EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
dated as of
September 20, 2001
by and among
XXXXXX COMPANY, INC.
A TEXAS CORPORATION
and
CONVENIENCE STORE DISTRIBUTING COMPANY, LLC,
AN INDIANA LIMITED LIABILITY COMPANY,
CONVENIENCE STORE TRANSPORTATION COMPANY, LLC,
AN INDIANA LIMITED LIABILITY COMPANY,
and
CSD PROPERTY, LLC,
AN INDIANA LIMITED LIABILITY COMPANY
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
1.1 Adverse Consequences...............................................1
1.2 Basis..............................................................2
1.3 Books and Records..................................................2
1.4 Business Day.......................................................2
1.5 Closing............................................................2
1.6 Closing Date.......................................................2
1.7 Code...............................................................2
1.8 Confidential Information...........................................2
1.9 Contaminated Site List.............................................2
1.10 Defensible Title...................................................2
1.11 Environmental Conditions...........................................3
1.12 Employment Laws....................................................3
1.13 Environmental Laws.................................................3
1.14 Environmental Liabilities..........................................3
1.15 Environmental Remediation Costs....................................4
1.16 ERISA..............................................................4
1.17 ERISA Affiliate....................................................4
1.18 Governmental Authority.............................................4
1.19 Governmental Requirement...........................................4
1.20 Hazardous Materials................................................4
1.21 Intellectual Property Rights.......................................4
1.22 IRS................................................................5
1.23 Knowledge..........................................................5
1.24 Liability..........................................................5
1.25 Material Adverse Change............................................5
1.26 Material Adverse Effect............................................5
1.27 Ordinary Course of Business........................................5
1.28 PBGC...............................................................5
1.29 Pension Plan.......................................................5
1.30 Permitted Exceptions...............................................6
1.31 Person.............................................................6
1.32 Real Property......................................................6
1.33 Release............................................................6
1.34 SEC................................................................6
1.35 Securities Act.....................................................6
1.36 Security Interest..................................................6
1.37 Subsidiary.........................................................7
1.38 Tax or Taxes.......................................................7
1.39 Tax Affiliate......................................................7
1.40 Tax Return.........................................................7
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ARTICLE II
PURCHASE AND SALE
2.1 Purchase and Sale..................................................7
2.2 Assumption of Liabilities.........................................11
2.3 Purchase Price....................................................13
2.4 Instruments of Transfer, Further Assurances.......................13
2.5 Closing...........................................................14
2.6 Adjustments to Purchase Price.....................................15
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Organization......................................................17
3.2 Authorization.....................................................17
3.3 No Violation......................................................18
3.4 Approvals.........................................................18
3.5 Financial Statements and Other Information........................18
3.6 No Undisclosed Liabilities........................................19
3.7 Events Subsequent to August 18, 2001..............................19
3.8 Taxes.............................................................20
3.9 Litigation........................................................21
3.10 Compliance with Laws..............................................21
3.11 Title to and Condition of Property................................21
3.12 Environmental Matters.............................................24
3.13 Inventories.......................................................26
3.14 Contracts.........................................................26
3.15 Employee and Labor Matters and Plans..............................28
3.16 Insurance Policies................................................29
3.17 Books and Records.................................................29
3.18 No Illegal or Improper Transactions...............................29
3.19 Brokerage Fees....................................................29
3.20 No Product Liabilities; Product Warranties........................29
3.21 Suppliers and Customers...........................................30
3.22 Intellectual Properties...........................................31
3.23 Licenses..........................................................32
3.24 Solvency..........................................................32
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASE
4.1 Organization......................................................33
4.2 Due Authorization.................................................33
4.3 Brokers...........................................................33
4.4 Non-Contravention.................................................33
4.5 Certain Proceedings...............................................33
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ARTICLE V
PRE-CLOSING COVENANTS
5.1 General...........................................................34
5.2 Notices and Consents..............................................34
5.3 Operation of Business.............................................34
5.4 Preservation of Business..........................................34
5.5 Full Access.......................................................34
5.6 Notice of Developments............................................34
5.7 Customer Contacts.................................................35
ARTICLE VI
POST-CLOSING COVENANTS
6.1 General...........................................................35
6.2 Transition........................................................35
6.3 Confidentiality...................................................36
6.4 Purchase Price Allocation.........................................36
