EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
by and between
GLEN'S MARKET, INC.,
CATT'S REALTY CO.
and
GLEN'S PHARMACY, INC.
as Sellers
and
VALULAND, INC.
as Buyer
and joined in by
certain shareholders of Sellers
as the Shareholders
and by
UNIVERSAL LAND COMPANY
as the Real Estate Company
and by
SPARTAN STORES, INC.
as the Parent of Buyer
MARCH 5, 1999
TABLE OF CONTENTS
PAGE
ARTICLE 1 - PRINCIPAL TRANSACTION. . . . . . . . . . . . . . . . . . . . .1
Section 1.1. Sale and Purchase of Assets. . . . . . . . . . . . . .1
Section 1.2. Excluded Assets. . . . . . . . . . . . . . . . . . . .3
Section 1.3. Purchase Price . . . . . . . . . . . . . . . . . . . .4
Section 1.4. Closing Balance Sheet and Inventory Valuation. . . . .5
Section 1.5. Purchase Price Adjustments . . . . . . . . . . . . . .5
Section 1.6. Closing. . . . . . . . . . . . . . . . . . . . . . . .7
Section 1.7. Deliveries at Closing. . . . . . . . . . . . . . . . .7
Section 1.8. Allocation of Purchase Price . . . . . . . . . . . . .8
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES
OF SELLERS, SHAREHOLDERS AND REAL ESTATE COMPANY . . . . . . . . . . . . .8
Section 2.1. Disclosure Schedule. . . . . . . . . . . . . . . . . .8
Section 2.2. Organization and Good Standing . . . . . . . . . . . .9
Section 2.3. Financial Statements . . . . . . . . . . . . . . . . .9
Section 2.4. Books and Records. . . . . . . . . . . . . . . . . . .9
Section 2.5. No Undisclosed Liabilities . . . . . . . . . . . . . .9
Section 2.6. Taxes. . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.7. No Material Adverse Change; Absence of Restricted
Events . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.8. Employees; Labor Relations . . . . . . . . . . . . . 10
Section 2.9. Employee Benefit Plans . . . . . . . . . . . . . . . 11
Section 2.10. Title to Properties. . . . . . . . . . . . . . . . . 12
Section 2.11. Personal Property. . . . . . . . . . . . . . . . . . 12
Section 2.12. Real Property. . . . . . . . . . . . . . . . . . . . 12
Section 2.13. Condition and Sufficiency of Assets. . . . . . . . . 13
Section 2.14. Accounts Receivable. . . . . . . . . . . . . . . . . 13
Section 2.15. Inventory. . . . . . . . . . . . . . . . . . . . . . 13
Section 2.16. Litigation . . . . . . . . . . . . . . . . . . . . . 13
Section 2.17. Authorization and Enforceability; No Conflict with
Other Instruments or Proceedings . . . . . . . . . . 14
Section 2.18. Contracts. . . . . . . . . . . . . . . . . . . . . . 14
Section 2.19. Intellectual Property Assets . . . . . . . . . . . . 15
Section 2.20. Insurance. . . . . . . . . . . . . . . . . . . . . . 15
Section 2.21. No Illegal Payments. . . . . . . . . . . . . . . . . 15
Section 2.22. Product and Service Warranties and Liabilities . . . 15
Section 2.23. Certain Relationships. . . . . . . . . . . . . . . . 16
Section 2.24. Permits and Licenses; Compliance with Legal
Requirements . . . . . . . . . . . . . . . . . . . . 16
Section 2.25. No Broker's Fees . . . . . . . . . . . . . . . . . . 16
Section 2.26. Year 2000 Compliance . . . . . . . . . . . . . . . . 16
Section 2.27. Environmental Matters. . . . . . . . . . . . . . . . 17
Section 2.28. Accuracy of Statements . . . . . . . . . . . . . . . 17
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PAGE
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF BUYER. . . . . . . . . . . 18
Section 3.1. Organization and Standing of Buyer . . . . . . . . . 18
Section 3.2. Authorization and Enforceability . . . . . . . . . . 18
Section 3.3. No Broker's Fees . . . . . . . . . . . . . . . . . . 18
Section 3.4. No Conflict with Other Instruments or Proceedings. . 18
ARTICLE 4 - COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . 18
Section 4.1. Conduct Pending the Closing. . . . . . . . . . . . . 18
Section 4.2. Access and Investigation by Buyer. . . . . . . . . . 19
Section 4.3. Employees. . . . . . . . . . . . . . . . . . . . . . 20
Section 4.4. Best Efforts . . . . . . . . . . . . . . . . . . . . 20
Section 4.5. Delivery of Property Received After Closing. . . . . 21
Section 4.6. Exclusive Dealing. . . . . . . . . . . . . . . . . . 21
Section 4.7. Non-Compete. . . . . . . . . . . . . . . . . . . . . 21
Section 4.8. Noncompetition Agreements. . . . . . . . . . . . . . 22
Section 4.9. Bulk Sales . . . . . . . . . . . . . . . . . . . . . 22
Section 4.10. Services Agreement . . . . . . . . . . . . . . . . . 22
Section 4.11. New Real Property Leases . . . . . . . . . . . . . . 22
Section 4.12. Shared Expenses. . . . . . . . . . . . . . . . . . . 22
Section 4.13. MESC Rating. . . . . . . . . . . . . . . . . . . . . 22
Section 4.14. Xxxxxx'x Stores. . . . . . . . . . . . . . . . . . . 23
Section 4.15. Cooperation. . . . . . . . . . . . . . . . . . . . . 23
Section 4.16. Confidentiality. . . . . . . . . . . . . . . . . . . 23
ARTICLE 5 - CONDITIONS TO OBLIGATION TO CLOSE. . . . . . . . . . . . . . 24
Section 5.1. Conditions to Obligation of Buyer. . . . . . . . . . 24
Section 5.2. Conditions to Obligation of Sellers. . . . . . . . . 25
ARTICLE 6 - TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 6.1. Termination Events . . . . . . . . . . . . . . . . . 27
Section 6.2. Effect of Termination. . . . . . . . . . . . . . . . 27
ARTICLE 7 - INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . 28
Section 7.1. Indemnification and Reimbursement by Sellers,
Shareholders and Real Estate Company . . . . . . . . 28
Section 7.2. Indemnification and Reimbursement by Buyer . . . . . 28
Section 7.3. Indemnification Procedures . . . . . . . . . . . . . 29
Section 7.4. Limitations on Indemnification.. . . . . . . . . . . 30
Section 7.5. Exclusive Remedy.. . . . . . . . . . . . . . . . . . 31
ARTICLE 8 - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE 9 - GENERAL. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 9.1. Survival of Representations, Warranties, Covenants
and Agreements . . . . . . . . . . . . . . . . . . . 41
Section 9.2. Binding Effect; Benefits; Assignment . . . . . . . . 41
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PAGE
Section 9.3. Entire Agreement . . . . . . . . . . . . . . . . . . 41
Section 9.4. Amendment and Waiver . . . . . . . . . . . . . . . . 41
Section 9.5. Governing Law; Venue.. . . . . . . . . . . . . . . . 42
Section 9.6. Public Disclosure. . . . . . . . . . . . . . . . . . 42
Section 9.7. Notices. . . . . . . . . . . . . . . . . . . . . . . 42
Section 9.8. Counterparts . . . . . . . . . . . . . . . . . . . . 43
Section 9.9. Expenses . . . . . . . . . . . . . . . . . . . . . . 43
Section 9.10. Force Majeure. . . . . . . . . . . . . . . . . . . . 43
Section 9.11. Severability . . . . . . . . . . . . . . . . . . . . 44
Section 9.12. Headings; Construction; Time of Essence. . . . . . . 44
Section 9.13. Guaranty of Parent . . . . . . . . . . . . . . . . . 44
Section 9.14. Shareholder Approval . . . . . . . . . . . . . . . . 44
Section 9.15. Parent Stock Redemption. . . . . . . . . . . . . . . 44
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EXHIBITS
Exhibit A--Business Locations
Exhibit B--Equipment, Vehicles and Other Personal Property
Exhibit C--Existing Real Property Leases
Exhibit D--Excluded Assets
Exhibit E--Assumed Liabilities
Exhibit F--Excluded Liabilities
Exhibit G--Inventory Valuation Method
Exhibit H--Purchase Price Allocation
Exhibit I--Accrued Vacation
Exhibit J--Noncompetition Agreement
Exhibit K--New Real Property Leases
Exhibit L--Xxxxxx'x Supply Agreements
Exhibit M--SUPERVALU Supply Agreement
DISCLOSURE SCHEDULE
Schedule 2.2--Organization and Standing of Sellers
Schedule 2.3--Financial Statements
Schedule 2.5--No Undisclosed Liabilities
Schedule 2.6--Taxes
Schedule 2.7--No Material Adverse Change; Absence of Restricted Events
Schedule 2.8--Employee Relations
Schedule 2.9--Employee Benefit Plans
Schedule 2.10--Title to Properties; Encumbrances
Schedule 2.11--Personal Property
Schedule 2.12--Real Property
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Schedule 2.13--Condition and Sufficiency of Assets
Schedule 2.16--Litigation
Schedule 2.17--Authorization and Enforceability; No Conflict
Schedule 2.18--Contracts
Schedule 2.19--Intellectual Property Assets
Schedule 2.20--Insurance
Schedule 2.22--Product Warranties and Liabilities
Schedule 2.23--Certain Relationships
Schedule 2.24--Permits and Licenses; Compliance with Law
Schedule 2.25--Sellers' Broker's Fees
Schedule 2.27--Environmental Matters
Schedule 3.3--Buyer's Broker's Fees
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("AGREEMENT") is made as of March
4, 1999 by and between Valuland, Inc., a Michigan corporation ("BUYER") and
Glen's Market, Inc. ("GLEN'S"), Catt's Realty Co. ("CATT'S") and Glen's
Pharmacy, Inc. ("GLENS PHARMACY") (each, a "SELLER," and, collectively, the
"SELLERS"). This Agreement is joined in by the undersigned shareholders of
Sellers (each, a "SHAREHOLDER", and, collectively, the "SHAREHOLDERS"); by
Universal Land Company, a Michigan corporation, ("REAL ESTATE COMPANY");
and by Spartan Stores, Inc., the parent corporation of Buyer ("PARENT").
Buyer, Sellers, Real Estate Company and Shareholders are sometimes referred
to individually in this Agreement as a "PARTY" and collectively as the
"PARTIES." All other capitalized terms used in this Agreement and not
otherwise defined have the meanings set forth in ARTICLE 8 of this
Agreement.
Sellers are engaged in the retail grocery, pharmacy and
transportation business (the "BUSINESS"). Buyer desires to purchase from
Sellers, and Sellers desire to sell to Buyer, certain assets of the
Business on the terms and subject to the conditions set forth in this
Agreement. The Shareholders and Real Estate Company join in this Agreement
to make certain covenants, representations and warranties for the purpose
of inducing Buyer to enter into this Agreement. Parent joins in this
Agreement to provide a guaranty as set forth in this Agreement with respect
to certain obligations of Buyer under this Agreement.
ARTICLE 1 - PRINCIPAL TRANSACTION
SECTION 1.1. SALE AND PURCHASE OF ASSETS. On the terms and subject
to the conditions of this Agreement, Sellers agree to sell and transfer to
Buyer, and Buyer agrees to purchase from Sellers, all of the assets (except
the Excluded Assets) used in the operation of the Business (the "PURCHASED
ASSETS"), at 23 retail grocery stores operated by Glen's and Catt's (the
"STORES"); four pharmacies operated by Glen's Pharmacy, Inc. (the "
PHARMACIES"); the general office in Gaylord, Michigan (the "GENERAL
OFFICE"); the distribution center in Waters, Michigan (the "DISTRIBUTION
CENTER ") and the Dairy Queen in Gaylord, Michigan (the "DAIRY QUEEN"),
each as set forth on EXHIBIT A (the "BUSINESS LOCATIONS"). The Purchased
Assets include, without limitation, each of the following, except to the
extent included in the Excluded Assets:
(a) All inventories of food, beverages, and other products
sold in the Ordinary Course of Business of Sellers other than
Non-assignable Private Label Inventory (the "INVENTORY");
(b) All machinery, equipment, furniture, office equipment,
store models and displays, automobiles, trucks, trailers,
vehicles, leasehold improvements, and all other tangible personal
property owned by Sellers and used in or related to the Business,
including without limitation those items set forth on EXHIBIT B,
together with all express and implied warranties by the
manufacturers or sellers of those items (to the extent legally
assignable), and all maintenance records, brochures, catalogues,
and other documents relating to those items or to the
installation or functioning of those items;
(c) All of Sellers' right, title, and interest in and to
all agreements, customer and supplier purchase orders and
agreements, personal property leases and other Contracts used in
or related to the Business (except Excluded Contracts, all
Contracts included in or related exclusively to the Excluded
Assets and all real property leases) (the "ASSIGNED CONTRACTS")
and any security deposits and similar deposits relating to the
Assigned Contracts;
(d) All of Sellers' right, title, and interest in and to
the real property leases listed on EXHIBIT C (the "EXISTING REAL
PROPERTY LEASES") and any security deposits and similar deposits
relating to the Existing Real Property Leases;
(e) All of Sellers' right, title, and interest in and to
all service marks, trade names (including without limitation the
names "Glen's," "Glen's Markets" and "Glen's Pharmacy" and all
variations of those names), trademarks, trademark registrations
and applications, logos, copyrighted works, copyright
registrations and applications, trade secrets, formulae,
technology, designs, processes, inventions, know-how, computer
programs and software, Internet web sites and domain names, and
other intellectual property rights, presently owned by Sellers
and, to the extent legally assignable, presently possessed or
used by Sellers (the "INTELLECTUAL PROPERTY ASSETS");
(f) All records, customer and supplier lists, payroll and
personnel records, product information, equipment lists,
telephone numbers (to the extent legally assignable),
specifications, drawings, plans, reports, data, notes,
correspondence, labels, catalogues, brochures, art work,
photographs, advertising materials, marketing and production
literature, files, and other records and documents in Sellers'
possession, including Sellers' books of account, ledgers, and
other financial records, but excluding Sellers' corporate records
and minute books;
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(g) All permits, licenses, orders, franchises,
certifications and approvals and all Governmental Authorizations
relating to or maintained as part of the Business, to the extent
legally assignable, including but not limited to all food stamp,
WIC, pharmacy, lottery, transportation and MLCC licenses;
(h) Any of Sellers' choses in action, claims, causes, or
rights of action and intangible property rights, including,
without limitation, restrictive covenants, confidentiality
obligations, and similar obligations of Sellers' present and
former directors, officers, employees, and shareholders;
(i) All cash, cash equivalents, accounts receivable,
incentive rebates receivable, notes receivable and prepaid
expenses; and
(j) Any goodwill associated with the Business.
