Exh. 10.33
Execution Copy
ASSET PURCHASE AGREEMENT
Dated as of August 6, 2003
by and among
SMART AND FINAL INC.,
a Delaware corporation
and
SMART AND FINAL STORES CORPORATION,
a California corporation
and
AMERICAN FOODSERVICE DISTRIBUTORS
a California corporation
and
GFS HOLDING, INC.,
a Delaware corporation
and
GFS ORLANDO, LLC,
a Delaware limited liability company
and
GFS STORES, LLC,
a Delaware limited liability company
TABLE OF CONTENTS
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 Sale and Purchase of the Assets........................................2
1.2 Purchase Price and Payment.............................................2
1.3 Assumption of Liabilities..............................................2
1.4 Adjustment of Purchase Price...........................................3
1.5 Adjustment Procedure...................................................3
1.6 Closing................................................................4
1.7 Closing Deliveries.....................................................5
1.8 Allocation of Purchase Price...........................................8
1.9 Transfer Taxes.........................................................8
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES
2.1 Organization and Qualification of the Seller Parties...................8
2.2 Authority; No Conflict.................................................9
2.3 Financial Statements..................................................10
2.4 Books and Records.....................................................10
2.5 No Undisclosed Liabilities............................................10
2.6 Compliance with Legal Requirements; Governmental Authorizations.......11
2.7 Absence of Certain Changes............................................12
2.8 Personal Property.....................................................14
2.9 Inventory.............................................................15
2.10 Accounts Receivable...................................................15
2.11 Contracts; No Defaults................................................15
2.12 Guaranties............................................................18
2.13 Employee Benefits.....................................................18
2.14 Employees.............................................................23
2.15 Labor Relations; Compliance...........................................23
2.16 Litigation............................................................24
2.17 Real Property.........................................................25
2.18 Insurance.............................................................26
2.19 Environmental Matters.................................................26
2.20 Relationships with Related Persons....................................27
2.21 Warranties............................................................27
2.22 Change in Business Relationships......................................27
2.23 Brokers...............................................................27
2.24 Solvency..............................................................27
2.25 True and Correct Information..........................................28
2.26 Ownership.............................................................28
2.27 Sufficiency of Assets.................................................28
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2.28 Title.................................................................28
2.29 Taxes.................................................................28
2.30 Intellectual Property.................................................28
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER PARTIES
3.1 Organization and Good Standing........................................30
3.2 Authority; No Violation...............................................30
3.3 Certain Proceedings...................................................30
3.4 Brokers or Finders....................................................30
3.5 Sufficiency of Funds..................................................30
3.6 Registration in State of Florida......................................30
3.7 Knowledge of Claims...................................................31
ARTICLE IV
COVENANTS OF SELLER PARTIES PRIOR TO CLOSING DATE
4.1 Access and Investigation..............................................31
4.2 Operation of the Retail Store Business and the Meat Processing
Business...........................................................31
4.3 Negative Covenant.....................................................32
4.4 Required Approvals....................................................32
4.5 Notification..........................................................32
4.6 Payment of Indebtedness by Related Persons............................32
4.7 No Negotiation........................................................32
4.8 Commercially Reasonable Efforts.......................................32
4.9 Employees.............................................................32
4.10 Clearance Certificates................................................34
4.11 Seller Parties' Environmental Investigation...........................35
ARTICLE V
COVENANTS OF THE BUYER PARTIES AND THE SELLER PARTIES PRIOR TO
CLOSING DATE
5.1 Approvals of Governmental Bodies......................................35
5.2 Commercially Reasonable Efforts.......................................35
5.3 Cooperation...........................................................35
5.4 Synthetic Lease Agreement.............................................36
ARTICLE VI
POST-CLOSING COVENANTS OF THE BUYER PARTIES AND THE SELLER PARTIES
6.1 General...............................................................36
6.2 Litigation Support....................................................36
6.3 Transition............................................................36
6.4 Delivery of Property Received After Closing...........................37
6.5 Real Property Consents................................................37
6.6 Insurance Matters.....................................................37
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6.7 Assistance and Cooperation............................................37
6.8 Assumed Contracts Consents............................................38
6.9 Environmental Testing.................................................38
ARTICLE VII
CONDITIONS PRECEDENT TO THE SELLER PARTIES' OBLIGATION TO CLOSE
7.1 Accuracy of Representations...........................................39
7.2 Performance...........................................................40
7.3 Additional Documents..................................................40
7.4 No Injunction.........................................................40
7.5 Closing of Share Purchase Transaction.................................40
7.6 Consents..............................................................40
ARTICLE VIII
CONDITIONS PRECEDENT TO THE BUYER PARTIES' OBLIGATION TO CLOSE
8.1 Accuracy of Representations...........................................40
8.2 Performance...........................................................41
8.3 Consents..............................................................41
8.4 Additional Documents..................................................41
8.5 No Injunction.........................................................41
8.6 No Proceedings........................................................41
8.7 No Claim Regarding Assets or Sale Proceeds............................41
8.8 No Prohibition........................................................41
8.9 Closing of Share Purchase Transaction.................................41
8.10 Execution and Closing of Real Estate Purchase Agreement...............41
ARTICLE IX
TERMINATION
9.1 Termination Events....................................................42
9.2 Effect of Termination.................................................42
ARTICLE X
INDEMNIFICATION
10.1 Indemnity by the Seller Parties.......................................42
10.2 Indemnity by the Buyer Parties........................................44
10.3 Procedure and Payment.................................................44
10.4 Calculation of Losses.................................................45
10.5 Survival of Representations and Warranties of the Seller Parties......46
10.6 Survival of Representations and Warranties of the Buyer Parties.......46
10.7 Escrow................................................................46
10.8 Indemnified Environmental Matters.....................................46
ARTICLE XI
DEFINITIONS
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ARTICLE XII
GENERAL PROVISIONS
12.1 Expenses With Respect to Transaction..................................59
12.2 Public Announcements..................................................59
12.3 Confidentiality.......................................................59
12.4 Notices...............................................................60
12.5 Jurisdiction..........................................................61
12.6 Further Assurances....................................................62
12.7 Waiver................................................................62
12.8 Entire Agreement and Modification.....................................63
12.9 Assignments, Successors, and No Third-Party Rights....................63
12.10 Severability..........................................................63
12.11 Section Headings, Construction........................................63
12.12 Preamble; Preliminary Statement.......................................63
12.13 Governing Law.........................................................63
12.14 No Strict Construction................................................64
12.15 Dispute Resolution....................................................64
12.16 Supplemental Disclosure...............................................64
12.17 Reliance..............................................................65
12.18 Counterparts..........................................................65
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SCHEDULES
Schedule 1.1(b) Excluded Assets
Schedule 1.3(a) Assumed Liabilities
Schedule 1.3(b) Excluded Liabilities
Schedule 1.4 Accounting Policies and Practices
Schedule 2.1 Qualified to do Business
Schedule 2.2 Notices; Consents
Schedule 2.2(b) No Conflicts
Schedule 2.3 Financial Statements
Schedule 2.5 Undisclosed Liabilities
Schedule 2.6 Compliance with Legal Requirements
Schedule 2.6(b) Governmental Authorizations
Schedule 2.7 Absence of Certain Changes
Schedule 2.8 Personal Property
Schedule 2.10 Accounts Receivable
Schedule 2.11(a) Contracts; No Defaults
Schedule 2.11(b) Contracts; Obligations
Schedule 2.11(c) Contracts in Full Force and Effect
Schedule 2.11(d) Compliance with Contracts
Schedule 2.12 Guaranties
Schedule 2.13(b)(i) Employee Benefits-Company Plans
Schedule 2.13(b)(ii) Multi-Employer Plans
Schedule 2.13(d) Compliance with Plans
Schedule 2.14 Employees
Schedule 2.15 Labor Relations; Compliance
Schedule 2.16(a) Litigation Proceedings
Schedule 2.16(b) Litigation Orders
Schedule 2.16(c) Compliance with Orders
Schedule 2.17 List of Real Property
Schedule 2.18(a) Insurance Loss Experience
Schedule 2.18(b) Payment of Insurance Premiums
Schedule 2.19 Environmental Matters
Schedule 2.20 Relationships with Related Persons
Schedule 2.22 Change in Business Relationships
Schedule 2.27 Sufficiency of Assets
Schedule 2.30 Trademarks and Tradenames
Schedule 4.6 Payment of Indebtedness by Related Persons
Schedule 6.5 Certain Leases
Schedule 8.3 Material Consents
Schedule 10.1(a) Indemnified Matters
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EXHIBITS
Exhibit A Escrow Agreement
Exhibit B Assumption Agreement
Exhibit C Noncompetition Agreement
Exhibit D Software License and Support Agreement
Exhibit E Tradename and Trademark License Agreement
Exhibit F Transitional Services Agreement
Exhibit G Employee Leasing Agreement
Exhibit H Opinion of Counsel
Exhibit I Real Estate Purchase Agreement
Exhibit J Vendor Contract Participation Agreement
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is dated as of August
6, 2003, by and among GFS HOLDING, INC., a Delaware corporation (the "Buyer
Member"), GFS ORLANDO, LLC, a Delaware limited liability company ("GFS Orlando")
and GFS STORES, LLC, a Delaware limited liability company ("GFS Stores" and,
together with GFS Orlando, the "Buyers"), and SMART & FINAL INC., a Delaware
corporation (the "Seller Shareholder"), SMART & FINAL STORES CORPORATION, a
California corporation ("SF Stores") and AMERICAN FOODSERVICE DISTRIBUTORS, a
California corporation ("AFD" and, together with SF Stores, the "Sellers").
Buyer Member, GFS Orlando, and GFS Stores are sometimes referred to in this
Agreement as the "Buyer Parties," and Seller Shareholder, SF Stores, and AFD are
sometimes referred to in this Agreement as the "Seller Parties." Capitalized
terms used, but not otherwise defined herein, shall have the meanings set forth
in Article XI hereof.
PRELIMINARY STATEMENT
Seller Shareholder is the record and beneficial owner of all of the
issued and outstanding equity securities of SF Stores and AFD. SF Stores is
engaged in the retail food store business in the State of Florida and operates
from several locations within that state. AFD operates, among other things, a
fresh meat processing business in the state of Florida under the name "Orlando
Foodservice" (the "Meat Processing Business"). AFD also conducts a foodservice
distribution business (the "Foodservice Business") through its wholly-owned
subsidiary, Xxxxx Xxx Company, a Florida corporation ("Xxxxx Xxx").
Buyer Member is the record and beneficial owner of all of the
outstanding membership interests of GFS Orlando and GFS Stores. GFS Orlando was
formed for the purpose of acquiring all of the assets that are used by AFD in
the operation of the Meat Processing Business and located in the state of
Florida. GFS Stores was formed for the purpose of acquiring certain of the
assets that are used by SF Stores in the operation of its retail store business
and located in the state of Florida. In a separate related transaction, Buyer
Member will acquire from AFD all of the issued and outstanding equity securities
of Xxxxx Xxx pursuant to a Share Purchase Agreement dated the date hereof by and
among Buyer Member, Seller Shareholder, and AFD (the "Share Purchase
Agreement").
This Agreement is being entered into by the Buyer Parties and the
Seller Parties to set forth the terms and conditions upon which Buyers will
acquire from Sellers certain of the assets that are used by SF Stores in the
operation of its retail store business and located in the state of Florida and
all of the assets that are used by AFD in the operation of the Meat Processing
Business and located in the state of Florida.
NOW, THEREFORE, in consideration of the mutual agreements and
covenants herein contained and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 Sale and Purchase of the Assets. On the Closing Date (as such term
is defined in Section 1.6), Sellers shall sell to Buyers, and Buyers shall
acquire from Sellers, the Assets, free and clear of all Encumbrances (other than
Permitted Encumbrances), and Buyers shall assume the Assumed Liabilities (with
GFS Stores acquiring that portion of the Assets and assuming that portion of the
Assumed Liabilities relating to the Retail Store Business and GFS Orlando
acquiring that portion of the Assets and assuming that portion of the Assumed
Liabilities relating to the Meat Processing Business), on the terms and subject
to the conditions set forth in this Agreement.
1.2 Purchase Price and Payment. The purchase price to be paid by
Buyers to Sellers for the Assets shall be Three Million Eight Hundred Seventeen
Thousand One Hundred Thirty-Two Dollars ($3,817,132), subject to adjustment
following the Closing Date for changes in Net Working Capital with respect to
the Meat Processing Business and the Retail Store Business as described in
Section 1.4 below (the "Purchase Price"). The Net Working Capital of Sellers
with respect to the Retail Store Business and the Meat Processing Business as of
March 23, 2003, is Four Million Seven Hundred Seventy One Thousand Two Hundred
Fifty-Seven Dollars ($4,771,257) (the "March 23, 2003 Net Working Capital"). In
order to establish a reasonable estimate of the Purchase Price at Closing,
Sellers shall prepare and deliver to Buyers, not less than five (5) business
days prior to the Closing Date, a detailed written statement (the "Preliminary
Purchase Price Statement") of Sellers' reasonable good faith calculation of the
Net Working Capital with respect to the Retail Store Business and the Meat
Processing Business as of the Closing Date (the "Preliminary Net Working
Capital"). If the Preliminary Net Working Capital is less than the March 23,
2003 Net Working Capital, the Purchase Price shall be reduced dollar for dollar
by such difference and if the Preliminary Net Working Capital is greater than
the March 23, 2003 Net Working Capital the Purchase Price shall be increased
dollar for dollar by such difference. The Purchase Price shall be paid at
Closing as follows:
(a) An amount equal to the Purchase Price (based on the
Preliminary Purchase Price Statement) less the sum of Two Million Dollars
($2,000,000) shall be paid to Sellers by wire transfer of immediately available
funds (the "Closing Payment"); and
(b) The sum of Two Million Dollars ($2,000,000) (the "Escrow
Payment") shall be delivered to Xxxxx Fargo Bank (the "Escrow Agent") to be held
in escrow on the terms and subject to the conditions set forth in an Escrow
Agreement substantially in the form attached hereto as Exhibit A (the "Escrow
Agreement").
1.3 Assumption of Liabilities. Subject to the terms of this Agreement,
GFS Stores will, and Buyer Member will cause GFS Stores to, assume and become
responsible for all of the Assumed Liabilities relating to the Retail Store
Business and GFS Orlando will, and Buyer Member will cause GFS Orlando to,
assume and become responsible for all of the Assumed Liabilities relating to the
Meat Processing Business at the Closing, specifically including those
liabilities identified on Schedule 1.3(a). Buyers will not assume or have any
responsibility, however, with respect to any other obligation or liability of
the Seller Parties not included within
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the Assumed Liabilities, including those specifically set forth on Schedule
1.3(b) (the "Excluded Liabilities").
1.4 Adjustment of Purchase Price. The Purchase Price shall be adjusted
on a dollar-for-dollar basis to reflect any increases or decreases in the
Preliminary Net Working Capital as of the Closing Date. For purposes of this
Agreement, the term "Net Working Capital" means the difference between (a) the
sum of cash, cash equivalents, temporary investments, accounts receivable,
inventories and prepaid expenses and other current assets and (b) the sum of
accounts payable and accrued expenses and other current liabilities, in each
case solely with respect to the Assets being acquired and the Assumed
Liabilities being assumed hereunder and in each case computed in accordance with
GAAP utilizing the accounting policies and practices set forth on Schedule 1.4.
1.5 Adjustment Procedure.
(a) Seller Shareholder shall prepare the Closing Financial
Statement (as defined below) and shall cause Ernst & Young, LLP to undertake a
balance sheet audit (the "Balance Sheet Audit") with respect to the Retail Store
Business and the Meat Processing Business as of the Closing Date and compute the
Net Working Capital of Sellers as of the Closing Date with respect to the Retail
Store Business and the Meat Processing Business and the adjustment, if any, to
the Purchase Price required by Section 1.4, and Ernst & Young LLP shall, and
Seller Shareholder shall cause Ernst & Young, LLP to, deliver to Buyer Parties,
within forty-five (45) days of the Closing Date, a detailed written statement
with reasonable supporting documentation (the "Closing Financial Statement")
reflecting the result of its audit. Buyers and Sellers shall have access to, and
will have the opportunity to present to Ernst & Young, LLP any material relating
to, the Closing Financial Statement, and to discuss the audit of the Closing
Financial Statement with Ernst & Young, LLP. The parties agree that with respect
to the audit contemplated by this Agreement and by Section 1.4(a) of the Share
Purchase Agreement, (i) the Seller Shareholder's cost shall not exceed, in the
aggregate, Thirty Five Thousand Dollars ($35,000) and that any amount in excess
of $35,000 shall be the obligation of Buyers, and (ii) the Seller Shareholder
shall cause Ernst & Young LLP to limit the scope of such audit upon receiving a
reasonable written request from Buyers setting forth the scope of such
restrictions within five (5) days of Ernst & Young LLP commencing such audit.
For the avoidance of doubt, other than (A) the adjustment of the Purchase Price
to reflect changes in the Preliminary Net Working Capital pursuant to Section
1.4 and (B) claims for breaches of the representations and warranties contained
in this Agreement that require the Seller Parties to indemnify Buyers pursuant
to Article X , the Balance Sheet Audit shall have no effect on any adjustment to
the Purchase Price. If within thirty (30) days following delivery of the Closing
Financial Statement Buyer Parties have not given Seller Shareholder notice of
their objection to the Closing Financial Statement (which notice must contain a
reasonable statement of the basis of the objection), then the Closing Financial
Statement shall be deemed to be the "Final Closing Financial Statement" and the
Net Working Capital amount set forth therein shall be deemed to be the "Final
Net Working Capital". If Buyer Parties give such notice of objection, then the
issues in dispute will be submitted to one of the "Big Four" national accounting
firms (other than Ernst & Young, LLP) mutually acceptable to Buyer Parties and
Seller Parties (the "Accountants") for resolution. If issues in dispute are
submitted to the Accountants for resolution, (i) each party will furnish to the
Accountants such work papers and other documents and information relating to the
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disputed issues as the Accountants may reasonably request and are available to
that party (or its independent public accountants), and will be afforded the
opportunity to present to the Accountants any material relating to the
determination and to discuss the determination with the Accountants; (ii) the
determination by the Accountants, as set forth in a notice delivered to both
parties by the Accountants, will be binding and conclusive on the parties; and
(iii) Buyer Parties will bear fifty percent (50%) and Seller Parties will bear
fifty percent (50%) of the fees of the Accountants for such determination. If
Buyer Parties have given a notice of objection in accordance with this Section
1.5(a), the Closing Financial Statement, as modified by resolution of any such
disputes with respect thereto by the Accountants, shall be the "Final Closing
Financial Statement" and the Net Working Capital amount set forth therein shall
be the "Final Net Working Capital".
(b) On the fifth (5th) business day following the final
determination of the Final Closing Financial Statement, if the Final Net Working
Capital is greater than the Preliminary Net Working Capital, Buyers will pay
such difference to Sellers in immediately available funds and the Escrow Agent
shall, and Buyers shall cause the Escrow Agent to, deliver to Sellers One
Million Dollars ($1,000,000) from the Escrow Payment in accordance with the
Escrow Agreement.
(c) On the fifth (5th) business day following the final
determination of the Final Closing Financial Statement, if the Final Net Working
Capital is less than the Preliminary Net Working Capital (such difference, the
"Difference") and such Difference is less than or equal to One Million Dollars
($1,000,000), Sellers shall direct the Escrow Agent to deliver to Buyers, from
the Escrow Payment, the Difference, and Buyers shall direct the Escrow Agent to
deliver to Sellers, from the Escrow Payment, One Million Dollars ($1,000,000)
less the Difference in accordance with the Escrow Agreement.
(d) On the fifth (5th) business day following the final
determination of the Final Closing Financial Statement, if the Difference is
greater than One Million Dollars ($1,000,000), Sellers shall direct the Escrow
Agent to deliver to Buyers, from the Escrow Payment, One Million Dollars
($1,000,000) and Seller Parties shall pay to Buyers, in immediately available
funds, the Difference less One Million Dollars ($1,000,000) in accordance with
the Escrow Agreement.
(e) Unless otherwise specifically provided for herein or in the
Share Purchase Agreement, any item which is contained within the Final Net
Working Capital or the Balance Sheet Audit or that has been reviewed as part of
the adjustment process in arriving at the Final Net Working Capital shall not
serve as a basis for an indemnification claim for a breach of a representation,
warranty, covenant or agreement under this Agreement.
1.6 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of Xxxxx & Xxxxxxx,
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000, within
three (3) business days following the satisfaction or waiver by the Buyer
Parties or the Seller Parties (as applicable) of all of the conditions set forth
in Articles VII and VIII, or at such other time and place as may be mutually
agreed upon by Buyers and Sellers (such time and date being hereinafter referred
to as the "Closing Date"). The parties currently intend the Closing Date to be
as of September 7, 2003.
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1.7 Closing Deliveries.
(a) Closing Deliveries By Seller Parties. On the Closing Date,
Seller Parties shall deliver, and cause to be delivered, to Buyers:
(i) Assignment Documents. A xxxx of sale, warranty deeds
relating to the owned real property and other documents of transfer and
conveyance sufficient to transfer and assign to the appropriate Buyer good
title to the Assets that it is acquiring, free and clear of any and all
Encumbrances (other than Permitted Encumbrances);
(ii) Assumption Documents. Assumption Agreements
substantially in the form of Exhibit B (the "Assumption Agreement") whereby
Buyers will assume all of the Assumed Liabilities;
(iii) Consents. Copies of all notices or Consents listed on
Schedule 2.2 duly executed by the appropriate parties thereto;
(iv) Bring-Down Certificate. A certificate signed by the
Seller Parties dated the Closing Date certifying that the conditions
contained in Sections 8.1 and 8.2 have been satisfied;
(v) Certificates of Good Standing. Certificates of good
standing with respect to each of the Seller Parties issued by the
appropriate state official for its jurisdiction of organization, each dated
not more than twenty (20) days prior to the Closing Date;
(vi) Escrow Agreement. The Escrow Agreement contemplated by
Section 1.2(b);
(vii) Noncompetition Agreement. A Noncompetition Agreement
signed by the appropriate Seller Parties in the form attached as Exhibit C;
(viii) Software License and Support Agreement. A Software
License and Support Agreement signed by the appropriate Seller Parties
substantially in the form attached as Exhibit D;
(ix) Tradename and Trademark License Agreements. The
Tradename and Trademark License Agreements signed by the appropriate Seller
Parties substantially in the forms attached as Exhibit E;
(x) Transitional Services Agreement. A Transitional Services
Agreement signed by the appropriate Seller Parties substantially in the
form attached as Exhibit F;
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(xi) Employee Leasing Agreement. An Employee Leasing
Agreement signed by the appropriate Seller Parties substantially in the
form attached as Exhibit G;
(xii) Opinion of Counsel. An opinion of counsel to the
Seller Parties, dated as of the Closing Date, substantially in the form
attached as Exhibit H;
(xiii) Real Estate Purchase Agreement. A Real Estate
Purchase Agreement with respect to the Fort Lauderdale Store included
within the Assets signed by the appropriate Seller Parties and the
necessary lenders and other parties to the Synthetic Lease Agreement
substantially in the form attached as Exhibit I;
(xiv) Non-Foreign Affidavit. The Seller Parties shall have
delivered to Buyers a non-foreign affidavit dated as of the Closing Date
and in form and substance required under the Treasury Regulations issued
pursuant to Section 1445 of the IRC;
(xv) Estoppel Certificates. Estoppel Certificates from each
of the landlords of the properties referenced in Items 1-9 of Schedule
2.17, provided, however, that if Seller Parties are unable to obtain an
Estoppel Certificate from any landlord after reasonable efforts to do so,
Seller Parties may instead certify the status of the specific lease to
Buyers by delivery of a Seller Parties' Estoppel Certificate in a form
reasonably acceptable to Buyers and indemnify Buyers from the inaccuracy of
any of the information contained in Seller Parties' Estoppel Certificate;
(xvi) Vendor Contract Participation Agreement. A Vendor
Contract Participation Agreement signed by the appropriate Seller Parties
substantially in the form attached as Exhibit J;
(xvii) Tax Clearances. The tax clearance certificates
contemplated by Section 4.10; and
(xviii) Further Documents. Such other documents as the Buyer
Parties may reasonably request in good faith at least ten (10) days prior
to the Closing Date for the purpose of facilitating the consummation of the
Contemplated Transactions.
(b) Closing Deliveries By Buyers. On the Closing Date, Buyers
shall deliver to Sellers:
(i) Closing Payment. The Closing Payment by delivery of
immediately available funds;
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(ii) Assumption Documents. The Assumption Agreement signed
by the appropriate Buyer substantially in the form attached as Exhibit B;
(iii) Escrow Payment. Evidence of payment of the Escrow
Payment to the Escrow Agent;
(iv) Noncompetition Agreement. A Noncompetition Agreement
signed by Buyers in the form attached as Exhibit C;
(v) Escrow Agreement. The Escrow Agreement contemplated by
Section 1.2(b);
(vi) Software License and Support Agreement. The Software
License and Support Agreement signed by the appropriate Buyer Parties
substantially in the form attached as Exhibit D;
(vii) Tradename and Trademark License Agreements. The
Tradename and Trademark License Agreements signed by the appropriate Buyer
Parties substantially in the form attached as Exhibit E;
(viii) Transitional Services Agreement. The Transitional
Service Agreement signed by the appropriate Buyer Parties substantially in
the form attached as Exhibit F;
(ix) Employee Leasing Agreement. The Employee Leasing
Agreement signed by the appropriate Buyer substantially in the form
attached as Exhibit G;
(x) Real Estate Purchase Agreement. A Real Estate Purchase
Agreement with respect to the Fort Lauderdale Store included within the
Assets signed by the appropriate Buyer Parties substantially in the form
attached as Exhibit I;
(xi) Vendor Contract Participation Agreement. A Vendor
Contract Participation Agreement signed by the appropriate Buyer Parties
substantially in the form attached as Exhibit J;
(xii) Bring-Down Certificate. A certificate signed by the
Buyer Parties dated the Closing Date certifying that the conditions
contained in Sections 7.1 and 7.2 have been satisfied;
(xiii) Resale Certificate. Valid resale certificates signed
by each of GFS Orlando and GFS Stores with respect to inventory and other
Assets intended for resale by the Buyer Parties; and
(xiv) Further Documents. Such other documents as Sellers may
reasonably request in good faith at least ten (10) days prior to the
Closing
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Date for the purpose of facilitating the consummation of the Contemplated
Transactions.
1.8 Allocation of Purchase Price. During the thirty (30) days
following the final determination of the Purchase Price, the Buyer Parties and
the Seller Parties shall in good faith agree upon the allocation of the Purchase
Price among the Assets and Seller Parties' other covenants set forth in this
Agreement. Such allocation shall be conclusive and binding on the Buyer Parties
and the Seller Parties for all purposes including, but not limited to, reporting
and disclosure requirements under Section 1060 of the IRC, and any other
federal, state, local or foreign Tax and other provisions. The Buyer Parties and
the Seller Parties agree to prepare and timely file a U.S. Treasury Form 8594
reflecting the allocations of the Purchase Price in accordance with such
allocation.
1.9 Transfer Taxes. The Buyer Parties will be liable for, will pay,
will timely file all Tax Returns in respect of, and will indemnify and hold
harmless the Seller Parties against, all conveyance, excise, sales, value added,
use, registration, stamp, franchise, property transfer, recording, registration
and similar Taxes, levies, charges and fees (collectively, "Transfer Taxes"),
which become payable in connection with the Contemplated Transactions.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER PARTIES
The Seller Parties jointly and severally represent and warrant to
Buyer Parties as follows:
2.1 Organization and Qualification of the Seller Parties.
(a) SF Stores is a corporation duly organized, validly existing,
and in good standing under the laws of the State of California, and AFD is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of California. Each of the Sellers has full power and
authority to carry on its business as it is now being conducted, to own or hold
under lease the properties and assets it now owns or holds under lease, and to
perform all of its obligations under the Assumed Contracts, except for such
failures which would not have a Material Adverse Effect. Each of the Sellers is
duly qualified to do business and is in good standing as a foreign corporation
in the jurisdictions listed on Schedule 2.1 and, except as disclosed on Schedule
2.1, there are no other jurisdictions in which the conduct of its businesses or
activities or its ownership of assets requires such qualification under
applicable law, except for such failures which would not have a Material Adverse
Effect. Copies of all Organizational Documents of each of the Sellers, as
currently in effect, have been delivered to Buyers and in the form so delivered
are true and complete in all material respects. The Retail Store Business is
conducted exclusively by and through SF Stores, and the Meat Processing Business
is conducted exclusively by and through AFD.
8
(b) Seller Shareholder is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
Seller Shareholder has full power and authority to carry on its business as it
is now being conducted.
2.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid and binding
obligation of each of the Seller Parties, enforceable against each of the Seller
Parties in accordance with its terms. Upon the execution and delivery by the
Seller Parties of the Escrow Agreement, the Noncompetition Agreement, the
Software License and Support Agreement, the Tradename and Trademark License
Agreement, the Transitional Services Agreement, the Employee Leasing Agreement,
the Real Estate Purchase Agreement, the Vendor Contract Participation Agreement,
the documents of assignment and conveyance contemplated by Section 1.7(a)(i) and
any other document delivered pursuant to Section 1.7(a)(xviii) (the "Related
Agreements"), the Related Agreements will constitute the legal, valid and
binding obligation of each of the Seller Parties that is a party to such Related
Agreement, enforceable against such Seller Parties in accordance with their
respective terms. Each of the Seller Parties has the right, power and authority
to execute and deliver this Agreement and the Related Agreements and to perform
its obligations under this Agreement and the Related Agreements to which it is a
party.
(b) Except as set forth in Schedule 2.2(b), neither the execution
and delivery of this Agreement and the Related Agreements nor the consummation
or performance of any of the Contemplated Transactions will (with or without
notice or lapse of time):
(i) contravene, conflict with, or result in a violation of
any provision of the Organizational Documents of any of the Seller Parties;
(ii) contravene, conflict with, or result in a violation of,
or give any Governmental Body or other Person the right to challenge any of
the Contemplated Transactions or to exercise any remedy or obtain any
relief under, any Legal Requirement or any Order to which any of the Seller
Parties, or any of the assets owned or used by Seller Parties, are subject,
except for such failures, contraventions, violations or conflicts which
would not have a Material Adverse Effect;
(iii) contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by the Seller Parties or that
otherwise relates to the business of, or any of the assets owned or used
by, the Seller Parties (with respect to the Retail Store Business or the
Meat Processing Business), except for such failures which would not have a
Material Adverse Effect;
(iv) contravene, conflict with, or result in a violation or
breach of any provision of, or to Seller Parties' Knowledge give any Person
the right to declare a default or exercise any remedy under, or to
accelerate the
9
maturity or performance of, or to cancel, terminate, or modify, in any
material respect, any Assumed Contract; or
(v) result in the imposition or creation of any Encumbrance
(other than Permitted Encumbrances) upon or with respect to any of the
assets owned or used by Sellers in connection with the Retail Store
Business or the Meat Processing Business.
Except as set forth in Schedule 2.2, none of the Seller Parties is
required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
of any of the Contemplated Transactions.
2.3 Financial Statements. Schedule 2.3 contains (i) the unaudited
balance sheets of AFD (with respect to the Meat Processing Business) as of
December 29, 2002, March 23, 2003 and June 15, 2003 (the "Orlando Balance
Sheets"), (ii) the unaudited statements of profits and losses of AFD (with
respect to the Meat Processing Business) for the fiscal year ended December 29,
2002 and the fiscal year-to-date period ended June 15, 2003 (the "Orlando P & L
Statements"), (iii) the unaudited balance sheet of SF Stores with respect to
that portion of the Retail Store Business included in the Assets as of March 23,
2003 (the "SF Stores Balance Sheet") and (iv) the unaudited statements of
profits and losses of SF Stores with respect to that portion of the Retail Store
Business included in the Assets for the fiscal year-to-date period ended June
15, 2003 (the "SF Stores P & L Statements" and, together with the Orlando
Balance Sheets, the Orlando P & L Statements and the SF Stores Balance Sheet,
the "Financial Statements"). The Financial Statements have been extracted from
the books and records of AFD (with respect to the Meat Processing Business) and
SF Stores (with respect to the Retail Store Business) and on the basis of the
presentation as reflected on Schedule 1.4. The Financial Statements are true,
correct and complete in all material respects and fairly present the financial
position of AFD (with respect to the Meat Processing Business) and SF Stores
(with respect to the Retail Store Business) and the results of their respective
operations as of the dates thereof or for the periods covered thereby, and have
been prepared in conformity with GAAP applied consistently throughout the
periods indicated. No financial statements of any Person other than the Sellers
are required by GAAP to be included in the financial statements of any of the
Sellers.
2.4 Books and Records. The books of account, minute books, stock
record books and other records of each of the Sellers, all of which have been
made available to Buyers, are complete and correct in all material respects and
have been maintained in accordance with Sellers' customary practices. The minute
books of each of the Sellers contain accurate and complete records in all
material respects of all meetings of, and action taken by, the shareholders and
board of directors (and committees thereof), as the case may be, of each of the
Sellers, and no such meeting has been held for which minutes have not been
prepared and are not contained in such minute books.
2.5 No Undisclosed Liabilities. Except as set forth on Schedule 2.5,
neither SF Stores (with respect to the Retail Store Business) nor AFD (with
respect to the Meat Processing Business) has any material liabilities or
obligations of any nature (whether known or unknown and whether absolute,
accrued, contingent, or otherwise) except for liabilities or obligations
reflected or reserved against in the Orlando Balance Sheets or the SF Stores
Balance
10
Sheet and liabilities incurred in the Ordinary Course of Business since the
respective dates thereof none of which, individually or in the aggregate, would
have a Material Adverse Effect.
2.6 Compliance with Legal Requirements; Governmental Authorizations.
(a) Except as set forth on Schedule 2.6 and except for those
violations or failures that would not have a Material Adverse Effect:
(i) SF Stores (with respect to the Retail Store Business)
and AFD (with respect to the Meat Processing business) are, and at all
times since January 1, 2001, have been, in compliance with each Legal
Requirement that is applicable to each of them or to the conduct or
operation of the Retail Store Business or the Meat Processing Business, as
appropriate, or the ownership or use of any of their respective assets;
(ii) no event has occurred or circumstance exists that (with
or without notice or lapse of time), to the Knowledge of the Seller Parties
(A) would constitute or result in a violation by Sellers of, or a failure
on the part of Sellers to comply with, any Legal Requirement applicable to
the Retail Store Business or the Meat Processing Business, or (B) give rise
to any obligation on the part of Sellers to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature; and
(iii) Seller Parties have not received, at any time since
January 1, 2001, any written notice or other written communication, or to
the Knowledge of Seller Parties, any other notice or communication, from
any Governmental Body or any other Person regarding (A) any actual, alleged
or potential violation of, or failure to comply with, any Legal Requirement
applicable to the Retail Store Business or the Meat Processing Business, or
(B) any actual, alleged or potential obligation on the part of SF Stores
(as it relates to the Retail Store Business) or AFD (as it relates to the
Meat Processing Business) to undertake, or to bear all or any portion of
the cost of, any remedial action of any nature.
(b) Schedule 2.6(b) contains a complete and accurate list of each
material Governmental Authorization that is held by each of the Sellers (with
respect to the Retail Store Business or the Meat Processing Business) or that
otherwise relates to the Retail Store Business or the Meat Processing Business,
or to any of the assets owned or used by Sellers in connection with the Retail
Store Business or the Meat Processing Business. Each material Governmental
Authorization listed on Schedule 2.6(b) is valid and in full force and effect.
Except as set forth on Schedule 2.6(b) and except for those violations or
failures that would not have a Material Adverse Effect:
(i) each of SF Stores (with respect to the Retail Store
Business) and AFD (with respect to the Meat Processing Business) is, and at
all times since January 1, 2001, has been, in compliance in all material
respects with
11
all of the terms and requirements of each Governmental Authorization
identified on Schedule 2.6(b);
(ii) no event has occurred or circumstance exists that would
(with or without notice or lapse of time) (A) constitute or result in a
violation of or a failure to comply with any term or requirement of any
Governmental Authorization listed on Schedule 2.6(b), or (B) result in the
revocation, withdrawal, suspension, cancellation, or termination of, or any
modification to, any Governmental Authorization listed or required to be
listed on Schedule 2.6(b);
(iii) neither SF Stores (with respect to the Retail Store
Business) nor AFD (with respect to the Meat Processing Business) has
received, at any time since January 1, 2001, any written notice or other
written communication, or to the Knowledge of the Seller Parties, any other
notice or communication, from any Governmental Body or any other Person
regarding (A) any actual, alleged or potential violation of or failure to
comply with any term or requirement of any Governmental Authorization
listed on Schedule 2.6(b), or (B) any actual, proposed or potential
revocation, withdrawal, suspension, cancellation, termination of, or
modification to, any Governmental Authorization listed on Schedule 2.6(b);
and
(iv) all applications legally required to have been filed
for the renewal of the Governmental Authorizations listed on Schedule
2.6(b) have been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to have been made with
respect to such Governmental Authorizations have been duly made on a timely
basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed on Schedule 2.6(b) collectively
constitute all of the Governmental Authorizations necessary to permit SF Stores
to lawfully conduct and operate the Retail Store Business and AFD to lawfully
conduct and operate the Meat Processing Business in the manner each currently
conducts and operates such business and to permit each of the Sellers (with
respect to such business) to own and use their assets in the manner in which
they currently own and use such assets.
2.7 Absence of Certain Changes. Except as disclosed on Schedule 2.7,
since December 30, 2002, each of SF Stores (with respect to the Retail Store
Business) and AFD (with respect to the Meat Processing Business) has conducted
its business only in the Ordinary Course of Business, and there has not been any
Material Adverse Effect. Without limiting the generality of the foregoing, and
except as otherwise disclosed on Schedule 2.7, since December 30, 2002, there
has not been:
(a) Any change in the authorized or issued shares of SF Stores or
AFD, grant of any option or right to purchase shares or other equity interests
of SF Stores or AFD, issuance of any security convertible into such shares or
equity interests, grant of any registration rights, purchase, redemption,
retirement or other acquisition by SF Stores or AFD of any such
12
shares or equity interests, or declaration or payment of any distribution or
payment in respect of such shares or equity interests;
(b) Any amendment to the Organizational Documents of SF Stores or
AFD;
(c) Any damage, destruction, casualty or other similar occurrence
or event (whether or not insured against) affecting the Assets, SF Stores (with
respect to the Retail Store Business), or AFD (with respect to the Meat
Processing Business) which either singly or in the aggregate materially
adversely affects their respective assets, liabilities, earnings, business or
operations;
(d) Any mortgage or pledge of or encumbrance on any of the
properties or assets of Sellers that are used in the operation of the Retail
Store Business or the Meat Processing Business and located in the state of
Florida;
(e) Any incurrence or creating by SF Stores (with respect to the
Retail Store Business) or AFD (with respect to the Meat Processing Business) of
any liability, commitment, or obligation in excess of $25,000, except unsecured
current liabilities incurred in the Ordinary Course of Business and Assumed
Contracts entered into in the Ordinary Course of Business;
(f) Any sale, lease, transfer, or other disposition of any assets
that are used in the operation of the Retail Store Business or the Meat
Processing Business and located in the state of Florida in excess of $25,000,
except assets sold, leased, transferred or otherwise disposed of in the Ordinary
Course of Business;
(g) Any payment or increase in compensation (including, without
limitation, bonuses, salaries, commissions, profit sharing, or pension) to any
shareholder, officer, or director or (except in the Ordinary Course of Business)
employee involved in the Retail Store Business or the Meat Processing Business
or entry into any employment, severance, or similar Assumed Contract with any
officer, director, or employee involved primarily in the Retail Store Business
or the Meat Processing Business other than increases or changes in the Ordinary
Course of Business;
(h) Any material change from the past practice of SF Stores (with
respect to the Retail Store Business) or AFD (with respect to the Meat
Processing Business) regarding the incurrence and timing of payment of trade
payables;
(i) Any loan or advance by Sellers (with respect to the Retail
Store Business or the Meat Processing Business) to, or guarantee by Sellers
(with respect to the Retail Store Business or the Meat Processing Business) for
the benefit of, any party with respect to the Retail Store Business or the Meat
Processing Business other than sales to customers of the Retail Store Business
or the Meat Processing Business on credit in the Ordinary Course of Business
consistent with past custom and practices;
(j) Any cancellation, waiver, or release by Sellers of any
material debts, rights, or claims with respect to the Retail Store Business or
the Meat Processing Business;
13
(k) Any material modification, amendment, or termination of any
Assumed Contract to which either of the Sellers is a party with respect to the
Retail Store Business or the Meat Processing Business, other than expiration of
Assumed Contracts in accordance with their terms;
(l) Any loss or adverse modification of the relationship of
Sellers (with respect to the Retail Store Business or the Meat Processing
Business) with any material customer, supplier, or key employee of the Retail
Store Business or the Meat Processing Business or receipt of notification to
such effect;
(m) Any material change from past practices in the application of
accounting principles, methods, or practices (including, but without limitation,
any change in depreciation or amortization policies or rates) utilized by
Sellers with respect to the Retail Store Business or the Meat Processing
Business;
(n) Any capital expenditures or commitments therefor by Sellers
with respect to the Retail Store Business or the Meat Processing Business in
each case in excess of $25,000, other than capital expenditures or commitments
therefor to replace obsolete or unrepairable equipment used in the Retail Store
Business or the Meat Processing Business in the Ordinary Course of Business;
(o) Any Encumbrance, other than Permitted Encumbrances, on any
asset of Sellers (with respect to the Retail Store Business or the Meat
Processing Business) that are used in the operation of the Retail Store Business
or the Meat Processing Business and located in the state of Florida other than
the items described on Schedule 2.7 (the "Permitted Exceptions");
(p) Any entry into, termination of, or receipt of notice of
termination of (i) any license, distributorship, dealer, sales representative,
joint venture, credit, or similar agreement relating to the Retail Store
Business or the Meat Processing Business, or (ii) any Assumed Contract or
transaction involving a total remaining commitment to or by Sellers of at least
$25,000 relating to the Retail Store Business or the Meat Processing Business
other than in the Ordinary Course of Business; or
(q) Any agreement, whether oral or written, by Sellers to do any
of the foregoing.
2.8 Personal Property. Schedule 2.8 contains (a) a list of all
material leases (other than real property leases), pursuant to which either of
the Sellers is either a lessor or lessee of tangible personal property that are
used in the operation of the Retail Store Business or the Meat Processing
Business and located in the state of Florida and (b) a list of all material
tangible and intangible personal property that are owned or used by each of the
Sellers in connection with the Retail Store Business or the Meat Processing
Business and located in the state of Florida. Except as set forth on Schedule
2.8, SF Stores and AFD have title to, or a valid leasehold interest in, each of
the items listed on Schedule 2.8 that it owns or leases, respectively, in each
case free and clear of any Encumbrances, except for Permitted Encumbrances, and
all items of tangible and intangible personal property listed on Schedule 2.8
are included within the Assets or are
14
licensed to Buyers pursuant to the Software License and Support Agreement or the
Tradename and Trademark License Agreements. Sellers own or lease all tangible or
intangible personal property, rights, and assets necessary for the operation by
Sellers of the Retail Store Business and the Meat Processing Business as now
conducted. Except as set forth in Schedule 2.8, none of the personal property
listed on Schedule 2.8 is held under any material lease, security agreement,
conditional sales contract or other title retention or security arrangement or
is located other than on the premises owned or used by Sellers in the state of
Florida. The assets used in the conduct of the Retail Store Business or the Meat
Processing Business are being sold in "as is" condition and, to the Knowledge of
Seller Parties, such assets are not subject to any known defects or conditions
that would require Buyers to expend a material amount of funds to repair other
than routine maintenance.
2.9 Inventory.
(a) All items included in the inventory of Sellers (with respect
to the Meat Processing Business and the Retail Store Business), whether or not
reflected on the Orlando Balance Sheets or the SF Stores Balance Sheet, are (i)
of good and standard quality and (ii) saleable in the Ordinary Course of
Business. Sellers have provided for slow moving and obsolete inventory by
establishing a reserve for the slow moving and obsolete inventory and a reserve
for shrinkage. Such reserves, based on the Sellers' Knowledge, are considered
adequate. Inventories reflected on the Orlando Balance Sheet and the SF Stores
Balance Sheet have been priced at the lower of cost or net realizable value.
(b) The aggregate amount of the reserves for slow-moving and
obsolete inventory and shrinkage with respect to the Meat Processing Business,
the Retail Store Business and the Foodservice Business (as such term is defined
in the Share Purchase Agreement) is no less than Eight Hundred Thousand Dollars
($800,000) in the aggregate.
2.10 Accounts Receivable. All of the Accounts Receivable (not
including the Foodservice Business) reflected on the Orlando Balance Sheets and
the SF Stores Balance Sheet represent valid obligations arising from sales
actually made or services actually performed by Sellers, as applicable, in the
Ordinary Course of Business. The allowance for doubtful accounts reflected on
the Orlando Balance Sheet and the SF Stores Balance Sheet has been calculated on
a consistent basis with past practice based on the Knowledge of Seller's
management at those dates and are considered adequate. Schedule 2.10 contains a
complete and accurate list of all Accounts Receivable (not including the
Foodservice Business) as of the date of the Orlando Balance Sheets and the SF
Stores Balance Sheet, which list sets forth the aging of such Accounts
Receivable (not including the Foodservice Business).
2.11 Contracts; No Defaults. Schedule 2.11(a) contains a complete and
accurate list, and Sellers have delivered to Buyers true and complete copies
(except for the Vendor Agreements as set forth on Annex 2 of the schedule
attached hereto) of:
(i) each Assumed Contract that involves the performance of
services or delivery of goods or materials to SF Stores (with respect to
the Retail Store Business) and AFD (with respect to the Meat Processing
Business) of an amount or value in excess of $25,000;
15
(ii) each Assumed Contract that was not entered into in the
Ordinary Course of Business and that involves expenditures or receipts of
SF Stores (with respect to the Retail Store Business) and AFD (with respect
to the Meat Processing Business) in excess of $25,000;
(iii) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Assumed Contract
affecting the ownership of, leasing of, title to, use of, or any leasehold
or other interest in, any real or personal property used in the operation
of the Retail Store Business or the Meat Processing Business (except
personal property leases and installment and conditional sales agreements
having a value per item or aggregate payments of less than $25,000 and with
terms of less than one year);
(iv) each licensing agreement or other Assumed Contract with
respect to patents, trademarks, copyrights, or other intellectual property
that are used in the operation of the Retail Store Business or the Meat
Processing Business, including agreements with current or former employees,
consultants, or contractors regarding the appropriation or the
nondisclosure of any of the Intellectual Property Rights;
(v) each collective bargaining agreement and other Assumed
Contract to or with any labor union or other employee representative of a
group of employees of the Retail Store Business or the Meat Processing
Business.
(vi) each joint venture, partnership, investment or other
agreement involving a sharing of profits, losses, costs, or liabilities by
Sellers with any other Person relating to the Retail Store Business or the
Meat Processing Business;
(vii) each Assumed Contract containing covenants that
restrict the business activity of the Seller Parties (with respect to the
Retail Store Business or the Meat Processing Business) or limits the
freedom of the Seller Parties (with respect to the Retail Store Business or
the Meat Processing Business) to engage in any line of business or to
compete with any Person ;
(viii) each Assumed Contract providing for payments to or by
any Person based on sales, purchases, or profits, other than direct
payments for goods;
(ix) each power of attorney that is currently outstanding;
(x) each Assumed Contract entered into other than in the
Ordinary Course of Business that contains or provides for an express
undertaking by Sellers (as it relates to the Retail Store Business or the
Meat Processing Business) to be responsible for consequential damages;
16
(xi) each Assumed Contract for capital expenditures or for
the purchase of intangible assets in excess of $25,000;
(xii) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by Sellers
with respect to the Retail Store Business or the Meat Processing Business
other than in the Ordinary Course of Business; and
(xiii) each material amendment, supplement, and modification
in respect of any of the foregoing.
(b) Except as set forth in Schedule 2.11(b), no officer,
director, agent, employee, consultant, or contractor of Seller Parties (with
respect to the Meat Processing Business or the Retail Store Business) is bound
by any Contract that limits the ability of such officer, director, agent,
employee, consultant, or contractor to (A) engage in or continue any conduct,
activity, or practice relating to the Retail Store Business or the Meat
Processing Business, or (B) assign to Sellers (with respect to the Meat
Processing Business or the Retail Store Business) or to any other Person any
rights to any invention, improvement, or discovery.
(c) Except as set forth in Schedule 2.11(c), each Assumed
Contract identified or required to be identified in Schedule 2.11(a) is in full
force and effect and is valid and enforceable in accordance with its terms.
(d) Except as set forth in Schedule 2.11(d):
(i) Sellers (with respect to the Meat Processing Business
and the Retail Store Business) are, and at all times since January 1, 2001,
have been, in compliance in all material respects with all applicable terms
and requirements of each Assumed Contract relating to the Retail Store
Business or the Meat Processing Business under which Sellers (with respect
to the Meat Processing Business or the Retail Store Business) have or had
any obligation or liability or by which Sellers (with respect to the Meat
Processing Business or the Retail Store Business) or any of the assets
owned or used by Sellers (with respect to the Meat Processing Business or
the Retail Store Business) are or were bound;
(ii) to the Knowledge of Seller Parties, each other Person
that has or had any obligation or liability under any Assumed Contract
under which Sellers have or had any rights relating to the Retail Store
Business or the Meat Processing Business is, and at all times since January
1, 2001, has been, in material compliance with all applicable terms and
requirements of such Assumed Contract;
(iii) no event has occurred or circumstance exists that
(with or without notice or lapse of time) may contravene, conflict with, or
result in a violation or breach of, or give Sellers (with respect to the
Meat Processing Business and the Retail Store Business) or other Person the
right to declare a default or exercise any remedy under, or to accelerate
the maturity or performance of, or to cancel, terminate, or modify, any
Assumed Contract; and
17
(iv) Sellers (with respect to the Meat Processing Business
and the Retail Store Business) have not given to or received from any other
Person, at any time since January 1, 2001, any notice or other
communication (whether oral or written) regarding any actual, alleged,
possible, or potential violation or breach of, or default under, any
Assumed Contract relating to the Retail Store Business or the Meat
Processing Business.