6.5 Limitation on Assignments.........................................36
6.6 Tax Matters.......................................................37
6.7 Warn Act..........................................................37
ARTICLE VII
CONDITIONS TO OBLIGATION TO CLOSE
7.1 Conditions to Obligation of Purchaser.............................37
7.2 Conditions to Obligation of Seller................................39
ARTICLE VIII
INDEMNITY
8.1 Survival of Representations and Warranties........................40
8.2 Indemnification Provisions for Benefit of Purchaser...............41
8.3 Indemnification Provisions for Benefit of Seller..................43
8.4 Matters Involving Third Parties...................................43
8.5 Other Indemnification Provisions..................................45
ARTICLE IX
[ARTICLE IX INTENTIONALLY OMITTED].........................................45
ARTICLE X
TERMINATION
10.1 Termination by Mutual Consent.....................................45
10.2 Termination by Either Seller or Purchaser.........................45
10.3 Other Termination Rights..........................................45
10.4 Effect on Obligations.............................................46
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ARTICLE XI
NON-COMPETITION AGREEMENT
11.1 Non-Competition...................................................46
11.2 Judicial Reformation..............................................47
11.3 Covenants Independent.............................................47
11.4 Remedies..........................................................47
ARTICLE XII
ENVIRONMENTAL STUDIES AND REMEDIATION ACTIVITIES
12.1 Environmental Studies.............................................47
12.2 Remediation.......................................................48
12.3 No Waiver ........................................................49
ARTICLE XIII
OTHER TAX AND EMPLOYEE BENEFIT MATTERS
13.1 Other Tax Matters.................................................49
13.2 Employee Benefit Plans............................................49
ARTICLE XIV
MISCELLANEOUS
14.1 Incorporation of Annexes and Schedules............................50
14.2 Further Actions ..................................................50
14.3 Press Releases and Public Announcements...........................50
14.4 No Third Party Beneficiaries......................................50
14.5 Entire Agreement..................................................50
14.6 Succession and Assignment.........................................50
14.7 Counterparts......................................................51
14.8 Headings..........................................................51
14.9 Notices ..........................................................51
14.10 Governing Law.....................................................52
14.11 Amendments and Waivers............................................52
14.12 Severability......................................................52
14.13 Expenses..........................................................52
14.14 Construction......................................................52
14.15 Specific Performance .............................................53
14.16 Accounts..........................................................53
14.17 Bulk Sales Laws...................................................54
14.18 Environmental Disclosure Statement................................54
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SCHEDULES
2.1(b)(ii) Prepaid Expenses
2.1(b)(iii)(A) Vehicles
2.1(b)(iii)(B) Equipment
2.1(b)(iv)(A) Scheduled Contracts
2.1(b)(v)(A) Licenses
2.1(b)(v)(B) Intangible Assets
2.1(c)(xii) Scheduled Assets
2.1(d) Scheduled Leases
2.2(a)(v) Liabilities
2.3 2.3 Pre-Closing Net Book Value
2.4(a) Xxxx of Sale
2.4(b) Assignment and Assumption Agreement
2.4(c) Intellectual Property Assignment
2.4(d) Special Warranty Deed
3.3 No Violation
3.4 Approvals
3.7 Events Subsequent to August 18, 2001
3.8 Taxes
3.9 Litigation
3.11 Title to and Condition of Property
3.12 Environmental Matters
3.14 Contracts
3.15 Employee and Labor Matters and Plans
3.16 Insurance Policies
3.20 No Product Liabilities; Product Warranties
3.21 Suppliers and Customers
3.22 Intellectual Properties
5.3 Operation of Business
6.5 Required Consents
7.1(i) Transition Services Agreement
7.1(j) Distribution Service Agreement - Xxxxx Supermarkets
7.1(k) Distribution Service Agreement - Village Pantry
7.1(m) Guaranty
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement is dated as of September 20, 2001 (this
"Agreement"), by and among XxXxxx Company, Inc., a Texas corporation
("Purchaser"), Convenience Store Distributing Company, LLC, an Indiana limited
liability company ("CSDC"), Convenience Store Transportation Company, LLC, an
Indiana limited liability company ("CSTC"), and CSD Property, LLC, an Indiana
limited liability company ("CSDP") (collectively, the "Seller"). Purchaser and
Seller shall herein be individually referred to as "Party" and collectively as
"Parties".
RECITALS:
WHEREAS, Seller operates a wholesale distribution business with respect
to the sale of certain food and non-food products to convenience food stores
(the "Business") in the states of Indiana, Ohio, Kentucky, Michigan, Illinois
and the surrounding states (the "Territory"); and
WHEREAS, Seller desires to sell to Purchaser Seller's assets and
Purchaser desires to purchase such assets, upon the terms and conditions
hereinafter set forth; and
WHEREAS, in connection with the transactions contemplated hereby,
Purchaser desires to protect the goodwill of the Business to be purchased
pursuant hereto by requiring Seller, their shareholders, and those shareholders'
affiliates to enter into the non-competition provisions hereof that are
ancillary to this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties intending to be legally bound, agree
as follows.
ARTICLE I
DEFINITIONS
Defined terms not defined in this Article I shall have the meaning
assigned to them in other Articles of this Agreement. The following terms shall
have the following respective meanings for all purposes of this Agreement:
1.1 ADVERSE CONSEQUENCES. "Adverse Consequences" shall mean all
actions, suits, proceedings, hearings, investigations, charges, complaints,
claims, payments, demands, injunctions, judgments, orders, decrees, rulings,
damages (other than punitive damages), dues, penalties, fines, costs, reasonable
amounts paid in settlement, Liabilities, obligations, Taxes, liens, losses,
expenses and fees of any nature including, without limitation, interest which
may be imposed in connection therewith, costs and expenses of investigation,
actions, suits, proceedings, demands, assessments and fees, reasonable expenses
and disbursements of counsel, consultants and other experts.
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1.2 BASIS. "Basis" shall mean any past or present fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act or transaction that forms or could form the
basis for any specified consequence.