The Purchased Assets shall be transferred to Buyer at the Closing free and
clear of any Encumbrances.
SECTION 1.2. EXCLUDED ASSETS. Sellers are retaining all of their
respective right, title and interest in and to the following (the "EXCLUDED
ASSETS"):
(a) All assets of Sellers located at and used exclusively
in the operation of the Business at the laundry and dry cleaning
facility in Gaylord, Michigan;
(b) All real property owned by Sellers;
(c) All stock owned by Sellers in Spartan Stores, Inc,
Grocers Baking Company and Purchases Sales, Inc.;
(d) All assets of Sellers located at and used exclusively
in the operation of the Business at any Xxxxxx'x Store as to
which Xxxxxx'x has exercised a Xxxxxx'x Option;
(e) All assets of Sellers located at and used exclusively
in the operation of the Business at the SUPERVALU Store if
SUPERVALU has exercised the SUPERVALU Option;
(e) All of Catt's right, title and interest in and to the
names "Catt's" and "Catt's Realty;"and
(f) All Non-assignable Private Label Inventory;
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(g) The lease of, and all assets located at and used
exclusively in the operation of, the Muy Grande Ranch;
(h) All assets of Sellers located at and used exclusively
in the operation of the Sav-A-Lot Stores;
(i) Those assets set forth on EXHIBIT D.
SECTION 1.3. PURCHASE PRICE. In consideration of the transfer of
the Purchased Assets to Buyer and the other undertakings set forth in this
Agreement, at the Closing Buyer shall pay and assume the following
(collectively, the "PURCHASE PRICE"):
(a) Subject to adjustments as provided in SECTION 1.5,
Buyer shall pay to Sellers the sum of Ninety Million Dollars
($90,000,000) (the "CASH PAYMENT"). On the Closing Date, Buyer
shall (i) retain an amount equal to One Million Dollars
($1,000,000) (the "HOLDBACK AMOUNT") and (ii) pay to Sellers in
readily available funds the remaining amount of the Cash Payment
(the "CLOSING PAYMENT"). On or before July 1, 2000, Buyer shall
pay to Sellers in readily available funds the Holdback Amount
plus interest at the annual rate of 7%, and less the amount of
Buyer's indemnification claims, if any, pursuant to ARTICLE 7 of
this Agreement.
(b) If at or prior to the Closing Buyer shall request
Sellers to terminate any supply contract with Xxxxxx'x for a
Xxxxxx'x Store, Buyer shall pay any applicable Xxxxxx'x
Termination Fee required pursuant to SECTION 4.14 of this
Agreement with respect to such Xxxxxx'x Store.
(c) Buyer shall assume and agree to pay, perform and
discharge, when due, the liabilities and obligations of Sellers
set forth on EXHIBIT E and all executory obligations under (i)
all Assigned Contracts other than Excluded Contracts and (ii) all
Existing Real Property Leases (except for any Existing Real
Property Leases as to which Buyer and the respective landlords
execute and deliver any amendment to the Existing Real Property
Lease, which in such case the Buyer shall then only assume and
agree to pay, perform and discharge, when due, the liabilities
and obligations of Sellers under the Existing Real Property
Lease, as so amended), in each case for any payment, performance,
discharge or obligation arising from and after the Closing Date
(the "ASSUMED LIABILITIES").
Except for the Assumed Liabilities, Sellers agree that Buyer shall not
assume or be obligated to pay, perform, or discharge any liability,
obligation, debt, charge, or expense of Sellers or Shareholders of any
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kind, description, or character, whether accrued, absolute, contingent, or
otherwise, or whether or not disclosed to Buyer in this Agreement, the
Disclosure Schedule, or otherwise (collectively, the "EXCLUDED
LIABILITIES"), including, but not limited to, those liabilities and
obligations listed on EXHIBIT F. Without limiting the generality of the
foregoing, and notwithstanding anything to the contrary contained in this
Agreement, except for the Assumed Liabilities, Buyer shall not assume or be
obligated to pay, perform, or discharge any liability, obligation, debt,
charge, or expense of Sellers or Shareholders even if imposed upon Buyer as
a successor to any Seller, with respect to any action, suit, proceeding, or
claim arising out of or relating to any event occurring, or with respect to
any cause of action arising, before or after the Closing Date, whether or
not asserted before or after the Closing Date, including, but not limited
to, any liability, obligation, debt, charge, or expense related to Taxes,
Environmental matters, agreements with sales representatives, employee
benefits, obligations or policies, judgments, product warranty claims,
product liability claims, and contractual claims. Sellers shall be liable
for all product warranty claims and all product liability claims arising
from products sold by Sellers on or before the Closing Date.
SECTION 1.4. CLOSING BALANCE SHEET AND INVENTORY VALUATION.
(a) Within thirty (30) days following the Closing, Buyer
shall prepare or cause to be prepared, and shall forward to
Sellers, (i) a balance sheet dated as of the Closing Date
reflecting only the Purchased Assets and the Assumed Liabilities
(the "CLOSING BALANCE SHEET") and (ii) Buyer's determination of
the Final Adjusted Inventory Value in accordance with the
Inventory Valuation Method set forth on EXHIBIT G (the "CLOSING
INVENTORY VALUATION"). The Closing Balance Sheet shall be
prepared in accordance with GAAP using Sellers' historical costs
and significant accounting policies, applied on a consistent
basis, except that Inventory shall be valued in accordance with
the Inventory Valuation Method.
(b) The Closing Balance Sheet and the Closing Inventory
Valuation shall be final, conclusive, and binding on Sellers and
Shareholders unless, within thirty (30) days after the date that
the Closing Balance Sheet and the Closing Inventory Valuation are
delivered to Sellers, Sellers notify Buyer in writing of Sellers'
objections to the Closing Balance Sheet or Closing Inventory
Valuation, specifically listing the disputed items and amounts
and the facts and accounting principles supporting each of
Sellers' objections. If Sellers give notice of objection,
Sellers and Buyer shall try to resolve the objections within
fifteen (15) days after Buyer receives the notification. If
Buyer and Sellers are unable to resolve Sellers' objections
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within the fifteen (15) day period, the disputed matters shall,
within thirty (30) days after the original notification, be
referred for decision to a nationally recognized independent
accounting firm selected by Buyer and Sellers. In reaching its
determination with respect to the disputed matters involving the
Closing Balance Sheet, the accounting firm shall be guided by
GAAP, consistently applied. In reaching its determination with
respect to disputed matters involving the Closing Inventory
Valuation, the accounting firm shall be guided by the Inventory
Valuation Method. Buyer and Sellers shall each pay one-half
(one-half) of the fees and expenses of the independent accounting firm
incurred in connection with the proceeding. The decision of the
independent accounting firm shall be final, conclusive and
binding on all Parties.
SECTION 1.5. PURCHASE PRICE ADJUSTMENTS.
(a) The Purchase Price shall be reduced on a dollar-for-
dollar basis to the extent the value of the Current Purchased
Assets (excluding the Inventory) as of Closing, as reflected on
the Closing Balance Sheet, is less than Five Million Five
Thousand Six Hundred Seventy Five Dollars ($5,005,675).
(b) The Purchase Price shall be increased or decreased, as
applicable, on a dollar-for-dollar basis, to the extent the
Initial Adjusted Inventory Value is more than or less than
$14,580,000.
(c) The Purchase Price shall be increased or decreased, as
applicable, on a dollar-for-dollar basis to the extent the Final
Adjusted Inventory Value is more than or less than the Initial
Adjusted Inventory Value.
(d) The Purchase Price shall be reduced on a dollar-for-
dollar basis to the extent Sellers' Normalized Working Capital
Liabilities as of Closing exceed the Normalized Working Capital
Liabilities Limit, as reflected on the Closing Balance Sheet.
(e) The amount of fees and other payments received by
Sellers or Buyer from any product or service supplier before or
after Closing based upon any volume requirements or time
commitments under any product or service supply Contract included
in the Purchased Assets shall be prorated between Buyer and
Sellers based upon the applicable volume requirements or time
commitments remaining as of Closing. Sellers shall be entitled
to such fees and payments to the extent that Sellers have
performed the volume requirements or time commitments as of
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Closing. Buyer shall be entitled to such fees and payments to
the extent that the volume requirements or time commitments are
to be performed by Buyer after Closing.
(f) The Purchase Price paid by Buyer to Sellers shall be
reduced by the SUPERVALU Adjustment Amount if SUPERVALU exercises
the SUPERVALU Option, except to the extent the exercise of such
option has reduced the Purchase Price pursuant to SECTION 1.5(A).
(g) The Purchase Price paid by Buyer to Sellers shall be
reduced by Fourteen Million Dollars ($14,000,000) if Xxxxxx'x
exercises the Xxxxxx'x Option as to the Xxxxxx'x Store located in
North Petoskey and by Two Million Dollars ($2,000,000) each if
Xxxxxx'x exercises the Xxxxxx'x Option as to a Xxxxxx'x Store
located in Alpena, Cadillac or South Petoskey, Michigan, except
to the extent the exercise of such option has reduced the
Purchase Price pursuant to SECTION 1.5(A).
(h) Unless the Purchase Price shall have been reduced
pursuant to SECTION 1.5(A), the Purchase Price shall be reduced
on a dollar-for-dollar basis to the extent the amount of cash and
cash equivalents as of Closing, as reflected on the Closing
Balance Sheet, is less than Three Million One Hundred Eight
Thousand One Hundred Eighty Seven Dollars ($3,108,187).
(i) The Purchase Price paid by Buyer to Sellers shall be
adjusted at or after the Closing at Sellers' option to reflect
any costs, expenses, and other amounts that Sellers are required
to pay to Buyer or that Buyer pays on behalf of Sellers pursuant
to SECTIONS 4.12 OR 9.9 of this Agreement.
(j) Within five (5) days after the determination of any
adjustment to the Purchase Price, Buyer and Sellers agree to pay
any amount due to the other, as the case may be by direct payment
and not by payment from the Holdback Amount. The Parties
acknowledge and agree that any required adjustment to the
Purchase Price at or after the Closing pursuant to this SECTION
1.5 is not a payment of indemnity pursuant to ARTICLE 7 of this
Agreement and is not subject to the limitations on
indemnification set forth in SECTION 7.5 of this Agreement.
SECTION 1.6. CLOSING. The purchase and sale contemplated by this
Agreement (the "CLOSING") shall take place at the offices of Xxxxxx
Xxxxxxxx & Xxxx LLP, 000 Xxx Xxxx Xxxxxxxx, 000 Xxxx Xxxxxx, X.X., Xxxxx
Xxxxxx, Xxxxxxxx 00000-0000, on March 29, 1999 or at such other time and
date as are mutually agreeable by the Parties, or, in the absence of an
agreement, at a time and date occurring after March 29, 1999, as specified
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by either Buyer or Sellers upon five (5) business days' notice to the
other, after fulfillment or waiver of the conditions precedent set forth in
ARTICLE 5 of this Agreement (the "CLOSING DATE"). The Closing shall be
deemed to be effective upon the close of business on the Closing Date.
SECTION 1.7. DELIVERIES AT CLOSING.
(a) At the Closing, Buyer shall execute and deliver, or
cause to be executed and delivered, to Sellers (i) the Closing
Payment by wire transfer; (ii) written instruments or agreements,
reasonably acceptable to Sellers, that provide for Buyer's
assumption of the Assumed Liabilities; (iii) certified copies of
resolutions of Buyer's directors, reasonably acceptable to
Sellers, authorizing the consummation of the transactions
contemplated by this Agreement; (iv) those agreements, documents
and instruments referenced in ARTICLE 5 of this Agreement; (v)
the Services Agreement, if required pursuant to SECTION 4.10;
(vi) the New Real Property Leases; (vii) the Noncompetition
Agreements; and (viii) any and all other agreements,
certificates, instruments, and documents as shall be reasonably
required of Buyer under this Agreement.
(b) At the Closing, Sellers and Shareholders, as
applicable, shall execute and deliver, or cause to be executed
and delivered, to Buyer (i) bills of sale, certificates of title,
endorsements, assignments, and other instruments of conveyance,
reasonably acceptable to Buyer, that are sufficient to transfer
to Buyer title in the Purchased Assets in accordance with this
Agreement; (ii) written consents of third parties, if necessary,
with respect to the transfer of the Purchased Assets (including
the Assigned Contracts and Existing Real Property Leases) to
Buyer; (iii) certified copies of resolutions of Sellers'
directors and shareholders, reasonably acceptable to Buyer,
authorizing the consummation of the transactions contemplated by
this Agreement; (iv) all records and other documents included in
the Purchased Assets; (v) consents and estoppel certificates,
reasonably acceptable to Buyer, from the lessors with respect to
the Existing Real Property Leases and any personal property
leases; (vi) evidence of the Secretary of State of Michigan or
other appropriate Governmental Body that Sellers, and their
Affiliates have changed their names to a name that does not
include "Glen's" or any derivation thereof; (vii) those documents
and instruments referenced in ARTICLE 5 of this Agreement; (viii)
the Services Agreement, if required pursuant to SECTION 4.10;
(ix) the New Real Property Leases; (x) the Noncompetition
Agreements; and (xi) any and all other agreements, certificates,
instruments, and documents as shall be reasonably required of
Sellers under this Agreement.
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(c) Buyer, Sellers, and Shareholders shall take all further
actions and execute and deliver any additional agreements,
certificates, instruments, and other documents on or after the
Closing as Buyer or Sellers shall reasonably request to
effectuate the transactions contemplated by this Agreement.
SECTION 1.8. ALLOCATION OF PURCHASE PRICE. The Purchase Price
shall be allocated among the Purchased Assets and Sellers' and
Shareholders' other covenants set forth in this Agreement in accordance
with EXHIBIT H, which allocation shall be final, conclusive and binding on
Buyer, Sellers and Shareholders for reporting and disclosure requirements
under the Internal Revenue Code and any other state, local, or foreign Tax
authority.
ARTICLE 2 - REPRESENTATIONS AND WARRANTIES
OF SELLERS, SHAREHOLDERS AND REAL ESTATE COMPANY
Sellers and Shareholders, and with respect solely to SECTIONS
2.13, 2.17,2.27 AND 2.28 Real Estate Company, jointly and severally
represent and warrant to Buyer as follows:
SECTION 2.1. DISCLOSURE SCHEDULE. Sellers have delivered to Buyer
on the date of this Agreement a Disclosure Schedule, which includes
numbered schedules corresponding to the sections and subsections of this
Agreement or otherwise specifically referred to in this ARTICLE 2. The
information contained in the Disclosure Schedule is complete and accurate
in all respects on the date of this Agreement and shall be complete and
accurate in all respects as of the Closing Date. All documents that are
attached to or form a part of the Disclosure Schedule are true and complete
copies of the genuine original documents they purport to represent.
