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Exhibit 2.1
ASSET PURCHASE AGREEMENT
BY AND
AMONG
GLACIER DISTRIBUTION COMPANY, INC.,
XXXXX XXXXXXX DISTRIBUTORS, INC.,
AND
XXXXX XXXXXXX
Dated as of December 30, 1999
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TABLE OF CONTENTS
1. Definitions..................................................... 1
2. Basic Transaction............................................... 4
(a) Purchase and Sale of Assets............................ 4
(b) Assumption of Liabilities.............................. 4
(c) Purchase Price......................................... 4
(d) Xxxxxxx Payments....................................... 4
(e) Adjustment of Purchase Price........................... 5
(f) Company Security Agreement............................. 5
(g) Xxxxxxx Security Agreement............................. 5
(h) The Closing............................................ 5
(i) Deliveries at the Closing.............................. 5
(j) Allocation............................................. 5
3. Representations and Warranties of the Seller.................... 5
(a) Organization of the Seller. ........................... 6
(b) Authorization of Transaction........................... 6
(c) Noncontravention....................................... 6
(d) Brokers' Fees. ....................................... 6
(e) Title to Tangible Assets. ............................ 7
(f) Financial Statements. ................................ 7
(g) Events Subsequent to Most Recent Fiscal Month End...... 7
(h) Legal Compliance. ..................................... 7
(i) Tax Matters............................................ 7
(j) Real Property. ....................................... 8
(k) Intellectual Property.................................. 8
(l) Contracts.............................................. 8
(m) Powers of Attorney..................................... 8
(n) Litigation............................................. 8
(o) Employee Benefits...................................... 8
(p) Environmental, Health, and Safety Matters.............. 9
(q) Certain Business Relationships with the Seller......... 10
4. Representations and Warranties of the Buyer..................... 10
(a) Organization of the Buyer.............................. 10
(b) Authorization of Transaction. ........................ 10
(c) Noncontravention. .................................... 10
(d) Brokers' Fees. ....................................... 10
5. Pre-Closing Covenants........................................... 11
(a) General. ............................................. 11
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(b) Notices and Consents.................................... 11
(c) Operation of Business................................... 11
(d) Full Access for Due Diligence Review. .................. 11
(e) Notice of Developments.................................. 11
(f) Exclusivity............................................. 11
6. Post-Closing Covenants........................................... 12
(a) General................................................. 12
(b) Litigation Support...................................... 12
(c) Transition.............................................. 12
(d) Covenant Not to Compete................................. 12
7. Conditions to Obligation to Close................................ 13
(a) Conditions to Obligation of the Buyer................... 13
(b) Conditions to Obligation of the Seller and/or Xxxxxxx... 14
8. Termination...................................................... 15
(a) Termination of Agreement................................ 15
(b) Effect of Termination................................... 15
9. Remedies for Breaches of this Agreement.......................... 16
(a) Survival of Representations and Warranties.............. 16
(b) Indemnification Provisions for Benefit of the Buyer..... 16
(c) Indemnification Provisions for Benefit of the Seller.... 16
(d) Matters Involving Third Parties......................... 16
10. Miscellaneous.................................................... 17
(a) Press Releases and Public Announcements. ............... 17
(b) No Third-Party Beneficiaries. .......................... 17
(c) Entire Agreement........................................ 17
(d) Succession and Assignment. ............................ 17
(e) Counterparts. ......................................... 17
(f) Headings. ............................................. 17
(g) Notices. ............................................... 18
(h) Arbitration............................................. 19
(i) Governing Law........................................... 19
(j) Amendments and Waivers. ............................... 19
(k) Severability. .......................................... 19
(l) Expenses. .............................................. 19
(m) Construction............................................ 19
(n) Incorporation of Exhibits and Schedules. .............. 20
(o) Bulk Sales Transfer Laws................................ 20
(p) Sales and Use Taxes..................................... 20
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LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A-1--Form of First Company Note
Exhibit A-2--Form of Second Company Note
Exhibit B-Form of Xxxxxxx Note
Exhibit C--Form of Xxxxxxx Employment Agreement
Exhibit D--Form of Xxxxxxx Non-Compete Agreement
Exhibit E--Form of Company Security Agreement
Exhibit F-Form of Xxxxxxx Security Agreement
Exhibit G--Form of Xxxx of Sale
Exhibit H--Form of Assumption Agreement
Exhibit I--Form of Employment Agreement - Xxxxx Xxxxxx
Exhibit J--Form of Employment Agreement - Xxx Xxxxxxx
Exhibit K--Form of Employment Agreement - Xxxx Xxxxxxx
Exhibit L-Form of Legal Opinion of Seller's and Xxxxxxx'x Counsel
SCHEDULES
Disclosure Schedule--Exceptions to Representations and Warranties
Schedule 1A--Acquired Assets
Schedule 1B--Assumed Liabilities
Schedule 2(j)--Allocation Schedule
Schedule 3(f)--Financial Statements
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is entered into as of
December 30, 1999, by and among Glacier Distribution Company, Inc., a Colorado
corporation (the "Buyer"), Xxxxx Xxxxxxx Distributors, Inc., a California
corporation (the "Seller") and Xxxxx Xxxxxxx ("Xxxxxxx"). The Buyer and the
Seller are referred to collectively herein as the "Parties."