1.3 BOOKS AND RECORDS. "Books and Records" shall mean originals or
copies of all books and records of Seller that are entirely or in substantial
part related to the Business or related to Seller, wherever located, including,
without limitation, technical and procedural manuals, customer and supplier
lists, financial records, maintenance records, consulting and marketing studies,
market information, marketing and sales plans, accounting records, inventory
records, sales and sales promotional data, advertising materials, cost and
pricing information, product development information, title reports and
policies, environmental and engineering studies, technical data, specifications,
work standards and assembling and process information, designs, processes,
operating manuals, operating data and plans, engineering drawings, working
drawings, schematics, blueprints, flowsheets and models, waste disposal,
records, correspondence, files, including without limitation, blueprints,
specifications, plats, maps, surveys, building and machinery diagrams,
maintenance and production records, environmental records and reports, sales and
property Tax records and returns, sales records, Seller's customer lists, sales
records and other customer data (including credit data) relating to the Business
and all of Seller's supplier lists and other supplier data relating to the
purchase of raw materials, Inventory, utilities and other supplies used in
connection with the Business, but excluding any income Tax records and returns,
and corporate minute book and stock records, LLC records, litigation records,
and personnel and labor relations records (other than those required to be
maintained by the U.S. Department of Transportation, or other driving records).
1.4 BUSINESS DAY. "Business Day" shall mean any day, other than a
Saturday, Sunday or legal holiday under the Federal laws of the United States.
1.5 CLOSING. "Closing" shall mean the purchase and sale provided in
this Agreement.
1.6 CLOSING DATE. "Closing Date" shall mean the date the Closing takes
place.
1.7 CODE. "Code" shall mean the Internal Revenue Code of 1986, as
amended.
1.8 CONFIDENTIAL INFORMATION. "Confidential Information" shall mean any
information concerning the Business or the affairs of Seller that is not already
generally available to the public.
1.9 CONTAMINATED SITE LIST. "Contaminated Site List" shall mean any
list, registry or other compilation established by any Governmental Authority of
sites that require or potentially require investigation, removal actions,
remedial actions, monitoring or any other response under any Environmental Laws
or treaty covering environmental matters, as the result of a Release or
threatened Release of any Hazardous Materials.
1.10 DEFENSIBLE TITLE. "Defensible Title" shall mean such title that is
insurable, good, valid, indefeasible and marketable.
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1.11 ENVIRONMENTAL CONDITIONS. "Environmental Conditions" shall mean
any pollution, contamination, degradation, damage or injury caused by, related
to, arising from or in connection with the generation, handling, use, treatment,
storage, transportation, disposal, discharge, Release or emission of any
Hazardous Materials.
1.12 EMPLOYMENT LAWS. "Employment Laws" means the Occupational Safety
and Health Act, as amended, and all regulations related to the foregoing, and
all other federal, state or local laws, statutes, ordinances, rules,
regulations, codes and orders relating to employment and labor, including,
without limitation, those relating to wages, hours, employment, or labor
standards generally, pay equity, employment equity, workers' compensation,
workplace safety and insurance, occupational health and safety, employer health
tax, employment or unemployment insurance, and income tax withholdings
applicable to persons employed in connection with the Business.
1.13 ENVIRONMENTAL LAWS. "Environmental Laws" shall mean all laws,
rules, regulations, statutes, ordinances, decrees or orders of any Governmental
Authority relating to (a) the control of any potential pollutant or protection
of the air, water or land, (b) solid, gaseous or liquid waste generation,
handling, treatment, storage, disposal or transportation, and (c) exposure to
hazardous, toxic or other substances alleged to be harmful, and includes without
limitation final and binding requirements related to the foregoing imposed by
(i) the terms and conditions of any license, permit, approval or other
authorization by any Governmental Authority, and (ii) applicable judicial,
administrative or other regulatory decrees, judgments and orders of any
Governmental Authority. The term "Environmental Laws" shall include, but not be
limited to, the following statutes and the regulations promulgated thereunder,
as currently in effect or as subsequently amended: the Clean Air Act, 42 U.S.C.
ss. 7401 et seq., the Clean Water Act, 33 U.S.C. ss. 1251 et seq., the Resource
Conservation Recovery Act, 42 U.S.C. ss. 6901 et seq., the Superfund Amendments
and Reauthorization Act, 42 U.S.C. ss. 11011 et seq., the Toxic Substances
Control Act, 15 U.S.C. ss. 2601 et seq., the Water Pollution Control Act, 33
U.S.C. ss. 1251, et seq., the Safe Drinking Water Act, 42 U.S.C. ss. 300f et
seq., the Comprehensive Environmental Response, Compensation, and Liability Act,
42 U.S.C. ss. 9601 et seq., the Federal Insecticide, Fungicide and Rodenticide
Act, 7 U.S.C. ss. 136, et. seq., and any similar state, federal or local statute
or ordinance.
1.14 ENVIRONMENTAL LIABILITIES. "Environmental Liabilities" shall mean
any and all liabilities, responsibilities, claims, suits, losses, costs
(including remediation, removal, response, abatement, clean-up, investigative
and/or monitoring costs and any other related costs and expenses, including
without limitation Environmental Remediation Costs), other causes of action
recognized now or at any later time, damages, settlements, expenses, charges,
assessments, liens, penalties, fines, pre-judgment and post-judgment interest,
attorney fees and other legal fees (a) pursuant to any agreement, order, notice,
directive (including directives embodied in Environmental Laws), injunction,
judgment or similar documents (including settlements), or (b) pursuant to any
claim by a Governmental Authority or other Person for personal injury, property
damage, damage to natural resources, remediation or similar costs or expenses
incurred or asserted by such Governmental Authority or Person pursuant to common
law or statute.