References in the Disclosure Schedule to sections and subsections of this
Agreement are for the convenience of the Parties only, and any fact or item
which is disclosed in any section of the Disclosure Schedule as an
exception to any representation or warranty in this Agreement shall be
deemed to be an exception to such representation and warranty, and to every
other representation and warranty contained herein, notwithstanding the
omission of a reference or cross-reference thereto.
SECTION 2.2. ORGANIZATION AND GOOD STANDING. Each Seller is a
corporation duly organized, validly existing and in good standing under the
laws of the state of Michigan, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use the
properties and assets that it purports to own or use, and to perform its
obligations under its Contracts. Each Seller is duly qualified to do
business and is in good standing in each state or other jurisdiction in
which either the ownership or use of the properties owned or used by it or
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the nature of the activities conducted by it requires such qualification.
Copies of each Seller's Organizational Documents are attached to SCHEDULE
2.2 of the Disclosure Schedule. Except for the Excluded Assets or as
disclosed on SCHEDULE 2.2, each Seller does not have any subsidiaries and
does not own or have any right to acquire any equity interest in any other
Person. The Shareholders own the number of shares of capital stock of each
Seller set forth on SCHEDULE 2.2.
SECTION 2.3. FINANCIAL STATEMENTS. Copies of the reviewed financial
statements for each Seller at and for the fiscal years ended January 3,
1998, December 28, 1996, and December 30, 1995, are attached to SCHEDULE
2.3 of the Disclosure Schedule (the "FINANCIAL STATEMENTS"). Also attached
to SCHEDULE 2.3 are copies of the interim balance sheets and interim
statements of income and cash flows of each Seller at and for each fiscal
quarter for the fiscal year ending January 2, 1999 and during the current
fiscal year, each prepared internally by Sellers (the "INTERIM FINANCIAL
STATEMENTS"). The Interim Financial Statements include the balance sheet
of each Seller at September 12, 1998 (the "BALANCE SHEET"). The Financial
Statements and Interim Financial Statements present fairly the financial
condition of each Seller at the dates indicated and its results of
operations for the periods then ended, all in accordance with GAAP applied
on a basis consistent throughout such periods and consistent with prior
periods.
SECTION 2.4. BOOKS AND RECORDS. All books of account, ledgers, and
financial and other records of Sellers, all of which have been made
available to Buyer, are complete and correct and have been maintained in
accordance with sound business practices. All of these books and records
are in the possession of Sellers.
SECTION 2.5. NO UNDISCLOSED LIABILITIES. Each of the Sellers has no
liabilities or obligations of any nature (whether known or unknown and
whether absolute, accrued, contingent or otherwise) except for liabilities
or obligations reflected or reserved against in the Balance Sheet of the
Seller and current liabilities incurred in the Ordinary Course of Business
since January 3, 1998, except (a) as set forth on SCHEDULE 2.5 or (b) where
the same has not had, and could not reasonably be expected to have, a
Material Adverse Effect.
SECTION 2.6. TAXES. Each Seller has timely (a) filed all Tax
Returns pursuant to applicable Legal Requirements; (b) paid or made proper
provision for payment of all Taxes due and payable by it; and (c) withheld
or collected all Taxes required by applicable Legal Requirements and, to
the extent required, paid such Taxes to the proper Governmental Body or
other Person. The charges, accruals and reserves with respect to the Taxes
on the books of each Seller are adequate (determined in accordance with
GAAP) and are at least equal to each Seller's liability for Taxes. No
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Seller has signed an extension with any Governmental Body concerning any
liability for Taxes and no open matters exist for any prior periods. There
is no proposed Tax assessment against any Seller and no deficiency has been
asserted against any Seller as a result of any examination by the IRS or
other Governmental Body that has not been paid or finally settled, and no
grounds exist for the assertion of any deficiency for any periods that have
not been audited by the IRS or other applicable Governmental Body. Glen's
and Catt's are, and during all applicable periods have been, S Corporations
for federal income tax purposes. Glen's Pharmacy is, and during all
applicable periods has been, a C Corporation for federal income tax
purposes. Copies of each Seller's federal, state and local income Tax
Returns with supporting schedules filed for the fiscal years ended January
3, 1998, December 28, 1996, and December 30, 1995 are attached to
SCHEDULE 2.6 of the Disclosure Schedule.
SECTION 2.7. NO MATERIAL ADVERSE CHANGE; ABSENCE OF RESTRICTED
EVENTS. Other than (a) as set forth in SCHEDULE 2.7 or (b) the sale of
assets at a Xxxxxx'x Store or SUPERVALU Store to Xxxxxx'x or SUPERVALU,
respectively, in accordance with their exercise of the Xxxxxx'x Option or
the SUPERVALU Option respectively, since January 3, 1998, (i) each Seller
has conducted its operations and affairs only in the Ordinary Course of
Business; (ii) there has not been any change in the business, operations,
properties, prospects, assets or condition (financial or otherwise,
including profitability, earnings or cash flow) of any Seller or the
Business which has resulted in, or reasonably could be expected to result
in, a Material Adverse Effect; and (iii) no Restricted Event has occurred
with respect to any Seller.
SECTION 2.8. EMPLOYEES; LABOR RELATIONS.
(a) SCHEDULE 2.8 of the Disclosure Schedule contains the
following information for each employee of Sellers (including
each employee on leave of absence or layoff status): name; job
title; current compensation paid or payable; vacation accrued;
and service credited for purposes of vesting and eligibility to
participate under any of Sellers' Employee Benefit Plans. To
Sellers' Knowledge, no employee of any Seller (other than the
Terminating Employees) intends to terminate his or her employment
with the Seller as a result of or in connection with the
transaction contemplated by this Agreement. Each of Sellers'
employees is employed on an "at will" basis. EXHIBIT I of this
Agreement sets forth all earned but unpaid vacation and flex-time
accrued or to be accrued by Sellers for their employees as of the
date set forth therein.
(b) No Seller is now and has not ever been a party to any
collective bargaining or other labor Contract. Since January 1,
1995, there has not been, there is not presently pending or
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existing and to Sellers' Knowledge there is not Threatened, any
strike, slowdown, picketing, work stoppage, labor arbitration or
proceeding concerning the grievance of any employee, application
or complaint filed by an employee or union with the National
Labor Relations Board or any comparable Governmental Body,
organizational activity or other labor dispute against or
affecting any Seller or its premises, and no application for
certification of a collective bargaining agent is pending or to
Sellers' Knowledge Threatened. No event has occurred or
circumstance exists that could provide the basis for any work
stoppage or other labor dispute. There is no lockout of any
employees by any Seller and no such action is contemplated by any
Seller. Each Seller has complied with all Legal Requirements
relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits,
collective bargaining, the payment of social security and similar
Taxes, occupational safety and health and plant closing; except
where such failure has not resulted and could not reasonably be
expected to result in a Material Adverse Effect. No Seller is
currently liable for the payment of any Taxes, fines, penalties
or other amounts, however designated, for failure to comply with
any Legal Requirements.
SECTION 2.9. EMPLOYEE BENEFIT PLANS.
(a) SCHEDULE 2.9 of the Disclosure Schedule sets forth each
Employee Benefit Plan maintained by each Seller or covering
current or former (including retired) employees of any Seller.
Copies of all written Employee Benefit Plans and all agreements
adopted or other material used in connection with or relating to
such Employee Benefit Plans (including descriptions of vacation,
separation and other personnel policies) are also attached to
SCHEDULE 2.9.
(b) Each Seller has timely performed all of its obligations
(including, to the extent applicable, reporting, disclosure,
prohibited transaction, IRS qualification and funding
obligations) under its Employee Benefit Plans. To the Sellers'
Knowledge, each Employee Benefit Plan, and the administration of
each Employee Benefit Plan, complies and has complied with all
applicable Legal Requirements.
(c) No Seller nor any predecessor or Affiliate of any
Seller has ever established, maintained or contributed to or
otherwise participated in, or had an obligation to establish,
maintain, contribute to or otherwise participate in, any Multi-
Employer Retirement Plan.
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SECTION 2.10. TITLE TO PROPERTIES; ENCUMBRANCES. Except as disclosed
on SCHEDULE 2.10, Sellers own all the properties and assets (whether real,
personal or mixed and whether tangible or intangible) located in or at the
facilities owned or operated by Sellers or reflected as owned in the books
and records of Sellers, including all of the properties and assets
reflected in the Balance Sheet or the Interim Financial Statements of the
Sellers (except for inventory sold or equipment replaced since the date of
the Balance Sheet or the subsequent Interim Financial Statements, as the
case may be, in the Ordinary Course of Business). All Purchased Assets are
free and clear of all Encumbrances.
SECTION 2.11. PERSONAL PROPERTY. SCHEDULE 2.11 of the Disclosure
Schedule contains a list of (a) all automobiles, trucks, trailers and other
vehicles owned or leased by each of the Sellers and (b) all machinery,
equipment, furniture and other tangible personal property owned or leased
by each of the Sellers, except that SCHEDULE 2.11 need not include any
asset with a book value of less than $5,000. All such personal property
is in the possession of Sellers at one of the Business Locations or at such
other location as is specified on SCHEDULE 2.11.
SECTION 2.12. REAL PROPERTY. SCHEDULE 2.12 of the Disclosure
Schedule contains a list of all real property, leaseholds or other real
property interests of each of the Sellers used in the operation of the
Business (the "REAL PROPERTY "). All buildings, plants and structures
owned, leased or used by each of the Sellers lie wholly within the
boundaries of the Real Property and do not encroach upon the property of,
or otherwise conflict with the property rights of, any other Person.
Sellers and Real Estate Company are not in violation of any zoning
regulation, building restriction, restrictive covenant, ordinance, or other
Legal Requirement relating to any Real Property. There are no ground
subsidences or slides on any Real Property. None of the Real Property is
the subject of any condemnation action and, to the Knowledge of Sellers,
there is no proposal under consideration by any Governmental Body to use
any of the Real Property for some other purpose. All Real Property is
zoned for a classification that permits the continued use of the Real
Property in the manner currently used by Sellers. All buildings and
improvements to the Real Property are adequately serviced by all utilities
necessary for the effective operation of the Business as presently
conducted. Final certificates of occupancy have been issued for the
improvements on the Real Property permitting the existing use of such
improvements. There are no Proceedings pending or, to the Knowledge of
Sellers or Real Estate Company, Threatened that would alter the current
zoning classification of the Real Property or alter any Legal Requirements
applicable to the Real Property. Sellers and Real Estate Company have not
received notice from any landlord, insurance company, Governmental Body or
other Person of any defects or inadequacies in the Real Property or the
improvements thereon that would adversely affect the insurability or
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usability of the Real Property or such improvements or prevent the issuance
of new insurance policies thereon at rates not materially higher than
present rates. To the Knowledge of Sellers and Real Estate Company, no
fact or condition exists that would result in the discontinuation of
necessary utilities or services to the Real Property or the termination of
current access to and from the Real Property.
SECTION 2.13. CONDITION AND SUFFICIENCY OF ASSETS. Except as
disclosed in Schedule 2.13 of the Disclosure Schedule, the buildings,
plants, structures, machinery, equipment, and other tangible property
owned, leased, licensed or used in the Business by each of the Sellers (a)
are structurally sound, are in good operating condition and repair and are
adequate for the uses to which they are being put; (b) do not need
maintenance or repairs except for ordinary, routine maintenance and repairs
that are not material in nature or cost; (c) are in material compliance
with all applicable codes and other Legal Requirements; and (d) are
sufficient for the continued conduct of the Businesses after the Closing in
substantially the same manner as conducted before the Closing.
SECTION 2.14. ACCOUNTS RECEIVABLE. All accounts receivable of each
of the Sellers that are reflected on the Balance Sheet or the subsequent
Interim Financial Statements of the Seller or on the accounting records of
the Seller as of the Closing Date (collectively, the "ACCOUNTS RECEIVABLE")
represent or will represent valid obligations arising from sales actually
made or services actually performed in the Ordinary Course of Business.
Unless paid before the Closing Date, the Accounts Receivable are, or will
be as of the Closing Date, current and collectible, and each of the
Accounts Receivable either has been or will be collected in full, without
any set-off, within 60 days after the day on which it first becomes due and
payable.
SECTION 2.15. INVENTORY. All inventory of each of the Sellers,
whether or not reflected in the Balance Sheet or the subsequent Interim
Financial Statements of the Seller, consists of a quality and quantity
usable and salable by Buyer without discount in the Ordinary Course of
Business, except for obsolete items and items below standard quality, all
of which have been written off or written down to net realizable value in
the Balance Sheet or the Interim Financial Statements of the Seller. The
quantities of each item of inventory are not excessive, but are reasonable
in the present circumstances of each of the Sellers.
SECTION 2.16. LITIGATION. Except as set forth on SCHEDULE 2.16 of
the Disclosure Schedule, there is no Proceeding or Order pending against
any Seller or, to the Knowledge of Sellers, that otherwise relates to or
may affect the Business of, or any of the property or assets owned or used
by, any Seller or that may interfere with the transactions contemplated by
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this Agreement. To Sellers' Knowledge, no such Proceeding or Order has
been Threatened and no event has occurred or circumstance exists that may
give rise to or serve as a basis for any such Proceeding or Order.
SECTION 2.17. AUTHORIZATION AND ENFORCEABILITY; NO CONFLICT WITH
OTHER INSTRUMENTS OR PROCEEDINGS.
(a) Sellers, Shareholders and Real Estate Company have full
capacity, power and authority to enter into and perform this
Agreement and to carry out the transactions contemplated by this
Agreement. This Agreement is binding upon Sellers, Shareholders
and Real Estate Company and is enforceable against each of them
in accordance with its terms; provided that no representation or
warranty is made as to the enforceability of the length or scope
of the covenants set forth in SECTION 4.7.
(b) The execution, delivery and performance of this
Agreement by Sellers, Shareholders and Real Estate Company and
the consummation of the transactions contemplated by this
Agreement will not (i) contravene the Organizational Documents of
Sellers or Real Estate Company or result in a Breach of any
provision of, or constitute a default under, any Contract, except
where the same has not had, and could not reasonably be expected
to have, a Material Adverse Effect; (ii) violate any Legal
Requirement or Order or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify any
Governmental Authorization applicable to Sellers or Shareholders;
(iii) result in the imposition of any Tax on Buyer or any of the
Sellers or accelerate any indebtedness of any of the Sellers or
increase the rate of interest payable by any of the Sellers with
respect to any indebtedness; or (iv) result in any Encumbrance
being created or imposed upon or with respect to the Real
Property or any of the property or assets owned, leased, licensed
or used by any of the Sellers. All consents, approvals or
authorizations of or declarations, filings or registrations with
any Person required in connection with the execution, delivery or
performance of this Agreement or the consummation of the
transactions contemplated by this Agreement are set forth on
SCHEDULE 2.17 of the Disclosure Schedule and will be obtained or
made, as applicable, by Shareholders or Sellers or Real Estate
Company before the Closing.
