copies of the portions of
such returns relating to the Company for taxable
years ending before or including the Closing Date.
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13.4.2 Non-Income Tax Returns. Seller shall cause to be
prepared and timely filed all Non-Income Tax Returns
of the Company due on or before the Closing Date.
Buyer shall cause the Company to prepare and timely
file all Non-Income Tax Returns of the Company due
after the Closing Date. Buyer shall cause the Company
to pay all Non-Income Taxes to which such Non-Income
Tax Returns relate and which are due after the
Closing Date. The parties agree to cooperate with
each other and their affiliates in the preparation of
such Non-Income Tax Returns. The parties shall be
entitled to utilize the services of the personnel who
would have been responsible for preparing such
returns to the extent reasonably necessary in
preparing said returns on a timely basis. The parties
shall also provide each other with full access to
applicable records to enable the preparation of such
returns. The parties shall make available to each
other copies of Non-Income Tax Returns of the
Companies covering Tax periods ending before or
including the Closing Date.
13.4.3 Allocations. Seller shall include the income and
deductions of the Company (including any deferred
income triggered into income by Treas.
Reg.ss.1.1502-13 and Treas. Reg.ss.1.1502-14 and any
excess loss accounts taken into income under Treas.
Reg.ss.1.1502-19, or equivalent provisions of state
or local law) on Seller's consolidated or combined
federal, state or local Income Tax Returns for all
periods through the Closing Date and shall pay any
Taxes attributable thereto. If the allocation of an
item of income, deduction or credit cannot be
specifically allocated based on such closing of the
books, such item shall be allocated, pro rata, on a
daily basis. Seller shall be liable for Income Taxes
attributable to the Pre-Closing Period. In case of
(i) Income Taxes attributable to Tax periods ending
after the Closing Date and (ii) all non-Income Taxes,
Buyer and the Company shall be jointly and severally
liable for such Taxes.
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13.5 Allocation of Income Tax Benefits.
13.5.1 If any adjustments shall be made to any federal,
state, local, or foreign Income Tax returns relating
to the Company or Seller for the Pre-Closing Period
which result in any Income Tax detriment to Seller or
any affiliate of Seller with respect to such period
and any Income Tax benefit to the Company, Buyer or
any affiliate of Buyer for any Tax period ending
after the Closing Date (to the extent such Income Tax
benefit is realized after the Closing Date), Seller
shall be entitled to the benefit of such Income Tax
benefit to the extent of the related Income Tax
detriment and Buyer shall or shall cause the Company
to pay to Seller such amount at such time or times as
and to the extent that the Company, Buyer or any
affiliate of Buyer actually realizes such benefit
through a refiling of Income Tax or reduction in the
amount of Income Tax which the Company would
otherwise have had to pay if such adjustment had not
been made.
13.5.2 If any adjustment shall be made to any federal,
state, local, or foreign Income Tax returns relating
to the Company for any Tax period ending after the
Pre-Closing Period which result in any Income Tax
detriment to Buyer, the Company or any affiliate of
Buyer with respect to such period and any Income Tax
benefit to Seller or any affiliate of Seller for any
Pre- Closing Period, Buyer shall be entitled to the
benefit of such Income Tax Benefits to the extent of
the related Income Tax detriment. Seller shall pay to
Buyer such amount at such time or times as and to the
extent that Seller or any affiliate of Seller
actually realizes such benefit through a refund of
Income Tax or reduction in the amount of Income Taxes
which Seller or any such affiliate would otherwise
have had to pay if such adjustment had not been made.
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13.6 Tax Indemnity. From and after the Closing Date, Seller shall
be liable for, and agrees to indemnify, defend and hold
harmless each of the Buyer and the Company from and against
all Income Taxes imposed on the Company in respect to the
Pre-Closing Period. In addition, the Seller agrees to
indemnify each of the Buyer and the Company from and against
the entirety of any losses or expenses the Buyer or the
Company may suffer resulting from any liability of the Company
for Taxes of any person other than the Company (i) under
Treas. Reg. 1.1502-6 (or any similar provision of state, local
or foreign law for any Pre-Closing Period and provided such
other person is not the Buyer or any affiliate of Buyer), (ii)
as a transferee or successor with respect to any transaction
made in a Pre-Closing Period in which the Buyer or any
affiliate of the Buyer was not a party, (iii) or by contract
between the Company and another person arising before Closing
for any Pre-Closing Period and provided such other person is
not the Buyer or an affiliate of the Buyer.