This Agreement contemplates a transaction in which the Buyer will
purchase substantially all of the assets (and assume certain of the liabilities)
of the Seller used in its distribution business (the "Business") in return for
cash, promissory notes and assumption of certain liabilities of the Seller, as
more particularly described herein.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties and Xxxxxxx agree as follows.
1. Definitions.
"Acquired Assets" means all of the right, title, and interest that the
Seller possesses and has the right to transfer in and to certain of its assets,
as more specifically set forth on Schedule 1A attached hereto.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Assumed Liabilities" means the balances as of the Closing of those
liabilities and obligations of the Seller owed to the vendors set forth on
Schedule 1B attached hereto and no others.
"Assumption Agreement" has the meaning set forth in Section 2(i) below.
"Xxxx of Sale" has the meaning set forth in Section 2(i) below.
"Bonus" has the meaning set forth in the Xxxxxxx Employment Agreement.
"Business" has the meaning set forth in the preface above.
"Buyer" has the meaning set forth in the preface above.
"Closing" has the meaning set forth in Section 2(h) below.
"Closing Date" has the meaning set forth in Section 2(h) below.
"Closing Payment" has the meaning set forth in Section 2(c) below.
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"Code" means the Internal Revenue Code of 1986, as amended.
"Company Notes" has the meaning set forth in Section 2(c) below.
"Company Security Agreement" has the meaning set forth in Section 2(f)
below.
"Confidential Information" means any information concerning the
businesses and affairs of the Seller and its Affiliates that is not already
generally available to the public.
"Disclosure Schedule" has the meaning set forth in Section 3 below.
"Effective Date" has the meaning set forth in Section 2(h) below.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement, (b) qualified defined
contribution retirement plan or arrangement which is an Employee Pension Benefit
Plan, (c) qualified defined benefit retirement plan or arrangement which is an
Employee Pension Benefit Plan (including any Multiemployer Plan), or (d)
Employee Welfare Benefit Plan or material fringe benefit or other retirement,
bonus, or incentive plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Section 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Section 3(1).
"Employment Agreements" has the meaning set forth in Section 7(a)(viii)
below.
"Environmental, Health, and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, and ordinances
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all those relating
to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes, as such requirements are enacted and in effect
on or prior to the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Financial Statement" has the meaning set forth in Section 3(f) below.
"First Company Note" has the meaning set forth in Section 2(c) below.
"First Note Amount" has the meaning set forth in Section 2(c) below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
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"Income Tax" means any federal, state, local, or foreign income tax,
including any interest, penalty, or addition thereto, whether disputed or not.
"Income Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto.
"Most Recent Financial Statements" has the meaning set forth in Section
3(f) below.
"Most Recent Fiscal Month End" has the meaning set forth in Section
3(f) below.
"Multiemployer Plan" has the meaning set forth in ERISA Section 3(37).
"Net Worth" means the book value of the Acquired Assets minus the
Assumed Liabilities, as calculated in accordance with GAAP consistently applied.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Purchase Price" has the meaning described in Section 2(c) below.
"Xxxxxxx Employment Agreement has the meaning described in Section 2(d)
below.
"Xxxxxxx Note" has the meaning described in Section 2(d) below.
"Xxxxxxx Payments" has the meaning set forth in Section 2(d) below.
"Xxxxxxx Security Agreement" has the meaning described in Section 2(g)
below.
"Second Company Note" has the meaning set forth in Section 2(c) below.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens and liens securing rental payments under capital lease
arrangements, and
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(d) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
2. Basic Transaction.
(a) Purchase and Sale of Assets. On and subject to the terms
and conditions of this Agreement, the Buyer agrees to purchase from the Seller,
and the Seller agrees to sell, transfer, convey, and deliver to the Buyer, all
of the Acquired Assets used in the Business at the Closing for the consideration
specified below in this Section 2, free and clear of any and all Security
Interests or rights of others whatsoever.
(b) Assumption of Liabilities. On and subject to the terms and
conditions of this Agreement, the Buyer agrees to assume and become responsible
for all of the Assumed Liabilities at the Closing. The Buyer will not assume or
have any responsibility, however, with respect to any other obligation or
liability of the Seller not included within the definition of Assumed
Liabilities; rather Seller shall remain liable for any such other liabilities
and Seller shall indemnify and hold harmless Buyer from and against any and all
such other liabilities. Seller hereby represents and warrants that such amounts
were incurred in the ordinary course of business by Seller and in a manner
consistent with Seller's prior practices.