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1.15 ENVIRONMENTAL REMEDIATION COSTS. "Environmental Remediation Costs"
shall mean all costs and expenses of actions or activities to (a) clean-up or
remove Hazardous Materials from the environment, (b) prevent or minimize the
movement, leaching or migration of Hazardous Materials into the environment, (c)
prevent, minimize or mitigate the Release or threatened Release of Hazardous
Materials into the environment, or injury or damage from such Release, and (d)
comply with the requirements of any Environmental Laws. Environmental
Remediation Costs include, without limitation, costs and expenses payable in
connection with the foregoing for legal, engineering or other consultant
services, for investigation, testing, sampling and monitoring, for boring,
excavation and construction, for removal, modification or replacement of
equipment or facilities, for labor and material, and for proper storage,
treatment and disposal of Hazardous Materials.
1.16 ERISA. "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
1.17 ERISA AFFILIATE. "ERISA Affiliate" shall mean any person, firm or
entity (whether or not incorporated) which, by reason of its relationship with
Seller, is required to be aggregated with Seller under Sections 414(b), 414(c)
or 414(m) of the Code, or which, together with Seller is a member of a
controlled group within the meaning of Section 4001(a) of ERISA.
1.18 GOVERNMENTAL AUTHORITY. "Governmental Authority" shall mean any
and all foreign, federal, state or local governments, governmental institutions,
public authorities and governmental entities of any nature whatsoever, and any
subdivisions or instrumentalities thereof, including, but not limited to,
departments, boards, bureaus, commissions, agencies, courts, administrations and
panels, and any divisions or instrumentalities thereof, whether permanent or ad
hoc.
1.19 GOVERNMENTAL REQUIREMENT. "Governmental Requirement" shall mean
any and all laws (including, but not limited to, applicable common law
principles), statutes, ordinances, codes, rules, regulations, interpretations,
guidelines, directions, orders, judgments, writs, injunctions, decrees,
decisions or similar items or pronouncements, promulgated, issued, passed or set
forth by any Governmental Authority.
1.20 HAZARDOUS MATERIALS. "Hazardous Materials" shall mean any (a)
toxic or hazardous materials or substances; (b) solid wastes, including
asbestos, buried contaminants, chemicals, flammable or explosive materials; (c)
radioactive materials; (d) petroleum wastes and spills or releases of petroleum
products; and (e) any other chemical, pollutant, contaminant, substance or waste
that is regulated by any Governmental Authority under any Environmental Law.
1.21 INTELLECTUAL PROPERTY RIGHTS. "Intellectual Property Rights" shall
mean any (a) patent, patent application, trademark (whether registered or
unregistered), trademark application, trade name, brand name, fictitious
business name, service xxxx (whether registered or unregistered), service xxxx
application, copyright (whether registered or unregistered), copyright
4
application, label, trade dress, formula, recipe, mixing instruction, product
specification, trade secret, know-how, computer software, computer program,
invention, design, proprietary product, technology, proprietary right or other
intellectual property right or intangible asset related to the Business owned by
Seller; or (b) right to use or exploit any of the foregoing; provided, however,
notwithstanding anything to the contrary, "Intellectual Property Rights" shall
not include any rights relating or pertaining to the Cigarette Stamping Machine
or to cigarette stamping technology developed or under development by Xxxxx
Supermarkets, Inc. or any of its affiliates.
1.22 IRS. "IRS" shall mean the Internal Revenue Service.
1.23 KNOWLEDGE. "Knowledge" shall mean, with respect to a Person,
actual knowledge after reasonable investigation, including the knowledge of such
Person's directors and officers.
1.24 LIABILITY. "Liability" shall mean any liability (whether known or
unknown, whether asserted or unasserted, whether absolute or contingent, whether
accrued or unaccrued, whether liquidated or unliquidated, and whether due or to
become due), including any liability for Taxes.
1.25 MATERIAL ADVERSE CHANGE. "Material Adverse Change" shall mean an
occurrence, event or development which has had or is reasonably likely to have a
Material Adverse Effect; provided, however, with respect to Seller, "Material
Adverse Change" shall mean a material adverse effect on the business, results of
operations, financial condition or assets of CSDC, CSTC and CSDP, taken together
as a whole.
1.26 MATERIAL ADVERSE EFFECT. "Material Adverse Effect" shall mean,
with respect to any Person, a material adverse effect on the business, results
of operations, financial condition or assets of such Person and its affiliates
taken as a whole; provided, however, with respect to Seller, "Material Adverse
Effect" shall mean a material adverse effect on the business, results of
operations, financial condition or assets of CSDC, CSTC and CSDP, taken together
as a whole. In determining whether any individual event would result in a
Material Adverse Effect, notwithstanding that such event does not of itself have
such effect, a Material Adverse Effect shall be deemed to have occurred if the
cumulative effect of such event and all other then existing events would result
in a Material Adverse Effect.
1.27 ORDINARY COURSE OF BUSINESS. "Ordinary Course of Business" shall
mean the ordinary course of business consistent with past custom and practice
(including with respect to quantity and frequency).
1.28 PBGC. "PBGC" shall mean the United States Pension Benefit Guaranty
Corporation.
1.29 PENSION PLAN. "Pension Plan" shall mean any ERISA Plan which is
subject to Title IV of ERISA or the minimum funding standards of Section 412 of
the Code or Section 302 of ERISA.
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1.30 PERMITTED EXCEPTIONS. "Permitted Exceptions" shall mean easements,
restrictions, rights-of-way, real estate taxes not due and payable and other
title matters, the existence of which individually do not have a Material
Adverse Effect on the operation of the Business on the Real Property.
1.31 PERSON. "Person" shall mean an individual, partnership,
corporation, joint venture, unincorporated organization, limited liability
company, cooperative or a Governmental Authority or agency thereof.
