STOCK PURCHASE AGREEMENT
BETWEEN
Health Food Associates, Inc.,
an Oklahoma corporation
Xxxxx X. Xxxxxxxxx, individually and as trustee of the
Xxxxx X. Xxxxxxxxx Health Food Associates Stock Trust
dated January 30, 1998, Xxxxx X. Xxxxxxxxx
and Xxxxxxx X. Xxxxxxxxx, as trustees of the
Xxxxx X. Xxxxxxxxx Trust dated July 11, 1994, as amended,
Xxxx Xxxxxxxxx, Xxxx Xxx O'Dell,
Xxxxx Xxxxx, and Xxx Xxxxxxxx
AND
Food for Health Co., Inc.,
an Arizona corporation
Dated: August 30, 1999
TABLE OF CONTENTS
-----------------
1. Purchase and Sale of Stock...........................................1
2. Purchase Price.......................................................1
2.1 Allocation of Closing Payment Among Shareholders.............2
2.2 Allocation of Payments under the Secured Note Among
Shareholders.................................................2
2.3 Allocation of Payments under the Convertible Note Among
Shareholders.................................................3
2.4 338(h)(10) Election..........................................3
3. Closing..............................................................3
4. Shareholders' Obligations at Closing; Further Assurances.............4
5. Representations and Warranties by Shareholders.......................4
6. Representations and Warranties by Hinkefent..........................5
6.1 Organization, Standing and Qualification.....................5
6.2 Subsidiaries.................................................5
6.3 Transactions with Certain Persons............................6
6.4 Capitalization...............................................6
6.5 Financial Statements.........................................7
6.6 Absence of Undisclosed Liabilities...........................8
6.7 Taxes........................................................8
6.8 Absence of Changes or Events.................................8
6.9 Litigation..................................................10
6.10 Compliance with Laws and Other Instruments..................10
6.11 Title to Properties.........................................11
6.12 Schedules...................................................11
6.13 Proprietary Rights..........................................13
6.14 No Guaranties...............................................13
6.5 Filing and Records..........................................13
6.16 Broker's Fees...............................................14
6.17 Environmental, Health, and Safety Matters...................14
6.18 Intellectual Property.......................................15
6.18.6 Year 2000 Representation and Warranty............18
6.19 Employment Matters..........................................18
6.19.1 Compliance with Employment Laws..................18
6.19.2 Plan Compliance..................................19
6.20 Inventory Returns...........................................20
6.21 Utilities...................................................20
6.22 Accuracy and Completeness of Representations and
Warranties................................................20
7. Representations and Warranties by Purchaser..........................20
7.1 Organization.................................................20
7.2 Authorization and Approval of Agreement......................20
7.3 Execution, Delivery and Performance of Agreement.............20
7.4 Litigation...................................................21
7.5 Broker's Fees................................................21
7.6 Issuance of Convertible Note.................................21
8. Conduct of Business Prior to Closing.................................21
8.1 Consents and Approvals.......................................21
9. Investigation, Confidentiality and Exclusivity.......................23
9.1 Investigations...............................................23
9.2 Confidentiality..............................................23
9.3 Press Releases...............................................24
9.4 Disposition of Property Upon Termination.....................24
9.5 Exclusivity..................................................24
10. Director and Shareholders Authorizations.............................24
11. Conditions Precedent to Purchaser's Obligations......................24
11.1 Approval of Agreement........................................25
11.2 Additional Documents.........................................25
11.3 Representations..............................................25
11.4 Covenants....................................................25
11.5 Diligence....................................................25
11.6 Closing Financial Statements.................................25
11.7 Certificate..................................................26
11.8 Good Standing................................................26
11.9 Opinion......................................................26
11.10 Environmental Report.........................................26
11.11 Acquisition of Assets of Elk River Trading Company...........26
11.12 Election.....................................................27
12. Conditions Precedent to Company's and Shareholders' Obligations......27
12.1 Representations..............................................27
12.2 Covenants....................................................27
12.3 Certificate..................................................27
12.4 Opinion......................................................27
12.5 Purchase Price...............................................27
12.6 Election.....................................................28
13. Indemnification......................................................28
13.1 By Shareholders.............................................28
13.2 By Purchaser................................................28
13.3 Procedure...................................................28
13.4 Contribution................................................29
13.5 Limitation on Indemnification...............................29
14. Offset...............................................................29
15. Survival of Representations and Warranties...........................29
16. Notices..............................................................30
17. Legal and Other Costs................................................30
18. Miscellaneous........................................................30
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") dated as of August 30, 1999
(the "Effective Date"), by and among Health Food Associates, Inc., an Oklahoma
corporation doing business in some locations as Akin's Natural Foods Market,
having its principal office at 0000 Xxxx 00xx Xxxxxx, Xxxxx, Xxxxxxxx 00000
("HFA"), Food for Health Co., Inc., an Arizona corporation, having its
principal office at 0000 Xxxx Xxxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx 00000
("Purchaser"), and Xxxxx X. Xxxxxxxxx, individually, ("Hinkefent"), Xxxxx X.
Xxxxxxxxx as trustees of the Xxxxx X. Xxxxxxxxx Health Food Associates Stock
Trust, dated January 30, 1998 (the "Stock Trust"), Xxxxx X. Xxxxxxxxx and
Xxxxxxx X. Xxxxxxxxx, as Trustee of the Xxxxx Xxxxxxxxx Trust dated July 11,
1994, as amended (the "Hinkefent Trust"), Xxxx Xxxxxxxxx, Xxxx Xxx O'Dell,
Xxxxx Xxxxx, and Xxx Xxxxxxxx, as sole shareholders of HFA (collectively, the
"Shareholders"). HFA is sometimes referred to as the "Company."
RECITALS:
A. HFA is in the business of operating retail stores for the purpose
of selling natural foods, supplements, and health and beauty care products to
the consuming public.
B. With the exception of Hinkefent, who owns his shares beneficially
through the Stock Trust and the Hinkefent Trust, Shareholders own all the
issued and outstanding shares of capital stock in HFA.
C. Purchaser wishes to acquire the ongoing business of HFA and has
agreed to purchase the issued and outstanding capital stock of HFA.
AGREEMENT:
In consideration of the mutual covenants and agreements hereinafter set
forth, the parties hereby agree as follows:
1. Purchase and Sale of Stock. Subject to and upon the terms and
conditions set forth in this Agreement, the Shareholders will sell, transfer,
convey, assign and deliver to Purchaser, and Purchaser will purchase, at the
Closing hereunder, all of the outstanding stock of the Company (the "Shares"),
free and clear of all liabilities, obligations, liens and encumbrances.
2. Purchase Price. In consideration of the transfer and delivery of
the Shares by Shareholders to Purchaser, and in reliance upon the
representations and warranties made in this Agreement by Company and
Shareholders, Purchaser will pay to Shareholders a total purchase price of:
o $14,000,000;
o less the amount, if any, by which the total liabilities
of Company as of the close of business on the last day of the month preceding
the Closing (excluding liabilities represented by any permitted payment set
forth on Schedule 2 that has not been made prior to that day) exceed $500,000
(the "Purchase Price").
The Purchase Price shall be payable as follows: (a) the difference between
$4,000,000 and the amount, if any, by which the total liabilities of Company
as of the close of business on the last day of the month preceding the Closing
exceed $500,000, shall be paid at the Closing by check or wire (the "Closing
Payment"); (b) $2,000,000 shall be payable by promissory note in the form
attached as Exhibit A (the "Convertible Note"); and (c) $8,000,000 shall be
payable by promissory note in the form attached as Exhibit B (the "Secured
Note") secured by a pledge of certain Shares in the form of Exhibit E. The
Convertible Note and the Secured Note are collectively referred to as the
"Notes."
2.1 Allocation of Closing Payment Among Shareholders. The Closing
Payment shall be paid and allocated among the Shareholders as follows:
PERCENTAGE OF INITIAL
SHAREHOLDER INSTALLMENT
----------- -----------
Stock Trust 38.5%
Hinkefent Trust 61.5%
Xxxx Xxxxxxxxx 0.0%
Xxxx Xxx O'Dell 0.0%
Xxxxx Xxxxx 0.0%
Xxx Xxxxxxxx 0.0%
-----
TOTAL SHARES 100.0%
=====
2.2 Allocation of Payments under the Secured Note Among
Shareholders. The amounts payable under the Secured Note shall be paid and
allocated among the Shareholders as follows:
PERCENTAGE OF PAYMENTS
SHAREHOLDER UNDER SECURED NOTE
------------- ------------------
Stock Trust 0.00%
Hinkefent Trust 27.00%
Xxxx Xxxxxxxxx 18.25%
Xxxx Xxx O'Dell 18.25%
Xxxxx Xxxxx 18.25%
Xxx Xxxxxxxx 18.25%
------
TOTAL SHARES 100.00%
======
2.3 Allocation of Payments under the Convertible Note Among
Shareholders. The amounts payable under the Convertible Note shall be paid
and allocated among the Shareholders as follows:
PERCENTAGE OF PAYMENTS
SHAREHOLDER UNDER CONVERTIBLE NOTE
----------- ----------------------
Stock Trust 0.0%
Hinkefent Trust 0.0%
Xxxx Xxxxxxxxx 25.0%
Xxxx Xxx O'Dell 25.0%
Xxxxx Xxxxx 25.0%
Xxx Xxxxxxxx 25.0%
-----
TOTAL SHARES 100.0%
=====
2.4 338(h)(10) Election. Shareholders agree to timely execute
and file Form 8023-A and otherwise cooperate with Purchaser in Purchaser's and
Shareholders' joint election to treat this transaction as a sale of assets
under I.R.C. Section 338(h)(10). Shareholders and Purchaser agree that the
Purchase Price shall be allocated among the purchased assets as set forth on
Schedule 2.4, which the parties agree may be attached hereto at any time prior
to Closing if initialed by Purchaser and Xxxx Xxxxxxxxx.