SECTION 2.18. CONTRACTS. SCHEDULE 2.18 of the Disclosure Schedule
sets forth and includes a copy of (a) each Material Assigned Contract and
each Existing Real Property Lease to which any Seller is a party or by
which any Seller is bound or affected and (b) each Contract with Xxxxxx'x
or SUPERVALU to which any Seller has been a party or by which any Seller
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has been bound or affected at any time since January 1, 1997. Each
Assigned Contract and Existing Real Property Lease is in full force and
effect and is valid and enforceable in accordance with its terms. Each
Seller and each other Person that is a party to each Assigned Contract and
Existing Real Property Lease has complied and is fully complying with all
of its applicable terms, and no event has occurred or circumstance exists
that (with or without notice or lapse of time) may contravene, conflict
with or result in a violation or Breach of, or give Sellers or any other
Person the right to declare a default under, any Assigned Contract or
Existing Real Property Lease. Except as separately set forth in SCHEDULE
2.18, no Seller is a party to any Assigned Contract the terms, rights,
benefits or obligations of which would be modified, accelerated, increased
or vested as a result of the consummation of the transactions contemplated
by this Agreement.
SECTION 2.19. INTELLECTUAL PROPERTY ASSETS. SCHEDULE 2.19 sets forth
all Intellectual Property Assets presently owned, leased, licensed or used
by Sellers or used in the Business. Unless otherwise indicated on SCHEDULE
2.19, Sellers will own the entire and exclusive right, title and interest
in and to the Intellectual Property Assets on the Closing Date and will
transfer the same to Buyer free and clear of all Encumbrances. Following
the Closing, Buyer shall have the exclusive right to use the Intellectual
Property Assets without payment to any other Person. Except as disclosed on
SCHEDULE 2.19, there is no infringement of or unlawful use by any Person of
any of the Intellectual Property Assets and no Seller has infringed or
unlawfully used any Intellectual Property Assets of any other Person.
SCHEDULE 2.19 also sets forth a list of all Contracts relating to
Intellectual Property Assets to which any Seller is a party or by which any
Seller is bound or affected. None of the Intellectual Property Assets are
subject to any pending or, to Sellers' Knowledge, Threatened claim or
challenge, and there is no valid basis for asserting any claim or
challenge. The Intellectual Property Assets are all that is necessary for
the operation of the Business as presently conducted and are sufficient in
form and quality so that following the Closing Buyer can sell the products
and provide the services sold or provided by Sellers in the Business before
the Closing in a manner that meets applicable specifications and conforms
to commercially acceptable quality standards.
SECTION 2.20. INSURANCE. SCHEDULE 2.20 of the Disclosure Schedule
contains a list of all policies of liability, crime, fidelity, life, fire,
product liability, workers' compensation, health, director and officer
liability and other forms of insurance owned or maintained by each of the
Sellers with respect to the Business, including for each policy: the name
of the insurer; the amount of coverage; the type of insurance; the policy
number; the renewal or expiration date; and all pending claims under the
policy. Sellers have provided to Buyer a copy of all insurance policies
listed on Schedule 2.20. All of the insurance policies listed on SCHEDULE
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2.20 are outstanding and in full force, all premiums with respect to the
policies are currently paid and all duties of the insureds under the
policies have been fully discharged.
SECTION 2.21. NO ILLEGAL PAYMENTS. No Seller nor any other Person
associated with or acting on behalf of any Seller has used any funds for
unlawful contributions, gifts, entertainment or other expenses or made any
direct or indirect unlawful payments or established or maintained any
unlawful or unrecorded funds.
SECTION 2.22. PRODUCT AND SERVICE WARRANTIES AND LIABILITIES. Set
forth on SCHEDULE 2.22 of the Disclosure Schedule are all warranties
applicable to products and services provided by any Seller. Except as
disclosed on SCHEDULE 2.22, there are no claims against any Seller to
return products in excess of an aggregate of $5,000 for all purchasers
considered collectively, by reason of alleged overshipments, defective
merchandise or otherwise, and there is no Proceeding pending or, to
Sellers' Knowledge, Threatened against any Seller under any warranty nor is
there any basis upon which any claim could validly be made. SCHEDULE 2.22
also summarizes all product liability claims that have been asserted
against any Seller during the five years preceding the date of this
Agreement.
SECTION 2.23. CERTAIN RELATIONSHIPS. Except as expressly permitted
by this Agreement or as disclosed on SCHEDULE 2.23 of the Disclosure
Schedule, no Seller nor any Related Person is an owner, shareholder,
creditor, director, agent, consultant or employee of, or lender to, any
Person engaged in a business that acts as a supplier of any goods or
services to any of the Sellers or any part of which is in actual or
potential competition with any of the Sellers. Except as disclosed on
SCHEDULE 2.23, none of the Sellers has any outstanding indebtedness to any
Related Person, and any Related Person does not have any outstanding
indebtedness to any of the Sellers.
SECTION 2.24. PERMITS AND LICENSES; COMPLIANCE WITH LEGAL
REQUIREMENTS. All Governmental Authorizations necessary for each Seller to
carry on its business as presently conducted are identified on SCHEDULE
2.24 of the Disclosure Schedule and have been timely obtained and are in
full force and effect. All fees and charges incident to those Governmental
Authorizations have been fully paid and are current and no suspension or
cancellation of any Governmental Authorization has been Threatened or could
result by reason of the transactions contemplated by this Agreement. No
Seller is subject to, nor has it been Threatened with, any Adverse
Consequence as the result of a failure to comply with any Legal Requirement
applicable to it or the conduct or operation of its business or the
ownership or use of any of its properties or assets. To the Knowledge of
Sellers, no event has occurred or circumstance exists (with or without
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notice or lapse of time) that may give rise to any such Adverse
Consequence. Each Seller is presently, and during all applicable
limitations periods has been, in full compliance with all applicable Legal
Requirements and Governmental Authorizations; except where such
noncompliance has not had, and could not reasonably be expected to have, a
Material Adverse Effect.
SECTION 2.25. NO BROKER'S FEES. Except as set forth on SCHEDULE
2.25, neither any of the Sellers, Shareholders, nor anyone acting on their
behalf has incurred any liability or obligation to pay fees or commissions
to any broker, finder or agent with respect to the transactions
contemplated by this Agreement for which Buyer could be liable.
SECTION 2.26. YEAR 2000 COMPLIANCE. SCHEDULE 2.26 contains a copy of
Sellers' Year 2000 Compliance Plan and Completion Schedule (the "YEAR 2000
PLAN"). The Year 2000 Plan accurately represents Sellers' Year 2000
compliance status as of the dates set forth therein and, to Sellers'
Knowledge, when the Year 2000 Plan is completed in accordance with the
schedule set forth therein, all Purchased Assets and all buildings, plants,
structures, machinery, equipment, software, hardware, computer systems and
other property owned, leased, licensed or used by the Sellers in the
Business (a "YEAR 2000 ASSET") will at all times before, during and after
January 1, 2000 accurately process and handle date and time data, including
but not limited to performing all leap year calculations and calculating,
comparing and sequencing during and between the years 1999 and 2000 and all
other years, and will not malfunction, cease to function or provide invalid
or incorrect results or data as a result of date or time data, including
when a Year 2000 Asset is used in combination with or is interfacing with
any other Year 2000 Asset or with any other asset or information
technology. No Proceeding is pending or Threatened by or against any
Seller based on any claim that any Seller or any Year 2000 Asset was not,
is not or will not be Year 2000 Compliant and, to Sellers' Knowledge, there
is no basis for such a Proceeding.
SECTION 2.27. ENVIRONMENTAL MATTERS. Without limiting the generality
of the other representations and warranties set forth in this ARTICLE II,
except as described in SCHEDULE 2.27: (i) each of the Sellers and Real
Estate Company has conducted its business in compliance with all applicable
Environmental Laws and Occupational Safety and Health Laws, including
without limitation by having all Permits required under any Environmental
Laws for the operation of their businesses; (ii) none of the Real Property
contains any Regulated Substance in amounts exceeding the levels permitted
by applicable Environmental Laws; (iii) none of the Sellers nor the Real
Estate Company have received any notice, demand letter or request for
information from any Governmental Body or other Person indicating that any
of the Sellers or Real Estate Company may be in violation of, or liable
under, any Environmental Law or relating to any of the Real Property or any
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asset owned, leased, licensed or used by any of the Sellers; (iv) no
reports have been filed, or are required to be filed, by any of the Sellers
or Real Estate Company concerning the release of any Regulated Substance or
the Threatened or actual violation of any Environmental Law; (v) there are
no underground storage tanks on, in or under the Real Property and no
underground storage tanks have been closed or removed from any of the Real
Property, and, to the extent that any underground storage tanks are
identified in SCHEDULE 2.27 none of such tanks have ever been used by any
of the Sellers or by Real Estate Company; (vi) there is no friable asbestos
or friable asbestos containing material present in any of the Real
Property, and no asbestos has been removed by or on behalf of any of the
Sellers or Real Estate Company from any of the Real Property; and (vii)
none of the Sellers nor Real Estate Company are subject to any Proceeding
asserted or arising under any Environmental Law. SCHEDULE 2.27 of the
Disclosure Schedule sets forth (and includes a copy of) all Environmental
investigations, studies, audits, tests, reviews or other analyses regarding
compliance or noncompliance with any Environmental Law conducted by or on
behalf of, or which are in the possession of, each of the Sellers or Real
Estate Company relating to the Real Property or the Sellers
SECTION 2.28. ACCURACY OF STATEMENTS. No representation or warranty
made by any Seller, Shareholder or Real Estate Company in this Agreement,
the Disclosure Schedule or any statement, certificate or schedule
furnished, or to be furnished, to Buyer pursuant to this Agreement or in
connection with the transactions contemplated by this Agreement contains
any untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained therein not misleading.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
SECTION 3.1. ORGANIZATION AND STANDING OF BUYER. Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the state of Michigan.
SECTION 3.2. AUTHORIZATION AND ENFORCEABILITY. Buyer has full
corporate power and authority to enter into this Agreement and to carry out
the transactions contemplated by this Agreement. This Agreement is binding
upon Buyer and is enforceable against Buyer in accordance with its terms.
SECTION 3.3. NO BROKER'S FEES. Except as set forth on SCHEDULE 3.3,
neither Buyer nor anyone acting on Buyer's behalf has incurred any
liability or obligation to pay fees or commissions to any broker, finder or
agent with respect to the transactions contemplated by this Agreement for
which Sellers or Shareholders could become liable.
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SECTION 3.4. NO CONFLICT WITH OTHER INSTRUMENTS OR PROCEEDINGS. The
execution, delivery and performance of this Agreement by Buyer and the
consummation of the transactions contemplated by this Agreement will not
(i) contravene the Organizational Documents of Buyer or result in a Breach
of any provision of, or constitute a default under, any Contract, except
where the same has not had, and could not reasonably be expected to have, a
Material Adverse Effect or (ii) violate any Legal Requirement or Order or
give any Governmental Body the right to revoke, withdraw, suspend, cancel,
terminate or modify any Governmental Authorization applicable to Buyer.
ARTICLE 4 - COVENANTS AND AGREEMENTS
Buyer, Sellers and Shareholders (as applicable) covenant to and
agree with each other as follows:
SECTION 4.1. CONDUCT PENDING THE CLOSING. From the date of this
Agreement to the Closing Date:
(a) Sellers shall conduct the operations and affairs of the
Business only in the Ordinary Course of Business. Without
Buyer's prior written consent, Sellers shall not enter into any
transactions not in the Ordinary Course of Business, including
(i) any sale or other disposition of the Business or any assets
of the Business except (A) the sale of inventory in the Ordinary
Course of Business, (B) the renewal or replacement of equipment
in the Ordinary Course of Business, and (C) the sale or
disposition of the assets of a Xxxxxx'x Store or SUPERVALU Store
to Xxxxxx'x or SUPERVALU, respectively, in accordance with
SECTION 4.6 of this Agreement, and (ii) any incurrence of
indebtedness for borrowed money except for draws upon Sellers'
working capital lines of credit in the Ordinary Course of
Business.
(b) Sellers and Shareholders shall exercise reasonable best
efforts to preserve intact the present business organization and
personnel of the Business and the goodwill of Sellers with all
Persons having business dealings with Sellers.
(c) Sellers shall (i) operate marketing, merchandising and
advertising plans in the Ordinary Course of Business; (ii)
provide Buyer the opportunity to review such plans; and (iii)
refrain from revising or deviating from such plans without
Buyer's prior written consent, which shall not be unreasonably
withheld.
(d) Sellers shall not enter into a new lease or extend or
amend any existing lease with respect to any Business Location
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without Buyer's prior written consent, which shall not be
unreasonably withheld.
(e) Sellers' mix of Inventory shall remain consistent with
Sellers' historical pattern and practice.
(f) Neither any Seller nor any Shareholder shall, without
the prior written consent of Buyer: (i) take any action that
would interfere with or prevent the timely consummation or
performance of this Agreement; or (ii) take any action that would
constitute a Restricted Event or which would be inconsistent in
any respect with any of the representations, warranties,
covenants or obligations set forth in this Agreement, as if such
representations, warranties, covenants or obligations were made
at a time subsequent to such action.
(g) Sellers shall not intentionally delay making any
capital improvements, maintenance or repairs, all of which shall
be made in the Ordinary Course of Business. Sellers shall not
intentionally delay the replacement, remediation or repair of any
Year 2000 Asset and shall follow the Year 2000 Plan in the
Ordinary Course of Business.
SECTION 4.2. ACCESS AND INVESTIGATION BY BUYER. From the date of
this Agreement to the Closing Date, each Seller shall provide Buyer and its
Representatives full and free access to the Seller's advisors, personnel,
properties, Contracts, books and records, and other documents and data for
the purpose of preparing Buyer to operate the Business. Buyer shall
conduct its investigation in a manner that does not unreasonably interfere
with the normal operations and relationships of the Business. Buyer shall
hold any information obtained from Sellers as part of its investigation in
strict confidence and shall return all such written information upon
written request by Sellers. During Buyer's investigation, Buyer shall have
the right to make copies of such materials as it deems appropriate.
Sellers shall cooperate with Buyer and its Representatives in connection
with conducting and completing an audit of the Business in accordance with
applicable regulations of the Securities and Exchange Commission no later
than 75 days after Closing.
SECTION 4.3. EMPLOYEES.