13.7 Refunds. Any refunds of Income Taxes received by the Company
attributable to the Pre-Closing Period shall be for the
benefit of Seller. Buyer shall or shall cause the Company to
pay to Seller or its order any such refunds within ten (10)
days of receipt thereof, except to the extent accrued as an
asset in the Company's books and records as of the Closing
Date. Any refunds of non-Income Taxes received by the Company
attributable to the Pre-Closing Period shall be for the
benefit of Buyer.
13.8 Cooperation. After the Closing Date, Seller and Buyer shall
make available to the other, free of charge, cost or expense
and as reasonably requested, all information, records or
documents reasonably relevant to Tax liabilities or potential
Tax liabilities of either the Company or its predecessors for
all periods prior to or including the Closing Date (or any
matter, transaction or event occurring on or before the
Closing Date that may affect such a Tax liability) and each
such person shall preserve all such available information,
records and documents until the expiration of any applicable
statute of limitations or extensions thereof. Each such person
shall provide, free of charge, cost or expense, the other(s)
and the pertinent Tax Authority with all available information
and documentation reasonably necessary to comply with
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all Tax audit information requests or inquiries made of any
such periods relevant to such Tax liabilities or potential Tax
liabilities (or any matter, transaction or event occurring on
or before the Closing date that reasonably may affect such a
Tax liability). Any information obtained pursuant to this
Section 13.8 shall be held in strict confidence and shall be
used solely in connection with the reason for which it was
requested.
13.9 Tax Audits. Buyer shall promptly notify Seller in writing upon
receipt by Buyer, any affiliate of Buyer, or the Company, and
Seller shall promptly notify Buyer in writing upon receipt by
Seller or any affiliate of Seller, of notice of any pending or
threatened federal, state, local or foreign Tax audits,
examinations or assessments of the Company for any Pre-Closing
Period, so long as Pre-Closing Period Taxable years remain
open. Seller shall have the sole right to represent the
Company and its predecessors in any Income Tax audit or
administrative or court proceeding relating to the Pre-
Closing Period, and to employ counsel of its choice at its
expense.
13.10 Buyer's Taxes. Buyer shall pay, or cause to be paid, and shall
indemnify and defend Seller and its affiliates against and
hold them harmless from any liability for Taxes for Tax
periods of the Company beginning, and portions of Tax periods
occurring after the Closing Date, including, without
limitation, any such liability with respect to operations of
the Company and dispositions of assets by the Company after
the Closing Date.
13.11 Survival. The representations, warranties and obligations of
the parties under Section 6.11 and Section 13, shall survive
the Closing until the expiration of the applicable or
underlying Tax statute of limitations (including any
extensions).
14. Miscellaneous. The following miscellaneous provisions shall apply
to this Agreement:
14.1 Notices. All notices or other communications required or
permitted to be given, pursuant to the terms of this
Agreement, shall be in writing and shall be deemed to be duly
given when received if delivered in person or by telex,
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telegram or cable and confirmed by mail, or mailed by
registered or certified mail (return receipt requested) or
overnight courier, express mail, postage prepaid, as follows:
If to Seller: ConAgra, Inc.
Xxx XxxXxxx Xxxxx
Xxxxx, Xxxxxxxx 00000-0000
Attn: Vice President/Controller
and a copy to: ConAgra Agri-Products Companies
0000 00xx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Controller
If to Buyer: Central Tractor Farm & Country, Inc.
0000 Xxxxxxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Attn: President
with a copy to: Xxxxxx X. Xxxxx
X.X. Childs Associates, L.P.
Xxx Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, XX 00000
and a copy to: Xxxxxxx Xxxxxxxx
Fenway Partners, Inc.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
and a copy to: Xx. Xxxxxxxxxxx Xxxxx, Esq.
Xxxxxxxx & Worcester, LLP
Xxx Xxxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
or at such other address as the party to whom notice is to be
given furnishes writing to the other party in the manner set
forth above.