3. Closing. The Closing shall take place on the date when each of the
conditions precedent hereunder have been either satisfied or waived by the
party for whose benefit the condition exists, provided that the Closing must
occur within 120 days after the Effective Date of this Agreement. The parties
will endeavor to close the agreement on September 13, 1999 or such other date
as Purchaser and Company may agree, subject to the 120 day limit. The Closing
shall take place at 9:00 a.m. local time at the offices of Company or such
other time and place as Purchaser and Company may agree upon. The day on
which the Closing actually takes place is sometimes referred to as the Closing
Date.
4. SHAREHOLDERS' OBLIGATIONS AT CLOSING; FURTHER ASSURANCE.
4.1 At the Closing, Company and Shareholders will deliver to
Purchaser:
4.1.1 stock certificates representing the Shares, together
with assignments separate from certificates duly executed by the Shareholders;
and
4.1.2 all documents required to be delivered to Purchaser
under the provisions of this Agreement.
4.2 At any time and from time to time after the Closing, at
Purchaser's request and without further consideration, the Company and
Shareholders will execute and deliver such other instruments of sale,
transfer, assignment and confirmation and take such action as Purchaser may
reasonably deem necessary or desirable (subject to the consent of the Company
and the Shareholders, which shall not be unreasonably withheld) in order to
more effectively convey to Purchaser, and to confirm Purchaser's title to, the
Shares, to put Purchaser in actual possession and operating control thereof
and to assist Purchaser in exercising all rights with respect thereto.
5. Representations and Warranties by Shareholders. Each Shareholder as
to itself (and Hinkefent as to the Stock Trust and the Hinkefent Trust)
represents and warrants that: (a) it is the lawful record and beneficial
owner of all of the Shares of the Company's capital stock set forth on
Schedule 6.4, with absolute right to sell them and with full title thereto,
free and clear of any liens, claims, encumbrances or restrictions of any kind;
(b) as to such Shares so owned by it, all are validly issued and outstanding,
fully paid and nonassessable, there are no undisclosed interests, present or
future, in the Shares or the ownership of the Company, nor do any of them know
of any assertion of such an interest, or of any facts or circumstances which
would give any person any such present or future interest or entitle any
person to assert such an interest; (c) there are no provisions of any
contract, indenture, agreement or other instrument to which the Shareholder is
a party or to which the Shares it owns are subject which would prevent, limit,
or condition the sale or transfer of the Shares it owns or the operation of
the Company to the Purchaser; (d) neither the execution, delivery nor
performance of this Agreement by Company, or the Shareholder will, with or
without the giving of notice or the passage of time, or both, conflict with,
result in a default, right to accelerate or loss of rights under, or result in
the creation of any lien, charge or encumbrance pursuant to, any provision of
any law, rule or regulation or any order, judgment or decree to which the
Shareholder is a party or by which it may be bound or affected; (e) the
Shareholder has the full power and authority to enter into this Agreement, to
make the representations, warranties and covenants contained herein and to
carry out the transactions contemplated hereby, and all proceedings required
to be taken by the Shareholder to authorize the execution, delivery and
performance of this Agreement and the agreements relating hereto have been
properly taken, and this Agreement constitutes the valid and binding agreement
of the Shareholder; and (f) except as provided in Schedule 5, neither the
execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (A) to the best of the Shareholder's
knowledge, 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 Shareholder is subject
or, any provision of its charter, bylaws or trust documents if it is not an
individual or (B) 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 Shareholder is a party or by which it is bound or to which any of his or
its assets is subject.
6. Representations and Warranties by Hinkefent. Hinkefent and Xxxx
Xxxxxxxxx jointly and severally represent and warrant to Purchaser as follows:
6.1 Organization, Standing and Qualification. Company is a
corporation duly organized, validly existing and in good standing under the
laws of Oklahoma and is qualified to do business and is in good standing in
each other jurisdictions in which the failure to be so qualified would have a
material adverse effect on Company's financial condition. Company has full
corporate power and authority to enter into this Agreement and the related
agreements referred to herein and to carry out the transactions contemplated
by this Agreement. Company is entitled to carry on its business as now being
conducted and to own, lease or operate its properties as and in the places
where such business is now conducted and such properties are now owned, leased
or operated. For purposes of this Agreement, the "business" of the Company
shall be deemed to include all web sites owned and controlled by Company and
all other assets of the Company, which are related to the operations of the
Company and all future business leads and prospects relating thereto.
Hinkefent has delivered to Purchaser true and complete copies of Company's
Articles of Incorporation and all amendments thereto and the Bylaws of Company
as presently in effect, certified as true and correct by Company's Secretary.
This Agreement constitutes the valid and legally binding obligation of
Company, Hinkefent and the Shareholders, enforceable in accordance with its
terms and conditions. To the best of knowledge of Hinkefent and Xxxx
Xxxxxxxxx, except as set forth in Schedule 6.12.11, neither Company,
Hinkefent, nor Shareholders need give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or
governmental agency or any other person or entity in order to consummate the
transactions contemplated by this Agreement.
6.2 Subsidiaries. The Company has no subsidiaries and no
interest, direct or indirect, in any other corporation or in any partnership,
joint venture or other business enterprise or entity other than as disclosed
in this SECTION 6.2. The business carried on by the Company has not been
conducted through any other direct or indirect subsidiary or affiliate of any
shareholders. Xxxxxxxxx, Xxxx Xxxxxxxxx, Xxxx Xxx O'Dell, Xxxxx Xxxxx, and
Xxx Xxxxxxxx (collectively, the "Hinkefents") and each Shareholder within the
last three years has been involved as owner, management, employee or
consultant in no business other than Company, except as referenced on SCHEDULE
6.2.
6.3 Transactions with Certain Persons. Except as set forth on
Schedule 6.3 and except for transactions not material to Company or its
financial condition, during the past three years Company has not, directly or
indirectly, (a) purchased, leased or otherwise acquired any property or
obtained any services from, or (b) sold, leased or otherwise disposed of any
property or furnished any services to, or (c) otherwise dealt with (except
with respect to remuneration for services rendered as a director, officer or
employee of Company), in the ordinary course of business or otherwise, (i) any
shareholders of Company or (ii) any person, firm or corporation which,
directly or indirectly, alone or together with others, controls, is controlled
by or is under common control with Company or any shareholders of Company.
Except as set forth in SCHEDULE 6.3, Company does not owe any material amount
to, or have any contract or commitment to pay any material amount or to incur
any material liability on behalf of, any of its shareholders, directors,
officers, employees or consultants ("Insider") (other than compensation for
current services not yet due and payable and reimbursement of expenses arising
in the ordinary course of business), and none of such persons owes any amount
to Company. Except as set forth on SCHEDULE 6.3, no part of the property or
assets of Company or any direct or indirect subsidiary or affiliate of Company
is used by the Hinkefents or any Shareholder, except in connection with the
business of the Company. For purposes of this Agreement, the "ordinary course
of business" shall mean the ordinary course of business consistent with past
custom and practice (including with respect to quantity and frequency).
Amounts or liabilities owed to or to be incurred on behalf of Insiders
required to be disclosed on Schedule 6.3 are referred to collectively as the
"Insider Obligations."
6.4 Capitalization. All of the presently authorized, issued and
outstanding shares of capital stock of Company and the names and addresses of
the record and beneficial owners thereof are as set forth on SCHEDULE 6.4.
Except as set forth on Schedule 6.4 there are no outstanding subscriptions,
options, warrants, calls, conversion rights, exchange rights, purchase rights,
contracts, demands, commitments, convertible securities or other agreements or
arrangements of any character or nature whatsoever under which Company or any
Shareholder is or may become obligated to issue, assign, sell or otherwise
cause to become outstanding or transfer any shares of the capital stock of
Company. There are no outstanding or authorized stock appreciation, phantom
stock, profit participation, or similar rights with respect to the Company,
other than the Company's 401(k) program, which does not invest any funds in
securities of the Company. There are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of the capital stock
of the Company. Except as set forth on Schedule 2, all dividends and other
distributions declared prior to the Effective Date with respect to the issued
and outstanding shares of the capital stock of the Company have been paid or
distributed.
6.5 Financial Statements. Company has delivered to Purchaser
copies of the following financial statements prepared by management of the
Company (collectively called the "Management Financial Statements"), all of
which are complete and correct in all material respects, have been prepared
from the books and records of Company consistently applied and maintained
throughout the periods indicated and fairly and reasonably present the
financial condition of Company as at their respective dates and the results of
its operations for the periods covered thereby:
6.5.1 an unaudited balance sheet of Company as at December
31, 1998 (the "Balance Sheet"), and unaudited balance sheets of Company as at
December 31, 1997 and December 31, 1996; and
6.5.2 unaudited statements of earnings and sources and uses
of cash for the periods ended December 31, 1998, 1997 and 1996.
The statements of earnings referenced in subsection 6.5.2 above do not
contain any items of special or non-recurring income or any other income not
earned in the ordinary course of business except as expressly specified
therein, and such financial statements include all adjustments, which consist
only of normal recurring accruals, necessary for such fair presentation.
Company agrees to deliver to Purchaser prior to Closing copies of the
following financial statements audited by PricewaterhouseCoopers LLP (the
"Audited Financial Statements"), all of which shall be deemed to have been
warranted and represented to be, at the time of delivery, complete and correct
in all material respects, prepared from the books and records of Company in
accordance with generally accepted accounting principles consistently applied
and maintained throughout the periods indicated and fairly and reasonably
present the financial condition of Company as at their respective dates and
the results of its operations for the periods covered thereby:
6.5.3 audited balance sheets of Company as at December 31,
1998, and December 31, 1997; and
6.5.4 unaudited statements of earnings for the periods ended
December 31, 1998, and December 31, 1997 and 1996.