1.32 REAL PROPERTY. "Real Property" shall mean all those certain
tracts, pieces or parcels of land owned or leased by Seller and used in
connection with the Business, as more particularly described in Disclosure
Schedule 3.11 attached hereto and made a part hereof for all purposes (herein
collectively referred to as the "Land"), together with the buildings,
structures, fixtures, paving, curbing, trees, shrubs, plants, and other
improvements of every kind and nature presently situated on, in, or under, or
hereafter erected or installed or used in, on, or about or in connection with
the ownership, use and operation of the Land (herein collectively referred to as
the "Improvements"), and all rights and appurtenances pertaining thereto,
including, but not limited to all right, title and interest, if any, of Seller
in and to (a) any land in the bed of any street, road or avenue open or proposed
in front of or adjoining the Land; (b) any rights-of-way, rights of ingress or
egress or other interests in, on, or to, any land, highway, street, road, or
avenue, open or proposed, in, on, or across, in front of, abutting or adjoining
the Land, and any awards made, or to be made in lieu thereof, and in and to any
unpaid awards for damage thereto by reason of a change of grade of any such
highway, street, road, or avenue; (c) any easement across, adjacent or
appurtenant to the Land, existing or abandoned; (d) all sewage treatment
capacity and water capacity and other utility capacity to serve the Land and
Improvements; (e) all oil, gas, and other minerals in, on or under, and that may
be produced from the Land; (f) all water in, under or that may be produced from
the Land, and all xxxxx, water rights, permits and historical water usage
pertaining to or associated with the Land; (g) any land adjacent or contiguous
to, or a part of the Land, whether those lands are owned or claimed by deed,
limitations or otherwise, and whether or not they are located inside or outside
the description given herein, or whether or not they are held under fence by
Seller; and (h) any reversionary rights attributable to the Land.
1.33 RELEASE. "Release" shall mean any spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping
or disposing into the environment.
1.34 SEC. "SEC" shall mean the Securities and Exchange Commission.
1.35 SECURITIES ACT. "Securities Act" shall mean the Securities Act of
1933, as amended, and the rules and regulations thereunder.
1.36 SECURITY INTEREST. "Security Interest" shall mean any mortgage,
deed of trust, pledge, lien, encumbrance, lease, conditional sale contract,
claim, condition, right of first refusal, option, liability, obligation,
agreement, privilege, liberty, easement, right-of-way, limitation,
6
reservation, charge, equitable interest, other security interest or other
encumbrance of any kind; provided, however, that "Security Interest" shall not
include any Permitted Exceptions.
1.37 SUBSIDIARY. "Subsidiary" shall mean, with respect to any entity,
any entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are directly or indirectly owned by such entity.
1.38 TAX OR TAXES. "Tax" or "Taxes" shall mean any federal, state,
local, or foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental
(including taxes under Section 59A of the Code), customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated tax, or
other tax of any kind whatsoever, including any interest, penalty or addition
thereto, whether disputed or not, including such item for which Liability arises
as a responsible person, transferee or successor-in-interest.
1.39 TAX AFFILIATE. "Tax affiliate" shall mean any entity that is a
member of a group of entities that includes Seller and that files Tax Returns on
a consolidated, combined, unitary or similar basis, if Seller may be held liable
for the Taxes of such entity or such group under applicable law.
1.40 TAX RETURN. "Tax Return" shall mean any return, declaration,
report, claim for refund or information return or statement relating to Taxes,
including any schedule or attachment thereto, and including any amendment
thereof.
ARTICLE II
PURCHASE AND SALE
2.1 PURCHASE AND SALE.
(a) On and subject to the terms and conditions of this Agreement,
at the Closing, Seller shall sell, convey, transfer, assign and deliver
to Purchaser, and Purchaser shall purchase from Seller, all of Seller's
right, title and interest in and to the assets described in Section
2.1(b) (all such assets being herein collectively referred to as the
"Assets" and individually referred to as an "Asset").
(b) The Assets shall consist of all of Seller's property and
assets, real, personal or mixed, tangible and intangible, of every kind
and description, wherever located, owned by Seller at the close of
business on the Closing Date, including, but not limited to, all assets
of Seller on the Closing Date described in the following clauses (i)
through (v):
(i) Inventories. Seller's inventories located either at the
Real Property or elsewhere insofar as any of the foregoing relates
to the Business, including,
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without limitation, finished goods, work-in-progress, raw
materials, supply inventories, and other inventories (the
"Inventories").
(ii) Prepaid Expenses. All right, title and interest of Seller
in and to all prepaid rentals and other prepaid expenses of the
Business set out in Schedule 2.1(b)(ii).
(iii) Property, Plant and Equipment.
(A) Vehicles. All the trucks, trailers and other
certificated vehicles described on Schedule 2.1(b)(iii)(A) (the
"Vehicles").
(B) Equipment. Seller's furniture, equipment, machinery,
apparatus, tools, dies, appliances, implements, spare parts,
supplies and other similar tangible personal property of Seller
(other than the Vehicles and the Inventories) (the
"Equipment"). The Equipment includes, without limitation, all
of the items listed on Schedule 2.1(b)(iii)(B).
(C) Real Property. All Real Property owned or leased by
Seller, subject to the Permitted Exceptions.