(e) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to
Sellers under current or completed Assumed Contracts relating to the Retail
Store Business or the Meat Processing Business with any Person and no such
Person has made written demand for such renegotiation.
(f) The Contracts relating to the sale, production, manufacture,
or provision of products or services by Sellers with respect to the Retail Store
Business and the Meat Processing Business have been entered into in the Ordinary
Course of Business and have been entered into without the commission of any act
alone or in concert with any other Person, or any consideration having been paid
or promised, that is or would be in violation of any Legal Requirement.
(g) Except for the oral agreements referenced in Items 3 and 9 of
Section 2.11(a)(i) on Schedule 2.11(a), to the Knowledge of Seller Parties there
are no material oral contracts with respect to the Meat Processing Business or
the Retail Store Business.
2.12 Guaranties. Except as set forth in Schedule 2.12, neither Seller
Shareholder nor Sellers is a guarantor or otherwise liable for any material
liability or obligation (including indebtedness) of any other Person.
2.13 Employee Benefits.
(a) The following terms have the meanings set forth below:
"Company Other Benefit Obligation" means an Other Benefit Obligation
owed, adopted, or followed by Sellers or an ERISA Affiliate of either of the
Sellers to any employee of Sellers.
"Company Plan" means all Plans of which Sellers or an ERISA Affiliate
of either of the Sellers is or was a Plan Sponsor, or to which Sellers or an
ERISA Affiliate of either of the Sellers otherwise contributes or has
contributed for the benefit of any employee or former employee of Sellers, or in
which Sellers or an ERISA Affiliate of either of the Sellers otherwise
participates or has participated for the benefit of any employee or former
employee of either of the Sellers, within the last 6 years prior to the date
hereof. All references to Plans are to Company Plans unless the context requires
otherwise.
"Company VEBA" means a VEBA whose members include employees of either
of the Sellers.
18
"ERISA Affiliate" means, with respect to each of SF Stores and AFD,
any other Person that, together with SF Stores or AFD, would be treated as a
"single employer" within the meaning of Section 4001(b) of ERISA.
"Multi-Employer Plan" has the meaning given in ERISA (S) 3(37)(A).
"Other Benefit Obligations" means all obligations, arrangements, or
customary practices, whether or not legally enforceable, to provide benefits,
other than salary, as compensation for services rendered, to present or former
directors, employees and agents of Sellers, other than such obligations,
arrangements, and practices that are Plans. Other Benefit Obligations include
consulting agreements under which the compensation paid does not depend upon the
amount of service rendered, sabbatical policies, severance payment policies, and
fringe benefits within the meaning of IRC (S) 132.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Pension Plan" has the meaning given in ERISA (S) 3(2)(A).
"Plan" has the meaning given in ERISA (S) 3(3).
"Plan Sponsor" has the meaning given in ERISA (S) 3(16)(B).
"Qualified Plan" means any Plan that meets or purports to meet the
requirements of IRC (S) 401(a).
"Title IV Plans" means all Pension Plans that are subject to Title IV
of ERISA, 29 U.S.C. (S) 1301 et seq., other than Multi-Employer Plans.
"VEBA" means a voluntary employees' beneficiary association under IRC
(S) 501(c)(9).
"Welfare Plan" has the meaning given in ERISA (S) 3(1).
(b) (i) Schedule 2.13(b)(i) contains a complete and accurate list
of all Company Plans, Company Other Benefit Obligations.
(ii) Schedule 2.13(b)(ii) sets forth each Multi-Employer
Plan.
(iii) There are no Company VEBAs.
(c) Sellers have delivered to Buyers, or will deliver to Buyers
within ten (10) days of the date of this Agreement:
(i) all documents that set forth the terms of the Company
Plans, or Company Other Benefit Obligations, and of any related trusts,
including (A) all plan descriptions and summary plan descriptions of
Company Plans for which Sellers is required to prepare, file, and
distribute plan descriptions
19
and summary plan descriptions, and (B) all summaries and descriptions
furnished to participants and beneficiaries regarding Company Plans, and
Company Other Benefit Obligations, for which a plan description or summary
plan description is not required;
(ii) all personnel, payroll, and employment manuals and
policies;
(iii) all collective bargaining agreements pursuant to which
contributions have been made or obligations incurred (including both
pension and welfare benefits) by Sellers and the ERISA Affiliates of either
of the Sellers, and all collective bargaining agreements pursuant to which
contributions are being made or obligations are owed by such entities;
(iv) a written description of any Company Plan or Company
Other Benefit Obligation that is not otherwise in writing;
(v) all insurance policies purchased by or to provide
benefits under any Company Plan;
(vi) all contracts with third party administrators,
actuaries, investment managers, consultants, and other independent
contractors that relate to the Company Plans or Company Other Benefit
Obligation;
(vii) all reports submitted within the two (2) years
preceding the date of this Agreement by third party administrators,
actuaries, investment managers, consultants, or other independent
contractors with respect to the Company Plans or Company Other Benefit
Obligations;
(viii) the Form 5500 filed for each of the most recent two
(2) plan years with respect to each Company Plan, including all schedules
thereto and the opinions of independent accountants;
(ix) all notices that were given by the Seller Parties or
any ERISA Affiliate of the Seller Parties or any Company Plans to the IRS,
the PBGC, pursuant to statute, within the four (4) years preceding the date
of this Agreement, that are not expressly mentioned elsewhere in this
Section 2.14;
(x) all notices that were given by the IRS, the PBGC, or the
Department of Labor to any of the Seller Parties, any ERISA Affiliate of
any of the Seller Parties, or any Company Plan within the four (4) years
preceding the date of this Agreement;
(xi) with respect to Qualified Plans, the most recent
determination letter for each Plan of SF Stores or AFD that is a Qualified
Plan; and
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(xii) with respect to Title IV Plans, the Form PBGC-1 filed
for each of the two (2) most recent years.
(d) Except as set forth in Schedule 2.13(d):
(i) To the Knowledge of the Seller Parties, SF Stores and
AFD have performed, in all material respects, all of their respective
obligations under all Company Plans, and Company Other Benefit Obligations.
SF Stores and AFD have made appropriate entries in its financial records
and statements for all obligations and liabilities under such Plans, and
Obligations that have accrued but are not due.
(ii) To the Knowledge of the Seller Parties, no written
statement has been made by any of the Seller Parties to any Person with
regard to any Plan or Other Benefit Obligation that was not in accordance
with the Plan or Other Benefit Obligation and that could have a material
adverse economic consequence to SF Stores, AFD, the Retail Store Business,
the Meat Processing Business, or Buyers.
(iii) Each of SF Stores and AFD, with respect to all Company
Plans, and Company Other Benefit Obligations, is, and each Company Plan,
and Company Other Benefit Obligation is, in full material compliance with
ERISA, the IRC, the privacy requirements of the Health Insurance
Portability and Accountability Act of 1996, and other applicable Legal
Requirements including the provisions of such Legal Requirements expressly
mentioned in this Section 2.14, and with any applicable collective
bargaining agreement.
(A) To the Knowledge of the Seller Parties, no
transaction prohibited by ERISA(S)406 and no "prohibited transaction"
under IRC(S) 4975(c) has occurred with respect to the Company Plan.
(B) None of the Seller Parties has any material
liability to PBGC with respect to any Plan or has any liability under
ERISA (S) 502 or (S) 4071.
(iv) Other than claims for benefits submitted by
participants or beneficiaries, no claim against, or legal proceeding
involving, any Company Plan or Company Other Benefit Obligation is pending
or, to the Knowledge of Seller Parties, is threatened.
(v) Each Company Plan intended to be a Qualified Plan has
received a determination letter from the IRS or has applied for a
determination letter from the IRS stating that it is so qualified. To the
Knowledge of the Seller Parties, each Plan intended to be a Qualified Plan,
in form and operation, is so qualified.
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(vi) SF Stores and AFD and each ERISA Affiliate of SF Stores
and AFD have met the minimum funding standard, and have made all
contributions required, under ERISA (S) 302 and IRC (S) 402.
(vii) The Seller Parties have paid all amounts due to the
PBGC pursuant to ERISA (S) 4007.
(viii) Neither SF Stores or AFD nor any ERISA Affiliate of
SF Stores or AFD has withdrawn from any Title IV Plan in a manner that
would that could be reasonably expected to subject any entity or any of the
Seller Parties to liability under ERISA (S) 4062(e), (S) 4063 or (S) 4064.
(ix) None of the Seller Parties and no ERISA Affiliate of
the Seller Parties has filed a notice to terminate any Plan, and none of
the Seller Parties and no ERISA Affiliate of the Seller Parties has adopted
any amendment to treat a Plan as terminated. The PBGC has not instituted
proceedings to treat the Company Plan as terminated. No event has occurred
or circumstance exists that would constitute grounds under ERISA (S) 4042
for the termination of, or the appointment of a trustee to administer, the
Company Plan.
(x) No amendment has been made, or is reasonably expected to
be made, to any Plan that has required or could require the provision of
security under ERISA (S) 307 or IRC (S) 401(a)(29).
(xi) None of the Seller Parties has Knowledge of any facts
or circumstances that would give rise to any liability of Seller
Shareholder, SF Stores, AFD, or Buyers to the PBGC under Title IV of ERISA.
(xii) None of the Seller Parties and no ERISA Affiliate of
any of the Seller Parties has ever established, maintained, or contributed
to or otherwise participated in, or had an obligation to maintain,
contribute to, or otherwise participate in, any Multi-Employer Plan.
(xiii) Except to the extent required under ERISA (S) 601 et
seq. and IRC (S) 4980B, neither SF Stores nor AFD provides health or
welfare benefits for any retired or former employee and neither SF Stores
nor AFD is obligated to provide health or welfare benefits to any active
employee following such employee's retirement or other termination of
service.
(xiv) SF Stores and AFD each have the right to modify and
terminate benefits to retirees (other than pensions) with respect to both
retired and active employees.
(xv) No payment that is owed or becomes due to any director,
officer, employee, or agent of SF Stores or AFD will be non-deductible to
SF Stores or AFD or subject to tax under IRC (S) 280G or (S) 4999; nor will
SF Stores or AFD be required to "gross up" or otherwise compensate any such
person because of the imposition of any excise tax on a payment to such
person.
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(xvi) The consummation of the Contemplated Transactions will
not result in the payment, vesting, or acceleration of any benefit.
2.14 Employees.
(a) Schedule 2.14 contains a complete and accurate list of the
following information for each employee, officer or director of each of SF
Stores (with respect to the Retail Store Business) and of AFD (with respect to
the Meat Processing Business) who earned more than $75,000 in calendar year
2002, or is reasonably expected to earn more than $75,000 in calendar year 2003,
including each employee on leave of absence or layoff status: name; job title;
current compensation paid or payable and any change in compensation since
December 30, 2002.
(b) To the Knowledge of the Seller Parties, no employee, officer,
or director of Sellers is a party to, or is otherwise bound by, any agreement or
arrangement, including any confidentiality, noncompetition, or proprietary
rights agreement, between such employee, officer, or director and any other
Person ("Proprietary Rights Agreement") that in any way adversely affects or
will affect (i) the performance of his or her duties as an employee, officer, or
director of either of the Sellers, or (ii) the ability of SF Stores to conduct
the Retail Store Business or AFD to conduct the Meat Processing Business,
including any Proprietary Rights Agreement with either of the Sellers by any
such employee or director. To the Knowledge of the Seller Parties, no director,
officer, or other key employee of SF Stores or AFD involved in the Retail Store
Business or the Meat Processing Business, respectively, intends to terminate his
or her employment with SF Stores or AFD prior to the Closing Date.
(c) Schedule 2.14 also contains a complete and accurate list of
the following information for each retired employee, officer or director of SF
Stores or AFD involved in the Retail Store Business or the Meat Processing
Business, respectively, or their dependents receiving benefits or scheduled to
receive benefits in the future: name, pension benefit, pension option election,
retiree medical insurance coverage, retiree life insurance coverage, and other
benefits.
2.15 Labor Relations; Compliance. Except as set forth in Schedule
2.15, neither SF Stores (with respect to the Retail Store Business) nor AFD
(with respect to the Meat Processing Business) during the past three years has
been, or presently is, a party to, any collective bargaining or other labor
Contract. During the past three years there has not been, and presently there is
no pending or existing, and to the Knowledge of the Seller Parties there is not
threatened (a) any strike, slowdown, picketing, work stoppage, or employee
grievance process, (b) any material proceeding against or affecting SF Stores,
AFD, the Retail Store Business, or the Meat Processing Business relating to the
alleged violation of any Legal Requirements pertaining to labor relations or
employment matters, including any charge or complaint filed by an employee or
union with the National Labor Relations Board, the Equal Employment Opportunity
Commission, or any comparable Governmental Body, organizational activity, or
other labor or employment dispute against or affecting SF Stores, AFD, the
Retail Store Business, the Meat Processing Business, or their premises, or (c)
any application for certification of a collective bargaining agent. To the
Knowledge of the Seller Parties, no event has occurred or circumstance exists
that could provide the basis for any work stoppage or other labor dispute. There
is no
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lockout of any employees of the Retail Store Business or the Meat Processing
Business by SF Stores or AFD, and no such action is contemplated by SF Stores or
AFD. Each of SF Stores and AFD has complied in all material respects with all
Legal Requirements relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective bargaining,
the payment of social security and similar taxes, occupational safety and
health, and plant closing. Neither SF Stores nor AFD is liable for the payment
of any compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.
2.16 Litigation.
(a) Except as set forth on Schedule 2.16(a), there is no pending
Proceeding:
(i) that has been commenced by or against Sellers (as it
relates to the Retail Store Business or the Meat Processing Business), or
any of the assets owned or used by, Sellers in connection with the Retail
Store Business or the Meat Processing Business; or
(ii) that challenges or that would reasonably be expected to
prevent, delay or make illegal any of the Contemplated Transactions.
To the Knowledge of the Seller Parties, (1) no such Proceeding has
been threatened and (2) no event has occurred or circumstance exists that would
give rise to or serve as a basis for the commencement of any such Proceeding.
Sellers have made available to Buyers the attorneys representing Sellers in the
Proceedings, and such attorneys have made available to Buyers summaries of all
pleadings, correspondence, and other documents, as applicable, relating to each
Proceeding listed on Schedule 2.16(a). The Proceedings listed on Schedule
2.16(a) would not, individually or in the aggregate, have a Material Adverse
Effect.
(b) Except as set forth on Schedule 2.16(b):
(i) there is no Order to which SF Stores or AFD or any of
the assets that are used in the Retail Store Business or the Meat
Processing Business and located in the state of Florida is subject;
(ii) Sellers are not subject to any Order that relates to
the Retail Store Business or the Meat Processing Business or any of the
assets owned or used by, Sellers (with respect to the Meat Processing
Business or the Retail Store Business); and
(iii) no officer, director, agent, or employee of SF Stores
or AFD is subject to any Order that prohibits such officer, director,
agent, or employee from engaging in or continuing any material conduct,
activity, or practice relating to the Retail Store Business or the Meat
Processing Business.
(c) Except as set forth on Schedule 2.16(c):
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(i) Each of the Sellers is, and at all times since January
1, 2000, has been, in material compliance with all of the terms and
requirements of each Order relating to the Retail Store Business or the
Meat Processing Business to which it, or any of the assets owned or used by
it in the Retail Store Business or the Meat Processing Business, is or has
been subject;
(ii) no event has occurred or circumstance exists that would
constitute or result in (with or without notice or lapse of time) a
violation of or failure to comply with any term or requirement of any Order
to which SF Stores or AFD, or any of the assets owned or used by SF Stores
or AFD in the Retail Store Business or the Meat Processing Business, is
subject; and
(iii) none of the Seller Parties (with respect to the Retail
Store Business or the Meat Processing Business) has received, at any time
since January 1, 2001, any written notice or other written communication,
or to the Knowledge of the Seller Parties any oral communication, from any
Governmental Body regarding any actual, alleged or potential violation of,
or failure to comply with, any term or requirement of any Order to which SF
Stores or AFD or any of the assets owned or used by SF Stores or AFD in the
Retail Store Business or the Meat Processing Business, is or has been
subject.
2.17 Real Property. Schedule 2.17 contains a complete and accurate
list of all real property, leaseholds, or other interests therein owned by SF
Stores or AFD in connection with the Retail Store Business or the Meat
Processing Business. Sellers have delivered to Buyers copies of the leases and
other instruments (as recorded) by which Sellers acquired such real property
interests, and copies of all title insurance policies, opinions, abstracts, and
surveys in the possession or control of the Seller Parties and relating to such
property or interests. SF Stores and AFD own the leasehold interests and all the
properties and assets (whether real, personal, or mixed and whether tangible or
intangible) related thereto that they purport to lease and use in connection
with the conduct of the Retail Store Business or the Meat Processing Business,
respectively, and are located in the facilities owned or operated by SF Stores
or AFD or reflected as leased in the books and records of SF Stores and AFD,
including all of the properties and assets reflected in the Orlando Balance
Sheets and the SF Stores Balance Sheet (except for assets held under capitalized
leases disclosed or not required to be disclosed in Schedule 2.17 and personal
property sold since the date of the Orlando Balance Sheets and the SF Stores
Balance Sheet, as the case may be, in the Ordinary Course of Business), and all
of the properties and assets purchased or otherwise acquired by Sellers since
the date of the Orlando Balance Sheets and the SF Stores Balance Sheet (except
for personal property acquired and sold since the date of the Orlando Balance
Sheets and the SF Stores Balance Sheet in the Ordinary Course of Business and
consistent with past practice), which subsequently purchased or acquired
properties and assets (other than inventory and short-term investments) are
listed in Schedule 2.17. Except as set forth in the preliminary title reports
for the properties leased by AFD (with respect to the Meat Processing Business)
and SF Stores and previously delivered to Buyers, all material properties and
assets reflected in the Orlando Balance Sheets and the SF Stores Balance Sheet
are free and clear of all Encumbrances and are not, in the case of real
property, subject to any rights of way, building or use restrictions,
exceptions, variances, reservations, or limitations of any nature.
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2.18 Insurance.
(a) Schedule 2.18(a) sets forth, by year, for the current policy
year and each of the two (2) preceding policy years:
(i) a summary of the loss experience under each policy that
provides coverage to AFD (with respect to the Meat Processing Business) and
SF Stores.
(b) Except as set forth in Schedule 2.18(b):
(i) the Seller Parties have paid all premiums due under each
policy that provides coverage to AFD (with respect to the Meat Processing
Business) and SF Stores.
(c) AFD (with respect to the Meat Processing Business) and SF
Stores do not have in effect a separate insurance policy.
(d) Each of AFD (with respect to the Meat Processing Business)
and SF Stores has been continuously covered since such time as the relevant
assets relating to the Meat Processing Business and the Retail Store Business
were acquired by Sellers by insurance in scope and amount customary and
reasonable for the businesses in which they have engaged during such period. All
such coverage is provided by reputable insurers.
(e) All policies providing coverage to AFD (with respect to the
Meat Processing Business) and SF Stores are in full force and effect and provide
coverage on an "occurrence" basis.
2.19 Environmental Matters. To the Knowledge of the Seller Parties or
except as would not be reasonably likely to result in a Material Adverse Effect
or except as set forth on Schedule 2.19:
(a) Compliance with Environmental Laws. Each of the Sellers is in
compliance with all applicable Environmental Laws, and is not in violation of or
liable under, any applicable Environmental Law in connection with the operation
of the Retail Store Business or the Meat Processing Business. Neither the Seller
Parties nor any other Person for whose conduct they are or may be held
responsible, received any notice of any violation or alleged violation of any
material Environmental Laws in connection with the operation of the Retail Store
Business or the Meat Processing Business, with the exception of notices of
violation or alleged liability that have been fully resolved with no future
obligations on the Retail Store Business or the Meat Processing Business or
Sellers. Sellers possess all permits, licenses, certificates and registrations
required of it under applicable Environmental Laws.
(b) No Hazardous Substances. None of the Seller Parties has
released any, and to the Knowledge of Seller Parties, no Hazardous Substances
have been released in, under or upon any real property at any time owned,
leased, used or operated by the Seller Parties in connection with the Retail
Store Business or the Meat Processing Business except in compliance with all
applicable Environmental Laws. There are no underground storage tanks
26
under any real property now or heretofore owned, leased, used or operated by the
Seller Parties in connection with the Retail Store Business or the Meat
Processing Business.
(c) No Actions or Proceedings. None of the Seller Parties is
subject to, nor have they received any notice of, any private, administrative or
judicial action, or notice of any intended private, administrative, or judicial
action, relating to the presence or alleged presence of Hazardous Substances in,
under or upon any real property, equipment or other personal property now or
heretofore owned, leased, used or operated by the Seller Parties in connection
with the Retail Store Business or the Meat Processing Business or any
predecessor or any property, whether or not it was owned, leased, used or
operated by the Seller Parties in connection with the Retail Store Business or
the Meat Processing Business, which was used by the Seller Parties for the
storage of inventory or production of finished goods or for the storage,
treatment or disposal of any waste, product or by-product. There are no pending
or threatened actions or proceedings or notices of potential actions or
proceedings from any Governmental Body or any other entity against Sellers
regarding any matter relating to applicable Environmental Law.
2.20 Relationships with Related Persons. Except as set forth on
Schedule 2.20, none of the Seller Parties has a controlling ownership interest
in, or any other right to control or direct the management or operation of, any
material competitor, supplier or customer of the Retail Store Business or the
Meat Processing Business or in any Person from whom or to whom Sellers lease any
real or material personal property.
2.21 Warranties. None of the Seller Parties (with respect to the
Retail Store Business or the Meat Processing Business) makes any material
express written warranties independent of, or in addition to, warranties made by
suppliers or manufacturers of products sold or distributed in connection with
the operation of the Retail Store Business or the Meat Processing Business. None
of the Seller Parties has received any material warranty claims as they relate
to the Retail Store Business or the Meat Processing Business.
2.22 Change in Business Relationships. Except as set forth on Schedule
2.22, none of the Seller Parties (with respect to the Retail Store Business or
the Meat Processing Business) has received any written notice or communication,
or to the Knowledge of the Seller Parties, any other notice or communication,
that (a) any material customer or supplier with a material business relationship
with Sellers (with respect to the Retail Store Business or the Meat Processing
Business) intends to discontinue or materially diminish or change its
relationship with the Retail Store Business or the Meat Processing Business, or
(b) any management employee of the Retail Store Business or the Meat Processing
Business intends to terminate his or her employment prior to the Closing Date.
2.23 Brokers. None of the Seller Parties nor their Affiliates has
employed or used the services of, or incurred any obligation or liability to,
any broker, agent or finder in connection with the transactions contemplated by
this Agreement.
2.24 Solvency.
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(a) None of the Seller Parties is now insolvent nor will be
rendered insolvent by any of the Contemplated Transactions. As used in this
Section, "insolvent" means that the sum of the debts and other probable
liabilities of such Seller Party exceeds the present fair saleable value of such
Seller Party's assets.
(b) Immediately after giving effect to the consummation of the
Contemplated Transactions: (i) each of the Seller Parties will be able to pay
its liabilities as they become due in the Ordinary Course of Business and (ii)
none of the Seller Parties will have unreasonably small capital with which to
conduct its business as presently conducted.
2.25 True and Correct Information. No representation or warranty of
the Seller Parties in this Agreement and no statement in the schedules hereto
omits to state a material fact necessary to make the statements herein or
therein, in light of the circumstances in which they were made, not misleading.
2.26 Ownership. Seller Shareholder is the record and beneficial owner
and holder of and has the exclusive right to vote all of the issued and
outstanding equity securities of SF Stores and AFD.
2.27 Sufficiency of Assets. Except as set forth on Schedule 2.27, or
as contemplated in the Transitional Services Agreement, the Software License and
Support Agreement and the Tradename and Trademark License Agreements, following
the Closing, the Assets transferred to Buyer Parties pursuant hereto will
constitute all of the assets necessary or required to permit Buyer Parties to
carry on the Retail Store Business and the Meat Processing Business after the
Closing in substantially the same manner as presently conducted.
2.28 Title. Except as set forth on Schedule 2.8 and Schedule 2.17 and
the preliminary title reports referred to in Section 2.17, the Seller Parties
have good and valid title to, or enforceable leasehold interests in or valid
rights under license or otherwise to use the Assets, in each case free and clear
of any Encumbrances, other than Permitted Encumbrances. Upon consummation of the
Contemplated Transactions, Buyer Parties will have acquired good and valid title
to, or enforceable leasehold interests in or valid rights under to use the
Assets, free and clear of any Encumbrances, other than Permitted Encumbrances.
2.29 Taxes. Sellers have filed all state, local and foreign Tax
Returns relating to the Retail Store Business and the Meat Processing Business
required to be filed by them, (ii) all such Tax Returns are true and correct in
all material respects and all Taxes reflected as due thereon have been paid in
full, and (iii) there are no liens for Taxes upon the Assets, except for liens
for current Taxes not yet due and payable.
2.30 Intellectual Property.
(a) Schedule 2.30 attached hereto constitutes a complete and
accurate list and summary description of all registered trademarks and
tradenames that are owned by AFD (with respect to the Meat Processing Business)
or SF Stores (with respect to the Retail Store Business) and presently used in
the operation of the Meat Process Business or the Retail Store Business all of
which are included in the Assets, or are licensed to Buyers pursuant to the
Software License and Support Agreement or the Tradename and Trademark License
28
Agreements.
(b) Sellers do not own or use any patents, patent applications,
or inventions or discoveries that may be patentable in connection with the Meat
Processing Business or the Retail Store Business in the state of Florida.
(c) Sellers do not own or use any rights in mask works in
connection with the operation of the Meat Processing Business or the Retail
Store Business in the state of Florida.
(d) Sellers do not own or use any registered copyrights in
connection with the Meat Processing Business or the Retail Store Business in the
state of Florida.
(e) Sellers have taken reasonable precautions to protect the
secrecy, confidentiality and value of any trade secrets which Sellers (with
respect to the Meat Processing Business or the Retail Store Business) may own,
and Sellers (with respect to the Meat Processing Business and the Retail Store
Business) own such trade secrets and have the valid right to use same. All such
trade secrets are included within the Assets. To the Knowledge of Sellers, the
trade secrets are not part of the public knowledge or literature and have not
been used, divulged or appropriated either for the benefit of any person (other
than Sellers) or to the detriment of Sellers. To the Knowledge of Sellers, no
material trade secret is subject to any adverse claim or has been challenged or
threatened in any way. For purposes of this Agreement, trade secrets are defined
as all know-how, trade secrets, confidential information, customer lists,
technical information, data, operational processes, plans, drawings, and
blueprints used in the conduct of the Meat Processing Business or the Retail
Store Business and located in the state of Florida.
(f) Other than pursuant to the Tradename and Trademark License
Agreement to be entered into between the appropriate Seller Parties and the
appropriate Buyer Parties, Sellers (with respect to the Meat Processing Business
or the Retail Store Business) are not a party to any contract or arrangement
whereby royalties are paid or received by Sellers with respect to trademarks,
tradenames, copyrights, rights in mask works, patents, or trade secrets.
(g) None of the current employees of Sellers (with respect
to the Meat Processing Business or the Retail Store Business) that are involved
in the Meat Processing Business or the Retail Store Business in the state of
Florida have executed written contracts with Sellers that assign to Sellers any
and all rights to any inventions, improvements, discoveries or information
relating to the Meat Processing Business or the Retail Store Business in the
state of Florida. To the Knowledge of Sellers, no employee of Sellers (with
respect to the Meat Processing Business or the Retail Store Business) in the
state of Florida has entered into any contract that restricts or limits in any
material way the scope or type of work in which the employee may be engaged, or
requires the employee to transfer, assign or disclose information concerning his
or her work to anyone other than Sellers.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER PARTIES
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The Buyer Parties represent and warrant to the Seller Parties as
follows:
3.1 Organization and Good Standing. Buyer Member is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware. GFS Orlando and GFS Stores are each limited liability companies duly
organized, validly existing, and in good standing under the laws of the State of
Delaware.
3.2 Authority; No Violation. Each of the Buyer Parties has the
requisite right, power and authority to execute, deliver, and perform its
obligations under this Agreement and the other agreements contemplated by this
Agreement to which such Buyer Party is a party ("Buyers' Other Agreements").
Upon the execution and delivery by the Buyer Parties of this Agreement and
Buyers' Other Agreements, this Agreement and Buyers' Other Agreements will
constitute the legal, valid, and binding obligations of those Buyer Parties that
executed such agreements, enforceable against the Buyer Party that executed such
agreement in accordance with their respective terms. Neither the execution,
delivery, and performance by the Buyer Parties of this Agreement and the Buyers'
Other Agreements, nor the consummation of the Contemplated Transactions will (a)
violate any of the Organizational Documents of any of the Buyer Parties, (b)
violate, conflict with, result in any breach of, constitute a default under,
result in the termination or acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice under any
Contract, license, or permit to which any of the Buyer Parties is a party or by
which any is bound, (c) require any authorization, consent, approval, exemption
or other action by or notice to any court, other Governmental Body, or other
person or entity under, the provisions of any Legal Requirement or any Contract
or permit to which any of the Buyer Parties is subject, bound, or affected, or
(d) violate or require any consent or notice under any Legal Requirement or
other restriction of any Governmental Body to which any of the Buyer Parties is
subject, bound, or affected.
3.3 Certain Proceedings. There is no pending Proceeding that has been
commenced against any of the Buyer Parties and that challenges, or may have the
effect of preventing, delaying, making illegal, or otherwise interfering with,
this Agreement or Buyers' Other Agreements. To the Knowledge of the Buyer
Parties, no such Proceeding has been threatened.
3.4 Brokers or Finders. Neither the Buyer Parties nor their respective
officers or agents have incurred any obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or other
similar payment in connection with this Agreement and will indemnify and hold
the Seller Parties harmless from any such payment alleged to be due by or
through Buyers as a result of the action of the Buyer Parties or their
respective officers or agents.
3.5 Sufficiency of Funds. Buyer Parties have and at Closing will have
sufficient funds for the payment of the Purchase Price.
3.6 Registration in State of Florida. GFS Orlando and GFS Stores are
each duly registered and qualified to do business in the state of Florida.
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3.7 Knowledge of Claims. To the actual knowledge of Buyer Parties
there is no claim that could be brought against Seller Parties as a result of
any of the Seller Parties' breach of any representation or warranty, or as a
result of any of the Seller Parties' failure to comply with any covenant or
agreement contained in this Agreement.
ARTICLE IV
COVENANTS OF SELLER PARTIES PRIOR TO CLOSING DATE
4.1 Access and Investigation. Between the date of this Agreement and
the earlier of the Closing Date and the termination of this Agreement pursuant
to Article IX, upon receipt of reasonable notice, each of the Seller Parties
will, and will cause their respective Representatives to, (a) afford the Buyer
Parties and their Representatives and prospective lenders and their
Representatives (collectively, "Buyers' Advisors") reasonable access to their
personnel, properties, contracts, customers, books and records, and other
documents and data relating to the Retail Store Business and the Meat Processing
Business, (b) furnish the Buyer Parties and Buyers' Advisors with copies of all
such contracts, books and records, and other existing documents and data as the
Buyer Parties may reasonably request, and (c) furnish the Buyer Parties and
Buyers' Advisors with such additional financial, operating, and other data and
information as the Buyer Parties may reasonably request.
4.2 Operation of the Retail Store Business and the Meat Processing
Business. Between the date of this Agreement and the Closing Date, the Seller
Parties will, and Seller Shareholder will cause each of the Sellers to:
(a) conduct the Retail Store Business and the Meat Processing
Business only in the Ordinary Course of Business;
(b) use commercially reasonable efforts to preserve intact the
current business organization of Sellers (with respect to the Retail Store
Business and the Meat Processing Business) and the Retail Store Business and the
Meat Processing Business (except as necessary to accommodate the transactions
contemplated hereby), keep available the services of the current officers, key
employees, and agents of Sellers that are involved in the Retail Store Business
or the Meat Processing Business, and maintain the relations and goodwill with
suppliers, customers, landlords, creditors, employees, agents, and others having
business relationships with Sellers with respect to the Retail Store Business or
the Meat Processing Business;
(c) confer with the Buyer Parties concerning operational matters
of a material nature; and
(d) otherwise discuss periodically with the Buyer Parties the
status of the business, operations, and finances of Sellers with respect to the
Retail Store Business and the Meat Processing Business.
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4.3 Negative Covenant. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, the Seller
Parties will not, and Seller Shareholder will cause Sellers not to, without the
prior written consent of the Buyer Parties, take any affirmative action or fail
to take any reasonable action within their or its control as a result of which
any of the changes or events listed in Section 2.7 is likely to occur,
including, but not limited to, incurring on behalf of Sellers any long-term
indebtedness or engaging in any transaction that would be required to be
recorded as a long-term liability on a balance sheet of Sellers prepared in
accordance with GAAP, that would be included within the Assumed Liabilities.
4.4 Required Approvals. As promptly as practicable after the date of
this Agreement, the Seller Parties will, and Seller Shareholder will cause
Sellers to, make all filings required by Legal Requirements to be made by them
in order to consummate the Contemplated Transactions. Between the date of this
Agreement and the Closing Date, the Seller Parties will, and Seller Shareholder
will cause Sellers to, cooperate with the Buyer Parties with respect to all
filings that any of the Buyer Parties is required by Legal Requirements to make
in connection with the Contemplated Transactions.
4.5 Notification. Between the date of this Agreement and the Closing
Date, the Seller Parties will promptly notify the Buyer Parties in writing if
any of the Seller Parties becomes aware of any fact or condition that causes or
constitutes a breach of any of the Seller Parties' representations and
warranties as of the date of this Agreement. During the same period, the Seller
Parties will promptly notify the Buyer Parties of the occurrence of any breach
of any covenant of any of the Seller Parties in this Article IV or of the
occurrence of any event that would reasonably be expected to make the
satisfaction of the conditions in Article VIII impossible or unlikely.
4.6 Payment of Indebtedness by Related Persons. Except as provided in
this Agreement or as set forth on Schedule 4.6, Seller Shareholder will cause
all indebtedness owed to Sellers (with respect to the Retail Store Business or
the Meat Processing Business) by Seller Shareholder or any Related Person to
Seller Shareholder to be paid in full prior to Closing.
4.7 No Negotiation. Until such time, if any, as this Agreement is
terminated pursuant to Article IX, the Seller Parties will not, and Seller
Shareholder will cause each of the Sellers and each of their Representatives not
to, directly or indirectly solicit, initiate, or encourage any inquiries or
proposals from, discuss or negotiate with, provide any non-public information
to, or consider the merits of any unsolicited inquiries or proposals from, any
Person (other than the Buyer Parties) relating to any transaction involving the
sale of the Retail Store Business or the Meat Processing Business or the Assets
(other than in the Ordinary Course of Business), or any of the capital stock of
the Sellers or any merger, consolidation, business combination, or similar
transaction involving the Sellers.
4.8 Commercially Reasonable Efforts. Between the date of this
Agreement and the Closing Date, the Seller Parties will use their commercially
reasonable efforts to cause the conditions in Article VIII to be satisfied.
4.9 Employees.
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(a) Termination of Sellers' Employees. Before the Closing,
Sellers shall give notice to all of their employees that are involved in the
Retail Store Business or the Meat Processing Business that their employment with
Sellers will terminate effective upon completion of the Closing.
(b) Offers of Employment. Buyers have no obligation to hire or
offer employment to any of Sellers' employees. However, Buyers are free, without
obligation, to interview, seek employment applications from, and employ any of
Sellers' employees that are involved in the Retail Store Business or the Meat
Processing Business, and Sellers agree to assist Buyers in all reasonable
respects in connection with Buyers' efforts to hire any of Sellers' employees
that are involved in the Retail Store Business or the Meat Processing Business
as designated by Buyers.
(c) Seller Employee Benefit Plans or Other Obligations. With
respect to any employee of Sellers hired by Buyers, Buyers shall not assume,
honor, or be obligated to perform, and the Seller Parties shall remain solely
responsible for, jointly and severally, any duties, responsibilities,
commitments, or obligations of Sellers with respect to any qualified or
non-qualified employee benefit plan presently maintained by Sellers or for the
benefit of Sellers' employees or any other contract or commitment concerning any
of Sellers' employees, except contracts or commitments specifically included in
the Assumed Liabilities. The terms and conditions of employment, if any, offered
by Buyers to any employee of Sellers shall be determined by Buyers in Buyers'
sole discretion.
(d) Employee Benefits. Buyer shall take all necessary actions to
provide that all Persons employed by the Sellers and involved in the Retail
Stores Business or the Meat Processing Business on the Closing Date who are
employed by the Buyer following the Closing Date ("Transferred Employees")
shall, through December 31, 2003, be allowed to participate without an increase
in cost to such employees, in either the employee welfare benefit plans or
arrangements in which such employees participated immediately prior to the
Closing Date or in substantially similar employee benefit plans or arrangements.
Buyers shall take all necessary actions to provide that, with respect to any
welfare benefits provided to Transferred Employees on or after the Closing Date,
(i) service accrued by Transferred Employees during employment with Company or
its Affiliates prior to the Closing Date shall be recognized, to the extent such
service was recognized under comparable Company Plans, for purposes of (A)
eligibility for benefits and (B) application of any and all pre-existing
condition limitations, and (ii) Transferred Employees shall be given credit for
amounts paid under a Company Plan during the applicable period for purposes of
applying deductibles, co-payments and out-of-pocket maximums as though such
amounts had been paid in accordance with the terms and conditions of the
employee welfare plans in which any Transferred Employee becomes entitled to
participate, provided, however, that nothing in this Section 4.9(d) shall
require the payment of duplicative benefits. Further, nothing in this Section
4.9(d) whether express or implied, shall confer upon any Person who is not a
party to this Agreement, including any Transferred Employee, any right to
employment or recall, any right to continued employment, any right to
compensation or benefits, or any other right of any kind or nature whatsoever.
(e) Treatment of 401(k) Accounts. As soon as practicable
following the first closing of the plan year of the Buyer 401(k) Plan (as
defined below) after the Closing Date,
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Seller Shareholder shall cause the trustee of the Smart & Final Inc. 401(k) Plan
("SFI 401(k) Plan") to transfer (in accordance with the requirements of Section
414(l) of the IRC), in cash (or, with respect to SFI 401(k) Plan loan promissory
notes, in kind), the account balances (including outstanding loan balances)
under the SFI 401(k) Plan (the "Transferred Account Balances") of each
Transferred Employee who is a participant in the SFI 401(k) Plan to the trustee
of a defined contribution plan (the "Buyer 401(k) Plan") and trust maintained by
any one or more of the Buyer Parties on or after the Closing Date (such plan and
trust to be established or designated by Buyer Parties) which are intended to be
qualified under Sections 401(a) and 501(a) of the IRC, respectively. Upon the
making of such transfer (the "Transfer") and the receipt by the trustee of the
Buyer 401(k) Plan of the Transferred Account Balances, the Buyer 401(k) Plan
shall automatically assume all liabilities for accrued benefits under the SFI
401(k) Plan in respect of such Transferred Employees, and the SFI 401(k) Plan
shall be relieved of all such liabilities. Effective as of the Transfer, Buyer
Parties shall indemnify and hold harmless the SFI 401(k) Plan, the trustees
thereof, Sellers, their officers, directors, employees and agents and
Affiliates, from and against any and all liabilities arising out of or related
to the participation of such Transferred Employees in the SFI 401(k) Plan and
the transfer of assets described herein. The parties shall cooperate in the
taking of any action and the filing of any documents that may be required in
connection with the transfer of assets and liabilities described herein.
Following the Closing Date, but prior to the Transfer, Buyer shall permit
Transferred Employees to participate in the Buyer 401(k) Plan. Following the
Closing Date, but prior to the Transfer, Buyer shall also make payroll
withholdings during each pay period with respect to the outstanding loans of any
Transferred Employee under the SFI 401(k) Plan and shall and forward such
amounts to the trustee of the SFI 401(k) Plan as soon as practicable following
each such withholding.
(f) COBRA Coverage. Notwithstanding anything to the contrary in
this Agreement, Seller Parties or their Affiliates shall provide group health
plan continuation coverage pursuant to Section 4980B of the Code and Sections
601 through 609 of ERISA (together with the regulations promulgated thereunder
"COBRA") with respect to any COBRA Eligible Individual (as defined below) during
such individual's COBRA Coverage Period (as defined below). For purposes of this
Section 4.9(f), a "COBRA Eligible Individual" is (i) an individual who (A) was
an employee of the Seller Parties and involved in the Meat Processing Business
or Retail Store Business prior to the Closing Date and who had or has a
"qualifying event" (within the meaning of Section 4980B(f)(3) of the Code) with
respect to the Seller Parties before the Closing Date or as a result of his or
her termination pursuant to Section 4.9 of this Agreement and (B) has elected or
is eligible to elect continuation coverage from the Seller Parties or their
Affiliates with respect to such qualifying event, and (ii) each individual (such
as a dependent) who is a qualified beneficiary with respect to individuals
described in clause (i). The "COBRA Coverage Period" with respect to each COBRA
Eligible Individual shall be the period during which continuation coverage would
be required to be provided to such individual under COBRA.
4.10 Clearance Certificates. On or prior to the Closing Date, the
Seller Parties will provide Buyers, with all clearance certificates or similar
documents that may be required by any state, local or other taxing authority in
order to relieve Buyers of any obligation to withhold or escrow any portion of
the Purchase Price.
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4.11 Seller Parties' Environmental Investigation. Nothing in this
Agreement shall be interpreted to prohibit Seller Parties' from undertaking
their own environmental investigation, including environmental testing, of the
Real Property, prior to the Closing Date.
ARTICLE V
COVENANTS OF THE BUYER PARTIES AND THE SELLER PARTIES PRIOR TO
CLOSING DATE
5.1 Approvals of Governmental Bodies. As promptly as practicable after
the date of this Agreement, each Buyer will, and will cause each of its Related
Persons to, make all filings required by Legal Requirements to be made by it or
them to consummate the Contemplated Transactions. Between the date of this
Agreement and the Closing Date, each Buyer will, and will cause each Related
Person to, (a) cooperate with the Seller Parties with respect to all filings
that the Seller Parties are required by Legal Requirements to make in connection
with the Contemplated Transactions, and (b) cooperate with the Seller Parties in
obtaining all consents identified in Schedule 2.2; provided, however, that this
Agreement will not require the Buyer Parties to dispose of or make any change in
any portion of its business or to incur any other material burden to obtain a
Governmental Authorization.
5.2 Commercially Reasonable Efforts. Except as set forth in the
proviso to Section 5.1, between the date of this Agreement and the Closing Date,
the Buyer Parties will use their commercially reasonable efforts to cause the
conditions in Article VII to be satisfied.
5.3 Cooperation. Each of the Seller Parties and Buyer Parties shall
cooperate, and use their reasonable commercial efforts, to make all filings and
obtain all licenses, permits, consents, approvals, authorizations,
qualifications and orders of governmental authorities and other third parties
necessary to consummate the Contemplated Transactions. In addition to the
foregoing, the Buyer Parties agree to provide such assurances as to financial
capability, resources and creditworthiness as may be reasonably requested by any
third party whose consent or approval is sought hereunder. Notwithstanding the
foregoing, nothing herein shall obligate or be construed to obligate (A) the
Seller Parties or the Buyer Parties to make any payment to any third party in
order to obtain the consent or approval of such third party or to transfer any
contract, license or permit in violation of its terms or (B) the Buyer Parties
to provide any financial information that is not publicly available. The Sellers
shall use commercially reasonable efforts to obtain such third party consents as
Buyers may reasonably deem necessary in connection with the transfer of the
Assumed Contracts, it being understood that (i) nothing in this Section 5.3 is
intended to be a covenant that the Seller Parties shall in fact obtain on the
Buyer Parties' behalf any such consents, (ii) obtaining such consents shall not
be a condition to Closing (except as provided in Section 8.3) and (iii) Seller
Parties' failure to obtain such consents as a result of Buyer Parties' failure
or inability to provide financial information pursuant to the exemption provided
in the prior sentence shall not be regarded as a breach by Seller Parties of its
obligations to obtain such consents pursuant to this Agreement. The Buyer
Parties shall cooperate and use commercially reasonable efforts to assist the
Seller Parties in obtaining such consents.
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5.4 Synthetic Lease Agreement. Between the date of this Agreement and
the Closing Date, the Seller Parties shall perform, at their sole cost and
expense, all of the "Lessee's" (as such term is defined in the Synthetic Lease
Agreement) obligations under the Synthetic Lease Provisions and the
Participation Agreement Provisions, but only to the extent that such obligations
relate to the Fort Lauderdale Store.
ARTICLE VI
POST-CLOSING COVENANTS OF THE BUYER
PARTIES AND THE SELLER PARTIES
The Buyer Parties and the Seller Parties agree as follows with respect
to the period following the Closing:
6.1 General. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each of
the parties will take such further action (including the execution and delivery
of such further instruments and documents) as any other party may request, all
at the sole cost and expense of the requesting party (unless the requesting
party is entitled to indemnification therefore under Article X below). Sellers
acknowledge and agree that from and after the Closing the Buyers will be
entitled to possession of all documents, books, records, agreements, and
financial data relating to the Retail Store Business and the Meat Processing
Business; provided, however, that notwithstanding anything to the contrary
contained herein, Buyers shall not be entitled to possession of any of Sellers'
Tax records.
6.2 Litigation Support. In the event and for so long as any party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(a) any transaction contemplated under this Agreement or (b) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Retail Store Business and the Meat Processing
Business, each of the other parties will reasonably cooperate with such party
and its counsel in the contest or defense, make available their personnel, and
provide such testimony and access to their books and records as shall be
reasonably necessary in connection with the contest or defense, all at the sole
cost and expense of the contesting or defending party (unless the contesting or
defending party is entitled to indemnification therefore under Article X below).
6.3 Transition. The Seller Parties will not take any action that is
designed or intended, or may reasonably be expected to discourage any lessor,
licensor, customer, supplier, employee, or other business associate of Sellers
with respect to the Retail Store Business or the Meat Processing Business from
maintaining substantially the same business relationships with Buyers with
respect to the Retail Store Business and the Meat Processing Business after the
Closing as it maintained with Sellers (with respect to the Retail Store Business
and the Meat Processing Business) prior to the Closing. The Seller Parties will
use commercially reasonable
36
efforts to refer all customer inquiries relating to the Retail Store Business
and the Meat Processing Business to Buyers from and after the Closing.
6.4 Delivery of Property Received After Closing. After the Closing,
the Seller Parties shall promptly transfer to Buyers, from time to time, any
property received by the Seller Parties that is used in the operation of the
Retail Store Business or the Meat Processing Business and any cash related
thereto, including, but not limited to, collections on accounts receivable that
are included in the Assets.
6.5 Real Property Consents. Seller Parties shall cooperate with Buyers
and shall use their commercially reasonable efforts to obtain all consents,
permits, approvals and authorizations necessary to transfer the leases set forth
on Schedule 6.5 to Buyers as soon as is commercially practicable.
6.6 Insurance Matters.
(a) Seller Parties shall remit to Buyers any monies received by
Seller Parties under its insurance policies (net of deductibles) as a result of
any claims relating to AFD (with respect to the Meat Processing Business) or SF
Stores that arise out of events that occur on or prior to the Closing Date.
Seller Parties shall use their commercially reasonable efforts to file all
claims relating to AFD (with respect to the Meat Processing Business) or SF
Stores (with respect to the Retail Store Business) that arise out of events that
occur on or prior to the Closing Date. Seller Parties shall directly pay to
Buyers any deductibles related to any such claims.
(b) Seller Parties shall pay to Buyers any amounts that Buyers
are required to pay with respect to workers' compensation claims arising out of
events that occur on or prior to the Closing Date to the extent that such claims
exceed in the aggregate the reserve for such claims reflected as a current
liability on the Final Closing Financial Statement, which reserve shall not be
less than Ninety Six Thousand Dollars ($96,000).
(c) After the Closing Date, Buyers shall maintain and provide
insurance policies for the Retail Store Business and the Meat Processing
Business (including, property, general liability and workers compensation) that
provide coverages that are comparable to those provided to AFD (with respect to
the Meat Processing Business) and SF Stores prior to the Closing Date.
(d) Buyers shall be responsible for all claims that arise from
events that occur after the Closing Date.
(e) Seller Parties and Buyers shall cooperate with one another
and use their commercially reasonable efforts to assist each other in the
administration of any claim that is the responsibility of the other party under
this Section 6.6.
6.7 Assistance and Cooperation. After the Closing Date, each Seller
Party and each Buyer Party shall (and shall cause their respective Affiliates
to):
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(a) timely sign and deliver such certificates or forms as may be
necessary or appropriate to establish an exemption from or otherwise reduce (if
entitled), or to file Tax Returns or other reports, with respect to Transfer
Taxes;
(b) reasonably cooperate in preparing for any audits of, or
disputes with taxing authorities regarding, any Tax Returns relating to the
Retail Store Business and the Meat Processing Business; and
(c) make available to the other party as reasonably requested all
information relating to Taxes or Tax Returns of or relating to the Retail Store
Business and the Meat Processing Business.