The statements of earnings referenced in subsection 6.5.4 above, when
delivered, shall be deemed to have been warranted and represented, at the time
of delivery, not to contain any items of special or non-recurring income or
any other income not earned in the ordinary course of business except as
expressly specified therein, and the Audited Financial Statements, when
delivered, shall be deemed to have been warranted and represented, at the time
of delivery, to include all adjustments, which consist only of normal
recurring accruals, necessary for such fair presentation.
The Management Financial Statements and the Audited Financial Statements are
referred to, collectively, as the "Financial Statements."
6.6 Absence of Undisclosed Liabilities. Except as and to the
extent reflected or reserved against on (a) either (i) the face of the Balance
Sheet or (ii) Schedule 6.6, and (b) depicted in the Financial Statements
(excluding the notes thereto), as of December 31, 1998 (the "Balance Sheet
Date"), Company has no debts, liabilities or obligations (whether absolute,
accrued, contingent or otherwise) of any nature whatsoever, including, without
limitation, any foreign or domestic tax liabilities or deferred tax
liabilities incurred in respect of or measured by Company's income, for the
period prior to the close of business on the Balance Sheet Date or any other
debts, liabilities or obligations relating to or arising out of any act,
omission, transaction, circumstance, sale of goods or services, state of facts
or other condition which occurred or existed on or before the Balance Sheet
Date, whether or not then known, due or payable. On the Balance Sheet and in
the Financial Statements as of the Balance Sheet Date, the inventory of the
Company (net of reserve for shrinkage or spoilage) identified thereon shall be
and is good and saleable inventory in the ordinary course of business and all
accounts receivable are either good and collectible or adequately and
reasonably reserved against. None of the Company's employees is now, or will
by the passage of time hereafter become, entitled to receive any vacation
time, vacation pay or severance pay attributable to services rendered prior to
the Balance Sheet Date except as disclosed on the face of the Balance Sheet
(excluding the notes thereto).
6.7 Taxes. All tax returns required to be filed in connection
with all taxes imposed by any taxing authority, and all taxes which are due or
payable by Company, have been accurately prepared and duly and timely filed
and, if applicable, paid and all deposits required by law to be made by
Company with respect to employees' withholding taxes have been duly made.
Company has no tax deficiency or claim outstanding, proposed or assessed
against it.
6.8 Absence of Changes or Events. Except as set forth in SCHEDULE
6.8 (or Schedules denominated according to the subsections of this SECTION
6.8), since the Balance Sheet Date Company has conducted its business only in
the ordinary course and has not:
6.8.1 incurred any obligation or liability, absolute,
accrued, contingent or otherwise, whether due or to become due, except current
liabilities for trade or business obligations incurred in connection with the
purchase of goods or services in the ordinary course of business and
consistent with its prior practice, none of which liabilities, in any case or
in the aggregate, materially and adversely affects the business, liabilities
or financial condition of Company;
6.8.2 discharged or satisfied any material lien, charge or
encumbrance other than those then required to be discharged or satisfied, or
paid any obligation or liability, absolute, accrued, contingent or otherwise,
whether due or to become due, other than current liabilities shown on the
Balance Sheet and current liabilities incurred since the Balance Sheet Date in
the ordinary course of business and consistent with its prior practice;
6.8.3 declared or made any payment of dividends or other
distribution to its shareholders or upon or in respect of any shares of its
capital stock, or purchased, retired or redeemed, or obligated itself to
purchase, retire or redeem, any of its shares or capital stock or other
securities;
6.8.4 mortgaged, pledged or subjected to lien, charge,
security interest or any other encumbrance or restriction any of its property,
business or assets, tangible or intangible, other than pledges of leased
office equipment;
6.8.5 sold, transferred, leased to others or otherwise
disposed of any of its assets, except for inventory sold in the ordinary
course of business, or canceled or compromised any debt or claim, or waived or
released any right of material value;
6.8.6 received any notice of termination of any contract,
lease or other agreement prior to its expiration date or suffered any damage,
destruction or loss (whether or not covered by insurance) which, in any case
or in the aggregate, has had or would have a materially adverse effect on the
assets, operations or prospects of Company;
6.8.7 encountered any labor union organizing activity, had
any actual or, threatened employee strikes, work stoppages, slow-downs or
lock-outs, or had any material change in its relations with its employees,
agents, customers or suppliers;
6.8.8 made any change in the rate of compensation,
commission, bonus or other direct or indirect remuneration payable, or paid or
agreed or orally promised to pay, conditionally or otherwise, any bonus, extra
compensation, pension or severance or vacation pay, to any shareholder,
director, officer, employee, salesman, distributor or agent of Company;
6.8.9 issued or sold any shares of its capital stock or
other securities, or issued, granted or sold any options, rights or warrants
with respect thereto, or acquired any capital stock or other securities of any
corporation or any interest in any business enterprise, or otherwise made any
loan or advance to or investment in any person, firm or corporation;
6.8.10 made any capital expenditures or capital additions in
excess of an aggregate of $20,000;
6.8.11 changed its banking or safe deposit arrangements;
6.8.12 instituted, settled or agreed to settle any
litigation, action or proceeding before any court or governmental body
relating to the Company or its property;
6.8.13 failed to replenish its inventories and supplies in a
normal and customary manner consistent with its prior practice and ordinary
business practices prevailing in the industry, or made any purchase commitment
in excess of the normal, ordinary and usual requirements of its business or at
any price materially in excess of the then current market price or upon terms
and conditions materially more onerous than those usual and customary in the
industry, or made any change in its selling, pricing, advertising or personnel
practices inconsistent with its prior practice and ordinary business practices
prevailing in the industry;
6.8.14 suffered any change, event or condition which in any
case or in the aggregate, has had or may have a materially adverse affect on
Company's condition (financial or otherwise), properties, assets, liabilities,
operations or prospects, including, without limitation, any change in
Company's revenues, costs, backlog or relations with its employees, agents,
customers or suppliers;
6.8.15 entered into any transaction, contract or commitment
other than in the ordinary course of business or paid or agreed to pay any
legal, accounting, brokerage, finder's fee, taxes or other expenses in
connection with, or incurred any severance pay obligations by reason of, this
Agreement or the transactions contemplated hereby; or
6.8.16 entered into any agreement or made any commitment to
take any of the types of action described in Sections 6.8.1 through 6.8.15
above.
6.9 Litigation. Except as set forth in Schedule 6.9, there is no
claim, legal action, suit, arbitration, governmental investigation or other
legal or administrative proceeding, nor any order, decree or judgment in
progress, pending or in effect, or to the knowledge of Hinkefent or Xxxx
Xxxxxxxxx threatened, nor to the knowledge of Hinkefent or Xxxx Xxxxxxxxx does
there exist the basis for any such claim, action, or other proceeding against
or relating to Company, its officers, directors or employees, its properties,
assets or business or the transactions contemplated by this Agreement.
6.10 Compliance with Laws and Other Instruments. Except as set
forth in Schedule 6.10.
6.10.1 Except as disclosed on Schedule 6.10.1, to the best
of knowledge of Hinkefent and Xxxx Xxxxxxxxx, Company has conducted its
business in compliance with all existing laws, rules, regulations, ordinances,
orders, judgments and decrees ("Laws") now or hereafter applicable to its
business, properties or operations and, when the Business is owned by
Purchaser as of the Closing Date, the Business will remain in compliance in
all material respect with such Laws;
6.10.2 Company has secured and is in compliance with all,
and there are no proceedings to revoke or challenge any, material permits
required for its Properties, and Business as presently conducted. All material
Permits required to be secured by Company relating to the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been taken and secured or will, before the Closing,
be taken or secured.
6.10.3 Company has not offered, paid, or agreed to pay money
or anything of value for the purpose of or with the intent of obtaining or
maintaining business for Company, or otherwise benefitting Company, in
violation of any Law; and
6.10.4 Neither the ownership nor use of Company's properties
nor the conduct of its business conflicts with the rights of any other person,
firm or corporation or violates, or with or without the giving of notice or
the passage of time, or both, will violate, conflict with or result in a
default, right to accelerate or loss of rights under, any terms or provisions
of its Articles of Incorporation or Bylaws as presently in effect, or any
lien, encumbrance, mortgage, lease, license, agreement, understanding, law,
ordinance, rule or regulation, or any order, judgment or decree to which
Company is a party or by which it may be bound or affected. Hinkefent is not
aware of any proposed regulations, judgments, decrees, governmental takings,
condemnations or other proceedings which would be applicable to its business,
operations or properties and which might adversely affect its properties,
assets, liabilities, operations or prospects, either before or after the
Closing.
6.11 Title to Properties. Except as set forth on Schedule 6.11,
Company has good and marketable title to all the properties and assets of
every kind or nature, including but not limited to intellectual property, it
owns in its business or purports to own, including, without limitation, those
reflected in its books and records and in the Balance Sheet (except inventory
shown on the Balance Sheet as consignment inventory and except inventory sold
after the Balance Sheet Date in the ordinary course of business). None of
such properties and assets are subject to any mortgage, pledge, lien, charge,
security interest, encumbrance, restriction, lease, license, liability or
adverse claim of any nature whatsoever, direct or indirect, whether accrued,
absolute, contingent or otherwise, except as expressly set forth in the
Balance Sheet as securing specific liabilities or as otherwise expressly
permitted by the terms hereof. All of the properties and assets owned, leased
or used by Company are in good operating condition and repair, have been
maintained in a commercially reasonable manner, and are suitable for the
purposes used. Neither Hinkefent, Xxxx Xxxxxxxxx nor Company knows of any
pending or threatened condemnation affecting the Properties.
6.12 Schedules. Attached as Schedule 6.12 is a separate schedule
containing an accurate and complete list and description of:
6.12.1 All real property owned by Company or in which
Company has a leasehold or other interest or which is used by Company in
connection with the operation of its business, or any other instrument under
which Company claims or holds such leasehold or other interest or right to the
use thereof or pursuant to which Company has assigned, sublet or granted any
rights therein, identifying the parties thereto, the rental or other payment
terms, expiration date and cancellation and renewal terms thereof.
