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STOCK PURCHASE AGREEMENT
among
GOLDEN STATE ACQUISITION CORP.,
SBIC PARTNERS, L.P.
and
XXXXXXX X. X'XXXXX
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Dated as of October 10, 1996
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TABLE OF CONTENTS
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ARTICLE I THE TRANSACTIONS. . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Closing Matters . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Time and Place of Closing . . . . . . . . . . . . . . . . . . 2
1.5 Subsequent Closing. . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE BUYERS. . . . . . . . . 3
2.1 Organization. . . . . . . . . . . . . . . . . . . . . . . . . 3
2.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.3 No Violation. . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Securities Act Representation . . . . . . . . . . . . . . . . 4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . 4
3.1 Corporate Organization. . . . . . . . . . . . . . . . . . . . 4
3.2 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 4
3.3 Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . 5
3.4 Newly Issued Shares . . . . . . . . . . . . . . . . . . . . . 5
3.5 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.6 No Violation. . . . . . . . . . . . . . . . . . . . . . . . . 6
3.7 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.8 Financial Statements. . . . . . . . . . . . . . . . . . . . . 7
3.9 Absence of Certain Changes or Events. . . . . . . . . . . . . 8
3.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.11 Employee Benefits . . . . . . . . . . . . . . . . . . . . . . 10
3.12 Material Contracts and Other Agreements . . . . . . . . . . . 13
3.13 Suppliers and Customers . . . . . . . . . . . . . . . . . . . 14
3.14 Leased Property . . . . . . . . . . . . . . . . . . . . . . . 14
3.15 Real Property . . . . . . . . . . . . . . . . . . . . . . . . 14
3.16 Compliance with Laws. . . . . . . . . . . . . . . . . . . . . 15
3.17 Licenses and Permits. . . . . . . . . . . . . . . . . . . . . 15
3.18 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . 15
3.19 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . 16
3.20 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . 16
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3.21 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Table of Contents (Continued)
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3.22 Environmental Laws and Regulations. . . . . . . . . . . . . . 17
3.23 Brokers; Certain Expenses . . . . . . . . . . . . . . . . . . 19
3.24 No Agreements to Sell the Company . . . . . . . . . . . . . . 19
3.25 Related-Party Transactions. . . . . . . . . . . . . . . . . . 19
3.26 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . 20
3.27 Compliance with the Immigration Reform and Control A20. . . . 19
3.28 Proprietary Rights. . . . . . . . . . . . . . . . . . . . . . 21
3.29 Small Business Administration Matters . . . . . . . . . . . . 21
3.30 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE IV COVENANTS AND AGREEMENTS. . . . . . . . . . . . . . . . . . . 22
4.1 Access to Properties and Records. . . . . . . . . . . . . . . 22
4.2 Indemnification by the Company. . . . . . . . . . . . . . . . 22
4.3 Best Efforts. . . . . . . . . . . . . . . . . . . . . . . . . 23
4.4 Consents. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.5 Delivery of Financial Statements and Other Documents. . . . . 24
4.6 Access to Records . . . . . . . . . . . . . . . . . . . . . . 24
4.7 No Transactions with Affiliates . . . . . . . . . . . . . . . 24
4.8 Qualification as a Qualified Small Business . . . . . . . . . 25
4.9 Use of Proceeds; Access to Records. . . . . . . . . . . . . . 25
4.10 Buyer's Right of First Refusal. . . . . . . . . . . . . . . . 25
ARTICLE V CONDITIONS PRECEDENT. . . . . . . . . . . . . . . . . . . . . 26
5.1 Conditions to Each Party's Obligations. . . . . . . . . . . . 26
5.2 Conditions to the Obligations of the Company. . . . . . . . . 27
5.3 Conditions to the Obligations of the Buyers. . . . . . . . . 27
ARTICLE VI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 28
6.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.2 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.3 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.5 Headings; Agreement . . . . . . . . . . . . . . . . . . . . . 29
6.6 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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6.7 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . 29
6.8 Conveyance Taxes. . . . . . . . . . . . . . . . . . . . . . . 29
6.9 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . 30
Table of Contents (Continued)
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6.10 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 30
6.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 30
6.12 Third Party Beneficiaries . . . . . . . . . . . . . . . . . . 30
6.13 Costs and Expenses. . . . . . . . . . . . . . . . . . . . . . 30
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DISCLOSURE SCHEDULES
Schedule 3.1 Corporate Organization
Schedule 3.2 Subsidiaries
Schedule 3.3 Capital Stock
Schedule 3.4 Newly Issued Shares
Schedule 3.5 Authority
Schedule 3.6 No Violation
Schedule 3.7 Litigation
Schedule 3.8 Financial Statements
Schedule 3.9 Absence of Certain Changes or Events
Schedule 3.10 Insurance
Schedule 3.11 Employee Benefits
Schedule 3.12 Material Contracts and Other Agreements
Schedule 3.13 Suppliers and Customers
Schedule 3.14 Leased Property
Schedule 3.15 Real Property
Schedule 3.16 Compliance With Laws
Schedule 3.17 Licenses and Permits
Schedule 3.18 Title to Assets
Schedule 3.19 Inventory
Schedule 3.20 Accounts Receivable
Schedule 3.21 Taxes
Schedule 3.22 Environmental Laws and Regulations
Schedule 3.23 Brokers; Certain Expenses
Schedule 3.24 No Agreements to Sell the Company
Schedule 3.25 Related-Party Transactions
Schedule 3.26 Labor Matters
Schedule 3.27 Compliance with the Immigration Reform and Control Act
Schedule 3.28 Proprietary Rights
Schedule 3.29 Small Business Administration Matters
Schedule 3.30 Disclosure
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EXHIBITS
Exhibit A List of Shares
Exhibit B Amended and Restated Stockholders Agreement
Exhibit C Amended and Restated Registration Rights Agreement
Exhibit D Certificate of Amendment to Certificate of Incorporation
Exhibit E Forms of Resignation
Exhibit F-1 Opinion of Counsel to the Company
Exhibit F-2 Opinion of Counsel to Buyers
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT ("Agreement") dated as of October 10, 1996 by
and among Golden State Acquisition Corp., a Delaware corporation (the
"Company"), SBIC Partners, L.P., a Texas limited partnership ("SBIC Partners"),
and Xxxxxxx X. X'Xxxxx ("X'Xxxxx," and, sometimes collectively with SBIC
Partners, the "Buyers").
R E C I T A L S:
WHEREAS, the Buyers wish to purchase from the Company, and the Company
wishes to sell to the Buyers, the number of shares of the Company's capital
stock as is set forth in Section 1.1 below, on the terms and subject to the
conditions set forth below;
WHEREAS, the Company, the Buyers, FAC, Ltd., a Cayman Islands
corporation ("FAC"), Exeter Equity Partners, L.P., a Delaware limited
partnership, Exeter Venture Lenders, L.P., a Delaware limited partnership
(collectively, "Exeter") and certain other parties have entered into that
certain Securities Purchase Agreement dated August 22, 1996 (the "FAC/Exeter
Securities Purchase Agreement"); and
WHEREAS, the Board of Directors of the Company (the "Board") has
approved this Agreement and the transactions contemplated hereby, upon the terms
and subject to the conditions set forth herein.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the foregoing promises, and such
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
THE TRANSACTIONS
1.1 PURCHASE AND SALE. Subject to the terms and conditions of
this Agreement, the Buyers agree to purchase from the Company and the Company
agrees to sell to the Buyers (the "Purchase") at the Closing, an aggregate of
Nine Hundred Fifty-Seven Thousand Three Hundred (957,300) shares (the "Shares")
of Class B Common Stock, $0.01 par value, of the Company (the "Class B Stock"),
in the respective amounts set forth opposite each Buyer's name on Exhibit A
hereto.
1.2 PURCHASE PRICE. The purchase price to be paid for each Share
shall be Seven Dollars and Twenty-Six Cents ($7.26), constituting an aggregate
purchase price for the Shares of Six Million Nine Hundred Forty-Nine Thousand
Nine Hundred Ninety-Eight Dollars Cents ($6,949,998) (the "Purchase Price").
1.3 CLOSING MATTERS. At the Closing (a) each Buyer will wire
transfer or otherwise make available in same day funds to the Company its or
his, as the case may be, portion of the Purchase Price, (b) the Company shall
deliver certificates to SBIC Partners and X'Xxxxx representing Seven Hundred
Fifty Thousand Six Hundred Eighty-Nine (750,689) shares of Class B Stock and
Two Hundred Six Thousand Six Hundred Eleven (206,611) shares of Class B
Stock, respectively, (c) the transactions contemplated by the FAC/Exeter
Securities Purchase Agreement shall be consummated in accordance with the
terms thereof, (d) each of the Company, Exeter, Buyers and all other parties
relevant thereto shall execute and deliver an amended and restated
Stockholders Agreement in the form attached hereto as Exhibit B (the "Amended
and Restated Stockholders Agreement"), (e) each of the Company, Exeter, the
Buyers and all other parties relevant thereto shall execute and deliver an
amended and restated Registration Rights Agreement, in the form attached
hereto as Exhibit C (the "Amended and Restated Registration Rights
Agreement"), (f) the Certificate of Amendment to Certificate of Incorporation
of the Company shall be amended, in the form of the certificate of amendment
attached hereto as Exhibit D, to provide, among other things, for the
immediate right of the Class B Stock to vote on all corporate matters and (g)
each representative of FAC and/or SMS who is presently serving as an officer
and/or director of the Company, Golden State Vintners, a California
corporation ("GSV"), or any other subsidiary of either entity shall execute
and deliver the forms of resignation attached hereto as Exhibit E. All
agreements referenced in this Section 1.3 shall sometimes be collectively
referred to herein as the "Ancillary Agreements."