Notwithstanding the foregoing or any other provision in this Agreement
to the contrary, no Buyer Party or any Affiliate thereof shall have the right to
receive or obtain any information relating to Taxes of the Seller Parties, any
of their Affiliates, or any of their predecessors other than information
relating to the Assets or necessary to file any Tax Returns for any period that
includes the Closing Date.
6.8 Assumed Contracts Consents. With respect to any Assumed Contract
for which any required consent or approval is not obtained prior to the Closing,
this Agreement shall not constitute an assignment or an attempted assignment
thereof if such assignment or attempted assignment would constitute a breach
thereof or a default thereunder, and the Seller Parties and Buyer Parties shall
each use commercially reasonable efforts to obtain any such consent or approval
after the Closing until such consent or approval has been obtained (but Buyer
Parties shall have no obligation to provide financial information except to the
extent provided by Section 5.3) and Seller Parties shall use their commercially
reasonable efforts to provide the Buyer Parties with the same benefits arising
under such Assumed Contract, including performance by the appropriate Seller
Parties (or the Buyer Parties, if applicable) as agent, if legally feasible;
provided that the Buyer Parties (or Seller Parties, if applicable) shall provide
Seller Parties (or Buyer Parties, if applicable) with such access to the
premises, books and records (other than financial records of the Buyer Parties)
and personnel as is reasonably necessary to enable Seller Parties (or Buyer
Parties, if applicable) to perform its obligations under such Assumed Contract
and Buyer Parties shall pay or satisfy the corresponding liabilities for the
enjoyment of such benefits to the extent Buyer Parties would have been
responsible therefor if such consent or approval had been obtained.
6.9 Environmental Testing.
(a) Subject to the conditions set forth herein, Sellers Parties
have the right to conduct environmental testing, at their own expense, at any of
the Real Property by providing written notice to the Buyer Parties within ninety
(90) days after the Closing Date. The Buyer Parties agree to provide access to
said Real Property to Seller Parties and Seller Parties' consultants and
contractors, and to reasonably cooperate with Seller Parties and Seller Parties'
consultants, with respect to said environmental testing, including, but not
limited, providing all relevant information to Seller Parties and their
consultants and contractors relating to any potential obstructions that may
interfere with environmental testing or cause property damage or personal
injury.
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(b) If Seller Parties determine that they desire to conduct
environmental testing as set forth above, Seller Parties shall provide written
notice to Buyer Parties at least five business days prior to the date Seller
Parties desire to conduct such environmental testing. Seller Parties' written
notice shall include a copy of the proposed sampling plan with respect to each
property at which they proposed to conduct testing. The sampling plan shall
include, at a minimum, a reasonable approximation of where samples will be
collected; the environmental media to be sampled; and the analyses which Seller
Parties proposed to perform on said samples.
(c) Prior to being allowed access to the Real Property, Seller
Parties' consultants or contractors shall provide to Buyer Parties copies of
insurance certificates demonstrating that said consultants or contractors have
appropriate insurance (in amounts consistent with customary industry standards)
to insure against property damage or personal injury claims that may result from
the performance of the environmental testing.
(d) Seller Parties agree that they shall be responsible for
ensuring that after the completion of environmental testing, their consultants
or contractors shall restore the Real Property to its prior condition,
including, but not limited to, taking all steps required to properly abandon any
monitoring xxxxx that have been installed in connection with the environmental
testing.
(e) Seller Parties agree that they shall promptly provide Buyer
Parties with copies of any sampling results and related reports with respect to
the environmental testing conducted pursuant to this provision. Seller Parties
also agree that if, as a result of the environmental testing, reporting to a
Governmental Authority is required, Seller Parties shall notify Buyer Parties
prior to reporting its findings to said Governmental Authority.
(f) Buyer Parties may accompany and monitor the environmental
testing performed by Seller Parties pursuant to this Section 6.9, including,
without limitation, retaining, at its own expense, its own consultants,
attorneys or other professionals to monitor said environmental testing. In
addition, Seller Parties agree that they will allow Buyer Parties to collect
split samples at Buyer Parties' request if it is reasonably practicable given
the amount of sample collected in any particular instance.
ARTICLE VII
CONDITIONS PRECEDENT TO THE SELLER PARTIES'
OBLIGATION TO CLOSE
Sellers' obligation to sell the Assets and to take the other actions
required to be taken by the Seller Parties at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Sellers, in whole or in part):
7.1 Accuracy of Representations. The representations and warranties of
the Buyer Parties contained herein shall be true and correct at the date hereof
and as of the Closing Date, except to the extent that such representations and
warranties are made as of a specified date, in which case such representations
and warranties shall be true and correct as of such date,
39
and except for such failures to be true and correct which, in each case or in
the aggregate would not have a material adverse effect on the ability of the
Buyer Parties to consummate the Contemplated Transactions.
7.2 Performance. The Buyer Parties shall have performed in all
material respects all obligations and agreements and complied in all material
respects with all covenants required by this Agreement to be performed or
complied with by the Buyer Parties prior to or at the Closing.
7.3 Additional Documents. Each of the following documents shall have
been delivered to the Sellers:
(a) Each document required to be delivered pursuant to Section
1.7(b); and
(b) evidence, satisfactory to the Seller Parties in their
reasonable discretion, that each of the Buyer Parties is in good standing in its
state of organization and that each of the Buyer Parties has the requisite
authority to enter into this Agreement and to consummate the transactions
contemplated thereby.
7.4 No Injunction. There is not in effect any Legal Requirement or any
injunction or other Order that prohibits the sale of the Assets by Sellers to
Buyers.
7.5 Closing of Share Purchase Transaction. The closing of the
transactions contemplated in the Share Purchase Agreement shall have occurred
simultaneously with the Closing.
7.6 Consents. Each of the material Consents identified in Schedule 8.3
shall have been obtained.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE BUYER
PARTIES' OBLIGATION TO CLOSE
Buyers' obligation to purchase the Assets and to take the other
actions required to be taken by Buyers at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyers, in whole or in part):
8.1 Accuracy of Representations. The representations and warranties of
the Seller Parties contained herein shall be true and correct at the date hereof
and as of the Closing Date, except to the extent that such representations and
warranties are made as of a specified date, in which case such representations
and warranties shall be true and correct as of such date, and except for such
failures to be true and correct which, in each case or in the aggregate would
not have a Material Adverse Effect.
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8.2 Performance. The Seller Parties shall have performed in all
material respects all obligations and agreements and complied in all material
respects with all covenants required by this Agreement to be performed or
complied with by the Seller Parties prior to or at the Closing.
8.3 Consents. Each of the material Consents identified in Schedule 8.3
shall have been obtained.
8.4 Additional Documents. Each of the following documents shall have
been delivered to Buyers:
Each document required to be delivered pursuant to Section
1.7(a)(i), 1.7(a)(ii), 1.7(a)(iv), 1.7(a)(v), 1.7(a)(vi), 1.7(a)(vii), 1.7
(a)(viii), 1.7(a)(ix), 1.7(a)(x), 1.7(a)(xi), 1.7(a)(xii),1.7(a)(xiii), 1.7
(a)(xiv), 1.7(a)(xvi), 1.7(a)(xvii) and 1.7(a)(xviii).
8.5 No Injunction. There is not in effect any Legal Requirement or any
injunction or other Order that prohibits the sale of the Assets by Sellers to
Buyers.
8.6 No Proceedings. Since the date of this Agreement, there shall not
have been commenced against either Buyers or Sellers any Proceeding involving
any challenge to or seeking damages or other relief in connection with any of
the Contemplated Transactions that would have a Material Adverse Effect.
8.7 No Claim Regarding Assets or Sale Proceeds. There shall not have
been made by any Person any claim, which would have a Material Adverse Effect,
asserting that such Person (a) is the holder or the beneficial owner of, or has
the right to acquire or to obtain beneficial ownership of, any of the Assets, or
(b) is entitled to all or any portion of the Purchase Price payable for the
Assets.
8.8 No Prohibition. Neither the consummation nor the performance of
any of the Contemplated Transactions shall, (with or without notice or lapse of
time), materially contravene, or conflict with, or result in a material
violation of, (a) any applicable Legal Requirement or Order, or (b) any Legal
Requirement or Order that has been published, introduced, or otherwise proposed
by or before any Governmental Body, and such contravention, conflict or
violation would have a Material Adverse Effect.
8.9 Closing of Share Purchase Transaction. The closing of the
transactions contemplated in the Share Purchase Agreement shall have occurred
simultaneously with the Closing.
8.10 Execution and Closing of Real Estate Purchase Agreement. The Real
Estate Purchase Agreement shall have been executed and delivered by all
necessary parties thereto and the closing of the transactions contemplated
thereby shall have occurred simultaneously with the Closing.
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ARTICLE IX
TERMINATION
9.1 Termination Events. This Agreement may, by notice given prior to
or at the Closing, be terminated:
(a) By either Seller Parties or Buyer Parties if a material
breach of any provision of this Agreement has occurred or been committed by the
other party and such breach has not been waived or cured within thirty (30) days
of receipt of written notice of such breach by the other party and failure to
cure such breach would have a Material Adverse Effect; or
(b) By the mutual written consent of Buyer Parties and Seller
Parties; or
(c) By either Buyer Parties or Seller Parties if the Closing has
not occurred (other than through the failure of any party seeking to terminate
this Agreement to comply fully with its obligations under this Agreement) on or
before October 5, 2003 (the "Termination Date"), or at such later date as the
parties may agree upon in writing; provided, however, that in the event either
party provides a notice to terminate this Agreement pursuant to Section 9.1(a)
the Termination Date will be extended, if necessary, to allow for the 30 day
cure or waiver period set forth therein.
9.2 Effect of Termination. Each party's right of termination under
Section 9.1 is in addition to any other rights it may have under this Agreement
or otherwise. Any exercise of a right of termination will not be an election of
remedies. If this Agreement is terminated pursuant to Section 9.1, all further
obligations of the parties under this Agreement will terminate, except that the
obligations of Sections 12.1 and 12.3 will survive; provided, however, that if
this Agreement is terminated by a party because of a willful breach of the
Agreement by the other party or because one or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of the other party's willful failure to comply with its obligations under
this Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
ARTICLE X
INDEMNIFICATION
10.1 Indemnity by the Seller Parties.
(a) The Seller Parties shall, from and after the Closing, jointly
and severally, indemnify the Buyer Parties and their respective Affiliates,
directors, officers, employees, controlling persons, agents and representatives
and their successors and assigns (collectively, the "Buyer Indemnified Parties")
against and hold each of them harmless from any and all Losses incurred or
suffered by the Buyer Indemnified Parties (whether originally asserted against
or imposed on the Buyer Indemnified Parties by a third party or originally
incurred or suffered directly by the Buyer Indemnified Parties) arising directly
out of (i) any
42
breach of any representation or warranty, covenant or agreement made or to be
performed by any of the Seller Parties pursuant to this Agreement (ii) the
failure by the Seller Parties to pay any of the Excluded Liabilities, (iii)
except for the Assumed Liabilities, the operation of the Retail Store Business
or the Meat Processing Business or the ownership or operation or use of the
Assets on or prior to the Closing Date, (iv) subject to the terms set forth in
Section 10.8, Indemnified Environmental Matters, and (v) the matters described
in Schedule 10.1(a) (such breach or failure, a "Seller Breach"), which breach
shall be determined giving effect to any and all amendments and supplements of
the schedules of the Seller Parties to the extent permitted under Section 12.16.
(b) The Seller Parties' obligations to indemnify the Buyer
Indemnified Parties pursuant to Section 10.1 are subject to the following
limitations:
(A) No indemnification shall be made by the Seller Parties unless the amount of
Losses under this Agreement, the Share Purchase Agreement, the Real Estate
Purchase Agreement and the Real Estate Purchase Agreement for the Frozen Food
Facility and Parking Lot (as such term is defined in the Share Purchase
Agreement) exceed in the aggregate an amount equal to $560,000, it being
understood that such amount shall be a "deductible" for the Seller Parties (the
"Seller Deductible"); provided, however, that, the Seller Deductible shall be
inapplicable to any Losses incurred or suffered by the Buyer Indemnified Parties
as a result of (i) fraud by the Seller Parties (as determined by a court of
law), (ii) the Sellers Parties' breach of the representation set forth in
Section 2.28, (iii) the Seller Parties' failure to perform its covenant in
Section 2.17, (iv) the Seller Parties' failure to pay the Excluded Liabilities,
(v) the operation of the Retail Store Business or the Meat Processing Business
on or prior to the Closing Date, (vi) the Seller Parties failure to perform
their covenants set forth in Section 5.4 and Section 6.6, or (vii) liabilities
and obligations arising in connection with the matters described in Schedule
10.1(a); and (B) in no event shall the Seller Parties' obligations to indemnify
the Buyer Indemnified Parties under this Agreement, the Share Purchase
Agreement, the Real Estate Purchase Agreement and the Real Estate Purchase
Agreement for the Frozen Food Facility and Parking Lot exceed Fifty Million
Dollars ($50,000,000) in the aggregate.
43
10.2 Indemnity by the Buyer Parties.
(a) The Buyer Parties shall, from and after the Closing, jointly
and severally indemnify the Seller Parties and their respective Affiliates,
directors, officers, employees, controlling persons, agents and representatives
and their successors and assigns (collectively, the "Seller Indemnified
Parties") against and hold each of them harmless from any and all Losses
incurred or suffered by the Seller Indemnified Parties (whether originally
asserted against or imposed on the Seller Indemnified Parties by a third party
or originally incurred or suffered directly or indirectly by the Seller
Indemnified Parties) arising directly out of (i) any breach of any
representation, warranty, covenant or agreement made or to be performed by any
of the Buyer Parties pursuant to this Agreement, (ii) the Buyer Parties' failure
to pay any of the Assumed Liabilities and (iii), except for the Excluded
Liabilities, the operation of the Retail Store Business or the Meat Processing
Business or the ownership or operation or use of the Assets after the Closing
Date (such breach, a "Buyer Breach").
(b) The Buyer Parties obligations to indemnify the Seller
Indemnified Parties pursuant to Section 10.1 are subject to the following
limitations:
(A) No indemnification shall be made by the Buyer Parties unless the amount of
Losses under this Agreement, the Share Purchase Agreement, the Real Estate
Purchase Agreement and the Real Estate Purchase Agreement for the Frozen Food
Facility and Parking Lot exceed in the aggregate an amount equal to $560,000, it
being understood that such amount shall be a "deductible" for the Buyer Parties
(the "Buyer Deductible"); provided, however, that the Buyer Deductible shall be
inapplicable to any Losses incurred or suffered by the Seller Indemnified
Parties as a result of (i) fraud by the Buyer Parties (as determined by a court
of law), (ii) the Buyer's failure to pay any of the Assumed Liabilities or (iii)
the operation of the Retail Store Business or the Meat Processing Business or
the ownership or operation or use of the Assets after the Closing Date and (B)
in no event shall the Buyer Parties' obligations to indemnify the Seller
Indemnified Parties under this Agreement, the Share Purchase Agreement, the Real
Estate Purchase Agreement and the Real Estate Purchase Agreement for the Frozen
Food Facility and Parking Lot exceed Fifty Million Dollars ($50,000,000) in the
aggregate.
10.3 Procedure and Payment.
(a) The person seeking indemnification under Section 10.1, and
10.2 (the "Indemnified Party") agrees to give prompt notice to the Person
against whom indemnity is sought (the "Indemnifying Party") of the assertion of
any claim, or the commencement of any suit, action or proceeding, in respect of
which indemnity may be sought under such Section and will provide the
Indemnifying Party such information with respect thereto as the Indemnifying
Party may reasonably request. The failure to so notify the Indemnifying Party
shall not relieve the Indemnifying Party of its obligations hereunder, except to
the extent such failure shall have materially and adversely prejudiced the
Indemnifying Party.
(b) The Indemnifying Party shall be entitled to defend any claim
asserted by any third party ("Third Party Claim") with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the Indemnifying
Party notifies the Indemnified Party in writing within fifteen (15) days after
the Indemnified Party has given notice
44
of the Third Party Claim that it will indemnify the Indemnified Party from and
against all Losses that the Indemnified Party may suffer resulting from, arising
out of, relating to, or caused by the Third Party Claim, (ii) the Indemnifying
Party provides the Indemnified Party with evidence reasonably acceptable to the
Indemnified Party that the Indemnifying Party will have the financial resources
to defend against the Third Party Claim and fulfill its indemnification
obligations under this Agreement, (iii) the Third Party Claim involves only
money damages and does not seek an injunction or other equitable relief, (iv)
settlement of, or an adverse judgment with respect to, the Third Party Claim is
not, in the good faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice materially adverse to the continuing business
interests of the Indemnified Party and (v) the Indemnifying Party conducts the
defense of the Third Party Claim actively and diligently.
(c) So long as the Indemnifying Party is conducting the defense
of any Third Party Claim in accordance with the provisions of this Section 10.3,
the Indemnified Party shall be entitled to participate in the defense of such
Third Party Claim and to employ separate counsel of its choice for such purpose.
The fees and expenses of such separate counsel shall be paid by the Indemnified
Party.
(d) Each party shall cooperate, and cause its Affiliates to
cooperate, in the defense or prosecution of any Third Party Claim and shall
furnish or cause to be furnished such records, information and testimony, and
attend such conferences, discovery proceedings, hearings, trials or appeals, as
may be reasonably requested by any other party in connection therewith.
10.4 Calculation of Losses.
(a) The amount of any Losses payable under Section 10.1 and 10.2
by the Indemnifying Party shall be net of any amounts recovered by the
Indemnified Party under applicable insurance policies and the Indemnified Party
shall use commercially reasonable efforts to collect any amounts available under
such insurance policies.
(b) If the Indemnified Party receives an amount under insurance
coverage or from a third party with respect to Losses at any time subsequent to
any indemnification provided by the Indemnifying Party pursuant to Section 10.1
and 10.2, then such Indemnified Party shall promptly reimburse the Indemnifying
Party for any payment made or expense incurred by such Indemnifying Party in
connection with providing such indemnification up to such amount received by
such Indemnified Party, but net of any expenses incurred by such Indemnified
Party in collecting such amount.
(c) In no event shall either the Buyer Parties or the Seller
Parties be liable to the other party for any consequential damages unless such
amounts are actually paid or awarded in connection with a Third Party Claim.
(d) The parties hereto shall treat any indemnity payment made
under this Agreement as an adjustment to the Purchase Price for all purposes,
including Tax purposes, unless required by law to treat such payment as other
than an adjustment to the Purchase Price.
45
(e) The parties shall take into account the time value of money
(using a variable rate equal to the prime rate of interest as published in the
Money Rates section of the Wall Street Journal) in determining Losses for
purposes of this Article X beginning the day after notice of an indemnification
claim is made.
10.5 Survival of Representations and Warranties of the Seller Parties.
Absent fraud by the Seller Parties (as determined by a court of law) all
representations and warranties made by the Seller Parties in this Agreement
shall survive the Closing for a period of two (2) years after the Closing Date,
except for (a) the representations and warranties contained in Sections 2.29 and
2.19 which shall survive for one (1) month after the maximum period permitted by
law and (b) the representations and warranties contained in Section 2.28, which
shall survive indefinitely; provided, however, that any representation,
warranty, covenant or agreement pertaining to a claim for which Buyers shall
have given written notice to the Seller Parties describing in reasonable detail
the facts relating to such claim on or prior to the expiration of the applicable
period specified above shall survive (solely for the purpose of resolving such
claim) until the resolution of such claim.
10.6 Survival of Representations and Warranties of the Buyer Parties.
Absent fraud by the Buyer Parties (as determined by a court of law), all
representations and warranties made by the Buyer Parties in this Agreement shall
survive the Closing for a period of two (2) years after the Closing Date;
provided, however, that any representation, warranty, covenant or agreement
pertaining to a claim for which the Seller Parties shall have given written
notice to the Buyer Parties describing in reasonable detail the facts relating
to such claim on or prior to the expiration of the period specified above shall
survive (solely for the purpose of resolving such claim) until the resolution of
such claim.
10.7 Escrow. Payments (under this Article X) to be made to the Buyer
Indemnified Parties as a result of Losses arising out of the breaches of
representations, warranties and covenants of the Seller Parties shall be made
pursuant to the terms set forth in the Escrow Agreement.
10.8 Indemnified Environmental Matters.
(a) (1) Seller Parties hereby agree to indemnify the Buyer
Indemnified Parties in respect of any and all Losses incurred by the Buyer
Indemnified Parties, including, without limitation, Losses relating to
Remediation or for third party claims for property damage or personal injury, in
connection with Hazardous Substances that were disposed of or released into
soils, groundwater, surface water, sediments or similar environmental media,
prior to the Closing Date, at any of the real property that is or has been
owned, leased or operated by the Meat Processing Business or the Retail Store
Business (the "Real Property").
(2) Seller Parties hereby agree to indemnify the Buyer
Indemnified Parties with respect to any fines and penalties that may be asserted
against Buyer Indemnified Parties with respect to any violation of applicable
Environmental Law by the Meat Processing Business or the Retail Store Business.
For purposes of clarification, the indemnity set forth herein does not include
any costs or expenses associated with any corrective actions that may be
required with respect to such violations or release of ammonia.
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(3) The Matters described in Sections 10.8(a)(1) are the
"Indemnified Environmental Matters."
(b) Seller Parties' obligation to indemnify the Buyer Indemnified
Parties with respect to the Indemnified Environmental Matters shall be subject
to the provisions of Article X, including, without limitation, Section 10.1(b)
and Section 10.8. Furthermore, any matter subject to indemnity pursuant to
Section 10.1(a) which by its nature also falls within the scope of Section
10.8(a)(1) or 10.8(a)(2) also shall be governed by the provisions of Section
10.8 to the extent applicable.
(c) (1) With respect to the matters identified in Section
10.8(a)(1) that relate to Remediation of Real Property, Seller Parties shall
only be required to defend, indemnify and hold harmless Buyer Indemnified
Parties with respect to such Indemnified Environmental Matters to the extent
that: (A) the Remediation of the Hazardous Substances is required pursuant to an
applicable Environmental Law that is in effect as of the Closing; (B) the
Remediation Standards applicable to the Remediation are the least stringent
Remediation Standards that would be applicable based on the use of the Real
Property as of the Closing Date; and (C) the Remediation shall be conducted in a
reasonable, cost effective manner consistent with applicable Environmental Law.
Buyer Indemnified Parties agree that they shall accept appropriate engineering
controls or institutional controls, including, if necessary, deed restrictions
or limitations on the drilling and use of water xxxxx, if such controls are
needed in order for the parties to complete a Remediation consistent with the
use of the least stringent Remediation Standards; provided, that Buyer
Indemnified Parties shall not be obligated to accept engineering or
institutional controls that unreasonably interfere with Buyer Indemnified
Parties' operations on the Real Property if such operations are materially the
same as the operations of the Seller Parties as of the Closing Date on said
properties.
(c) (2) Notwithstanding anything to the contrary herein, Seller
Parties shall have no obligation to defend, indemnify and hold harmless the
Buyer Indemnified Parties to the extent that any Remediation with respect to the
Indemnified Environmental Matters results from the cessation of all or
substantially all of the operations at the Real Property or a material change in
the use of the Real Property.
(d) Notwithstanding anything to the contrary herein, with respect
to claims arising pursuant to Section 10.8, Seller Parties shall not be
obligated to indemnify Buyer Indemnified Parties for any costs or expenses of
Buyer Indemnified Parties related to the time spent on any indemnified matter by
employees or management of Buyer Indemnified Parties.
(e) If Buyer Indemnified Parties or any of their affiliates
intend to sell, lease, sublease or otherwise convey the Real Property, Buyer
Indemnified Parties or said affiliate shall include, as a condition of such
sale, lease, sublease or other agreement terms and conditions that will ensure
that any institutional or engineering controls that have been accepted with
respect to the Real Property are not disturbed (or, if such controls will be
disturbed, will be restored at the expense of the party causing the disturbance
or, if additional Remediation is required as a result of the disturbance of such
controls, that such additional Remediation will be performed at the sole cost
and expense of the party causing the disturbance).
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(f) For purposes of this Agreement: (1) the term "Remediation
Standard" means a numerical or narrative standard (whether resulting from an
enacted statute, promulgated regulation, guidance or policy document issued by a
regulatory agency, or developed on a case-by-case basis through a risk
assessment or other methodology authorized pursuant to an applicable
Environmental Law) that defines the concentrations of Hazardous Substances that
may be permitted to remain in any environmental media after an investigation,
remediation or containment of a release of Hazardous Substances; and (2) the
term "Remediation" means any action of any kind to investigate and/or clean up a
release of Hazardous Substances into an environmental medium, including, but not
limited to, the following activities: (A) monitoring, investigation, assessment,
treatment, cleanup, containment, removal, mitigation, response or restoration
work; (B) obtaining any permits, consents, approvals or authorizations of any
governmental authority necessary to conduct any such activity; (C) preparing and
implementing any plans or studies for any such activity; and (D) obtaining a
written notice from a Governmental Authority with jurisdiction over the site
being investigated and/or cleaned up under Environmental Laws that no additional
work is required by such Governmental Authority.
(g) (1) Buyer Indemnified Parties, consistent with the provisions
of this Section 10.8, shall be entitled to control Remediations with respect to
the Indemnified Environmental Matters to the extent that such Remediations are
necessary. Buyer Indemnified Parties shall promptly provide copies to Seller
Parties of all notices, correspondence, draft reports, submissions, work plans,
and final reports. Buyer Indemnified Parties shall provide Seller Parties a
reasonable opportunity (at Seller Parties' own expense) to comment on any
submissions Buyer Indemnified Parties intend to deliver or submit to the
appropriate regulatory body prior to said submission. Further, Buyer Indemnified
Parties and Seller Parties agree to work together in good faith to agree on the
legal, regulatory, investigatory and remedial strategy and actions with respect
to such Remediations. Seller Parties may, at their own expense, hire their own
consultants, attorneys or other professionals to monitor the work performed by
Buyer Indemnified Parties, including any field work undertaken by Purchaser.
Notwithstanding the above, Seller Parties shall not take any actions that shall
unreasonably interfere with Buyer Indemnified Parties. If Buyer Indemnified
Parties' performance of any Remediation with respect to Indemnified
Environmental Matters does not substantially conform with the requirements of
this section, including, without limitation, Section 10.8(c), Seller Parties
shall have no obligation to defend, indemnify and hold harmless Buyer
Indemnified Parties with respect to the Indemnified Environmental Matters.
(2) In addition to any other limitations on Buyer Indemnified Parties'
right to indemnification with respect to the Indemnified Environmental Matters,
Seller Parties' obligation to defend, indemnify and hold harmless Buyer
Indemnified Parties with respect to the Indemnified Environmental Matters shall
terminate at such time as a no further action letter or equivalent approval has
been issued by the FDEP or other relevant Governmental Authority, whichever
comes first.
(h) Exclusive Remedy for Environmental Matters; Indemnification
by Buyer.
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Notwithstanding anything to the contrary in this Agreement, Buyer
Indemnified Parties hereby agree that their sole and exclusive remedy against
Seller Parties and their officers, managers, members, employees, Affiliates,
successors and assigns) (collectively, the "Seller-Related Parties"), with
respect to any and all matters arising under or related to Environmental Law or
Hazardous Substances, in connection with the Real Property, shall be the
indemnity set forth in this Section 10.8 and a claim for breach of
representation pursuant to Section 10.1(a)(i). Except with respect to the remedy
referred to in the preceding sentence, the Buyer Indemnified Parties hereby
waive, to the fullest extent permitted under applicable law, and forever release
the Seller-Related Parties, in connection with the Real Property, and indemnify
and hold harmless the Seller-Related Parties against, any and all claims or
Losses arising under or related to Environmental Laws, Hazardous Substances or
the environment.
ARTICLE XI
DEFINITIONS
For purposes of this Agreement, the following terms have the meaning
set forth below:
"AAA" is defined in Section 12.15(a) of this Agreement.
"Accountants" is defined in Section 1.5(a) of this Agreement.
"Accounts Receivable" means the trade receivables as reflected on the
Final Closing Financial Statement with respect to the Meat Processing Business,
the Retail Store Business and the Foodservice Business (as such term is defined
in the Share Purchase Agreement).
"AFD" is defined in the preamble of this Agreement.
"Affiliate" means, with respect to any party, any Person directly or
indirectly controlling, controlled by, or under common control with such party,
and any officer, director or executive employee of such party.
"Agreement" is defined in the preamble of this Agreement.
"Agreement Disputes" is defined in Section 12.15 of this Agreement.
"Assets" means as of the Closing Date, other than the Excluded Assets,
all of the right, title and interest of the Seller Parties in and to all the
assets and properties and rights that are used in the Retail Store Business and
the Meat Processing Business and located in the state of Florida, other than the
Excluded Assets, including but not limited to (a) real property, leaseholds and
subleaseholds therein, improvements, fixtures, and fittings therein, and
easements, rights-of-way, and other appurtenant rights thereto (such as
appurtenant rights in and to public streets), (b) tangible personal property
(such as machinery, equipment, inventories of raw materials and supplies, stock
in trade, manufactured and purchased parts, goods in process and finished goods,
49
furniture, automobiles, trucks, tractors, trailers, tools, jigs, and dies), (c)
intellectual property assets, goodwill associated therewith, licenses,
sublicenses or uses (as the case may be) granted and obtained with respect
thereto, and rights thereunder, remedies against infringements thereof, and
rights to protection of interests therein under the laws of all jurisdictions,
(d)leases, subleases, and rights thereunder, (e) agreements, Assumed Contracts,
indentures, mortgages, instruments, security interests, guaranties, and other
similar arrangements providing benefits to Seller Parties, and all rights
thereunder, (f) Accounts Receivable, notes, and other receivables, (g) claims,
deposits, prepayments, refunds, causes of action, chooses in action, rights of
recovery and rights of setoff, (h) franchises, approvals, permits, licenses,
orders, registrations, certificates, variances, and similar Governmental
Authorizations obtained from governmental bodies), (i) books, records, ledgers,
files, documents, correspondence, lists, plats, architectural plans, drawings
and specifications, creative materials, advertising and promotional materials,
studies and reports, (j) cash and cash equivalents, and (k) rights in and with
respect to the assets associated with the Company Plans to the extent Buyers
will be providing benefits to the Transferred Employees pursuant to such Company
Plans.
"Assumed Contract" means any Contract (a) under which any of the
Seller Parties has or has the option to acquire any material rights relating to
the Retail Store Business or the Meat Processing Business, (b) under which any
of the Seller Parties has or is subject to any obligation or liability relating
to the Retail Store Business or the Meat Processing Business, including real
property leases, or (c) by which either of the Sellers (with respect to the
Retail Store Business or the Meat Processing Business) or any of the Assets are
bound.
"Assumed Liabilities" means (i) any direct or indirect debt,
obligation or liability of Sellers with respect to the Retail Store Business or
the Meat Processing Business of any kind or nature, whether accrued or fixed,
absolute or contingent, determined or determinable, matured or unmatured, and
whether due or to become due, asserted or unasserted, or known or unknown, but
only to the extent (a) set forth on the face of the Orlando Balance Sheets and
the SF Stores Balance Sheet (rather than in the notes thereto), (b) set forth on
the Final Closing Financial Statement, (c) reflected on Schedule 1.3(a) or (d)
arising out of the Assumed Contracts and the other contracts included in the
Assets, and (ii) all liabilities arising out of or relating to the operation of
the Retail Store Business and/or the Meat Processing Business, which arise
between the signing and the Closing Date that are incurred in the Ordinary
Course of Business and are not required by GAAP to be shown on the Final Closing
Financial Statement or in any notes thereto, none of which, individually or in
the aggregate, would have a Material Adverse Effect.
"Assumption Agreement" is defined in Section 1.7(a)(ii) of this
Agreement.
"Balance Sheet" is defined in Section 2.4 of this Agreement.
"Balance Sheet Audit" is defined in Section 1.5(a) of this Agreement.
"Buyer Breach" is defined in Section 10.2(a) of this Agreement.
"Buyer Deductible" is defined in Section 10.2(b) of this Agreement.
"Buyer Member" is defined in the preamble of this Agreement.
50
"Buyer Indemnified Parties" is defined in Section 10.1(a) of this
Agreement.
"Buyer Parties" is defined in the preamble of this Agreement.
"Buyer 401(k) Plan" is defined in Section 4.9(e) of this Agreement.
"Buyers" is defined in the preamble of this Agreement.
"Buyers' Advisors" is defined in Section 4.1 of this Agreement.
"Buyers' Other Agreements" is defined in Section 3.2 of this
Agreement.
"Closing" is defined in Section 1.6 of this Agreement.
"Closing Date" is defined in Section 1.6 of this Agreement.
"Closing Financial Statement" is defined in Section 1.5(a) of this
Agreement.
"Closing Payment" is defined in Section 1.2(a) of this Agreement.
"COBRA" is defined in Section 4.9(e) of this Agreement.
"COBRA Eligible Individual" is defined in Section 4.9(e) of this
Agreement.
"Confidentiality Agreement" is defined in Section 12.3 of this
Agreement.
"Consent" means any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contemplated Transactions" means all of the transactions contemplated
by this Agreement.
"Contract" means any material written agreement, contract,
obligations, promise, or undertaking that is legally binding.
"Difference" is defined in Section 1.5(c) of this Agreement.
"Dispute Notice" is defined in Section 12.15(a) of this Agreement.
"Encumbrance" means any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
"Environmental Laws" means all applicable federal, state and local
laws, rules, regulations and ordinances relating to public health and safety,
worker health and safety and pollution and protection of the environment,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C.(S)9601 et seq., the
Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C.(S)6901 et
seq.,
51
the Emergency Planning and Community Right to Know Act ("Right-to-Know Act"), 42
U.S.C.(S)11001 et seq., the Clean Air Act ("CAA"), 42 U.S.C.(S)7401 et seq., the
Federal Water Pollution Control Act ("Clean Water Act"), 33 U.S.C.(S)1251 et
seq., the Toxic Substances Control Act ("TSCA"), 15 U.S.C.(S)2601 et seq., the
Safe Drinking Water Act, 42 U.S.C.(S)300f et seq., the Occupational Safety and
Health Act ("OSHA"), 42 U.S.C.(S)651 et seq., and the Hazardous Materials
Transportation Act, 49 U.S.C.(S)1801, all as amended, and any regulations, rules
or ordinances adopted promulgated pursuant thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974 or
any successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Escrow Agent" is defined in Section 1.2(b) of this Agreement.
"Escrow Agreement" is defined in Section 1.2(b) of this Agreement.
"Escrow Payment" is defined in Section 1.2(b) of this Agreement.
"Excluded Assets" means (a) supplies and other tangible personal
property consumed in the Ordinary Course of Business between the date of this
Agreement and the Closing Date, (b) the corporate books and records of Sellers,
(c) any Tax refunds or credits attributable to the Assets of the Retail Store
Business and the Meat Processing Business, relating to any taxable period, or
any portion thereof, ending on or prior to or which includes the Closing Date,
(d) any insurance policies in respect of the Retail Store Business and the Meat
Processing Business and the Assets, (e) all right, title and interest of the
Seller Parties in and to all the assets and properties that are not used in the
Retail Store Business and the Meat Processing Business and not located in the
state of Florida, (f) all assets listed on Schedule 1.1(b) and (g) all rights in
respect of the Excluded Assets and the Excluded Liabilities.
"Excluded Liabilities" is defined in Section 1.3 of this Agreement.
"Final Closing Financial Statement" is defined in Section 1.5(a) of
this Agreement.
"Final Net Working Capital" is defined in Section 1.5(a) of this
Agreement.
"Financial Statements" is defined in Section 2.3 of this Agreement.
"Foodservice Business" is defined in the Preliminary Statement of this
Agreement.
"Fort Lauderdale Store" means the premises located at 0000 X. Xxxxxxx
Xxxxxxx, Xx. Xxxxxxxxxx, Xxxxxxx, together with certain items of equipment
located therein.
"GAAP" means generally accepted United States accounting principles,
applied consistent basis.
"GFS Orlando" is defined in the preamble of this Agreement.
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"GFS Stores" is defined in the preamble of this Agreement.
"Governmental Authorization" means any material approval, consent,
license, permit, waiver, or other authorization issued, granted, given, or
otherwise made available by or under the authority of any Governmental Body or
pursuant to any Legal Requirement.
"Governmental Body" means any:
(a) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court or other
tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"Hazardous Substances" means any pollutant or contaminant (as that
term is defined in 42 U.S.C. (S)9601(33)), toxic pollutant (as that term is
defined in 33 U.S.C. (S)1362(13)), hazardous substance (as that term is defined
in 42 U.S.C. (S)(S)9601 et seq. and the regulations promulgated thereunder),
hazardous chemical (as that term is defined by 29 C.F.R. (S)1910.1200(c)),
hazardous waste (as that term is defined in 42 U.S.C. (S)6202(2)), radioactive
material, including without limitation any source, special nuclear or by-product
material as defined in 42 U.S.C. (S)(S)2011 et seq., friable asbestos and
asbestos containing material, regulated levels of polychlorinated biphenyls,
petroleum and petroleum waste, including crude oil or any petroleum derived
substance, waste or breakdown or decomposition product thereof, or any
constituent of any such petroleum substance or waste, or any substance or
material which because of its toxicity, corrosiveness, ignitability, reactivity
or infectious characteristics may pose a threat to human health or the
environment.
"Xxxxx Xxx" is defined in the Preliminary Statement of this Agreement
"Indemnified Environmental Matters" is defined in Section 10.8(a)(3)
of this Agreement.
"Indemnified Party" is defined in Section 10.3(a) of this Agreement.
"Indemnifying Party" is defined in Section 10.3(a) of this Agreement.
"IRC" means the Internal Revenue Code of 1986 or any successor law,
and regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
53
"IRS" means the United States Internal Revenue Service or any
successor agency, and to the extent relevant, the United States Department of
the Treasury.
"Knowledge" means (i) in the case of an individual, such individual's
actual knowledge; or (ii) in the case of a Person (other than an individual or
the Sellers) the actual knowledge of any executive officer of such Person. In
addition to the foregoing, the Seller Parties will be deemed to have "Knowledge"
of a particular fact or matter if any executive officer of Seller Shareholder,
AFD, SF Stores or any of Xxxxx Samples, Xxx Xxxxxxxx, Xxxxx Xxxxxx, Xxx XxXxxxxx
or Xxxx Xxxxx has actual knowledge of such fact or matter or should have known
of such fact or matter after undertaking reasonable inquiry.
"Legal Requirement" means any federal, state, local, municipal,
foreign, international, or other administrative order, constitution, principle
of common law, treaty, law, rule, ordinance, or regulation (including, but not
limited to, building and zoning ordinances, occupational health and safety laws
and regulations, and Environmental Laws, statutes, and ordinances).
"Losses" means any and all liabilities, obligations, demands, claims,
actions, causes of actions, losses (including diminution in value), assessments,
costs, damages, fines or expenses, including, without limitation, interest,
penalties, reasonable attorney fees and all amounts paid in investigation,
defense or settlement of any of the foregoing.
"Material Adverse Effect" means any condition, event, circumstance,
change or effect that, individually or in the aggregate, has had or would
reasonably be expected to have a material adverse effect on the business,
assets, properties, results of operation or financial condition or Prospects of
the Retail Store Business, the Meat Processing Business and the Foodservice
Business (as such term is defined in the Share Purchase Agreement), in the
aggregate, it being understood that none of the following shall be deemed by
itself or by themselves, either alone or in combination, to constitute a
material adverse effect: (i) any changes resulting from the announcement of the
transactions contemplated hereby or from any action taken by the terms hereof,
(ii) any changes in general economic conditions in industries in which the
Retail Store Business, the Meat Processing Business or the Foodservice Business
operates, which conditions do not affect the Retail Store Business, the Meat
Processing Business or the Foodservice Business (as applicable)
disproportionately relative to other entities operating in such industries,
(iii) any changes in the United States or global economy as a whole, (iv) any
changes arising as a result of any action taken by the Buyer Parties and (v) the
departure of any employee or employees involved primarily in the Foodservice
Business, Meat Processing Business or the Retail Store Business as a result of
any action taken by the Buyer Parties at any time prior to the Closing.
"Meat Processing Business" is defined in the Preliminary Statement of
this Agreement.
"Net Working Capital" is defined in Section 1.4 of this Agreement.
"Noncompetition Agreement" is defined in Section 1.7(a)(vii) of this
Agreement.
54
"Order" means any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body.
"Ordinary Course of Business" is defined such that an action taken by
a Person will be deemed to have been taken in the "Ordinary Course of Business"
only if:
(a) such action is consistent with the past practices of such
Person and is taken in the ordinary course of the normal day-to-day operations
of such Person;
(b) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority);
(c) such action is substantially the same in nature and magnitude
to actions customarily taken, without any authorization by the board of
directors (or by any Person or group of Persons exercising similar authority),
in the ordinary course of the normal day-to-day operations of other Persons that
are in the same line of business as such Person.
"Organizational Documents" means, as applicable, (a) the articles or
certificate of incorporation and the bylaws of a corporation; (b) the
partnership agreement and any statement of partnership of a general partnership;
(c) the limited partnership agreement and the certificate of limited partnership
of a limited partnership; (d) the articles or certificate of organization and
the operating or limited liability company agreement of a limited liability
company; (e) any charter or similar document adopted or filed in connection with
the creation, formation, or organization of a Person; and (f) any amendment to
any of the foregoing.
"Orlando Balance Sheets" is defined in Section 2.3 of this Agreement.
"Orlando P & L Statements" is defined in Section 2.3 of this
Agreement.
"Participation Agreement" means the agreement dated as of November 30,
2001 among Smart & Final, Inc., as lessee, the parties identified therein as
"Guarantors," Xxxxx Fargo BankNorthwest, National Association, not individually
except as expressly stated therein but solely as the Owner Trustee under the S&F
Trust 1998-1, the various parties identified therein as "Holders," the various
parties identified therein as "Lenders, and Fleet Capital Corporation, as the
agent for the Lenders and, in respect of the Security Documents (as defined
therein), as agent for the Lenders and the Holders.
"Participation Agreement Provisions" means Section 11 of the
Participation Agreement (Indemnification).
"Permitted Encumbrances" means (i) any statutory liens for current
Taxes not yet due and payable and (ii) Encumbrances arising in the Ordinary
Course of Business with respect to the Meat Processing Business and the Retail
Store Business since the date of the most recent Financial Statement, none of
which, individually or in the aggregate, would have a Material Adverse Effect.
"Permitted Exceptions" is defined in Section 2.7(o) of this Agreement.
55
"Person" means any individual, sole proprietorship, partnership,
limited partnership, joint venture, estate, trust, unincorporated association,
organization, labor union, limited liability company, corporation or other
entity or any Governmental Body.
"Preliminary Net Working Capital" is defined in Section 1.2 of this
Agreement.
"Preliminary Purchase Price Statement" is defined in Section 1.2 of
this Agreement.
"Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative,
investigative, or informal) commenced, brought, conducted, or heard by or before
or otherwise involving any Governmental Body or arbitrator.
"Proprietary Rights Agreement" is defined in Section 2.14(b) of this
Agreement.
"Prospects" means, to the Sellers' actual knowledge, the prospects as
of the date of this Agreement of the Retail Store Business, the Meat Processing
Business and the Foodservice Business (as such term is defined in the Share
Purchase Agreement) in the aggregate.
"Purchase Price" is defined in Section 1.2 of this Agreement.
"Related Agreements" is defined in Section 2.2(a) of this Agreement.
"Real Estate Purchase Agreement" is defined in Section 1.7(xiii) of
this Agreement.
"Real Property" is defined in Section 10.8(a)(1) of this Agreement.
"Related Person" means with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material Interest;
and
(d) any Person with respect to which such individual or one or
more members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
56
(a) any Person that directly or indirectly controls, is directly
or indirectly controlled by, or is directly or indirectly under common control
with such specified Person;
(b) any Person that holds a Material Interest in such specified
Person;
(c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material
Interest;
(e) any Person with respect to which such specified Person serves
as a general partner or trustee (or in a similar capacity); and
(f) any Related Person of any individual described in clause (b)
or (c).
For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse, (iii) any other
natural person who resides permanently with such individual, and (b) "Material
Interest" means direct or indirect beneficial ownership (as defined in Rule
13d-3 under the Securities Exchange Act of 1934) of voting securities or other
voting interests representing at least 25% of the outstanding voting power of a
Person or equity securities or other equity interests representing at least 25%
of the outstanding equity securities or equity interests in a Person.
"Remediation" is defined in Section 10.8(f)(2) of this Agreement.
"Remediation Standard" is defined in Section 10.8(f)(1) of this
Agreement.
"Representative" means with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other representative
of such Person, including legal counsel, accountants, and financial advisors.
"Retail Store Business" means the retail food store business engaged
in by SF Stores in the state of Florida at the properties referenced in Items
1-9 of Schedule 2.17.
"Schedule" means the disclosure schedules attached hereto, as amended
and supplemented in accordance with Section 12.16.
"Securities Act" means the Securities Act of 1933, or any successor
law, and regulations and rules issued pursuant to that Act or any successor law.
"Sellers" is defined in the first paragraph of this Agreement.
"Seller Breach" is defined in Section 10.1(a) of this Agreement.
"Seller Deductible" is defined in Section 10.1(b) of this Agreement.
"Seller Indemnified Parties" is defined in Section 10.2(a) of this
Agreement.
57
"Seller Shareholder" is defined in the preamble of this Agreement.
"Seller Parties" is defined in the preamble of this Agreement.
"Seller-Related Parties" is defined in Section 10.8(h) of this
Agreement.
"SF Stores" is defined in the preamble of this Agreement.
"SF Stores Balance Sheet" is defined in Section 2.3 of this Agreement.
"SF Stores P & L Statements" is defined in Section 2.3 of this
Agreement.
"SFI 401(k) Plan" is defined in Section 4.9(e) of this Agreement.
"Share Purchase Agreement" is defined in the Preliminary Statement of
this Agreement.
"Software License and Support Agreement" is defined in Section
1.7(a)(viii) of this Agreement.
"Synthetic Lease Agreement" means the Agreement, dated as of November
30, 2001 between Xxxxx Fargo Bank Northwest, National Association, not
individually but solely as the Owner Trustee under S&F Trust 1998-1, as lessor,
and Smart & Final Inc., as lessee.
"Synthetic Lease Provisions" means the following provisions of the
Synthetic Lease Agreement: (i) Section 4.1 (Taxes; Utility Charges); (ii)
paragraphs (a), (c) and (e) of Section 8.2 (Possession and Use of the
Properties); (iii) Section 8.3 (Integrated Properties); (iv) Section 9.1
(Compliance with Legal Requirements, etc.); (v) Section 10.1 (Maintenance and
Repair; Return); (vi) Section 11.1 (Modifications); (vii) Article XIII
(Permitted Contests and Payment of Impositions, Utility Charges and other
Matters); (viii) Article XIV (insurance); (ix) Section 28.2(a) (Compliance with
Laws); (x) Section 28.2(b) (Payment of Taxes); (xi) Section 28.2(c) (Compliance
with Environmental Laws); and (xii) Section 28.2(f) (Inspection Rights).
"Tax" and "Taxes" means all taxes, charges, withholdings, fees, levies
or other assessments, including, without limitation, all net income, gross
income, gross receipts, real or personal property, tollgate, capital, net worth,
sales, use, ad valorem, single business, transfer, franchise, profits, license,
leasing, withholding, payroll, employment, social security, unemployment,
excise, estimated, severance, stamp, occupation, services, property or other
taxes, customs duties, fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts imposed by any federal, state, local or other taxing authority, domestic
or foreign.
"Tax Return" means any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any Legal Requirement relating to any Tax.
58
"Termination Date" is defined in Section 9.1(d) of this Agreement.
"Third Party Claim" is defined in Section 10.3(b) of this Agreement.
"Tradename and Trademark License Agreement" is defined in Section
1.7(a)(ix) of this Agreement.
"Transfer" is defined in Section 4.9(e) of this Agreement.
"Transfer Taxes" is defined in Section 1.9 of this Agreement.
"Transferred Account Balances" is defined in Section 4.9(e) of this
Agreement.
"Transferred Employees" is defined in Section 4.9(d) of this
Agreement.
"Vendor Agreements" means the agreements listed in Annex 2 of Schedule
2.11(a).
ARTICLE XII
GENERAL PROVISIONS
12.1 Expenses With Respect to Transaction. Except as otherwise
expressly provided in this Agreement, each party to this Agreement will bear its
respective expenses incurred in connection with the preparation, execution, and
performance of this Agreement and the Contemplated Transactions, including all
fees and expenses of agents, representatives, counsel and accountants.
12.2 Public Announcements. Prior to the signing of this Agreement, the
Seller Parties and the Buyer Parties shall prepare a mutually agreeable release
announcing the Contemplated Transactions. Except for such press release, neither
the Seller Parties nor the Buyer Parties shall, without the approval of the
other, make any press release or other announcement concerning the existence of
this Agreement or the terms of the Contemplated Transactions, except as and to
the extent that any such party shall be so obligated by Legal Requirements, in
which case the other party shall be advised and the parties shall use their
reasonable best efforts to cause a mutually agreeable release or announcement to
be issued; provided, however, that the foregoing shall not preclude
communications or disclosures necessary to comply with accounting, stock
exchange or federal securities law disclosure obligations. The Seller Parties
and the Buyer Parties will consult with each other concerning the means by which
the employees, customers, and suppliers of the Sellers and others having
dealings with the Sellers will be informed of the Contemplated Transactions.