(D) Computers. All computer equipment and hardware owned
by Seller, including, without limitation, all central
processing units, terminals, disk drives, tape drives,
electronic memory units, printers, keyboards, screens,
peripherals (and other input/output devices), modems and other
communication controllers, and any and all parts and
appurtenances thereto owned by Seller, together with all
Intellectual Property Rights owned by Seller and used in the
operation of such computer equipment and hardware, including,
without limitation, all software, Seller's rights under any
licenses related to such use, at any time, of such computer
equipment, hardware or software, and all leases pursuant to
which Seller leases any computer equipment, hardware or
software, in all cases insofar and only insofar as any of the
foregoing assets are owned by Seller and directly relate to the
Business.
(iv) Other Assets.
(A) Scheduled Contracts. All right, title and interest of
Seller in, to and under the contracts, agreements, arrangements
and commitments, written or oral, relating to the Business or
the Assets as described on Schedule 2.1(b)(iv)(A) (the
"Scheduled Contracts") and all rights of Seller (including
rights of refund and offset), privileges, deposits, claims,
causes of action and options relating or pertaining to the
Scheduled Contracts.
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(B) Other Property. All other or additional privileges,
rights, interests, properties and assets owned by Seller of
every kind and description and wherever located that are used
or intended for use solely in connection with the Business as
presently being conducted.
(v) Assets Not In Balance Sheet.
(A) Licenses. All right, title and interest of Seller in,
to and under all licenses and permits relating to the Business
or all or any of the Assets, including, without limitation,
Licenses as defined in Section 3.23 and those listed on
Schedule 2.1(b)(v)(A).
(B) Intangible Assets. All of Seller's covenants by
others not to compete and other Intellectual Property Rights
owned by Seller, and the right to recover for infringement
thereon, and all goodwill associated with the Business in
connection with which the marks owned by Seller are used (the
"Intangible Assets"). The Intangible Assets include, without
limitation, all of the items listed on Schedule 2.1(b)(v)(B).
(C) Books and Records. Seller's Books and Records.
(D) Names. The following names:
(i) Convenience Store Distributing Company,
(ii) Convenience Store Transportation Company, and
(iii) CSD Property.
(E) Other Intangibles. All right, title and interest of
Seller in, to and under all rights, privileges, claims, causes
of action, and options owned by Seller relating or pertaining
to the Business or the foregoing Assets.
(c) The Assets shall not include any of the following
(collectively, the "Excluded Assets"):
(i) Accounts. All accounts receivable of Seller and all other
rights of Seller to payment for goods sold or leased or for
services rendered by Seller, including, without limitation, those
which are not evidenced by instruments or chattel paper; together
with the benefit of any security for such accounts (the
"Accounts").
(ii) Consideration. The consideration delivered or to be
delivered by Purchaser to Seller for the purchase of the Assets
pursuant to this Agreement.
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(iii) Computers. All computer equipment and hardware owned by
Xxxxx Supermarkets, Inc. or any of its affiliates other than
Seller, including, without limitation, all central processing
units, terminals, disk drives, tape drives, electronic memory
units, printers, keyboards, screens, peripherals (and other
input/output devices), modems and other communication controllers,
and any and all parts and appurtenances thereto, and any related
software, together with all intellectual property rights owned by
Xxxxx Supermarkets, Inc. or any of its affiliates other than Seller
including, without limitation, all software, rights under any
licenses related to such use, at any time, of such computer
equipment, hardware or software, and all leases pursuant to which
Xxxxx Supermarkets, Inc. or any of its affiliates other than Seller
leases any computer equipment, hardware or software.
(iv) Cigarette Stamping Machine and Technology. Cigarette
Stamping Machine and any cigarette stamping technology developed or
being developed by Xxxxx Supermarkets, Inc. or any of its
affiliates.
(v) Other Assets. Any asset owned by Xxxxx Supermarkets, Inc.
or any of its affiliates other than Seller, including, but not
limited to, the mobile generator owned by Xxxxx Supermarkets, Inc.
and stored on Seller's property.
(vi) Specified Accounts. All accounts receivable of Seller
relating or pertaining to Xxxxx Supermarkets, Inc. or its
Subsidiaries or affiliates, and all rights of Seller to payments
for goods sold or leased or services rendered by Seller to any of
the foregoing; and all accounts receivable of Seller relating or
pertaining to third parties which are former customers of Seller as
of the Closing Date, or such accounts which have been outstanding
for ninety (90) days or more as of the Closing Date, or such
accounts which have been disputed in writing by the obligor
thereunder.
(vii) Cash. All cash, cash equivalents and short-term
investments.
(viii) Minute Books and Other Records. All minute books, stock
or limited liability company records and corporate seals, any Tax
books, records and returns, litigation records, claims, general
ledger system, insurance claims, and personnel and labor relations
records (other than those required to be maintained by the U.S.
Department of Transportation, or other driving records).
(ix) Records. All personnel records and other records that
Seller is required by law to retain in its possession.
(x) Refunds. All claims for refund of Taxes and other
governmental charges of whatever nature (other than Taxes
associated with returned products for which Purchaser is liable).
(xi) ERISA Plans. All ERISA Plan rights or assets.
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(xii) Agreements. All rights of Seller under this Agreement,
the Xxxx of Sale, the Assumption Agreement, and the Intellectual
Property Assignment.
(xiii) Scheduled Assets. The property and assets expressly
listed on Schedule 2.1(c)(xii).
(xiv) Cigarette Excise Tax Indicia. All cigarette excise tax
indicia not transferable to Purchaser in accordance with the
applicable Governmental Requirement.