1.4 TIME AND PLACE OF CLOSING. The consummation of the
transactions contemplated in this Agreement (the "Closing") shall take place at
10:00 a.m., October 10, 1996, at the offices of Xxxxxxx & XxXxxxxx, 000 Xxxxx
Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, XX 00000, on the first business day
following the satisfaction or waiver of all of the conditions required to be
satisfied at or prior to the Closing (but in no event later than December 31,
1996 or at such other time, place or date as the parties hereto shall agree upon
in writing (the "Closing Date").
1.5 SUBSEQUENT CLOSING. Prior to November 27, 1996, the Company
may raise up to an additional Two Hundred Fifty Thousand Dollars ($250,000)
through the issuance of Thirty-Four Thousand Four Hundred Thirty-Five (34,435)
shares of non-voting Class K Common Stock (the "Class K Shares"). At the
closing of such issuance, this Agreement will be supplemented to reflect the
purchase and sale of the Class K Shares.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE BUYERS
Each of the Buyers severally but not jointly represents and warrants
to the Company, as to all matters relevant thereto, as follows:
2.1 ORGANIZATION. SBIC Partners, Xxxxxxx Xxxxxxx & Xxxxx X.X. and
SL-SBIC Partners, L.P. are each limited partnerships duly organized, validly
existing and in good standing under the laws of the State of Texas. Xxxxxxx
Xxxxxxx & Xxxxx Venture Co. and FW-SBIC Partners, Inc. are each corporations
duly organized, validly existing and in good standing under the laws of the
State of Texas.
2.2 AUTHORITY. SBIC Partners has full partnership power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated on its part hereby. The execution, delivery and
performance by SBIC Partners of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
partnership action on the part of SBIC Partners. No other action on the part of
either SBIC Partners or its respective partners is necessary to authorize the
execution and delivery of this Agreement by SBIC Partners or the performance by
such Buyer of its obligations hereunder. This Agreement has been duly executed
and delivered by each Buyer and constitutes a legal, valid and binding agreement
of such Buyer, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium, reorganization or similar laws
affecting creditors' rights generally and subject to general equitable
principles (regardless of whether such enforceability is considered in a
proceeding in equity or at law). Each other agreement to be executed by each
Buyer in connection with this Agreement, including, without limitation, each of
the Ancillary Agreements, on or prior to the Closing Date will be duly executed
and delivered by such Buyer, and (assuming due execution and delivery by the
other party or parties thereto) will constitute a legal, valid and binding
obligation of such Buyer, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws affecting creditors' rights generally and subject to general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law) and except to the extent that indemnification
with respect to securities laws violations may be held void as against public
policy.
2.3 NO VIOLATION. The execution and delivery of this Agreement,
the Ancillary Agreements and each other agreement contemplated hereby and
thereby by each Buyer, the performance by each Buyer of its obligations
hereunder and thereunder, and the consummation by it of the transactions
contemplated hereby and thereby, will not (a) violate any provision of law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award applicable to such Buyer, (b) require the consent, waiver, approval,
license or authorization of or any filing by such Buyer with any person or
governmental authority or (c) violate, result (with or without
3
notice or the passage of time, or both) in a breach of or give rise to the right
to accelerate, terminate or cancel any obligation under or constitute (with or
without notice or the passage of time, or both) a default under, any of the
terms or provisions of any charter or bylaw, partnership agreement, indenture,
mortgage, agreement, contract, order, judgment, ordinance, regulation or decree
to which such Buyer is subject or by which such Buyer is bound.
2.4 BROKERS. Neither Buyer has paid or become obligated to pay
any fee or commission to any broker, finder, investment banker or other
intermediary in connection with this Agreement.
2.5 SECURITIES ACT REPRESENTATION. Each Buyer is an "accredited
investor" as defined in Rule 501 promulgated as part of Regulation D under the
Securities Act of 1933, as amended. Neither Buyer is purchasing the Shares with
a view to a distribution or resale of any of such securities in violation of any
applicable securities laws.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants, except as disclosed on the
schedules (the "Disclosure Schedules") attached hereto, each of which
disclosures shall reference the applicable Section hereof to which it applies,
to the Buyers as follows:
3.1 CORPORATE ORGANIZATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with all requisite corporate power and authority to carry on its
business as it is now being conducted, and is qualified or licensed to do
business and is in good standing in each jurisdiction in which the failure to be
so qualified or licensed could reasonably be expected, individually or in the
aggregate, to have a material and adverse effect upon the financial condition,
prospects or results of operations of the Company (a "Material Adverse Effect").
True and complete copies of the Certificate of Incorporation and the Bylaws of
the Company, each as amended to date, have been delivered to the Buyers.
3.2 SUBSIDIARIES. A true and complete list of all direct and
indirect subsidiaries of the Company (the "Subsidiaries") is set forth on the
Disclosure Schedules. Each Subsidiary is a corporation or partnership duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation, with all requisite corporate power and authority
to own, operate and lease its properties and to carry on its business as it is
now being conducted, and is qualified or licensed to do business and is in good
standing in each jurisdiction in which the failure to be so qualified or
licensed could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect; and all of the issued shares of capital stock or
other equity interest of
4
each Subsidiary have been duly and validly authorized and issued, are fully paid
and non-assessable, and are owned directly or indirectly by the Company, free
and clear of any and all liens, encumbrances, security interests, preemptive
rights, adverse claims or equities or rights in favor of another
("Encumbrances"). Neither the Company, except with respect to the Subsidiaries,
nor any of the Subsidiaries owns, directly or indirectly, any stock, partnership
interest, joint venture interest or other security, investment or interest in
any other corporation, organization or entity.
3.3 CAPITAL STOCK. As of the date hereof, the authorized capital
stock of the Company consists of: (i) One Million (1,000,000) shares of Class A
Stock, Six Hundred Fifty Thousand (650,000) shares of which are issued and
outstanding; (ii) Two Million (2,000,000) shares of Class B Stock, One Million
Three Hundred Thousand (1,300,000) shares of which are issued and outstanding,
and One Hundred Thirty-Six Thousand Two Hundred Ten (136,210) shares of which
are reserved for exchange pursuant to that certain Preferred Stock Exchange
Agreement entered into as of April 27, 1995 by and among the Company and certain
shareholders of GSV; (iii) Three Million Five Hundred Thousand (3,500,000)
shares of Class D Common Stock, par value $0.01 per share, none of which are
issued and outstanding, but Two Million Eighty-Six Thousand Two Hundred Ten
(2,086,210) shares of which are reserved for issuance upon conversion of the
Class A Stock and Class B Stock pursuant to the Company's Certificate of
Incorporation; (iv) Two Hundred Thousand (200,000) shares of 12% cumulative
convertible preferred stock, One Hundred Thousand (100,000) of which are issued
and outstanding; (v) Seven Hundred Fifty Thousand (750,000) shares of 6% junior
exchangeable preferred stock, Five Hundred Twenty-Three Thousand Nine Hundred
Eighty (523,980) shares of which are issued and outstanding; and (vi) One
Million (1,000,000) shares of Class E Common Stock, par value $0.01 per share,
Four Hundred Fourteen Thousand Seventy-Nine (414,079) shares of which are issued
and outstanding. All of the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable and free of preemptive rights with respect thereto and were
issued in compliance with all applicable securities laws and regulations.
Except as set forth in the Disclosure Schedules, there are no voting trusts or
other agreements, arrangements or understandings with respect to the voting of
the capital stock of the Company (i) to which the Company is a party or (ii) to
the best of the Company's knowledge, to which any other person, including
without limitation any holder of shares of the Company's capital stock, is a
party. Except as set forth in the Disclosure Schedules, there are no preemptive
rights, registration rights, subscriptions, options, warrants, rights,
convertible securities or other agreements or commitments of any character
relating to the issued or unissued capital stock or other securities of the
Company and there are no outstanding contractual obligations of the Company to
repurchase, redeem or otherwise acquire or sell, issue or otherwise transfer any
shares of capital stock. The Disclosure Schedules set forth the record
ownership of the Company's capital stock after consummation of the transactions
contemplated hereby.
3.4 NEWLY ISSUED SHARES. The Shares sold and issued by the
Company to the Buyers in accordance with the terms of this Agreement have been
duly authorized and, when issued as contemplated hereby at the Closing, will be
validly issued, fully paid and non-assessable
5
and no person has any preemptive right, option, warrant, subscription agreement
or other right with respect to such Shares. At the Closing, the Buyers will
acquire good and marketable title to the Shares free and clear of any and all
Encumbrances except such Encumbrances as may be created by each Buyer pursuant
to the Stockholders Agreement.
3.5 AUTHORITY. The Company has full corporate power and authority
to execute and deliver this Agreement, the Ancillary Agreements and each other
agreement contemplated hereby and thereby, to carry out its obligations
hereunder and thereunder and to consummate the transactions contemplated on its
part hereby and thereby. The execution, delivery and performance by the Company
of this Agreement and the Ancillary Agreements and the consummation of the
transactions contemplated on its part hereby and thereby have been duly
authorized by the Board, and no other corporate proceedings on the part of the
Company or its stockholders are necessary to authorize the execution and
delivery of this Agreement, the Ancillary Agreements, each other agreement
contemplated hereby and thereby or to consummate the transactions contemplated
on its part hereby and thereby. This Agreement has been duly executed and
delivered by the Company and constitutes legal, valid and binding obligations of
the Company, enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, moratorium, reorganization or
similar laws affecting creditors' rights generally and subject to general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law). Each other agreement to be executed by the
Company in connection with this Agreement on or prior to the Closing Date,
including without limitation, the Ancillary Agreements, will be duly executed
and delivered by the Company, and (assuming due execution and delivery by the
other party or parties thereto) will constitute a legal, valid and binding
obligation of the Company, enforceable against the Company in accordance with
their respective terms, subject to applicable bankruptcy, insolvency,
moratorium, reorganization, or similar laws affecting creditors' rights
generally and subject to general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at law) and
except to the extent that indemnification with respect to securities laws
violations may be held void as against public policy.