6.12.2 All tangible personal property (other than inventory
and supplies), owned, leased or used by Company except for items having a
value of less than $2,500 which do not, in the aggregate, have a total value
of more than $20,000, setting forth with respect to all such listed property a
summary description of all leases, liens, claims, encumbrances, charges,
restrictions, covenants and conditions relating thereto, identifying the
parties thereto, the rental or other payment terms, expiration date and
cancellation and renewal terms.
6.12.3 All fire, theft, casualty, liability and other
insurance policies insuring Company, specifying with respect to each such
policy the name of the insurer, the risk insured against, the limits of
coverage, the deductible amount (if any), the premium rate and the date
through which coverage will continue by virtue of premiums already paid.
6.12.4 All sales agency agreements, distributorship
agreements, or agreements providing for the services of an independent
contractor to which Company is a party or by which it is bound.
6.12.5 All contracts, agreements and commitments, whether
or not fully performed, in respect of the issuance, sale or transfer of the
capital stock, bonds or other securities of Company or pursuant to which
Company has acquired any substantial portion of its business or assets.
6.12.6 All contracts, agreements, commitments or other
understandings or arrangements to which Company is a party or by which it or
any of its property is bound or affected but excluding (A) purchase and sales
orders and commitments made in the ordinary course of business involving
payments or receipts by Company of less than $5,000 in any single case but not
more than $10,000 in the aggregate (exclusive of purchase orders for
replacement inventory), and (B) contracts entered into in the ordinary course
of business and involving payments or receipts by Company of less than $5,000
in the case of any single contract but not more than $10,000 in the aggregate
(exclusive of purchase orders for replacement inventory).
6.12.7 All collective bargaining agreements, employment and
consulting agreements, executive compensation plans, bonus plans, deferred
compensation agreements, employee pension plans or retirement plans, employee
stock options or stock purchase plans and group life, health and accident
insurance and other employee benefit plans, agreements, arrangements or
commitments, including, without limitation, holiday, vacation, Christmas and
other bonus practices, to which Company is a party or is bound or which relate
to the operation of Company's business.
6.12.8 The names and current annual salary rates of all
persons (including independent commission agents) whose annual compensation
(direct or indirect) from Company is currently at the rate of more than
$25,000 per annum and showing separately for each such person the amounts paid
or payable as salary, bonus payments and any indirect compensation for the
year ended December 31, 1998; and
6.12.9 The names of all of Company's directors and
officers; the name of each bank in which Company has an account or safe
deposit box and the names of all persons authorized to draw thereon or have
access thereto; and the names of all persons, if any, holding tax or other
powers of attorney from Company and a summary of the terms thereof.
6.12.10 Each loan, conditional sales, or security agreement
of Company relating to the Business with an unpaid balance of more than
$25,000 and which will not be released on or before the Closing.
To the best of knowledge of Hinkefent and Xxxx Xxxxxxxxx, (a) all of the
contracts, agreements, leases, licenses and commitments required to be listed
on Schedule 6.12 (other than those which have been fully performed) are valid
and binding, enforceable in accordance with their respective terms, and in
full force and effect, and (b) except as specified in Schedule 6.12.11, no
consent or waiver needs to be obtained prior to the Closing in connection with
the purchase of the Shares in order to prevent a breach thereof, and (c) after
the Closing, Company will be entitled to the full benefits of such agreements,
leases, licenses and commitments. Hinkefent, Xxxx Xxxxxxxxx and the Company
shall obtain, prior to Closing, all consents and waivers needed to prevent
such breach ("Third Party Consents"), and shall furnish written evidence
thereof in form reasonably acceptable to Purchaser. Except as disclosed in
Schedule 6.12, there is not thereunder any existing default or event which,
after notice or lapse of time, or both, would constitute a default or result
in a right to accelerate or loss of rights. True and complete copies of all
such contracts, agreements, leases, licenses and other documents listed on
Schedule 6.12 (together with any and all amendments thereto) have been
delivered or made available to Purchaser. Each of the documents and materials
previously delivered to Purchaser or its representatives and the Information,
as such term is defined below, whether or not attached to or described in this
Agreement as a schedule, are true and correct copies of such items and
truthfully, accurately and completely describe or depict the information
contained therein. Company and Hinkefent have caused the same to be provided
to Purchaser with the intent that Purchaser rely on the same with regard to
the transactions contemplated by this Agreement.
6.13 Proprietary Rights. Company is the owner of its proprietary
rights and property including the Intellectual Property, as defined herein,
all of which is set forth on Schedule 6.13.
6.14 No Guaranties. Company has not guaranteed the obligations or
liabilities of any other person, firm or corporation.
6.15 Filing and Records. The Company has made all material
required government filings applicable to the Business, and the books of
account, minute books, stock certificate books and stock transfer ledgers of
Company are complete and correct in all material respects and are prepared on
a basis consistent with prior years, and there have been no transactions
involving the business of Company which properly should have been set forth
therein and which have not been accurately so set forth.
6.16 Broker's Fees. Company is not obligated to pay any broker's
or other finder's fees to any third party in connection with the transactions
contemplated by this Agreement except as disclosed on Schedule 2.
6.17 Environmental, Health, and Safety Matters. For purposes of
this Agreement, "Environmental, Health, and Safety Requirements" shall mean
all federal, state, local and foreign statutes, regulations, ordinances and
other provisions having the force or effect of law, all judicial and
administrative orders and determinations, all contractual obligations and all
common law 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, chemical substances or mixtures,
pesticides, pollutants, contaminants, toxic chemicals, petroleum products or
byproducts, asbestos, polychlorinated biphenyls, noise or radiation, each as
amended and as now or hereafter in effect.
6.17.1 To the best of knowledge of Hinkefent and Xxxx
Xxxxxxxxx, Company has complied and is in compliance with all Environmental,
Health, and Safety Requirements.
6.17.2 To the best of knowledge of Hinkefent and Xxxx
Xxxxxxxxx, without limiting the generality of the foregoing, Company has
obtained and complied with, and is in compliance with, all permits, licenses
and other authorizations that are required pursuant to Environmental, Health,
and Safety Requirements for the occupation of its facilities and the operation
of its business.
6.17.3 Neither Company nor Hinkefent nor their respective
predecessors or affiliates has received any written or oral notice, report or
other information regarding any actual or alleged violation of Environmental,
Health, and Safety Requirements, or any liabilities or potential liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise), including
any investigatory, remedial or corrective obligations, relating to any of them
or its facilities arising under Environmental, Health, and Safety
Requirements.
6.17.4 To the best of knowledge of Hinkefent and Xxxx
Xxxxxxxxx, none of the following exists at any property or facility owned or
operated by the Company: (1) underground storage tanks, (2) asbestos-
containing material in any form or condition, (3) materials or equipment
containing polychlorinated biphenyls, or (4) landfills, surface impoundments,
or disposal areas.
6.17.5 To the best of knowledge of Hinkefent and Xxxx
Xxxxxxxxx, neither Company nor its predecessors or affiliates has treated,
stored, disposed of, arranged for or permitted the disposal of, transported,
handled, or released any substance, including without limitation any hazardous
substance, or owned or operated any property or facility (and no such property
or facility is contaminated by any such substance) in a manner that has given
or would give rise to liabilities, including any liability for response costs,
corrective action costs, personal injury, property damage, natural resources
damages or attorney fees, pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA"), the
Solid Waste Disposal Act, as amended ("SWDA") or any other Environmental,
Health, and Safety Requirements.
6.17.6 To the best of knowledge of Hinkefent and Xxxx
Xxxxxxxxx, neither this Agreement nor the consummation of the transaction that
is the subject of this Agreement will result in any obligations for site
investigation or cleanup, or notification to or consent of government agencies
or third parties, pursuant to any of the so-called "transaction-triggered" or
"responsible property transfer" Environmental, Health, and Safety
Requirements.
6.17.7 Company has not, either expressly or by operation of
law, assumed or undertaken any liability, including without limitation any
obligation for corrective or remedial action, of any other person relating to
Environmental, Health, and Safety Requirements.
6.17.8 To the best of knowledge of Hinkefent and Xxxx
Xxxxxxxxx, no facts, events or conditions relating to the past or present
facilities, properties or operations of the Company will prevent, hinder or
limit continued compliance with Environmental, Health, and Safety
Requirements, give rise to any investigatory, remedial or corrective
obligations pursuant to Environmental, Health, and Safety Requirements, or
give rise to any other liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise) pursuant to Environmental, Health, and Safety
Requirements, including without limitation any relating to onsite or offsite
releases or threatened releases of hazardous materials, substances or wastes,
personal injury, property damage or natural resources damage.
6.17.9 Hinkefent has received a copy of those Phase 1
environmental reports referred to in Section 11.10 and has no reason to
believe that any statement contained is incorrect or misleading.
6.18 Intellectual Property. For purposes of this Agreement,
"Intellectual Property" means (a) any inventions and new technologies (whether
patentable or unpatentable and whether or not reduced to practice), all
improvements thereto, and all patents, patent applications, and patent
disclosures, together with all reissuances, continuations, continuations-in-
part, revisions, extensions, and reexaminations thereof, (b) all trademarks,
service marks, trade dress, logos, trade names, and corporate names, together
with all translations, adaptations, derivations, and combinations thereof and
including all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations, and renewals in
connection therewith, (d) all mask works and all applications, registrations,
and renewals in connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development, know-how,
formulas, compositions, manufacturing and production processes and techniques,
technical data, designs, drawings, specifications, customer and supplier
lists, pricing and cost information, and business and marketing plans and
proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments thereof (in whatever form or medium).