(a) In connection with this transaction, Buyer shall
consider all of Sellers' management employees for management
positions with Buyer on mutually acceptable terms. Buyer shall
seek employment applications from all employees of Sellers. If
prior to the Closing Date a sufficient number of employees of
each Seller have applied for employment with Buyer to be
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effective immediately after Closing, Buyer shall offer employment
to a sufficient number of employees of each Seller, such that no
more than 49 employees of each Seller do not receive offers of
employment; provided, however, that Buyer may offer employment to
a lesser number of employees of each Seller if it does not
require such Seller to provide the notices required by WARN or
any similar statute. Buyer and Sellers shall cooperate and share
information in connection with the determination of whether such
notices may be required. Each Seller agrees to terminate,
effective upon Closing, each employee to be employed by Buyer at
Closing and to assist Buyer in all reasonable respects in
connection with Buyer's efforts to hire any employees of Sellers.
(b) With respect to any employee of a Seller hired by
Buyer, Buyer shall not assume, honor or be obligated to perform,
and such Seller shall remain solely responsible for, any duties,
responsibilities, commitments or obligations of such Seller with
respect to any qualified or non-qualified Employee Benefit Plan
presently maintained by such Seller or for the benefit of such
Seller's employees or any Contract or commitment concerning any
of such Seller's employees. The terms and conditions of
employment offered by Buyer to an employee of any Seller shall be
determined by, and may be changed at will by, Buyer in its sole
discretion. Each Seller shall provide all notices required by
WARN or any similar statute.
SECTION 4.4. BEST EFFORTS. The Buyer and each Seller shall use its
reasonable best efforts to obtain all consents and approvals necessary to
transfer the Purchased Assets to Buyer in accordance with the terms of this
Agreement, and to bring about the satisfaction of the conditions required
to be performed, fulfilled, and complied with pursuant to this Agreement
and to take or cause to be taken all action, and to do or cause to be done
all things necessary, proper, or advisable under all applicable Legal
Requirements to consummate and make effective the transactions contemplated
by this Agreement as expeditiously as practicable.
SECTION 4.5. DELIVERY OF PROPERTY RECEIVED AFTER CLOSING. From and
after the Closing, Sellers and Shareholders shall promptly transfer to
Buyer, from time to time, any cash or other property received by Sellers or
Shareholders that belongs to Buyer as provided in this Agreement.
SECTION 4.6. EXCLUSIVE DEALING. Sellers and Shareholders shall not,
directly or indirectly, through any Representative or Related Party or
otherwise, solicit or entertain an offer from, negotiate with or in any
manner encourage, discuss, accept, or consider any proposal of any Person
other than Buyer or its Affiliates relating to the acquisition of the
Sellers, their assets, the Business, or their capital stock or other
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securities, in whole or in part, whether directly or indirectly, through
purchase, merger, consolidation, or otherwise (other than sales of
inventory in the Ordinary Course of Business); provided that Sellers may
consider offers and proposals from and negotiate with Xxxxxx'x and
SUPERVALU solely with respect to Sellers' assets located at any Xxxxxx'x
Store or the SUPERVALU Store, respectively, to the extent reasonably
necessary in connection with the Xxxxxx'x Option and the SUPVERVALU Option.
Seller and Shareholders shall not disclose or permit to be disclosed to
Xxxxxx'x or SUPERVALU any of the terms, conditions or other aspects of the
transaction contemplated by this Agreement, including the Purchase Price,
unless Sellers shall have received Buyer's prior written consent. Sellers
and Shareholders shall promptly provide notice of their obligations under
this SECTION 4.6 to any Person who contacts such Seller, Shareholder,
Representative or Related Party regarding any such offer or proposal or any
related inquiry.
SECTION 4.7. NON-COMPETE. In consideration of the consummation of
the transactions contemplated by this Agreement, each Seller, Shareholder
(other than Xxxx X. Xxxx) and Real Estate Company covenants and agrees that
it, he or she will not, for a period of ten (10) years from the Closing
Date, compete, directly or indirectly, with the Business or with Buyer or
its Affiliates, including but not limited to participating, directly or
indirectly, in the ownership, management, financing or control of, or
acting as a consultant, employee or agent for, or leasing any real property
to, any Person that is engaged or plans to become engaged in the business
of owning or operating a grocery store, supermarket, limited assortment
store or a store that offers grocery products in combination with
pharmaceutical products, general merchandise or other nonfood products,
including grocery superstores (a "GROCERY BUSINESS"); provided, however,
that it, he or she shall not be prohibited from: (a) purchasing real
property which is leased at the time of purchase to any Person operating a
Grocery Business on the leased site; (b) continuing to lease such site to
such Person; or (c) leasing real property to Buyer or any of its
Affiliates. In addition, Sellers may continue their operation of the three
Sav-A-Lot stores at the sites currently operated by Sellers as such stores
as of the date of this Agreement. The geographic scope of the foregoing
covenant shall be the states of Michigan, Indiana, Ohio, Illinois and
Wisconsin. Sellers, Shareholders and Real Estate Company each covenant and
agree that, for a period of two (2) years from the Closing Date, each will
not hire any Person employed by Buyer or its Affiliates at any time during
such period (other than a Terminating Employee) or induce any such employee
to leave such employment or directly or indirectly assist any other Person
in requesting or inducing any such employee to leave his or her employment.
Sellers, Shareholders and Real Estate Company also each covenant and agree
that each will not, from the date of this Agreement and forever afterward,
use or disclose to any Person, any proprietary, secret or confidential
information of the Sellers, including sales information and business and
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trade secrets. If any court of competent jurisdiction finds that the time
period of the foregoing covenants is too lengthy or the scope of the
covenants too broad, the restrictive time period shall be deemed to be the
longest period permissible by law and the scope shall be deemed to comprise
the largest scope permissible by law under the circumstances. It is the
Parties' intent to protect and preserve the business and goodwill of
Sellers to be acquired by Buyer and thus the Parties agree and direct that
the time period and scope of the covenants set forth in this SECTION 4.7 be
the maximum permissible duration and size.
SECTION 4.8. NONCOMPETITION AGREEMENTS. At the Closing, Xxxx X.
Xxxx, Xxxx X. Xxxx and Xxxxxx Xxxxxxx shall execute and deliver
noncompetition agreements in substantially the form attached as EXHIBIT J
(the "NONCOMPETITION AGREEMENTS").
SECTION 4.9. BULK SALES. Subject to SECTION 7.1 below, the Parties
waive any bulk sales or transfer laws, or similar laws, applicable to the
sale of the Purchased Assets and other transactions contemplated by this
Agreement.
SECTION 4.10. SERVICES AGREEMENT. If any of the conditions in
SECTIONS 5.1 (H) OR (I) have not been satisfied as of the Closing Date and
Buyer has not waived the condition on or before the Closing Date, Buyer,
Sellers and Shareholders shall execute and deliver a Services Agreement
with respect to operation of the Stores, on terms and conditions mutually
agreeable to Buyer and Sellers (the "SERVICES AGREEMENT").
SECTION 4.11. NEW REAL PROPERTY LEASES. At the Closing, Buyer and
the Real Estate Company shall execute and deliver real property leases in
substantially the form attached as EXHIBIT K (the "NEW REAL PROPERTY
LEASES").
SECTION 4.12. SHARED EXPENSES. On or before the Closing Date, Buyer
and Sellers each shall pay one-half of all out-of-pocket costs and expenses
associated with (a) Buyer's investigation of potential Environmental
Liability, including but not limited to Buyer retaining environmental
consultants to conduct phase one environmental assessments on Buyer's
behalf; provided that Sellers shall have no obligation to pay in excess of
Thirty Thousand Dollars ($30,000) pursuant to this SECTION 4.12(A), and (b)
the services provided by the Inventory Appraiser.
SECTION 4.13. MESC RATING. At Buyer's option, Buyer will be a
successor to each Seller solely for purposes of the Michigan Employment
Security Act, M.C.L.A. 421.22. Buyer and Sellers shall take such
actions and execute such documents as are reasonable and necessary to
transfer to Buyer, pursuant to M.C.L.A. 421.22(d), that portion
of each Seller's rating account as is proportional to the percentage of
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such Seller's assets being acquired by Buyer, which the Parties agree to be
in excess of 75 percent with respect to each Seller.
SECTION 4.14. XXXXXX'X STORES. Sellers shall accept Xxxxxx'x
proposal to terminate the Xxxxxx'x Supply Agreements effective as of
Closing. Buyer shall at Closing pay two-thirds of the Xxxxxx'x Termination
Fee.
SECTION 4.15. COOPERATION. Each Party shall provide to each of the
other Parties such cooperation and information as any of them may
reasonably request in filing any Tax Return, amended Tax Return, or claim
for refund, determining a liability for Taxes, or a right to refund of
Taxes, or in conducting any audit or other proceedings with respect to
Taxes. Such cooperation and information shall include providing copies of
all relevant portions of relevant Tax Returns, together with relevant
accompanying schedules and relevant work papers, relevant documents
relating to rulings or other determinations by taxing authorities, and
relevant records concerning the ownership and tax basis of property which
any such party may possess. Each Party shall make its employees reasonably
available on a mutually convenient basis at its cost to provide an
explanation of any documents or information so provided. Buyer shall make
the services of Xxxx Xxxxxxxxxxx reasonably available to Sellers to assist
Sellers in connection with the closing of accounting records with respect
to business conducted by Sellers prior to the Closing; provided that
Sellers shall pay Buyer a fee commensurate with (a) the time spent by Xx.
Xxxxxxxxxxx in providing such services to Sellers and (b) the compensation
paid by Buyer to Xx. Xxxxxxxxxxx
SECTION 4.16. CONFIDENTIALITY. The Parties agree to retain in strict
confidence all proprietary, secret or confidential information
("CONFIDENTIAL INFORMATION") furnished by either Party (the "DISCLOSING
PARTY") to another Party (the "RECEIVING PARTY") with the same degree of
care as the Receiving Party retains its own confidential information of a
similar nature and not to disclose any Confidential Information to any
third party, except as required by law, sought by subpoena, discovery
device or other legal process, without the prior written consent of the
Disclosing Party; provided, however, that any such Confidential Information
may be disclosed to any of the Receiving Party's advisors or
representatives whom the Receiving Party reasonably determines need to know
such information in connection with this Agreement. Confidential
Information does not include information which (a) is or at any time
becomes generally available to the public other than as a result of a
disclosure by the Receiving Party in violation of this Agreement; (b) was
available to a Receiving Party on a nonconfidential basis prior to its
disclosure by the Disclosing Party; or (c) at any time becomes available to
a Receiving Party on a nonconfidential basis from a Person who is not
otherwise known by the Receiving Party to be bound by a confidentiality
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agreement with the Disclosing Party or is not otherwise known by the
Receiving Party to be prohibited from transmitting the information. Upon
termination of this Agreement for any reason, all Confidential Information
shall be returned to the Disclosing Party or affirmatively destroyed upon
the written request of the Disclosing Party. Return or destruction of such
Confidential Information shall in no event relieve the Receiving Party of
any obligations of confidentiality contained herein respecting such
Confidential Information. The obligations of the Parties set forth in this
SECTION 4.16 shall survive termination of this Agreement.
ARTICLE 5 - CONDITIONS TO OBLIGATION TO CLOSE
SECTION 5.1. CONDITIONS TO OBLIGATION OF BUYER. Buyer's obligation
to purchase the Purchased Assets and to take the other actions required to
be taken by Buyer at the Closing is subject to the satisfaction, at or
before the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
(a) The representations and warranties set forth in ARTICLE
2 of this Agreement, individually and collectively, shall have
been accurate in all material respects as of the date of this
Agreement and shall be accurate in all material respects as of
the Closing Date as if made on the Closing Date;
(b) Sellers and each Shareholder shall have performed and
complied in all material respects with all respective covenants
and obligations under this Agreement;
(c) Sellers shall have delivered to Buyer in form and
substance reasonably acceptable to Buyer: (i) the written opinion
of Sellers' legal counsel; (ii) a certificate stating that the
conditions specified in SECTIONS 5.1(A) and (B) have been
satisfied; and (iii) such other certificates, instruments or
documents as Buyer may reasonably request;
(d) There shall not be any Proceeding or Order pending or
Threatened or any Legal Requirement in effect that would prevent
the consummation of any of the transactions contemplated by this
Agreement or which could result in any Adverse Consequence
against Buyer or Sellers if the transactions contemplated by this
Agreement were consummated;
(e) Except as contemplated by this Agreement, there shall
not have been any material adverse change in the Business,
financial or otherwise, from the date of this Agreement to the
Closing Date;
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(f) Buyer shall be satisfied with the results of its
investigation of potential Environmental Liability, including its
review of the Disclosure Schedule delivered pursuant to SECTION
2.27;
(g) All Governmental Authorizations from any Governmental
Body that are necessary for the consummation of the transactions
contemplated by this Agreement, including pursuant to the Xxxx-
Xxxxx-Xxxxxx Antitrust Improvement Act, shall have been received
and shall be in full force and effect. All necessary filings,
declarations, and notices of Buyer and Sellers with or to any
Governmental Body shall also have been made or given;
(h) All authorizations, consents, and approvals by any
third parties (other than Governmental Authorizations from any
Governmental Body) that are necessary for the consummation of the
transactions contemplated by this Agreement shall have been
received and shall be in full force and effect, including all
consents and estoppel certificates in form and substance
satisfactory to Buyer from any franchisor relating to the Dairy
Queen, any lessor relating to any Existing Real Property Lease or
any personal property lease (but excluding the consent of
Loblaw's in connection with the President's Choice license), and
any licensor with respect to any ATM, software, hardware or
equipment license. All necessary filings, declarations, and
notices of Buyer and Sellers with or to such third parties shall
also have been made or given;
(i) All applicable Governmental Bodies shall have
authorized or approved the transfer to Buyer of all food stamp
licenses, WIC licenses, lottery licenses, MLCC licenses, pharmacy
licenses, transportation licenses and all other Governmental
Authorizations necessary for Buyer to operate the Business in the
manner operated by Sellers prior to the Closing Date shall have
been received and shall be in full force and effect;
(j) Excluding Buyer's obligation to pay the Xxxxxx'x
Termination Fee in accordance with SECTION 4.14 of this
Agreement, Sellers' or Buyer's obligations, liabilities,
responsibilities, commitments, and rights with respect to any
supply agreements, customer agreements or leases with Xxxxxx'x,
SUPERVALU, or their Affiliates, including the termination or
waiver of all options relating to the purchase of all or any
portion of the Business, shall have been resolved to the
satisfaction of Buyer;
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(k) Sellers shall have paid all indebtedness and
liabilities necessary to obtain the release of any Encumbrance on
the Purchased Assets;
(l) Sellers shall have delivered to Buyer 12th period
financial statements as of and for the period ended December 5,
1998;
(m) Catt's and Real Estate Company shall have executed and
delivered the New Real Property Leases; and
(n) Xxxx X. Xxxx, Xxxx X. Xxxx and Xxxxxx Xxxxxxx shall
have executed and delivered the Noncompetition Agreements.