(c) Purchase Price. The Buyer, as consideration for the
Acquired Assets (the "Purchase Price") (i) agrees to pay to the Seller $50,000
(the "Closing Payment") in immediately available funds; (ii) agrees to issue to
the Seller a five-year secured promissory note (the "First Company Note")
(substantially in the form of Exhibit A-1 attached hereto) in the amount of
$75,000 (the "First Note Amount"), subject to adjustment as set forth below in
Section 2(e); and (iii) agrees to issue to the Seller a ten-year secured
promissory note (the "Second Company Note") (substantially in the form of
Exhibit A-2 attached hereto) in the amount of $206,054 (the First Company Note
and the Second Company Note are collectively referred to herein as the "Company
Notes"). The Closing Payment and the Company Notes shall be delivered at
Closing.
(d) Xxxxxxx Payments. In addition to the Purchase Price, Buyer
agrees to (i) issue, to Xxxxxxx, a five-year promissory note (the "Xxxxxxx Note"
substantially in the form of Exhibit B attached hereto) in the amount of
$126,887.53 as consideration for the non-compete provisions contained in (x) the
employment agreement dated as of the Closing Date by and between Xxxxxxx and
Buyer (the "Xxxxxxx Employment Agreement") substantially in the form of Exhibit
C attached hereto; and (y) the non-compete agreement dated as of the Closing
Date by and between Xxxxxxx and Buyer (the "Xxxxxxx Non-Compete Agreement")
substantially in the form of Exhibit D attached hereto; and (ii) pay Xxxxxxx the
Bonus, if any, as such term is defined in the Xxxxxxx Employment Agreement (the
items described in clauses (i) and (ii) above are collectively referred to
herein as the "Xxxxxxx Payments"). The Xxxxxxx Note, the Xxxxxxx Employment
Agreement and the Xxxxxxx Non-Compete Agreement shall be delivered at Closing.
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(e) Adjustment of Purchase Price. The First Note Amount shall
be decreased or increased on a dollar for dollar basis, as the case may be, by
the amount the Net Worth is greater than a negative $390,000, or is less than a
negative $390,000, as the case may be, as of the Effective Date. The Parties
shall mutually agree to the Net Worth on the Closing Date.
(f) Company Security Agreement. Until such time as the
obligations of Buyer under the Company Notes are satisfied in full, such
obligations shall be secured by certain of the Acquired Assets pursuant to the
terms and conditions set forth in a security agreement (the "Company Security
Agreement") the form of which is attached hereto as Exhibit E.
(g) Xxxxxxx Security Agreement. The obligation of the buyer to
pay Xxxxxxx a Bonus, if any, shall be secured pursuant to the terms and
conditions set forth in a security agreement (the "Xxxxxxx Security Agreement")
the form of which is attached hereto as Exhibit F.
(h) The Closing. The closing of the transactions contemplated
by this Agreement (the "Closing") shall take place at the offices of Xxxxxx
Xxxxx Xxxxx Xxxxxxxxx & Xxxxxx LLC, 0000 00xx Xxxxxx, Xxxxx 0000, Xxxxxx,
Xxxxxxxx 00000, commencing at 9:00 a.m. local time on December 30, 1999, or such
other date as the Parties may mutually determine (the "Closing Date") to be
effective for financial and accounting purposes only as of November 15, 1999
(the "Effective Date").
(i) Deliveries at the Closing. At the Closing, (i) the Seller
will deliver to the Buyer the various certificates, instruments, and documents
referred to in Section 7(a) below; (ii) the Buyer will deliver to the Seller the
various certificates, instruments, and documents referred to in Section 7(b)
below; (iii) the Seller will execute, acknowledge (if appropriate), and deliver
to the Buyer (A) a xxxx of sale and assignment agreement (the "Xxxx of Sale")
substantially in the form attached hereto as Exhibit G and (B) such other
instruments of sale, transfer, conveyance, and assignment as the Buyer and its
counsel may reasonably request (which may include any real property and
intellectual property transfer documents) ; (iv) the Buyer will execute,
acknowledge (if appropriate), and deliver to the Seller (A) an assumption
agreement (the "Assumption Agreement") in the form attached hereto as Exhibit H
with respect to the Assumed Liabilities and (B) such other instruments of
assumption as the Seller and its counsel may reasonably request; (v) the Buyer
will deliver to the Seller the Closing Payment and the Company Notes and to
Xxxxxxx, the Xxxxxxx Note and the Xxxxxxx Employment Agreement; and (vi) Xxxxxxx
will deliver to the Buyer the Xxxxxxx Non-Compete Agreement.
(j) Allocation. The Parties agree to allocate the Purchase
Price (and all other capitalizable costs) among the Acquired Assets, the Assumed
Liabilities and the other covenants contained herein (and in the Xxxxxxx
Employment Agreement and the Xxxxxxx Non-Compete Agreement) for all purposes
(including financial accounting and tax purposes) in accordance with the
allocation schedule attached hereto as Schedule 2(j).
3. Representations and Warranties of the Seller. The Seller represents
and warrants to the Buyer that the statements contained in this Section 3 are
correct and complete as of the date of
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this Agreement and will be correct and complete as of the Closing Date (as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Section 3), except as set forth in the disclosure
schedule accompanying this Agreement (the "Disclosure Schedule"). The Disclosure
Schedule will be arranged in paragraphs corresponding to the lettered and
numbered paragraphs contained in this Section 3.