12.3 Confidentiality. The Buyer Parties and the Seller Parties shall
abide by and comply with all of the terms and conditions of the Non-Disclosure
Agreement entered into by and among the Seller Shareholder and Buyer Member and
dated as of February 10, 2003, as amended (the "Confidentiality Agreement").
Notwithstanding the foregoing, if required by
59
Legal Requirements, the Seller Parties and the Buyer Parties (and each of their
respective employees, representatives, or other agents) may disclose to any and
all persons, without limitation of any kind, the tax treatment and any facts
that may be relevant to the tax structure of the Contemplated Transactions
beginning on the earliest of (i) the date of the public announcement of
discussions relating to the Contemplated Transactions, (ii) the date of public
announcement of the Contemplated Transactions, or (iii) the date of the
execution of an agreement (with or without conditions) to enter into the
Contemplated Transactions; provided, however, that neither the Seller Parties
nor the Buyer Parties (nor any of their respective Representatives) may disclose
any other information that is not relevant to understanding the tax treatment
and tax structure of the Contemplated Transactions (including the identity of
any party and any information that could lead another to determine the identity
of any party), or any other information to the extent that such disclosure could
result in a violation of any federal or state securities law.
12.4 Notices. All necessary notices, demands, requests and other
communications required or permitted to be given hereunder shall in every case
be in writing and shall be deemed duly given (a) when delivered personally, (b)
upon receipt or refusal of receipt, if sent by registered or certified mail, in
all such cases with postage prepaid, return receipt requested, or (c) the next
business day if delivered by a recognized overnight courier service, airbill
prepaid, designated for next business day delivery, to the parties at the
addresses as set forth below or at such other addresses as may be furnished in
writing:
If to Buyer: Xxxxx Xxxxxxxxx
Xxxxxx Food Service, Inc.
X.X. Xxx 0000
Xxxxx Xxxxxx, Xxxxxxxx 00000
and to: Xxxxx X. Xxxx
00000 Xxxx Xxxxxxxx Xxxxx
X.X. Xxx 000
Xxxxxx, Xxxxxxxx 00000-0000
With a copy to: Miller, Johnson, Xxxxx & Xxxxxxxxx,
P.L.C.
000 Xxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
If to Sellers: Xxxxxx Xxxxxxxxx
Smart & Final, Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
60
With a copy to: Legal Department
Smart & Final, Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
And a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
And a copy to: Xxxxx & Xxxxxxx
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx XX
12.5 Jurisdiction.
(a) In the event any dispute arises out of this Agreement or any
of the transactions contemplated by this Agreement, each of the parties hereto
consents to submit itself to the personal jurisdiction of any federal court in
the state of Delaware and, in case such court refuses jurisdiction then each of
the parties consents to submit itself to the personal jurisdiction of any state
court in the state of Delaware. Each of the parties further agrees that it will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from such courts, and agrees that, except as permitted
pursuant to this Section 12.5, it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any other
court other than a federal court in the state of Delaware.
(b) In the event the state court specified in Section 12.5(a)
refuses to exercise jurisdiction over the parties hereto or the subject matter
at issue, then with respect to any legal action or proceeding brought by any of
the Seller Parties against any of the Buyer Parties arising out of or relating
to this Agreement or any of the transactions contemplated by this Agreement,
each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of any federal court within the jurisdiction of the United
States District Court for the Western District of Michigan (and each
appellate court thereof) or any state court in the state of Michigan;
(ii) agrees that any federal court within the jurisdiction
of the United States District Court for the Western District of Michigan or
any state court in the state of Michigan shall be deemed to be a convenient
forum; and
(iii) agrees not to assert (by way of motion, as a defense
or otherwise), in any such legal proceeding commenced in any federal court
within the jurisdiction of the United States District Court for the Western
District of Michigan or any state court in the state of Michigan, any claim
that such party is not subject personally to the jurisdiction of such
court, that such legal
61
proceeding has been brought in an inconvenient forum, or that the venue of
such proceeding is improper.
(c) In the event the state court specified in Section 12.5(a)
refuses to exercise jurisdiction over the parties hereto or the subject matter
at issue, then with respect to any legal action or proceeding brought by any of
the Buyer Parties against any of the Seller Parties arising out of or relating
to this Agreement or any of the transactions contemplated by this Agreement,
each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of any federal court within the jurisdiction of the United
States District Court for the Central District of California (and each
appellate court thereof) or any state court in the state of California;
(ii) agrees that any federal court within the jurisdiction
of the United States District Court for the Central District of California
or any state court in the state of California shall be deemed to be a
convenient forum; and
(iii) agrees not to assert (by way of motion, as a defense
or otherwise), in any such legal proceeding commenced in any federal court
within the jurisdiction of the United States District Court for the Central
District of California or any state court in the state of California, any
claim that such party is not subject personally to the jurisdiction of such
court, that such legal proceeding has been brought in an inconvenient
forum, or that the venue of such proceeding is improper.
(d) The parties hereby waive any right to a jury trial.
12.6 Further Assurances. From time to time after the Closing Date, at
the request of the other party hereto and at the expense of the party so
requesting (unless the requesting party is entitled to indemnification therefor
under Article X), each of the parties hereto shall execute and deliver to such
requesting party such documents and take such other action as such requesting
party may reasonably request in order to consummate more effectively the
transactions contemplated hereby.
12.7 Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in the Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of
62
such party or of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.
12.8 Entire Agreement and Modification. This Agreement (including all
exhibits and schedules hereto) supersedes all prior agreements between the
parties other than the Confidentiality Agreement with respect to its subject
matter (including the Letter of Intent between Xxxxxx Food Service, Inc. and the
Seller Shareholder, dated May 29, 2003, as amended) and constitutes (along with
the documents referred to in this Agreement) a complete and exclusive statement
of the terms of the agreement between the parties with respect to its subject
matter. This Agreement may not be amended except by a written agreement executed
by the parties to be charged with the amendment.
12.9 Assignments, Successors, and No Third-Party Rights. Neither party
may assign any of its rights or obligations under this Agreement without the
prior consent of the other parties except that Buyers may assign any of their
rights or obligations under this Agreement to any Affiliate of Buyer Member.
Subject to the preceding sentence, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the successors and permitted
assigns of the parties. Nothing expressed or referred to in this Agreement will
be construed to give any Person other than the parties to this Agreement any
legal or equitable right, remedy, or claim under or with respect to this
Agreement or any provision of this Agreement. This Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of the parties
to this Agreement and their successors and assigns.
12.10 Severability. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
12.11 Section Headings, Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
12.12 Preamble; Preliminary Statement. The Preliminary Statement set
forth in the Preamble hereto is hereby incorporated and made a part of this
Agreement.
12.13 Governing Law. This Agreement will be governed by the internal
laws of the State of Delaware without regard to conflicts of laws principles.
63
12.14 No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party hereto by virtue of having drafted this Agreement or otherwise.
12.15 Dispute Resolution. Except as hereinafter provided in this
Section 12.15 and subject to the provisions set forth in Article X, from and
after the Closing, all claims, controversies, differences, or disputes between
or among any of the parties hereto arising from or relating to this Agreement,
including claims by one party that another party or parties hereto have failed
to perform any of their obligations hereunder (collectively, "Agreement
Disputes"), shall be resolved as follows:
(a) Facilitative Mediation. The parties to an Agreement Dispute
shall first attempt to resolve such Agreement Dispute by means of a mediation
conducted in the following manner. A party desiring mediation of any Agreement
Dispute shall give or shall have given a written notice, in the manner set forth
in Section 12.4 hereof (a "Dispute Notice"), to the other party or parties
setting forth the nature of the dispute and the relief intended to be sought and
shall submit such Agreement Dispute for resolution by facilitative mediation in
Chicago, Illinois, under the Commercial Mediation Rules (but not otherwise under
the auspices) of the American Arbitration Association (the "AAA") in effect on
the date of this Agreement, unless the parties have agreed, in writing, to
resolve any such dispute by other means. Each party agrees that it will submit
to and shall not challenge or object to the jurisdiction (either personal or
subject matter) or the venue of such mediation in Chicago, Illinois.
(b) Legal Proceedings. If any Agreement Dispute has not been
resolved by mediation as provided above within sixty (60) days after submission
thereof, then either party may commence a suit or legal action or an action at
equity to enforce its rights or the other party's obligations or recover any
damages arising from the other party's breach or such other relief as may be
appropriate under the circumstances.
(c) Attorney Fees and Other Costs. The prevailing party in any
mediation or any action or legal or other proceeding brought with respect to an
Agreement Dispute shall be entitled to recover the reasonable fees and
disbursements of its attorneys, accountants, and expert witnesses in connection
with any such mediation or any action or legal or other proceeding brought in
accordance with the provisions hereof.
(d) Exceptions for Equitable Relief. Notwithstanding the
foregoing or anything to the contrary contained elsewhere in this Agreement, a
party may bring a proceeding against any other party hereto for specific
performance or injunctive or other forms or equitable relief in the state or
federal courts pursuant to the procedures set forth in Section 12.5 without
having to submit the matter or Agreement Dispute in question to mediation as
hereinabove set forth, provided, however, that such party shall not seek any
monetary award or relief in such action or proceeding unless its failure to do
so would prejudice such party's rights or ability to seek such monetary award or
relief in another action or proceeding.
12.16 Supplemental Disclosure. The Seller Parties shall have the right
from time to time up to seven (7) days prior to the Closing to supplement or
amend the disclosure schedules
64
with respect to any matter hereafter arising that, if existing or known at the
date of this Agreement, would have been required to be set forth or described in
such disclosure schedule. Any such supplemental or amended disclosure shall be
deemed to have cured any breach of any representation or warranty made in this
Agreement for purposes of Article X, but will not be deemed to have cured any
such breach made in this Agreement or to have been disclosed as of the date of
this Agreement for purposes of Article VIII.
12.17 Reliance. All covenants, warranties and representations made
herein by any party (including the disclosures made on the Schedules) shall be
deemed to be relied upon by the other party notwithstanding any investigation by
or actual knowledge of such by the other party.
12.18 Counterparts. This Agreement may be executed in two or more
counterparts, each or which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[Remainder of page intentionally left blank]
65
IN WITNESS WHEREOF, the parties have each executed and delivered this
Agreement as of the day and year first above written.
SELLER PARTIES:
SELLER SHAREHOLDER:
SMART & FINAL INC.
By /s/ Xxxxxx Xxxxxxxxx
--------------------------------
Its EVP
----------------------------
By /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Its SVP
----------------------------
SF STORES:
SMART & FINAL STORES CORPORATION
By /s/ Xxxxxx Xxxxxxxxx
--------------------------------
Its EVP
----------------------------
By /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Its SVP
----------------------------
AFD:
AMERICAN FOODSERVICE DISTRIBUTORS
By /s/ Xxxxxx Xxxxxxxxx
--------------------------------
Its EVP
----------------------------
By /s/ Xxxxxx X. Xxxxxxxx
--------------------------------
Its SVP
----------------------------
66
BUYER PARTIES:
BUYER MEMBER:
GFS HOLDING, INC.
By /s/ Xxxx Xxxxxx
--------------------------------
Its Authorized Agent
----------------------------
GFS ORLANDO:
GFS ORLANDO, LLC
By /s/ Xxxx Xxxxxx
--------------------------------
Its Authorized Agent
----------------------------
GFS STORES:
GFS STORES, LLC
By /s/ Xxxx Xxxxxx
--------------------------------
Its Authorized Agent
----------------------------
67
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is entered into and effective
as of August , 2003 (the "Effective Date"), by and between SMART & FINAL INC.,
--
a Delaware corporation ("SFI"), AMERICAN FOODSERVICE DISTRIBUTORS, a California
corporation ("AFD"), SMART & FINAL STORES CORPORATION, a California corporation
("SF Stores" and, together with SFI and AFD, collectively, the "Sellers"), GFS
HOLDING, INC., a Delaware corporation ("GFS Holding"), XXXXX XXX COMPANY, a
Florida corporation ("Xxxxx Xxx"), GFS STORES, LLC, a Delaware limited liability
company ("GFS Stores"), and GFS Orlando, LLC, a Delaware limited liability
company ("GFS Orlando" and, together with GFS Holding, Xxxxx Xxx and GFS Stores,
collectively, the "Buyers"), and XXXXX FARGO BANK, N.A., solely in its capacity
as Escrow Agent as is set forth herein (the "Escrow Agent"). Capitalized terms
not otherwise defined herein shall have the respective meanings set forth in the
Share Purchase Agreement (as defined below).
R E C I T A L S
A. Pursuant to that certain Share Purchase Agreement (the "Share
Purchase Agreement"), dated of even date herewith, by and between SFI, AFD and
GFS Holding, GFS Holding will purchase all of the issued and outstanding common
shares of Xxxxx Xxx; and pursuant to that certain Asset Purchase Agreement (the
"Asset Purchase Agreement"), dated of even date herewith, by and among GFS
Holding, GFS Orlando and GFS Stores, and Sellers, GFS Stores and GFS Orlando
will, directly or indirectly, acquire from Sellers certain of the assets of SF
Stores and all of the assets of the Orlando Foodservice division of AFD
(collectively, the "Assets" and, together with Xxxxx Xxx, the "Companies").
B. Following the consummation of the transactions contemplated by the
Share Purchase Agreement and the Asset Purchase Agreement, Buyers will continue
to operate the Companies.
C. The Asset Purchase Agreement requires that the Buyers deposit with
the Escrow Agent the sum of Two Million Dollars ($2,000,000) and the Share
Purchase Agreement requires that the Buyers deposit with the Escrow Agent the
sum of One Million Dollars ($1,000,000), for an aggregate deposit of Three
Million Dollars ($3,000,000) (the "Escrow Fund").
D. An aggregate amount equal to One Million Five Hundred Thousand
Dollars ($1,500,000) (the "Purchase Price Escrow Deposit") of the Escrow Fund
shall be a fund against which claims by the Buyers may be made with respect to
adjustments to the Purchase Price pursuant to Sections 1.4 and 1.5 of the Asset
Purchase Agreement and Sections 1.3 and 1.4 of the Share Purchase Agreement.
E. An aggregate amount equal to One Million Five Hundred Thousand
Dollars ($1,500,000) (the "Indemnity Escrow Deposit") of the Escrow Fund shall
be a fund against which claims for indemnification against the Sellers may be
made by the Buyers pursuant to Article X of the Asset Purchase Agreement and
pursuant to Article X of the Share Purchase Agreement.
AGREEMENT
In consideration of the premises set forth above and other good and
valuable consideration, the receipt of which is hereby acknowledged, the Buyers,
the Sellers and the Escrow Agent agree as follows:
1. Appointment of Escrow Agent.
(a) The Escrow Agent is hereby appointed escrow agent in
accordance with the instructions set forth in this Agreement and hereby agrees
to act as the Escrow Agent under this Agreement. The Escrow Agent shall have no
duty to enforce any provision hereof requiring performance by any other party
hereunder.
(b) The Escrow Agent hereby acknowledges receipt of the Escrow
Fund.
(c) The Escrow Agent shall not have any interest in the Escrow
Fund, but shall serve as escrow holder only and have only possession thereof.
The Escrow Agent expressly waives any right to set off and appropriate any
amounts under the Escrow Fund.
2. Distribution of Purchase Price Escrow Deposit. The Buyers and the
Sellers shall, not more than five (5) business days after the final
determination of the Final Closing Financial Statement and the adjustments to
the Purchase Price, if any, pursuant to Sections 1.4 and 1.5 of the Asset
Purchase Agreement and Sections 1.3 and 1.4 of the Share Purchase Agreement,
provide the Escrow Agent with a written notice (the "Distribution Notice") with
respect to the disposition of the Purchase Price Escrow Deposit. The
Distribution Notice shall be signed by authorized officers of the Buyers and the
Sellers, and shall describe the portions of the Purchase Price Escrow Deposit to
be distributed to the Buyers or to the Sellers, as the case may be. Not more
than five (5) business days after the delivery of the Distribution Notice, the
Escrow Agent shall distribute the Purchase Price Escrow Deposit in the manner
described in the Distribution Notice, together with any interest and income
earned on the portion so distributed. The parties acknowledge that no
distributions shall be made under this Section 2 until the Final Closing
Financial Statement, and adjustments to the Purchase Price with respect to the
determination of the Final Net Working Capital, if any, have been determined
under both the Asset Purchase Agreement and the Share Purchase Agreement, and
that any such distribution will be of the net amount under both the Asset
Purchase Agreement and the Share Purchase Agreement.
3. Claim Certificates With Respect to the Indemnity Escrow Deposit.
The Buyers, from time to time on or prior to the first anniversary of the
Closing Date, may make an indemnification claim against the Indemnity Escrow
Deposit under and pursuant to Article X of
2
the Asset Purchase Agreement and/or Article X of the Share Purchase Agreement
(as applicable), on behalf of themselves or another Buyer Indemnified Party, for
up to all of the Indemnity Escrow Deposit (a "Claim") by delivering to the
Escrow Agent a certificate (a "Claim Certificate") signed by authorized officers
of the Buyers stating:
(a) That the Buyers or another Buyer Indemnified Party are
entitled to be indemnified under Section 10.1 of the Asset Purchase Agreement
and/or Section 10.1 of the Share Purchase Agreement (as applicable);
(b) The reasons therefore, set forth in reasonable detail;
(c) The amount of the Claim by the Buyers or such other Buyer
Indemnified Party, provided, however, that where the amount of the Claim is not
a liquidated sum, the amount of the Claim shall be the amount reasonably
estimated by the Buyers in good faith; and
(d) That the Buyers have delivered a copy of such Claim
Certificate to the Sellers and their legal counsel and the date on which such
copy was delivered.
Whenever a Claim Certificate is delivered to the Escrow Agent, the
Escrow Agent shall thereupon promptly deliver a copy to the Sellers and their
legal counsel.
4. Disputed Claims With Respect to the Indemnity Escrow Deposit. The
Sellers may dispute any Claim in whole or in part (hereinafter a "Disputed
Claim"), by delivering to the Escrow Agent a written notice (an "Objection
Notice") within twenty (20) days of receipt of the Claim Certificate from the
Buyers stating:
(a) That the Sellers dispute or object in good faith to such
Claim in whole or in part;
(b) A reasonably detailed description of the reasons for such
good faith objection or dispute;
(c) That the Sellers have delivered a copy of the Objection
Notice to the Buyers and their legal counsel and the date on which such copy was
delivered;
(d) The portion of the Claim set forth in the Claim Certificate
to which there is a good faith dispute or objection, including a reasonable
estimate of the dollar amount of such portion of the Claim (the "Disputed Claims
Amount"); and
(e) The portion of the Claim set forth in the Claim Certificate,
if any, to which there is no dispute or objection, including a reasonable
estimate of the dollar amount of such portion of the Claim (hereinafter referred
to as an "Undisputed Claim").
Whenever there shall be delivered to the Escrow Agent an Objection
Notice, the Escrow Agent shall thereupon promptly deliver a copy to the Buyers
and their legal counsel.
3
5. Payment of Claims With Respect to the Indemnity Escrow Deposit.
(a) If the Escrow Agent does not receive an Objection Notice
within twenty (20) days of the date that the Sellers receive a Claim Certificate
from the Buyers, the Escrow Agent shall thereupon promptly pay to the Buyers
from the Indemnity Escrow Deposit an amount equal to the amount of the Claim
specified in the Claim Certificate plus interest on the amount so paid, computed
from the date of the Claim Certificate.
(b) If the Escrow Agent receives from the Sellers an Objection
Notice which consents or agrees to all or part, or does not dispute a portion,
of a Claim, the Escrow Agent shall thereupon promptly pay to the Buyers from the
Indemnity Escrow Deposit an amount equal to the aggregate amount of such
Undisputed Claim as specified in such notice from the Sellers plus interest on
the amount so paid, computed from the date of the Claim Certificate.
(c) If the Indemnity Escrow Deposit is not sufficient to pay in
full any amounts payable to the Buyers under the preceding Section 5(a) or 5(b),
the Escrow Agent shall pay to the Buyers the full amount of the Indemnity Escrow
Deposit and all interest thereon and this escrow shall thereupon terminate.
6. Distribution of Indemnity Escrow Deposit. Except as provided in
Section 5 hereof, the Escrow Agent shall not make any distribution of the
Indemnity Escrow Deposit with respect to any Claim made by the Buyers hereunder
until:
(a) it receives the written consent or agreement from the Sellers
with respect to such distribution; or
(b) there is a Final Decision with respect to a Disputed Claim.
As used herein, "Final Decision" means a resolution of the Disputed Claim by
facilitative mediation pursuant to Section 12.15 of the Asset Purchase Agreement
and/or Section 12.15 of the Share Purchase Agreement (as the case may be) or, if
the Disputed Claim is not resolved by facilitative mediation, a final decision,
order, judgment or decree of a court having jurisdiction which is either not
subject to appeal or as to which notice of appeal has not been timely filed or
served.
7. Administration of Escrow.
(a) So long as the Escrow Fund is held in escrow, it shall be
invested and reinvested by the Escrow Agent solely in Investments, pursuant to
written instructions signed by the Buyers and the Sellers. Neither the Escrow
Agent, the Buyers, nor the Sellers shall be liable or responsible for any loss
resulting from any investment or reinvestment made pursuant to this Section
7(a). All investments of the Escrow Fund shall be held by, or registered in the
name of, Escrow Agent or its nominee.
As used herein "Investments" means:
(i) direct obligations of, or obligations fully guaranteed
by, the United States of America or any agency thereof with any residual
amount being invested in the Federal Treasury Obligations Money Market
Fund;
4
(ii) any taxable publicly traded money market fund;
(iii) certificates of deposit whether negotiable or
nonnegotiable, issued by any bank, trust company or national banking
association, including the Escrow Agent, provided that such certificates of
deposit shall (A) be issued by a bank, trust company or national banking
association having a capital stock and surplus of more than Five Hundred
Million Dollars ($500,000,000), (B) be fully insured by the Federal Deposit
Insurance Corporation or (C) be fully and continuously secured by direct
obligations of, or obligations unconditionally guaranteed by, the United
States of America, which (1) shall have a market value (exclusive of
accrued interest) at all times at least equal to the principal amount of
such certificates of deposit, (2) shall be lodged with the Escrow Agent (or
any correspondent bank or trust company designated by the Escrow Agent), as
custodian, by the bank, trust company or national banking association
issuing such certificate of deposit, and (3) the bank, trust company or
national banking association issuing each certificate of deposit required
to be so secured shall furnish the Escrow Agent with an undertaking
satisfactory to it that the aggregate market value of such obligations
securing each such certificate of deposit will at all times be an amount
equal to the principal amount of each such certificate of deposit (and the
Escrow Agent shall be entitled to rely on each such undertaking); or
(iv) in the absence of written direction, the Escrow Fund
may be invested in Xxxxx Fargo 100% Treasury Money Market, a money market
fund.
(b) Maturities or unexpired terms of maturities of instruments in
which the Escrow Fund is invested shall not exceed ninety (90) days. The Escrow
Agent is authorized to sell any such Investments as may be required to make any
payment required to be made under this Agreement, and the Escrow Agent shall not
be liable for any loss due to early redemption. In the event that no written
instructions are given by the Buyers and the Sellers as to any uninvested
portion of the Escrow Fund, such portion shall be invested by the Escrow Agent
in United States treasury bills for a thirty (30) day period; provided, however
that if such period is not available, such portion shall be invested for the
closest period of shorter duration.
(c) Not less than ten (10) nor more than fifteen (15) business
days prior to the termination of this Agreement, the Escrow Agent shall deliver
to the Buyers and the Sellers a report outlining (i) the total amount of the
Escrow Fund as of such date and the total amount of interest earned on the
Escrow Fund prior thereto and not distributed pursuant to the terms of this
Agreement and (ii) copies of or a description of all Claim Certificates pursuant
to which payments from the Escrow Fund have been made and a description of all
other payments made from the Escrow Fund during the preceding twenty-three (23)
month period and all pending Claim Certificates as of such date.
(d) At the prior written request of either the Buyers or the
Sellers at any time, the Escrow Agent shall deliver to the Buyers and the
Sellers such information as shall be
5
reasonably requested with respect to the Escrow Fund and any interest earned
thereon or payments made therefrom.
(e) Net profits resulting from, and interest and income produced
by investments of, the Escrow Fund shall be deemed a part of the Escrow Fund and
reinvested by Escrow Agent.
8. Reliance. Escrow Agent may act upon any instrument or other writing
believed by it in good faith to be genuine and to be signed or presented by the
proper person or persons and shall not be liable in connection with the
performance by it of its duties pursuant to the provisions hereof, except for
its own bad faith, fraud, willful misconduct or gross negligence. The Buyers on
the one hand and the Sellers on the other shall indemnify and hold harmless the
Escrow Agent for one half (1/2) of all losses, costs, and expenses which may be
incurred by it without bad faith, fraud, gross negligence or willful misconduct
on the part of the Escrow Agent, arising out of or in connection with its
entering into this Agreement and carrying out its duties hereunder. Such
indemnification provisions shall survive the termination of this Agreement or
the removal or resignation of the Escrow Agent.
9. Distribution of Funds; Termination of Escrow. Unless earlier
terminated pursuant to Section 5(c):
On the first anniversary of the Closing Date, the Indemnity
Escrow Deposit held by the Escrow Agent pursuant to the terms of this Agreement
less (i) all amounts previously distributed pursuant to Section 5 hereof and
(ii) an amount equal to One Hundred Percent (100%) of the Disputed Claims Amount
(including, for purposes hereof, all Claims with respect to which the Sellers
have not submitted an Objection Notice), shall be paid by the Escrow Agent to
the Sellers for the benefit of the Sellers, together with any interest and
income earned on the funds so distributed.
Upon settlement of all Disputed Claims outstanding as of the
first anniversary of the Closing Date, this escrow shall thereupon terminate,
and the remainder of the Indemnity Escrow Deposit held by the Escrow Agent after
any payment due to the Buyers shall be paid by the Escrow Agent to the Sellers
for the benefit of the Sellers, together with any interest and income earned on
the funds so distributed, in accordance with such settlement, written notice of
which shall be delivered to the Escrow Agent.
10. Fees and Expenses. The Escrow Agent shall be entitled to
compensation for its services as stated in the schedule attached as Annex I,
which compensation shall be paid one-half (1/2) by the Sellers and one-half
(1/2) by the Buyers. The fee agreed upon for the services rendered hereunder is
intended as full compensation for the Escrow Agent's services as contemplated by
this Agreement; provided, however, that in the event that the conditions for the
disbursement of funds under this Agreement are not fulfilled, or the Escrow
Agent tenders any material service not contemplated in this Agreement or there
is any assignment of interest in the subject matter of this Agreement not
contemplated herein, or any material modification hereof, or if any material
controversy arises hereunder, or the Escrow Agent is made a party to any
litigation pertaining to this Agreement, or the subject matter hereof, then the
Escrow Agent shall
6
be reasonably compensated for such extraordinary services and reimbursed for all
costs and expenses, including reasonable attorney fees, occasioned by any delay,
controversy, litigation or event, and the same shall be recoverable one-half
(1/2) from the Sellers and one-half (1/2) from the Buyers.
11. Liability of the Escrow Agent.
(a) The Escrow Agent shall hold, invest and disburse the Escrow
Fund and any interest, dividends, or other income accrued thereon only in
accordance with (a) this Agreement or (b) written instructions accompanied by a
certificate signed by the Buyers and the Sellers confirming that such written
instructions are being given in conformity with this Agreement. The Escrow Agent
shall not be bound in any way by, or be deemed to have knowledge of, the Asset
Purchase Agreement and the Share Purchase Agreement or any other agreement
between or among the parties hereto, other than this Agreement. The Escrow Agent
shall have no duties other than those expressly imposed on it herein and shall
not be liable with respect to any action taken by it, or any failure on its part
to act, except to the extent that such actions constitute a breach of this
Agreement, bad faith, fraud, gross negligence, or willful misconduct.
(b) The Escrow Agent makes no representations and has no
responsibility as to the validity, genuineness or sufficiency of any of the
documents or instruments delivered to it hereunder. Subject to Section 11(a)
hereof, the Escrow Agent (i) shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument or other writing delivered to it
hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof and (ii) may act in reliance upon any instrument or signature
reasonably believed by it to be genuine and may assume that any person
purporting to give notice, receipt or advice or make any statement or execute
any document in connection with the provisions hereof has been duly authorized
to do so. The Escrow Agent may act in reliance upon the written advice of
counsel satisfactory to it in reference to any matter in connection with this
Agreement and shall not incur any liability for any action taken in good faith
in accordance with such written advice.
(c) In the event of any disagreement between the other parties
hereto resulting in adverse claims or demands being made in connection with the
Escrow Fund, or in the event that the Escrow Agent in good faith is in doubt as
to what action it should take hereunder, the Escrow Agent shall be entitled to
refrain from acting until the Escrow Agent shall have received (i) a final
nonappealable order of a court of competent jurisdiction directing delivery of
the amount of the Escrow Fund in dispute or (ii) written instructions jointly
executed by the Sellers and the Buyers directing delivery of the amount of the
Escrow Fund in dispute, in which event the Escrow Agent shall deliver the amount
of the Escrow Fund in dispute in accordance with such order or instructions. Any
court order referred to in clause (i) above shall be accompanied by a legal
opinion by counsel for the presenting party reasonably satisfactory to the
Escrow Agent to the effect that said order or determination is final and
nonappealable. The Escrow Agent shall act on such court order and legal opinion
without further questions.
7
12. Resignation; Removal.
(a) The Escrow Agent may resign upon thirty (30) days advance
written notice to the parties. If a successor escrow agent is not appointed by
the mutual agreement of the Buyers and the Sellers within the thirty (30) day
period following such notice, the Escrow Agent may petition any court of
competent jurisdiction to name a successor escrow agent or may tender into the
registry or custody of any court of competent jurisdiction any part or all of
the Escrow Fund, whereupon Escrow Agent's duties hereunder shall terminate.
(b) The Escrow Agent shall be entitled to its compensation earned
prior to its resignation hereunder.
(c) The Buyers and the Sellers may, at any time substitute a new
escrow agent by giving thirty (30) days notice thereof to the existing Escrow
Agent and paying all fees and expenses of such Escrow Agent incurred to the date
of the substitution. Upon the effective date of the substitution of a successor
escrow agent, the Escrow Agent shall deposit all of the Escrow Fund with such
successor.
13. Tax Reporting.
(a) Any payments of income from the Escrow Fund shall be subject
to withholding regulations then in force with respect to United States taxes.
For federal and state income tax purposes, all interest earned on the Escrow
Fund shall be considered the currently reportable income of the party who
receives the distribution with respect thereto. The Escrow Agent shall file
annually all information returns with the Internal Revenue Service and other
governmental authorities documenting such interest income.
(b) Prior to Closing, the Buyers and the Sellers shall provide
the Escrow Agent with certified tax identification numbers by furnishing
appropriate forms W-9 or W-8 and other forms and documents that the Escrow Agent
may reasonably request. The Buyers and the Sellers understand that if such tax
reporting documentation is not so certified to the Escrow Agent, the Escrow
Agent may be required by the Internal Revenue Code of 1986, as amended, to
withhold a portion of any interest or other income earned on the investment of
monies or other property held by the Escrow Agent pursuant to this Agreement.
(c) To the extent that the Escrow Agent becomes liable for the
payment of any taxes in respect of income derived from the investment of funds
held or payments made hereunder, the Escrow Agent shall satisfy such liability
to the extent possible from the Escrow Fund. The Buyers and the Sellers agree to
indemnify and hold the Escrow Agent harmless from and against any taxes,
additions for late payment, interest, penalties and other expenses that may be
assessed against the Escrow Agent on or with respect to any payment or other
activities under this Agreement unless any such tax addition for late payment,
interest, penalties and other expenses shall arise out of or be caused by the
actions of, or failure to act by, the Escrow Agent.
8
14. Miscellaneous Provisions.
(a) Confidentiality. Each of Sellers and Buyers (as appropriate,
the "Promisor") covenant and agree to and will cause their respective authorized
agents, representatives, affiliates, employees, officers, directors,
accountants, counsel and other designated representatives (collectively,
"Representatives") to (i) treat and hold as confidential (and not disclose or
provide access to any person to) all records, books, contracts, instruments,
computer data and other data and information (collectively, "Information")
concerning the other party (the "Promisee") and the Escrow Fund in the
Promisor's possession or furnished by the Promisee or its Representatives
pursuant to this Agreement, (ii) in the event that Promisor or its
Representatives become legally compelled to disclose any such Information,
provide the Promisee with prompt written notice of such requirement so that the
Promisee may seek a protective order or other remedy or waive compliance with
this Section 14(a), and (iii) in the event that such protective order or other
remedy is not obtained, or the Promisee waives compliance with this Section
14(a), furnish only that portion of such Information which is legally required
to be provided and exercise Promisor's best efforts to obtain assurances that
confidential treatment will be accorded such Information; provided, however,
that this sentence shall not apply to any Information that, at the time of
disclosure, is available publicly and was not disclosed in breach of this
Agreement by such party or its Representatives; and provided further, however,
that the provisions of clauses (i) and (ii) above shall not preclude a party
from disclosing Information to its Representatives (provided that each such
Representative shall be advised of the confidential nature of such Information)
or from disclosing Information to or filing Information with any governmental
authority or agency with jurisdiction over such party. Each party agrees and
acknowledges that remedies at law for any breach of its obligations under this
Section 14(a) are inadequate and that in addition thereto the other party shall
be entitled to seek equitable relief, including injunction and specific
performance, in the event of any such breach, without the necessity of
demonstrating the inadequacy of monetary damages. The provisions of this Section
14(a) shall not apply to the extent any such Information is required to be
disclosed by applicable law.
(b) Notices. All necessary notices, demands, requests and other
communications required or permitted to be given hereunder shall in every case
be in writing and shall be deemed duly given (a) when delivered personally, (b)
upon receipt or refusal of receipt, if sent by registered or certified mail, in
all such cases with postage prepaid, return receipt requested, or (c) the next
business day if delivered by a recognized overnight courier service, airbill
prepaid, designated for next business day delivery, to the parties at the
addresses as set forth below or at such other addresses as may be furnished in
writing:
If to Buyers: Xxxxx Xxxxxxxxx
Xxxxxx Food Service, Inc.
X.X. Xxx 0000
Xxxxx Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
9
and to: Xxxxx X. Xxxx
00000 Xxxx Xxxxxxxx Xxxxx
X.X. Xxx 000
Xxxxxx, Xxxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Miller, Johnson, Xxxxx & Xxxxxxxxx, P.L.C.
000 Xxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Sellers: Xxxxxx Xxxxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxx Xxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
10
And a copy to: Xxxxx & Xxxxxxx
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx XX
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Escrow Agent: Xxxxx Fargo Bank, N.A.
Corporate Trust Services
000 Xxxxxxxx Xxxx., 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(c) Jurisdiction.
(1) In the event any dispute arises out of this Agreement or
any of the transactions contemplated by this Agreement, each of the parties
hereto consents to submit itself to the personal jurisdiction of any federal
court in the state of Delaware and, in case such court refuses jurisdiction then
each of the parties consents to submit itself to the personal jurisdiction of
any state court in the state of Delaware. Each of the parties further agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from such court, and agrees that, except as permitted
pursuant to this Section 14(c), it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any other
court other than a federal court in the state of Delaware.
(2) In the event the state court specified in Section
14(c)(1) refuses to exercise jurisdiction over the parties hereto or the subject
matter at issue, then with respect to any legal action or proceeding brought by
any of the Seller Parties against any of the Buyer Parties arising out of or
relating to this Agreement or any of the transactions contemplated by this
Agreement, each party to this Agreement:
(i) expressly and irrevocably consents and submits to
the jurisdiction of any federal court within the jurisdiction of the United
States District Court for the Western District of Michigan (and each
appellate court thereof) or any state court in the state of Michigan;
(ii) agrees that any federal court within the
jurisdiction of the United States District Court for the Western District
of Michigan or any state court in the state of Michigan shall be deemed to
be a convenient forum; and
11
(iii) agrees not to assert (by way of motion, as a
defense or otherwise), in any such legal proceeding commenced in any
federal court within the jurisdiction of the United States District Court
for the Western District of Michigan or any state court in the state of
Michigan, any claim that such party is not subject personally to the
jurisdiction of such court, that such legal proceeding has been brought in
an inconvenient forum, or that the venue of such proceeding is improper.
(3) In the event the state court specified in Section
14(c)(1) refuses to exercise jurisdiction over the parties hereto or the subject
matter at issue, then with respect to any legal action or proceeding brought by
any of the Buyer Parties against any of the Seller Parties arising out of or
relating to this Agreement or any of the transactions contemplated by this
Agreement, each party to this Agreement:
(i) expressly and irrevocably consents and submits to
the jurisdiction of any federal court within the jurisdiction of the United
States District Court for the Central District of California (and each
appellate court thereof) or any state court in the state of California;
(ii) agrees that any federal court within the
jurisdiction of the United States District Court for the Central District
of California or any state court in the state of California shall be deemed
to be a convenient forum; and
(iii) agrees not to assert (by way of motion, as a
defense or otherwise), in any such legal proceeding commenced in any
federal court within the jurisdiction of the United States District Court
for the Central District of California or any state court in the state of
California, any claim that such party is not subject personally to the
jurisdiction of such court, that such legal proceeding has been brought in
an inconvenient forum, or that the venue of such proceeding is improper.
(4) The parties hereby waive any right to a jury trial.
(d) Further Assurances. From time to time, at the request of the
other party hereto and at the expense of the party so requesting, each of the
parties hereto shall execute and deliver to such requesting party such documents
and take such other action as such requesting party may reasonably request in
order to consummate more effectively the transactions contemplated hereby.
(e) Waiver. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power, or privilege under this Agreement
or the documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent
12
permitted by applicable law, (a) no claim or right arising out of this Agreement
or the documents referred to in this Agreement can be discharged by one party,
in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
(f) Entire Agreement and Modification. This Agreement supersedes
all prior agreements between the parties with respect to its subject matter and
constitutes a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the parties to be charged
with the amendment.
(g) Assignments, Successors, and No Third-Party Rights. Neither
party may assign any of its rights or obligations under this Agreement without
the prior consent of the other parties, except that (i) GFS Holding may assign
any of its rights under this Agreement to any Affiliate of GFS Holding, and (ii)
any entity into which the Escrow Agent may be merged or converted or with which
it may be consolidated, or entity resulting from any merger, conversion or
consolidation to which the Escrow Agent shall be a party, or any entity
succeeding to the business of the Escrow Agent shall be the successor of the
Escrow Agent hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. Subject to the preceding sentence, this Agreement will
apply to, be binding in all respects upon, and inure to the benefit of the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns.
(h) Severability. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
(i) Section Headings, Construction. The headings of Sections in
this Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or "Sections" refer
to the corresponding Section or Sections of this Agreement. All words used in
this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
(j) Preamble; Recitals. The Recitals set forth in the Preamble
hereto are hereby incorporated and made a part of this Agreement.
13
(k) Governing Law. This Agreement will be governed by the
internal laws of the State of Delaware without regard to conflicts of laws
principles.
(l) No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party hereto by virtue of having drafted this Agreement or otherwise.
(m) Dispute Resolution. Except as hereinafter provided in this
Section 14(m) all claims, controversies, differences, or disputes between or
among any of the parties hereto arising from or relating to this Agreement,
including claims by one party that another party or parties hereto have failed
to perform any of their obligations hereunder (collectively, "Agreement
Disputes"), shall be resolved as follows:
(1) Facilitative Mediation. The parties to an Agreement
Dispute shall first attempt to resolve such Agreement Dispute by means of a
mediation conducted in the following manner. A party desiring mediation of any
Agreement Dispute shall give or shall have given a written notice, in the manner
set forth in Section 14(b) hereof (a "Dispute Notice"), to the other party or
parties setting forth the nature of the dispute and the relief intended to be
sought and shall submit such Agreement Dispute for resolution by facilitative
mediation in Chicago, Illinois, under the Commercial Mediation Rules (but not
otherwise under the auspices) of the American Arbitration Association (the
"AAA") in effect on the date of this Agreement, unless the parties have agreed,
in writing, to resolve any such dispute by other means. Each party agrees that
it will submit to and shall not challenge or object to the jurisdiction (either
personal or subject matter) or the venue of such mediation in Chicago, Illinois.
(2) Legal Proceedings. If any Agreement Dispute has not been
resolved by mediation as provided above within sixty (60) days after submission
thereof, then either party may commence a suit or legal action or an action at
equity to enforce its rights or the other party's obligations or recover any
damages arising from the other party's breach or such other relief as may be
appropriate under the circumstances.
(3) Attorney Fees and Other Costs. The prevailing party in
any mediation or any action or legal or other proceeding brought with respect to
an Agreement Dispute shall be entitled to recover the reasonable fees and
disbursements of its attorneys, accountants, and expert witnesses in connection
with any such mediation or any action or legal or other proceeding brought in
accordance with the provisions hereof.
(4) Exceptions for Equitable Relief. Notwithstanding the
foregoing or anything to the contrary contained elsewhere in this Agreement, a
party may bring a proceeding against any other party hereto for specific
performance or injunctive or other forms or equitable relief in the state or
federal courts pursuant to the procedures set forth in Section 14(c) of Delaware
without having to submit the matter or Agreement Dispute in question to
mediation as hereinabove set forth, provided, however, that such party shall not
seek any monetary award or relief in such action or proceeding unless its
failure to do so would prejudice such party's rights
14
or ability to seek such monetary award or relief in another action or
proceeding.
(n) Counterparts. This Agreement may be executed in two or more
counterparts, each or which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
IN WITNESS WHEREOF, Sellers and Buyers and Escrow Agent have executed
this Agreement as of the date set forth in the first paragraph hereof.
SELLERS:
SFI:
SMART & FINAL INC.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Its: Xxxxxx X. Xxxxxxxx
-----------------------------
Senior Vice President and
Secretary
SF STORES:
SMART & FINAL STORES CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Its: Xxxxxx X. Xxxxxxxx
-----------------------------
Senior Vice President and
Secretary
AFD:
AMERICAN FOODSERVICE DISTRIBUTORS
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Its: Xxxxxx X. Xxxxxxxx
-----------------------------
Senior Vice President and
Secretary
15
BUYERS:
GFS HOLDING:
GFS HOLDING, INC.
By: /s/ Xxxxx X. Xxxx
------------------------------
Its:
-----------------------------
GFS ORLANDO:
GFS ORLANDO, LLC
By: /s/ Xxxxx X. Xxxx
------------------------------
Its:
-----------------------------
GFS STORES:
GFS STORES, LLC
By: /s/ Xxxxx X. Xxxx
------------------------------
Its:
-----------------------------
ESCROW AGENT:
XXXXX FARGO BANK, N.A.
By: /s/ Xxxxx Xxxx
------------------------------
Its: Xxxxx Xxxx
-----------------------------
Vice President
16
ANNEX I
Fee Schedule
1. Annual escrow fee $2,000
2. Reimbursement of expenses $1,000 advance
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is made on
September , 2003, by and between SMART & FINAL STORES CORPORATION, a
---
California corporation (the "Seller"), and GFS STORES, LLC, a Delaware limited
liability company (the "Buyer") "), and is joined in by SMART & FINAL INC., a
Delaware corporation (the "Seller Shareholder" and, together with the Seller,
the "Seller Parties"). The assignment and assumption accomplished by this
Agreement is made in connection with a certain Asset Purchase Agreement dated as
of August 6, 2003, by and among the Seller and the Buyer, among others (the
"Asset Purchase Agreement"). The Seller Shareholder owns all of the issued and
outstanding equity securities of the Seller and is a party to numerous contracts
that benefit the Seller. The Seller Shareholder joins in this Agreement to
assign to the Buyer any rights the Seller Shareholder may have under such
contracts. Unless the context specifically indicates otherwise, capitalized
terms used herein shall have the meanings assigned to such terms in the Asset
Purchase Agreement.
The Seller Parties hereby assign, transfer, and convey to the Buyer
all of their right, title, and interest in and to the Assumed Contracts relating
to the Retail Store Business, and the Buyer hereby assumes, accepts, and
undertakes and agrees to fully assume, pay, perform, and discharge when due all
of the Assumed Liabilities relating to the Retail Store Business. The Seller
Parties, jointly and severally, represent and warrant to the Buyer that all
material consents and approvals required for the assignment, transfer, and
conveyance of the Assumed Contracts relating to the Retail Store Business have
been obtained.
Except for the Assumed Liabilities relating to the Retail Store
Business, the Buyer does not assume and shall not be obligated to pay, perform,
or discharge any liability, obligation, debt, charge, or expense of the Seller
Parties of any kind, description, or character, whether accrued, absolute,
contingent, or otherwise, or whether or not disclosed to the Buyer in the Asset
Purchase Agreement, the Schedules to the Asset Purchase Agreement, or otherwise.
Without limiting the generality of the foregoing, except for the Assumed
Liabilities relating to the Retail Store Business, the Buyer does not assume and
shall not be obligated to pay, perform, or discharge any of the liabilities or
obligations of the Seller Parties, whether or not asserted before or after the
Closing Date.
This Agreement shall be governed by and interpreted and enforced in
accordance with the internal laws of the State of Delaware without regard to
conflicts of law principles (whether of the State of Delaware or any other
jurisdiction) that would result in the application of the laws of any
jurisdiction other than the State of Delaware.
[Remainder of page intentionally left blank]
Signed as of the date first written above.
SELLER:
SMART & FINAL STORES CORPORATION
By /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Its Senior Vice President &
--------------------------
Secretary
SELLER SHAREHOLDER:
SMART & FINAL INC.
By /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Its Senior Vice President &
--------------------------
Secretary
BUYER:
GFS STORES, LLC
By /s/ Xxxx Xxxxxx
------------------------------
Its Autorized Agent
--------------------------
2
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (this "Agreement") is made on
September , 2003, by and between AMERICAN FOODSERVICE DISTRIBUTORS, a
---
California corporation (the "Seller"), and GFS ORLANDO, LLC, a Delaware limited
liability company (the "Buyer"), and is joined in by SMART & FINAL INC., a
Delaware corporation (the "Seller Shareholder" and, together with the Seller,
the "Seller Parties"). The assignment and assumption accomplished by this
Agreement is made in connection with a certain Asset Purchase Agreement dated as
of August 6, 2003, by and among the Seller and the Buyer, among others (the
"Asset Purchase Agreement"). The Seller Shareholder owns all of the issued and
outstanding equity securities of the Seller and is a party to numerous contracts
that benefit the Seller. The Seller Shareholder joins in this Agreement to
assign to the Buyer any rights the Seller Shareholder may have under such
contracts. Unless the context specifically indicates otherwise, capitalized
terms used herein shall have the meanings assigned to such terms in the Asset
Purchase Agreement.
The Seller Parties hereby assign, transfer, and convey to the Buyer
all of their right, title, and interest in and to the Assumed Contracts relating
to the Meat Processing Business, and the Buyer hereby assumes, accepts, and
undertakes and agrees to fully assume, pay, perform, and discharge when due all
of the Assumed Liabilities relating to the Meat Processing Business. The Seller
Parties, jointly and severally, represent and warrant to the Buyer that all
material consents and approvals required for the assignment, transfer, and
conveyance of the Assumed Contracts relating to the Meat Processing Business
have been obtained.
Except for the Assumed Liabilities relating to the Meat Processing
Business, the Buyer does not assume and shall not be obligated to pay, perform,
or discharge any liability, obligation, debt, charge, or expense of the Seller
Parties of any kind, description, or character, whether accrued, absolute,
contingent, or otherwise, or whether or not disclosed to the Buyer in the Asset
Purchase Agreement, the Schedules to the Asset Purchase Agreement, or otherwise.
Without limiting the generality of the foregoing, except for the Assumed
Liabilities relating to the Meat Processing Business, the Buyer does not assume
and shall not be obligated to pay, perform, or discharge any of the liabilities
or obligations of the Seller Parties, whether or not asserted before or after
the Closing Date.
This Agreement shall be governed by and interpreted and enforced in
accordance with the internal laws of the State of Delaware without regard to
conflicts of law principles (whether of the State of Delaware or any other
jurisdiction) that would result in the application of the laws of any
jurisdiction other than the State of Delaware.
Signed as of the date first written above.
SELLER:
AMERICAN FOODSERVICE DISTRIBUTORS
By /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Its Secretary
--------------------------
SELLER SHAREHOLDER:
SMART & FINAL INC.
By /s/ Xxxxxx X. Xxxxxxxx
------------------------------
Its Senior Vice President
--------------------------
Secretary
BUYER:
GFS ORLANDO, LLC
By /s/ Xxxx Xxxxxx
------------------------------
Its Autorized Agent
--------------------------
2
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement") is entered into as of
September 7, by and between SMART & FINAL INC., a Delaware corporation ("SFI"),
AMERICAN FOODSERVICE DISTRIBUTORS, a California corporation ("AFD"), SMART &
FINAL STORES CORPORATION, a California corporation ("SF Stores" and, together
with SFI and AFD, collectively, the "Sellers"), and GFS HOLDING, INC., a
Delaware corporation ("GFS Holding"), XXXXX XXX COMPANY, a Florida corporation
("Xxxxx Xxx"), GFS STORES, LLC, a Delaware limited liability company ("GFS
Stores"), and GFS ORLANDO, LLC, a Delaware limited liability company ("GFS
Orlando" and, together with GFS Holding, Xxxxx Xxx and GFS Stores, collectively,
the "Buyers"). Capitalized terms used but not otherwise defined herein shall
have the meanings assigned to them in the Share Purchase Agreement (as defined
below).