3.6 NO VIOLATION. The execution, delivery and performance of
this Agreement, the Ancillary Agreements and each other agreement
contemplated hereby and thereby by the Company and the consummation by it of
the transactions contemplated hereby and thereby will not (a) violate any
provision of law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award applicable to the Company or any Subsidiary,
(b) require the consent, waiver, approval or authorization of or any filing
by the Company or any Subsidiary with any person or governmental authority,
(c) violate, result (with or without notice or the passage of time, or both)
in a breach of, or give rise to the right to terminate, accelerate or cancel
any obligation under, or require the payment of any fee, or constitute (with
or without notice or the passage of time, or both) a default under, any of
the terms or provisions of the charter documents of the Company or any
Subsidiary, or any indenture, mortgage, lien, order, judgment, ordinance,
regulation, decree or other agreement or instrument to which the Company or
any Subsidiary is subject or bound which could reasonably be expected to
have, individually or in the aggregate, a
6
Material Adverse Effect or interfere in any way with the Company's ability to
consummate the transactions contemplated by this Agreement, the Ancillary
Agreements and each other agreement contemplated hereby and thereby, (d) result
in the creation of any Encumbrance upon any property of the Company or any
Subsidiary which could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect or (e) result in a loss or adverse
modification of any license, permit, certificate, franchise or contract granted
to or otherwise held by the Company or any Subsidiary which could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
Except as set forth in the Disclosure Schedules, neither the Company nor, to the
best of the Company's knowledge, any other party, has, in connection with this
Agreement, (x) obtained any waiver, supplement, modification or amendment of the
terms or provisions of any indenture, mortgage, lien, lease, agreement,
contract, instrument, order, judgment, ordinance, regulation or decree to which
the Company is subject or bound or (y) entered into any understanding or
agreement, oral or written, whether or not legally enforceable, with respect
thereto.
3.7 LITIGATION. There are no actions, proceedings, complaints,
grievances, investigations or unfair labor practice complaints or grievances or
investigations pending or, to the best of the Company's knowledge, threatened,
against the Company or any Subsidiary or the Company's or such Subsidiary's
assets or properties before any court or governmental or regulatory authority or
body or arbitrator, which could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect, nor is there any basis for any of
the foregoing. There are no such actions, proceedings or investigations pending
or, to the best knowledge of the Company, threatened against the Company or, to
the best knowledge of the Company, pending or threatened against any other party
challenging the validity or propriety of the transactions contemplated by this
Agreement and the Ancillary Agreements. None of the Company, any Subsidiary,
nor any of the Company's or such Subsidiary's assets or properties is subject to
any order, judgment, injunction or decree, which could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
3.8 FINANCIAL STATEMENTS. The Disclosure Schedules set forth (i)
the unaudited consolidated financial statements of the Company for the nine
months ended March 31, 1996 and (ii) the audited consolidated financial
statements of the Company for the fiscal years ended June 30, 1995 and June 30,
1994 (the "Financials"). As of their respective dates, the Financials did not
and will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Financials were prepared in accordance with generally
accepted accounting principles ("GAAP") applied on a consistent basis (except as
may be indicated therein or in the notes thereto) and present fairly the
consolidated financial position, results of operations and cash flows of the
Company and the Subsidiaries as of the dates and for the periods indicated
(subject, in the case of unaudited quarterly financial statements, to normal
year-end adjustments).
7
3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since June 30, 1996 the
Company and the Subsidiaries have conducted their respective businesses in the
ordinary course and there has not been any:
(a) material adverse change in the financial
condition, assets, liabilities, business, operations or results of
operations of the Company and the Subsidiaries, taken as a whole;
(b) addition to or modification of employee benefits
plans, arrangements or practices;
(c) sale, assignment or transfer of any of the
material assets of the Company or any Subsidiary, other than in the
ordinary course of business, consistent with past practice;
(d) cancellation of any indebtedness owed to the
Company or any Subsidiary in an aggregate amount greater than Fifty
Thousand Dollars ($50,000), or waiver of any rights of similar value
to the Company or such Subsidiary relating to any of its business
activities or properties, other than in the ordinary course of
business;
(e) amendment, cancellation or termination of any
Contract (as defined in Section 3.12), license or other instrument
material to the Company or any Subsidiary, except in the ordinary
course of business;
(f) failure to repay any material obligation of the
Company or any Subsidiary;
(g) change in accounting methods, principles or
practices by the Company or any Subsidiary materially affecting any of
their respective assets, liabilities, results of operations or
business;
(h) material revaluation by the Company or any
Subsidiary of any of their assets, including without limitation, any
material write-offs, material increases in any reserves except in the
ordinary course of business consistent with past practice or any
write-up of the value of inventory, property, plant, equipment or any
other asset;
(i) material damage, destruction or loss (whether or
not covered by insurance) affecting any office, warehouse, vineyard or
winery owned or maintained by the Company or any Subsidiary or any
other material asset of the Company or any Subsidiary and resulting in
a loss in excess of One Hundred Thousand Dollars ($100,000);
8
(j) mortgage, pledge or other encumbrance of any
assets of the Company or any Subsidiary, material singly or in the
aggregate, except purchase money mortgages, equipment leases or other
encumbrances arising in the ordinary course of business;
(k) declaration, setting aside or payment of any
dividend or other distribution or payment (whether in cash, stock or
property) with respect to the capital stock or other equity securities
of the Company or any Subsidiary, or any redemption, purchase or other
acquisition of any of the securities of the Company or any Subsidiary,
or any other payment to any stockholder of the Company in its capacity
as a stockholder and except as contemplated by this Agreement and the
FAC/Exeter Securities Purchase Agreement;
(l) issuance by the Company or any Subsidiary of, or
commitment by any of them to issue, any capital stock or other equity
securities or obligations or any securities convertible into or
exchangeable or exercisable for capital stock or other equity
interests, except as contemplated by this Agreement;
(m) indebtedness for borrowed money incurred by the
Company or any Subsidiary or any commitment to incur indebtedness for
borrowed money entered into by the Company or any Subsidiary, or any
loans made or agreed to be made by the Company or any Subsidiary other
than pursuant to commitments or credit facilities existing on the date
hereof and set forth on the Disclosure Schedules;
(n) incurrence of other liabilities involving One
Hundred Thousand Dollars ($100,000) or more, except in the ordinary
course of business, or any increase or change in any assumptions
underlying, or methods of calculating, any bad debt, contingency or
other reserves;
(o) payment, discharge or satisfaction of any
liabilities other than the payment, discharge or satisfaction (i) in
the ordinary course, consistent with past practice, of liabilities
reserved against in the Financial Statements for the year ended June
30, 1995 or of liabilities incurred in the ordinary course, consistent
with past practice, since July 1, 1995 or (ii) of other liabilities
involving One Hundred Thousand Dollars ($100,000) or less individually
and Two Hundred Fifty Thousand Dollars ($250,000) or less in the
aggregate;
(p) increase in the compensation of officers or
employees (including any such increase pursuant to any bonus, pension,
profit sharing or other plan or commitment) or any increase in the
compensation payable or to become payable to any officer or employee
or any severance or termination pay,
9
except for increases in the ordinary course of business, consistent
with past practice or as required by law or any existing agreement;
(q) granting of any bonus, incentive compensation,
service, award or other like benefit to any officer or employee except
in accordance with plans or arrangements disclosed on the Disclosure
Schedules; or
(r) other event or condition of any character which in
any one case or in the aggregate has had a Material Adverse Effect, or
any event or condition which, it is reasonable to expect will,
individually or in the aggregate, have a Material Adverse Effect.
3.10 INSURANCE. The Disclosure Schedules contain a list of all
policies of insurance, surety bonds and letters of credit maintained by the
Company and the Subsidiaries (showing as to each policy or binder, the carrier,
coverage limits, expiration dates, annual premiums and a general description of
the type of coverage provided), which list is true, complete and accurate in all
material respects as of the date hereof. None of the Company or any of the
Subsidiaries is in default with respect to its obligations under any such
policies. All of such policies are sufficient for compliance with all
requirements of law and all contracts, leases and other agreements to which the
Company or any Subsidiary is a party except where any such insufficiencies would
not have, individually or in the aggregate, a Material Adverse Effect. None of
the Company or the Subsidiaries has failed to give any notice or to present any
material claim under any such policy or binder in a due and timely fashion
except for such failure as would not have, individually or in the aggregate, a
Material Adverse Effect. Such policies and binders are in full force and effect
on the date hereof and will continue to be kept in full force and effect on
substantially equivalent terms through the consummation of the transactions
contemplated hereby except to the extent policies expire and are replaced in the
ordinary course of business with policies and binders on substantially
equivalent terms or such expirations as would not have, individually or in the
aggregate, a Material Adverse Effect.
3.11 EMPLOYEE BENEFITS.
(a) The term "Benefit Plans" means:
(i) all employee benefit plans, as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and
(ii) all other deferred compensation, profit-sharing,
bonus, stock option, stock purchase, stock bonus, excess benefit,
vacation pay, holiday pay, dependent care assistance, severance,
incentive or other compensation arrangements, maintained or
contributed to by the Company for the benefit of one or more of its
employees (or former employees) and/or their beneficiaries. For
purposes of this Section 3.11, the term "Company" shall include the
Subsidiaries.
10
(b) The term "Pension Plan" means an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA maintained by the
Company.
(c) Except with respect to any "Multiemployer Plan," as
defined in Section 4001(a)(3) of ERISA, the Company has furnished, or made
available at the due diligence room of the Company, to the Buyers:
(i) true and correct copies of the current version
of all Benefit Plans and any summary plan descriptions thereof; and
(ii) a copy of the most recent actuarial report, if
any, available to the Company with respect to each Pension Plan.