(d) Seller shall assign to Purchaser, and Purchaser shall assume,
perform and discharge all of the liabilities, duties and obligations of
Seller that arise after the Closing Date under all leases identified on
Schedule 2.1(d), (the "Scheduled Leases") to the extent such leases are
assignable to Purchaser.
2.2 ASSUMPTION OF LIABILITIES.
(a) On the Closing Date Purchaser shall assume and agree to
discharge the following Liabilities (the "Assumed Liabilities"):
(i) all accounts payable and accrued expenses arising in the
Ordinary Course of Business;
(ii) accrued sick and vacation pay incurred by Seller prior to
the Closing Date;
(iii) any Liability under the Scheduled Contracts or agreements
included in the Assets (including any such agreement entered into
by Seller after the date of this Agreement and through the Closing
Date), but only to the extent such obligations do not arise from or
relate to any breach of any provision of any such Scheduled
Contracts or agreements by Seller;
(iv) any Liability under Scheduled Leases (including any such
agreement entered into by Seller after the date of this Agreement
and through the Closing Date), but only to the extent such
obligations do not arise from or relate to any breach of any
provision of any such Scheduled Leases by Seller;
(v) liabilities listed on Schedule 2.2(a)(v), including capital
lease obligations, but only to the extent such obligations do not
arise from or relate to any breach of any provision of such
contract by Seller;
(vi) all liabilities to Seller's customers under written (or
implied) warranties arising on or after the Closing Date;
(vii) product returns:
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(a) all liabilities of Seller to Seller's customers for
customer returns with respect to products which can be returned
to the manufacturer by Purchaser, to the extent of credit
allowed by the manufacturer;
(b) beginning with the period twenty-one (21) days after
Closing, all liabilities of Seller to Seller's customers for
customer returns and guaranteed sale obligations arising in the
Ordinary Course of Business; and
(viii) all scheduled or accrued 2000 and 2001 ad valorem or
similar Taxes under any property or lease included in the Assets.
(b) Except as otherwise provided in Section 2.2(a), Purchaser does
not assume or agree to pay, perform or discharge, and shall not be
responsible for, any other liabilities or obligations of Seller,
whether accrued, absolute, contingent or otherwise, including, without
limitation, liabilities or obligations based on, arising out of or in
connection with:
(i) any claims by any director, officer or employee of Seller
relating to the transactions contemplated hereby, this Agreement or
its performance or consummation, or any claims by any of them
relating to or arising out of (A) their employment (including,
without limitation, any modification or termination thereof) by
Seller, (B) any employment contract with Seller or (C) any pension
or other benefit liabilities of Seller;
(ii) any claims or conditions arising under or relating to
Environmental Laws or other legal requirements attributable or
relating to the Assets (including, without limitation, the
operation thereof) or the Business prior to the Closing, except as
set forth in Section 12.2;
(iii) any unlicensed or other unauthorized use by Seller of any
patented or unpatented invention, trade secret, copyright,
trademark or other Intellectual Property Right;
(iv) any intercompany royalty payable to Xxxxx Supermarkets,
Inc. or its Subsidiaries or affiliates;
(v) any liability or obligation of Seller under any note or
bond secured by the Assets;
(vi) any statutory liens accrued or existing on the Closing
Date against the Assets other than Permitted Liens;
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(vii) any known liability or obligation of Seller arising out
of or in any way relating to or resulting from any product
manufactured, distributed or sold or any repair or other services
performed, on or at any time prior to the Closing Date (including
any liability or obligation of Seller for claims made for injury to
person, damage to property or other damage, whether made in product
liability, tort, breach of warranty or otherwise), except as set
forth in Section 2.2(a); or
(viii) all Employee Benefit Plan liabilities (including but not
limited to COBRA liabilities) of Seller (except for accrued sick
and vacation pay incurred by Seller prior to the Closing Date).
2.3 PURCHASE PRICE. The purchase price to be paid by Purchaser to
Seller for the Assets shall be Sixteen Million Eight Hundred Fifty-Nine Thousand
Dollars ($16,206,000.00) (the "Purchase Price") representing the net book value
of the Assets as set forth on Schedule 2.3, subject to adjustment as set forth
in Sections 2.6 below.
(a) If the sum of the Purchase Price plus the Adjustment Amount,
minus the Estimated Purchase Price is a positive number, Purchaser
shall pay such amount to Seller within 10 days.
(b) If the sum of the Purchase Price plus the Adjustment Amount,
minus the Estimated Purchase Price is a negative number, Seller shall
pay to Purchaser such amount within 10 days.
(c) "Adjustment Amount" (which can be a positive or negative
number) means the Closing Date Net Book Value, determined pursuant to
Section 2.6, minus Pre-Closing Net Book Value as set forth on the
attached Schedule 2.3.
2.4 INSTRUMENTS OF TRANSFER; FURTHER ASSURANCES. In order to consummate
the transactions contemplated herein, at the Closing Seller and Purchaser shall
deliver to each other:
(a) a Xxxx of Sale substantially in the form attached as Schedule
2.4(a) to this Agreement ("Xxxx of Sale"), covering all of the Assets
that constitute Personal Property;
(b) an Assignment and Assumption Agreement covering all of the
Assumed Liabilities of Purchaser substantially in the form attached as
Schedule 2.4(b) to this Agreement ("Assumption Agreement");
(c) an Assignment and Transfer of Intellectual Property to
Purchaser substantially in the form attached as Schedule 2.4(c) to this
Agreement (an "Intellectual Property Assignment") covering all Assets
constituting Intellectual Property Rights.