RECITALS
A. Pursuant to that certain Share Purchase Agreement (the "Share
Purchase Agreement"), dated August 6, 2003, by and between SFI, AFD and GFS
Holding, GFS Holding will purchase all of the issued and outstanding equity
securities of Xxxxx Xxx; and pursuant to that certain Asset Purchase Agreement
(the "Asset Purchase Agreement"), dated August 6, 2003, by and among Sellers and
GFS Holding, GFS Stores and GFS Orlando, GFS Holding, GFS Stores and GFS Orlando
will, directly or indirectly, acquire from Sellers certain of the assets of SF
Stores and all of the assets of the Orlando Foodservice division of AFD ("OFS")
(collectively, the "Assets").
X. Xxxxxxx are, directly or indirectly, respectively, the owners of
all of the issued and outstanding equity securities of Xxxxx Xxx, and of the
Assets.
C. Xxxxx Xxx, SF Stores and OFS are engaged in the foodservice
distribution, retail food store, and meat processing business in the State of
Florida (collectively, the "Business").
D. Following the consummation of the transactions contemplated by the
Share Purchase Agreement and the Asset Purchase Agreement, Buyers will continue
to operate the Business.
E. Buyers have required as a material condition to the closing of the
transactions contemplated by the Share Purchase Agreement and the Asset Purchase
Agreement that Sellers agree to the restrictions and covenants contained in this
Agreement.
AGREEMENT
In consideration of the recitals set forth above and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Non-Competition.
(a) Definition of Competitor. As used in this Agreement,
"Competitor" means any person, corporation, partnership, association, joint
venture or other organization or entity that now or hereafter engages in or
attempts to engage in any aspect of the Business in the states of Florida,
Michigan, Illinois, Indiana and Ohio, or any aspect of the foodservice business
in the Caribbean, Central America or South America (specifically excluding
Mexico from this definition) (the "Territory").
(b) Covenant Not To Compete. The Sellers covenant and agree that
they will not, during the Non-Competition Period (as defined below), directly or
indirectly:
(i) engage in, continue in, or carry on, invest in, own,
manage, operate, finance or control, or participate in the ownership,
management, operation, finance or control, of any business that competes in any
aspect of the Business in the Territory, including, without limitation, owning
or controlling any financial interest in any Competitor in the Territory; or
(ii) be retained by, employed by, consult with, advise or
assist in any way, whether or not for consideration, any Competitor in any
aspect of the Business in the Territory; or
(iii) neither for itself or any other Person, induce or
attempt to induce any customer, supplier, licensee or business relation of
Buyers or any entity controlled by or under common control with any Buyer entity
that may subsequently operate the Business to cease doing business with Buyers
with respect to the Business in the Territory or in any way interfere with the
relationship between any customer, supplier, licensee or business relation of
Buyers with respect to the Business in the Territory;
(iv) neither for itself or any other Person, solicit the
business of any Person known to be a customer of Buyers with respect to the
Business in the Territory, whether or not Sellers had prior contact with such
Person; or
(v) engage in any practice the purpose of which is to evade
the provisions of this covenant not to compete;
provided, however, that the none of the foregoing shall prohibit the ownership
of securities of a corporation that is listed on a national securities exchange
or traded in the national over-the-counter market in an amount that does not
exceed five percent (5%) of the outstanding shares of any such corporation.
2
2. Term.
(a) The covenants stated in Section 1 (the "Covenants") shall be
effective from the date of this Agreement to and including the second (2nd)
anniversary of the Closing Date of the Share Purchase Agreement (the
"Non-Competition Period").
(b) In the event of a material breach by Sellers of any covenant
set forth above, the Noncompetition Period shall be extended by the amount of
time during which such breach continues.
3. Remedies. All remedies, either under this Agreement or by law or
otherwise afforded to Buyers and their respective successors and assigns, shall
be cumulative and not alternative. Sellers acknowledge and agree that the
provisions and restrictions contained in Sections 1 and 2 are not overbroad, are
not overlong, and are reasonably necessary to protect the legitimate continuing
business interests of Buyers, that any violation or breach of such provisions
and restrictions will result in irreparable injury to Buyers for which a remedy
at law would be inadequate and that, in addition to any relief for damages that
may be available to Buyers for such violation or breach, and regardless of any
other provision contained in this Agreement, Buyers shall be entitled to such
injunctive and other equitable relief as a court may grant after considering the
intent of Sections 1 and 2.
4. Enforceability. If any court determines that any of the Covenants,
or any parts thereof, are invalid or unenforceable, the other Covenants and the
remainder of any of the Covenants so impaired shall not thereby be affected and
shall be given full effect, without regard to the invalid portions. If any court
determines that any of the Covenants, or any parts thereof, are unenforceable
because of the duration or geographic scope thereof, the parties agree that the
duration or geographic scope of such Covenants, or any parts thereof, shall be
the maximum duration or geographic scope, as the case may be, provided by law,
of such Covenants, and, in such reduced form, such Covenants shall then be
enforceable.
5. Notices. All necessary notices, demands, requests and other
communications required or permitted to be given hereunder shall in every case
be in writing and shall be deemed duly given (a) when delivered personally, (b)
upon receipt or refusal of receipt, if sent by registered or certified mail, in
all such cases with postage prepaid, return receipt requested, or (c) the next
business day if delivered by a recognized overnight courier service, airbill
prepaid, designated for next business day delivery, to the parties at the
addresses as set forth below or at such other addresses as may be furnished in
writing:
If to Buyers: Xxxxx Xxxxxxxxx
Xxxxxx Food Service, Inc.
X.X. Xxx 0000 Xxxxx Xxxxxx,
Xxxxxxxx 00000
and to: Xxxxx X. Xxxx
00000 Xxxx Xxxxxxxx Xxxxx
X.X. Xxx 000 Xxxxxx,
Xxxxxxxx 00000-0000
3
With a copy to: Miller, Johnson, Xxxxx & Xxxxxxxxx, P.L.C.
000 Xxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
If to Sellers: Xxxxxx Xxxxxxxxx
Smart & Final, Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
With a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
and a copy to: Xxxxx & Xxxxxxx
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx XX
6. Jurisdiction.
(a) In the event any dispute arises out of this Agreement or any
of the transactions contemplated by this Agreement, each of the parties hereto
consents to submit itself to the personal jurisdiction of any federal court in
the state of Delaware and, in case such court refuses jurisdiction then each of
the parties consents to submit itself to the personal jurisdiction of any state
court in the state of Delaware. Each of the parties further agrees that it will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from such court, and agrees that, except as permitted pursuant
to this Section 6, it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any other court other
than a federal court in the state of Delaware.
(b) In the event the state court specified in Section 6(a)
refuses to exercise jurisdiction over the parties hereto or the subject matter
at issue, then with respect to any legal action or proceeding brought by any of
the Seller Parties against any of the Buyer Parties arising out of or relating
to this Agreement or any of the transactions contemplated by this Agreement,
each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of any federal court within the jurisdiction of the United
States District Court for the Western District of Michigan (and each
appellate court thereof) or any state court in the state of Michigan;
4
(ii) agrees that any federal court within the jurisdiction
of the United States District Court for the Western District of Michigan or
any state court in the state of Michigan shall be deemed to be a convenient
forum; and
(iii) agrees not to assert (by way of motion, as a defense
or otherwise), in any such legal proceeding commenced in any federal court
within the jurisdiction of the United States District Court for the Western
District of Michigan or any state court in the state of Michigan, any claim
that such party is not subject personally to the jurisdiction of such
court, that such legal proceeding has been brought in an inconvenient
forum, or that the venue of such proceeding is improper.
(c) In the event the state court specified in Section 6(a)
refuses to exercise jurisdiction over the parties hereto or the subject matter
at issue, then with respect to any legal action or proceeding brought by any of
the Buyer Parties against any of the Seller Parties arising out of or relating
to this Agreement or any of the transactions contemplated by this Agreement,
each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of any federal court within the jurisdiction of the United
States District Court for the Central District of California (and each
appellate court thereof) or any state court in the state of California;
(ii) agrees that any federal court within the jurisdiction
of the United States District Court for the Central District of California
or any state court in the state of California shall be deemed to be a
convenient forum; and
(iii) agrees not to assert (by way of motion, as a defense
or otherwise), in any such legal proceeding commenced in any federal court
within the jurisdiction of the United States District Court for the Central
District of California or any state court in the state of California, any
claim that such party is not subject personally to the jurisdiction of such
court, that such legal proceeding has been brought in an inconvenient
forum, or that the venue of such proceeding is improper.
(d) In the event the state court specified in Section 6(a)
refuses to exercise jurisdiction over the parties hereto or the subject matter
at issue, then in addition to the jurisdictions available to the parties under
Sections 6(b) and 6(c) above, any party also may commence a proceeding for
damages or equitable relief for alleged breach of this Agreement in any state or
federal court of the jurisdiction where the alleged breach occurs.
(e) The parties hereby waive any right to a jury trial.
5
7. Further Assurances. From time to time, at the request of the other
party hereto and at the expense of the party so requesting, each of the parties
hereto shall execute and deliver to such requesting party such documents and
take such other action as such requesting party may reasonably request in order
to consummate more effectively the transactions contemplated hereby.
8. Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in the Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
9. Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the parties to be charged with the amendment.
10. Assignments, Successors, and No Third-Party Rights. Neither party
may assign any of its rights under this Agreement without the prior consent of
the other parties except that Buyer may assign any of its rights under this
Agreement to any Affiliate of Buyer. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give any
Person other than the parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
11. Severability. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
12. Section Headings, Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or
6
Sections of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
13. Preamble; Recitals. The Recitals set forth in the Preamble hereto
are hereby incorporated and made a part of this Agreement.
14. Governing Law. This Agreement will be governed by the internal
laws of the State of Delaware without regard to conflicts of laws principles.
15. No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party hereto by virtue of having drafted this Agreement or otherwise.
16. Dispute Resolution. Except as hereinafter provided in this Section
16, all claims, controversies, differences, or disputes between or among any of
the parties hereto arising from or relating to this Agreement, including claims
by one party that another party or parties hereto have failed to perform any of
their obligations hereunder (collectively, "Agreement Disputes"), shall be
resolved as follows:
(a) Facilitative Mediation. The parties to an Agreement Dispute
shall first attempt to resolve such Agreement Dispute by means of a mediation
conducted in the following manner. A party desiring mediation of any Agreement
Dispute shall give or shall have given a written notice, in the manner set forth
in Section 5 hereof (a "Dispute Notice"), to the other party or parties setting
forth the nature of the dispute and the relief intended to be sought and shall
submit such Agreement Dispute for resolution by facilitative mediation in
Chicago, Illinois, under the Commercial Mediation Rules (but not otherwise under
the auspices) of the American Arbitration Association (the "AAA") in effect on
the date of this Agreement, unless the parties have agreed, in writing, to
resolve any such dispute by other means. Each party agrees that it will submit
to and shall not challenge or object to the jurisdiction (either personal or
subject matter) or the venue of such mediation in Chicago, Illinois.
(b) Legal Proceedings. If any Agreement Dispute has not been
resolved by mediation as provided above within sixty (60) days after submission
thereof, then either party may commence a suit or legal action or an action at
equity to enforce its rights or the other party's obligations or recover any
damages arising from the other party's breach or such other relief as may be
appropriate under the circumstances.
(c) Attorney Fees and Other Costs. The prevailing party in any
mediation or any action or legal or other proceeding brought with respect to an
Agreement Dispute shall be entitled to recover the reasonable fees and
disbursements of its attorneys, accountants, and expert witnesses in connection
with any such mediation or any action or legal or other proceeding brought in
accordance with the provisions hereof.
(d) Exceptions for Equitable Relief. Notwithstanding the
foregoing or anything to the contrary contained elsewhere in this Agreement, a
party may bring a proceeding against any other party hereto for specific
performance or injunctive or other forms or equitable
7
relief in the state or federal courts pursuant to the procedures set forth in
Section 6 without having to submit the matter or Agreement Dispute in question
to mediation as hereinabove set forth, provided, however, that such party shall
not seek any monetary award or relief in such action or proceeding unless its
failure to do so would prejudice such party's rights or ability to seek such
monetary award or relief in another action or proceeding.
17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
IN WITNESS WHEREOF, Sellers and Buyers have executed this
Non-Competition Agreement as of the date set forth in the first paragraph
hereof.
"SFI"
SMART & FINAL INC.
a Delaware corporation
By: /s/ Xxxxxx Xxxxxxxxx
---------------------------------
Its:
--------------------------------
"AFD"
AMERICAN FOODSERVICE DISTRIBUTORS
a California corporation
By: /s/ Xxxxxx Xxxxxxxxx
---------------------------------
Its:
--------------------------------
"SF Stores"
SMART & FINAL STORES CORPORATION
a California corporation
By: /s/ Xxxxxx Xxxxxxxxx
---------------------------------
Its:
--------------------------------
8
"GFS Holding"
GFS HOLDING, INC.
a Delaware corporation
By: /s/ Xxxxx X. Xxxx
---------------------------------
Its:
--------------------------------
"Xxxxx Xxx"
XXXXX XXX COMPANY
a Florida corporation
By: /s/ Xxxxx X. Xxxx
---------------------------------
Its:
--------------------------------
"GFS Stores"
GFS STORES, LLC
a Delaware limited liability company
By: GFS HOLDING, INC.
Its: Manager
By: /s/ Xxxxx X. Xxxx
---------------------------------
Its:
--------------------------------
9
"GFS Orlando"
GFS Orlando, LLC
a Delaware limited liability company
By: GFS HOLDING, INC.
Its: Manager
By: /s/ Xxxxx X. Xxxx
---------------------------------
Its:
--------------------------------
10
SOFTWARE LICENSE, USE AND SUPPORT AGREEMENT
THIS SOFTWARE LICENSE, USE AND SUPPORT AGREEMENT (this "Agreement"),
effective as of the 7th day of September, 2003, is made by and between SMART &
FINAL INC., a Delaware corporation ("SFI"), AMERICAN FOODSERVICE DISTRIBUTORS, a
California corporation ("AFD"), SMART & FINAL STORES CORPORATION, a California
corporation ("SF Stores" and, together with SFI and AFD, the "Licensors"), and
GFS HOLDING, INC., a Delaware corporation ("GFSH"), XXXXX XXX COMPANY, a Florida
corporation ("Xxxxx Xxx"), GFS ORLANDO, LLC, a Delaware limited liability
company ("GFS Orlando"), and GFS STORES, LLC, a Delaware limited liability
company ("GFS Stores" and, together with GFSH, Xxxxx Xxx and GFS Orlando, the
"Licensees").
RECITALS
A. SFI is the record and beneficial owner of all of the issued and
outstanding equity securities of AFD and SF Stores. SF Stores is engaged in the
retail food store business in the State of Florida and operates from several
locations within that state (the "Retail Store Business").
B. AFD is the record and beneficial owner of all of the issued and
outstanding common shares of Xxxxx Xxx, through which AFD conducts a foodservice
distribution business in the State of Florida (the "Foodservice Business").
C. In addition to the Foodservice Business, AFD also operates, among other
things, a fresh meat processing business in the State of Florida under the name
"Orlando Food Service" (the "Meat Processing Business" and, together with the
Retail Store Business and the Foodservice Business, the "Florida Business").
D. Licensors have historically used both proprietary and commercially
available computer software from their California operations in the conduct of
the Florida Business. Licensors have also provided technical support to the
Florida Business with respect to this software.
E. Pursuant to a Share Purchase Agreement dated August 6, 2003 (the "Share
Purchase Agreement"), GFSH is on the date of this Agreement acquiring from SFI
and AFD all of the issued and outstanding equity securities of Xxxxx Xxx.
F. In a separate related transaction, GFSH's wholly-owned subsidiaries, GFS
Orlando and GFS Stores, will acquire from AFD and SF Stores, respectively,
substantially all of the assets used or useful in the operation of the Meat
Processing Business and the Retail Store Business pursuant to an Asset Purchase
Agreement dated August 6, 2003 (the "Asset Purchase Agreement" and, together
with the Share Purchase Agreement, the "Purchase Agreements").
G. One of the conditions to the closing of the transactions contemplated by
each of the Purchase Agreements is the granting by Licensors to Licensees of a
fee-free license to use the
Smart & Final proprietary computer software identified on the attached Exhibit A
(the "Licensor Proprietary Software"), as well as the right to use certain
third-party computer operating systems (the "OEM Software" and, together with
the Licensor Proprietary Software, the "Software") identified on the attached
Exhibit A used in the conduct of the Florida Business, under Licensors' licenses
with the third-party vendors, for a limited period of time. This Agreement does
not operate to grant any license in the OEM Software. This Agreement is being
entered into by the parties as required by the Purchase Agreements.
AGREEMENT
In consideration of the premises set forth above and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Licensors and Licensees agree as follows:
1. Grant of License for Licensor Proprietary Software. Licensors grant to
Licensees, and Licensees accept, subject to the restrictions set forth in this
Agreement, a non-transferable, non-exclusive license (the "License") to use the
Licensor Proprietary Software and related Documentation as identified on the
attached Exhibit A, including any updates or new releases related thereto that
are developed by or at the request of the Licensors during the Term to ensure
the reliability and continued functionality thereof. The scope and limitations
of the License are set forth on Exhibit A. For purposes of this Agreement, the
term "Documentation" shall mean all of the system specifications, help files
(including online help materials accessible through the Licensor Proprietary
Software), and technical manuals, and all other user instructions regarding the
capabilities, operation, and use of the Licensor Proprietary Software.
2. Permission to Use OEM Software. Licensors grant to Licensees permission
to use the OEM Software (hereinafter the "OEM Software"), for the Term and
subject to all of the terms and conditions of Licensors' licenses with the third
party manufacturers of the OEM Software that are applicable to Licensors.
3. License Restrictions. Neither Licensees nor their agents shall (i)
reverse engineer, decompile, or disassemble the Software (except as may be
reasonably necessary to provide compatibility with Licensees' software for use
solely in the Florida Business); (ii) assign, sublicense, rent, timeshare, loan,
lease or otherwise transfer the Software; or (iii) remove any proprietary
notices (e.g., copyright and trademark notices) from the Software. Except as may
be provided herein, Licensors reserve all right, title, and interest in and to
the Licensor Proprietary Software and all derivative works. The vendors of the
OEM Software reserve all right, title and interest in and to the OEM Software.
4. Technical Support. During the Term and subject to third party OEM
vendors' approval (in the case of the OEM Software only), Licensors will provide
Licensees with updates, modifications or changes to the Software which are
developed by or at the request of Licensors or become available from applicable
third party vendors during the Term and are reasonably necessary to correct
errors, and ensure continued efficient operation of the Software. All such
updates, enhancements, modifications or changes shall be included in the
definitions of Software. In addition, Licensors shall provide or cause to be
provided to Licensees reasonable technical support (which may be provided via
e-mail, telephone, or other reasonable means of communication) in order to
ensure the continued efficient operation of the Software.
2
5. Confidentiality
5.1 Definition. Each party agrees that all confidential or proprietary
information supplied by one party and its affiliates and agents (collectively,
the "Disclosing Party") to the other (the "Receiving Party") in connection with
this Agreement, including, without limitation, (i) source and object code,
prices, trade secrets, business processes, mask works, databases, hardware,
software, designs and techniques, programs, engine protocols, models, displays
and manuals, and the selection, coordination, and arrangement of the contents of
such materials and (ii) any unpublished information concerning research
activities and plans, customers, marketing or sales plans, sales forecasts or
results of marketing efforts, pricing or pricing strategies, costs, operational
techniques, strategic plans, customer information, and unpublished financial
information, including information concerning revenues, profits and profit
margins that does not relate to the Florida Business, will be deemed
confidential and proprietary to the Disclosing Party, regardless of whether such
information was disclosed intentionally or unintentionally or marked as
"confidential" or "proprietary" ("Confidential Information"). Neither party
shall have any obligation with respect to Confidential Information which: (i) is
or becomes generally known to the public by any means other than a breach of the
obligations of the Receiving Party; (ii) was previously known to the Receiving
Party or rightly received by the Receiving Party from a third party; (iii) is
independently developed by the Receiving Party; or (iv) is subject to disclosure
under court order or other lawful process.
5.2 Obligations of Licensees. Licensees agree not to make Licensors'
Confidential Information available in any form to any unauthorized third party
or to use Licensors' Confidential Information for any purpose other than as
specified in this Agreement. Licensees agree to take all reasonable steps to
ensure that Confidential Information of Licensors is not disclosed or
distributed by its employees, agents or contractors in violation of the
provisions of this Agreement. Licensors' Confidential Information shall remain
its sole and exclusive property. Licensees acknowledge that any use or
disclosure of Licensors' Confidential Information other than as specifically
provided for in this Agreement may result in irreparable injury and damage to
the Licensors. Accordingly, Licensees hereby agree that, in the event of use or
disclosure other than as specifically provided for in this Agreement, Licensors
may be entitled to equitable relief as granted by any appropriate judicial body.
5.3 Obligations of Licensors. Licensors agree not to make Licensees'
Confidential Information available in any form to any unauthorized third party
or to use Licensees' Confidential Information for any purpose other than as
specified in this Agreement. Licensors agree to take all reasonable steps to
ensure that Confidential Information of Licensees is not disclosed or
distributed by its employees, agents or contractors in violation of the
provisions of this Agreement. Licensees' Confidential Information shall remain
its sole and exclusive property. Licensors acknowledge that any use or
disclosure of Licensees' Confidential Information other than as specifically
provided for in this Agreement may result in irreparable injury and damage to
the Licensees. Accordingly, Licensors hereby agree that, in the event of use or
disclosure other than as specifically provided for in this Agreement, Licensees
may be entitled to equitable relief as granted by any appropriate judicial body.
6. Term. The term of this Agreement (the "Term") shall commence on the date
hereof and shall continue for a period not to exceed one hundred eighty (180)
days, or until
3
terminated as provided in Section 7 herein, or by mutual written agreement of
the parties. Upon termination or expiration of this Agreement, Licensees agree
to immediately discontinue all use of, and deliver to Licensors, the Licensor
Proprietary Software, Documentation, and the OEM Software, and acknowledge that
all rights in the Licensor Proprietary Software, Documentation and OEM Software
shall remain the property of Licensors, or the applicable third-party vendors.
7. Termination. If either party materially defaults in the performance of
any of its obligations under this Agreement, which default is not substantially
cured within thirty (30) days after written notice is given to the defaulting
party specifying the default, the party not in default may, by giving written
notice thereof to the defaulting party, terminate this Agreement and pursue all
remedies for such breach available at law or in equity.
8. Licensors' Warranties. Licensors, jointly and severally, warrant to
Licensees as follows:
(a) Licensors warrant that they have the full power, capacity and
authority to enter into and perform this Agreement and to make the grant of
rights contained herein and that to the best of Licensors' knowledge, and
provided that Licensees do not exceed the scope of the license and
permissions granted hereunder, Licensees' use of the Software as permitted
hereunder will not infringe the patent, copyright, trade xxxx, trade
secret, or other proprietary rights of any third party, and further warrant
that there is currently no actual or, to the best of their knowledge,
threatened suit by any such third party based on an alleged violation of
such right by Licensors.
(b) Licensors warrant that during the Term, the Software shall
materially conform to the requirements set forth in this Agreement and, to
the extent not inconsistent with the foregoing, the Documentation
(collectively, the "Specifications") and function in a manner consistently
with its functionality prior to the date of this Agreement.
9. Licensors' Indemnification. Licensors shall indemnify, defend, and hold
harmless Licensees and their shareholders, directors, officers, managers,
members, agents, employees, members, subsidiaries and successors in interest
from any claim, liability and expense, including reasonable attorneys' fees,
arising out of any claim that Licensees' permitted use of the Software infringes
the patent, copyright, trade xxxx, trade secret or other proprietary rights of a
third party. In the event a claim of infringement is asserted, Licensors shall
procure for Licensees the right to continue using the Software pursuant to this
Agreement. Any costs associated with implementing either of the above
alternatives will be borne by Licensors.
10. Licensees' Indemnification. Licensees shall indemnify, defend, and hold
harmless Licensors and their directors, officers, agents, employees, members,
subsidiaries and successors in interest from any claim, liability and expense,
including reasonable attorneys' fees, arising out of Licensee's exceeding the
scope of the License and the permissions granted hereunder with respect to
Licensees' use of the OEM Software including, but not limited to, Licensees'
continuing to use the OEM Software beyond the Term of this Agreement.
4
11. DISCLAIMER.
(a) EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, LICENSORS MAKE NO
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE
IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY,
QUIET ENJOYMENT, QUALITY OF INFORMATION, OR TITLE/NON-INFRINGEMENT AND ALL
SUCH WARRANTIES ARE HEREBY SPECIFICALLY DISCLAIMED.
(b) LICENSEE UNDERSTANDS AND ACKNOWLEDGES THAT THE SYSTEMS ARE NOT
GTIN 2005 OR RSS COMPLIANT, AND LICENSOR WILL NOT PROVIDE UPDATES TO THE
SYSTEMS AND HARDWARE TO ALLOW THEM TO MEET GTIN 2005 AND RSS REQUIREMENTS.
IN ADDITION, THE ELECTRONIC PAYMENT SYSTEMS ARE NOT TRIPLE DES/DUKPT
COMPLIANT, AND LICENSOR WILL NOT PROVIDE UPDATES TO THE SYSTEMS AND
HARDWARE TO ALLOW THEM TO MEET TRIPLE DES/DUKPT REQUIREMENTS.
12. License Fees. Provided Licensees do not exceed the scope of the License
and permissions granted under this Agreement, there shall be no license fees
owed or payable to Licensors.
13. Notices. All notices, requests, demands or other communications
required or permitted to be given under this Agreement shall be in writing and
shall be effective when delivered if personally delivered or three (3) days
after mailing if mailed by registered or certified mail with postage prepaid,
return receipt requested, and addressed to the parties at the addresses set
forth in Section 12.4 of each of the Purchase Agreements or at such other
addresses as the parties may designate in writing by providing notice thereof in
compliance with this paragraph.
14. Amendment. No provision of this Agreement may be modified except by a
written document signed by a duly authorized representative of each of the
parties.
15. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties and to their respective assigns. This Agreement cannot be
assigned by any party except upon the express prior written consent of the other
parties hereto, which shall not be unreasonably withheld, conditioned or
delayed.
16. Severability. If any provisions of this Agreement shall be prohibited
or unenforceable by any applicable law, the provision shall be ineffective only
to the extent and for the duration of the prohibition of unenforceability,
without invalidating any of the remaining provisions.
17. Governing Law. This Agreement will be governed by the internal laws of
the State of Delaware without regard to conflicts of laws principles. Any
dispute arising out of this Agreement shall be resolved in accordance with the
procedures set forth in Section 12.5 of each of the Purchase Agreements.
5
18. Entire Agreement. The terms and conditions of this Agreement, together
with the terms and conditions of the attached Exhibits, constitute the entire
agreement between Licensees and Licensors with respect to the subject matter of
this Agreement and supersedes all earlier agreements and understandings, oral
and written, between the parties.
19. Counterparts. This Agreement may be executed in counterparts, each of
which, when so executed, shall be deemed to be an original and such counterparts
shall together constitute one and the same instrument.
20. Construction. This Agreement shall be deemed to represent the mutual
intent of the parties hereto and no rule of strict construction shall be applied
against any party by virtue of having drafted this Agreement.
21. Survival. The following provisions shall survive any termination or
expiration of this Agreement: Sections 5 (Confidentiality), 9 (Licensors'
Indemnification), 10 (Licensees' Indemnification), 18 (Entire Agreement), 21
(Survival).
Licensors and Licensees have caused this Agreement to be signed as of the
day and year first above written.
LICENSORS:
SFI:
SMART & FINAL INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Its:
-------------------------
AFD:
AMERICAN FOODSERVICE DISTRIBUTORS
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Its:
-------------------------
SF STORES:
SMART & FINAL STORES CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
-------------------------------
Its:
-------------------------
[Signatures Continued On Next Page]
6
LICENSEES:
GFSH:
GFS HOLDING, INC.
By: /s/ Xxxxx X. Xxxx
-------------------------------
Its:
-------------------------
XXXXX XXX:
XXXXX XXX COMPANY
By: /s/ Xxxxx X. Xxxx
-------------------------------
Its:
-------------------------
GFS ORLANDO:
GFS ORLANDO, LLC
By: /s/ Xxxxx X. Xxxx
-------------------------------
Its:
-------------------------
GFS STORES:
GFS STORES, LLC
By: /s/ Xxxxx X. Xxxx
-------------------------------
Its:
-------------------------
7
EXHIBIT "A"
Licensor Proprietary Software
Cash Proof
DSD
POS End of Day Processing
Inventory Adjustment
Price Change System
Host Price Verify
shelf Tags
Pricing Method Labels
OEM Software
DEX
ACS 4.0
COPS
Shelf Tag Audit
TRADENAME AND TRADEMARK LICENSE AGREEMENT
THIS TRADENAME AND TRADEMARK LICENSE AGREEMENT (this "Agreement") is
entered into and effective as of September 7, 2003 (the "Effective Date"), by
and between SMART & FINAL INC., a Delaware corporation ("SFI"), SMART & FINAL
STORES CORPORATION, a California corporation ("SF Stores"), and AMERICAN
FOODSERVICE DISTRIBUTORS, a California corporation ("AFD" and, together with SFI
and SF Stores, the "Licensors"), GFS HOLDING, INC., a Delaware corporation ("GFS
Holding"), XXXXX XXX COMPANY, a Florida corporation ("Xxxxx Xxx"), GFS STORES,
LLC, a Delaware limited liability company ("GFS Stores"), and GFS ORLANDO, LLC,
a Delaware limited liability company ("GFS Orlando" and, together with GFS
Holding, Xxxxx Xxx and GFS Stores, the "Licensees").
RECITALS
A. Xxxxx Xxx, SF Stores and AFD (through a division operated under the
name "Orlando Foodservice") are engaged in the foodservice distribution, retail
food store, and meat processing businesses, respectively, in the State of
Florida (the "Businesses").
B. Pursuant to that certain Share Purchase Agreement (the "Share
Purchase Agreement"), dated August 6, 2003, by and between SFI and AFD and GFS
Holding, GFS Holding will purchase all of the issued and outstanding equity
securities of Xxxxx Xxx. In a separate related transaction and pursuant to that
certain Asset Purchase Agreement (the "Asset Purchase Agreement") dated August
6, 2003, by and among GFS Holding, GFS Orlando and GFS Stores, and Licensors,
GFS Stores and GFS Orlando will, directly or indirectly, acquire from Licensors
certain of the assets of SF Stores related to the retail food store business in
the State of Florida and all of the assets of AFD used in the operation of the
meat processing business in the State of Florida.
C. Following the consummation of the transactions contemplated by the
Share Purchase Agreement and the Asset Purchase Agreement, Licensees will
operate the Businesses.
D. Licensors are the owners of the trademarks (collectively, the
"Trademarks") and the tradenames (collectively, the "Tradenames") described in
Exhibit "A" attached hereto.
E. Licensees desire to obtain a license to use the Trademarks and the
Tradenames on the terms set forth below for a period of two (2) years after the
consummation of the transactions contemplated by the Share Purchase Agreement
and the Asset Purchase Agreement.
F. Licensees have required as a condition to the execution of the
Share Purchase Agreement and the Asset Purchase Agreement that Licensors enter
into this Agreement.
NOW THEREFORE, in consideration of the premises set forth above, the
representations and warranties set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Licensors and Licensees agree as follows:
AGREEMENT
1. Grant of License. On the terms and subject to the conditions set
forth herein, Licensors hereby grant to Licensees a limited, non-transferable
(except as may be provided herein) license ("License") to Use (as defined in
Section 11 below) the Trademarks and Tradenames solely for purposes of
conducting the Businesses. Licensees shall not have any right to sublicense the
right to use the Trademarks or Tradenames to any third party.
2. Exclusivity. Licensors grant to Licensees the exclusive right to
Use the Trademarks and the Tradenames within the Territory (as defined in
Section 11 below) during the term of this Agreement. Licensors covenant and
agree not to use the Trademarks or the Tradenames, or any combination thereof,
during the term of this Agreement within the Territory without the prior written
consent of Licensees. The parties acknowledge that Licensor's use of the
Internet, television and radio for advertising or other purposes in connection
with its business outside the Territory shall not constitute a violation of the
rights granted to Licensee hereunder.
3. Restrictions. Except as expressly provided for herein, nothing
contained in this Agreement will be deemed to grant to Licensees any right,
title or interest in or to the Trademarks and Tradenames. Subject only to the
License, Licensors shall own all right, title and interest in and to the
Trademarks and Tradenames, including all Intellectual Property Rights and
goodwill therein and thereto. Licensees shall not use the Trademarks and/or
Tradenames with any activity that (a) disparages, or may be reasonably expected
to have a disparaging effect on, Licensors or any of their affiliates, or any
products or services of Licensors or their affiliates; or (b) violates or
infringes any Intellectual Property Rights of Licensors or any third party.
Licensees will not challenge or contest Licensors' ownership in, or the validity
or scope of, any of the Trademarks or Tradenames in any jurisdiction, nor the
validity of any licenses to any of the Trademarks and Tradenames granted by
Licensors to any third party in any jurisdiction, and will not do anything
inconsistent with Licensors' title, right and interest in and to the Trademarks
and Tradenames, including any attempted registration of any of them, or any use
or any attempted registration of any other trademark or service xxxx that is
confusingly similar to any of the Trademarks or Tradenames.
4. Form of Use. Licensees agree to use the Trademarks and the
Tradenames in form and manner not materially inconsistent with Licensors' use
immediately prior to the date hereof. Licensees further agree to use
commercially reasonable efforts to maintain the quality of the products sold by
each of them in connection with the Businesses at a level reasonably consistent
with the level of quality typical of Licensors' products.
5. Term. The term of this Agreement and the License granted herein
shall
2
commence on the Effective Date and shall continue for a period of two (2) years,
unless sooner terminated as set forth in Section 6 or unless extended by mutual
agreement by the parties.
6. Termination. In the event that either party breaches this
Agreement, then the non-breaching party may provide written notice to the
breaching party indicating: (a) the nature and basis of such default with
reference to the applicable provisions of this Agreement; (b) instructions for
cure; and (c) the non-defaulting party's intention to terminate this Agreement.
In the event that such default is not cured within thirty (30) days after such
notice (or such longer cure period as the parties may agree upon), the
non-defaulting party may terminate this Agreement upon written notice effective
immediately to the breaching party.
7. Effect of Termination. The terms and conditions of the following
Sections will survive termination or expiration of this Agreement: Sections 3,
6, 8, 9, 12.1 through 12.3, and 13 through 21. In addition, the termination or
expiration of this Agreement shall not relieve either party of any liability
that accrued prior to such termination or expiration. Except as expressly
provided in this Section 7, all other provisions of this Agreement shall
terminate upon the expiration or termination hereof. Upon termination or
expiration of this Agreement, Licensees' license and right to Use the Trademarks
and Tradenames shall immediately and automatically terminate, all rights granted
hereunder shall automatically revert to Licensors, Licensees shall immediately
cease, completely and permanently, to Use the Trademarks and Tradenames and any
name confusingly similar thereto in any manner or for any purpose, delete the
same from their corporate or business name, and destroy all printed materials
bearing the Trademarks and the Tradenames. Notwithstanding the foregoing, in the
event of termination, Licensees shall have the right to Use the Trademarks and
the Tradenames (a) to sell products that are on hand at the date of termination
or expiration of this Agreement and with respect to those products that
Licensees are obligated to purchase at such date, and (b) to carry out marketing
projects to which Licensees have committed at the date of termination or
expiration of this Agreement.
8. Royalty-Free. The License shall be royalty-free. The License is
being granted in consideration of the transactions described in the Asset
Purchase Agreement and the Share Purchase Agreement and no further consideration
shall be payable.
9. Indemnification
9.1 Licensors shall defend Licensees and their affiliates, and
their respective employees, officers, directors, managers, members,
stockholders, consultants and other agents (collectively the
"Licensees' Indemnified Parties") from any and all third-party Claims
and Losses (as defined below) imposed on, incurred by or asserted
against any of the Licensees' Indemnified Parties as a result of any
alleged infringement by the Trademarks or Tradenames on any third
party's legally enforceable Intellectual Property Rights. Licensors
shall indemnify and hold the Licensees' Indemnified Parties harmless
from any and all such Claims and Losses imposed on, incurred by or
asserted against them. Licensors' obligation to defend and indemnify
under this subsection shall be conditioned on
3
the following: (a) Licensees shall promptly notify Licensors in
writing of the claim, action or allegation (but, in any event, in a
time frame that does not prejudice the rights of Licensors); (b)
Licensees shall provide all reasonable cooperation, at Licensors'
expense, with Licensors in the defense thereof; and (c) Licensors
shall have sole control of the defense and all related settlement
negotiations, but shall apprise Licensees of the status of any
proceedings or negotiations, provided, however, that no such
settlement shall materially and adversely affect Licensees right to
Use the Trademarks and Tradenames in the Territory during the term of
this Agreement.
9.2 Licensors shall not have the obligation to defend, indemnify
and hold the Licensees' Indemnified Parties harmless to the extent
Claims and Losses imposed on, incurred by or asserted against the
Licensees' Indemnified Parties as a result of (a) Licensees' gross
negligence or willful tortious misconduct; or (b) any allegation of
infringement to the extent such infringement is attributable to the
fact that the Trademarks or Tradenames have not been Used in
accordance with this Agreement.
9.3 Licensees shall defend Licensors and their affiliates, and
their respective employees, officers, directors, consultants and other
agents (collectively the "Licensors' Indemnified Parties") from any
and all third-party Claims and Losses imposed on, incurred by or
asserted against any of the Licensors' Indemnified Parties arising out
of Licensees' Use of the Trademarks and Tradenames in violation of
this Agreement. Notwithstanding any of the foregoing, Licensors shall
have the right, at their option and expense, to participate in the
defense and related settlement negotiations of any claim, action or
allegation to the extent it relates to the Trademarks and Tradenames,
provided, however, that Licensors shall not settle any claim or action
without Licensees' prior written consent, which consent shall not be
unreasonably withheld, conditioned, or delayed. If Licensors choose
not to participate in the defense and related settlement negotiations
as provided above, Licensees shall have the right to control the
defense and related settlement negotiations, provided, however that
Licensees shall not settle any claim or action without Licensors'
prior written consent, which consent shall not be unreasonably
withheld, conditioned, or delayed. In the event Licensors choose not
to participate in the defense and related settlement negotiations
pursuant to this Section 9.3, Licensors shall use their best efforts
to cooperate with Licensees in the defense thereof and Licensees shall
be liable to Licensors for Licensors' reasonable expenses incurred in
providing such cooperation.
9.4 Unless otherwise stated herein, "Claims or Losses" means any
and all liabilities, obligations, losses, damages, penalties, claims,
actions, suits, judgments, and reasonable costs and expenses awarded
to, or agreed to be paid to, a third party of whatever nature
including, without limitation, (a) indirect, special, punitive,
consequential or incidental loss or damage awarded to a third party
4
(including, without limitation, by way of settlement) against a party
entitled to indemnification under this Section, and (b) reasonable
administrative costs, litigation costs, and auditors' and attorneys'
fees, both in-house and outside counsel, and related disbursements.
9.5 This Section 9 sets forth the entire liability of the Parties
with respect to Claims or Losses arising out of or relating to any
claims, actions, suits or other proceedings in connection with alleged
infringement of Intellectual Property Rights by the Trademarks or
Tradenames or the Use thereof by Licensees, and the exclusive remedy
of the Licensees' Indemnified Parties and the Licensors' Indemnified
Parties in connection with such Claims or Losses.
10. Maintenance and Enforcement of Registrations. Licensors shall have
the right and obligation to undertake such actions, including making applicable
registrations and filings with the appropriate authorities, as are reasonably
necessary to establish and protect the Trademarks and Tradenames in the
Territory or in any other jurisdiction in the world. Licensors shall pay all
costs or fees associated with any such actions, and Licensee shall provide all
reasonable cooperation to Licensors with respect to such actions. Moreover,
Licensors shall have the right to defend or prosecute any trademark infringement
actions as may be necessary to protect the Trademarks or Tradenames in the
Territory. Licensors shall have sole control of any such actions and all related
settlement negotiations. Licensees shall, at Licensors' expense, provide all
reasonable cooperation to Licensors (a) in assisting Licensors with respect to
such actions and any related settlement negotiations upon Licensors' request,
and (b) in protecting Licensors' rights in the Trademarks and Tradenames by
giving prompt notice to Licensors of any infringement that Licensee becomes
aware of.
11. Certain Definitions. For purposes of this Agreement, the following
capitalized terms shall have the meanings assigned to them below:
11.1 "Territory" shall mean the States of Florida, Michigan,
Illinois, Indiana and Ohio, the Caribbean, Central America and South
America (specifically excluding Mexico from this definition).
11.2 "Intellectual Property Rights" shall mean all intellectual
property rights in any jurisdiction, including, without limitation,
all common law rights, state registrations, and federal registrations
in and to trademarks, service marks, brand names, certification marks,
trade dress, trade names and other indications of origin.
11.3 "Use" means the use of the Trademarks and Tradenames within
the Territory for the purpose of conducting the Businesses in
accordance with the terms hereof and any trademark usage guidelines
that may be provided by Licensors to licensees from time to time.
12. Disclaimers/Limitations of Liability.
5
12.1 EXCEPT FOR THE WARRANTIES EXPRESSLY STATED IN SECTION 13
BELOW NEITHER PARTY MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES OF
ANY KIND, WHETHER EXPRESS, IMPLIED OR STATUTORY (INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTIES ARISING FROM TRADE USAGE, COURSE OF
DEALING, OR COURSE OF PERFORMANCE, OR THE IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE), AND BOTH
PARTIES HEREBY EXPRESSLY DISCLAIM ALL SUCH WARRANTIES.
12.2 EXCEPT FOR BOTH PARTIES' INDEMNIFICATION OBLIGATIONS UNDER
SECTION 9, NEITHER PARTY NOR ANY OF EITHER PARTY'S AFFILIATES SHALL BE
LIABLE TO THE OTHER PARTY OR TO ANY OTHER INDIVIDUAL OR ENTITY FOR ANY
INDIRECT, SPECIAL, PUNITIVE, EXEMPLARY, CONSEQUENTIAL, OR INCIDENTAL
LOSS OR DAMAGE OF ANY KIND OR NATURE, RELATING TO OR ARISING OUT OF
THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO ANY LOSS OF REVENUES,
ANTICIPATED PROFITS OR SAVINGS, LOSS BY REASON OF SHUTDOWN IN
OPERATION OR FOR INCREASED EXPENSES OF OPERATION, EVEN IF THEY OR ANY
OF THEIR AFFILIATES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH
LOSSES OR DAMAGES.
12.3 NO LIMITATION SET FORTH IN THIS SECTION 12 SHALL RELIEVE
EITHER PARTY AND THEIR AFFILIATES FROM LIABILITY FOR DAMAGES THAT
RESULT FROM (I) THEIR OWN GROSS NEGLIGENCE OR WILLFUL TORTIOUS
MISCONDUCT; OR (II) PERSONAL INJURY OR WRONGFUL DEATH CLAIMS.
13. Representations and Warranties of Licensors. Licensors jointly and
severally represent and warrant to Licensees as follows:
13.1 Licensors represent and warrant to Licensees that they own
all right, title and interest in the Trademarks and Tradenames and have the
absolute and unrestricted right, power, and authority to grant the rights
hereunder.
13.2 Licensors represent and warrant to Licensees that they are
authorized to enter into this Agreement and that their license of the
Trademarks and Tradenames under the terms of this Agreement shall not
violate any other agreements, or obligations of Licensors, or any Federal,
state, local, or foreign laws, rules, or regulations relating to Licensors
or Licensors' use of the Trademarks and Tradenames.
13.3 Exhibit A attached hereto constitutes a complete and
accurate list and summary description of all U.S. and Puerto Rico
registered trademarks and tradenames owned by Licensors and used by
Licensors in the conduct of the Businesses.
6
13.4 Licensors do not own or use any patents, patent
applications, or inventions or discoveries that may be patentable in
connection with the Businesses.
13.5 Licensors do not own or use any registered copyrights in
connection with the Businesses.
13.7 Licensors have taken reasonable precautions to protect the
secrecy, confidentiality and value of any trade secrets which Licensors may
own, and Licensors own such trade secrets and have the valid right to use
same. To the best of Licensors' knowledge, the trade secrets are not part
of the public knowledge or literature and have not been used, divulged or
appropriated either for the benefit of any person (other than Licensors) or
to the detriment of Licensors. To the best of Licensors' knowledge, no
material trade secret is subject to any adverse claim or has been
challenged or threatened in any way. For purposes of this Agreement, trade
secrets are defined as all know-how, trade secrets, confidential
information, customer lists, software, technical information, data, process
technology, plans, drawings, and blueprints used in the conduct of the
Businesses.
13.8 Licensors are not a party to any contract or arrangement
whereby royalties are paid or received by Licensors with respect to
trademarks, tradenames, copyrights, rights in mask works, patents, or trade
secrets.
13.9 None of the current employees of Licensors that are involved
in the Businesses have executed written contracts with Licensors that
assign to Licensors any rights to any inventions, improvements, discoveries
or information relating to the Businesses. To the best of Licensors'
knowledge, no employee of Licensors that is involved in any of the
Businesses has entered into any contract that restricts or limits in any
material way the scope or type of work in which the employee may be
engaged, or requires the employee to transfer, assign or disclose
information concerning his or her work to anyone other than Licensors.
14. Notices. All notices, requests, demands or other communications
required or permitted to be given under this Agreement shall be in writing and
shall be effective when delivered if personally delivered or three (3) days
after mailing if mailed by registered or certified mail with postage prepaid,
return receipt requested, and addressed to the parties at the addresses set
forth in Section 12.4 of the Share Purchase Agreement or at such other addresses
as the parties may designate in writing by providing notice thereof in
compliance with this paragraph.
15. Amendment. No provision of this Agreement may be modified except
by a written document signed by a duly authorized representative of each of the
parties.
16. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties and to their respective assigns. This Agreement
cannot be assigned by any party except upon the express prior written consent of
the other parties hereto, which shall not be unreasonably withheld, conditioned
or delayed, provided, however, that Licensees may assign
7
their rights and obligations hereunder to any person controlled by or under
common control with GFS Holding or any purchaser of any portion of the
Businesses without first obtaining the consent of Licensors. Any assignee or
transferee (voluntary or involuntary) of rights in the Trademarks and the
Tradenames shall be subject to the terms of this Agreement.
17. Severability. If any provisions of this Agreement shall be
prohibited or unenforceable by any applicable law, the provision shall be
ineffective only to the extent and for the duration of the prohibition of
unenforceability, without invalidating any of the remaining provisions.
18. Governing Law. This Agreement will be governed by the internal
laws of the State of Delaware without regard to conflicts of laws principles.
Any dispute arising out of this Agreement shall be resolved in accordance with
the procedures set forth in Section 12.5 of the Asset Purchase Agreement.
19. Entire Agreement. This Agreement constitutes the entire agreement
between Licensees and Licensors with respect to the subject matter of this
Agreement and supersedes all earlier agreements and understandings, oral and
written, between the parties.
20. Counterparts. This Agreement may be executed in counterparts, each
of which, when so executed, shall be deemed to be an original and such
counterparts shall together constitute one and the same instrument.
21. Construction. This Agreement shall be deemed to represent the
mutual intent of the parties hereto and no rule of strict construction shall be
applied against any party by virtue of having drafted this Agreement.
8
IN WITNESS WHEREOF, Licensors and Licensees have caused this Agreement
to be signed the day and year first above written.
LICENSORS:
SFI:
SMART & FINAL INC.
a Delaware corporation
By:Xxxxxx X. Xxxxxxxx
--------------------------------------
Its:
AFD:
AMERICAN FOODSERVICE DISTRIBUTORS
a California corporation
By:Xxxxxx X. Xxxxxxxx
--------------------------------------
Its:
SF Stores:
SMART & FINAL STORES CORPORATION
a California corporation
By:Xxxxxx X. Xxxxxxxx
--------------------------------------
Its:
9
LICENSEES:
GFS Holding:
GFS HOLDING, INC.
a Delaware corporation
By: /s/ Xxxxx X. Xxxx
--------------------------------------
Its:
Xxxxx Xxx:
XXXXX XXX COMPANY
a Florida corporation
By: /s/ Xxxxx X. Xxxx
--------------------------------------
Its:
GFS Stores:
GFS STORES, LLC
a Delaware limited liability company
By:GFS HOLDING, INC.
---------------------------------
Its:Manager
---------------------------------
By: /s/ Xxxxx X. Xxxx
--------------------------------------
Its:
10
GFS Orlando:
GFS Orlando, LLC
a Delaware limited liability company
By:GFS HOLDING, INC.