SECTION 5.2. CONDITIONS TO OBLIGATION OF SELLERS. Sellers'
obligation to sell the Purchased Assets and to take the other actions
required to be taken by Sellers at the Closing is subject to the
satisfaction, at or before the Closing, of each of the following conditions
(any of which may be waived by Sellers, in whole or in part):
(a) The representations and warranties set forth in ARTICLE
3 of this Agreement, individually and collectively, shall have
been accurate in all material respects as of the date of this
Agreement and shall be accurate in all material respects as of
the Closing Date;
(b) Buyer shall have performed and complied in all material
respects with all of its covenants and obligations under this
Agreement;
(c) Buyer shall have delivered to Sellers in form and
substance reasonably acceptable to Sellers: (i) a written opinion
of Buyer's legal counsel; (ii) a certificate stating that each of
the conditions specified in SECTIONS 5.2(A) and (B) have been
satisfied; and (iii) such other certificates, instruments or
documents as Sellers may reasonably request;
(d) There shall not be any Proceeding or Order pending or
Threatened or any Legal Requirement in effect that would prevent
the consummation of any of the transactions contemplated by this
Agreement or which could result in any Adverse Consequence
against Buyer or Sellers if the transactions contemplated by this
Agreement were consummated;;
(e) All Governmental Authorizations from any Governmental
Body that are necessary for the consummation of the transactions
contemplated by this Agreement, including pursuant to the Xxxx-
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Xxxxx-Xxxxxx Antitrust Improvement Act, shall have been received
and shall be in full force and effect. All necessary filings,
declarations, and notices of Buyer and Sellers with or to any
Governmental Body shall also have been made or given;
(f) Buyer shall have executed and delivered the New Real
Property Leases; and
(g) Sellers' obligations, liabilities, responsibilities,
commitments, and rights with respect to any supply agreements,
customer agreements or leases with Xxxxxx'x, SUPERVALU, or their
Affiliates, including the termination or waiver of all options
relating to the purchase of all or any portion of the Business,
shall have been resolved to the satisfaction of Sellers, to the
extent that any resolution in which Buyer is involved would
adversely affect the obligations, liabilities, responsibilities,
commitments, or rights of Sellers after Closing.
ARTICLE 6 - TERMINATION
SECTION 6.1. TERMINATION EVENTS. This Agreement may be terminated
by (a) mutual written consent of Buyer and Sellers or (b) written notice
given before or at the Closing by:
(i) Buyer or Sellers if a material Breach of any provision
of this Agreement has been committed by the other party and the
Breach has not been waived or cured within 10 days following
written notice of the Breach;
(ii) Buyer if any of the conditions in SECTION 5.1 have not
been satisfied as of the Closing Date or if satisfaction of such
a condition is or becomes impossible (other than through the
failure of Buyer to comply with its obligations under this
Agreement) and Buyer has not waived the condition on or before
the Closing Date;
(iii) Sellers if any of the conditions in SECTION 5.2 have
not been satisfied as of the Closing Date or if satisfaction of
such a condition is or becomes impossible (other than through the
failure of any Sellers or Shareholder to comply fully with their
respective obligations under this Agreement) and Sellers have not
waived the condition on or before the Closing Date;
(iv) Buyer if the Closing has not occurred (other than
through the failure of Buyer to comply fully with its obligations
under this Agreement) on or before March 29, 1999, or such later
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date as the conditions in SECTION 5.2(E) of this Agreement have
been fulfilled or waived by Sellers, but no later than May 31,
1999, unless Buyer and Sellers agree in writing to such later
date; or
(v) Sellers if the Closing has not occurred (other than
through the failure of Sellers, Shareholders or the Real Estate
Company to comply fully with their respective obligations under
this Agreement) on or before March 29, 1999, or such later date
as the conditions in SECTION 5.1(G)(H)(I) AND (J) of this
Agreement have been fulfilled or waived by Buyer, but no later
than May 31, 1999, unless Buyer and Sellers agree in writing to
such later date.
SECTION 6.2. EFFECT OF TERMINATION.
(a) If this Agreement is terminated pursuant to SECTION
6.1, all further obligations of the Parties under this Agreement
will terminate and no Party shall have any further obligation to
the other Party; provided, however, if any Party shall be in
Breach of this Agreement prior to termination, the other Party's
right to pursue all legal remedies (including pursuant to SECTION
6.2(B) below) will survive such termination unimpaired.
(b) If Buyer on the one hand, or Sellers or Shareholders on
the other, terminate this Agreement pursuant to SECTION 6.1, and
if the termination by the terminating party (the "NON-DEFAULTING
PARTY") is based upon a material Breach of any representation,
warranty, covenant or agreement by the other Party (the
"DEFAULTING PARTY") arising from a willful act or omission by the
Defaulting Party, the Defaulting Party shall pay the Non-
Defaulting Party a termination fee in the amount of Five Million
Dollars ($5,000,000) within 10 days after receipt of written
demand therefor.
ARTICLE 7 - INDEMNIFICATION
SECTION 7.1. INDEMNIFICATION AND REIMBURSEMENT BY SELLERS,
SHAREHOLDERS AND REAL ESTATE COMPANY. Sellers and Shareholders (and Real
Estate Company with respect solely to SECTION 7.1(B) AND (C) and the
representations, warranties, covenants and obligations of Real Estate
Company) jointly and severally shall indemnify and hold harmless Buyer and
its Representatives and Affiliates ("BUYER'S INDEMNIFIED PARTIES"), and
shall reimburse Buyer's Indemnified Parties on demand, for all Adverse
Consequences arising from or related to (a) any Breach by any Seller,
Shareholder or Real Estate Company of any representation, warranty,
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covenant or obligation of any Seller, Shareholder or Real Estate Company in
this Agreement or any other instrument or document executed or delivered by
any Seller, Shareholder or Real Estate Company to Buyer pursuant to this
Agreement; (b) any and all liabilities and obligations of any of the
Sellers, Shareholders, Real Estate Company or their Affiliates of any
nature, whether accrued, absolute, contingent, or otherwise (including
without limitation Tax liabilities), other than the Assumed Liabilities;
(c) any failure to comply with any applicable bulk sale and transfer laws,
or similar laws, relating to this Agreement and any claims against Buyer by
creditors of any Seller (except with respect to the Assumed Liabilities);
(d) any use of the Purchased Assets by any Seller or Shareholder on or
before the Closing Date or the conduct of the Business on or before the
Closing Date; and (e) the enforcement of indemnification rights under this
ARTICLE 7.
SECTION 7.2. INDEMNIFICATION AND REIMBURSEMENT BY BUYER. Buyer
shall indemnify and hold harmless Sellers and their Representatives and
shall reimburse Sellers and their Representatives for all Adverse
Consequences arising from or related to (a) any Breach by Buyer of any
representation, warranty, covenant or obligation of Buyer in this Agreement
or in any other instrument or document delivered by Buyer to Sellers
pursuant to this Agreement; (b) any use of the Purchased Assets by Buyer
after the Closing Date or the conduct of the Business after the Closing
Date; and (c) the enforcement of indemnification rights under this
ARTICLE 7.
SECTION 7.3. INDEMNIFICATION PROCEDURES.
(a) Third-Party Claims.
(i) Promptly after receipt by a Person entitled to be
indemnified under this ARTICLE 7 (an "INDEMNIFIED PARTY") of
notice of the commencement of any Proceeding against it,
such Indemnified Party shall, if a claim for indemnification
is to be made against a Party (an "INDEMNIFYING PARTY")
under this ARTICLE 7, give notice to the Indemnifying Party
of the commencement of such Proceeding. The failure to
promptly notify the Indemnifying Party shall not relieve the
Indemnifying Party of any liability that it may have to an
Indemnified Party except to the extent that the defense of
such action was irreparably and materially prejudiced by the
Indemnifying Party's failure to provide prompt notice.
(ii) If any Proceeding is brought against an
Indemnified Party and it gives notice to the Indemnifying
Party of the commencement of such Proceeding, the
Indemnifying Party shall, unless the claim involves Taxes,
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be entitled to participate in such Proceeding and, to the
extent that it wishes (unless (A) the Indemnifying Party is
also a party to such Proceeding and the Indemnified Party
determines in good faith that joint representation would be
inappropriate or (B) the Indemnifying Party fails to provide
reasonable assurances to the Indemnified Party of its
financial capacity to defend such Proceeding and provide
indemnification with respect to such Proceeding), to assume
the defense of such Proceeding with counsel satisfactory to
the Indemnified Party. Following a proper assumption of
defense by an Indemnifying Party, as long as the
Indemnifying Party diligently conducts such defense it shall
not be liable for any subsequent fees of legal counsel or
other expenses incurred by the Indemnified Party in
connection with the defense of such Proceeding. If the
Indemnifying Party assumes the defense of a Proceeding, (A)
it will be conclusively established for purposes of this
Agreement that the claims made in that Proceeding are within
the scope of and subject to indemnification; (B) no
compromise or settlement of such claims may be effected by
the Indemnifying Party without the Indemnified Party's
written consent unless (x) there is no finding or admission
of any violation of Legal Requirements or any violation of
the rights of any Person and no effect on any other claims
that may be made by or against the Indemnified Party, and
(y) the sole relief provided is monetary damages that are
paid in full by the Indemnifying Party concurrently with the
compromise or settlement; and (C) the Indemnifying Party
will have no liability with respect to any compromise or
settlement of such claims effected without its consent. If
notice is given to an Indemnifying Party of the commencement
of any Proceeding and the Indemnifying Party does not within
ten days give notice to the Indemnified Party of its
election to assume the defense of such Proceeding, the
Indemnifying Party will be bound by any determination made
in such Proceeding or any compromise or settlement effected
by the Indemnified Party.
(iii) Notwithstanding the foregoing, if an Indemnified
Party determines in good faith that there is a reasonable
probability that a Proceeding may adversely affect it or its
Affiliates other than as a result of monetary damages for
which it would be entitled to indemnification under this
Agreement, the Indemnified Party may, by notice to the
Indemnifying Party, assume the exclusive right to defend,
compromise or settle such Proceeding, but the Indemnifying
Party will not be bound by any determination of a Proceeding
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so defended or any compromise or settlement effected without
its consent (which may not be unreasonably withheld).
(iv) The Parties shall make available to each other and
each other's legal counsel and other professional advisors
all of its or his books and records reasonably relating to a
third-party claim and each Party shall render to the other
assistance as may be reasonably required in order to insure
the proper and adequate defense of a third-party claim.
(v) Each Party hereby consents to the non-exclusive
jurisdiction of any court in which a Proceeding is brought
against any Indemnified Party for purposes of any claim that
an Indemnified Party may have under this Agreement with
respect to such Proceeding or the matters alleged therein.
(b) Other Claims. A claim for indemnification for any
matter not involving a third-party claim may be asserted by
notice to the Party from whom indemnification is sought.
SECTION 7.4. LIMITATIONS ON INDEMNIFICATION. The indemnification by
Seller and Shareholders provided pursuant to this ARTICLE 7 shall be
limited as follows:
(a) Neither Seller nor any Shareholder shall be liable to
Buyer's Indemnified Parties for any indemnification pursuant to
this ARTICLE 7 to the extent such indemnification, when
aggregated with all other indemnification payments made by Seller
or Shareholders pursuant to the provisions of this ARTICLE 7,
exceeds Twenty Million Dollars ($20,000,000); provided that this
SECTION 7.4(A) shall not apply to any Environmental Liability or
any Adverse Consequences arising from or relating to any Breach
by any Seller or Shareholder of any representation or warranty
contained in SECTIONS 2.6, 2.10, 2.17 OR 2.25.
(b) Neither Seller nor any Shareholder shall be liable to
Buyer's Indemnified Parties for any indemnification claims
pursuant to this ARTICLE 7 until the aggregate amount of the net
liability of such indemnification claims, calculated pursuant to
subparagraph (c), exceeds Two Hundred Fifty Thousand Dollars
($250,000). Upon reaching such amount, Seller and the
Shareholders shall be liable only for those amounts in excess of
such amount up to the maximum amount provided in subparagraph (a)
of this Section;
(c) For purposes of this ARTICLE 7, in computing any
individual or aggregate payment for indemnification to any of
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Buyer's Indemnified Parties, the amount of each such liability
shall be deemed to be an amount net of (i) any Tax benefit
realized by Buyer, as determined by the accountant of Buyer using
reasonable assumptions and methods of valuation consistent with
Buyer's then current accounting policies; (ii) any insurance
proceeds realized by any of Buyer's Indemnified Parties; and
(iii) any indemnity or contribution paid by any third party to
any of Buyer's Indemnified Parties with respect thereto; and
(d) Neither Seller nor any Shareholder shall be liable to
any of Buyer's Indemnified Parties for any indemnification
pursuant to SECTION 7.1(A) above for any claims brought by
Buyer's Indemnified Parties after one (1) year from the Closing
Date, except for Adverse Consequences arising from or related to
(i) any Breach by Sellers or Shareholders of any representation
or warranty contained in SECTIONS 2.6, 2.10, 2.17 OR 2.25 for
which a claim for indemnity may be made any time before
expiration of the applicable statute of limitations; (ii) any
Breach by Sellers or Shareholders of any representation or
warranty contained in SECTION 2.27 for which a claim for
indemnity may be made any time before expiration of six years
after the Closing Date; and (iii) any claim asserting that
Sellers or Shareholders had actual knowledge that a
representation or warranty was materially false when made or was
made with the intent to deceive, for which a claim for indemnity
may be made any time before expiration of the applicable statute
of limitations.
SECTION 7.5. EXCLUSIVE REMEDY. The indemnification provided by this
ARTICLE 7 shall be the sole and exclusive monetary remedy of the Parties
after Closing with respect to the matters covered by this ARTICLE 7, except
that nothing in this Section shall limit in any way the availability of
specific performance, injunctive relief, or other equitable remedies to
which any Party may otherwise be entitled.
ARTICLE 8 - DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings specified or referred to in this ARTICLE 8:
"ACCRUED VACATION" has the meaning set forth in EXHIBIT E of this
Agreement.
"ADVERSE CONSEQUENCE" means any loss, cost, liability (including any
Environmental Liability), penalty, Tax, claim, damage or expense (including
cost of investigation, defense, settlement and reasonable attorneys' and
other professional fees).
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"AFFILIATE" means, with respect to any particular Person, (a) any
Person controlling, controlled by or under common control with such Person,
whether by ownership or control of voting securities, by contract or
otherwise, (b) any Person owning or controlling 10% or more of the
outstanding voting securities of such other Person, (c) any partner,
officer, director, employee or shareholder of such Person or any parent,
spouse, child, brother, sister or other relative with a relationship (by
blood, marriage or adoption) not more remote than first cousin of any of
the foregoing, or (d) any liquidating trust, trustee or other similar
person or entity for any person.