(a) Organization of the Seller. The Seller is a corporation
duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(b) Authorization of Transaction. The Seller has full power
and authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. Without
limiting the generality of the foregoing, the board of directors and the
shareholders of the Seller have duly authorized the execution, delivery, and
performance of this Agreement by the Seller, including, but not limited to,
authorizing the payment of the Xxxxxxx Payments directly to Xxxxxxx. This
Agreement constitutes the valid and legally binding obligation of the Seller,
enforceable in accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above), will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Seller is subject or any provision of
the charter or bylaws of any of the Seller or (ii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license, instrument, or other
arrangement to which the Seller is a party or by which it is bound or to which
any of its assets is subject (or result in the imposition of any Security
Interest upon any of its assets), except where the violation, conflict, breach,
default, acceleration, termination, modification, cancellation, failure to give
notice, or Security Interest would not have a material adverse effect on the
financial condition of the Seller or on the ability of the Parties to consummate
the transactions contemplated by this Agreement. The Seller does not need to
give any notice to, make any filing with, or obtain any authorization, consent,
or approval of any government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement (including the
assignments and assumptions referred to in Section 2 above), except where the
failure to give notice, to file, or to obtain any authorization, consent, or
approval would not have a material adverse effect on the financial condition of
the Seller or on the ability of the Parties to consummate the transactions
contemplated by this Agreement.
(d) Brokers' Fees. The Seller has no liability or obligation
to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which the Buyer could become
liable or obligated.
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(e) Title to Tangible Assets. The Seller has good title to, or
a valid leasehold interest in, the material tangible assets it uses regularly in
the conduct of the Business free and clear of all Security Interests.
(f) Financial Statements. Attached hereto as Schedule 3(f) are
the following financial statements (collectively the "Financial Statements"):
(i) unaudited, consolidated balance sheets and statements of income as of and
for the fiscal year ended December 31, 1998 for the Seller; and (ii) unaudited
consolidated balance sheets and statements of income (the "Most Recent Financial
Statements") as of November 15, 1999 (the "Most Recent Fiscal Month End") for
the Seller. The Financial Statements (including the notes thereto) have been
prepared on a federal income tax basis (and not in accordance with GAAP) applied
on a consistent basis throughout the periods covered thereby and present fairly
the financial condition of the Seller as of such dates and the results of
operations for the Seller for such periods; provided, however, that the Most
Recent Financial Statements are subject to normal year-end adjustments and lack
footnotes and other presentation items.
(g) Events Subsequent to Most Recent Fiscal Month End. Since
the Most Recent Fiscal Month End, there has not been any material adverse change
in the financial condition of the Seller. Without limiting the generality of the
foregoing, since that date the Seller has not engaged in any practice, taken any
action, or entered into any transaction outside the Ordinary Course of Business.
(h) Legal Compliance. The Seller has complied with all
applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof), except where the
failure to comply would not have a material adverse effect upon the financial
condition of the Seller.
(i) Tax Matters.
(i) The Seller has filed all Income Tax Returns that
it was required to file, and has paid all Income Taxes shown thereon as
owing, except where the failure to file Income Tax Returns or to pay
Income Taxes would not have a material adverse effect on the financial
condition of the Seller.
(ii) Section 3(i) of the Disclosure Schedule lists
all Income Tax Returns filed with respect to the Seller for taxable
periods ended on or after December 31, 1998, indicates those Income Tax
Returns that have been audited, and indicates those Income Tax Returns
that currently are the subject of audit. The Seller has delivered to
the Buyer correct and complete copies of all federal Income Tax
Returns, examination reports, and statements of deficiencies assessed
against or agreed to by the Seller since December 31, 1998.
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(iii) The Seller has not waived any statute of
limitations in respect of Income Taxes or agreed to any extension of
time with respect to an Income Tax assessment or deficiency.
(iv) The Seller is not a party to any Income Tax
allocation or sharing agreement.
(j) Real Property. Section 3(j) of the Disclosure Schedule
lists all real property leased or subleased to the Seller. The Seller has
delivered to the Buyer correct and complete copies of the leases and subleases
listed in Section 3(j) of the Disclosure Schedule (as amended to date). Each
lease and sublease listed in Section 3(j) of the Disclosure Schedule is legal,
valid, binding, enforceable, and in full force and effect, except where the
illegality, invalidity, nonbinding nature, unenforceability, or ineffectiveness
would not have a material adverse effect on the financial condition of the
Seller.
(k) Intellectual Property. Section 3(k) of the Disclosure
Schedule identifies each patent or registration which has been issued to the
Seller with respect to any of its intellectual property and identifies each
pending patent application or application for registration which the Seller has
made with respect to any of its intellectual property.
(l) Contracts. Section 3(l) of the Disclosure Schedule lists
all written contracts and other written agreements to which the Seller is a
party the performance of which will involve consideration in excess of $5,000.
The Seller has delivered to the Buyer a correct and complete copy of each
contract or other agreement listed in Section 3(l) of the Disclosure Schedule
(as amended to date).