---------------------------------
Its: Manager
By: /s/ Xxxxx X. Xxxx
--------------------------------------
Its:
11
U.S. TRADE MARKS
--------------------------------------------------------------------------------------------------------------------------
Xxxx
CPH Docket Type SERIAL NO. FILED
XXXX Country Class REG. NO. ISSUED Owner/Registrant STATUS
--------------------------------------------------------------------------------------------------------------------------
AMBIANCE 47307-USA TM 76/314099 09/18/2001 Smart & Final Stores Corporation REGISTERED
UNITED STATES 30 2634835 10/15/2002
--------------------------------------------------------------------------------------------------------------------------
AMBIANCE (and design) 47308-USA TM 76/314098 09/18/2001 Smart & Final Stores Corporation REGISTERED
UNITED STATES 30 2631245 10/08/2002
--------------------------------------------------------------------------------------------------------------------------
XXX XXXXXX 00000-XXX TM 76/349677 12/17/2001 Smart & Final Stores Corporation REGISTERED
UNITED STATES 29 2704013 04/08/2003
--------------------------------------------------------------------------------------------------------------------------
DAVIS LAY 32998-USA TM 78/023061 08/25/2000 American Food service Distributors REGISTERED
UNITED STATES 31 2684702 02/04/2003
--------------------------------------------------------------------------------------------------------------------------
DAVIS LAY 40276-USA SM 74/030062 02/20/1990 American FoodService Distributors REGISTERED
UNITED STATES 42 1626437 12/04/1990
--------------------------------------------------------------------------------------------------------------------------
DEC-O-TOPPES 30856-USA TM 74/056158 05/07/1990 Smart & Final Stores Corporation REGISTERED
UNITED STATES 30 1809395 12/07/1993
--------------------------------------------------------------------------------------------------------------------------
Design (caricature) 28792-USA SM 75/065063 02/29/1996 Smart & Final Stores Corporation REGISTERED
UNITED STATES I 42 2045799 03/18/1997
--------------------------------------------------------------------------------------------------------------------------
XXXX 00000-XXX TM 268609 07/01/1980 Smart & Final Stores Corporation REGISTERED
UNITED STATES 01, 1232379 03/29/1983
03,
04,
06,
08,
16,
21,
29,
30,
32
--------------------------------------------------------------------------------------------------------------------------
XXXX 00000-XXX TM 596917 05/05/1950 Smart & Final Stores Corporation REGISTERED
UNITED STATES 29 553059 01/08/1952
--------------------------------------------------------------------------------------------------------------------------
XXXX 00000-XXX TM 949445 08/13/1971 Smart & Final Stores Corporation REGISTERED
UNITED STATES I 46 949445 12/26/1972
--------------------------------------------------------------------------------------------------------------------------
XXXX 00000-XXX TM 190554 10/24/1978 Smart & Final Iris Corporation REGISTERED
UNITED STATES 29, 1138499 08/05/1980
30,
32
--------------------------------------------------------------------------------------------------------------------------
XX XXXXXXXXX 00000-XXX TM 74/711131 08/04/1995 American Foodservice Distributors REGISTERED
UNITED STATES 29, 2046604 03/18/1997
30
--------------------------------------------------------------------------------------------------------------------------
XX XXXXXXXXX 00000-XXX TM 76/164959 11/14/2000 American Foodservice Distributors REGISTERED
UNITED STATES 29 2712588 05/06/2003
--------------------------------------------------------------------------------------------------------------------------
XXXXXXXXX 00000-XXX TM 73/777077 01/27/1989 Smart & Final Stores Corporation REGISTERED
UNITED STATES 30 1596691 05/15/1990
--------------------------------------------------------------------------------------------------------------------------
XXXXXXXXX 00000-XXX TM 76/141669 10/05/2000 Smart & Final Stores Corporation REGISTERED
UNITED STATES 29 2611751 08/27/2002
--------------------------------------------------------------------------------------------------------------------------
U.S. TRADEMARKS
--------------------------------------------------------------------------------------------------------------------------
Xxxx
CPH Docket Type SERIAL NO. FILED
XXXX Country Class REG. NO. ISSUED Owner/Registrant STATUS
--------------------------------------------------------------------------------------------------------------------------
MONTECITO 40610-USA TM 76/141668 10/05/2000 Smart & Final Stores Corporation REGISTERED
UNITED STATES 30 2597177 07/23/2002
--------------------------------------------------------------------------------------------------------------------------
PRO PRIDE 49311-USA TM 78/180287 10/30/2002 Smart & Final Stores Corporation PENDING ITU
UNITED STATES
--------------------------------------------------------------------------------------------------------------------------
PRO PRIDE 49312-USA TM 78/180288 10/30/2002 Smart & Final Stores Corporation PENDING ITU
UNITED STATES 05
--------------------------------------------------------------------------------------------------------------------------
PRO PRIDE 49313-USA TM 78/180290 10/30/2002 Smart & Final Stores Corporation PENDING ITU
UNITED STATES
--------------------------------------------------------------------------------------------------------------------------
PRO VALUE 50005-USA TM 78/224380 03/11/2003 Smart & Final Stores Corporation PENDING ITU
UNITED STATES 03
--------------------------------------------------------------------------------------------------------------------------
PRO VALUE 50006-USA TM 78/224385 03/11/2003 Smart & Final Stores Corporation PENDING ITU
UNITED STATES 05
--------------------------------------------------------------------------------------------------------------------------
PRO VALUE 50007-USA TM 78/224388 03/11/2003 Smart & Final Stores Corporation PENDING ITU
UNITED STATES 21
--------------------------------------------------------------------------------------------------------------------------
XXXXXXX XXXXXX 41590-USA TM 76/217999 03/01/2001 Smart & Final Stores Corporation REGISTERED
UNITED STATES 32 2668095 12/31/2002
--------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 28814-USA TM 396652 09/30/1982 Smart & Final Stores Corporation REGISTERED
UNITED STATES 1260298 12/06/1983
--------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 28998-USA TM 75/228178 01/21/1997 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES I 01 2180065 08/11/1998
--------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 28999-USA TM 75/147695 08/09/1996 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES 03 2128362 01/13/1998
--------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 29000-USA TM 75/156279 08/26/1996 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES I 04 2070012 06/10/1997
--------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 29001-USA TM 75/191220 11/01/1996 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES 05 2130164 01/20/1998
--------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 29002-USA TM 75/228186 01/21/1997 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES I 08 2180066 08/11/1998
--------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 29003-USA TM 75/147698 08/09/1996 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES I 03, 2130003 01/20/1998
16
--------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 29004-USA TM 75/281472 04/25/1997 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES 21 2199487 10/27/1998
--------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 29005-USA TM 75/147697 08/09/1996 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES 29, 2130002 01/20/1998
30
--------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 29006-USA TM 75/228185 01/21/1997 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES 30 2187207 09/08/1998
--------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 29007-USA TM 75/481270 05/07/1998 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES 31 2232366 03/16/1999
--------------------------------------------------------------------------------------------------------------------------
U.S. TRADE MARKS
--------------------------------------------------------------------------------------------------------------------------
Xxxx
CPH Docket Type SERIAL NO. FILED
XXXX Country Class REG. NO. ISSUED Owner/Registrant STATUS
--------------------------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 29008-USA TM 75/147696 08/09/1996 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES I 32 2069962 06/10/1997
--------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 30857-USA SM 1797359 06/30/1992 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES 42 1797359 10/05/1993
--------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 30858-USA SM 74/290045 06/30/1992 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES 42 1797358 10/05/1993
--------------------------------------------------------------------------------------------------------------------------
SMART & FINAL SM 31900676 Smart & Final Stores Corporation REGISTERED
(words only) XXXXXX XXXX 00 00000 01/1996
--------------------------------------------------------------------------------------------------------------------------
SMART ADVANTAGE 29752-USA SM 75/191219 11/01/1996 Smart & Final Stores Corporation REGISTERED
UNITED STATES 35 2327520 03/14/2000
--------------------------------------------------------------------------------------------------------------------------
SMART AND FINAL 30853-USA SM 396652 09/30/1982 Smart & Final Stores Corporation REGISTERED
UNITED STATES I 42 1260298 12/06/1983
--------------------------------------------------------------------------------------------------------------------------
SMART AND FINAL 30852-USA SM 396650 09/30/1982 Smart & Final Stores Corporation REGISTERED
IRIS CO. UNITED STATES I 42 1260297 12/06/1983
--------------------------------------------------------------------------------------------------------------------------
SMART BUY 30854-USA TM 535967 05/06/1985 Smart & Final Stores Corporation REGISTERED
UNITED STATES I 03, 1393707 05/20/1986
05,
06,
08,
16,
29,
30,
31,
32
--------------------------------------------------------------------------------------------------------------------------
SMART CASH 47010-USA TM 76/300244 08/10/2001 Smart & Final Stores Corporation ALLOWED ITU
UNITED STATES 09 09/10/2002
--------------------------------------------------------------------------------------------------------------------------
SMART PARTNERS 26588-USA SM 74/513818 04/18/1994 Smart & Final Stores Corporation REGISTERED
UNITED STATES 42 1927296 10/17/1995
--------------------------------------------------------------------------------------------------------------------------
SMART PRO 39633-USA SM 76/164822 11/14/2000 Smart & Final Stores Corporation REGISTERED
UNITED STATES 42 2618821 09/10/2002
--------------------------------------------------------------------------------------------------------------------------
SMART TRACK 29713-USA TM 75/239138 00/00/0000 Xxxxx Xxx Xxxxxxx XXXXXXXXXX
XXXXXX XXXXXX 36 2134349 02/03/1998
--------------------------------------------------------------------------------------------------------------------------
SMART U 30860-USA SM 74/371407 03/24/1993 Smart & Final Stores Corporation REGISTERED
UNITED STATES 41 1811196 12/14/1993
--------------------------------------------------------------------------------------------------------------------------
SMART UNIVERSITY 30859-USA SM 74/371244 03/24/1993 Smart & Final Stores Corporation REGISTERED
UNITED STATES 41 1811195 12/14/1993
--------------------------------------------------------------------------------------------------------------------------
SMARTY 30861-USA TM 74/430367 08/27/1996 Smart & Final Stores Corporation REGISTERED
UNITED STATES 31 1840778 06/21/1994
--------------------------------------------------------------------------------------------------------------------------
SNACK'RS 34829-USA TM 76/034048 04/25/2000 Smart & Final Stores Corporation REGISTERED
UNITED STATES 30 2633979 10/15/2002
--------------------------------------------------------------------------------------------------------------------------
U.S. TRADE MARKS
--------------------------------------------------------------------------------------------------------------------------
Xxxx
CPH Docket Type SERIAL NO. FILED
XXXX Country Class REG. NO. ISSUED Owner/Registrant STATUS
--------------------------------------------------------------------------------------------------------------------------
TENDER-XXX 30855-USA TM 515539 12/28/1984 Casino USA, Inc. REGISTERED
UNITED STATES I 29 1348349 07/09/1985
--------------------------------------------------------------------------------------------------------------------------
TRANSITIONAL SERVICES AGREEMENT
THIS TRANSITIONAL SERVICES AGREEMENT (this "Agreement") is entered
into and effective as of September 7, 2003 (the "Effective Date"), by and
between SMART & FINAL INC., a Delaware corporation ("SFI"), AMERICAN FOODSERVICE
DISTRIBUTORS, a California corporation ("AFD"), SMART & FINAL STORES
CORPORATION, a California corporation ("SF Stores" and, together with SFI and
AFD, collectively, the "Sellers"), and GFS HOLDING, INC., a Delaware corporation
("GFS Holding"), XXXXX XXX COMPANY, a Florida corporation ("Xxxxx Xxx"), GFS
STORES, LLC, a Delaware limited liability company ("GFS Stores"), and GFS
Orlando, LLC, a Delaware limited liability company ("GFS Orlando" and, together
with GFS Holding, Xxxxx Xxx and GFS Stores, collectively, the "Buyers").
Capitalized terms not otherwise defined herein shall have the respective
meanings set forth in the Share Purchase Agreement (as defined below).
RECITALS
A. Pursuant to that certain Share Purchase Agreement (the "Share
Purchase Agreement"), dated August 6, 2003, by and between SFI, AFD and GFS
Holding, GFS Holding will purchase all of the issued and outstanding equity
securities of Xxxxx Xxx; and pursuant to that certain Asset Purchase Agreement
(the "Asset Purchase Agreement"), dated August 6, 2003, by and among GFS
Holding, GFS Orlando and GFS Stores, and Sellers, GFS Stores and GFS Orlando
will, directly or indirectly, acquire from Sellers certain of the assets of SF
Stores and all of the assets of the Orlando Foodservice division of AFD
(collectively, the "Assets").
B. Following the consummation of the transactions contemplated by the
Share Purchase Agreement and the Asset Purchase Agreement, Buyers will continue
to operate the businesses conducted by AFD, SF Stores and Xxxxx Xxx in the State
of Florida (the "Business").
C. Buyers desire to engage the services of Sellers and its personnel
to provide transitional support for a period of up to six (6) months after the
consummation of the transactions contemplated by the Share Purchase Agreement
and the Asset Purchase Agreement.
D. Buyers have required as a condition to the consummation of the
transactions contemplated by the Share Purchase Agreement and the Asset Purchase
Agreement that Sellers enter into this Agreement.
AGREEMENT
In consideration of the premises set forth above and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Sellers and Buyers agree as follows:
1. Services for Stores. During the Term of this Agreement, Sellers
will provide the transitional services described in this Section 1 for the
benefit of the stores (the "Stores") being acquired by GFS Stores from SF Stores
in the state of Florida. These transitional services will include the resources
reasonably necessary to maintain continuous operation of the Stores in a manner
substantially consistent with current practices and in the areas described
below. Sellers represent and warrant to Buyers that nothing contained in any of
the agreements to which Sellers are a party prohibits Sellers from providing the
Services, Systems and Support to Buyers as provided in Section 1 of this
Agreement. For purposes of Section 1 of this Agreement, "Systems" is defined as
the hardware and software located in each Store or in SFI's Commerce facility
reasonably necessary to support the transitional service process. "Services" is
defined as providing substantially the same activities currently provided by SFI
from its Commerce facility or by third parties that are necessary to continue
the current business operations in the Stores. "Support" is defined as the
materials, communications and intervention necessary to continue operations
substantially as they are presently conducted in the Stores. All of the
transitional services to be provided by Sellers pursuant to this Section 1 shall
be provided consistent with historical practices at the Stores and at levels
substantially the same as presently provided with no unique services or support
required except as specifically set forth herein. Sellers' obligations under
this Section 1 also are subject to compliance with all applicable laws and
regulations, and with all confidentiality agreements or obligations. Buyers
agree to cooperate with Sellers and use their commercially reasonable efforts to
promptly respond to Sellers' requests for information and action that may be
required in order to facilitate Sellers' provision of transitional services
hereunder. The transitional services to be provided by Sellers pursuant to this
Section 1 are the following:
A. Business Process Systems, Service and Support.
(1) Advertising: Sellers will provide GFS Stores the ability to
influence Hot Sheet advertising direction, materials and
activities during the transition period. This includes the
continuation of mailed and inserted Hot Sheet promotional
services, including logo and graphics materials. GFS Stores
will define the product and pricing within the theme and
format of Sellers' Hot Sheet promotional period and provide
same to Sellers, who then will provide creative design,
layout, SFI name and the processes to produce and deliver
the materials. GFS Stores will identify the customer types
for the mailed Hot Sheet, and Sellers will develop and
deliver the pieces to those customers.
2
Sellers will provide copies of all template, logo and item
art work that may be used in developing and delivering Hot
Sheet promotional pieces during the time period from the
2003 Memorial Day promotion period until the termination of
this Agreement. Such materials will be delivered to Buyers
as soon as they are available. Sellers do not own or have
rights to, and will not provide Buyers with, any radio
jingles or other radio materials utilizing the SFI name.
(2) Xxxxx Xxx support: Continue to provide the systems and data
interfaces to support the existing Xxxxx Xxx/SFI Florida
price/cost, credit authorization and A/R management, item
maintenance, and DSR commissions, so long as Buyer conducts
POS using ACS 4.0 and NCR POS equipment.
(3) Pricing support for all items sold within the Stores
including DSD, warehouse, and corporate brands, provided
that Sellers retain the right to change inventory items
consistent with product changes throughout all of Sellers'
stores, and provided further that if requested by Buyers, a
reasonably limited number of inventory items may be changed,
bearing in mind the restraints on Sellers' Systems. Provide
ability to influence direction, materials, and activities,
including promotional pricing.
(4) Category Management support for all product categories
within the Stores, including procurement, vendor agreements,
and logistics.
(5) Loyalty card program: Subject to compliance with the
existing program and applicable law, all processes and
systems to support use of the Smart Advantage program in the
Stores, including all card benefits (reseller tax
management, tobacco sales management and control, charge on
account privileges, e-discounts/couponing/promotional and
quantity discounts).
(6) Store tagging and in-store signage systems, services, and
support.
(7) Store space management systems, services and support.
(8) Product information maintenance, systems, services and
support, including item setup, modifications, deletions, and
category support, all consistent with current practices.
3
(9) Product order entry systems, services, and support to
maintain a continuous flow of product from existing vendors,
although there can be no assurance of continued vendor
participation.
(10) Electronic communications capability to employees via
e-mail, fax, voice systems, services, and support as
necessary to operate the Stores, provided that Buyers'
employees agree to and sign SFI's computing policy and
Buyers agree to enforce those policies.
(11) Existing-store financial reporting including intranet
reports (a list of which is attached hereto as Exhibit "A"),
used to manage the day-to-day operations of the Stores by
Store managers and regional staff members.
(12) Loss prevention systems, services, and support, including
exception (XBR) reporting, camera systems, and access to
camera systems.
(13) Individual Store level income statement process, including a
period by period, Store by Store, and general ledger
download of each Store account.
(14) Accounts payable systems, services, and support in the
format currently utilized by Sellers.
(15) Store accounts receivable systems, services, and support
during normal East Coast business hours.
(16) Fixed asset management systems, services, and support.
(17) Vendor agreement systems, services, and support.
(18) Check authorization systems, services, and support,
including Telecheck. Buyers agrees to abide by SCAN
reporting and check management processes.
(19) Electronic payments, systems agreements, systems, services,
and support, including Visa, MC, Discover, Debit, Gift Card,
and Xxxxx Xxx charge, including customer dispute management
of charged transactions. Buyers will absorb all transaction
charge backs for Credit, Debit, A/R and check transactions
and will be subject to the settlement fees as defined in
Sellers' transaction agreements. Sellers and Buyers each
will accept financial responsibility for any penalties
assessed to the other party by reason of their actions or
failure to act.
4
(20) Inventory management systems, services, and support,
including RIMA.
(21) Store receiving systems, services, and support to input,
transmit, and maintain invoicing records from vendors,
including the payment process.
(22) Consumables and supplies necessary to operate equipment in
the Stores, including all computer systems.
(23) Armored car pickup/delivery service to Stores.
B. Information.
(1) Item master file information necessary for conversion to GFS
Stores systems: An initial one (1) time download (file
format specification to be provided by Buyers), then a daily
update of changes until conversion to GFS Stores systems is
complete.
(2) Customer identification information necessary for conversion
to GFS Stores systems: An initial one (1) time download
(file format specification to be provided by Buyers), then a
daily update of changes until conversion to GFS Stores
systems is complete. Subject to compliance with the existing
program and applicable law, a complete description of the
customer number layout, any alias customer number
relationships that exist for the Smart Advantage card
program, and/or the Xxxxx Xxx customer number relationship.
(3) Pricing master file information necessary for conversion to
GFS Stores systems: An initial one (1) time download (file
format specification to be provided by Buyers) that
specifies store/item/price, and in the case of Xxxxx Xxx
customer/item/price), then a daily update of changes until
conversion to GFS Stores systems is complete.
(4) Sales information: An initial one (1) time download (file
format specification to be provided by Buyers) of the
available historical sales transaction data extracted from
the Florida POS systems (excluding credit card data) in a
flat file readable format (non-TLOG format, assuming MATRA
output), then a daily update of changes until conversion to
the GFS Stores systems is complete.
(5) Fixed assets: A one (1) time download of all asset data
available, by Store, including the asset description, date
5
placed in service, acquisition cost, accumulated
depreciation and net-book-value.
(6) Store profile: A one (1) time download of all Store specific
information for normal systems operations, including tax
tables/rules and licensing information.
(7) Vendors: A listing of all vendor information unique to Store
operations, with a daily update of changes.
(8) Xxxxx Xxx integration: A one (1) time download of all
interfaces provided to/from Xxxxx Xxx, along with file
format specifications.
(9) Reseller Tax: A one (1) time download of customer/item
reseller tax information.
C. Computer Systems Hardware and Software and Support.
(1) Provide temporary benefit of output from all systems
necessary to continue Store operations as currently in
existence. All maintenance and service agreements to be
provided during this period, including all hardware,
software licensing and support, third party services
provided (AfterBot, ACI, Electronic payment systems, and
telecommunications, both data and voice).
(2) Computer Systems & Support (all consistent with current
practice):
a. Battery backup systems (UPS)
b. Cashier balance, cash proof
c. Copiers
d. Daily sales audit and end-of-day processing
e. Data warehouse reporting provided to Stores
f. Digital receipt via AfterBot
g. DSD receiving/reporting
h. EPS ACI systems support - Debit, Credit, Check
authorization, Gift card, In-house credit (Xxxxx Xxx)
i. FAX
j. Intranet, as needed to operate the Stores and subject
to signed SFI computing policy agreement.
k. Item/price maintenance - store/central
l. Invoice processing
m. Operating systems
n. Order entry, including COPS
o. PBX/in-store voice & communications systems
6
p. PCs
q. POS systems and interfaces and peripherals
r. POS XBR Loss prevention system exception reporting,
client access only for LP rep.
s. Price verification
t. Product lookup
u. Product management maintenance
v. RF network and hand held devices
w. Satellite communications infrastructure
x. Scales
y. Servers
z. Signs/tags printing
aa. Special order entry system
bb. Store/regional manager financial reporting
cc. Time and attendance
dd. Timeclocks, time data capture
ee. Virus protection software
(3) Central Systems - Requiring continued support of
applications (all consistent with current practice):
a. General Ledger (GEAC)
b. Financial Reporting (TM1)
c. Reporting database (RIMA)
d. Accounts Receivable (GEAC/Base 24)
e. Inventory/Costing (RIMA)
f. Inventory Ordering (COPS)
g. Accounts Payable (GEAC)
h. Cash Reconciliation (Daily cash proof)
i. Fixed Assets (GEAC)
j. Vendor Support (mainframe)
k. Digital Receipt/Sales Tax (Afterbot).
l. Property Tax (Fixed asset system)
m. Credit Card Processing
n. Resale licensing (Tandem) Subject to Florida stores
completing signup process of resale customers
2. Services for Florida Food Service Operations. During the Term of
this Agreement, Sellers will provide the transitional services described in this
Section 2 for the benefit of the Xxxxx Xxx and/or Orlando Food Service
Operations (collectively, the "Florida Food Service Operations"). These
transitional services will include the resources reasonably necessary to
maintain continuous operation of the Florida Food Service Operations in Florida
in a manner substantially consistent with current practices. Sellers represent
and warrant to Buyers that nothing contained in any of the agreements to which
Sellers are a party prohibits Sellers from providing the Services, Systems and
Support to Buyers as provided in Section 2 of this Agreement. For purposes of
Section 2 of this Agreement, "Systems" is defined as the hardware and software
located in Florida
7
or elsewhere necessary to support the transitional service process. "Services"
is defined as providing substantially the same activities currently provided by
SFI from its Commerce facility or by third parties that are necessary to
continue the current business operations in the Florida Food Service Operations.
"Support" is defined as the materials, communications and intervention necessary
to continue operations substantially as they are presently conducted in the
Florida Food Service Operations. All of the transitional services to be provided
by Sellers pursuant to this Section 2 shall be provided consistent with
historical practices in the Foodservice Operations and at levels substantially
the same as presently provided with no unique services or support required
except as specifically set forth herein. Sellers' obligations under this Section
2 also are subject to compliance with all applicable laws and regulations, and
with all confidentiality agreements or obligations. Buyers agree to cooperate
with Sellers and use their commercially reasonable efforts to promptly respond
to Sellers' requests for information and action that may be required in order to
facilitate Sellers' provision of transitional services hereunder. The
transitional services to be provided by Sellers pursuant to this Section 2 are
the following:
A. Payroll Processing
(1) ADP agreement feed through Commerce, California (Solely for
start-up purposes and transition of payroll processing to
Xxxxx Xxx Company)
B. Network Support
(1) Currently some network and infrastructure support services
are being provided in Stockton, California for the Florida
Food Service Operations. GFS Orlando will require this
support to continue for up to six (6) months.
C. E-mail Addresses
(1) Systems, services and support required to provide continuous
access to the e-mail addresses. Seller to provide e-mail
addresses of Florida Stores, relevant personnel and
transition staff.
D. Wide Area Network
(1) Support of the ordering process from the Stores to Xxxxx
Xxx. These orders are processed in Commerce, California and
sent to Xxxxx Xxx for fulfillment.
E. Fixed Asset Accounting
(1) Continued support of the fixed asset accounting system for
up to six (6) months.
8
3. Personnel Cooperation. Commencing upon execution of this Agreement,
and continuing for two (2) weeks thereafter, at no cost to Buyers, Sellers will
provide Buyers with the use of an office at Sellers' Commerce, California
facility for one (1) designated person ("Point Person"), together with related
telephones, equipment and access (including remote access) to Sellers' systems
that apply to the Stores and the Florida Food Service Operations. Xxx Xxxxxxx is
hereby designated as Sellers' initial contact with the Point Person, and the
Point Person shall be afforded full access to all of Sellers' personnel and
systems to assist in a smooth transition of the Stores and the Florida Food
Service Operations to Buyers. After the expiration of the two (2) week period,
the Point Person also shall be provided with remote access and access at the
Commerce facility for one (1) day per week for follow-up issues, and Sellers'
personnel will also be available by telephone to assist the Point Person in
connection with transition matters.
4. Term. The Term of this Agreement shall commence upon the
consummation of the transactions contemplated by the Share Purchase Agreement
and the Asset Purchase Agreement and, at Buyers' option, shall continue for up
to six (6) months thereafter. The Term of this Agreement may be shortened upon
written notice from Buyers to Sellers; provided, that, if this Agreement is
shortened as to the provision of the Systems services provided hereunder, it
must be shortened as to all Systems services concurrently.
5. Compensation for Services. In consideration of provision of the
transitional services described in Sections 1, 2 and 3 above (the "Basic
Services") to be provided by Sellers to Buyers in connection with the Stores and
the Florida Food Service Operations, Buyers will reimburse Sellers for the
actual out-of-pocket initial start-up and set-up costs incurred in connection
with the e-mail conversion, but in no event shall such reimbursement exceed
$50,000. Sellers shall receive no other compensation for the Basic Services. In
the event Buyers request additional services not included in the Basic Services,
the parties will meet to discuss same and the cost therefor, but Sellers shall
be under no obligation to provide any additional services, except upon terms
acceptable to Sellers.
6. Default; Termination.
A. Sellers' Default. Sellers shall be in default under this Agreement
if Sellers breach any material provision or condition of this Agreement (a
"Sellers' Event of Default"). If a Sellers' Event of Default occurs (i)
which event does not result in a material adverse effect on the provision
of Basic Services, and is not cured by Sellers within thirty (30) days
after receipt of written notice from Buyers to cure such breach, or (ii)
which event results in a material adverse effect on the provision of Basic
Services, and is not cured by Sellers within three (3) business days after
receipt of written notice from Buyers to cure such breach, then, in such
event, in addition to any other right or remedy Buyers may have under this
Agreement, Buyers shall have the right to terminate this Agreement, so long
as such Event of Default is not the result of the action or inaction of a
third-party.
9
B. Buyers' Default. Buyers shall be in default under this Agreement if
Buyers breach any material provision or condition of this Agreement (a
"Buyers' Event of Default"). If a Buyers' Event of Default occurs (i) which
event does not result in a material adverse effect on Sellers' operations
or information systems, and is not cured by Buyers within thirty (30) days
after receipt of written notice from Sellers to cure such breach, or (ii)
which event results in a material adverse effect on Sellers' operations or
information systems, and is not cured by Buyers within three (3) business
days after receipt of written notice from Sellers to cure such breach,
then, in such event, in addition to any other right or remedy Sellers may
have under this Agreement, Sellers shall have the right to terminate this
Agreement, so long as such Event of Default is not the result of the action
or inaction of a third-party.
C. Limitation on Damages; No Offset. In no event shall Sellers or
Buyers be liable to the other party for any consequential damages or lost
profits in excess of $750,000, and in no event shall either party be
entitled to offset against any amounts due under this Agreement any amounts
payable under the Share Purchase Agreement, the Asset Purchase Agreement,
or any other agreement executed in connection therewith.
7. Indemnification.
A. Indemnity by Sellers. Sellers shall, jointly and severally,
indemnify Buyers and their affiliates, directors, officers, managers,
employees, controlling persons, agents and representatives and their
successors and assigns (collectively, the "Buyer Indemnified Parties")
against and hold each of them harmless from any and all damage, loss, cost,
penalty, liability and expense (including, without limitation, reasonable
attorneys' fees and expenses in connection with any action, suit or
proceeding) ("Damages") incurred or suffered by the Buyer Indemnified
Parties (whether originally asserted against or imposed on the Buyer
Indemnified Parties by a third party or originally incurred or suffered
directly by the Buyer Indemnified Parties) arising directly out of any
breach of any representation or warranty, covenant or agreement made or to
be performed by Sellers pursuant to this Agreement (such breach, a "Seller
Breach").
B. Indemnity by Buyers. Buyers shall indemnify Sellers and their
affiliates, directors, officers, employees, controlling persons, agents and
representatives and their successors and assigns (collectively, the "Seller
Indemnified Parties") against and hold each of them harmless from any and
all Damages incurred or suffered by the Seller Indemnified Parties (whether
originally asserted against or imposed on the Seller Indemnified Parties by
a third party or originally incurred or suffered directly by the Seller
Indemnified Parties) arising directly out of any breach of any
representation, warranty, covenant or agreement made or to be performed by
Buyers pursuant to this Agreement, and from any and all liability or
expenses, including fines by any governmental entities, incurred by reason
of providing the Smart Advantage program
10
information to Buyers pursuant to Section 1.A(5) above (such breach, a
"Buyer Breach").
C. Procedure and Payment.
(1) The person seeking indemnification under Section 7.A, and
7.B (the "Indemnified Party") agrees to give prompt notice
to the Person against whom indemnity is sought (the
"Indemnifying Party") of the assertion of any claim, or the
commencement of any suit, action or proceeding, in respect
of which indemnity may be sought under such Section and will
provide the Indemnifying Party such information with respect
thereto as the Indemnifying Party may reasonably request.
The failure to so notify the Indemnifying Party shall not
relieve the Indemnifying Party of its obligations hereunder,
except to the extent such failure shall have materially and
adversely prejudiced the Indemnifying Party.
(2) The Indemnifying Party shall be entitled to defend any claim
asserted by any third party ("Third Party Claim") with
counsel of its choice reasonably satisfactory to the
Indemnified Party so long as (i) the Indemnifying Party
notifies the Indemnified Party in writing within fifteen
(15) days after the Indemnifying Party has given notice of
the Third Party Claim that it will indemnify the Indemnified
Party from and against all Damages that the Indemnified
Party may suffer resulting from, arising out of, relating
to, or caused by the Third Party Claim, (ii) the
Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that
the Indemnifying Party will have the financial resources to
defend against the Third Party Claim and fulfill its
indemnification obligations under this Agreement, (iii) the
Third Party Claim involves only money damages and does not
seek an injunction or other equitable relief, and (iv) the
Indemnifying Party conducts the defense of the Third Party
Claim actively and diligently.
(3) So long as the Indemnifying Party is conducting the defense
of any Third Party Claim in accordance with the provisions
of this Section 7.C, the Indemnified Party shall be entitled
to participate in the defense of such Third Party Claim and
to employ separate counsel of its choice for such purpose.
The fees and expenses of such separate counsel shall be paid
by the Indemnified Party.
11
(4) Each party shall cooperate, and cause its Affiliates to
cooperate, in the defense or prosecution of any Third Party
Claim and shall furnish or cause to be furnished such
records, information and testimony, and attend such
conferences, discovery proceedings, hearings, trials or
appeals, as may be reasonably requested by any other party
in connection therewith.
D. Calculation of Damages.
(1) The amount of any Damages payable under Section 7.A and 7.B
by the Indemnifying Party shall be net of any amounts
recovered by the Indemnified Party under applicable
insurance policies and the Indemnified Party shall use
commercially reasonable efforts to collect any amounts
available under such insurance policies.
(2) If the Indemnified Party receives an amount under insurance
coverage or from a third party with respect to Damages at
any time subsequent to any indemnification provided by the
Indemnifying Party pursuant to Section 7.A and 7.B, then
such Indemnified Party shall promptly reimburse the
Indemnifying Party for any payment made or expense incurred
by such Indemnifying Party in connection with providing such
indemnification up to such amount received by such
Indemnified Party, but net of any expenses incurred by such
Indemnified Party in collecting such amount.
(3) In no event shall either Buyers or Sellers be liable to the
other party for any consequential damages or lost profits in
excess of $750,000.
8. Force Majeure. Neither Sellers nor Buyers shall be responsible to
the other for any delay in or failure of performance of their obligations under
this Agreement to the extent such delay or failure is attributable to any cause
beyond their reasonable control, including, without limitation, any act of God,
fire, accident, strike or other labor difficulties, war, embargo or other
governmental act, or riot that, in the case of Sellers, prevents Sellers from
providing services under this Agreement, or, in the case of Buyers, prevents
Buyers from utilizing the services under this Agreement; provided that the party
affected thereby gives the other party prompt notice of the occurrence of any
event which has caused or is likely to cause any such delay or failure, setting
forth its best estimate of the length of any delay and any possibility that it
will be unable to resume performance; and provided further that said affected
party shall use its commercially reasonable efforts to expeditiously overcome
the effects of that event and resume performance or utilization.
12
9. Miscellaneous Provisions.
A. Confidentiality. Each of Sellers and Buyers (as appropriate, the
"Promisor") covenant and agree to and will cause their respective
authorized agents, representatives, affiliates, employees, officers,
directors, accountants, counsel and other designated representatives
(collectively, "Representatives") to (i) treat and hold as confidential
(and not disclose or provide access to any person to) all records, books,
contracts, instruments, computer data and other data and information
(collectively, "Information") concerning the other party (the "Promisee")
in the Promisor's possession or furnished by the Promisee or its
Representatives pursuant to this Agreement, (ii) in the event that Promisor
or its Representatives become legally compelled to disclose any such
Information, provide the Promisee with prompt written notice of such
requirement so that the Promisee may seek a protective order or other
remedy or waive compliance with this Section 9.A, and (iii) in the event
that such protective order or other remedy is not obtained, or the Promisee
waives compliance with this Section 9.A, furnish only that portion of such
Information which is legally required to be provided and exercise
Promisor's best efforts to obtain assurances that confidential treatment
will be accorded such Information; provided, however, that this sentence
shall not apply to any Information that, at the time of disclosure, is
available publicly and was not disclosed in breach of this Agreement by
such party or its Representatives; and provided further, however, that the
provisions of clauses (i) and (ii) above shall not preclude a party from
disclosing Information to its Representatives (provided that each such
Representative shall be advised of the confidential nature of such
Information) or from disclosing Information to or filing Information with
any governmental authority or agency with jurisdiction over such party.
Each party agrees and acknowledges that remedies at law for any breach of
its obligations under this Section 9.A are inadequate and that in addition
thereto the other party shall be entitled to seek equitable relief,
including injunction and specific performance, in the event of any such
breach, without the necessity of demonstrating the inadequacy of monetary
damages. The provisions of this Section 9.A shall not apply to the extent
any such Information is required to be disclosed by applicable law.
B. Notices. All necessary notices, demands, requests and other
communications required or permitted to be given hereunder shall in every
case be in writing and shall be deemed duly given (a) when delivered
personally, (b) upon receipt or refusal of receipt, if sent by registered
or certified mail, in all such cases with postage prepaid, return receipt
requested, or (c) the next business day if delivered by a recognized
overnight courier service, airbill prepaid, designated for next business
day delivery, to the parties at the addresses as set forth below or at such
other addresses as may be furnished in writing:
If to Buyers: Xxxxx Xxxxxxxxx
Xxxxxx Food Service, Inc.
X.X. Xxx 0000
Xxxxx Xxxxxx, Xxxxxxxx 00000
13
and to: Xxxxx X. Xxxx
00000 Xxxx Xxxxxxxx Xxxxx
X.X. Xxx 000
Xxxxxx, Xxxxxxxx 00000-0000
With a copy to: Miller, Johnson, Xxxxx & Xxxxxxxxx,
P.L.C.
000 Xxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
If to Sellers: Xxxxxx Xxxxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
With a copy to: Xxxxxx X. Xxxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
With a copy to: Xxx Xxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
With a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
And a copy to: Xxxxx & Xxxxxxx
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx XX
C. Jurisdiction.
(1) In the event any dispute arises out of this Agreement or any
of the transactions contemplated by this Agreement, each of the parties hereto
consents to submit itself to the personal jurisdiction of any federal court in
the state of Delaware and, in case such court refuses jurisdiction then each of
the parties consents to submit itself to the personal jurisdiction of any state
court in the state of Delaware. Each of the parties further agrees that it will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from such court, and agrees that, except as permitted pursuant
to this Section 9.C, it will not bring any action relating to this Agreement or
any
14
of the transactions contemplated by this Agreement in any other court other than
a federal court in the state of Delaware.
(2) In the event the state court specified in Section 9.C(1)
refuses to exercise jurisdiction over the parties hereto or the subject matter
at issue, then with respect to any legal action or proceeding brought by any of
the Seller Parties against any of the Buyer Parties arising out of or relating
to this Agreement or any of the transactions contemplated by this Agreement,
each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of any federal court within the jurisdiction of the United
States District Court for the Western District of Michigan (and each
appellate court thereof) or any state court in the state of Michigan;
(ii) agrees that any federal court within the jurisdiction
of the United States District Court for the Western District of Michigan or
any state court in the state of Michigan shall be deemed to be a convenient
forum; and
(iii) agrees not to assert (by way of motion, as a defense
or otherwise), in any such legal proceeding commenced in any federal court
within the jurisdiction of the United States District Court for the Western
District of Michigan or any state court in the state of Michigan, any claim
that such party is not subject personally to the jurisdiction of such
court, that such legal proceeding has been brought in an inconvenient
forum, or that the venue of such proceeding is improper.
(3) In the event the state court specified in Section 9.C(1)
refuses to exercise jurisdiction over the parties hereto or the subject matter
at issue, then with respect to any legal action or proceeding brought by any of
the Buyer Parties against any of the Seller Parties arising out of or relating
to this Agreement or any of the transactions contemplated by this Agreement,
each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of any federal court within the jurisdiction of the United
States District Court for the Central District of California (and each
appellate court thereof) or any state court in the state of California;
(ii) agrees that any federal court within the jurisdiction
of the United States District Court for the Central District of California
or any state court in the state of California shall be deemed to be a
convenient forum; and
(iii) agrees not to assert (by way of motion, as a defense
or otherwise), in any such legal proceeding commenced in any federal court
within the jurisdiction of the United States District Court for the Central
District of California or any state court in the state of California, any
claim that such party is not subject personally to the
15
jurisdiction of such court, that such legal proceeding has been brought in
an inconvenient forum, or that the venue of such proceeding is improper.
(4) The parties hereby waive any right to a jury trial.
D. Further Assurances. From time to time, at the request of the other
party hereto and at the expense of the party so requesting (unless the
requesting party is entitled to indemnification therefor under Section 7),
each of the parties hereto shall execute and deliver to such requesting
party such documents and take such other action as such requesting party
may reasonably request in order to consummate more effectively the
transactions contemplated hereby.
E. Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by
any party in exercising any right, power, or privilege under this Agreement
or the documents referred to in this Agreement will operate as a waiver of
such right, power, or privilege, and no single or partial exercise of any
such right, power, or privilege will preclude any other or further exercise
of such right, power, or privilege or the exercise of any other right,
power, or privilege. To the maximum extent permitted by applicable law, (a)
no claim or right arising out of this Agreement or the documents referred
to in this Agreement can be discharged by one party, in whole or in part,
by a waiver or renunciation of the claim or right unless in writing signed
by the other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and (c)
no notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
F. Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by the
parties to be charged with the amendment.
G. Assignments, Successors, and No Third-Party Rights. Neither party
may assign any of its rights or obligations under this Agreement without
the prior consent of the other parties, except that GFS Holding may assign
any of its rights under this Agreement to any Affiliate of GFS Holding.
Subject to the preceding sentence, this Agreement will apply to, be binding
in all respects upon, and inure to the benefit of the benefit of the
successors and permitted assigns of the parties. Nothing expressed or
referred to in this Agreement will be construed to give any Person other
than the parties to this Agreement any legal or equitable right, remedy, or
claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are
16
for the sole and exclusive benefit of the parties to this Agreement and
their successors and assigns.
H. Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions
of this Agreement will remain in full force and effect. Any provision of
this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or
unenforceable.
I. Section Headings, Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or "Sections"
refer to the corresponding Section or Sections of this Agreement. All words
used in this Agreement will be construed to be of such gender or number as
the circumstances require. Unless otherwise expressly provided, the word
"including" does not limit the preceding words or terms.
J. Preamble; Recitals. The Recitals set forth in the Preamble hereto
are hereby incorporated and made a part of this Agreement.
K. Governing Law. This Agreement will be governed by the internal laws
of the State of Delaware without regard to conflicts of laws principles.
L. No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against
any party hereto by virtue of having drafted this Agreement or otherwise.
M. Dispute Resolution. Except as hereinafter provided in this Section
9.M all claims, controversies, differences, or disputes between or among
any of the parties hereto arising from or relating to this Agreement,
including claims by one party that another party or parties hereto have
failed to perform any of their obligations hereunder (collectively,
"Agreement Disputes"), shall be resolved as follows:
(1) Facilitative Mediation. The parties to an Agreement Dispute
shall first attempt to resolve such Agreement Dispute by
means of a mediation conducted in the following manner. A
party desiring mediation of any Agreement Dispute shall give
or shall have given a written notice, in the manner set
forth in Section 9.B hereof (a "Dispute Notice"), to the
other party or parties setting forth the nature of the
dispute and the relief intended to be sought and shall
submit such Agreement Dispute for resolution by facilitative
mediation in Chicago, Illinois, under the Commercial
Mediation Rules (but not otherwise under the auspices) of
the American Arbitration
17
Association (the "AAA") in effect on the date of this
Agreement, unless the parties have agreed, in writing, to
resolve any such dispute by other means. Each party agrees
that it will submit to and shall not challenge or object to
the jurisdiction (either personal or subject matter) or the
venue of such mediation in Chicago, Illinois.
(2) Legal Proceedings. If any Agreement Dispute has not been
resolved by mediation as provided above within sixty (60)
days after submission thereof, then either party may
commence a suit or legal action or an action at equity to
enforce its rights or the other party's obligations or
recover any damages arising from the other party's breach or
such other relief as may be appropriate under the
circumstances.
(3) Attorney Fees and Other Costs. The prevailing party in any
mediation or any action or legal or other proceeding brought
with respect to an Agreement Dispute shall be entitled to
recover the reasonable fees and disbursements of its
attorneys, accountants, and expert witnesses in connection
with any such mediation or any action or legal or other
proceeding brought in accordance with the provisions hereof.
(4) Exceptions for Equitable Relief. Notwithstanding the
foregoing or anything to the contrary contained elsewhere in
this Agreement, a party may bring a proceeding against any
other party hereto for specific performance or injunctive or
other forms or equitable relief in the state or federal
courts pursuant to the procedures set forth in Section 9.C
without having to submit the matter or Agreement Dispute in
question to mediation as hereinabove set forth, provided,
however, that such party shall not seek any monetary award
or relief in such action or proceeding unless its failure to
do so would prejudice such party's rights or ability to seek
such monetary award or relief in another action or
proceeding.
N. Counterparts. This Agreement may be executed in two or more
counterparts, each or which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to
constitute one and the same agreement.
O. Relationship of Parties. The relationship between Sellers and
Buyers for purposes of this Agreement shall be that of an independent
contractor and not of employment and, except to the extent required to
enable Sellers to perform their duties hereunder, neither party is an agent
of the other. By entering into this
18
Agreement, neither party to this Agreement is, in any way, assuming any
liabilities, debts or obligations of the other party, whether now existing
or hereafter created.
IN WITNESS WHEREOF, Sellers and Buyers have executed this Agreement as of
the date set forth in the first paragraph hereof.
"SFI"
SMART & FINAL INC.
a Delaware corporation
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------------------
Its:
----------------------------------------
"AFD"
AMERICAN FOODSERVICE DISTRIBUTORS
a California corporation
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------------------
Its:
----------------------------------------
"SF Stores"
SMART & FINAL STORES CORPORATION
a California corporation
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------------------
Its:
----------------------------------------
"GFS Holding"
GFS HOLDING, INC.
a Delaware corporation
By: /s/ Xxxxx X. Xxxx
-----------------------------------------
Its:
----------------------------------------
19
"Xxxxx Xxx"
XXXXX XXX COMPANY
a Florida corporation
By: /s/ Xxxxx X. Xxxx
-----------------------------------------
Its:
----------------------------------------
"GFS Stores"
GFS STORES, LLC
a Delaware limited liability company
By: GFS HOLDING, INC.
Its: Manager
By: /s/ Xxxxx X. Xxxx
-----------------------------------------
Its:
----------------------------------------
"GFS Orlando"
GFS Orlando, LLC
a Delaware limited liability company
By: GFS HOLDING, INC.
Its: Manager
By: /s/ Xxxxx X. Xxxx
-----------------------------------------
Its:
----------------------------------------
20
Exhibit "A"
----------------------------------------------------------------------------------------------------------------
List of reports
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Type / Source
----------------------------------------------------------------------------------------------------------------
Report Name Store Region Mgr .xls File ES9000 .pdf
----------------------------------------------------------------------------------------------------------------
RMIA X X O'K
----------------------------------------------------------------------------------------------------------------
Payroll Distrubution Report X X X Pending
(PDR)(1)
----------------------------------------------------------------------------------------------------------------
P&L X Paper ???????
----------------------------------------------------------------------------------------------------------------
DSD weekly and 52 week X X O'K
recap
----------------------------------------------------------------------------------------------------------------
Managers' Special X X O'K
----------------------------------------------------------------------------------------------------------------
Lost & Damaged X X X O'K
----------------------------------------------------------------------------------------------------------------
Weekly Inventory Summary (new) X X We need to get report I.D
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Inventory Turns X X O'K Xxx X.
----------------------------------------------------------------------------------------------------------------
Perishables Tracking X X O'K Xxxxx
----------------------------------------------------------------------------------------------------------------
District Xxxx out X X O'K Xxx X.
----------------------------------------------------------------------------------------------------------------
Top 100 Items by Sales / Margin X X O'K Xxxxx
----------------------------------------------------------------------------------------------------------------
Consolidated Operations X X O'K Xxx X.
RMIA
----------------------------------------------------------------------------------------------------------------
Labor Reports (period basis) X X ????? Xxx X.
----------------------------------------------------------------------------------------------------------------
Weekly Potential Shrink X X O'K Xxx X.
Report
----------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
LP
----------------------------------------------------------------------------------------------------------------
XBR is an LP based system that produces ad hoc queries to monitor the POS system (cashier integrity).
----------------------------------------------------------------------------------------------------------------
_______________
[1] This line is interlineated in the original.
A-1
EMPLOYEE LEASING AGREEMENT
THIS EMPLOYEE LEASING AGREEMENT (this "Agreement") is entered into and
effective as of September 7, 2003 (the "Effective Date"), by and between SMART &
FINAL INC., a Delaware corporation ("SFI"), AMERICAN FOODSERVICE DISTRIBUTORS, a
California corporation ("AFD"), SMART & FINAL STORES CORPORATION, a California
corporation ("SF Stores" and, together with SFI and AFD, collectively, the
"Sellers"), and GFS HOLDING, INC., a Delaware corporation ("GFS Holding"), XXXXX
XXX COMPANY, a Florida corporation ("Xxxxx Xxx"), GFS STORES, LLC, a Delaware
limited liability company ("GFS Stores"), and GFS Orlando, LLC, a Delaware
limited liability company ("GFS Orlando" and together with GFS Holding, Xxxxx
Xxx and GFS Stores, collectively, the "Buyers"). Capitalized terms not otherwise
defined herein shall have the respective meanings set forth in the Share
Purchase Agreement (as defined below).
RECITALS
A. Pursuant to that certain Share Purchase Agreement (the "Share
Purchase Agreement"), dated August 6, 2003, by and between SFI and AFD and GFS
Holding, GFS Holding will purchase all of the issued and outstanding equity
securities of Xxxxx Xxx; and pursuant to that certain Asset Purchase Agreement
(the "Asset Purchase Agreement"), dated August 6, 2003, by and among GFS
Holding, GFS Orlando, and GFS Stores, and Sellers, GFS Stores and GFS Orlando
will, directly or indirectly, acquire from Sellers certain of the assets of SF
Stores and all of the assets of the Orlando Foodservice division of AFD
(collectively, the "Assets").
B. Following the consummation of the transactions contemplated by the
Share Purchase Agreement and the Asset Purchase Agreement, Buyers will continue
to operate the businesses operated by AFD, SF Stores and Xxxxx Xxx in the State
of Florida (the "Business").
C. Buyers desire to lease from Sellers certain employees of Sellers
who are knowledgeable about the certain aspects of the Business and for the
purpose of performing such tasks as are beneficial to the transition and
ownership of the Business.
D. Buyers have required as a condition to the consummation of the
transactions contemplated by the Share Purchase Agreement and the Asset Purchase
Agreement that Sellers enter into this Agreement.
AGREEMENT
In consideration of the premises set forth above and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Sellers and Buyers agree as follows:
1. Lease of Employees.
1.1 Leased Employees. During the period beginning 12:01 a.m. on the
Effective Date and ending on 11:59 p.m. on the first anniversary of the
Effective Date (the "Lease Period"), and subject to the provisions of this
Agreement, Sellers shall furnish to Buyers the full-
time services of the Leased Employees of Sellers listed on Exhibit "A" attached
hereto (the "Leased Employees").