"ASSIGNED CONTRACTS" has the meaning set forth in SECTION 1.1(C) of
this Agreement.
"ASSUMED LIABILITIES" has the meaning set forth in SECTION 1.3(C) of
this Agreement.
"BALANCE SHEET" has the meaning set forth in SECTION 2.3 of this
Agreement.
"BREACH" means, as to any representation, warranty, covenant,
obligation or other provision of this Agreement or any instrument or
document delivered pursuant to this Agreement, (a) any inaccuracy in, or
any failure to perform or comply with, such representation, warranty,
covenant, obligation or other provision or (b) any claim by any Person or
other occurrence or circumstance that is or was inconsistent with such
representation, warranty, covenant, obligation or other provision, in
either case regardless of whether deliberate, reckless, negligent, innocent
or unintentional.
"BUSINESS" has the meaning set forth in the second paragraph of this
Agreement.
"BUSINESS LOCATIONS" has the meaning set forth in SECTION 1.1 of this
Agreement.
"BUYER" has the meaning set forth in the first paragraph of this
Agreement.
"BUYER'S LETTER OF INTENT" shall mean the Proposal to Purchase Assets
of Glen's Markets, Inc. dated December 23, 1998.
"CASH PAYMENT" has the meaning set forth in SECTION 1.3(A) of this
Agreement.
"CLOSING" has the meaning set forth in SECTION 1.6 of this Agreement.
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"CLOSING BALANCE SHEET " has the meaning set forth in SECTION 1.4 of
this Agreement.
"CLOSING DATE" means the date and time as of which the Closing
actually takes place.
"CLOSING INVENTORY VALUATION " has the meaning set forth in SECTION
1.4(A) of this Agreement.
"CONTRACT" means any agreement, contract, obligation, promise or
undertaking (whether written or oral and whether express or implied) that
is legally binding.
"CURRENT PURCHASED ASSETS" means total Purchased Assets, less goodwill
and fixed assets.
"DAIRY QUEEN" has the meaning set forth in SECTION 1.1 of this
Agreement.
"DISCLOSURE SCHEDULE" has the meaning set forth in SECTION 2.1 of the
Agreement.
"DISTRIBUTION CENTER" has the meaning set forth in SECTION 1.1 of this
Agreement.
"EMPLOYEE BENEFIT PLAN" means any "employee pension benefit plan" or
"employee welfare benefit plan" as defined under ERISA, any incentive
compensation plan, benefit plan for retired employees, plan or Contract
providing for bonuses, pensions, profit-sharing, stock options, stock
purchase rights, deferred compensation, insurance or retirement benefits of
any nature, in each case whether written or oral.
"ENCUMBRANCE" means any charge, claim, community property interest,
condition, equitable interest, mortgage, lien, option, pledge, security
interest, right of first refusal or restriction of any kind, including any
restriction on use, voting (in the case of any security), transfer, receipt
of income or exercise of any other attribute of ownership.
"ENVIRONMENT" means soil, land surface or subsurface strata, surface
waters (including navigable waters and ocean waters), groundwaters,
drinking water supply, stream sediments, ambient air (including indoor
air), plant and animal life and any other environmental medium or natural
resource.
"ENVIRONMENTAL LAW" means any Legal Requirement designed: (a) to
advise appropriate authorities, employees and the public of intended,
threatened or actual releases of pollutants or hazardous substances or
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materials, violations or discharge limits, or other prohibitions and of the
commencements of activities, such as resource extraction or construction,
that could have significant impact on the Environment; (b) to prevent or
acceptably minimize the release or emission of pollutants or hazardous
substances or materials into the Environment; (c) to reduce the quantities,
prevent the release and minimize the hazardous characteristics of wastes
that are generated; (d) to regulate the generation, treatment, storage,
handling or disposal of hazardous substances; (e) to assure that products
are designed, formulated, packaged or used so that they do not present
unreasonable risks to human health or the Environment when used or disposed
of; (f) to protect resources, species or ecological amenities; (g) to
acceptably minimize the risks inherent in transportation of hazardous
substances, pollutants, oil or other potentially harmful substances; (h) to
clean up pollutants that have been released, prevent the threat of release
or pay the costs of such clean up or prevention; (i) to make responsible
parties pay private parties, or groups of them, for damages done to their
health or Environment, or to permit self-appointed representatives of the
public interest to recover for injuries done to public assets; or (j) to
regulate in any manner the potential impact of an activity on the
Environment.
"ENVIRONMENTAL LIABILITY" means any Adverse Consequence arising from
or relating to Environmental Law or Occupational Safety and Health Law,
including in connection with (a) any Environmental, health or safety
matters or conditions (including on-site or off-site contamination,
occupational safety and health and regulation of chemical substances or
products); and (b) any responsibility for response costs, corrective action
or actions to achieve compliance, including any cleanup, removal,
containment or other remediation or response action ("CLEANUP") required by
applicable Environmental Law or Occupational Safety and Health Law (whether
or not such Cleanup has been required or requested by any Governmental Body
or any other Person) and for any natural resource damages. The terms
"removal," "remedial," and "response action" include the types of
activities covered by the United States Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. 9601 et seq.,
as amended, or any similar state law.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCLUDED ASSETS" has the meaning set forth in SECTION 1.2 of this
Agreement.
"EXCLUDED CONTRACT" means each:
(i) collective bargaining agreement or other Contract to or
with any labor union or other employee representative of a group
of employees;
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(ii) joint venture, partnership, or other Contract (however
named) that following Closing would involve a sharing of profits,
losses, costs, or liabilities by Buyer with any other Person;
(iii) Contract that could in any way purport to restrict the
business activity of Buyer or limit the freedom of Buyer to
engage in any line of business or to compete with any Person
after Closing;
(iv) Contract (A) that contains an effective and outstanding
power of attorney and (B) a copy of which is not included in
SCHEDULE 2.18;
(v) Contract that contains or provides for an express
undertaking that following Closing would require Buyer to be
responsible for consequential, punitive or exemplary damages; and
(vi) Contract (A) that was entered into by any Seller other
than in the Ordinary Course of Business and (B) a copy of which
is not included in SCHEDULE 2.18.
"EXCLUDED LIABILITIES" has the meaning set forth in SECTION 1.3(D) of
this Agreement.
"EXISTING REAL PROPERTY LEASE" has the meaning set forth in SECTION
1.1(D) of this Agreement.
"FINAL ADJUSTED INVENTORY VALUE" has the meaning set forth in EXHIBIT
G.
"FINANCIAL STATEMENTS" has the meaning set forth in SECTION 2.3 of
this Agreement.
"GAAP" means generally accepted accounting principles.
"GENERAL OFFICE" has the meaning set forth in SECTION 1.1 of this
Agreement.
"GOVERNMENTAL AUTHORIZATION" means any approval, consent, license,
permit, waiver or other authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or
pursuant to any Legal Requirement.
"GOVERNMENTAL BODY" means any: (a) nation, state, county, city, town,
village, district or other jurisdiction of any nature; (b) federal, state,
local, municipal, foreign or other government; (c) governmental or quasi-
governmental authority of any nature (including any governmental agency,
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branch, department, official or entity and any court or other tribunal);
(d) multi-national organization or body; or (e) body exercising, or
entitled or purporting to exercise, any administrative, executive,
judicial, legislative, police, regulatory or Taxing authority or power of
any nature.
"INDEMNIFIED PARTY" has the meaning set forth in SECTION 7.3(A) of
this Agreement.
"INDEMNIFYING PARTY" has the meaning set forth in SECTION 7.3(A) of
this Agreement.
"INITIAL ADJUSTED INVENTORY VALUE" has the meaning set forth in
EXHIBIT G.
"INTELLECTUAL PROPERTY ASSETS" has the meaning set forth in SECTION
1.1(E) of this Agreement.
"INTERIM FINANCIAL STATEMENTS" has the meaning set forth in SECTION
2.3 of this Agreement.
"INVENTORY" has the meaning set forth in SECTION 1.1(A) of this
Agreement.
"INVENTORY VALUATION METHOD" means the method agreed upon by Buyer and
Sellers for determining the value of the Inventory, as set forth in EXHIBIT
G.
"IRS" means the Internal Revenue Service.
"KNOWLEDGE" means, with respect to any Person, the actual awareness of
a particular fact or other matter; provided, however, that "Sellers'
Knowledge" or "Knowledge of Sellers" means the actual awareness of Xxxx X.
Xxxx, Xxxx X. Xxxx, Xxxxx Xxxx, Xxxx Xxxxxxxxxxx, Xxxxxx Xxxxxxx or any
director or officer of any Seller and the awareness that such a person
should have as a reasonably prudent business person.
"LEGAL REQUIREMENT" means any federal, state, local, municipal,
foreign, international, multinational or other constitution, law,
ordinance, statute, code, regulation or treaty.
"MATERIAL ADVERSE EFFECT" means a material and adverse effect upon the
Purchased Assets and the Assumed Liabilities, taken as a whole, and
comprising the Business.
"MATERIAL ASSIGNED CONTRACT" means each Assigned Contract that
following Closing would require capital expenditures by Buyer in excess of
-39-
$5,000 or involve performance of services by or delivery of goods or
materials to Buyer of an amount or value in excess of $5,000.
"MLCC" means the Michigan Liquor Control Commission.
"MULTI-EMPLOYER RETIREMENT PLAN" has the meaning set forth in SECTION
3(37)(A) of ERISA.
"NEW REAL PROPERTY LEASES" has the meaning set forth in SECTION 4.11
of this Agreement.
"NON-ASSIGNABLE PRIVATE LABEL INVENTORY" means any President's Choice
or other private label inventory to which Sellers' shall not have obtained
as of Closing a consent to assignment or other agreement reasonably
acceptable to Buyer authorizing Buyer to sell the inventory after Closing.
"NONCOMPETITION AGREEMENT" has the meaning set forth in SECTION 4.7 of
this Agreement.
"NORMALIZED WORKING CAPITAL LIABILITIES" means all accounts payable
(including bank overdrafts) and accrued expenses, excluding (a) any accrued
vacation or flex-time other than the Accrued Vacation and (b) all federal,
state and local taxes identified on the Balance Sheet.
"NORMALIZED WORKING CAPITAL LIABILITIES LIMIT" means (a) Thirteen
Million Dollars ($13,000,000) if neither SUPERVALU nor Xxxxxx'x exercises
the SUPERVALU Option or the Xxxxxx'x Option, respectively; (b) Thirteen
Million Dollars ($13,000,000) less the amount of Normalized Working Capital
Liabilities attributable to the SUPERVALU Store, if SUPERVALU exercises the
SUPERVALU Option; and (c) Thirteen Million Dollars ($13,000,000) less the
amount of Normalized Working Capital Liabilities attributable to each
Xxxxxx'x Store as to which Xxxxxx'x shall have exercised the Xxxxxx'x
Option.
"OCCUPATIONAL SAFETY AND HEALTH LAW" means any Legal Requirement
designed to provide safe and healthful working conditions and to reduce
occupational safety and health hazards, and any program, whether
governmental or private, designed to provide safe and healthful working
conditions.
"ORDER" means any award, decision, injunction, judgment, order,
ruling, subpoena or verdict entered, issued, made or rendered by any court,
administrative agency or other Governmental Body or by any arbitrator.
"ORDINARY COURSE OF BUSINESS" means in accordance with Sellers'
historical and customary day-to-day practices with respect to the activity
in question.
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"ORGANIZATIONAL DOCUMENTS" means the complete charter and the bylaws
of Sellers, including all amendments.
"PARTY OR PARTIES" has the meaning set forth in the first paragraph of
this Agreement.
"PERSON" means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company,
joint venture, estate, trust, association, organization or other entity or
Governmental Body.
"PHARMACIES" has the meaning set forth in SECTION 1.1 of this
Agreement.
"PROCEEDING" means any action, arbitration, audit, hearing,
investigation, litigation or suit (whether civil, criminal, administrative,
investigative or informal) commenced, brought, conducted or heard by or
before, or otherwise involving, any Governmental Body or arbitrator.
"PURCHASE PRICE" has the meaning set forth in SECTION 1.3 of this
Agreement.
"PURCHASED ASSETS" has the meaning set forth in SECTION 1.1 of this
Agreement.
"REAL ESTATE COMPANY" has the meaning set forth in the first paragraph
of this Agreement.
"REAL PROPERTY" has the meaning set forth in SECTION 2.12 of this
Agreement.
"REAL PROPERTY LEASES" means Existing Real Property Leases and New
Real Property Leases.
"REGULATED SUBSTANCE" means any substance listed, defined, designated
or classified as hazardous, toxic, radioactive or dangerous, or otherwise
regulated, under any Environmental Law.
"RELATED PERSON" means with respect to a particular individual: (a)
each other member of such individual's Family; (b) any Person that is
directly or indirectly controlled by any one or more members of such
individual's Family; (c) any Person in which members of such individual's
Family hold (individually or in the aggregate) a Material Interest; and (d)
any Person with respect to which one or more members of such individual's
Family serves as a director, officer, partner, executor or trustee (or in a
similar capacity). For purposes of this definition, (a) the "FAMILY" of an
individual includes (i) the individual; (ii) the individual's spouse;
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(iii) any other natural person who is related to the individual or the
individual's spouse within the second degree; and (iv) any other natural
person who resides with such individual; and (b) "MATERIAL INTEREST" means
direct or indirect beneficial ownership (as defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of voting securities or other voting
interests representing at least 20% of the outstanding voting power of a
Person or equity securities or other equity interests representing at least
20% of the outstanding equity securities or equity interests in a Person.
"REPRESENTATIVE" means with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor or other
representative of such Person, including legal counsel, accountants and
financial advisors.
"RESTRICTED EVENT" means (a) any payment or increase of any bonuses,
salaries or other compensation to any employee who is not a shareholder,
officer or director of Sellers (except in the Ordinary Course of Business);
(b) the entry into any employment, severance or similar Contract with any
director, officer or employee; (c) the adoption of, or the change in the
payments to or benefits under, any Employee Benefit Plan for or with any
employees of Sellers; (d) any damage to or destruction or loss of any
property or assets of Sellers, whether or not covered by insurance,
materially and adversely affecting the properties, assets, business,
financial condition or prospects of Sellers; (e) the entry into,
termination of or receipt of notice of termination of any Contract with any
Person other than Buyer or its Affiliates with a total remaining commitment
by Sellers of more than $10,000 or to supply to any Business Location any
goods or services with a value in excess of $10,000; (f) any sale, lease or
other disposition of any property or asset of Sellers (other than sales of
inventory or renewals or replacements of equipment in the Ordinary Course
of Business) or the imposition of any Encumbrance on any material property
or asset of Sellers; (g) the cancellation or waiver of any claims or rights
with a value to Sellers in excess of $10,000; (h) any material change in
the accounting methods used by Sellers; (i) any capital expenditure in
excess of $10,000; (j) any change in Sellers' policies, procedures or
practices with respect to earning, paying, accruing or taking of employee
vacation or flex-time; or (k) any commitment or Contract, whether written
or oral, to do any of the foregoing.