14.2 Amendments and Waivers. This Agreement may not be modified or
amended, except by instrument or instruments in writing,
signed by the party against whom enforcement of any such
modification or amendment is sought. Either Seller or Buyer
may, by an instrument in writing, waive compliance
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by the other party with any term or provision of this
Agreement on the part of such other party to be performed or
complied with. No action taken pursuant to this Agreement,
including any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking
such action of compliance with any representation, warranty or
agreement contained herein. The waiver by any party hereto of
a breach of any term or provision of this Agreement shall not
be construed as a waiver of any subsequent breach.
14.3 Expenses. Except as otherwise provided herein, whether or not
this Agreement shall be consummated, Seller and Buyer shall
each pay its own expenses incident to the preparation,
execution and consummation of this Agreement.
14.4 Survival of Representations, Warranties and Indemnifications.
Except as set forth in Section 13 above, all representations
and warranties (and indemnities related thereto) made in or
pursuant to this Agreement, as well as indemnities related to
breaches of Section 8.1.1, shall expire 18 months after
Closing unless a claim in respect thereof is made before such
period expires. Seller's indemnity obligation with respect to
breaches of Section 6.22 shall expire two (2) years after
Closing unless a claim in respect thereof is made before such
period expires.
14.5 Entire Agreement. This Agreement, which includes the Exhibits
hereto, the Disclosure Schedule and the Interim Period
Agreement entered into on the date hereof by and between
Seller and Buyer, and the other documents and certificates
delivered pursuant to the terms hereof, set forth the entire
agreement and understanding of the parties hereto with respect
to the subject matter contained herein, and supersede all
prior agreements, promises, covenants, arrangements,
communications, representations or warranties, whether oral or
written, by any officer, employee or representative of any
party hereto. In addition, the Confidentiality Agreement,
dated November 19, 1996, between Seller and X.X. Childs
Associates, L.P., the Confidentiality Agreement, dated
November 19, 1996, between Seller and
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Fenway Partners, Inc. and the Confidentiality Agreement, dated
May 2, 1997, between Seller and Buyer all shall survive.
14.6 Reliance. No claim shall be made against Seller in respect of
any warranty, representation, indemnity, covenant, undertaking
or otherwise arising out of or in connection with the
transactions contemplated herein except where the same is
expressly contained in this Agreement, and Buyer confirms that
it has not relied on any warranty, representation, indemnity,
covenant or undertaking of any person which is not expressly
contained in this Agreement and the Disclosure Schedule.
14.7 Applicable Law. This Agreement and the legal relations among
the parties hereto shall be governed by and construed in
accordance with the laws of the State of Delaware applicable
to contracts made and performed in Delaware.
14.8 Binding Effect; Benefits. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their
respective heirs, successors and assigns; nothing in this
Agreement, express or implied, is intended to confer on any
person other than the parties hereto or their respective
heirs, successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this
Agreement.
14.9 Assignability. Neither this Agreement nor any of the parties'
rights hereunder shall be assignable by any party hereto
without the prior written consent of the other party hereto.
14.10 Effect of Headings. The headings of the various sections and
subsections herein are inserted merely as a matter of
convenience and for reference and shall not be construed as in
any manner defining, limiting, or describing the scope or
intent of the particular sections to which they refer, or as
affecting the meaning or construction of the language in the
body of such sections.
14.11 Exhibits; Disclosure Schedule. All exhibits and disclosures
referred to in this Agreement are attached hereto and are
incorporated herein by reference as if fully set forth herein.
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14.12 Severability. Any term or provision of this Agreement, which
is invalid or unenforceable in any jurisdiction, shall be
ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms
or other provisions of this Agreement in any other
jurisdiction.
14.13 Construction. For purposes of this Agreement, the phrases
"Seller's knowledge" or "to the knowledge of Seller" mean the
actual knowledge of Seller's senior corporate executive
officers or such knowledge as Seller's senior corporate
executive officers would have after due inquiry of the Company
Employees listed on Exhibit 14.13. The language in all parts
of this Agreement shall in all cases be construed as a whole
according to its fair meaning, strictly neither for nor
against any party hereto, and without implying a presumption
that the terms thereof shall be more strictly construed
against one party by reason of the rule of construction that a
document is to be construed more strictly against the person
who himself drafted same. It is hereby agreed that
representatives of both parties have participated in the
preparation hereof
14.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be regarded as an original
and all of which shall constitute one and the same instrument.