(d) With respect to each Pension Plan that is subject to
Title IV of ERISA, other than a Multiemployer Plan:
(i) the Disclosure Schedules provide a break-down of
the aggregate liability of such Pension Plans stated in the Company's
financial statements into separate statements as to the liability (or
net asset balance) of each such Pension Plan; and
(ii) no event has occurred, and no condition or set
of circumstances exists as of the date hereof, which presents a
material risk of the termination of any Pension Plan by the Pension
Benefit Guaranty Corporation and no reportable event (within the
meaning of section 4043 of ERISA) which, in and of itself, could have
an adverse effect exceeding Fifty Thousand Dollars ($50,000) has
occurred.
(e) Except as set forth in the Disclosure Schedules, all
unpaid liabilities of the Company with respect to, and all unfunded benefits
(whether vested or not) under each Benefit Plan have been calculated and are
reflected in the Company's financial statements in accordance with GAAP, and any
such liabilities incurred after the date of such financial statements will be
incurred in the ordinary course of business, determined in a manner
substantially similar to that used in such financial statements.
(f) In the case of each Pension Plan that is subject to
Section 412 of the Internal Revenue Code of 1986, as amended (the "Code"), there
is no accumulated funding deficiency (within the meaning of Section 4971 of the
Code), whether or not such deficiency has been waived.
(g) Each Benefit Plan complies currently, and has complied
in the past, both in form and in operation, in all material respects, with all
applicable law, such as ERISA and the Code (including Section 4980B thereof).
Furthermore, the Internal Revenue Service has
11
issued a favorable determination letter with respect to each Pension Plan that
is intended to qualify under Section 401(a) of the Code, and no event has
occurred before or after the date of the letter that would disqualify the plan.
(h) No nonexempt "prohibited transaction" (as defined in
Section 4975 of the Code and Section 406 of ERISA) has occurred with respect to
any Benefit Plan.
(i) Except as set forth in the Disclosure Schedules, there
is no contract, agreement or benefit arrangement with the Company which,
individually or collectively, could give rise to the payment of any amount which
would constitute an "excess parachute payment" (within the meaning of
Section 280G of the Code).
(j) Except as related liabilities are reflected in the
Company's financial statement prepared in accordance with GAAP, and except as
set forth in the Disclosure Schedules, the Company does not maintain, or
contribute to, any plan that provides or will provide medical or death benefits
to one or more former employees (including retirees), other than benefits that
are required to be provided pursuant to Section 4980B of the Code or state law
continuation coverage or conversion rights.
(k) There are no lawsuits or other claims, pending or, to
the best knowledge of the Company, threatened (other than routine claims for
benefits under the plan) against (i) any Benefit Plan or (ii) any fiduciary of
such plan brought on behalf of any participant, beneficiary, or fiduciary
thereunder, nor is there any reasonable cause for any such claim.
(l) The Company has no intention or commitment, whether
legally binding or not, to create any additional Benefit Plan or to modify or
change any existing Benefit Plan, except as required to conform to changes in
the law. The benefits under all Benefit Plans are as represented, and have not
been, and, prior to the Closing will not be, increased subsequent to the date
Benefit Plan documents are provided to the Buyers, except as required to conform
to changes in the law.
(m) The Company has complied (to the extent applicable) in
all material respects with the provisions of the Worker Adjustment and
Retraining Notification Act and the Americans with Disabilities Act.
(n) The Company has complied in all material respects with
all reporting and disclosure obligations imposed upon it under all applicable
federal and state securities laws by reason of the operation of the Benefit
Plans.
(o) No event or circumstances have occurred with respect to
employee benefit plans (as defined in section 3(3) of ERISA) of former
Subsidiaries of the Company which might give rise to liability in excess of the
amount already reflected in the Company's financial statements in accordance
with GAAP.
12
(p) Any trust that is intended to be tax-exempt as a
voluntary Employees' Beneficiary Association under Section 501(c)(9) of the Code
has received a favorable determination letter from the Internal Revenue Service
regarding its tax-exempt status that reflects the provisions of the Deficit
Reduction Act of 1984, all contributions to it were properly and fully deducted
in the year when paid, and it has not incurred any tax on unrelated business
taxable income under Code Sections 511 through 514.
3.12 MATERIAL CONTRACTS AND OTHER AGREEMENTS. The Disclosure
Schedules disclose, as of the date hereof, whether written or oral (a) all
contracts, agreements and commitments whether or not fully performed pursuant
to which the Company or any of the Subsidiaries has since July 1, 1992
acquired or disposed (the "Disposed Businesses") of a portion of its business
or assets which provided for an aggregate purchase price in excess of One
Hundred Thousand Dollars ($100,000); (b) all agreements containing covenants
not to compete on the part of the Company or any of the Subsidiaries or
otherwise restricting the ability of the Company or any of the Subsidiaries
in any material way to engage in its business; (c) all material notes,
mortgages, credit agreements, lines of credit, indentures, letters of credit,
guarantees, performance bonds and other obligations and agreements and other
instruments for or relating to any lending or borrowing (including assumed
debt) entered into by the Company or any of the Subsidiaries or pursuant to
which any properties or assets of the Company or any of the Subsidiaries are
pledged or mortgaged as collateral; (d) any employment or consulting
agreement with any present or former director, officer or employee of the
Company or any of the Subsidiaries which calls for annual compensation in
excess of Fifty Thousand Dollars ($50,000); (e) contracts, supply orders,
purchase orders or other agreements whereby the Company or any of the
Subsidiaries have purchased or agreed to sell a material quantity of
inventory, supplies, bottled wine, wine in bulk or grapes; (f) contracts,
supply orders, purchase orders or other agreements whereby the Company or any
of the Subsidiaries have purchased or agreed to purchase a material quantity
of inventory, supplies, bottled wine, wine in bulk or grapes and (g) any
other contracts and agreements which are material to the Company or any of
the Subsidiaries. The foregoing are hereinafter referred to as the
"Contracts." With respect to each Contract, (1) such Contract is valid,
binding and enforceable against the Company and, to the best of the Company's
knowledge, each other party thereto in accordance with its terms; (2) neither
the Company or any of the Subsidiaries nor, to the best of Company's
knowledge, any other party to such Contract is in material breach thereof or
material default thereunder; and (3) there does not exist any event that,
with the giving of notice or the lapse of time or both, would constitute a
material breach of or a material default under such Contract, and neither the
Company nor any of the Subsidiaries has received or given notice of any such
breach, default or event. To the best knowledge of the Company, the Company
and the Subsidiaries could not reasonably be expected to have any continuing
liabilities or obligations in connection with or arising in respect of the
Disposed Businesses, individually or in the aggregate, in excess of One
Hundred Thousand Dollars ($100,000).
3.13 SUPPLIERS AND CUSTOMERS. The Disclosure Schedules set forth
(a) the ten (10) largest suppliers of the Company and GSV in terms of purchases
by the Company and
13
GSV for the 1995 calendar year (the "Large Suppliers"), showing the total
purchases by the Company and GSV from each such supplier during such calendar
year and (b) the ten (10) largest customers of the Company and GSV in terms of
sales by the Company and GSV during the 1995 calendar year (the "Large
Customers"), showing the total sales by the Company and GSV to each such
customer during such calendar year. The Company and GSV have a good business
relationship with its Large Suppliers and its Large Customers. None of the
Large Suppliers or Large Customers has canceled or otherwise terminated, or
threatened in writing to cancel or otherwise terminate, its relationship with
either the Company or GSV or, since January 1, 1996, decreased materially, or
threatened to decrease or limit materially, its products and services to either
the Company or GSV or its usage or purchase of products or services of either
the Company or GSV.
3.14 LEASED PROPERTY. The Disclosure Schedule sets forth a list of
all real property that is leased by the Company and GSV.
3.15 REAL PROPERTY. For purposes of this Agreement, "Fee
Property" shall mean all real property owned in whole or in part by the
Company or the Subsidiaries and all leased property. The Disclosure
Schedules contain an accurate and complete list of all Fee Property owned in
whole or in part by the Company or the Subsidiaries and includes the name of
the record title holder thereof and a list of all indebtedness secured by a
lien, mortgage or deed of trust thereon. The Company or the Subsidiaries has
good, valid, marketable and insurable title in fee simple to all the Fee
Property, free and clear of all encumbrances, liens, charges or other
restrictions of any kind or character, except for (a) liens reflected in the
Disclosure Schedules, (b) liens consisting of zoning or planning
restrictions, easements and other customary restrictions or limitations on
the use of real property which do not materially detract from the value of,
or impair the use of, such property by the Company or the Subsidiaries in the
operation of the business, and (c) liens for current taxes, assessments or
governmental charges or levies on property not yet due and payable
("Permitted Liens"). Except as set forth on the Disclosure Schedules, (a)
all of the buildings, structures and appurtenances situated in whole or in
part on any of the Real Property are in good operating condition and in a
state of good maintenance and repair in all material respects, are adequate
and suitable for the purposes for which they are presently being used and,
with respect to each, the Company and the Subsidiaries have adequate rights
of ingress and egress for operation of the business in the ordinary course
and consistent with past practice, (b) none of such buildings, structures or
appurtenances (or any equipment therein), nor the operation or maintenance
thereof, violates any restrictive covenant or any provision of any federal,
state or local law, ordinance, Rule or regulation, or encroaches on any
property owned by others in any way which could reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect, (c) no
condemnation proceeding or other litigation is pending or, to the best
knowledge of the Company and the Subsidiaries, threatened which would
preclude or impair the use of any Real Property by the Company and the
Subsidiaries for the purposes for which it is currently used, (d) none of the
Company or any of the Subsidiaries has violated or failed to hold any valid
and effective certificates of occupancy, underwriters' certificates relating
to electrical work, zoning, other permits and licenses (including building,
14
housing, safety, fire, health and similar permits and approvals) required by
applicable law with respect to any Real Property or the business conducted
thereat which could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
3.16 COMPLIANCE WITH LAWS. The Company and the Subsidiaries are in
compliance with applicable federal, state or local statutes, laws and
regulations, including, without limitation, any applicable alcohol production
and sale, franchise, building, zoning, health, environmental, sanitation,
safety, labor relations or other law, ordinance or regulation, other than
violations, if any, which, individually or in the aggregate, could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect.