(m) Powers of Attorney. There are no outstanding powers of
attorney executed on behalf of the Seller.
(n) Litigation. Section 3(n) of the Disclosure Schedule sets
forth each instance in which the Seller (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party to any
action, suit, proceeding, hearing, or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction, except where the injunction, judgment, order, decree,
ruling, action, suit, proceeding, hearing, or investigation would not have a
material adverse effect on the financial condition of the Seller.
(o) Employee Benefits.
(i) Section 3(o)(i) of the Disclosure Schedule lists
each Employee Benefit Plan that the Seller maintains or to which the
Seller contributes.
(A) Each such Employee Benefit Plan (and
each related trust, insurance contract, or fund) complies in
form and in operation in all respects with the
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applicable requirements of ERISA and the Code, except where
the failure to comply would not have a material adverse effect
on the financial condition of the Seller.
(B) All contributions (including all
employer contributions and employee salary reduction
contributions) which are due have been paid to each such
Employee Benefit Plan which is an Employee Pension Benefit
Plan.
(C) Each such Employee Benefit Plan which is
an Employee Pension Benefit Plan has received a determination
letter from the Internal Revenue Service to the effect that it
meets the requirements of Code Section 401(a).
(D) As of the last day of the most recent
prior plan year, the market value of assets under each such
Employee Benefit Plan which is an Employee Pension Benefit
Plan (other than any Multiemployer Plan) equaled or exceeded
the present value of liabilities thereunder (determined in
accordance with then current funding assumptions).
(E) The Seller has delivered to the Buyer
correct and complete copies of the plan documents and summary
plan descriptions, the most recent determination letter
received from the Internal Revenue Service, the most recent
Form 5500 Annual Report, and all related trust agreements,
insurance contracts, and other funding agreements which
implement each such Employee Benefit Plan.
(p) Environmental, Health, and Safety Matters.
(i) The Seller is in compliance with Environmental,
Health, and Safety Requirements, except for such noncompliance as would
not have a material adverse effect on the financial condition of the
Seller.
(ii) The Seller and its Subsidiaries have not
received any written notice, report or other information regarding any
actual or alleged material violation of Environmental, Health, and
Safety Requirements, or any material liabilities or potential material
liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise), including any investigatory, remedial or corrective
obligations, relating to the Seller or its facilities arising under
Environmental, Health, and Safety Requirements, the subject of which
would have a material adverse effect on the financial condition of the
Seller.
(iii) This Section 3(p) contains the sole and
exclusive representations and warranties of the Seller with respect to
any environmental, health, or safety matters, including without
limitation any arising under any Environmental, Health, and Safety
Requirements.
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(q) Certain Business Relationships with the Seller. None of
the Seller's Affiliates owns any material asset, tangible or intangible, which
is used in the business of the Seller.
4. Representations and Warranties of the Buyer. The Buyer represents
and warrants to the Seller that the statements contained in this Section 4 are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section 4),
except as set forth in the Disclosure Schedule. The Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 4.
(a) Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(b) Authorization of Transaction. The Buyer has full power and
authority (including full corporate power and authority) to execute and deliver
this Agreement and to perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the Buyer, enforceable
in accordance with its terms and conditions.
(c) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions contemplated hereby
(including the assignments and assumptions referred to in Section 2 above), will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer is subject or any provision of
its charter or bylaws or (ii) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
the Buyer is a party or by which it is bound or to which any of its assets is
subject (or result in the imposition of any Security Interest upon any of its
assets), except where the violation, conflict, breach, default, acceleration,
termination, modification, cancellation, failure to give notice, or Security
Interest would not have a material adverse effect on the financial condition of
the Buyer or on the ability of the Parties to consummate the transactions
contemplated by this Agreement. The Buyer does not need to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to consummate the
transactions contemplated by this Agreement (including the assignments and
assumptions referred to in Section 2 above), except where the failure to give
notice, to file, or to obtain any authorization, consent, or approval would not
have a material adverse effect on the financial condition of the Buyer or on the
ability of the Parties to consummate the transactions contemplated by this
Agreement.
(d) Brokers' Fees. The Buyer has no liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Seller could become
liable or obligated.
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5. Pre-Closing Covenants. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its reasonable best
efforts to take all action and to do all things necessary in order to consummate
and make effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in Section 7
below).
(b) Notices and Consents. The Seller will give any notices to
third parties, and the Seller will use its reasonable best efforts to obtain any
third party consents, that the Buyer reasonably may request in connection with
the matters referred to in Section 3(c) above. Each of the Parties will give any
notices to, make any filings with, and use its reasonable best efforts to obtain
any authorizations, consents, and approvals of governments and governmental
agencies in connection with the matters referred to in Section 3(c) and Section
4(c) above.