"XXXXXX'X" means Xxxxxx'x, Inc.
"XXXXXX'X OPTION" means the right of Xxxxxx'x to purchase certain
assets of Sellers located at and used exclusively in the operation of the
Business at the Xxxxxx'x Stores, as set forth in the Xxxxxx'x Supply
Agreements.
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"XXXXXX'X SUPPLY AGREEMENTS" means the supply agreements between
Glen's and Xxxxxx'x with respect to each Xxxxxx'x Store, copies of which
are attached hereto as EXHIBIT L.
"XXXXXX'X STORES" means the Stores located in Alpena, Cadillac, North
Petoskey and South Petoskey, Michigan, which are currently supplied by
Xxxxxx'x pursuant to the Xxxxxx'x Supply Agreements.
"XXXXXX'X TERMINATION FEE" means an amount equal to the net present
value as of Closing of Sellers' remaining required product purchases under
the Xxxxxx'x Supply Agreements at a 2% net margin discounted by 10% through
Sellers' base rent periods. Product purchases shall be estimated to
increase at a 2% per year inflation rate. The aggregate amount of the
Xxxxxx'x Termination Fee for all Xxxxxx'x Stores shall not exceed Three
Million Four Hundred Twenty Five Thousand Dollars ($3,425,000).
"SAV-A-LOT STORES" means the three stores operated by Sellers under
the "Sav-A-Lot" name as of September 12, 1998.
"SELLERS" has the meaning set forth in the first paragraph of this
Agreement.
"SERVICES AGREEMENT" has the meaning set forth in SECTION 4.10 of this
Agreement.
"SHAREHOLDERS" has the meaning set forth in the first paragraph of
this Agreement.
"STORES" has the meaning set forth in SECTION 1.1 of this Agreement.
"SUPERVALU" means SUPERVALU, INC.
"SUPERVALU ADJUSTMENT AMOUNT" means the amount paid by SUPERVALU to
Sellers in connection with SUPERVALU's purchase of the assets associated
with the SUPERVALU Store pursuant to SUPERVALU's exercise of the SUPERVALU
Option.
"SUPERVALU OPTION" means the right of SUPERVALU to purchase certain
assets of Sellers located at and used exclusively in the operation of the
Business at the SUPERVALU Store, as set forth in the SUPERVALU Supply
Agreement.
"SUPERVALU SUPPLY AGREEMENT" means the supply agreement between Glen's
and SUPERVALU with respect to the SUPERVALU Store, a copy of which is
attached hereto as EXHIBIT M.
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"SUPERVALU STORE" means the Store located in Sault St. Xxxxx,
Michigan, which is currently supplied by SUPERVALU pursuant to the
SUPERVALU Supply Agreement.
"TAX" means any tax (including, without limitation, any income tax,
capital gains tax, value-added tax, sales tax, property tax, gift tax or
estate tax), levy, assessment, tariff, duty (including any customs duty),
deficiency or other fee, and any related charge or amount (including any
fine, penalty or interest), imposed, assessed or collected by or under the
authority of any Governmental Body or payable pursuant to any tax-sharing
agreement or any other Contract relating to the sharing of payment of any
such tax, levy, assessment, tariff, duty, deficiency or fee.
"TAX RETURN" means any return (including, without limitation, any
information return), report, statement, schedule, notice, form or other
document or information filed with or submitted to, or reported to be filed
with or submitted to, any Governmental Body in connection with the
determination, assessment, collection or payment of any Tax or in
connection with the administration, implementation or enforcement of or
compliance with any Legal Requirement relating to any Tax.
"TERMINATING EMPLOYEE" means Xxxx X. Xxxx, Xxxxxx Xxxxxx, Xxxxxx X.
Xxxxxxx, Xxx Xxxxxxx, Xxx Xxxxxxx, Xxxx Xxxxxxx, Xx Xxxx and Xxxxxx Xxxx.
"THREATENED" means, as to any claim, Proceeding, dispute, action or
other matter, that a demand or statement has been made (orally or in
writing) or a notice has been given (orally or in writing) that would lead
a prudent Person to conclude that such a claim, Proceeding, dispute, action
or other matter is reasonably likely to be asserted, commenced, taken or
otherwise pursued in the future.
"WARN" means the Federal Worker Adjustment and Retraining Act,
29 U.S.C. 2101-2109.
"WIC" means the Federal Supplemental Food Program For Women, Infants
and Children administered by the WIC Division of the Michigan Department of
Community Health and other applicable state agencies and departments.
ARTICLE 9 - GENERAL
SECTION 9.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. All representations, warranties, covenants and agreements made
by any Party to this Agreement will survive the Closing without expiration
and any investigation at any time made by or on behalf of the other Parties
before or after the Closing. No investigation by or Knowledge of Buyer or
its Representatives will affect in any manner the representations,
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warranties, covenants or agreements of the other Parties set forth in this
Agreement (or in any document to be executed or delivered in connection
with the consummation of the transactions contemplated by this Agreement)
or Buyer's right to rely thereon, and such representations, warranties,
covenants and agreements will survive any such investigation.
SECTION 9.2. BINDING EFFECT; BENEFITS; ASSIGNMENT. All of the terms
of this Agreement will be binding upon, inure to the benefit of and be
enforceable by and against the heirs and personal representatives of each
Shareholder and the successors and authorized assigns of each Party.
Nothing in this Agreement, express or implied, is intended to confer upon
any other Person any rights or remedies under or by reason of this
Agreement, this Agreement being for the exclusive benefit of the Parties
and their respective heirs, personal representatives, successors and
authorized assigns. No Party will assign any of its respective rights or
obligations under this Agreement to any other Person without the prior
written consent of all of the other Parties; provided however that Buyer
may assign its rights to any Affiliate of Buyer, but such assignment shall
not relieve Buyer of its obligations under this Agreement.
SECTION 9.3. ENTIRE AGREEMENT. This Agreement, and the exhibits and
schedules to this Agreement (including the Disclosure Schedule), and the
agreements referred to in this Agreement set forth the entire agreement and
understanding of the Parties in respect of the transactions contemplated by
this Agreement and supersede all prior agreements, arrangements and
understandings relating to the subject matter hereof, including Buyer's
Letter of Intent. No representation, promise, inducement or statement of
intention has been made by any Party that is not embodied in this Agreement
or in the documents referred to in this Agreement, and no Party will be
bound by or liable for any alleged representation, promise, inducement or
statement of intention not so set forth.
SECTION 9.4. AMENDMENT AND WAIVER. This Agreement may be amended,
modified, supplemented, superseded or canceled and any of the terms,
covenants, representations, warranties or conditions hereof may be waived
only by a written instrument executed by the Parties or, in the case of a
waiver, by or on behalf of the Party waiving compliance. The failure of
any Party at any time to require performance of any provision of this
Agreement will in no manner affect the right of that Party at a later time
to enforce such provision. No waiver by any Party of any condition or of
any Breach of any term, covenant, representation or warranty contained in
this Agreement, in any one or more instances, will be deemed to be or
construed as a further or continuing waiver of any such condition or of any
Breach of the term, covenant, representation or warranty or any other term,
covenant, representation or warranty set forth in this Agreement.
SECTION 9.5. GOVERNING LAW; VENUE. This Agreement will be governed
by and construed in accordance with the laws of the state of Michigan as
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applicable to contracts made and to be performed in the state of Michigan
without regard to conflict of laws principles. Any action or legal
proceeding concerning this Agreement or any other dispute between the
Parties shall be brought in the state or federal courts located in Kent
County, Michigan. The Parties agree that Kent County is a mutually
convenient forum and that each of the Parties conducts business in Kent
County.
SECTION 9.6. PUBLIC DISCLOSURE. Except as may be required by
applicable law or the applicable rules of any national securities exchange
or automated quotation service, no Party will make any public disclosure of
the existence or terms of this Agreement or the transactions contemplated
by this Agreement without the prior written consent of Buyer and
Shareholders, which consent will not be unreasonably withheld.
SECTION 9.7. NOTICES. All notices, requests, demands and other
communications to be given pursuant to the terms of this Agreement will be
in writing and will be deemed to have been duly given if delivered by hand,
sent by facsimile with confirmation, sent by a nationally recognized
overnight mail service, or mailed first class, postage prepaid:
(a) If to Buyer:
Spartan Stores, Inc.
000 00xx Xxxxxx, X.X.
X.X. Xxx 0000
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxxx X. Xxxxx, President and Chief Executive
Officer
and with a copy to:
Warner, Norcross & Xxxx LLP
000 Xxx Xxxx Xxxxxxxx
000 Xxxx Xxxxxx, X.X.
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Telephone: 616/000-0000
Facsimile: 616/752-2509
Attention: Xxxx X. XxXxxxxx
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(b) If to any Seller, Shareholder or Real Estate Company:
Catt's Realty Co.
X.X. Xxx 0000
Xxxxxxx, Xxxxxxxx 00000
Telephone: 000-000-0000
Facsimile: 000-000-0000
Attention: Xxxx X. Xxxx
and with a copy to:
Xxxxxx Xxxxxxxxx Xxxxxxx & Xxxxxxx
000 Xxxxxx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Telephone: 000-0000
Facsimile: 336-7000
Attention: J. Xxxxx Xxxxx
Any Party may change its address, telephone number or facsimile number by
prior written notice to the other Parties.
SECTION 9.8. COUNTERPARTS. This Agreement may be executed in
counterparts, by facsimile signature or otherwise, each of which when so
executed will be deemed to be an original and such counterparts will
together constitute one and the same agreement.
SECTION 9.9. EXPENSES. Except as otherwise provided in this
Agreement, each Party shall pay its, his or her own respective expenses,
costs and fees (including fees for attorneys, accountants and advisors)
incurred in connection with the negotiation, preparation, execution and
delivery of this Agreement and the consummation of the transactions
contemplated by this Agreement, provided that such expenses, costs or fees
of Sellers shall be paid from the Purchase Price (and not the assets of the
Business). Sellers shall be responsible for any transfer, sales, recording
or other Taxes or fees incurred in connection with the transactions
contemplated by this Agreement, including the transfer of the Purchased
Assets to Buyer.
SECTION 9.10. FORCE MAJEURE. No Party shall be deemed to be in
Breach of this Agreement or otherwise responsible for delays or failures in
performance resulting from acts of God; acts of war or civil disturbance;
epidemics; governmental action or inaction; disruptions in financial
markets; fires; earthquakes; unavailability of labor, materials, power, or
communication; or other causes beyond such Party's reasonable control.
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SECTION 9.11. SEVERABILITY. Any provision, or clause of any
provisions, of this Agreement that may be found to be contrary to Michigan
law or otherwise unenforceable will not affect the remaining terms of this
Agreement, which will be construed as if the unenforceable provision or
clause were absent from this Agreement.
SECTION 9.12. HEADINGS; CONSTRUCTION; TIME OF ESSENCE. The headings
of the sections and paragraphs in this Agreement have been inserted for
convenience of reference only and will not restrict or otherwise modify any
of the terms or provisions of this Agreement. Unless otherwise expressly
provided, the word "including" whenever used in this Agreement does not
limit the preceding words or terms. With regard to all dates and time
periods set forth or referred to in this Agreement, time is of the essence.
SECTION 9.13. GUARANTY OF PARENT. By joining in this Agreement,
Parent guarantees to Sellers the full and prompt payment and performance
when due of all indebtedness and obligations of Buyer to Sellers under this
Asset Purchase Agreement prior to or as of the Closing Date. This guaranty
of Parent is an absolute, irrevocable, primary, continuing, unconditional,
and unlimited guaranty of performance and payment. This guarantee shall
terminate upon Closing. Parent has full capacity, power, and authority to
enter into this Agreement and to carry out the covenants and agreements
specifically made by Parent in this Agreement, and this Agreement is
binding on Parent and enforceable against Parent in accordance with the
terms of this Agreement. The signing, delivery, and performance of this
Agreement have been duly authorized by all necessary action of the
directors and shareholders (if necessary) of Parent.
SECTION 9.14. SHAREHOLDER APPROVAL. This Agreement is being executed
by the Shareholders, subject to the approval of all shareholders of Sellers
as required by law, at meetings duly called and convened for that purpose;
provided, however, that the Shareholders by their signatures hereto
represent their agreement herewith, and agree to vote their interests in
favor of the approval of this Agreement, and they agree that their
execution hereof satisfies the condition in Buyer's Letter of Intent that a
definitive agreement be executed within the time set forth in Buyer's
Letter of Intent. Promptly after the date of this Agreement, Sellers shall
seek their shareholders' approval of this Agreement and the transactions
contemplated by this Agreement.
SECTION 9.15. PARENT STOCK REDEMPTION. Upon request by Sellers at
any time within one year after Closing, Sellers may sell to Parent any
stock of Parent held by Sellers as of the date of this Agreement and, in
exchange therefor, Parent shall pay to Sellers in immediately available
funds an amount per share equal to the then current trading value per
share.
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The Parties have executed this Agreement as of the date stated in
the first paragraph of this Agreement.
GLEN'S MARKET, INC. ("SELLER" AND AS
SHAREHOLDER OF GLEN'S PHARMACY, INC.)
By /s/Xxxx X. Xxxx
Its President
CATT'S REALTY CO. ("SELLER")
By /s/Xxxx X. Xxxx
Its President
GLEN'S PHARMACY, INC. ("SELLER")
By /s/Xxxx X. Xxxx
Its President
VALULAND, INC. ("BUYER")
By /s/Xxxxx X. Xxxxx
Its Chairman of the Board
UNIVERSAL LAND COMPANY
("REAL ESTATE COMPANY")
By /s/Xxxx X. Xxxx
Its President
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SPARTAN STORES, INC.
("PARENT")
By /s/Xxxxx X. Xxxxx
Its President and CEO
/s/Xxxx X. Xxxx
Xxxx X. Xxxx, (a "SHAREHOLDER")
Individually and as Trustee of the
Catt's Realty Xxx TR #5
/s/Xxxx X. Xxxx
Xxxx X. Xxxx (a "SHAREHOLDER")
/s/Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx, (a "SHAREHOLDER")
Individually and as Trustee of the DWF
Retained Xxx TR#1
/s/Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx, (a "SHAREHOLDER")
Individually and as Trustee of the SKF
Retained Xxx TR#1
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