3.17 LICENSES AND PERMITS. Except as set forth in the Disclosure
Schedules, the Company and the Subsidiaries have all governmental or regulatory
licenses, permits and authorizations (all of which are in full force and effect)
necessary to conduct their business as it is now being conducted, including
without limitation those required by the U.S. Bureau of Alcohol, Tobacco and
Firearms and the California Alcoholic Beverage Control Board, except for such
governmental or regulatory licenses, permits and authorizations the absence of
which would not have, individually or in the aggregate, a Material Adverse
Effect, and none of such governmental or regulatory licenses, permits and
authorizations will be impaired as a result of the transactions contemplated by
this Agreement, except in any case that would not have, individually or in the
aggregate, a Material Adverse Effect. Neither the Company nor any of the
Subsidiaries has received any notice to the effect that, or otherwise been
advised that, it is not in compliance with, or that it is in violation of, any
such governmental or regulatory licenses, permits and authorizations in a manner
that would have, individually or in the aggregate, a Material Adverse Effect,
and there are not currently existing circumstances that are likely to result in
a failure of the Company or any Subsidiary to comply with, or in a violation by
the Company or any Subsidiary of, any such governmental or regulatory licenses,
permits or authorizations that would have, individually or in the aggregate, a
Material Adverse Effect.
3.18 TITLE TO ASSETS. The Company and the Subsidiaries own or
lease all tangible personal property necessary for the conduct of their business
as presently conducted. Each such asset has been maintained in accordance with
ordinary industry practice, is in good operating condition and is usable in the
ordinary course of business, other than where any such failures individually or
in the aggregate would not have a Material Adverse Effect. Except for liens
arising under documents set forth in the Disclosure Schedules and for other
imperfections which individually or in the aggregate would not have a Material
Adverse Effect and except for leased or licensed assets, the Company and the
Subsidiaries have good and marketable title to all of the owned tangible
personal property used in the conduct of their businesses, except for assets
disposed of in the ordinary course of business. The Company has good and valid
leasehold title to all leased tangible personal property leased by it from third
parties, free and clear of all liens, security interests and other encumbrances
except for imperfections individually or in the aggregate as would not cause a
Material Adverse Effect and except as set forth in the Disclosure Schedules.
15
3.19 INVENTORY. The value at which the inventory of the Company
and the Subsidiaries is carried on the June 30, 1995 consolidated balance sheet
(the "Balance Sheet") reflects the customary inventory valuation policy of the
Company and is consistently applied in accordance with GAAP. The Company's and
the Subsidiaries' current inventory consists of items of a quality which are
saleable in the ordinary course of business at prevailing prices, and is in a
quantity sufficient to service the operations of the business of the Company and
the Subsidiaries at the Company's and the Subsidiaries' respective, current
levels of operations. Since July 1, 1995 the Company and the Subsidiaries have
continued to replenish their inventory in the ordinary course of business
consistent with past practice, and have not made any change in their inventory
policies or procedures.
3.20 ACCOUNTS RECEIVABLE. All accounts receivable acquired since
June 30, 1995 by the Company and the Subsidiaries are collectible at the
aggregate recorded amounts thereof, net of any applicable reserves for doubtful
accounts as set forth in the Financials, which reserves are adequate and were
calculated consistent with past practices. There are no refunds, rebates,
discounts or other adjustments payable with respect to such accounts receivable.
3.21 TAXES. The Company and the Subsidiaries have paid, or the
Company's June 30, 1995 consolidated balance sheet contains adequate
provision for, all federal, state, local and foreign income, liquor,
licenses, alternative, add-on, gross receipts, franchise, payroll, F.I.C.A.,
unemployment, withholding, real property, personal property, sales, payroll,
disability and other taxes imposed on the Company or any of the Subsidiaries
or with respect to any of their respective properties, or otherwise payable
by any of them, including interest, penalties and other additions, if any, in
respect thereof (collectively, "Company Taxes"), for the taxable period ended
on June 30, 1995 and for all taxable periods ended prior thereto. Company
Taxes paid and/or incurred since July 1, 1995 until the Closing Date include,
or will include, only Company Taxes incurred in the ordinary course of
business determined in the same manner as in the taxable period ending on
June 30, 1996. Without limiting the foregoing representations in any way,
(a) the Company and the Subsidiaries have collected all sales, use and value
added taxes required to be collected, and have remitted, or will remit on a
timely basis, such amounts to the appropriate governmental authorities and
have furnished properly completed exemption certificates for all exempt
transactions and (b) the Company and the Subsidiaries have properly withheld
income and social security or other similar taxes and paid payroll taxes with
respect to all persons properly characterized as employees for federal, state
or local tax purposes. Other than between the Company and the Subsidiaries,
neither the Company nor any Subsidiary is a party to or bound by any tax
sharing, tax indemnity or tax allocation agreement or other similar
arrangement. The Company and the Subsidiaries have timely filed all returns,
reports and other filings related to Company Taxes which any of them is
required to file and have paid, or provided for, all the amounts shown to be
due thereon. The Company has made available to the Buyers (c) complete
copies of all such tax returns, reports and filings and (d) complete copies
of all audit reports and other governmental claims asserting Company Taxes in
addition to those Company Taxes set forth on such returns, reports and
filings. Except for actions and proceedings pending or threatened by any
governmental authority involving an aggregate amount of less than Fifty
16
Thousand Dollars ($50,000), no action or proceeding is pending or threatened by
any governmental authority for assessment or collection from the Company or any
of the Subsidiaries of any Company Taxes, no unresolved claim for assessment or
collection of any Company Taxes has been asserted against the Company or any of
the Subsidiaries, and all resolved assessments of Company Taxes have been paid
or are reflected in the Company's June 30, 1995 consolidated balance sheet.
There are no liens for Company Taxes (other than for current Company Taxes not
yet due and payable) upon the assets of the Company or any of the Subsidiaries.
3.22 ENVIRONMENTAL LAWS AND REGULATIONS.
(a) For the purposes of this section, the following words
and phrases shall have the following meanings:
"CURRENT REAL PROPERTY" means all Real Property currently
owned, operated, leased or occupied by the Company.
"ENVIRONMENTAL CONDITION" means any condition relating to the
presence, release, disposal, storage or treatment of Hazardous Materials in, at
on, under or about (i) the Real Property, or (ii) the environment beyond the
Real Property, which Hazardous Materials migrated or emanated from the Real
Property, or (iii) the disposal of Hazardous Materials at any property.
"ENVIRONMENTAL LAW" means any environmental or health and
safety-related law, regulation, rule, requirement, ordinance, order or
determination of any governmental or judicial authority at the federal, state,
or local level, whether existing as of the date hereof, previously enforced or
subsequently enacted.
"HAZARDOUS MATERIAL" means any pollutant, contaminant, toxic
substance, hazardous waste, hazardous material, hazardous substance, petroleum
or petroleum product, asbestos, polychlorinated biphenyls, underground storage
tanks and the contents thereof including, without limitation, any such materials
defined in or regulated pursuant to any Environmental Law.
"REAL PROPERTY" means any real property or "facility" (as
defined in the Resource Conservation and Recovery Act, 42 U.S.C Section 6901 et
seq. ("RCRA")) currently or formerly owned, operated, leased or occupied by the
Company.
"COMPANY" means Golden State Acquisition Corp., Golden State
Vintners, and/or any of the Subsidiaries or affiliates thereof.
(b) The Company has no liability under, and is in
compliance in all material respects with, all Environmental Laws applicable to
the Company's business, the Real Property and any facilities and operations
thereon.
17
(c) The Company possesses all permits and authorizations
under Environmental Laws required or necessary to conduct its business (the
"Required Permits"), except where the failure to obtain any such permits or
authorizations would not have, individually or in the aggregate, a Material
Adverse Effect. The Company is in compliance with all terms and conditions of
the Required Permits, except where the failure to comply would not, individually
or in the aggregate, have a Material Adverse Effect. The Required Permits are
in full force and effect and will not be impaired as a result of the
transactions contemplated hereby or by any of the Ancillary Agreements.
(d) In the last five (5) years, the Company has not: (i)
entered into or been subject to any outstanding consent decree, compliance order
or administrative order with respect to the Real Property or any facilities or
operations thereon the future compliance with which would, individually or in
the aggregate, have a Material Adverse Effect; or (ii) as of the date hereof
received any notice, complaint or claim from any governmental authority with
respect to any Environmental Condition. With respect to each of these matters,
the Company has taken all appropriate action consistent with all applicable
Environmental Laws, except where the failure to take any such action would not,
individually or in the aggregate, have a Material Adverse Effect.
(e) There has been no release, disposal, treatment, storage
or presence of any Hazardous Material at, in, on, under or about the Real
Property that could reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect.
(f) No lien has been imposed or, to the Company's
knowledge, is threatened on any or all of the Real Property by any governmental
agency at the federal, state, or local level in connection with the presence,
release, disposal, storage or treatment on or off the Real Property of any
Hazardous Material.