(c) Operation of Business. From the date hereof until the
Closing Date, the Seller will not engage in any practice, take any action, or
enter into any transaction outside the Ordinary Course of Business. Without
limiting the generality of the foregoing, the Seller will not, except in the
Ordinary Course of Business, declare or pay any dividends, pay any bonuses,
purchase, sell, lease or dispose of any assets, issue any securities, incur any
liability or make any commitment to do so, accelerate the collection of accounts
receivable, defer accounts payable, change its policies with respect to bad debt
reserves, or make any changes with respect to working capital, without the
Buyer's prior written consent.
(d) Full Access for Due Diligence Review. The Seller will
permit representatives of the Buyer to have full access at all reasonable times,
and in a manner so as not to interfere with the normal business operations of
the Seller, to all premises, properties, personnel, books, records (including
tax records), contracts, and documents of or pertaining to the Seller, and will
provide all reasonable assistance, in order for the Buyer to conduct its due
diligence review. The Buyer will treat and hold as such any Confidential
Information it receives from any Affiliates of the Seller and the Seller in the
course of the reviews contemplated by this Section 5(d), will not use any of the
Confidential Information except in connection with this Agreement, and, if this
Agreement is terminated for any reason whatsoever, will return to the Seller all
tangible embodiments (and all copies) of the Confidential Information which are
in its possession.
(e) Notice of Developments. Each Party will give prompt
written notice to the other Party of any material adverse development causing a
breach of any of its own representations and warranties in Section 3 and Section
4 above. No disclosure by any Party pursuant to this Section 5(e), however,
shall be deemed to amend or supplement the Disclosure Schedule or to prevent or
cure any misrepresentation or breach of warranty.
(f) Exclusivity. From the date hereof until the earlier of (i)
December 31, 1999, (ii) the Closing Date, or (iii) the date that the Agreement
is terminated pursuant to Section 8 below,
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the Seller will not solicit, initiate, or encourage the submission of any
proposal or offer from any Person relating to the acquisition of all or
substantially all of the capital stock or assets of the Seller (including any
acquisition structured as a merger, consolidation, or share exchange).
6. Post-Closing Covenants. The Parties agree as follows with respect to
the period following the Closing.
(a) General. In case at any time after the Closing any further
action is necessary to carry out the purposes of this Agreement, each of the
Parties will take such further action (including the execution and delivery of
such further instruments and documents) as any other Party reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Section 9 below).
(b) Litigation Support. In the event and for so long as any
Party actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Seller, the other Party will cooperate with
the contesting or defending Party and its counsel in the contest or defense,
make available its personnel, and provide such testimony and access to its books
and records as shall be necessary in connection with the contest or defense, all
at the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Section 9 below).
(c) Transition. The Seller will not take any action that is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of the Seller from maintaining
the same business relationships with the Buyer after the Closing as it
maintained with the Seller prior to the Closing.
(d) Covenant Not to Compete. For a period of five (5) years
from and after the Closing Date, the Seller will not engage directly or
indirectly in any business that the Seller conducts as of the Closing Date in
any geographic area in which the Seller conducts that business as of the Closing
Date; provided, however, that no owner of less than 5% of the outstanding stock
of any publicly traded corporation shall be deemed to engage solely by reason
thereof in any of its businesses. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Section 6(d) is invalid
or unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time within
which the judgment may be appealed. If at any time during the five-year period
described above in this Section 6(d), an event of default occurs under the
Second Company Note, then the provisions of this Section
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6(d) shall terminate and be of no further force and effect unless the Second
Company Note is paid in full within thirty (30) days of such event of default.
7. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of
the Buyer to consummate the transactions to be performed by it in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in
Section 3 above and elsewhere herein shall be true and correct in all
material respects at and as of the Closing Date;
(ii) the Seller shall have performed and complied
with all of its covenants hereunder in all material respects through
the Closing;
(iii) there shall not be any injunction, judgment,
order, decree, ruling, or charge in effect preventing consummation of
any of the transactions contemplated by this Agreement;
(iv) the Seller shall have delivered to the Buyer a
certificate to the effect that each of the conditions specified above
in Section 7(a)(i)-(iii) is satisfied in all respects;
(v) the Seller and the Buyer shall have received all
authorizations, consents, and approvals of governments and governmental
agencies referred to in Section 3(c) and Section 4(c) above;
(vi) the Buyer shall have confirmed available
year-to-date operating results of the Seller for the current year to
the Buyer's reasonable satisfaction;
(vii) the Buyer shall have entered into employment
agreements reasonably satisfactory to Buyer with Xxxxx Xxxxxx, Xxx
Xxxxxxx and Xxxx Xxxxxxx substantially in the forms of Exhibits I, J
and K (collectively, the "Employment Agreements");
(viii) Xxxxxxx and Buyer shall have executed and
delivered the Xxxxxxx Employment Agreement;
(ix) Xxxxxxx and Buyer shall have executed and
delivered the Xxxxxxx Non-Compete Agreement;
(x) the Seller and the Buyer shall have executed and
delivered the Company Security Agreement;
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(xi) Xxxxxxx and the Buyer shall have executed and
delivered the Xxxxxxx Security Agreement;
(xii) counsel to the Seller and Xxxxxxx shall have
delivered an opinion substantially in the form of Exhibit L; and
(xiii) all actions to be taken by the Seller in
connection with consummation of the transactions contemplated hereby
and all certificates, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Buyer.