6.18.1 To the best of the Company's and Hinkefent's and
Xxxx Xxxxxxxxx'x knowledge, the Company owns or has the right to use pursuant
to license, sublicense, agreement, or permission all Intellectual Property
necessary or desirable for the operation of the businesses of the Company as
presently conducted and as presently proposed to be conducted. Each item of
Intellectual Property owned or used by Company immediately prior to the
Closing hereunder will be owned or available for use by Company on identical
terms and conditions immediately subsequent to the Closing hereunder. Except
as provided in Schedule 6.18.1, to the best of the Company's and Hinkefent's
and Xxxx Xxxxxxxxx'x knowledge, the Company has taken all reasonably prudent
action to maintain and protect each item of Intellectual Property that it owns
or uses listed in subpart (b) of Section 6.18.
6.18.2 To the best of the Company's and Hinkefent's and
Xxxx Xxxxxxxxx'x knowledge, neither the Company nor the Hinkefents nor any
Shareholder has interfered with, infringed upon, misappropriated, or otherwise
come into conflict with any Intellectual Property rights of third parties, and
neither the Company nor the Hinkefents nor any Shareholder, director, officer
(nor any employees with responsibility for Intellectual Property matters) of
the Company has ever received any charge, complaint, claim, demand, or notice
alleging any such interference, infringement, misappropriation, or violation
(including any claim that the Company must license or refrain from using any
Intellectual Property rights of any third party). To the knowledge of any of
the directors and officers (and employees with responsibility for Intellectual
Property matters) of Company and Hinkefent and Xxxx Xxxxxxxxx, no third party
has interfered with, infringed upon, misappropriated, or otherwise come into
conflict with any Intellectual Property rights of the Company.
6.18.3 Schedule 6.18.3 identifies each license, trademark,
patent or registration which has been issued to the Company with respect to
any of its Intellectual Property, identifies each pending patent application
or application for registration which Company has made with respect to any of
its Intellectual Property, and identifies each license, agreement, or other
permission which Company has granted to any third party with respect to any of
its Intellectual Property (together with any exceptions). Company has
delivered to Purchaser correct and complete copies of all such patents,
registrations, applications, licenses, agreements, and permissions (as amended
to date) and has made available to Purchaser correct and complete copies of
all other written documentation evidencing ownership and prosecution (if
applicable) of each such item. Schedule 6.18.3 also identifies each trade name
or unregistered trademark used by Company in connection with of its business.
With respect to each item of Intellectual Property required to be identified
in Schedule 6.18.3:
(A) To the best of knowledge of Hinkefent and Xxxx Xxxxxxxxx,
Company possesses all right, title, and interest in and to the item, free and
clear of any Security Interest, license, or other restriction;
(B) the item is not subject to any outstanding injunction, judgment,
order, decree, ruling, or charge;
(C) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or, to the knowledge of Company,
Hinkefent, Xxxx Xxxxxxxxx and Shareholders and the directors and officers of
Company, is threatened which challenges the legality, validity,
enforceability, use, or ownership of the item; and
(D) Company has not ever agreed to indemnify any Person for or
against any interference, infringement, misappropriation, or other conflict
with respect to the item.
6.18.4 Schedule 6.18.4 identifies each item of Intellectual
Property that any third party owns and that Company uses pursuant to license,
sublicense, agreement, or permission. The Company has delivered to Purchaser
correct and complete copies of all such licenses, sublicenses, agreements, and
permissions (as amended to date). With respect to each item of Intellectual
Property required to be identified in Schedule 6.18.4, to the best of
knowledge of Hinkefent and Xxxx Xxxxxxxxx,:
(A) the license, sublicense, agreement, or permission covering the
item is legal, valid, binding, enforceable, and in full force and effect;
(B) the license, sublicense, agreement, or permission will continue
to be legal, valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby (including the assignments and assumptions referred to above);
(C) no party to the license, sublicense, agreement, or permission is
in breach or default, and no event has occurred which with notice or lapse of
time would constitute a breach or default or permit termination, modification,
or acceleration thereunder;
(D) no party to the license, sublicense, agreement, or permission
has repudiated any provision thereof;
(E) with respect to each sublicense, the representations and
warranties set forth in subsections (A) through (D) above are true and correct
with respect to the underlying license;
(F) the underlying item of Intellectual Property is not subject to
any outstanding injunction, judgment, order, decree, ruling, or charge that
affects Company's right to the use of such Intellectual Property;
(G) no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand is pending or, is threatened which challenges the
legality, validity, or enforceability of the underlying item of Intellectual
Property; and
(H) neither the Company nor Hinkefent nor any Shareholder has
granted any sublicense or similar right with respect to the license,
sublicense, agreement, or permission.
6.18.5 To the knowledge of Company and Hinkefent and Xxxx
Xxxxxxxxx, the Company will not interfere with, infringe upon, misappropriate,
or otherwise come into conflict with, any Intellectual Property rights of
third parties as a result of the continued operation of its businesses as
presently conducted and as presently proposed to be conducted.
6.18.6 Year 2000 Representation and Warranty. The Systems
of Company are not Year 2000 Compliant. Company has delivered to Purchaser
complete and accurate lists of its vendors and automated Systems materials to
its operations, including, software, firmware, hardware, embedded chips and
other processing devices and all reports, files and information in its
possession relating to the extent to which the Systems of the Company and its
suppliers and vendors are or are not Year 2000 Compliant. For purposes of
this section:
6.18.6.1 "Systems" means any of the following: (i)
computer software; (ii) computer hardware; (iii) other products in which one
or more computer chips are embedded; or (iv) computer, communication or other
information systems that include hardware and software.
6.18.6.2 "Year 2000 Compliant" means the ability
of one or more Systems to properly run using date data from any century,
including dates after December 31, 1999. Such ability includes: (a) yielding
correct results in arithmetic operations, comparisons and sorting of date
data into and between the twentieth and twenty-first centuries, including
correct Leap Year calculations, and (ii) not ceasing to execute, not returning
an error message and not otherwise failing due to date-related processing or
due to the then current date or any other date being a date in the twentieth
or twenty-first centuries. "Leap Year" means the year during which an extra
day is added in February (February 29th).
6.19 Employment Matters.
6.19.1 Compliance with Employment Laws. Except as otherwise
disclosed under this Agreement, Company (1) To the best of knowledge of
Hinkefent and Xxxx Xxxxxxxxx, is in material compliance with all Laws
regulating employment practices, terms and conditions of employment and wages
and hours, (2) is not subject to any unfair labor practice complaint or other
petition before the National Labor Relations Board, (3) is not subject to any
material labor strike, dispute, slow-down, or stoppage, (4) is not subject to
any material Proceeding arising out of or under a collective bargaining
agreement, and (5) has not experienced any primary work stoppage or other
labor difficulty involving its employees during the past three years;
6.19.2 Plan Compliance. Company has administered and
maintained its executive compensation plans, salary continuation plans, bonus
plans, holiday and other bonus practices, deferred compensation agreements,
pension or retirement plans, employee stock option or stock purchase plans,
employee life, health, and accident insurance, and other employee benefit
plans, agreements, arrangements or commitments relating to employees of
Company in the Business in material compliance with all applicable Laws.
Except as set forth on SCHEDULE 6.19 attached hereto, which also includes
copies of the Company's current employee handbook and employment application,
there are no employee pension benefit plans, as defined in Section 3(2) of
Employee Retirement Income Security Act of 1974, as amended ("ERISA")
(including, without limitation, any defined benefit plan, defined contribution
plan, simplified employee pension plan, annuity plan, multiple employer plan,
or multi-employer plan, as defined in ERISA and the Code), currently
maintained by or on behalf of the Company, or with respect to which the
Company is required to contribute, or may have any liability or obligation, or
are otherwise bound (the "ERISA Pension Plans"). Each ERISA Pension Plan that
is intended to be tax qualified has received one or more United States
Internal Revenue Service determination letters to such effect covering such
plan from inception to date, and nothing has occurred that would adversely
affect or otherwise jeopardize such plan's tax qualification. Neither
Company, Hinkefent nor Xxxx Xxxxxxxxx knows or has reason to know, of any
prohibited transaction (as defined in ERISA) relating to any Employment Plan.
Each employee benefit plan within the meaning of Section 3(3) of ERISA
("Employee Benefit Plan") complies, and has from its inception complied, in
all material respects with all applicable requirements of ERISA, including
reporting requirements and all qualification requirements of the Code. No
Employee Benefit Plan has any amount of unfunded benefit liabilities (within
the meaning of Section 4001(a)(18) of ERISA). Each Employee Benefit Plan (i)
has complied with all notification and continuation coverage requirements of
COBRA, Section 4980B of the Code and all regulations thereunder; (ii) has not
experienced any reportable event as defined in ERISA; and (iii) has not
terminated. Except as set forth on Schedule 6.19, Seller has no nonqualified
deferred compensation, severance pay, or other employee pension plans. The
Company has delivered to Purchaser correct and complete copies of each
Employee Benefit Plan, including all amendments to such plan, and all summary
plan descriptions and other summaries of such plan, each trust agreement,
annuity or insurance contract, or other funding instrument pertaining to each
Employee Benefit Plan, the most recent annual report (IRS Form 5500 Series),
including all schedules to such report, if applicable, filed with respect to
each Employee Benefit Plan for which such a report is required to be filed,
the most recent IRS determination letter, plan audit, financial statement, and
accountant's opinion (with footnotes), if applicable, for each Employee
Benefit Plan for which same is required to be prepared, and the most recent of
all relevant schedules and reports concerning the administrative costs,
benefit payments, employee and employer contributions, claims experience,
financial information, and insurance premiums for each Employee Benefit Plan,
to the extent any of same have been prepared by, or are in the possession of,
the Company.
6.20 Inventory Returns. After the Closing, to the best of
Company's, Hinkefent's and Xxxx Xxxxxxxxx'x knowledge, the Business will not
be required pursuant to its regular return policy or otherwise to accept the
return of any material portion of Inventory sold by Company to others prior to
the Closing Date;
6.21 Utilities. To the best of Company's, Hinkefent's and Xxxx
Xxxxxxxxx'x knowledge, all water, sewer, gas, electric, telephone, and
drainage facilities required by applicable law or by the normal use and
operation of the Properties are adequate to service each of the Properties
under its current use;
6.22 Accuracy and Completeness of Representations and Warranties.
No representation or warranty made by Company or Hinkefent or Xxxx Xxxxxxxxx
in this Agreement and no statement contained in any schedule delivered or to
be delivered to Purchaser pursuant to this Agreement contains or will contain
any untrue statement of a material fact or omits to state a material fact,
necessary to make the statements contained herein or therein, not misleading.