(g) Between July 1, 1991 and the date hereof, the
Company has not received any notice, complaint or claim from any governmental
authority that the Company and/or any Current Real Property is not in
compliance with any applicable Environmental Laws relating to: (i) the
maintenance of records of Hazardous Material handled at each Current Real
Property; (ii) reporting, monitoring, inspections and compliance with the
manifest system for tracking the movement of Hazardous Material; (iii)
operating methods, techniques and practices for treating, storing and
disposing of Hazardous Material; (iv) the location, design and construction
of the Current Real Property; (v) contingency plans for minimizing
unanticipated damage from Hazardous Material treatment, storage or disposal
activities; (vi) maintenance and operation of each Current Real Property,
including qualifications with respect to ownership, continuity of operation,
personnel training, financial responsibility and closure; and (vii)
compliance with RCRA permit requirements.
(h) None of the matters set forth in the Disclosure
Schedules with respect to this section, individually or in the aggregate, have a
Material Adverse Effect.
18
3.23 BROKERS; CERTAIN EXPENSES. The Company has not paid or become
obligated to pay any fee or commission to any broker, finder, investment banker
or other intermediary in connection with this Agreement, except as may be
contemplated in connection with the FAC/Exeter Securities Purchase Agreement.
3.24 NO AGREEMENTS TO SELL THE COMPANY. Except as contemplated by
this Agreement or the FAC/Exeter Securities Purchase Agreement, none of the
Company or any of the Subsidiaries or any of its stockholders has any legal
obligation, absolute or contingent, to any other person, firm or entity to sell
capital stock, material assets (other than in the ordinary course of business
and consistent with past practices) or business of the Company or any of the
Subsidiaries or to effect any merger, consolidation, liquidation, dissolution,
recapitalization or other reorganization of the Company or any of the
Subsidiaries or to enter into any agreement with respect thereto.
3.25 RELATED-PARTY TRANSACTIONS. Except as set forth in the
Disclosure Schedules, since July 1, 1994, no employee, officer, or director of
the Company or of any Subsidiary, or, to the knowledge of the Company, no
affiliate (as such term is defined in the Securities and Exchange Act of 1934,
as amended ("Affiliates")) of any such person, and no member of such persons'
immediate families is indebted to, or has engaged in any transaction with, the
Company or any Subsidiary. Except as set forth in the Disclosure Schedules,
neither the Company nor any Subsidiary is indebted to, or a party to any
contract, agreement or instrument with, any employee, officer, director or
Affiliate, of the Company or of any Subsidiary, or, to the knowledge of the
Company, any Affiliate of any such person, or any member of such persons'
immediate families. To the best of the Company's knowledge, except as set forth
in the Disclosure Schedules, none of such persons or affiliates have any direct
or indirect ownership interest in any firm or corporation with which the Company
or any Subsidiary is affiliated or with which the Company or any Subsidiary has
a business relationship, or any firm or corporation that competes with the
Company or any Subsidiary, except that employees, officers or directors of the
Company and any Subsidiary and members of their immediate families may own stock
in publicly traded companies that may compete with the Company or any
Subsidiary. Except as set forth in the Disclosure Schedules, no member of the
immediate family of any officer or director of the Company or any Subsidiary is
directly or indirectly interested in any Contract with the Company or any
Subsidiary. Section 3.25 of the Disclosure Schedules describes in detail (a)
the Company's business relationships with the Grape Group and (b) the owners of
S.E. Vineyards, the aggregate number of acres owned or controlled thereby and
the most recent financial statements thereof. All of the transactions described
in Section 3.25 of the Disclosure Schedules that were entered into after
January 1, 1995 were on terms no less favorable to the Company than would have
been available from an unaffiliated third party at the time such transactions
were entered into, provided that, with respect to transactions that have not by
the terms thereof been fully performed involving current employees, officers or
directors of the Company, affiliates of any such person and any member of such
persons' immediate family, this time limitation shall not apply, provided,
further that this provision shall not apply to employment agreements disclosed
on the Disclosure Schedules.
19
3.26 LABOR MATTERS.
(a) Neither the Company nor any Subsidiary is a party to or
bound by any collective bargaining agreements or other agreements with labor
unions. The Company and the Subsidiaries have not violated any laws,
regulations, orders or contract terms, affecting the collective bargaining
rights of employees, equal opportunity employment, or employees' health, safety,
welfare, wages and hours, the default or violation of which could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
(b) Except as could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect: (i) there are no
labor disputes existing, or to the Company's best knowledge, threatened,
involving strikes, slow-downs, work stoppages, job actions or lockouts of any
employees of the Company or any of the Subsidiaries (ii) there are no unfair
labor practices or petitions for election pending before the National Labor
Relations Board or any other federal or state Labor Commission relating to the
employees of the Company or any of the Subsidiaries, and (iii) no demand for
recognition heretofore made by any labor organization is pending with respect to
the Company or any of the Subsidiaries.
3.27 COMPLIANCE WITH THE IMMIGRATION REFORM AND CONTROL ACT. Since
January 1, 1991, each of the Company and GSV has complied with and has not
violated the terms and provisions of the Immigration Reform and Control Act of
1986, or any related Regulations promulgated thereunder (the "Immigration
Laws"). With respect to each employee (as defined in Section 274a.1(f) of
Title 8, Code of Federal Regulations) of the Company or GSV for whom compliance
with the Immigration Laws by an employer (as defined in Section 274a.1(g) of
Title 8, Code of Federal Regulations) is required, each of the Company and GSV
has in its records such employee's Form I-9 (Employment Eligibility Verification
Form) and all other records, documents or other papers in the Company's
possession with respect to such employee. Since January 1, 1991, neither the
Company nor GSV has been the subject of any inspection or, to the Company's
knowledge, investigation relating to its compliance with or violation of the
Immigration Laws, nor has it been fined or otherwise penalized by reason of any
failure to comply with the Immigration Laws, nor is any such proceeding pending
or, to the Company's knowledge, threatened.
3.28 PROPRIETARY RIGHTS. The Company and the Subsidiaries own or
have the right to use all of the federal and state registrations of trademarks
and of other marks, trade names or other trade rights, and all pending
applications for any such registrations and all of the patents and copyrights
and all pending applications therefor, all other trademarks and other marks,
trade names and other trade rights in which the Company or any of the
Subsidiaries has any interest whatsoever, and all other trade secrets, designs,
plans, specifications, technical information and other proprietary rights,
whether or not registered, which are material to the conduct of the business of
the Company and the Subsidiaries (collectively, "Proprietary Rights"). Other
than payments between the Company and the Subsidiaries, no person has a right to
receive from the Company or the Subsidiaries a royalty or similar payment in
respect of any Proprietary Rights whether or not pursuant to any contractual
arrangements entered into by the Company or any of the Subsidiaries. Neither
the Company nor any of the Subsidiaries have received any notice of
20
invalidity or infringement of any rights of others with respect to Proprietary
Rights since July 1, 1992 which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. No proceedings
have been instituted against or notices received by the Company or any of the
Subsidiaries that are presently outstanding alleging that the Company's or any
of the Subsidiaries' use of any Proprietary Rights infringes upon or otherwise
violates any rights of a third party in or to such Proprietary Rights. All of
the Proprietary Rights are valid and enforceable rights of the Company or the
Subsidiaries and will not cease to be valid and in full force and effect by
reason of the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated by this Agreement.
3.29 SMALL BUSINESS ADMINISTRATION MATTERS. The Company complies
with the size standards set forth in 13 C.F.R. Section 121.301(a) and, to the
extent relevant, those size standards set forth in 13 C.F.R. Section 121.601.
On or promptly after the Closing, the Company shall deliver to the Buyers,
upon request, (a) an executed copy of SBA Form 480 - Size Status Declaration,
(b) an executed copy of SBA Form 652 - Assurance of Compliance for
Nondiscrimination, and (c) the information needed to complete Part A of SBA
Form 1031 - Portfolio Financing Report.
3.30 DISCLOSURE. To the best knowledge of the Company, no
representation or warranty by the Company or any Subsidiary in this Agreement,
any of the Disclosure Schedules hereto or any other agreement delivered in
connection herewith contains any untrue statement of material fact or omits to
state any material fact necessary, in light of the circumstances under which it
was made, in order to make the statements herein not misleading.
ARTICLE IV
COVENANTS AND AGREEMENTS
4.1 ACCESS TO PROPERTIES AND RECORDS. The Company shall afford to
the Buyers and their accountants, counsel and other representatives, on
reasonable notice, full access during normal business hours from the date hereof
to the Closing Date to all of its and the Subsidiaries' properties, books,
accounts, agreements, personnel, facilities, proprietary information, contracts,
commitments and records and shall make reasonably available their officers and
employees to answer fully and promptly questions put to them thereby. As soon
as reasonably practicable, the Company shall furnish the Buyers with audited
consolidated financial statements for the fiscal year ended June 30, 1996. No
investigation pursuant to this Section 4.1 will affect or be deemed to modify
any representation or warranty made by the Company.
4.2 INDEMNIFICATION BY THE COMPANY.
(a) (i) The Company agrees to indemnify the Buyers, and
each of the Buyer's respective officers, directors, partners, employees, agents
and representatives, against and hold the Buyers, and each of the Buyer's
respective officers, directors, partners, employees,
21
agents and representatives, harmless from all claims, obligations, costs and
expenses (including, without limitation, reasonable attorneys' fees and
expenses) and liabilities of and damages to the Buyers arising out of the
material breach of any representation, warranty, covenant or agreement of the
Company herein or arising out of or in any way relating to the transactions
contemplated by this Agreement, including without limitation, any of the
transactions contemplated by the FAC/Exeter Securities Purchase Agreement.
(ii) The Company agrees to indemnify the Buyers
against and hold the Buyers harmless from all claims, obligations, costs and
expenses (including, without limitation reasonable attorney's fees and expenses)
and liabilities of and damages to the Buyers if the Buyers becomes a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
instituted by any third party which challenges the transactions contemplated by
this Agreement, including without limitation, any of the transactions
contemplated by the FAC/Exeter Securities Purchase Agreement or otherwise arises
out of this Agreement.