The Buyer may waive any condition specified in this Section 7(a) if it
executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Seller and/or Xxxxxxx. The
obligation of the Seller and/or Xxxxxxx to consummate the transactions to be
performed by it in connection with the Closing is subject to satisfaction of the
following conditions:
(i) the representations and warranties set forth in
Section 4 above shall be true and correct in all material respects at
and as of the Closing Date;
(ii) the Buyer shall have performed and complied with
all of its covenants hereunder in all material respects through the
Closing;
(iii) there shall not be any injunction, judgment,
order, decree, ruling, or charge in effect preventing consummation of
any of the transactions contemplated by this Agreement;
(iv) the Buyer shall have delivered to the Seller a
certificate to the effect that each of the conditions specified above
in Section 7(b)(i)-(iii) is satisfied in all respects;
(v) the Seller and the Buyer shall have received all
authorizations, consents, and approvals of governments and governmental
agencies referred to in Section 3(c) and Section 4(c) above;
(vi) the Seller and the Buyer shall have executed and
delivered the Company Security Agreement;
(vii) Xxxxxxx and the Buyer shall have executed and
delivered the Xxxxxxx Security Agreement;
(viii) Xxxxxxx and the Buyer shall have executed and
delivered the Xxxxxxx Non-Compete Agreement;
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(ix) Xxxxxxx and the Buyer shall have executed and
delivered the Xxxxxxx Employment Agreement;
(x) the relevant parties shall have entered into the
Employment Agreements; and
(xi) all actions to be taken by the Buyer in
connection with consummation of the transactions contemplated hereby
and all certificates, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Seller.
The Seller and/or Xxxxxxx may waive any condition specified in this
Section 7(b) if it/he executes a writing so stating at or prior to the Closing.
8. Termination.
(a) Termination of Agreement. The Parties may terminate this
Agreement as provided below:
(i) the Buyer and the Seller may terminate this
Agreement by mutual written consent at any time prior to the Closing;
(ii) the Buyer may terminate this Agreement by giving
written notice to the Seller at any time prior to the Closing (A) in
the event the Seller has breached any representation, warranty, or
covenant contained in this Agreement in any material respect or (B) if
the Closing shall not have occurred on or before November 30, 1999, by
reason of the failure of any condition precedent under Section 7(a)
hereof (unless the failure results primarily from the Buyer itself
breaching any representation, warranty, or covenant contained in this
Agreement); and
(iii) the Seller may terminate this Agreement by
giving written notice to the Buyer at any time prior to the Closing (A)
in the event the Buyer has breached any representation, warranty, or
covenant contained in this Agreement in any material respect or (B) if
the Closing shall not have occurred on or before November 30, 1999, by
reason of the failure of any condition precedent under Section 7(b)
hereof (unless the failure results primarily from the Seller itself
breaching any representation, warranty, or covenant contained in this
Agreement).
(b) Effect of Termination. If any Party terminates this
Agreement pursuant to Section 8(a) above, all rights and obligations of the
Parties hereunder shall terminate without any liability of any Party to any
other Party (except for any liability of any Party then in breach); provided,
however, that the confidentiality provisions contained in Section 5(d) above
shall survive termination.
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9. Remedies for Breaches of this Agreement.
(a) Survival of Representations and Warranties.
All of the representations and warranties of the Parties contained in
Sections 3 and 4 of this Agreement shall survive the Closing.
(b) Indemnification Provisions for Benefit of the Buyer.
(i) In the event the Seller breaches any of its
representations, warranties, and covenants contained in this Agreement,
then the Seller agrees to indemnify and hold harmless the Buyer from
and against the entirety of any Adverse Consequences the Buyer shall
suffer through and after the date of the claim for indemnification
caused by the breach.
(ii) The Seller agrees to indemnify the Buyer from
and against the entirety of any Adverse Consequences the Buyer shall
suffer caused by any liability of the Seller which is not an Assumed
Liability (including any liability arising under or as a result of any
failure to comply with any bulk sales transfer law, or similar law, of
any jurisdiction, under any common law doctrine of de facto merger or
successor liability, or otherwise).
(c) Indemnification Provisions for Benefit of the Seller.
(i) In the event the Buyer breaches any of its
representations, warranties, and covenants contained in this Agreement,
then the Buyer agrees to indemnify and hold harmless the Seller from
and against the entirety of any Adverse Consequences the Seller shall
suffer through and after the date of the claim for indemnification
caused by the breach.
(ii) The Buyer agrees to indemnify the Seller from
and against the entirety of any Adverse Consequences the Seller shall
suffer caused by any liability of the Seller which is an Assumed
Liability.
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against any other
Party (the "Indemnifying Party") under this Section 9, then the
Indemnified Party shall promptly (and in any event within five business
days after receiving notice of the Third Party Claim) notify each
Indemnifying Party thereof in writing.