1.2 Location. The location of work to be performed by of each Leased
Employee shall be as set forth on Exhibit "A" attached hereto, unless otherwise
consented to by Sellers.
1.3 Payment and Employment Policies. Sellers shall have sole
responsibility for: (i) establishment and payment of all wages, salaries and
other forms of compensation for the Leased Employees; (ii) payment of all
payroll, social security and unemployment taxes related to the Leased Employees;
(iii) establishing all personnel policies and employee benefit programs for the
Leased Employees; and (iv) determination of work schedules for the Leased
Employees. Buyers shall have full authority to direct the Leased Employees with
respect to the performance by Leased Employees of their respective Services (as
defined below) to Buyers. Sellers shall use their reasonable diligent efforts to
ensure that the Leased Employees perform the Services (as defined below) in the
best interests of Buyers.
1.4 Employment of Leased Employees. Sellers shall have full
responsibility and authority for decisions regarding termination and
reassignment of Leased Employees. In the event that Buyers provide reasonable
evidence to Sellers that the performance of a Leased Employee is unsatisfactory
or if Buyers notify Sellers that the services of a particular Leased Employee
are no longer needed, then Sellers shall reassign the Leased Employee from
Buyers, subject to and in accordance with the personnel policies of Sellers. In
the event Buyers request the reassignment of the services of a Leased Employee,
or in the event of the resignation, retirement or other termination of services
by a Leased Employee for Buyers, such Leased Employee shall be reassigned to
Sellers, who shall be responsible for taking any action with respect to such
Leased Employee's employment by Sellers. Leased Employees who are reassigned
from Buyers or are terminated during the Lease Period are referred to herein as
"Former Leased Employees." Exhibit "A" shall be revised to exclude such Former
Leased Employees from time to time, as appropriate.
1.5 Permanent Hire. Buyers may, in their discretion and at any time
during the Lease Period, offer to permanently hire any of the Leased Employees
without any additional compensation therefor payable to Sellers, other than for
the payments provided pursuant to this Agreement.
2. Payment For Leased Employees.
2.1 Payment Terms. On or before the 25th day of each calendar month,
Sellers shall issue an invoice to Buyers specifying the Reimbursable Amount (as
defined in Section 2.2 below) for the immediately preceding calendar month.
Buyers shall pay the Reimbursable Amount specified in each such invoice within
ten (10) days after receipt of such invoice.
2.2 Reimbursable Amount. The term "Reimbursable Amount" is an amount
equal to the costs paid and expenses accrued (as hereafter provided) by Sellers
during such period, solely with respect to the Leased Employees that are
providing services to Buyers hereunder, including, without limitation, the
reasonable cost of: (i) salaries, wages and incentive, vacation, holiday and
self-funded sick pay; (ii) Seller-paid social security taxes, medicare taxes
-2-
and other payroll taxes; (iii) premiums paid by Sellers on behalf of Leased
Employees for coverage by any long-term disability insurance, insured short-term
disability benefits, group term life insurance, accidental death and disability
insurance, business travel accident insurance requested by Buyers, and insured
group health, dental or vision plans; (iv) other employee welfare benefits,
fringe benefits or perquisites, including, but not limited to, benefits under
any employee welfare benefit plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended), supplemental unemployment
compensation plan benefits or any other fringe benefit arrangement which does
not constitute an employee benefit plan, or Sellers' costs under any employment
agreement not otherwise described in this Section which have been disclosed to
Buyers; (v) Sellers' contributions to any tax-qualified defined contribution
plan on behalf of Leased Employees (other than employee pretax deferral amounts
included in (i) above, as wages); (vi) Sellers' provided benefits under any
tax-qualified defined benefit pension plan; (vii) Sellers' provided self-funded
group health, dental and vision benefits; (viii) Sellers' costs for
administration of any benefit plan, program or arrangement provided to or for
the benefit of the Leased Employees; (ix) any other government charges relating
to the employment of the Leased Employees, including worker's compensation
claims; (x) amounts paid for the insurance coverage required under Section 3
below, (xi) expenses of complying with and administering any collective
bargaining agreement with respect to Leased Employees; and (xii) any amounts due
Sellers pursuant to Section 4 below, in each case to the extent that such
payments and benefits are generally provided to Sellers' employees as a group.
2.3 Late Payment. Any portion of the Reimbursable Amount that is not
paid as and when due pursuant to the payment terms provided in this Section
shall be considered a "Late Payment." Sellers shall notify Buyers of such Late
Payment, in writing, and interest shall accrue on such Late Payment (or any
portion thereof) from the date that such Late Payment was first invoiced to
Buyers until the date such amount is fully paid to Sellers at the rate equal to
the lesser of: (i) the maximum rate allowed by law, or (ii) the prime rate as
announced from time to time by Xxxxx Fargo Bank, N.A. plus five percentage (5%)
points per annum.
2.4 Covenant of Sellers. Sellers covenant and agree not to increase
the levels of compensation and benefits provided to any of the Leased Employees
during the Lease Period, other than for normal increases in compensation and
benefits to similarly-situated employees of Sellers, and in the ordinary course
and operation of Sellers' business.
3. Sellers' Insurance Obligations.
3.1 Insurance. Sellers shall obtain and maintain at their own expense
general liability, worker's compensation, disability and casualty and other
similar employee benefit insurance, in amounts reasonably sufficient to meet
state requirements, including insurance for any claims, losses, costs and
expenses incurred in connection with the injury or death of a Leased Employee
pursuant to this Agreement.
3.2 Additional Insurance. Sellers shall be required to purchase and
maintain such insurance with limits described in Section 3.3 below and as
approved by Buyers as will protect it from claims set forth below which may
arise out of or result from the Leased Employee's provision of Services (as
defined in Section 5.2 below) under this Agreement; provided,
-3-
however, that Sellers shall not be required to obtain errors and omissions
insurance. Coverage shall include, but not be limited to, the following claims:
(a) Claims under Workmen's Compensation;
(b) Claims for damage because of bodily injury, occupational
sickness or disease, or death of employees;
(c) Claims for damages because of bodily injury, sickness or
disease, or death of any person other than employees of Buyers;
(d) Claims for damages insured by usual personal injury liability
coverage which are sustained by any other person;
(e) Claims for damages because of injury to or destruction of
tangible property, including loss of use resulting therefrom; and
(f) Claims for damages because of bodily injury or death of any
person or property damage arising out of the use of any of Buyers' motor
vehicles.
3.3 Insurance Amounts. Sellers' comprehensive General Liability
Insurance shall be in an amount not less than $1,000,000 for property damage,
injuries, including accidental death, to any one person and subject to the same
limit for each person, and in an amount not less than $1,000,000 for one
occurrence. Sellers shall also obtain and maintain Excess Umbrella Liability
Insurance in an amount of at least $1,000,000 for each occurrence and aggregate.
Sellers shall be required to maintain the above coverages for the period of time
extending throughout the Lease Period.
4. Indemnification.
4.1 Indemnification of Sellers. Buyers shall indemnify and hold
harmless Sellers and their Affiliates, directors, officers, employees,
controlling persons, agents and representatives and their successors and assigns
(collectively, the "Seller Indemnified Parties") from and with respect to any
and all Losses incurred by the Seller Indemnified Parties in connection with or
arising out of (i) Buyers' or their Affiliates', or Buyers' or their Affiliates'
employees', acts or omissions relating to the Leased Employees; (ii) the
employment, the failure to employ or the termination of employment of any Leased
Employee with respect to the Lease Period or in relation to Section 1.4 above
taken by Buyers or their Affiliates or Buyers' or their Affiliates' employees,
including, but not limited to, constructive termination, claims arising under
any employment agreement, collective bargaining agreement, employment law or
regulation, including without limitation Title VII of the Civil Rights Act of
1964, as amended; the Age Discrimination in Employment Act of 1967, as amended;
the Internal Revenue Code of 1986, as amended; the Employee Retirement Income
Security Act of 1974, as amended; the Worker Adjustment Retraining and
Notification Act; or claims arising under any other federal, state, or local
civil rights, employee benefit, labor, contract, tort, or common law; (iii) acts
or omissions of Leased Employees taken at the direction of Buyers' or their
Affiliates' employees; or (iv) the negligent acts or omissions or willful
misconduct of the Leased Employees taken at the direction of Buyers' or their
Affiliates' employees. Buyers' indemnification obligations
-4-
under this Section 4.1 shall not extend to any Losses incurred by any of the
Seller Indemnified Parties as a result of the acts or omissions of the Seller
Indemnified Parties relating to the Leased Employees.
4.2 Survival of Provisions. The indemnification obligations of the
Buyers under this Agreement shall survive any termination of this Agreement for
a period of one (1) year.
5. Services.
5.1 General. Leased Employees are Buyers' agents and will act as
directed by and under the supervision of Buyers and their employees, and will
confer with Buyers regarding the Leased Employee's Services (as defined in
Section 5.2 below).
5.2 Services. Buyers and Sellers hereby covenant and agree that in
return for the fee provided for in Section 2 above, Sellers shall cause the
Leased Employees to devote their full time and efforts to the diligent and
faithful performance of such tasks as are beneficial to the transition and
ownership of the Business from Buyers to Sellers (the "Services").
6. Maintenance of Records.
6.1 Buyers and Sellers shall each have the following rights and
obligations with respect to the maintenance of records and the following rights
with respect to the inspection of the records maintained by the other:
(a) Buyers shall maintain accurate records of all hours worked by
each Leased Employee in such form as Sellers shall reasonably request and,
at such times as Sellers shall reasonably request, Buyers shall furnish
such records to Sellers.
(b) All business records and information relating to the business
activities of either Buyers or Sellers shall be the property of that party.
(c) Each of Buyers and Sellers shall safeguard all records
maintained by it pursuant to this Agreement for a period of six years, or
if longer, as required by applicable law.
(d) The parties shall give each other and their respective
counsel, auditors and other authorized representatives reasonable access to
each other's books and records relating to Leased Employees and Former
Leased Employees, including, without limitation, correspondence, accounting
records, personnel files, and legal complaints, upon reasonable notice and
during normal business hours, as may be necessary for the performance of
the respective duties and obligation hereunder; provided, however, that any
review of Sellers' books and records pursuant to this Section shall be
conducted in a manner as not to interfere unreasonably with the conduct of
the business of Sellers.
7. Force Majeure.
7.1 Neither Sellers nor Buyers shall be responsible to the other for
any delay in or failure of performance of its obligations under this Agreement
to the extent such delay or failure
-5-
is attributable to any cause beyond its reasonable control, including, without
limitation, any act of God, fire, accident, strike or other labor difficulties,
war, embargo or other governmental act, or riot that, in the case of Sellers,
prevents Sellers from providing Leased Employees under this Agreement, or, in
the case of Buyers, prevents Buyers from utilizing the services of Leased
Employees under this Agreement; provided that the party affected thereby gives
the other party prompt notice of the occurrence of any event which has caused or
is likely to cause any such delay or failure, setting forth its best estimate of
the length of any delay and any possibility that it will be unable to resume
performance; and provided further that said affected party shall use its
commercially reasonable efforts to expeditiously overcome the effects of that
event and resume performance or utilization.
8. Termination and Replacement.
8.1 Termination. This Agreement may be terminated:
(a) By either Sellers or Buyers upon not less than fifteen (15)
days' prior written notice to the other party in the event that such other
party has materially breached its obligations under this Agreement and has
failed or refused to remedy such breach within fifteen (15) days after
written demand therefor is given by the aggrieved party to the other or in
the event that such other party has materially breached the same obligation
under this Agreement more than once (regardless of whether such breach is
remedied);
(b) By either Sellers or Buyers upon written notice to the other
party, effective immediately, in the event the other party shall become the
subject (voluntarily or involuntarily) of any proceeding relating to
bankruptcy or insolvency, or make an assignment or other arrangement for
the benefit of its creditors, or be dissolved or liquidated (except as a
consequence of a merger, consolidation or other corporate reorganization
not involving the insolvency of such dissolved or liquidated party);
8.2 Obligations Upon Termination. Upon termination or expiration of
this Agreement, Buyers shall be liable to Sellers for all unpaid Reimbursable
Amounts attributable to any period(s) prior to the termination of this
Agreement.
9. Sellers Not Fiduciary.
9.1 Nothing set forth in this Agreement shall be deemed to constitute
Sellers a fiduciary of Buyers, nor shall Sellers have any liability to Buyers
with respect to the service of the Leased Employees provided under this
Agreement other than as expressly set forth in Section 4 above.
10. Limited Warranty; Limitation of Liability; Compliance with Employment Laws.
10.1 Warranties of Compliance with Employment Laws. As an inducement
to the parties to enter into this Agreement, Buyers and Sellers represent,
warrant and covenant to each other that they each will comply in all material
respects with all applicable federal, state and local laws, rules, regulations
and ordinances applicable to the Leased Employees and their services hereunder,
to the extent that such party exclusively controls a matter or supervises a
Leased Employee with respect to a matter, including without limitation, those
relating to
-6-
workers' compensation, labor and employment relations, employee health and
safety, and employment discrimination.
10.2 Limitation of Warranty; Limitation of Liability. Except as
expressly provided in Section 10.1, Leased Employees are provided under this
Agreement without warranty of any kind whatsoever. For breaches of warranty and
other breaches of contract with respect to this Agreement, Seller's liability
shall in no event exceed the total amount paid by Buyers under this Agreement.
Without limitation, Sellers SHALL NOT BE SUBJECT TO AND EXPRESSLY DISCLAIM: (A)
ANY OTHER OBLIGATIONS OR LIABILITIES ARISING OUT OF BREACH OF CONTRACT OR
WARRANTY; (B) ANY OBLIGATIONS OR LIABILITIES WHATSOEVER ARISING FROM TORT CLAIMS
(INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR ARISING UNDER OTHER THEORIES OF
LAW WITH RESPECT TO THE UNDERTAKINGS, ACTS OR OMISSIONS OF LEASED EMPLOYEES
HEREUNDER; AND (C) CONSEQUENTIAL, INCIDENTAL, INDIRECT OR CONTINGENT DAMAGES
WHATSOEVER WITH RESPECT TO THIS AGREEMENT, OR ANY UNDERTAKINGS, ACTS OR
OMISSIONS OF LEASED EMPLOYEES PROVIDED HEREUNDER.
11. Miscellaneous Provisions.
11.1 Confidentiality. Each of Sellers and Buyers (as appropriate, the
"Promisor") covenant and agree to and will cause their respective authorized
agents, representatives, affiliates, employees, officers, directors,
accountants, counsel and other designated representatives (collectively,
"Representatives") to (i) treat and hold as confidential (and not disclose or
provide access to any person to) all records, books, contracts, instruments,
computer data and other data and information (collectively, "Information")
concerning the other party (the "Promisee") or the Leased Employees in the
Promisor's possession or furnished by the Promisee or its Representatives
pursuant to this Agreement, (ii) in the event that Promisor or its
Representatives become legally compelled to disclose any such Information,
provide the Promisee with prompt written notice of such requirement so that the
Promisee may seek a protective order or other remedy or waive compliance with
this Section 11.1, and (iii) in the event that such protective order or other
remedy is not obtained, or the Promisee waives compliance with this Section
11.1, furnish only that portion of such Information which is legally required to
be provided and exercise Promisor's best efforts to obtain assurances that
confidential treatment will be accorded such Information; provided, however,
that this sentence shall not apply to any Information that, at the time of
disclosure, is available publicly and was not disclosed in breach of this
Agreement by such party or its Representatives; and provided further, however,
that the provisions of clauses (i) and (ii) above shall not preclude a party
from disclosing Information to its Representatives (provided that each such
Representative shall be advised of the confidential nature of such Information)
or from disclosing Information to or filing Information with any governmental
authority or agency with jurisdiction over such party. Each party agrees and
acknowledges that remedies at law for any breach of its obligations under this
Section 11.1 are inadequate and that in addition thereto the other party shall
be entitled to seek equitable relief, including injunction and specific
performance, in the event of any such breach, without the necessity of
demonstrating the inadequacy of monetary damages. The provisions of this Section
11.1 shall not apply to the extent any such Information is required to be
disclosed by applicable law.
-7-
11.2 Notices. All necessary notices, demands, requests and other
communications required or permitted to be given hereunder shall in every case
be in writing and shall be deemed duly given (a) when delivered personally, (b)
upon receipt or refusal of receipt, if sent by registered or certified mail, in
all such cases with postage prepaid, return receipt requested, or (c) the next
business day if delivered by a recognized overnight courier service, airbill
prepaid, designated for next business day delivery, to the parties at the
addresses as set forth below or at such other addresses as may be furnished in
writing:
If to Buyers: Xxxxx Xxxxxxxxx
Xxxxxx Food Service, Inc.
X.X. Xxx 0000
Xxxxx Xxxxxx, Xxxxxxxx 00000
and to: Xxxxx X. Xxxx
00000 Xxxx Xxxxxxxx Xxxxx
X.X. Xxx 000
Xxxxxx, Xxxxxxxx 00000-0000
With a copy to: Miller, Johnson, Xxxxx & Xxxxxxxxx, P.L.C.
000 Xxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
If to Sellers: Xxxxxx Xxxxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
With a copy to: Xxxxxx X. Xxxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
With a copy to: Xxx Xxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
With a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
And a copy to: Xxxxx & Xxxxxxx
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx XX
-8-
11.3 Jurisdiction.
(a) In the event any dispute arises out of this Agreement or any of
the transactions contemplated by this Agreement, each of the parties hereto
consents to submit itself to the personal jurisdiction of any federal court
in the state of Delaware and, in case such court refuses jurisdiction then
each of the parties consents to submit itself to the personal jurisdiction
of any state court in the state of Delaware. Each of the parties further
agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from such court, and
agrees that, except as permitted pursuant to this Section 11.3, it will not
bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any other court other than a federal
court in the state of Delaware.
(b) In the event the state court specified in Section 11.3(a) refuses
to exercise jurisdiction over the parties hereto or the subject matter at
issue, then with respect to any legal action or proceeding brought by any
of the Seller Parties against any of the Buyer Parties arising out of or
relating to this Agreement or any of the transactions contemplated by this
Agreement, each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of any federal court within the jurisdiction of the
United States District Court for the Western District of Michigan (and
each appellate court thereof) or any state court in the state of
Michigan;
(ii) agrees that any federal court within the jurisdiction of the
United States District Court for the Western District of Michigan or
any state court in the state of Michigan shall be deemed to be a
convenient forum; and
(iii) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any federal
court within the jurisdiction of the United States District Court for
the Western District of Michigan or any state court in the state of
Michigan, any claim that such party is not subject personally to the
jurisdiction of such court, that such legal proceeding has been
brought in an inconvenient forum, or that the venue of such proceeding
is improper.
(c) In the event the state court specified in Section 11.3(a) refuses
to exercise jurisdiction over the parties hereto or the subject matter at
issue, then with respect to any legal action or proceeding brought by any
of the Buyer Parties against any of the Seller Parties arising out of or
relating to this Agreement or any of the transactions contemplated by this
Agreement, each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of any federal court within the jurisdiction of the
United States
-0-
Xxxxxxxx Xxxxx for the Central District of California (and each
appellate court thereof) or any state court in the state of
California;
(ii) agrees that any federal court within the jurisdiction of the
United States District Court for the Central District of California or
any state court in the state of California shall be deemed to be a
convenient forum; and
(iii) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any federal
court within the jurisdiction of the United States District Court for
the Central District of California or any state court in the state of
California, any claim that such party is not subject personally to the
jurisdiction of such court, that such legal proceeding has been
brought in an inconvenient forum, or that the venue of such proceeding
is improper.
(d) The parties hereby waive any right to a jury trial.
11.4 Further Assurances. From time to time, at the request of the
other party hereto and at the expense of the party so requesting (unless the
requesting party is entitled to indemnification therefor under Section 4), each
of the parties hereto shall execute and deliver to such requesting party such
documents and take such other action as such requesting party may reasonably
request in order to consummate more effectively the transactions contemplated
hereby.
11.5 Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
11.6 Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the parties to be charged
with the amendment.
11.7 Assignments, Successors, and No Third-Party Rights. Neither party
may assign any of its rights or obligations under this Agreement without the
prior consent of the
-10-
other parties, except that GFS Holding may assign any of its rights under this
Agreement to any Affiliate of GFS Holding. Subject to the preceding sentence,
this Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give any
Person other than the parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
11.8 Severability. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
11.9 Section Headings, Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
11.10 Preamble; Recitals. The Recitals set forth in the Preamble
hereto are hereby incorporated and made a part of this Agreement.
11.11 Governing Law. This Agreement will be governed by the internal
laws of the State of Delaware without regard to conflicts of laws principles.
11.12 No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party hereto by virtue of having drafted this Agreement or otherwise.
11.13 Dispute Resolution. Except as hereinafter provided in this
Section 11.13 all claims, controversies, differences, or disputes between or
among any of the parties hereto arising from or relating to this Agreement,
including claims by one party that another party or parties hereto have failed
to perform any of their obligations hereunder (collectively, "Agreement
Disputes"), shall be resolved as follows:
(a) Facilitative Mediation. The parties to an Agreement Dispute
shall first attempt to resolve such Agreement Dispute by means of a
mediation conducted in the following manner. A party desiring mediation of
any Agreement Dispute shall give or shall have given a written notice, in
the manner set forth in Section 11.2 hereof (a "Dispute Notice"), to the
other party or parties setting forth the nature of the dispute and the
relief intended to be sought and shall submit such Agreement Dispute for
resolution by facilitative mediation in Chicago, Illinois, under the
Commercial Mediation Rules (but not otherwise under the auspices) of the
American Arbitration Association (the "AAA")
-11-
in effect on the date of this Agreement, unless the parties have agreed, in
writing, to resolve any such dispute by other means. Each party agrees that
it will submit to and shall not challenge or object to the jurisdiction
(either personal or subject matter) or the venue of such mediation in
Chicago, Illinois.
(b) Legal Proceedings. If any Agreement Dispute has not been
resolved by mediation as provided above within sixty (60) days after
submission thereof, then either party may commence a suit or legal action
or an action at equity to enforce its rights or the other party's
obligations or recover any damages arising from the other party's breach or
such other relief as may be appropriate under the circumstances.
(c) Attorney Fees and Other Costs. The prevailing party in any
mediation or any action or legal or other proceeding brought with respect
to an Agreement Dispute shall be entitled to recover the reasonable fees
and disbursements of its attorneys, accountants, and expert witnesses in
connection with any such mediation or any action or legal or other
proceeding brought in accordance with the provisions hereof.
(d) Exceptions for Equitable Relief. Notwithstanding the
foregoing or anything to the contrary contained elsewhere in this
Agreement, a party may bring a proceeding against any other party hereto
for specific performance or injunctive or other forms or equitable relief
in the state or federal courts pursuant to the procedures set forth in
Section 11.3 without having to submit the matter or Agreement Dispute in
question to mediation as hereinabove set forth, provided, however, that
such party shall not seek any monetary award or relief in such action or
proceeding unless its failure to do so would prejudice such party's rights
or ability to seek such monetary award or relief in another action or
proceeding.
11.14 Counterparts. This Agreement may be executed in two or more
counterparts, each or which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
IN WITNESS WHEREOF Sellers and Buyers have executed this Agreement as
of the date set forth in the first paragraph hereof.
"SFI"
SMART & FINAL INC.
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
Its:
-------------------------------------
-12-
"AFD"
AMERICAN FOODSERVICE DISTRIBUTORS
a California corporation
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
Its:
-------------------------------------
"SF Stores"
SMART & FINAL STORES CORPORATION
a California corporation
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
Its:
-------------------------------------
"GFS Holding"
GFS HOLDING, INC.
a Delaware corporation
By: /s/ Xxxxx X. Xxxx
--------------------------------------
Its:
-------------------------------------
"Xxxxx Xxx"
XXXXX XXX COMPANY
a Florida corporation
By: /s/ Xxxxx X. Xxxx
--------------------------------------
Its:
-------------------------------------
-13-
"GFS Stores"
GFS STORES, LLC
a Delaware limited liability company
By: GFS HOLDING, INC.
Its: Manager
By: /s/ Xxxxx X. Xxxx
--------------------------------------
Its:
-------------------------------------
"GFS Orlando"
GFS Orlando, LLC
a Delaware limited liability company
By: GFS HOLDING, INC.
Its: Manager
By: /s/ Xxxxx X. Xxxx
--------------------------------------
Its:
-------------------------------------
-14-
EXHIBIT "A"
TO
EMPLOYEE LEASING AGREEMENT
LEASED EMPLOYEES LOCATION
---------------- --------
Xxxx Xxxxxxxx Miami
Xxxxxxx Xxxxxx Miami
A-1
XXXXX & LARDNER
0000 XXXXXXX XXXX XXXX, XXXXX 0000
XXX XXXXXXX, XXXXXXXXXX 00000-0000
000.000.0000 TEL
000.000.0000 FAX
xxx.xxxxxxxxxxxx.xxx
WRITER'S DIRECT LINE
310.277.2223
CLIENT/MATTER NUMBER
024041-0111
September 7, 2003
GFS Holding, Inc.
c/o Xxxxx Xxxxxxxxx
Xxxxxx Food Service, Inc.
X.X. Xxx 0000
Xxxxx Xxxxxx, Xxxxxxxx 00000
Re: Asset Purchase Agreement Dated as of August 6, 2003
Ladies and Gentlemen:
We have acted as counsel for Smart & Final Inc., a Delaware
corporation ("Smart & Final"), Smart & Final Stores Corporation, a California
corporation ("SF Stores") and American Foodservice Distributors, a California
corporation ("American Foodservice" and, together with Smart & Final and SF
Stores, the "Seller Parties"), in connection with the transactions pursuant to
and referenced in the Asset Purchase Agreement (the "Asset Purchase Agreement")
dated as of August 6, 2003 and executed by and among the Seller Parties and GFS
Holding, Inc., a Delaware corporation ("GFS Holding"), GFS Orlando, LLC, a
Delaware limited liability company ("GFS Orlando") and GFS Stores, LLC, a
Delaware limited liability company ("GFS Stores" and, together with GFS Orlando
and GFS Holding, the "Buyer Parties"). We are rendering this opinion to you
pursuant to Section 1.9(a)(xii) of the Asset Purchase Agreement. Capitalized
terms used herein and not otherwise defined shall have the meanings ascribed to
such terms in the Asset Purchase Agreement.
In our capacity as counsel to the Seller Parties, we have examined
originals, or copies identified to our satisfaction as being true copies of such
corporate records, agreements, instruments and other documents of the Seller
Parties as in our judgment are necessary or appropriate to enable us to render
the opinions set forth herein. These records, agreements, instruments and
documents include, without limitation:
a. The Asset Purchase Agreement, and the Schedules thereto;
b. An Escrow Agreement (the "Escrow Agreement") dated September ,
---
2003 and executed by and among the Seller Parties, the Buyer Parties, Xxxxx
Xxx Company, a Florida corporation ("Xxxxx Xxx") and Xxxxx Fargo Bank,
N.A., as Escrow Agent;
BRUSSELS DETROIT MILWAUKEE SAN DIEGO TAMPA
CHICAGO JACKSONVILLE ORLANDO SAN DIEGO/DEL MAR TOKYO
DENVER LOS ANGELES SACRAMENTO SAN FRANCISCO WASHINGTON, D.C. 015.594824.5
MADISON TALLAHASSEE XXXX XXXX XXXXX
XXXXX & XXXXXXX
XXXXXXXXX XX LAW
GFS Holding, Inc.
September 7, 2003
Page 2
c. An Assignment and Assumption Agreement (the "Assumption Agreement")
dated as of September , 2003 and executed by and among Smart & Final, SF
---
Stores and GFS Stores;
d. A Noncompetition Agreement (the "Noncompetition Agreement") dated
September , 2003 and executed by and among the Seller Parties, the Buyer
---
Parties and Xxxxx Xxx;
e. A Software License, Use and Support Agreement (the "Software
License Agreement") dated as of September , 2003 and executed by and
---
among the Seller Parties, the Buyer Parties and Xxxxx Xxx;
f. A Tradename and Trademark License Agreement (the "Trademark License
Agreement") dated as of September , 2003 and executed by and among the
---
Seller Parties, the Buyer Parties and Xxxxx Xxx;
g. A Transitional Services Agreement (the "Transitional Services
Agreement") dated as of September , 2003 and executed by and among the
---
Seller Parties, the Buyer Parties and Xxxxx Xxx;
h. An Employee Leasing Agreement (the "Employee Leasing Agreement")
dated as of September , 2003 and executed by and among the Seller
---
Parties, the Buyer Parties and Xxxxx Xxx;
i. A Real Estate Purchase Agreement (the "Real Estate Purchase
Agreement") dated as of September , 2003 and executed by and between
--
Smart & Final and GFS Marketplace Realty Four, LLC, a Delaware limited
liability company, with respect to the Fort Lauderdale Store;
j. A Vendor Contract Participation Agreement (the "Vendor Contract
Participation Agreement") dated as of September , 2003 and executed and
--
among the Seller Parties, the Buyer Parties and Xxxxx Xxx;
k. Amendment Xx. 0 ("Xxxxxxxxx Xx. 0 to the Lease Agreement"), dated
, 2003, to that certain Lease Agreement (and related documents)
----- ---
dated as of November 30, 2001 between Xxxxx Fargo Bank, NW, N.A., as the
Owner Trustee and Lessor and Smart & Final Inc., as Lessee, as previously
amended by amendments Nos. 1-4 thereto dated June 4, 2002, February 14,
2003, June 1, 2003 and July 11, 2003, respectively;
l. Amendment Xx. 0 ("Xxxxxxxxx Xx. 0 to the Credit Agreement"), dated
, 2003, to that certain Credit Agreement (and related documents),
------ ---
dated as of November 30, 2001, among Smart & Final Inc., as Borrower, and
various parties, as Lenders, BNP Paribas, as Administrative Agent and Lead
Arranger, Xxxxxx Trust & Savings Bank, as Syndication Agent, and
Cooperative Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland",
as Documentation Agent, as previously amended by amendments Nos. 0-0
XXXXX & XXXXXXX
XXXXXXXXX XX LAW
GFS Holding, Inc.
September 7, 2003
Page 3
thereto dated June 4, 2002, February 18, 2003, June 1, 2003 and July 11,
2003, respectively (referred to along with the Escrow Agreement, the
Assumption Agreement, the Noncompetition Agreement, the Software License
Agreement, the Trademark License Agreement, the Transitional Services
Agreement, the Employee Leasing Agreement, the Real Estate Purchase
Agreement, the Vendor Contract Participation Agreement, Amendment No. 5 to
the Credit Agreement, and Amendment No. 5 to the Lease Agreement,
collectively, as the "Related Agreements");
m. The Certificate of Incorporation of Smart & Final, certified on
August 27, 2003 by the Delaware Secretary of State;
n. The Articles of Incorporation of SF Stores, certified on August 29,
2003 by the California Secretary of State;
o. The Articles of Incorporation of American Foodservice, certified on
August 29, 2003 by the California Secretary of State;
p. The Bylaws of Smart & Final, certified by the Secretary or
Assistant Secretary of Smart & Final;
q. The Bylaws of SF Stores, certified by the Secretary or Assistant
Secretary of SF Stores;
r. The Bylaws of American Foodservice, certified by the Secretary or
Assistant Secretary of American Foodservice;
s. A Certificate of Good Standing as to Smart & Final, certified on
August 21, 2003 by the Delaware Secretary of State;
t. A Certificate of Good Standing as to Smart & Final, certified on
August 29, 2003 by the Florida Secretary of State;
u. A Certificate of Status as to SF Stores, certified on August 23,
2003 by the California Secretary of State;
v. A Certificate of Good Standing as to SF Stores, certified on August
29, 2003 by the Florida Secretary of State;
w. A Certificate of Status as to American Foodservice, certified on
September 2, 2003 by the California Secretary of State;
x. A Certificate of Good Standing as to American Foodservice,
certified on August 29, 2003 by the Florida Secretary of State;
XXXXX & LARDNER
ATTORNEYS AT LAW
GFS Holding, Inc.
September 7, 2003
Page 4
y. The resolutions of the Board of Directors of Smart & Final with
respect to the Asset Purchase Agreement and the Related Agreements,
certified by the Secretary or Assistant Secretary of Smart & Final;
z. The resolutions of the Board of Directors of SF Stores with respect
to the Asset Purchase Agreement and the Related Agreements, certified by
the Secretary or Assistant Secretary of SF Stores;
aa. The resolutions of the Board of Directors of American Foodservice
with respect to the Asset Purchase Agreement and the Related Agreements,
certified by the Secretary or Assistant Secretary of American Foodservice;
bb. The Officer's Certificate of Smart & Final delivered to us in
connection with this opinion, a copy of which is attached hereto as Exhibit
"A";
cc. The Officer's Certificate of SF Stores delivered to us in
connection with this opinion, a copy of which is attached hereto as Exhibit
"B"; and
dd. The Officer's Certificate of American Foodservice delivered to us
in connection with this opinion, a copy of which is attached hereto as
Exhibit "C".
For the purposes of our opinions, we have assumed the authenticity of
all documents submitted to us as originals, the conformity to the originals of
all documents submitted to us as copies, and the authenticity of the originals
of all documents submitted to us as copies. We have also assumed the genuineness
of the signatures of persons signing all documents in connection with which
these opinions are rendered. We have further assumed: (i) the authority of such
persons signing all documents on behalf of the parties thereto other than the
Seller Parties; (ii) the due authorization of all documents by the parties
thereto other than the Seller Parties; (iii) the due execution and delivery of
all documents by the parties thereto other than the Seller Parties; (iv) the
absence of duress, fraud, undue influence, or mutual mistake of material fact on
the part of the parties; (v) that the choice of law provisions in the Asset
Purchase Agreement and the Related Agreements were not made with a view towards
evading otherwise applicable law or the consequences thereof; and (vi) that the
application of Delaware law to the Asset Purchase Agreement and the Related
Agreements would not be contrary to a fundamental public policy of a
jurisdiction that has a materially greater interest than the State of Delaware
in the determination of a particular question at issue. As to any facts material
to the opinions set forth herein, which we have not independently established or
verified, we have relied solely upon the representations and warranties of the
officers of the Seller Parties, the representations and warranties of the Seller
Parties contained in the Asset Purchase Agreement and the Related Agreements,
and upon the Officer's Certificates from each of the Seller Parties, but without
any further independent investigation. In addition, we have obtained and relied
upon such certificates from public officials as we have deemed necessary. We
have assumed that such representations and warranties, and such certifications,
are true, correct and complete.
XXXXX & XXXXXXX
ATTORNEYS AT LAW
GFS Holding, Inc.
September 7, 2003
Page 5
As used in this opinion, the expression "to our knowledge" with
reference to matters of fact: (i) means that, after an examination of documents
made available to us by or on behalf of the Seller Parties and based on the
representations and warranties of the officers of the Seller Parties, the
representations and warranties of the Seller Parties contained in the Asset
Purchase Agreement and the Related Agreements, and upon the Officer's
Certificates from each of the Seller Parties, but without any further
independent investigation, we find no reason to believe that the opinions set
forth herein are factually incorrect; and (ii) refers to the current actual
knowledge of the attorneys of this law firm who have worked on matters for the
Seller Parties in connection with the consummation of the transactions
contemplated by the Asset Purchase Agreement and the Related Agreements. Except
to the extent expressly set forth hereinabove, we have not undertaken any
independent investigation to determine the existence or absence of any fact, and
no inference as to our knowledge of the existence or absence of any fact should
be drawn from our representation of the Seller Parties or the rendering of the
opinions set forth herein.
In addition to the foregoing, in rendering the opinions set forth
herein, we note that the Asset Purchase Agreement and the Related Agreements
state that they are to be governed by Delaware law. We advise you that we are
not admitted to practice in that state, although we are familiar with the
corporate laws of that state.
Based solely upon the foregoing, and subject to the qualifications and
exceptions heretofore and hereinafter set forth, we are of the opinion that:
1. Smart & Final is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, and is qualified to
transact business and is in corporate good standing under the laws of the State
of Florida, and has all corporate power required to carry on its business as now
conducted and as proposed to be conducted and to execute, deliver and perform
its obligations under the Asset Purchase Agreement and the Related Agreements.
2. SF Stores is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of California, and is qualified to
transact business and is in corporate good standing under the laws of the State
of Florida, and has all corporate power required to carry on its business as now
conducted and as proposed to be conducted and to execute, deliver and perform
its obligations under the Asset Purchase Agreement and the Related Agreements.
3. American Foodservice is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of California, and is
qualified to transact business and is in corporate good standing under the laws
of the State of Florida, and has all corporate power required to carry on its
business as now conducted and as proposed to be conducted and to execute,
deliver and perform its obligations under the Asset Purchase Agreement and the
Related Agreements.
4. The execution, delivery and performance by the Seller Parties of the
Asset Purchase Agreement and the Related Agreements have been duly authorized by
all necessary corporate action, and do not violate or contravene the Certificate
of Incorporation or Articles of Incorporation, as applicable, or the Bylaws of
the Seller Parties. The Asset Purchase Agreement and the Related Agreements have
been duly executed by and delivered on behalf of the Seller Parties.
XXXXX & LARDNER
ATTORNEYS AT LAW
GFS Holding, Inc.
September 7, 2003
Page 6
5. The Asset Purchase Agreement and the Related Agreements have been duly
executed and delivered and constitute the legally valid and binding obligation
of the Seller Parties and, other than the Noncompetition Agreement, are
enforceable against the Seller Parties in accordance with their terms, except as
enforceability may be limited by any bankruptcy, insolvency, reorganization,
moratorium or other laws or equitable principles affecting creditors' rights
generally, and except as provided further below in this letter.
6. Except as disclosed in the Schedules to the Asset Purchase Agreement,
the execution, delivery and performance by the Seller Parties of the Asset
Purchase Agreement and the Related Agreements: (i) requires no approval, filing
with, authorization, consent, adjudication or order of any governmental
authority which has not been obtained; (ii) does not violate any current law or
regulation of the States of California or Delaware, or the federal laws of the
United States of America binding on the Seller Parties, which a lawyer, using
customary professional diligence, would reasonably recognize as applicable to
the Seller Parties and the transactions contemplated by the Asset Purchase
Agreement and the Related Agreements; (iii) to the best of our knowledge, does
not violate any order, writ, judgment, injunction, decree or award binding on
the Seller Parties; and (iv) subject to the exceptions set forth below, does not
violate or contravene or constitute a default under any material agreement
binding upon the Seller Parties.
The foregoing opinions are subject to the following additional
exceptions assumptions and qualifications:
1. We express no opinion as to the applicability of, compliance with, or
effect of:
a. any principles of public policy which may limit enforceability of
the Asset Purchase Agreement or any of the Related Agreements;
b. the effect of bankruptcy, insolvency, reorganization, fraudulent
transfer, fraudulent conveyance, moratorium or other similar laws or
judicially developed doctrine (such as substantive consolidation or
equitable subordination) now or hereafter in effect relating to or
affecting the rights and remedies of creditors generally;
c. the effect of procedural due process, general principles of equity
including, without limitation, principles of commercial reasonableness,
good faith and fair dealing, whether such enforcement is considered in a
proceeding in equity or at law, and the discretion of the court before
which any proceeding therefor may be brought, including the court's failure
or refusal to enforce provisions of agreements or documents if enforcement
thereof is based upon defaults or breaches which are immaterial to the
ultimate performance contemplated thereby or for other reasons deemed
equitable by the court;
d. the availability of the remedy of specific performance, or of any
other equitable remedy or relief to enforce any right under any agreement
or document; and
XXXXX & XXXXXXX
ATTORNEYS AT LAW
GFS Holding, Inc.
September 7, 2003
Page 7
e. the enforceability, in any particular circumstance, of any
provision of the Asset Purchase Agreement or the Related Agreements which
provides for the severability of illegal or unenforceable provisions.
For purposes of the opinions in paragraphs 1, 2 and 3 above, we have
relied exclusively upon a certificate issued by a governmental authority in each
relevant jurisdiction, and statements and representations of officers of the
Seller Parties. Such opinions are not intended to provide any conclusion or
assurance beyond that conveyed by such certificate. We have assumed without
investigation that there has been no relevant change or development between the
date of such certificate and the date of this letter.
In addition, in rendering the opinions set forth above, we have
assumed that the transactions described in or contemplated by the Asset Purchase
Agreement have been or will be consummated consistent with the descriptions of
such transactions as set forth in the Asset Purchase Agreement and the Related
Agreements as provided to us, and in accordance with the operative documents
relating to such transactions.
The opinions set forth above are based on the laws of the States of
California and Delaware only as they exist as of the date of this letter, and we
assume no obligation to modify, supplement or update this letter to reflect any
facts or circumstances which may hereafter come to our attention or on account
of changes in such laws or court decisions which may hereafter occur.
Furthermore, we advise you that we are not admitted to practice in the State of
Delaware. As to matters of Delaware law set forth in this letter, we advise you
that, with your permission, we have relied on the opinion of The Bayard Firm.
This opinion is expressly limited to the matters set forth above and
we render no opinion, whether by implication or otherwise, as to any other
matter relating to the Seller Parties or to any investment therein, or under any
other law.
This opinion is solely for your benefit and, without our prior written
consent, shall not be quoted in whole or in part, summarized or otherwise
referred to, relied upon or filed with or supplied to any other person or
entity.
Very truly yours,
XXXXX & XXXXXXX
EXECUTION VERSION
AGREEMENT FOR PURCHASE AND SALE OF REAL ESTATE
THIS AGREEMENT FOR PURCHASE AND SALE OF REAL ESTATE (this "Agreement")
is made this day of September 2003, between SMART & FINAL, INC., a
------
Delaware corporation, of 000 Xxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx 00000 (the
"Seller") and GFS MARKETPLACE REALTY FOUR, LLC, a Delaware limited liability
company, of 000 - 00xx Xxxxxx, X.X., Xxxxx Xxxxxx, Xxxxxxxx 00000 (the "Buyer").
RECITALS:
A. Seller, Smart and Final Stores Corporation ("SF Stores"), and
American Foodservice Distributors have heretofore entered into that certain
Asset Purchase Agreement dated as of August 6, 2003 (the "APA") with GFS
Holding, Inc., GFS Orlando, LLC, and GFS Stores, LLC ("GFS Stores"), pursuant to
which, among other things, GFS Stores is acquiring certain assets used by SF
Stores in the retail store business heretofore operated by SF Stores in the
State of Florida, including, without limitation, the assets used at the store
located at the Subject Property (as defined in Section 1(b) below).
B. Seller currently leases the Subject Property from Xxxxx Fargo Bank
Northwest, National Association, not in its individual capacity but solely as
owner trustee under the S&F Trust 1998-1 (the "Owner Trustee") pursuant to that
certain Lease Agreement dated as of November 30, 2001 (as amended and
supplemented to date, the "Synthetic Lease," and together with the Participation
Agreement, the Trust Agreement, the Credit Agreement, and the Mortgage
Instruments (as each such term is defined in Appendix A to the Participation
Agreement) relating to the Subject Property, referred to herein collectively as
the "Synthetic Lease Documents"). A copy of each of the Synthetic Lease
Documents, redacted to preserve the confidentiality of the financial terms of
the transaction contemplated thereby, has previously been provided by Seller to
Buyer.
C. This Agreement is being entered into pursuant to and in
contemplation of the consummation of the transactions contemplated by the APA.
D. Seller desires to sell to Buyer, and Buyer desires to purchase from
Seller, the Subject Property, all on the terms and subject to the conditions set
forth below.
IN CONSIDERATION OF THE MUTUAL COVENANTS CONTAINED IN THIS AGREEMENT,
THE PARTIES AGREE AS FOLLOWS:
1
1. Property Included in Purchase and Sale Agreement.
(a) Seller agrees to sell to Buyer, and Buyer agrees to purchase from
Seller, subject to the terms of this Agreement, the real property, improvements,
fixtures and appurtenances located at 0000 X. Xxxxxxx Xxxxxxx, Xx. Xxxxxxxxxx,
Xxxxxxx, which property is more particularly described on attached Exhibit A
(the "Real Property"). The legal description for the Real Property shall be
subject to verification by Buyer prior to Closing (as defined in Section 13 of
this Agreement) based on the survey and title commitment to be provided by
Seller under this Agreement.
(b) Also included in this sale at no additional cost to Buyer are the
items of equipment and other personal property associated with the Real Property
and leased to Seller pursuant to the Synthetic Lease (the "Personal Property").
For the avoidance of doubt, Seller and Buyer expressly acknowledge and agree
that the Xxxxxx satellite system currently installed at the Real Property is not
leased to Seller pursuant to the Synthetic Lease and is not included within the
Personal Property to be conveyed to Buyer pursuant to this Agreement. The Real
Property and the Personal Property are collectively referred to in this
Agreement as the "Subject Property."
(c) For the avoidance of doubt, Seller and Buyer mutually acknowledge
and agree that the Subject Property shall include all improvements located on
the Real Property, all fixtures affixed to such improvements (including, without
limitation, all shelving, racks and refrigeration units or equipment, but not
including the Xxxxxx satellite system referenced above), all beneficial
easements, including, without limitation, easements relating to ingress and
egress, all rights, permits, licenses and appurtenances pertaining to the Real
Property, if any, and all of Seller's right, title and interest in all public
ways adjoining the same.
2. Purchase Price. The purchase price for the Subject Property shall
be the sum of Three Million One Hundred Thousand Dollars ($3,100,000.00) (the
"Purchase Price").
3. Payment of Purchase Price. The Purchase Price shall be paid by
Buyer at Closing in the form of cashier's check or bank money order or by wire
transfer of immediately available funds.
4. Taxes and Assessment; Utilities and Rents.
(a) Seller shall assume and pay all real estate and personal property
taxes ("Taxes") on the Subject Property which are billed or become due and
payable on or before the Closing Date (as defined in Section 13 of this
Agreement) and all outstanding special assessments, including any certified
municipal or county special assessments, which have been levied or assessed or
which are a lien against the Subject Property as of the Closing Date whether due
or not. All Taxes coming due and payable during the calendar year in which the
Closing occurs shall be prorated between Buyer and Seller as of the Closing Date
with the Seller being responsible for that portion of such Taxes allocable to
the period from January 1 of the year of Closing to the Closing Date
2
and the Buyer being responsible for the balance of such Taxes. If the precise
amount of such Taxes is not known as of the Closing Date, such Taxes shall be
estimated based upon the best available information. Notwithstanding the
foregoing provisions of this Section 4(a), Seller and Buyer expressly
acknowledge and agree that, as specified in Section 13, Buyer shall be solely
responsible for paying any and all documentary stamps/transfer taxes and
surtaxes which are payable upon the recording of the deed as to the conveyance
to Buyer only.
(b) All bills for utility services to the Subject Property shall be
paid by Seller up to the Closing Date. Any prepaid rents and other amounts paid
under any written and oral leases covering all or any portion of the Subject
Property (the "Leases") shall be prorated to the Closing Date. All claims for
unpaid rent shall be assigned to Buyer without additional consideration.
5. Conveyance of Title; Indemnity by Seller.
(a) Fee simple title to the Subject Property shall be conveyed to
Buyer at Closing pursuant to a deed direct from the Owner Trustee, which deed,
Buyer hereby expressly acknowledges and agrees, may take the form of a quitclaim
deed so long as such quitclaim deed is satisfactory to the Title Company (as
defined in Section 6 below) for purposes of issuing the title insurance policy
referenced therein. Seller hereby acknowledges and agrees that, if such
quitclaim deed is not satisfactory to the Title Company for such purpose, then
Seller shall either cause the Owner Trustee to convey title to Buyer pursuant to
a Special Warranty Deed (as commonly known in Florida real estate transactions),
or shall procure and obtain such other instruments and documents as may
reasonably be required by the Title Company in order to issue the title
insurance policy referenced in Section 6 on the basis of the quitclaim deed from
the Owner Trustee.
(b) Subject to and expressly conditioned upon the occurrence of the
Closing, Seller hereby expressly represents and warrants to Buyer that title to
the Subject Property conveyed by the Owner Trustee pursuant to any quitclaim
deed delivered by the Owner Trustee to Buyer at the Closing will be free and
clear of any and all liens, encumbrances, security interests, easements,
restrictions and rights of third parties created by, through or under either
Seller or the Owner Trustee, other than Permitted Encumbrances (as defined
below), and Seller further undertakes and agrees to defend such title against
all persons claiming by, through or under either Seller or the Owner Trustee.
For purposes of this Section 5(b) and all other purposes of this Agreement,
"Permitted Encumbrances" shall mean and include any and all liens, encumbrances,
security interests, easements, restrictions and rights of third parties
whatsoever that would not materially and significantly impair Buyer's functional
use of the Subject Property for the purposes for which it is currently being
used, including without limitation, all such liens, encumbrances, security
interests, easements, restrictions and rights of third parties which are
specifically identified in this Agreement as constituting "Permitted
Encumbrances."
(c) Seller represents and warrants that no work or materials have been
supplied to or incorporated into the Subject Property (other than routine
maintenance and
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repairs made in the ordinary course of business) which could give rise to a lien
of any kind prior to the date of this Agreement, and that no such work or
materials will be supplied to or incorporated into the Subject Property prior to
surrender of possession to Buyer which have not been paid for in full or which
will not be paid in the ordinary course of business. For the avoidance of doubt,
Seller expressly acknowledges and agrees that it will pay in full all costs
associated with any work performed on or with respect to the Subject Property
prior to the Closing in the ordinary course of business (it being expressly
understood by both parties that such payments may be made after the Closing).