(b) The Buyers agree to give the Company prompt written
notice of any claim, assertion, event or proceeding by or in respect of a third
party of which it has knowledge concerning any liability or damage as to which
it may request indemnification hereunder. The Company shall have the right to
direct, through counsel of its own choosing, the defense or settlement of any
such claim or proceeding (provided that the Company shall have first
acknowledged its indemnification obligations hereunder specifically in respect
of such claim or proceeding) at its own expense, which counsel shall be
reasonably satisfactory to the Buyers. If the Company elects to assume the
defense of any such claim or proceeding, the Buyers may participate in such
defense, but in such case the expenses of the Buyers incurred in connection with
such participation shall be paid by the Buyers. The Buyers shall cooperate with
the Company in the defense or settlement of any such claim, assertion, event or
proceeding. If the Company elects to direct the defense of any such claim or
proceeding, the Buyers shall not pay, or permit to be paid, any part of any
claim or demand arising from such asserted liability, unless the Company
consents in writing to such payment or unless the Company withdraws from the
defense of such asserted liability, or unless a final judgment from which no
appeal may be taken by or on behalf of the Company is entered against the Buyers
for such liability. If the Company shall fail to defend, or if, after
commencing or undertaking any such defense, the Company fails to prosecute or
withdraws from such defense, the Buyers shall have the right to undertake the
defense or settlement thereof at the Company's expense.
4.3 BEST EFFORTS. Upon the terms and subject to the conditions
herein provided, each of the Buyers and the Company agrees to use its reasonable
best efforts to take, or cause to be taken, all action, and to do, or cause to
be done, all things necessary, proper or advisable to consummate the
transactions contemplated by this Agreement including (a) to lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated hereby and (b) to
fulfill all conditions on its part to be fulfilled under this Agreement. In
case at any time after the Closing Date any further
22
action is reasonably necessary or desirable to carry out the purposes of this
Agreement, the proper partners, officers or directors of each party to this
Agreement shall take all such reasonably necessary action. No party hereto will
take any action for the purpose of delaying, impairing or impeding the receipt
of any required consent, authorization, order or approval or the making of any
required filing. The Company shall each give prompt notice to the Buyers of (i)
the occurrence, or failure to occur, of any event which occurrence or failure
would be likely to cause any representation or warranty of the Company contained
in this Agreement, as the case may be, to be untrue or inaccurate in any
material respect any time from the date hereof to the Closing Date and (ii) any
material failure of the Company, as the case may be, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder, and the Company shall use all reasonable efforts to remedy such
failure. In addition, the Company shall give prompt notice to the Buyers of any
material developments involving the operations or activities of the Company or
any of the Subsidiaries.
4.4 CONSENTS. The Company and each of the Buyers will use its
reasonable best efforts to obtain all necessary waivers, consents and approvals
of all third parties and governmental authorities necessary to the consummation
of the transactions contemplated by this Agreement, including, but not limited
to, the transactions contemplated by the FAC/Exeter Securities Purchase
Agreement.
4.5 DELIVERY OF FINANCIAL STATEMENTS AND OTHER DOCUMENTS.
(a) The Company shall deliver to the Buyers, as soon as
practicable, but in any event within ninety (90) days after the end of each
fiscal year of the Company, a statement of operations for such fiscal year, a
balance sheet of the Company as of the end of such year, and a statement of cash
flows for such year, such year-end financial reports to be in reasonable detail
and prepared in accordance with GAAP.
(b) The Company shall deliver to the Buyers, as soon as
practicable, but in any event within forty-five (45) days after the end of each
of the first three (3) quarters of each fiscal year of the Company, an unaudited
statement of operations, balance sheet, and statement of cash flows of the
Company for such fiscal quarters as of the end of such fiscal quarters.
(c) The Company shall deliver to the Buyers, as soon as
practicable, but in any event within thirty (30) days after the end of each
month, an unaudited statement of operations, balance sheet, and statement of
cash flows of the Company for such month and for the fiscal year-to-date.
(d) The Company shall deliver to the Buyers prior to the
close of each fiscal year, an operating budget for the next fiscal year
forecasting the Company's revenues, expenses and cash position, prepared on a
monthly basis, including balance sheets and sources and applications of funds
statements for such months.
23
(e) The Company shall deliver to the Buyers, as soon as
practicable, but in any event within ten (10) days of receipt by the Company,
copies of any management letters of the Company's accountants.
(f) The Company shall promptly deliver to the Buyers: (i)
notice of any defaults under any Contracts or other material agreements and (ii)
notice of any material litigation.
(g) The Company shall deliver to the Buyers, as soon as
practicable, all other information requested by the Buyers, where such
information is readily available and may be reduced to written form.
4.6 ACCESS TO RECORDS. The Company shall afford to the Buyers and
their respective officers, directors, partners, employees, counsel and other
authorized representatives free and full access, at all reasonable times, to all
of the books, records and properties of the Company, including, without
limitation, those of any Subsidiary, and to all officers, employees and
accounting professionals of the Company or any Subsidiary.
4.7 NO TRANSACTIONS WITH AFFILIATES. Neither the Company nor any
Affiliate thereof will enter into any transaction with any stockholder of the
Company or any Affiliate thereof or with any member of management of the Company
unless the terms and conditions of each such transaction are no less favorable
to the Company or its Affiliate, as the case may be, than would be obtained in a
comparable arm's-length transaction with an unaffiliated third party.
4.8 QUALIFICATION AS A QUALIFIED SMALL BUSINESS. The Company
agrees to deliver to the Buyers, from time to time, such forms, documents,
schedules and other instruments reasonably requested by Buyers to cause the
Class B Stock to qualify as a qualified small business stock, as such term is
defined in Section 1202(b) of the Internal Revenue Code of 1986, as amended.
4.9 USE OF PROCEEDS; ACCESS TO RECORDS. The Company covenants and
agrees that it will use the proceeds from the sale of the Shares hereunder for
general working capital purposes, and otherwise as duly authorized by the Board
of Directors of the Company for the growth, expansion and modernization of the
Company. The Company will provide each Buyer requesting such information with
reasonable access to the Company's financial records so as to allow such Buyer
to confirm that such proceeds were used in the manner contemplated by this
Agreement, such access to include a review by such Buyer of the use of proceeds
within ninety (90) days after the Closing. The Company acknowledges and agrees
that, if the proceeds are not used in the manner contemplated hereby, each Buyer
shall have the right to demand the immediate repayment thereof.
4.10 BUYER'S RIGHT OF FIRST REFUSAL. The Company hereby grants to
each Buyer the right of first refusal to purchase, pro rata, all or any part of
New Securities, as defined below,
24
which the Company may, from time to time, propose to offer, sell and issue. A
Buyer's pro rata share, for purposes of this right of first refusal, is equal to
such Buyer's percentage interest in the aggregate number of shares of common
stock of the Company then outstanding (assuming, for purposes of such percentage
interest, complete conversion of all outstanding convertible securities and
complete exercise of any and all outstanding options and warrants of the
Company). This right of first refusal shall be subject to the following
provisions:
(a) "New Securities" shall mean any shares of capital stock
of the Company, including common stock and preferred stock, whether or not
presently authorized, any rights, options or warrants to purchase such shares,
and securities of any type whatsoever that are, or may become, convertible into
such shares; provided that "New Securities" does not include (i) options, or
shares of common stock issuable upon exercise of options granted under the
Company's 1996 Stock Option Plan, (ii) shares issuable on exercise of up to
223,913 options granted to X'Xxxxx and up to 50,000 options granted to Xxxxx
Xxxxxxxx, (iii) securities issued in connection with the leasing or financing of
equipment, or with the indebtedness of the Company to banks, insurance
companies, or other commercial leading institutions regularly engaged in the
business of lending money, (iv) securities issued pursuant to the acquisition of
another corporation by the Company by (A) merger, (B) purchase of substantially
all of the assets or (C) other reorganization whereby the Company owns not less
than fifty-one percent (51%) of the voting power of such corporation, (v) any of
the Company's Common Stock (or related options exercisable for such Common
Stock) issued to employees, officers and directors of, and consultants to, the
Company, pursuant to any arrangement approved by the Board of Directors of the
Company, (vi) stock issued upon conversion or exercise of any convertible
securities, options or warrants, provided that the rights of first refusal
established by this Section 4.10 first applied or were properly waived with
respect to the initial sale or grant by the Company of such convertible
securities, options or warrants, and (vii) stock issued in connection with any
stock split, stock dividend or recapitalization by the Company.
(b) In the event the Company proposes to undertake an
issuance of New Securities, it shall give each Buyer written notice of its
intention, describing the type of New Securities, and the price and terms upon
which the Company proposes to issue the same. Each Buyer shall have thirty (30)
days from the date of receipt of any such notice to agree to purchase up to the
Buyer's pro rata share of such New Securities for the price and upon the terms
specified in the notice by giving written notice to the Company and stating
therein the quantity of New Securities to be purchased.
(c) In the event a Buyer fails to exercise the right of
first refusal within such thirty (30) day period, the Company shall have ninety
(90) days thereafter to sell the New Securities with respect to which the
Buyer's option was not exercised, at the price and upon terms no more favorable
to the purchasers of such securities than specified in the Company's notice. In
the event the Company has not sold the New Securities within said ninety (90)
day period, the Company shall not thereafter issue or sell any New Securities,
without first offering such securities to the Buyers in the manner provided
above.
25
(d) The right of first refusal shall terminate on the
consummation of the initial public offering of shares of the Company's common
stock of at least 20% of the common stock then outstanding that results in gross
proceeds to the Company of at least $35,000,000.