(ii) Any Indemnifying Party will have the right at
any time to assume and thereafter conduct the defense of the Third
Party Claim with counsel of his or its choice reasonably satisfactory
to the Indemnified Party; provided, however, that the Indemnifying
Party will not consent to the entry of any judgment or enter into any
settlement with respect
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to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably) unless the judgment
or proposed settlement involves only the payment of money damages and
does not impose an injunction or other equitable relief upon the
Indemnified Party.
(iii) Unless and until an Indemnifying Party assumes
the defense of the Third Party Claim as provided in Section 9(d)(ii)
above, however, the Indemnified Party may defend against the Third
Party Claim in any manner it reasonably may deem appropriate.
(iv) In no event will the Indemnified Party consent
to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of each of
the Indemnifying Parties (not to be withheld unreasonably).
10. Miscellaneous.
(a) Press Releases and Public Announcements. No Party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement prior to the Closing without the prior written approval
of the other Party; provided, however, that any Party may make any public
disclosure it believes in good faith is required by applicable law or any
listing or trading agreement concerning its publicly-traded securities (in which
case the disclosing Party will use its reasonable best efforts to advise the
other Party prior to making the disclosure).
(b) No Third-Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they related in any way to
the subject matter hereof.
(d) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party.
(e) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
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(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Buyer:
Glacier Distribution Company, Inc.
000 Xxxx 00xx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx
Fax No.: (000) 000-0000
Copy to:
Xxxxxx Xxxxx Xxxxx Xxxxxxxxx & Xxxxxx LLC
0000 00xx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Fax No.: (000) 000-0000
If to the Seller:
Xxxxx Xxxxxxx Distributors, Inc.
c/o Xxxxx Xxxxxxx
0000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
Copy to:
Xxxxxxx X. Xxxxx, Esq.
00000 Xxxx Xxxxxxx Xxxx., Xxxxx 000
Xxxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given
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unless and until it actually is received by the intended recipient. Any Party
may change the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Party notice in
the manner herein set forth.
(h) Arbitration. Any claim or controversy arising out of or
relating to this Agreement or the breach hereof shall be settled by arbitration
administered in Denver, Colorado by the American Arbitration Association in
accordance with its applicable rules. The arbitration shall be conducted by a
panel of three arbitrators with at least ten years experience in complex
business transactions. Each of the Parties shall select one arbitrator and the
two arbitrators so selected shall select the third arbitrator. The prevailing
party shall be awarded reasonable costs and expenses, including without
limitation attorneys' fees. The award of the arbitrators shall be final and
binding upon the Parties and any judgment on the award rendered in such
arbitration may be entered in any court having jurisdiction thereof.
(i) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Colorado without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Colorado or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Colorado.
(j) Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
the Buyer and the Seller. No waiver by any Party of any default,
misrepresentation, or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
(l) Expenses. Each of the Buyer and the Seller will bear its
own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby.
(m) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
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(n) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(o) Bulk Sales Transfer Laws. With respect to all creditors of
Seller not identified on Schedule 1B, Seller shall either comply with the
provisions of all bulk sales transfer laws of any applicable jurisdiction in
connection with the transactions contemplated by this Agreement or shall take
all actions as are necessary to satisfy any creditors' rights against the Seller
which may arise in connection with the consummation of the transactions
contemplated by this Agreement.
(p) Sales and Use Taxes. Seller shall be solely responsible
for all sales and use taxes arising in connection with the transactions
contemplated by this Agreement.
* * * * *
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
GLACIER DISTRIBUTION COMPANY, INC.
/s/ Xxx X. Xxxxx
----------------------------------------
By: Xxx X. Xxxxx
Its: C.E.O.
XXXXX XXXXXXX DISTRIBUTORS, INC.
/s/ Xxxxxx X. Xxxxxxx
----------------------------------------
By: Xxxxxx X. Xxxxxxx
Its: President
________________________________________
XXXXX XXXXXXX
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EXHIBIT A-1
Form of First Company Note
27
EXHIBIT A-2
Form of Second Company Note
28
EXHIBIT B
Form of Xxxxxxx Note
29
EXHIBIT C
Form of Xxxxxxx Employment Agreement
30
EXHIBIT D
Form of Xxxxxxx Non-Compete Agreement
31
EXHIBIT E
Form of Company Security Agreement
32
EXHIBIT F
Form of Xxxxxxx Security Agreement
33
EXHIBIT G
Form of Xxxx of Sale
34
EXHIBIT H
Form of Assumption Agreement
35
EXHIBIT I
Form of Employment Agreement -- Xxxxx Xxxxxx
36
EXHIBIT J
Form of Employment Agreement -- Xxx Xxxxxxx
37
EXHIBIT K
Form of Employment Agreement -- Xxxx Xxxxxxx
38
EXHIBIT L
Form of Legal Opinion of Seller's and Xxxxxxx'x Counsel
39
SCHEDULE 1A
List of Acquired Assets
40
SCHEDULE 1B
List of Assumed Liabilities
41
SCHEDULE 2(i)
Allocation Schedule
42
SCHEDULE 3(f)
Financial Statements