7. Representations and Warranties by Purchaser. Purchaser represents
and warrants to the Shareholders as follows:
7.1 Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Arizona
and has full power and authority to enter into this Agreement and the related
agreements referred to herein and to carry out the transactions contemplated
by this Agreement and to carry on its business as now being conducted and to
own, lease or operate its properties.
7.2 Authorization and Approval of Agreement. All proceedings or
actions required to be taken by Purchaser relating to the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby shall have been taken at or prior to the Closing.
7.3 Execution, Delivery and Performance of Agreement. Neither the
execution, delivery nor performance of this Agreement by Purchaser will, with
or without the giving of notice or the passage of time, or both, conflict
with, result in a default, right to accelerate or loss of rights under, or
result in the creation of any lien, charge or encumbrance pursuant to, any
provision of Purchaser's Articles of Incorporation or Bylaws or any franchise,
mortgage, deed of trust, lease, license, agreement, understanding, law,
ordinance, rule or regulation or any order, judgment or decree to which
Purchaser is a party or by which it may be bound or affected. Purchaser has
full power and authority to enter into this Agreement and to carry out the
transactions contemplated hereby, and all proceedings required to be taken by
Purchaser to authorize the execution, delivery and performance of this
Agreement and the agreements relating hereto have been properly taken and this
Agreement constitutes a valid and binding obligation of Purchaser.
7.4 Litigation. There is no legal action, suit, arbitration,
governmental investigation or other legal or administrative proceeding, nor
any order, decree or judgment in progress, pending or in effect, or to the
knowledge of Purchaser threatened, against or relating to Purchaser in
connection with or relating to the transactions contemplated by this
Agreement, and Purchaser does not know or have any reason to be aware of any
basis for the same.
7.5 Broker's Fees. Purchaser is not obligated to pay any broker's
or other finder's fees to any third party in connection with the transactions
contemplated by this Agreement.
7.6 Issuance of Convertible Note. The issuance of the Convertible
Note will qualify for an exemption from registration under the Securities Act
of 1933 based upon representations of the Shareholders of their
qualifications.
8. Conduct of Business Prior to Closing.
8.1 Consents and Approvals. After the execution of this Agreement
and prior to the Closing, Purchaser, Hinkefent, Xxxx Xxxxxxxxx and Company
shall undertake to use their best efforts to obtain as quickly as reasonably
possible all approvals necessary for the transactions contemplated by this
Agreement from all necessary regulatory authorities (the "Regulatory
Authorities"), Shareholders and other parties, including without limitation
Third Party Consents (as defined in Section 6.12), and to comply with all
applicable laws which may be applicable to the transactions contemplated by
this Agreement.
8.2 Prior to the Closing, Company shall conduct its business and
affairs only in the ordinary course and consistent with its prior practice and
shall maintain, keep and preserve its assets and properties in good condition
and repair and maintain insurance thereon in accordance with present
practices, and Company and each Shareholder will use their best efforts (i)to
preserve the business and organization of Company intact, (ii)to keep
available to Purchaser the services of Company's present officers, employees,
agents and independent contractors, (iii)to preserve for the benefit of
Purchaser the goodwill of the Company as relates to its favorable relations
with suppliers, customers, landlords and others having business relations with
it, and (iv) to use reasonable efforts in obtaining the consent of any party
whose consent may be required by reason of the transactions contemplated
hereby. Without limiting the generality of the foregoing, prior to the
Closing Company will not, without Purchaser's prior written approval:
8.2.1 change its Articles of Incorporation or Bylaws or
merge or consolidate or obligate itself to do so with or into any other
entity;
8.2.2 enter into any contract, agreement, commitment or
other understanding or arrangement except for those of the type which would
not have to be listed and described under Section 6.12.6; or
8.2.3 perform, take any action or incur or permit to exist
any of the acts, transactions, events or occurrences of the type (1) described
in Sections 6.8.1, .0, .0, .0, .0, .0, .0, .10, .11, .12, .13, .15, or .16 of
this Agreement (excluding any exceptions permitted under those sections) which
would have been inconsistent with the representations and warranties set forth
therein had the same occurred after the Balance Sheet Date and prior to the
date hereof or (2) described in Section 6.3 of this Agreement (excluding any
exceptions permitted under that section) which would be required to be set
forth on Schedule 6.3 if it had taken place during the past three years.
8.3 Company shall give Purchaser prompt written notice of any
material change in any of the information contained in the representations and
warranties made in Section 6 or elsewhere in this Agreement or the Schedules
referred to herein which occurs prior to the Closing.
8.4 Company shall not cause or permit its total liabilities to
increase or decrease other than in the ordinary, reasonable and prudent course
of business. Company shall, and Hinkefent and Xxxx Xxxxxxxxx will cause
Company to, consult with Purchaser with respect to material changes in the
conduct of the business of the Company; provided, however, that nothing
contained in this Section 8.4 shall require Company to take or fail to take
any action that, in Company's reasonable judgment, is likely to give rise to a
substantial penalty or a claim for damages by any third party against Company,
or is likely to result in losses to Company, or is otherwise likely to
prejudice in any material respect or interfere with the conduct of Company's
business and operations in the ordinary course consistent with prior practice,
or is likely to result in a breach by Company of any of its representations,
warranties or covenants contained in this Agreement (unless any such breach is
first waived in writing by Purchaser).
8.5 From the date of this Agreement, Company and the Shareholders
shall not:
8.5.1 take any action that would encumber or restrict the
Shares or their sale or transfer, except any action by Company to enforce its
rights hereunder.
8.5.2 take any action which would breach any of their
representations and warranties in this Agreement;
8.5.3 sell or otherwise dispose of any of the assets of the
Company except in the ordinary course of business;
8.5.4 subject any properties to an encumbrance, other than
in the ordinary course of business;
8.5.5 enter into or terminate any material contract relating
to the Business except in the ordinary course of business and except for those
of the type which would not have to be listed and described in Schedule 6.10
or any other schedule to this Agreement;
8.5.6 grant any options or other rights or interests in the
Shares.
Company will consult with Purchaser about material changes in the conduct of
the Business. Company is not required to take or fail to take any action
that, in Company's reasonable judgment, is likely to result in (a) a
substantial penalty, (b) a claim for damages by any third party against
Company, (c) losses to Company, (d) prejudice to or interference with the
Company's business and operations, or (e) a breach by Company of any of the
representations and warranties made by it in this Agreement.
9. Investigation, Confidentiality and Exclusivity.
9.1 Investigations. Subject to the restrictions of Section 9.2,
Company consents to Purchaser commencing a due diligence investigation of the
operations and financial status of Company at Purchaser's expense. Upon
reasonable notice and during regular business hours, Company will give
Purchaser and Purchaser's attorneys, accountants and other representatives
full access to Company's officers, directors, employees, independent
contractors, counsel, and independent accountants and all properties,
documents, contracts, books and records of Company and will furnish Purchaser
with copies of such documents (certified by Company's officers if so
requested) and with such information with respect to the affairs of Company
(all of which are collectively referred to as "Information") as Purchaser may
reasonably request from time to time, including without limitation all books
and records, references and customer contracts. Purchaser does not assume
responsibility for its accuracy or completeness of the Information, whether or
not Purchaser independently verifies the Information. Any such furnishing of
such Information to Purchaser or any investigation by Purchaser shall not
affect Purchaser's right to rely on any representations and warranties made in
this Agreement or in connection herewith or pursuant hereto. Subject to the
restrictions of Section 9.2, Purchaser shall provide to Company all
information reasonably necessary to permit Company to evaluate Purchaser's
ability to perform under this Agreement.
9.2 Confidentiality. Shareholders, Company and Purchaser agree to
keep the existence and terms of this Agreement confidential and to keep
confidential all information and communications concerning this Agreement,
including the fact that any meetings or discussions between Purchaser and
Company took place or were scheduled to take place, except to the extent
necessary or appropriate in connection with any applicable regulations. The
parties contemplate that by virtue of this Agreement, each may come into
possession of the other's confidential financial and other business
information, and each party agrees that it shall keep such information
confidential and shall not engage in any activities which would or could
violate the Confidentiality and Non-Disclosure Agreement, a copy of which is
attached to this Agreement as Exhibit 9.2, and an original of which has been
signed by each party prior to or contemporaneously with its execution and
delivery of this Agreement. Shareholders and Company agrees that Purchaser
may disclose to potential investors all information provided by Company, as
long as such information is disclosed pursuant to a written nondisclosure
agreement and on the condition that such information may be used for the sole
purpose of determining whether to make an investment in Purchaser, in which
case Shareholders and Company agree that such potential investors may contact
Company directly. Except as provided by the foregoing sentences, no party
shall make any disclosure regarding any other party to this Agreement to any
person or entity unless it shall have first obtained and delivered to such
other party, as applicable, such person's or entity's signature on an original
of the attached Confidentiality and Non-Disclosure Agreement and also obtained
such other party's written approval for such disclosure.
9.3 Press Releases. Any public announcement of the pendency of
the transactions embodied in this Agreement shall be made only upon receiving
the prior written consent from Purchaser and Hinkefent as to the necessity for
the announcement and the text to be used.
9.4 Disposition of Property Upon Termination. Upon expiration or
earlier termination of this Agreement for any reason, each party shall deliver
to the other all tangible forms of confidential information, trade secrets and
other proprietary property of the other parties which is in its possession or
control, and shall certify to the other parties in writing that it has no
other such property in its possession or control, and that it has no knowledge
of the possession by others of any such property of the other parties
previously in its possession or control.