ARTICLE V
CONDITIONS PRECEDENT
5.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of each party to effect the transactions contemplated by this
Agreement shall be subject to the conditions that no federal or state
governmental authority or other agency or commission or federal or state court
of competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, injunction or other order (whether
temporary, preliminary, or permanent) which is in effect and has the effect of
prohibiting consummation of the transactions contemplated by this Agreement.
5.2 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligation
of the Company to effect the transaction contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) The Buyers shall have performed in all material
respects their obligations under this Agreement required to be performed by them
on or prior to the Closing Date pursuant to the terms hereof.
(b) The representations and warranties of the Buyers
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing Date as if made at and as of such date, except to the
extent that any such representation or warranty is made as of a specified date
in which case such representation or warranty shall have been true and correct
as of such date. The Buyers shall have delivered a certificate to the effect
set forth in Sections 5.2(a) and (b).
5.3 CONDITIONS TO THE OBLIGATIONS OF THE BUYERS. The obligations
of the Buyers to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to the Closing Date of the following
additional conditions:
(a) The Company shall have performed in all material
respects its obligations under this Agreement required to be performed by it on
or prior to the Closing Date pursuant to the terms hereof.
(b) The representations and warranties of the Company
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing Date as if made at and as of such date, except to the
extent that any such representation or warranty is made
26
as of a specified date in which case such representation or warranty shall have
been true and correct as of such date. The Company shall have delivered to the
Buyers a certificate to the effect set forth in Sections 5.3(a) and (b).
(c) Since January 1, 1996, there shall have been no
material adverse change in the financial condition, prospects or results of
operations of the Company and the Subsidiaries considered as a whole.
(d) The Buyers shall have received fully executed copies of
each of the Ancillary Agreements.
(e) The Buyers and their legal and financial advisors shall
have completed their due diligence of the Company, GSV and any Subsidiaries of
such entities, and the conclusions reached by such advisors is satisfactory to
all of the Buyers.
(f) The size and composition of the Board of Directors
shall be satisfactory to Buyers.
(g) All of the conditions to Closing set forth in
Section 4.3 of the FAC/Exeter Securities Purchase Agreement shall have been
satisfied or waived.
(h) The Buyers shall have received such other duly and
validly executed documents and instruments in connection with the Closing as are
reasonably requested by them.
(i) All necessary waivers, consents and approvals to or of
the transactions contemplated by this Agreement or the FAC/Exeter Securities
Purchase Agreement.
ARTICLE VI
MISCELLANEOUS
6.1 AMENDMENT. This Agreement may be amended by the parties
hereto. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto, provided that after the Closing
this Agreement may be amended without each party's written agreement, but no
such amendment shall be enforceable against any party which has not signed such
amendment.
6.2 WAIVER. At any time prior to the Closing Date, the parties
hereto may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto, and (c) waive compliance with any of the agreements or
conditions herein, provided that any such waiver of or failure to insist on
strict compliance with
27
any such representation, warranty, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure. Any
agreement on the part of a party hereto to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
6.3 SURVIVAL. The representations and warranties set forth in
Articles II and III shall survive the Closing.
6.4 NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been given or
made if in writing and delivered personally, sent by commercial carrier or
registered or certified mail (postage prepaid, return receipt requested) or
transmitted by facsimile to the parties at the following addresses and numbers:
(a) If to the Buyers to:
SBIC Partners, L.P.
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, XX 00000
Fax No.: (000) 000-0000
Xxxxxxx X. X'Xxxxx
00 Xxxx Xxx Xxxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Fax No.: (000) 000-0000
(b) If to the Company, to:
00 Xxxx Xxx Xxxxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Fax No.: (000) 000-0000
or at such other addresses as shall be furnished by the parties by like notice,
and such notice or communication shall be deemed to have been given or made as
of the date actually received.
6.5 HEADINGS; AGREEMENT. The headings contained in this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement. The term "Agreement" for purposes of representations and warranties
hereunder shall be deemed to include the Exhibits hereto to be executed and
delivered by a party.
28
6.6 PUBLICITY. So long as this Agreement is in effect, the
parties hereto shall not, and shall cause their affiliates not to, issue or
cause the publication of any press release or other announcement with respect to
the transactions contemplated by this Agreement or this Agreement without the
consent of the other parties, which consent shall not be unreasonably withheld
or delayed.
6.7 ENTIRE AGREEMENT. This Agreement (including all the
Disclosure Schedules and Exhibits hereto) constitutes the entire agreement among
the parties and supersedes all other prior agreements and understandings, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof.
6.8 CONVEYANCE TAXES. The Company agrees to assume liability for
and to hold the Buyers harmless against any sales, use, transfer, stamp, stock
transfer, real property transfer or gains, and value added taxes, any transfer,
registration, recording or other fees, and any similar taxes incurred as a
result of the transactions contemplated hereby.
6.9 ASSIGNMENT. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefits of the parties hereto and their
respective successors and permitted assigns. Except as otherwise provided in
the Ancillary Agreements or Exhibits to this Agreement, and except for an
assignment of rights, interests or obligations by Buyers after the Closing,
neither this Agreement nor any of the rights, interests or obligations shall be
assigned by any of the parties hereto without the prior written consent of the
other parties, provided that SBIC Partners shall have the right to assign all or
any portion of its rights hereunder to any affiliate thereof without the consent
of any other party hereto.
6.10 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.
6.11 GOVERNING LAW. The validity and interpretation of this
Agreement shall be governed by the laws of the State of California, without
reference to the conflict of laws principles thereof.
6.12 THIRD PARTY BENEFICIARIES. This Agreement is not intended to
confer upon any other person any rights or remedies hereunder.
6.13 COSTS AND EXPENSES. The Company will pay all costs and
expenses incurred by Buyers in connection with the transactions contemplated
hereby, including without limitation, the legal fees and expenses of Xxxxxxx &
XxXxxxxx, whether or not the transactions contemplated hereby are consummated.
29
(THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK)
30
IN WITNESS WHEREOF, each of the Buyers and the Company has caused this
Agreement to be duly signed as of the date first written above.
COMPANY: GOLDEN STATE ACQUISITION CORP.,
a Delaware corporation
By:
--------------------------------------------------
Xxxxxxx X. X'Xxxxx
Chief Executive Officer
BUYERS:
SBIC PARTNERS: SBIC PARTNERS, L.P.,
a Texas limited partnership
By: Xxxxxxx Xxxxxxx & Xxxxx X.X.,
General Partner
By: Xxxxxxx Xxxxxxx & Xxxxx Venture Co.,
General Partner
By: ----------------------------------------
Xxxxxxx X. Xxxxx
Office of the President
By: SL-SBIC Partners, L.P.,
General Partner
By: FW-SBIC, Inc.,
General Partner
By: ----------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Chairman
X'XXXXX: --------------------------------------
Xxxxxxx X. X'Xxxxx
31
GOLDEN STATE ACQUISITION CORP.
SUPPLEMENTAL SIGNATURE PAGE
TO
STOCK PURCHASE AGREEMENT
SUBSEQUENT CLOSING -- NOVEMBER 26, 1996
By their execution hereof, GOLDEN STATE ACQUISITION CORP., a Delaware
corporation (the "Company"), and the undersigned (each, a "Buyer" and
collectively, the "Buyers"), hereby become parties to the Stock Purchase
Agreement dated as of October 10, 1996 (the "Stock Purchase Agreement") by and
among the Company, SBIC Partners, L.P. and Xxxxxxx X. X'Xxxxx. As of the
Subsequent Closing, as defined below, each Buyer hereby acknowledges and agrees
to the provisions, terms and conditions of the Stock Purchase Agreement and each
Buyer represents and warrants on his or its own behalf that the representations
and warranties set forth in Section 2 of the Stock Purchase Agreement are true
and correct. The shares of the Company's Class K Common Stock (the "Class K
Stock") acquired by the Buyers at the Subsequent Closing shall, for all intents
and purposes, be deemed to have been acquired under the Stock Purchase
Agreement.
The Buyers hereby agree to purchase and the Company agrees to sell and
issue the number of shares of Class K Stock as set forth opposite each Buyer's
name on the attached Exhibit B for the purchase price of $7.26 per share. The
purchase and sale of the Class K Stock shall take place at the offices of
Xxxxxxx & XxXxxxxx, 000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx
00000, at 10:00 a.m. on November 26, 1996, or at such other time and place as
the Company and the Buyers shall agree (the "Subsequent Closing").
IN WITNESS WHEREOF, this Supplemental Signature Page has been executed
and delivered as of the date forth set forth above.
GOLDEN STATE ACQUISITION CORP.
By:
----------------------------------------
Xxxxxxx X. X'Xxxxx
President
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
BUYERS: R&M PARTNERS/GSV, G.P.
By:
----------------------------------------
Xxxxxxx X. XxXxxxxx
General Partner
Address: Xxxxxxx & XxXxxxxx
000 Xxxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
---------------------------------------------
Xxxxxx Xxxxxxxx
Address: The Xxxxxxxx Company
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
---------------------------------------------
Xxxxx Xxxxxx
Address: Xxxxxx Consulting Inc.
000 Xxxxx Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
2
EXHIBIT B
SCHEDULE OF SUBSEQUENT BUYERS
------------------------------------------------------------------------------
------------------------------------------------------------------------------
Number of
Shares of Class K Aggregate
Buyer Common Stock Purchase Price
----- ------------ --------------
------------------------------------------------------------------------------
R&M Partners/GSV, G.P. 20,661 $149,998.86
------------------------------------------------------------------------------
Xxxxx Xxxxxx 6,887 $ 49,999.62
------------------------------------------------------------------------------
Xxxxxx Xxxxxxxx 6,887 $ 49,999.62
------------------------------------------------------------------------------
TOTAL 34,435 $249,998.10
------------------------------------------------------------------------------
------------------------------------------------------------------------------
3