Seller shall provide the following affidavits to the Title Company that issues
the commitment referenced in Section 6:
(i) Seller's Affidavit. An affidavit from Seller attesting that:
(a) no individual, entity or governmental authority (except as to work
performed at the direction of the Buyer) has any claim against the Subject
Property under applicable construction lien laws; (b) no individual, entity
or governmental authority is either in possession of the Subject Property
or has a possessory interest or claim in the Subject Property; and (c) no
improvements to the Subject Property have been made (except as to work
performed at the direction of Buyer) for which payment has not been made,
and (d) containing information necessary to enable the Title Company to
delete exceptions to the title commitment for matters appearing during the
so-called "gap" period and for parties in possession and boundary disputes.
(ii) FIRPTA. A Non-Foreign Transferor Affidavit in accordance
with Section 1445 of the Internal Revenue Code of 1986, as amended (the
"Code").
6. Title Insurance. Seller shall furnish Buyer at Seller's expense an
ALTA owner's title insurance policy issued by Chicago Title Insurance Company
(the "Title Company") covering the Real Property in the amount of the Purchase
Price and insuring good and marketable title to the Real Property and all
beneficial easements, subject only to the Permitted Encumbrances. Such policy
shall have the standard exceptions for gap period, the rights of parties in
possession, matters discoverable by survey, and taxes and assessments other than
for the year of the Closing and thereafter deleted. The commitment for such
policy shall be delivered to Buyer as soon as reasonably practicable but in no
event later than ten (10) days after the execution of this Agreement. Seller
shall furnish Buyer with a "marked up" title insurance commitment conforming to
the standards specified in this Section 6 and Section 8 below at the Closing.
7. Survey; Architectural and Engineering Drawings and Reports; Service
Contracts.
(a) As soon as reasonably possible and in no event later than fifteen
(15) days after the execution of this Agreement, Seller shall provide to Buyer,
at Seller's expense, with a survey of the Real Property showing the area,
dimensions and location of the Real Property to the nearest monuments, streets,
the location of all improvements and
4
encroachments, and the location of all recorded easements upon or appurtenant to
the Real Property, which survey shall be subject to Buyer's approval and shall:
(i) prepared by a Florida licensed surveyor. The survey must meet
or exceed the minimum standards established under Chapter 61G17 of the
Florida Administrative Code and must be certified by the surveyor to Buyer,
Seller and the Title Company;
(ii) show the size, location and type of any and all buildings,
structures and improvements on the Real Property;
(iii) show that there are no rights-of-way over or encroachments
by any buildings, structures or improvements located on adjacent property
onto or uses affecting, the Real Property or easement areas on the Real
Property; and
(iv) confirm that the legal description of the Real Property as
set forth in the title commitment is exactly the same as the legal
description set forth in the survey.
(b) Buyer's obligation to close this transaction is contingent upon
the Real Property being free from all encroachments and other survey defects
that would materially and significantly impair Buyer's functional use of the
Subject Property for the purposes for which it is currently being used. As soon
as reasonably practicable and in no event later than ten (10) days after the
execution of this Agreement, Seller shall also provide Buyer with copies of: (i)
all existing architectural and engineering drawings and reports concerning the
Real Property currently in Seller's possession or under Seller's control; and
(ii) all service contracts for all or any portion of the Subject Property, each
of which is listed in Exhibit B attached hereto (the "Contracts").
8. Correction of Title or Survey Defects. If the title insurance
commitment or survey discloses any title or survey defects that would materially
and significantly impair Buyer's functional use of the Subject Property for the
purposes for which it is currently being used, Buyer shall notify Seller of
Buyer's objections to the defects within ten (10) days following Buyer's receipt
of such title insurance commitment or survey, as the case may be, and Seller
shall be obligated, as of the Closing, to discharge or obtain title insurance
coverage over any such liens, encumbrances, or mortgages that may be discharged
by the payment of money. If Seller is unable to cure any title or survey defects
that would materially and significantly impair Buyer's functional use of the
Subject Property for the purposes for which it is currently being used, Buyer
may, at its sole option, elect to: (a) terminate its obligation to purchase the
Subject Property and have no further obligation or liability under this
Agreement; or (b) waive any and all such defects and proceed to close this
transaction. For the avoidance of doubt, Seller and Buyer expressly acknowledge
and agree that (i) any title or survey defects that would not materially and
significantly impair Buyer's functional use of the Subject Property for the
purposes for which it is currently being used shall be deemed "Permitted
Encumbrances" for all purposes of this Agreement, (ii) Seller shall have no
obligation whatsoever to cure any such Permitted Encumbrances (except that
Seller
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hereby agrees to cure such Permitted Encumbrances, if any, which may be cured at
no cost whatsoever to Seller), and (iii) Buyer shall be obligated to purchase
the Subject Property and consummate the Closing notwithstanding the occurrence
or existence of any such Permitted Encumbrances.
9. Physical Inspection of Subject Property; Environmental Assessment.
(a) For a period of twenty (20) days after the execution of the APA
(the "Inspection Period"), Buyer shall have the right to further inspect the
Subject Property, to determine its physical characteristics and suitability for
its use by Buyer. For this purpose, such inspections, investigations,
appraisals, tests and determinations of the Subject Property during the
Inspection Period shall include, but shall not be limited to, inquiring as to
the existence of utility services, public services and access; review of any
Leases relating to the Subject Property; review of the blueprints and "as built"
for the improvements on the Subject Property; insuring compliance as to
applicable zoning ordinances, use regulations and business codes; conducting
soil tests of the Real Property, borings and other engineering and architectural
tests; the environmental conditions which exist at the Real Property (including,
if desired by Buyer, a Phase I and Phase II environmental assessment and a
baseline environmental assessment) and the Real Property's compliance with all
applicable state and federal environmental laws and regulations; and determining
the availability of any governmental approvals or permits. Buyer's obligation to
close this transaction is contingent upon Buyer's satisfaction with its
inspection findings.
(b) Buyer shall provide reasonable prior notice to Seller of any
proposed inspection or testing by Buyer or any Representative (as defined in the
APA) of Buyer pursuant to this Section 9 and shall schedule such inspection or
testing so as to not disrupt the normal business operations of Seller at the
Real Property. Seller and its agents and employees shall fully cooperate with
Buyer and shall provide Buyer with such information and records as Buyer may
reasonably request concerning the Real Property. Costs and expenses incurred in
connection with Buyer's inspection and testing of the Real Property shall be
paid by Buyer. Upon completion of its inspections, Buyer shall repair and
restore any damage to the Subject Property caused by such inspections and
testing.
(c) Buyer hereby expressly agrees to indemnify and hold Seller
harmless for any and all Losses (as defined in Section 17(a) below) arising out
of any damage to property or any personal injury or death suffered by any person
(including, but not limited to, Buyer or any Representative (as defined in the
APA) of Buyer) resulting from or arising out of the negligence of Buyer or any
Representative of Buyer in connection with any of the activities contemplated by
this Section 9.
10. Representations and Warranties of Seller. In addition to any other
representations and warranties contained in this Agreement, Seller makes the
following representations and warranties, each of which is expressly qualified
by and subject to any and all disclosures made by Seller pursuant to the APA,
and each of which,
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as so qualified and except as otherwise specified below, shall be true both as
of the date of this Agreement and as of the Closing Date, and each of which
shall survive for two years following the Closing (except that the
representations in subsections (a), (b) and (c) (but solely to the extent
relating to notice of any public health or environmental law or regulation)
below shall survive for one month after the maximum period permitted by law):
(a) To Seller's Knowledge (as defined in Section 29 of this
Agreement), or except as would not be reasonably likely to have a material
adverse effect on the value or the use of the Subject Property by Buyer for the
purposes for which the Subject Property is currently being used, or except as
set forth on Schedule 2.19 to the APA, none of the Seller Parties (as defined in
the APA) has released any Hazardous Substances in, under or upon the Subject
Property except in compliance with all applicable Environmental Laws (as defined
in the APA).
(b) To Seller's Knowledge or except as set forth on Schedule 2.19 to
the APA, there are no underground storage tanks on the Real Property, and, to
Seller's Knowledge, or except as would not be reasonably likely to have a
material adverse effect on the value or the use of the Subject Property by Buyer
for the purposes for which the Subject Property is currently being used, or
except as set forth on Schedule 2.19 to the APA, no friable asbestos is present
on or in the Subject Property.
(c) Except as set forth on Schedules 2.6 and 2.19 to the APA and
except for any non-compliance that would not be reasonably likely to have a
material adverse effect on the value or the use of the Subject Property by Buyer
for the purposes for which the Subject Property is currently being used, Seller
has not received any written notice or communication, and to Seller's Knowledge,
Seller has not received any other notice or communication, from any Governmental
Body (as defined in the APA) asserting that the Subject Property is not in
compliance with any applicable zoning, building, public health or environmental
law or regulation, or any other law or regulation of any Governmental Body
having jurisdiction over the Subject Property, with the exception of notices of
violation or alleged liability that have been fully resolved with no future
obligations on the Retail Store Business (as defined in the APA), Buyer, Seller
or SF Stores.
(d) To Seller's Knowledge, there are no pending or proposed special
assessments or condemnation proceedings affecting or which may affect the
Subject Property or any part of the Subject Property.
(e) Except as provided pursuant to the terms of the Synthetic Lease
Documents and that certain Credit Agreement dated as of November 30, 2001 among
Seller, as borrower, BNP Paribas as administrative agent and lead arranger, and
certain other parties as defined therein (the "Revolving Credit Agreement," and
together with all Loan Documents as defined therein, the "Revolving Credit
Documents"), there are no agreements of sale, options or other rights of third
parties to acquire the Subject Property, other than this Agreement. To Seller's
Knowledge, there are no unrecorded easements, leases, claims, restrictions,
covenants, agreements, or encumbrances affecting all or any
7
portion of the Subject Property (except the Leases) or any other agreements
which would otherwise affect the Subject Property.
(f) Subject to the prior receipt of all consents required pursuant to
the terms of the Synthetic Lease Documents and the Revolving Credit Documents,
Seller has the sole power to execute, deliver and carry out the terms and
provisions of this Agreement, and has taken all necessary action to authorize
the execution, delivery, and performance of this Agreement, and this Agreement
constitutes the legal, valid and binding obligation of Seller enforceable in
accordance with its terms.
(g) There are no actions, suits or proceedings which have been
instituted, or to Seller's Knowledge threatened, against or which affect the
Subject Property, at law or in equity, or before any federal, state or municipal
governmental commissions, board, bureau, agency, or instrumentality which may
affect the value, occupancy, or use of the Subject Property. Seller will give
Buyer prompt written notice of any such action, suit or proceeding of which it
obtains Knowledge subsequent to the date of this Agreement and prior to the
Closing, to the extent Seller acquires such Knowledge.
(h) Except as provided in Section 15 below, Seller shall not make or
allow to occur any material change to, or deterioration of, the physical
condition of the Subject Property, or any part thereof, which has not been
corrected as of the date of Closing.
(i) Seller shall pay all debts, charges, taxes and all other
obligations, liabilities, costs and expenses related to Seller's ownership, use
and occupancy of the Subject Property in the ordinary course of business, and
shall timely file all tax returns required to be filed by Seller by any federal,
state or local governmental unit or agency.
(j) Seller shall promptly comply with all governmental laws, statutes,
ordinances and regulations applicable to Seller in connection with this
transaction.
(k) To Seller's Knowledge, except as to items listed in Exhibit C
attached, the improvements located on the Real Property and all fixtures and
equipment, plumbing, well, septic system, heating and electrical systems, are in
good condition and repair, ordinary wear and tear excepted, and the Subject
Property is served by electricity, gas, city water and sewer service sufficient
to operate the Subject Property as of the Closing in the same manner as
presently operated.
(l) Seller is not a "foreign person" as that term is defined in
Section 7701 of the Code, and Seller will provide an affidavit at Closing
attesting to this and including Seller's tax identification number.
11. Buyer's Conditions Precedent. Buyer shall not be obligated to
close the transaction contemplated hereunder unless the following conditions
precedent shall each have been satisfied prior to the Closing:
(a) Environmental Matters. Buyer shall have received results from its
environmental investigation which are reasonably satisfactory to Buyer.
8
(b) No Litigation. There shall be no actions, proceedings or
investigations involving Seller or Buyer which would materially interfere with
Seller's or Buyer's performance of their respective obligations hereunder or
Buyer's intended use of the Subject Property.
(c) Compliance with Laws. There shall be no material uncured
violations, including, without limitation, environmental violations, of any
laws, ordinances, orders, regulations, rules or requirements of any governmental
authority having jurisdiction over the Subject Property.
(d) Good Title and Survey. Except as otherwise provided herein, the
title insurance commitment referred to in Section 6 shall disclose good and
marketable title to the Real Property vested in the Owner Trustee, free and
clear of all title exceptions that would materially and significantly impair
Buyer's functional use of the Subject Property for the purposes for which it is
currently being used, and the survey shall not disclose any encroachments or
other defects that would materially and significantly impair Buyer's functional
use of the Subject Property for the purposes for which it is currently being
used.
(e) Authorizations. Buyer shall have received all such instruments and
documents as Buyer's counsel shall reasonably require (i) to establish the power
and authority of Seller to accept this offer and to carry out Seller's
obligations hereunder, and (ii) to eliminate any title exceptions that are not
permitted hereby in the title commitment.
(f) Inspection Reports. Buyer shall have completed the inspections set
forth above, or the Inspection Period shall have expired.
(g) Closing of Related Transactions. The closing of the transactions
contemplated by (i) the APA, (ii) a certain Share Purchase Agreement between
Seller and certain other parties dated August 6, 2003 (the "SPA"), and (iii) a
certain Real Estate Purchase Agreement dated the date hereof between Seller and
Xxxxx Xxx Properties, LLC with respect to the freezer facility located in the
City of Miami, Florida shall occur simultaneously with the Closing.
(h) Representations. All Seller representations and warranties are
true and correct as of the Closing
(i) Consent of Seller's Lenders and Related Matters. All consents
required pursuant to the terms of the Synthetic Lease Documents and the
Revolving Credit Documents shall have been obtained, including, in each
instance, such waivers or amendments of any of the terms thereof as may be
required to permit the consummation of the transactions contemplated by this
Agreement and the transactions contemplated by the other agreements described in
Section 11(g) and the documents referenced therein.
As Buyer shall determine that each of the conditions set forth above
have been satisfied prior to the Closing, Buyer shall so notify Seller in
writing. Buyer may, at its option, terminate this Agreement without liability to
either party, in the absence of such notice as to any condition prior to the
Closing.
9
12. Seller's Conditions Precedent. Seller shall not be obligated to
close the transaction contemplated hereunder unless the conditions precedent
specified in Section 11(g) and 11(i) above shall each have been satisfied prior
to the Closing
13. Closing and Possession; Transfer of Property. The closing of the
transactions contemplated by this Agreement (the "Closing") shall occur within
three (3) days after all of the conditions precedent specified in Section 11
above (other than such conditions which are to occur simultaneously with the
Closing hereunder) have been satisfied or waived and Buyer gives Seller notice
of its intent to close; provided, however, that the Closing shall not occur
later than the earlier of September 7, 2003 or such later date (but no later
than October 5, 2003) as the date on which the closing of the transactions
described in Section 11(g) occurs. The date of Closing is referred to in this
Agreement as the "Closing Date". The Closing shall occur at the time and place
specified in the APA for the closing of the transaction contemplated by the APA
or at such other place as the parties shall mutually agree. Seller shall
surrender possession of the Subject Property to Buyer at Closing. However, prior
to Closing, Buyer and its agents, employees, contractors and consultants shall
have reasonable access to the Subject Property for purposes of the inspections
permitted under Section 9 above.
At the Closing, Seller shall deliver to Buyer each of the following:
(a) A deed (which, subject to the terms and conditions specified in
Section 5(a) above, may be a quitclaim deed) duly executed and in recordable
form, conveying the Real Property to Buyer.
(b) A xxxx of sale (which may be a quitclaim xxxx of sale from the
Owner Trustee, but which shall include Seller's warranty as to title consistent
with the provisions of Section 5(b) above) duly executed conveying the Personal
Property to Buyer.
(c) An assignment, in a form satisfactory to Buyer, assigning to Buyer
all rights and obligations Seller may have under any assignable Contracts that
Buyer desires to assume. All Contracts not assumed by Buyer shall be terminated
by Seller as of the Closing Date.
(d) All books, records and other financial information concerning the
Subject Property which are in Seller's possession or under Seller's control (the
"Books and Records").
In addition, the parties shall execute and deliver to each other at
Closing a closing statement showing the computation of the funds payable to the
Seller pursuant to this Agreement, all of which funds each of Seller and Buyer
expressly acknowledges and agrees shall be released directly to the Owner
Trustee at the Closing. Buyer shall pay all of the documentary stamps/transfer
taxes and surtaxes which are payable upon the recording of the deed as to the
conveyance to Buyer only.
14. Synthetic Lease. At or prior to Closing, Seller shall procure or
obtain such documents or instruments as may be required in order to terminate
the
10
Synthetic Lease with respect to the Subject Property and to release the Subject
Property from all liens and encumbrances created pursuant to the Synthetic Lease
Documents and the Revolving Credit Documents. Any such instruments of
termination or release, as the case may be, with respect to the Real Property
shall be in such form as the Title Company may reasonably require to be
recordable in the real property records of the county in which the Real Property
is located.
15. Condition of Subject Property.
(a) In the event the Subject Property should be damaged by fire or
other casualty or become subject to condemnation proceedings prior to the
Closing, Buyer shall nonetheless proceed to close this transaction, and Seller
shall, subject to the immediately following sentence, assign to Buyer, effective
as of the Closing, all of Seller's rights to any insurance or condemnation
proceeds and to cause the Owner Trustee and the Agent (as defined in the
Synthetic Lease Documents) to assign to Buyer all of their respective rights, if
any, to any such insurance or condemnation proceeds. For the avoidance of doubt,
Seller and Buyer hereby acknowledge and agree that, in the event of any such
casualty or condemnation, (i) Seller shall use any insurance or condemnation
proceeds actually received by Seller (to the extent that Seller is not required
by the terms of the Synthetic Lease to turn over such proceeds to the Owner
Trustee or to the Agent) to repair (or commence repair) of damage to the Subject
Property caused by such casualty or condemnation, and (ii) Seller shall deliver,
or cause to be delivered, to Buyer at the Closing the remaining, unused balance,
if any, of such proceeds (including that portion, if any, of such proceeds paid
to the Owner Trustee or to the Agent pursuant to the terms of the Synthetic
Lease Documents).
(b) Each of Seller and Buyer hereby expressly acknowledges and agrees
that, notwithstanding anything to the contrary set forth in Section 15(a) above,
in the event that all of the following conditions shall occur:
(i) any casualty damage to or condemnation of the Subject
Property occurs prior to the Closing;
(ii) any insurance proceeds or condemnation awards are actually
paid to the Owner Trustee or the Agent pursuant to the Synthetic Lease
Documents prior to the Closing (all such proceeds being referred to herein
collectively as the "Actual Proceeds");
(iii) Buyer has provided written notice of the satisfaction of
all conditions precedent specified in Section 11 (other than those which
are to occur simultaneously with the Closing) and Buyer has deposited, in
escrow with instructions for release upon the Closing, the full amount of
the Purchase Price in the form of a cashier's check or wired funds to the
Title Company or such other person as Buyer and Seller may agree in writing
to act as escrow agent for purposes of effecting the closing of the
transaction contemplated by this Agreement (in either case, the "Escrow
Agent"); and
11
(iv) either the Owner Trustee or the Agent, or both of them,
shall fail to either (x) deposit with the Escrow Agent the full amount of
the Actual Proceeds received by the Owner Trustee or the Agent, as the case
may be, together with written instructions to release the same to Buyer
upon the Closing, or else (y) issue written instructions to the Escrow
Agent authorizing the Escrow Agent to credit the full amount of the Actual
Proceeds against the Purchase Price, to disburse to the Owner Trustee or
the Agent, as the case may be, at Closing only the net amount of the
Purchase Price after giving effect to such credit (and to release any and
all instruments deposited into escrow by the Owner Trustee and/or the Agent
against the disbursement of such amount to the Owner Trustee or the Agent,
as the case may be), and to disburse to Buyer the portion of the funds
deposited by Buyer equal to the amount of the Actual Proceeds at Closing;
then Buyer shall have the right, by written notice to Seller and to the Escrow
Agent, to cancel the proposed purchase of the Subject Property and terminate
this Agreement, and upon such termination, neither party shall have any further
liability to the other hereunder or in connection with the transactions
contemplated hereby.
16. Insurance; Risk of Loss. Until the Closing, Seller shall maintain
in full force and effect all fire and public liability insurance covering the
Subject Property maintained by Seller in the ordinary course of business, and
such insurance with respect to casualty damage shall be for the replacement
value of the Subject Property. The risk of loss shall remain with Seller until
Closing, subject to Buyer's rights under Section 15, above.
17. Seller's Indemnities.
(a) Seller shall indemnify and hold Buyer harmless from any and all
liabilities, obligations, losses (including diminution in value), damages,
claims, charges, costs and expenses, including reasonable actual attorney's fees
(collectively, "Losses") to the extent, if any, such Losses are incurred as the
result of any of the following: (i) the failure of any of the representations
and warranties contained in this Agreement to be true and accurate in all
respects (which, for the avoidance of doubt, shall not include any Losses
arising out of or in connection with exceptions to such representations and
warranties expressly disclosed to Buyer pursuant to this Agreement or the APA);
(ii) the failure of Seller to perform any of its obligations under this
Agreement; (iii) any act or event occurring on or in connection with the Subject
Property prior to the date of Closing or otherwise attributable (but solely to
the extent so attributable) to the use or operation of the Subject Property
prior to Closing, including, but not limited to, liabilities for environmental
contamination caused by the release of Hazardous Substances in, on or under the
Subject Property prior to Closing; or (iv) the failure of Seller to pay any of
its debts, charges, taxes, liabilities or other obligations, whether accrued,
absolute, contingent, known or unknown as of the date of Closing. The terms of
this Section 17 shall survive for two years following the Closing (except that,
with respect to any matters relating to the representations set forth in
subsections (a), (b) and (c) (to the extent specified in the introductory
paragraph of Section 10) of Section 10 above and any matters relating to
environmental contamination covered by subclause (iii) above, the
12
provisions of this Section 17 shall survive for one month after the maximum
period permitted by law.
(b) Seller's liability under the indemnity set forth above shall be
subject to all of the terms, conditions and limitations set forth in Section 10
of the APA, including, without limitation, the application of the Seller
Deductible (as defined in Section 10.1 thereof). In addition, and without
limiting the generality of the immediately preceding sentence, Buyer expressly
acknowledges and agrees that Seller shall have no liability to indemnify Buyer
for any Losses under Section 17(a) above to the extent such Losses arise from or
are attributable to (i) the gross negligence or willful misconduct of any Buyer
Party (as defined in the APA), or (ii) any act or event occurring on or in
connection with the Subject Property following the Closing.
(c) For the avoidance of doubt, Seller and Buyer hereby acknowledge
and agree that, Sections 17(a)(iii) and 17(b)(ii) above shall be read together
so that, in the event that Buyer incurs any Losses in connection with or as a
result of any release of Hazardous Substances in, on or under the Subject
Property following the Closing, Seller shall indemnify Buyer solely for the
incremental increase, if any, in such Losses incurred by Buyer that is
attributable to any prior record of the release of Hazardous Substances in, on
or under the Subject Property prior to Closing.
18. Seller's Default. In the event of any material default by Seller
under this Agreement (which, for the avoidance of doubt, shall consist of any
default or defaults, which, if uncured, individually or in the aggregate, would
materially and significantly impair Buyer's functional use and/or ownership of
the Subject Property for the purposes for which it is currently used), Buyer
shall have the right to terminate this Agreement by written notice to Seller if
such material default is not cured within thirty (30) days following Seller's
receipt of written notice of such material default from Seller. In addition,
Buyer shall have all such rights and remedies as may be available to it under
applicable law or in equity, including, but not limited to, the right to recover
such damages as it may be entitled to as a result of such material default by
Seller (including costs and attorney's fees), or to specifically enforce
Seller's obligations under this Agreement. For the avoidance of doubt, Buyer
acknowledges and agrees that Buyer shall not have the right to terminate this
Agreement in the event of any default by Seller that is not material, but may
still pursue damage remedies, if any, for such a default.
19. Buyer's Default. In the event of any material default by Buyer
under this Agreement, Seller shall have the right to terminate this Agreement by
written notice to Buyer if such material default is not cured within thirty (30)
days following Buyer's receipt of written notice of such material default from
Seller. In addition, Seller shall have all such rights and remedies as may be
available to it under applicable law or in equity, including, but not limited
to, the right to recover such damages as it may be entitled to as a result of
such material default by Buyer (including costs and attorney's fees). For the
avoidance of doubt, Seller acknowledges and agrees that Seller shall not have
the right to terminate this Agreement in the event of any default by Buyer that
is not material, but may still pursue damage remedies, if any, for such a
default.
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20. Survival of Representations and Warranties. All representations
and warranties made in this Agreement shall survive for two years following the
Closing (except that the representations set forth in subsections (a), (b) and
(c) (to the extent specified in the introductory paragraph of Section 10) of
Section 10 above shall survive for one month after the maximum period permitted
by law.
21. Enforceability. Except as otherwise expressly provided, this
Agreement shall inure to the benefit of, be binding upon, and be specifically
enforceable by Seller and Buyer, and their respective successors and assigns.
22. Entire Agreement. This Agreement, together with the APA, contains
all of the representations and statements by each party to the other and
expresses the entire understanding between the parties with respect to its
subject matter. All prior communications concerning this transaction are merged
in and replaced by this Agreement.
23. Commission. Seller and Buyer each represent to the other that
neither party has engaged the services of a real estate broker or salesperson
and that no other person is entitled to a fee or commission as a result of the
transaction contemplated in this Agreement.
24. Notices. All notices required or given under this Agreement shall
be in writing and either delivered personally by reputable courier or mailed by
regular, first class U.S. mail (postage prepaid) addressed to the parties at
their addresses specified above or such other address as a party may specify by
providing notice thereof in accordance with this Section. Notices delivered
personally or by courier shall be effective upon receipt, and notices mailed by
first class U.S. mail shall be effective three days following deposit in the
mail, postage prepaid.
25. Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns.
26. Construction. This Agreement shall be construed under the laws of
the State of Florida, and shall not be construed against either party as
draftsman.
27. Radon Gas. Section 404.056(7) Florida Statutes requires the
following disclosure in any contract for sale of real estate:
Radon is a naturally occurring radioactive gas that, when it has
accumulated in a building in sufficient quantities, may present health
risks to persons who are exposed to it over time. Levels of radon that
exceed federal and state guidelines have been found in buildings in
Florida. Additional information regarding radon and radon testing may
be obtained from your county public health unit.
28. Dispute Resolution. All Agreement Disputes (as defined in the APA)
shall be dealt with as set forth in the APA.
14
29. Definition of "Knowledge". The term "Knowledge" as applied to
Seller in this Agreement means that the particular fact or matter is actually
known by any executive officer of Seller or SF Stores, or Xxx Xxxxxxxx, or any
of the foregoing officers or individuals should have known of such fact or
matter after undertaking reasonable inquiry.
15
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
SMART & FINAL, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Its: Xxxxxxx X. Xxxxxxx
--------------------------------
Senior Vice President &
Chief Financial Officer
SELLER
GFS MARKETPLACE REALTY FOUR, LLC
By: Xxxxxx X. Xxxxx
------------------------------------
Its: Manager
-------------------------------
BUYER
16
EXHIBIT A
DESCRIPTION OF REAL PROPERTY
All of Parcel A of THE MATT PLAT, according to the plat thereof, as recorded in
Plat Book 163, page 18, of the public records of Broward County, Florida.
EXHIBIT B
SERVICE AGREEMENTS
Monthly Maintenance Service Agreement dated effective as of December 1, 2001
between R.K.O. Mechanical, Inc. and Smart & Final Stores Corporation, for the
provision of air conditioning and refrigeration systems maintenance.
Security system agreement between Integrated Security Systems and Smart & Final
for Store # 511.
Service Agreement/Contract Amendment between Smart & Final Stores Corporation
and A-1 Fire Equipment dated June 26, 2002.
EXHIBIT C
EXCEPTIONS TO REPRESENTATION IN SECTION 10(K)
None.
VENDOR CONTRACT PARTICIPATION AGREEMENT
THIS VENDOR CONTRACT PARTICIPATION AGREEMENT (this "Agreement") is
entered into and effective as of September 7, 2003 (the "Effective Date"), by
and between SMART & FINAL INC., a Delaware corporation ("SFI"), AMERICAN
FOODSERVICE DISTRIBUTORS, a California corporation ("AFD"), SMART & FINAL STORES
CORPORATION, a California corporation ("SF Stores" and, together with SFI and
AFD, collectively, the "Sellers"), and GFS HOLDING, INC., a Delaware corporation
("GFS Holding"), XXXXX XXX COMPANY, a Florida corporation ("Xxxxx Xxx"), GFS
STORES, LLC, a Delaware limited liability company ("GFS Stores"), and GFS
Orlando, LLC, a Delaware limited liability company ("GFS Orlando" and, together
with GFS Holding, Xxxxx Xxx and GFS Stores, collectively, the "Buyers").
Capitalized terms not otherwise defined herein shall have the respective
meanings set forth in the Share Purchase Agreement (as defined below).
RECITALS
A. Pursuant to that certain Share Purchase Agreement (the "Share
Purchase Agreement"), dated August 6, 2003, by and between SFI, AFD and GFS
Holding, GFS Holding will purchase all of the issued and outstanding equity
securities of Xxxxx Xxx; and pursuant to that certain Asset Purchase Agreement
(the "Asset Purchase Agreement"), dated August 6, 2003, by and among GFS
Holding, GFS Orlando and GFS Stores, and Sellers, GFS Stores and GFS Orlando
will, directly or indirectly, acquire from Sellers certain of the assets of SF
Stores and all of the assets of the Orlando Foodservice division of AFD
(collectively, the "Assets").
B. Following the consummation of the transactions contemplated by the
Share Purchase Agreement and the Asset Purchase Agreement, Buyers will continue
to operate the businesses conducted by AFD, SF Stores and Xxxxx Xxx in the State
of Florida (the "Business").
X. Xxxxxxx are parties to various vendor contracts (the "Vendor
Contracts") described in the Schedules to the Share Purchase Agreement and the
Asset Purchase Agreement and to be assigned to or utilized by Buyers after the
Closing. Many of the Vendor Contracts are multiple party contracts ("Multiple
Party Vendor Contracts") which contain provisions unrelated to the Business, and
therefore Sellers have provided Buyers with summaries of the portions of the
Multiple Party Vendor Contracts which relate to the Business instead of
disclosing the entire contract. Buyers have requested, and Sellers have agreed,
to cooperate with Buyers in the use and operation of the Vendor Contracts,
including the Multiple Party Vendor Contracts, on the terms set forth below.
D. Buyers have required as a condition to the consummation of the
transactions contemplated by of the Share Purchase Agreement and the Asset
Purchase Agreement that Sellers enter into this Agreement.
AGREEMENT
In consideration of the premises set forth above and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Sellers and Buyers agree as follows:
1. Term. The term of this Agreement shall commence upon the Closing of
the Share Purchase Agreement and the Asset Purchase Agreement and shall continue
until expiration of the last of the Vendor Contracts to expire. Buyers expressly
acknowledge that Sellers are under no obligation to renew or extend any of the
Vendor Contracts beyond their stated terms.
2. Cooperation. From time to time after the Closing Date, Sellers
shall cooperate with Buyers in arranging for purchases within the State of
Florida pursuant to the Vendor Contracts. Sellers also shall permit Buyers to
contact the vendors under each of the Vendor Contracts so that Buyers may
establish new relationships with those vendors if Buyers so desire. Sellers also
shall provide Buyers with all correspondence, information and invoices related
to performance of the Vendor Contracts in the State of Florida to enable Buyers
to deal with such vendors on an effective basis.
3. Contract Performance. Buyers may elect to purchase products under
the Vendor Contracts, and if and to the extent that Buyers elect to do so,
Sellers and Buyers each agree to honor the terms of all of the Vendor Contracts,
and to conduct their respective purchases under the Multiple Party Vendor
Contracts in such a manner as to not disrupt the purchasing rights and
obligations of the other parties to the Multiple Party Vendor Contracts. In
particular, Sellers and Buyers each agree to honor any payment terms of the
Vendor Contracts (subject to good faith disputes with such vendors).
4. Indemnification.
A. Indemnity by Sellers. Sellers shall, jointly and severally,
indemnify Buyers and their affiliates, directors, officers, employees,
controlling persons, agents and representatives and their successors and
assigns (collectively, the "Buyer Indemnified Parties") against and hold
each of them harmless from any and all damage, loss, cost, penalty,
liability and expense (including, without limitation, reasonable attorneys'
fees and expenses in connection with any action, suit or proceeding)
("Damages") incurred or suffered by the Buyer Indemnified Parties (whether
originally asserted against or imposed on the Buyer Indemnified Parties by
a third party or originally incurred or suffered directly by the Buyer
Indemnified Parties) arising directly out of any breach of any
representation or warranty, covenant or agreement made or to be performed
by Sellers pursuant to this Agreement, or arising directly out of any
liability or obligations under the Multiple Party Vendor Contracts to the
extent such liability or obligations have not been disclosed to Buyers in
the summaries of the Multiple Party Vendor Contracts (such breach, a
"Seller Breach").
B. Indemnity by Buyers. Buyers shall indemnify Sellers and their
affiliates, directors, officers, employees, controlling persons, agents and
representatives and their
2
successors and assigns (collectively, the "Seller Indemnified Parties")
against and hold each of them harmless from any and all Damages incurred or
suffered by the Seller Indemnified Parties (whether originally asserted
against or imposed on the Seller Indemnified Parties by a third party or
originally incurred or suffered directly by the Seller Indemnified Parties)
arising directly out of any breach of any representation, warranty,
covenant or agreement made or to be performed by Buyers pursuant to this
Agreement (such breach, a "Buyer Breach").
C. Procedure and Payment.
(1) The person seeking indemnification under Section 4.A, and 4.B
(the "Indemnified Party") agrees to give prompt notice to the Person
against whom indemnity is sought (the "Indemnifying Party") of the
assertion of any claim, or the commencement of any suit, action or
proceeding, in respect of which indemnity may be sought under such
Section and will provide the Indemnifying Party such information with
respect thereto as the Indemnifying Party may reasonably request. The
failure to so notify the Indemnifying Party shall not relieve the
Indemnifying Party of its obligations hereunder, except to the extent
such failure shall have materially and adversely prejudiced the
Indemnifying Party.
(2) The Indemnifying Party shall be entitled to defend any claim
asserted by any third party ("Third Party Claim") with counsel of its
choice reasonably satisfactory to the Indemnified Party so long as (i)
the Indemnifying Party notifies the Indemnified Party in writing
within fifteen (15) days after the Indemnified Party has given notice
of the Third Party Claim that it will indemnify the Indemnified Party
from and against all Damages that the Indemnified Party may suffer
resulting from, arising out of, relating to, or caused by the Third
Party Claim, (ii) the Indemnifying Party provides the Indemnified
Party with evidence reasonably acceptable to the Indemnified Party
that the Indemnifying Party will have the financial resources to
defend against the Third Party Claim and fulfill its indemnification
obligations under this Agreement, (iii) the Third Party Claim involves
only money damages and does not seek an injunction or other equitable
relief, and (iv) the Indemnifying Party conducts the defense of the
Third Party Claim actively and diligently.
(3) So long as the Indemnifying Party is conducting the defense
of any Third Party Claim in accordance with the provisions of this
Section 4.C, the Indemnified Party shall be entitled to participate in
the defense of such Third Party Claim and to employ separate counsel
of its choice for such purpose. The fees and expenses of such separate
counsel shall be paid by the Indemnified Party.
(4) Each party shall cooperate, and cause its Affiliates to
cooperate, in the defense or prosecution of any Third Party Claim and
shall furnish or cause to be furnished such records, information and
testimony, and attend such conferences, discovery proceedings,
hearings, trials or appeals, as may be reasonably requested by any
other party in connection therewith.
3
D. Calculation of Damages.
(1) The amount of any Damages payable under Section 4.A and 4.B
by the Indemnifying Party shall be net of any amounts recovered by the
Indemnified Party under applicable insurance policies and the
Indemnified Party shall use commercially reasonable efforts to collect
any amounts available under such insurance policies.
(2) If the Indemnified Party receives an amount under insurance
coverage or from a third party with respect to Damages at any time
subsequent to any indemnification provided by the Indemnifying Party
pursuant to Section 4.A and 4.B, then such Indemnified Party shall
promptly reimburse the Indemnifying Party for any payment made or
expense incurred by such Indemnifying Party in connection with
providing such indemnification up to such amount received by such
Indemnified Party, but net of any expenses incurred by such
Indemnified Party in collecting such amount.
5. Force Majeure. Neither Sellers nor Buyers shall be responsible to
the other for any delay in or failure of performance of their obligations under
this Agreement to the extent such delay or failure is attributable to any cause
beyond their reasonable control, including, without limitation, any act of God,
fire, accident, strike or other labor difficulties, war, embargo or other
governmental act, or riot; provided that the party affected thereby gives the
other party prompt notice of the occurrence of any event which has caused or is
likely to cause any such delay or failure, setting forth its best estimate of
the length of any delay and any possibility that it will be unable to resume
performance; and provided further that said affected party shall use its
commercially reasonable efforts to expeditiously overcome the effects of that
event and resume performance or utilization.
6. Miscellaneous Provisions.
A. Confidentiality. Each of Sellers and Buyers (as appropriate, the
"Promisor") covenant and agree to and will cause their respective
authorized agents, representatives, affiliates, employees, officers,
directors, accountants, counsel and other designated representatives
(collectively, "Representatives") to (i) treat and hold as confidential
(and not disclose or provide access to any person to) all records, books,
contracts, instruments, computer data and other data and information
(collectively, "Information") concerning the other party (the "Promisee")
and the Vendor Contracts in the Promisor's possession or furnished by the
Promisee or its Representatives pursuant to this Agreement, (ii) in the
event that Promisor or its Representatives become legally compelled to
disclose any such Information, provide the Promisee with prompt written
notice of such requirement so that the Promisee may seek a protective order
or other remedy or waive compliance with this Section 6.A, and (iii) in the
event that such protective order or other remedy is not obtained, or the
Promisee waives compliance with this Section 6.A, furnish only that portion
of such Information which is legally required to be provided and exercise
Promisor's best efforts to obtain assurances that confidential treatment
will be accorded such Information; provided, however, that this sentence
shall not apply to any Information that, at the time of disclosure, is
available publicly and was not disclosed in
4
breach of this Agreement by such party or its Representatives; and provided
further, however, that the provisions of clauses (i) and (ii) above shall
not preclude a party from disclosing Information to its Representatives
(provided that each such Representative shall be advised of the
confidential nature of such Information) or from disclosing Information to
or filing Information with any governmental authority or agency with
jurisdiction over such party. Each party agrees and acknowledges that
remedies at law for any breach of its obligations under this Section 6.A
are inadequate and that in addition thereto the other party shall be
entitled to seek equitable relief, including injunction and specific
performance, in the event of any such breach, without the necessity of
demonstrating the inadequacy of monetary damages. The provisions of this
Section 6.A shall not apply to the extent any such Information is required
to be disclosed by applicable law.
B. Notices. All necessary notices, demands, requests and other
communications required or permitted to be given hereunder shall in every
case be in writing and shall be deemed duly given (a) when delivered
personally, (b) upon receipt or refusal of receipt, if sent by registered
or certified mail, in all such cases with postage prepaid, return receipt
requested, or (c) the next business day if delivered by a recognized
overnight courier service, airbill prepaid, designated for next business
day delivery, to the parties at the addresses as set forth below or at such
other addresses as may be furnished in writing:
If to Buyers: Xxxxx Xxxxxxxxx
Xxxxxx Food Service, Inc.
X.X. Xxx 0000
Xxxxx Xxxxxx, Xxxxxxxx 00000
and to: Xxxxx X. Xxxx
00000 Xxxx Xxxxxxxx Xxxxx
X.X. Xxx 000
Xxxxxx, Xxxxxxxx 00000-0000
With a copy to: Miller, Johnson, Xxxxx & Xxxxxxxxx, P.L.C.
000 Xxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
If to Sellers: Xxxxxx Xxxxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
With a copy to: Xxxxxx X. Xxxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
5
With a copy to: Xxx Xxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
With a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
And a copy to: Xxxxx & Xxxxxxx
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx XX
C. Jurisdiction.
(1) In the event any dispute arises out of this Agreement or any
of the transactions contemplated by this Agreement, each of the
parties hereto consents to submit itself to the personal jurisdiction
of any federal court in the state of Delaware and, in case such court
refuses jurisdiction then each of the parties consents to submit
itself to the personal jurisdiction of any state court in the state of
Delaware. Each of the parties further agrees that it will not attempt
to deny or defeat such personal jurisdiction by motion or other
request for leave from such court, and agrees that, except as
permitted pursuant to this Section 6.C, it will not bring any action
relating to this Agreement or any of the transactions contemplated by
this Agreement in any other court other than a federal court in the
state of Delaware.
(2) In the event the state court specified in Section 6.C(1)
refuses to exercise jurisdiction over the parties hereto or the
subject matter at issue, then with respect to any legal action or
proceeding brought by any of the Seller Parties against any of the
Buyer Parties arising out of or relating to this Agreement or any of
the transactions contemplated by this Agreement, each party to this
Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of any federal court within the jurisdiction of the
United States District Court for the Western District of Michigan
(and each appellate court thereof) or any state court in the
state of Michigan;
(ii) agrees that any federal court within the jurisdiction
of the United States District Court for the Western District of
Michigan or any state court in the state of Michigan shall be
deemed to be a convenient forum; and
6
(iii) agrees not to assert (by way of motion, as a defense
or otherwise), in any such legal proceeding commenced in any
federal court within the jurisdiction of the United States
District Court for the Western District of Michigan or any state
court in the state of Michigan, any claim that such party is not
subject personally to the jurisdiction of such court, that such
legal proceeding has been brought in an inconvenient forum, or
that the venue of such proceeding is improper.
(3) In the event the state court specified in Section 6.C(1)
refuses to exercise jurisdiction over the parties hereto or the
subject matter at issue, then with respect to any legal action or
proceeding brought by any of the Buyer Parties against any of the
Sellers arising out of or relating to this Agreement or any of the
transactions contemplated by this Agreement, each party to this
Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of any federal court within the jurisdiction of the
United States District Court for the Central District of
California (and each appellate court thereof) or any state court
in the state of California;
(ii) agrees that any federal court within the jurisdiction
of the United States District Court for the Central District of
California or any state court in the state of California shall be
deemed to be a convenient forum; and
(iii) agrees not to assert (by way of motion, as a defense
or otherwise), in any such legal proceeding commenced in any
federal court within the jurisdiction of the United States
District Court for the Central District of California or any
state court in the state of California, any claim that such party
is not subject personally to the jurisdiction of such court, that
such legal proceeding has been brought in an inconvenient forum,
or that the venue of such proceeding is improper.
(4) The parties hereby waive any right to a jury trial.
D. Further Assurances. From time to time, at the request of the other
party hereto and at the expense of the party so requesting (unless the
requesting party is entitled to indemnification therefor under Section 4),
each of the parties hereto shall execute and deliver to such requesting
party such documents and take such other action as such requesting party
may reasonably request in order to consummate more effectively the
transactions contemplated hereby.
E. Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by
any party in exercising any right, power, or privilege under this Agreement
or the documents referred
7
to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power, or
privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To
the maximum extent permitted by applicable law, (a) no claim or right
arising out of this Agreement or the documents referred to in this
Agreement can be discharged by one party, in whole or in part, by a waiver
or renunciation of the claim or right unless in writing signed by the other
party; (b) no waiver that may be given by a party will be applicable except
in the specific instance for which it is given; and (c) no notice to or
demand on one party will be deemed to be a waiver of any obligation of such
party or of the right of the party giving such notice or demand to take
further action without notice or demand as provided in this Agreement or
the documents referred to in this Agreement.
F. Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by the
parties to be charged with the amendment.
G. Assignments, Successors, and No Third-Party Rights. Neither party
may assign any of its rights or obligations under this Agreement without
the prior consent of the other parties, except that GFS Holding may assign
any of its rights under this Agreement to any Affiliate of GFS Holding.
Subject to the preceding sentence, this Agreement will apply to, be binding
in all respects upon, and inure to the benefit of the benefit of the
successors and permitted assigns of the parties. Nothing expressed or
referred to in this Agreement will be construed to give any Person other
than the parties to this Agreement any legal or equitable right, remedy, or
claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
H. Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions
of this Agreement will remain in full force and effect. Any provision of
this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or
unenforceable.
I. Section Headings, Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or "Sections"
refer to the corresponding Section or Sections of this Agreement. All words
used in this Agreement will be construed to be of such gender or number as
the circumstances require. Unless otherwise expressly provided, the word
"including" does not limit the preceding words or terms.
J. Preamble; Recitals. The Recitals set forth in the Preamble hereto
are hereby incorporated and made a part of this Agreement.
8
K. Governing Law. This Agreement will be governed by the internal laws
of the State of Delaware without regard to conflicts of laws principles.
L. No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against
any party hereto by virtue of having drafted this Agreement or otherwise.
M. Dispute Resolution. Except as hereinafter provided in this Section
6.M all claims, controversies, differences, or disputes between or among
any of the parties hereto arising from or relating to this Agreement,
including claims by one party that another party or parties hereto have
failed to perform any of their obligations hereunder (collectively,
"Agreement Disputes"), shall be resolved as follows:
(1) Facilitative Mediation. The parties to an Agreement Dispute
shall first attempt to resolve such Agreement Dispute by means of a
mediation conducted in the following manner. A party desiring
mediation of any Agreement Dispute shall give or shall have given a
written notice, in the manner set forth in Section 6.B hereof (a
"Dispute Notice"), to the other party or parties setting forth the
nature of the dispute and the relief intended to be sought and shall
submit such Agreement Dispute for resolution by facilitative mediation
in Chicago, Illinois, under the Commercial Mediation Rules (but not
otherwise under the auspices) of the American Arbitration Association
(the "AAA") in effect on the date of this Agreement, unless the
parties have agreed, in writing, to resolve any such dispute by other
means. Each party agrees that it will submit to and shall not
challenge or object to the jurisdiction (either personal or subject
matter) or the venue of such mediation in Chicago, Illinois.
(2) Legal Proceedings. If any Agreement Dispute has not been
resolved by mediation as provided above within sixty (60) days after
submission thereof, then either party may commence a suit or legal
action or an action at equity to enforce its rights or the other
party's obligations or recover any damages arising from the other
party's breach or such other relief as may be appropriate under the
circumstances.
(3) Attorney Fees and Other Costs. The prevailing party in any
mediation or any action or legal or other proceeding brought with
respect to an Agreement Dispute shall be entitled to recover the
reasonable fees and disbursements of its attorneys, accountants, and
expert witnesses in connection with any such mediation or any action
or legal or other proceeding brought in accordance with the provisions
hereof.
(4) Exceptions for Equitable Relief. Notwithstanding the
foregoing or anything to the contrary contained elsewhere in this
Agreement, a party may bring a proceeding against any other party
hereto for specific performance or injunctive or other forms or
equitable relief in the state or federal courts pursuant to the
procedures set forth in Section 6.C without having to submit the
matter or
9
Agreement Dispute in question to mediation as hereinabove set forth,
provided, however, that such party shall not seek any monetary award
or relief in such action or proceeding unless its failure to do so
would prejudice such party's rights or ability to seek such monetary
award or relief in another action or proceeding.
N. Counterparts. This Agreement may be executed in two or more
counterparts, each or which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to
constitute one and the same agreement.
O. Relationship of Parties. The relationship between Sellers and
Buyers for purposes of this Agreement shall be that of an independent
contractor and not of employment and, except to the extent required to
enable Sellers to perform their duties hereunder, neither party is an agent
of the other. By entering into this Agreement, neither party to this
Agreement is, in any way, assuming any liabilities, debts or obligations of
the other party, whether now existing or hereafter created.
IN WITNESS WHEREOF, Sellers and Buyers have executed this Agreement as
of the date set forth in the first paragraph hereof.
"SFI"
SMART & FINAL INC.
a Delaware corporation
By: /s/ Xxxxxx Xxxxxxxxx
--------------------------------------
Its:
-------------------------------------
"AFD"
AMERICAN FOODSERVICE DISTRIBUTORS
a California corporation
By: /s/ Xxxxxx Xxxxxxxxx
--------------------------------------
Its:
-------------------------------------
"SF Stores"
SMART & FINAL STORES CORPORATION
a California corporation
By: /s/ Xxxxxx Xxxxxxxxx
--------------------------------------
Its:
-------------------------------------
10
"GFS Holding"
GFS HOLDING, INC.
a Delaware corporation
By: /s/ Xxxxx X. Xxxx
--------------------------------------
Its:
-------------------------------------
"Xxxxx Xxx"
XXXXX XXX COMPANY
a Florida corporation
By: /s/ Xxxxx X. Xxxx
--------------------------------------
Its:
-------------------------------------
"GFS Stores"
GFS STORES, LLC
a Delaware limited liability company
By: GFS HOLDINGS, INC.
Its: Manager
By: /s/ Xxxxx X. Xxxx
--------------------------------------
Its:
-------------------------------------
"GFS Orlando"
GFS Orlando, LLC
a Delaware limited liability company
By: GFS HOLDINGS, INC.
Its: Manager
By: /s/ Xxxxx X. Xxxx
--------------------------------------
Its:
-------------------------------------
11