14.15 Publicity. The parties hereto agree that they will consult
with each other concerning any proposed press release or
public announcement pertaining to the transactions
contemplated and shall use their best efforts to agree upon
the text of any such press release or the making of such
public announcement. Except as mutually agreed, neither Buyer
nor Seller shall disclose (except as required by applicable
law) the terms and conditions contained in this Agreement.
14.16 Further Assurances. If at any time after the Closing any
further actions are necessary or desirable to carry out the
purposes of this Agreement, each of the parties will take such
further action (including the execution and delivery of such
further instruments and documents) as the other party
reasonably may
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request, all at the sole cost and expense of the requesting
party (unless the action requested is necessary for
fulfillment of the obligations to whom such request is made).
14.17 Assumption of Retained Liabilities. Seller hereby assumes and
agrees to perform and discharge the following obligations and
liabilities of the Company (collectively, the "Retained
Liabilities"): Liability for debt for money borrowed by the
Company prior to Closing; liability for Retained Litigation
Matters (as defined below); liability for insurance claims
under Section 4.3.2; liability or obligation arising out of
all Company store locations, whether leased or owned by the
Company, which have been closed prior to the date hereof;
liabilities under Section 5.1; liability for the 401(k) Plan
under Section 5.3; liability for Employee Plans under Section
5.5; liability for COBRA obligations under Section 5.9;
liability for interest and/or penalties which may be payable
in connection with the matter listed on item 1 on Section 6.11
(Pending Tax Audits, etc.) of the Disclosure Schedule;
liability for UST's as set forth in Exhibit 8.4.1(A); and
liability for Pre-Closing Income Taxes under Section 13.
14.17.1 Retained Litigation Matters. Notwithstanding anything
in this Agreement to the contrary, Seller shall
retain liability for, and shall be entitled to any
recoveries in connection with, and shall indemnify
and hold Buyer and the Company harmless from, any
loss, damage and expense relating to the litigation
matters listed as items 2, 4, 5, 6, 7, 8, 10, 11, 12,
13, 16, 18, and 20 on Section 6.15 (Litigation) of
the Disclosure Schedule (collectively, the "Retained
Litigation Matters"). Buyer shall retain liability
for, and shall indemnify and hold Seller harmless
from, any loss, damage and expense relating to all
other litigation matters set forth on Section 6.15
(Litigation) of the Disclosure Schedule. If the
litigation described in item 22 on Section 6.15 of
the Disclosure Schedule is an insured matter or
relates to a store location (whether owned or leased)
closed by the Company prior to the date hereof, then
such item 22 shall be included as a Retained
Litigation Matter.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
CONAGRA, INC., a Delaware CENTRAL TRACTOR FARM &
corporation COUNTRY, INC., a Delaware corporation
By: /s/Xxxxxxx X. XxXxxxx By: /s/Xxxxx XxXxxxxxx
Its: _____________________________ Its: President & CEO
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The following exhibits to the Stock Purchase Agreement are omitted from this
filing:
Exhibit No. Description
----------- -----------
3.1.2 Legal Opinion of Xxxxxxxx & Worcester, LLP
3.1.5 Letter of Credit Terms
3.1.7 Equipment Sublease Agreement
3.2.2 Legal Opinion of XxXxxxx, North, Xxxxxx & Xxxxx, P.C.
3.2.6 Directors and Officers to Resign
4.1.2 Inventory Procedures
4.1.3(A) Forms of Deloitte's Report
4.1.4 Deloitte's Workpapers Letter
4.1.5 Representation Letters
4.6.1 Leases Requiring Consent
4.6.3(A) Ongoing Obligation Leases
4.6.3(B) Letters of Credit Re: Ongoing Obligation Leases
4.7 Closed Store Locations
5.1(A) Company Employee Receiving Seller Health Benefits
5.1(B) Buyer's Severance Policy
5.1(C) Executives Receiving Incentive Bonus
7.6 Buyer Financing Committments
8.1.3 Financial, Accounting and Other Information
8.1.4 Transition Services Agreement
8.4.1(A) UST Environmental Matters
8.4.1(B) List of Company Stores Contact State Regarding UST's
9.7 Noncompetition Agreement
13.3 Allocation of Purchase Price
14.13 Seller's Knowledge Qualifier