9.5 Exclusivity. As long as the parties are proceeding in
accordance with this Agreement, neither party shall have any discussions with
any third party concerning any acquisition of control of Company or any
investment in or merger with Company.
10. Director and Shareholders Authorizations.
10.1 At or prior to the Closing, Company will deliver to Purchaser
a copy of the resolutions of the Board of Directors and the resolutions or
consents of the Shareholders of Company, together with any and all required
resolutions or consents of Shareholders, approving the execution and delivery
of this Agreement and the consummation of all of the transactions contemplated
hereby, duly certified by an officer of Company.
10.2 At or prior to Closing, Purchaser will deliver of
Shareholders a copy of the resolutions or consents of the Board of Directors
of Purchaser, together with any and all resolutions or consents of
shareholders of Purchaser, approving the execution and delivery of this
Agreement and the consummation of all of the transactions contemplated hereby,
duly certified by an officer of Purchaser.
11. Conditions Precedent to Purchaser's Obligations. All obligations of
Purchaser hereunder are subject, at the option of Purchaser, to the
fulfillment of each of the following conditions at or prior to the Closing,
and Company and Shareholders shall exert their best efforts to cause each such
condition to be so fulfilled on or prior to September 10, 1999, or such other
date as Purchaser and Company may agree.
11.1 Approval of Agreement. The Board of Directors and
shareholders of Company shall have approved of this Agreement and related
documents.
11.2 Additional Documents. Xxxx Xxxxxxxxx and Purchaser shall
have entered into an employment and non-competition agreement in the form
attached as Exhibit C, and Hinkefent and Purchaser shall have entered into a
non-competition agreement in the form attached as Exhibit D.
11.3 Representations. All representations and warranties of
Company, Hinkefent, Xxxx Xxxxxxxxx and the Shareholders contained herein or in
any document delivered pursuant hereto shall be true and correct in all
material respects when made and shall be deemed to have been made again at and
as of the date of the Closing, and shall then be true and correct in all
material respects except for changes in the ordinary course of business after
the date hereof in conformity with the covenants and agreements contained
herein, provided that (a) Company, Hinkefent, and the Shareholders shall have
provided to Purchaser written updates to any disclosures and schedules under
this Agreement ("Updates") necessary to make all representations and
warranties of Company, Hinkefent and the Shareholders contained herein or in
any documents delivered pursuant hereto true and correct in all material
respects as of the Closing, (b) the Purchaser approves in writing of such
Updates in its sole discretion, and (c) representations and warranties
regarding Elk River Trading Company that are contained in an asset purchase
agreement which, together with all amendments and schedules and exhibits, has
been approved in form and content by Purchaser, shall be in full force and
effect, and Hinkefent and Xxxx Xxxxxxxxx shall guarantee the truth and
accuracy of such representations and warranties to Purchaser as if they had
been fully set forth in this Agreement.
11.4 Covenants. All covenants, agreements and obligations
required by the terms of this Agreement to be performed by Company, Hinkefent,
Xxxx Xxxxxxxxx or by Shareholders at or before the Closing shall have been
duly and properly performed in all material respects, and all documents
required to be delivered to Purchaser at or prior to the Closing shall have
been so delivered.
11.5 Diligence. Purchaser shall have completed its due diligence
within 30 days after the Effective Date with results satisfactory to
Purchaser, provided that Purchaser shall also be satisfied with the results of
due diligence with respect to any material events or developments arising
subsequent to the 30th day after the Effective Date and prior to Closing.
11.6 Closing Financial Statements. Purchaser shall be provided by
Company with an unaudited balance sheet as at June 30, 1999 and unaudited
statements of earnings and sources and uses of cash for the period ended June
30, 1999 (collectively, "Interim Financial Statements") and an unaudited
balance sheet of Company as at the last day of the month prior to Closing for
the period then ended ("Closing Balance Sheet"), all representations,
warranties, indemnities and covenants made by Company and/or the Shareholders
in this Agreement which relate to the Financial Statements shall similarly be
deemed to relate to the Interim Financial Statements, as though each of such
representations, warranties, indemnities and covenants were fully set forth
herein as additional representations, warranties, indemnities and covenants
containing the words "Interim Financial Statements" in lieu of the words
"Financial Statements," and all representations, warranties, indemnities and
covenants made by Company and/or the Shareholders in this Agreement which
relate to the Balance Sheet or the Balance Sheet Date shall similarly be
deemed to relate to the Closing Balance Sheet, and the Closing Balance Sheet
Date, as the case may be as though each of such representations, warranties,
indemnities and covenants were fully set forth herein as additional
representations, warranties, indemnities and covenants containing the words
"Closing Balance Sheet" in lieu of the words "Balance Sheet" and the date
thereof in lieu of the words "the Balance Sheet Date."
11.7 Certificate. There shall be delivered to Purchaser a
certificate executed by the President and Secretary of Company and by
Hinkefent and each Shareholders, individually, dated the date of the Closing,
certifying that the conditions set forth in this Section 11 have been
fulfilled.
11.8 Good Standing. There shall be delivered to Purchaser a
certificate issued by the agency regulating corporations in each of the states
in which the Company is doing business, attesting to the corporate existence
and good standing of Company in such state.
11.9 Opinion. Purchaser shall have received an opinion of
Company's counsel, dated the date of the Closing, in form and substance
satisfactory to counsel for Purchaser, to the effect that the Company is duly
formed, validly existing, and in good standing, this Agreement has been duly
authorized on behalf of the Company, Hinkefent and the Shareholders, and the
Agreement has been validly executed and is enforceable against the Company,
Hinkefent and the Shareholders in accordance with its terms, subject to
qualifications relating to insolvency laws, equitable principles, and the
like.
11.10 Environmental Report. Purchaser, Xxxx Xxxxxxxxx and
Hinkefent shall have received and Purchaser shall have approved, in its sole
discretion, a Phase 1 environmental report, or a report deemed by Purchaser in
its sole discretion to be equivalent to a Phase 1 environmental report,
relating to conditions on or under all locations at or adjacent to premises
used or owned or controlled by Company, except that the portion of the report
relating to premises leased by Company as to which the owner refuses consent
to access after request by Company may omit information regarding such
premises that is impossible to obtain without such access.
11.11 Acquisition of Assets of Elk River Trading Company. Company
shall have acquired all of the assets (excluding cash and cash equivalents)
of, including without limitation all rights to the name of, and shall have
assumed none of the liabilities of Elk River Trading Company (except
assumption of the lessee's rights and liabilities under the lease of Elk River
Trading Company), in a transaction in form and substance acceptable to
Purchaser, and Purchaser shall have received a legal opinion of counsel to the
Company in form and substance satisfactory to counsel for Purchaser, to the
effect that the Company's acquisition did not violate, or cause any
acceleration or default under, any lien, any provision of law or any contract
or lease to which Elk River Trading Company or its assets are subject, and
that there is no basis for any claim against Company arising from such
acquisition. All representations, warranties, covenants and conditions in
favor of the Company contained in the acquisition agreement shall be deemed to
be representations, warranties, covenants and conditions in favor of Purchaser
which are the obligations of Hinkefent and Xxxx Xxxxxxxxx to warrant,
represent, perform or fulfill, as if fully set forth in this Agreement.
11.12 Election. Company, Shareholders and Purchaser shall have
executed the Election to Allocate Income Under Normal Accounting Rules Under
Section 1362(e)(3) in the form set forth on Exhibit 11.
12. Conditions Precedent to Company's and Shareholders' Obligations.
All obligations of Company and Shareholders at the Closing are subject, at the
option of Company and each Shareholder, to the fulfillment of each of the
following conditions at or prior to the Closing, and Purchaser shall exert its
best efforts in the exercise of reasonable business judgment to cause each
such condition to be so fulfilled:
12.1 Representations. All representations and warranties of
Purchaser contained herein or in any document delivered pursuant hereto shall
be true and correct in all material respects when made and as of the Closing.
12.2 Covenants. All obligations required by the terms of this
Agreement to be performed by Purchaser at or before the Closing shall have
been duly and properly performed in all material respects.
12.3 Certificate. There shall be delivered to Shareholders a
certificate executed by an officer of the Purchaser, dated the date of the
Closing, certifying that the conditions set forth in this Section 12 have been
fulfilled.
12.4 Opinion. Company shall have received an opinion of
Purchaser's counsel, dated the date of the Closing in form and substance
satisfactory to counsel for Company, to the effect that the Purchaser is duly
formed, validly existing, and in good standing, this Agreement has been duly
authorized on behalf of the Purchaser, and the Agreement has been validly
executed and is enforceable against the Purchaser in accordance with its
terms, subject to qualifications relating to insolvency laws, equitable
principles, and the like.
12.5 Purchase Price. Shareholders shall have received at Closing
payment of the first installment of the Purchase Price in accordance with
Section 2 and shall have delivered the Notes to the Shareholders.
12.6 Election. Company, Shareholders and Purchaser shall have
executed the Election to Allocate Income Under Normal Accounting Rules Under
Section 1362(e)(3) in the form set forth on Exhibit 11.
13. Indemnification. Purchaser agrees to indemnify Company and the
Shareholders and Company agree to indemnify Purchaser, in connection with this
transaction, against all expenses, losses, claims, damages and liabilities,
including without limitation expenses of investigating the foregoing, expenses
of appearing in any action or legal proceeding to which any indemnitee may
become subject in order to defend against the foregoing, expenses of preparing
for any such action or proceeding, and reasonable counsel fees and
disbursements (collectively, "Liabilities") which result from or arise from or
are based upon, the matters as set forth below. The indemnification
provisions of this Agreement shall apply equally to Purchaser, Purchaser's
members, officers, directors, agents, employees and affiliates and each
person, if any, who controls Purchaser or any of Purchaser's affiliates
(collectively, the "Purchaser Indemnitees") and to Shareholders, Company and
its officers, directors, agents, employees and affiliates, the beneficiaries
of Shareholders, and each person, if any, who controls Company, Shareholders,
beneficiaries of the Shareholders or any of their affiliates (collectively,
the "Company Indemnitees").
13.1 By Shareholders. Hinkefent, Xxxx Xxxxxxxxx, and each
Shareholder hereby agrees to indemnify and agree to hold Purchaser harmless
from, against and in respect of (and shall on demand reimburse Purchaser for)
any and all Liabilities suffered or incurred by Purchaser by reason of any
untrue representation, breach of warranty or non-fulfillment of any covenant
by Hinkefent, Xxxx Xxxxxxxxx, or such Shareholder, respectively.
13.2 By Purchaser. Purchaser hereby agrees to indemnify and hold
Shareholders harmless from, against and in respect of (and shall on demand
reimburse Shareholders for) any and all Liabilities resulting from any untrue
representation, breach of warranty or non-fulfillment of any covenant or
agreement by Purchaser contained herein.
13.3 Procedure. Promptly after any person entitled to
indemnification hereunder receives notice of the commencement of any
proceeding, such person will give notice in writing to the indemnifying party,
which must be given within three years after the Closing. The indemnifying
party will without being deemed to have admitted any liability assume the
defense, including the employment of and payment of such counsel's fees and
disbursements. Should the person entitled to indemnification reasonably
determine that separate counsel is necessary (whether due to the existence of
different defenses, potential conflicts of interest or otherwise), or if the
indemnifying party has not assumed the defense, then the person entitled to
indemnification may, employ separate counsel, and the indemnifying party shall
pay such counsel's reasonable fees and disbursements as incurred. In the
event of any proceedings in connection with this Agreement, each party agrees
that, if requested, it or its representatives will testify or otherwise assist
each other party in preparing for testimony.
13.4 Contribution. If any indemnification or reimbursement sought
pursuant to this Agreement is held by a court to be unenforceable for any
reason other than the express terms of this Agreement (for example, but not by
way of limitation, enforcement is against public policy), then Purchaser,
Hinkefent, Shareholders and Company agree, to contribute to the Liabilities
for which such indemnification or reimbursement is held unavailable in such
proportion as is appropriate to reflect the relative benefits to Purchaser and
Company in connection with the transaction or transactions contemplated by
this Agreement.
13.5 Limitation on Indemnification. Notwithstanding any other
provision of this Agreement, no person or entity shall be obligated to
indemnify or hold harmless any other person or entity, and no representation,
warranty or covenant made by any person or entity pursuant to this Agreement
shall be deemed to be breached or condition unfulfilled, unless and until the
Liabilities suffered or incurred (or reasonably likely to be suffered or
incurred) by the party otherwise entitled to indemnification, which result
from or arise from or are based upon such untrue representation, breach of
warranty or non-fulfillment of covenant or condition, together with the
Liabilities suffered or incurred (or reasonably likely to be suffered or
incurred) by the same party resulting from or arising from or based upon all
untrue representations, breaches of warranties and non-fulfillment of
covenants made by all other parties to this Agreement in favor of such person
and all unfulfilled conditions in favor of such person, exceed, in the
aggregate: the difference between $500,000 and the amount of actual total
liabilities of Company as of the close of business on the last day of the
month preceding the Closing (excluding liabilities represented by any
permitted payment set forth on Schedule 2 that has not been made prior to that
day).
14. Offset. In addition to any other remedy and subject to the
limitations referenced in Section 13.5, Purchaser shall be entitled, upon any
breach of this Agreement by Company or Shareholders, to offset against
Purchaser's obligations to Company, Hinkefent, any Shareholder, or any
Affiliate of the foregoing, including without limitation obligations under the
Notes, the amount of damages, losses or expenses estimated by Purchaser to
arise from such breach. Without limiting the foregoing, Purchaser may
exercise this right of offset for any amount by which the actual liabilities
of Company as of the close of business on the last day of the month preceding
the Closing exceed the liabilities on such date as certified by Company.
15. Survival of Representations and Warranties. All statements,
representations, warranties, indemnities, covenants and agreements made by
each of the parties hereto shall survive after the Closing for a period of two
years after the Closing. Nothing herein shall be deemed to constitute a
representation or warranty with respect to any matter as of any time after the
Closing, including without limitation any warranty or representation relating
to any claims threatened or asserted after Closing with respect to product
labeling, product function, product advertising, or other product liability
claims that were unknown at time of Closing.
16. Notices. Any and all notices, offers, demands or other
communications required or permitted to be given under any of the provisions
of this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or on the tenth business day after mailed by
first class registered or certified United States mail, return receipt
requested, addressed to the parties at the addresses set forth herein (or at
such other address as any party may specify by notice to all other parties
given as aforesaid). Copies of any notice sent to Purchaser must be sent to:
Xxxxx XxXxxx, Esq., Xxxxx and Roca LLP, 00 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxx 00000. Copies of any notice sent to Company, Hinkefent, Xxxx
Xxxxxxxxx or Shareholders must be sent to: Xxxxx X. Xxxxxxxxx, 0000 Xxxx 00xx
Xxxxxx, Xxxxx, Xxxxxxxx 00000 and R. Xxxxx Xxxxxx, Xxxxxx and Xxxxxx, P.C.,
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000, Xxxxx, Xxxxxxxx 00000-0000.
17. Legal and Other Costs.
17.1 In the event that any party defaults (the "Defaulting Party")
in his, her or its obligations under this Agreement and, as a result thereof,
the other party (the "Non-Defaulting Party") seeks to legally enforce his, her
or its rights hereunder against the Defaulting Party, then, in addition to all
damages and other remedies to which the Non-Defaulting Party is entitled by
reason of such default, the Defaulting Party shall promptly pay to the Non-
Defaulting Party an amount equal to all costs and expenses (including
reasonable attorneys' fees and costs) paid or incurred by the Non-Defaulting
Party in connection with such enforcement.
17.2 Each party shall be solely responsible for its respective
expenses incurred in regard to the negotiation and drafting of this Agreement
as well as the obligations to be undertaken by the respective parties in
accordance with this Agreement and the proposed transactions described herein,
provided that the Company shall be permitted to make expenditures set forth in
Schedule 2.
18. Miscellaneous.
18.1 This writing constitutes the entire agreement of the parties
with respect to the subject matter hereof and may not be modified, amended or
terminated except by a written agreement specifically referring to this
Agreement signed by all of the parties hereto.
18.2 No waiver of any breach or default hereunder shall be
considered valid unless in writing and signed by the party giving such waiver,
and no such waiver shall be deemed a waiver of any subsequent breach or
default of the same or similar nature.
18.3 This Agreement shall be binding upon and inure to the benefit
of each party hereto, its, his or her successors, assigns, heirs and personal
representatives.
18.4 The paragraph headings contained herein are for the purposes
of convenience only and are not intended to define or limit the contents of
said paragraphs.
18.5 Without further consideration each party hereto shall
cooperate, shall take such further action and shall execute and deliver such
further documents as may be reasonably requested by any other party in order
to carry out the provisions and purposes of this Agreement.
18.6 Shareholders will pay all sales, transfer and documentary
taxes, if any, payable in connection with the sale, conveyances, assignments,
transfers and deliveries to be made to Purchaser hereunder.
18.7 This Agreement may be executed in one or more counterparts,
all of which taken together shall be deemed one original.
18.8 This Agreement and all amendments thereof shall be governed
by and construed in accordance with the laws in force in the State of Arizona.
Venue for any litigation arising thereunder shall lie in the state and federal
courts situated in either Maricopa County, Arizona or Tulsa County, Oklahoma.
18.9 For purposes of this Agreement, an individual will be deemed to have
"knowledge" of a particular fact or other matter if: (a) such individual is
actually aware of such fact or other matter; or, (b) a prudent individual
could be expected to discover or otherwise become aware of such fact or other
matter in the course of conducting a reasonably comprehensive investigation
concerning the existence of such fact or other matter. A person (other than
an individual) will be deemed to have "knowledge" of a particular fact or
other matter if any individual who is serving, or who has at any time served,
as a director, officer, partner, executor, or trustee of such person (or in
any similar capacity) has, or at any time had, knowledge of such fact or other
matter.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
FOOD FOR HEALTH CO., INC.,
an Arizona corporation
Xxxxx Xxxxxxx
-----------------------------------
Xxxxx Xxxxxxx, President
Xxxxx Xxxxxxxx
-----------------------------------
Xxxxx Xxxxxxxx, Secretary
HEALTH FOOD ASSOCIATES, INC.,
an Oklahoma corporation
Xxxx Xxxxxxxxx
-----------------------------------
Xxxx Xxxxxxxxx, President
SHAREHOLDERS:
Xxxxx X. Xxxxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxxxx
0000 Xxxxx Xxxxxxxx
Xxxxx, Xxxxxxxx 00000
Xxxxx X. Xxxxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxxxx, as trustee of the
Xxxxx X. Xxxxxxxxx Health Food
Associate Stock Trust dated January 30,
1998
Xxxxx x. Xxxxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxxxx, as trustee of the
Xxxxx X. Xxxxxxxxx Trust dated July 11,
1994, as amended
Xxxxxxx X. Xxxxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxxxx, as trustee of the
Xxxxx X. Xxxxxxxxx Trust dated July 11,
1994, as amended
Xxxx Xxxxxxxxx
-----------------------------------
Xxxx Xxxxxxxxx
0000 Xxxxx 00xx Xxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Xxxx Xxx O'Dell
-----------------------------------
Xxxx Xxx O'Dell
0000 Xxxx Xxxxx
Xxxxxx Xxxxx, Xxxxxxxx 00000
Xxxxx Xxxxx
-----------------------------------
Xxxxx Xxxxx
00000 Xxxx 0xx
Xxxxx, Xxxxxxxx 00000
Xxx Xxxxxxxx
-----------------------------------
Xxx Xxxxxxxx
0000 Xxxxx 00xx Xxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