(d) a Special Warranty Deed Purchaser substantially in the form
attached as Schedule 2.4(d) to this Agreement ("Deed") necessary to
convey the Real Property to Purchaser.
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At the Closing, and at all times thereafter as may be necessary, Seller shall
execute and deliver to Purchaser (a) such other instruments of transfer as shall
be reasonably necessary or appropriate to vest in Purchaser title to the Assets
and to comply with the purposes and intent of this Agreement and (b) such other
instruments as shall be reasonably necessary or appropriate to evidence the
assignment by Seller and assumption by Purchaser of the Scheduled Contracts, the
Scheduled Leases and other assumed liabilities. At the Closing, and at all times
thereafter as may be necessary, Purchaser shall execute and deliver to Seller
such other instruments as shall be reasonably necessary or appropriate to
evidence the assumption by Purchaser of all Assumed Liabilities.
2.5 CLOSING.
(a) Subject to the provisions of Article VII hereof, the Closing of
the transactions contemplated hereunder shall take place at 11:00 a.m.,
local time, at the offices of CSDC, on the first Monday or Tuesday no
later than the sixth Business Day after satisfaction of the latest to
occur of the conditions set forth in Article VII hereof (other than any
conditions which are waived in accordance with said Article) or such
other time, place or date as Seller and Purchaser may mutually agree.
(b) At the Closing:
(i) Seller shall deliver to Purchaser the Xxxx of Sale, the
Intellectual Property Assignment, the Special Warranty Deed, and
title documents relating to all owned Vehicles together with
appropriate transfer documentation; and
(ii) Seller shall deliver to Purchaser those other documents
required to be delivered to Purchaser pursuant to the terms of this
Agreement, including, without limitation, the documents
contemplated in Section 7.1.
(c) At Closing:
(i) Purchaser shall pay to Seller by wire transfer of
immediately available funds the Estimated Purchase Price or other
such amount as the Parties may mutually agree;
(ii) Purchaser shall deliver to Seller the Assignment and
Assumption Agreement; and
(iii) Purchaser shall deliver or cause to be delivered to
Seller those documents required to be delivered to Seller pursuant
to the terms of this Agreement, including, without limitation, the
documents contemplated in Section 7.2.
(d) At the Closing, each of the Parties shall execute, deliver and
acknowledge, or cause to be executed, delivered and acknowledged, to
the other Parties such other
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certificates and documents required to be delivered by such Party
hereunder.
(e) "Estimated Purchase Price", means the Pre-Closing Net Book
Value, as adjusted pursuant to this Section 2.5(e). For purposes of
determining the Estimated Purchase Price only, Seller shall reasonably
adjust the Pre-Closing Net Book Value to reflect the estimated true-up
of Inventory as of the Closing Date pursuant to the written advice
furnished to Seller pursuant to Section 2.5(f).
(f) For purposes of determining the Estimated Purchase Price, the
Parties have mutually agreed upon Xxxxxx Xxxxxxxx ("Xxxxxx Xxxxxxxx")
to act as a third party in determining the book value of the Inventory,
in accordance with generally accepted accounting principles consistent
with Seller's past practice (except as set forth in this Agreement).
All costs incurred with respect to Xxxxxx Xxxxxxxx pursuant to this
Section 2.5 shall be borne equally by Seller and Purchaser. The book
value of the Inventory, shall be determined by Xxxxxx Xxxxxxxx:
(i) observing a physical count of the Inventory conducted by
Seller on the Friday before the Closing Date,
(ii) including only those items which are on hand, in
appropriate quantities, usable and saleable in the Ordinary Course
of Business as of the Closing Date,
(iii) excluding cigarette excise tax indicia, the transfer of
which is statutorily prohibited, and
(iv) using Seller's cost of such items on a first-in,
first-out basis less an allowance for active manufacturers' deals and
allowances which are based on inventory purchases (as opposed to sales)
and cash discounts (exclusive of all manufacturer individual programs
such as the Xxxxxx Xxxxxx Xxxxxxx Program); provided, however, such
allowance shall be limited to (A) zero if such allowance before
reduction is less than $250,000 or (B) the allowance before reduction
less $250,000.
The physical inventory shall be conducted by Seller (who may be accompanied by
representatives of Xxxxxx Xxxxxxxx and Purchaser) and shall be conducted in a
manner consistent with Seller's practice in prior periods, including such
periods' methods of counting, except as otherwise provided in this Agreement. In
determining whether inventory is on hand, in appropriate quantities, usable and
saleable in the Ordinary Course of Business as of the Closing Date, the
following items shall not be included: (i) perishable food which is not fresh;
and (ii) items which cannot be sold in the Ordinary Course of Business by Seller
prior to their stated expiration date, consistent with Seller's past practice.
2.6 ADJUSTMENTS TO PURCHASE PRICE.
(a) As soon as practicable and in any event no later than forty
five (45) days after the Closing Date, Seller shall deliver to
Purchaser its determination of the net book
15
value of Seller as of the Closing Date, prepared in accordance with
generally accepted accounting principles consistent with Seller's past
practice (except as set forth in this Agreement)(the "Closing Date Net
Book Value"). Seller shall provide Purchaser with reasonable access to
its work papers in connection with such calculation and shall make
itself available at reasonable times upon request of Purchaser to
discuss with Purchaser such calculation.
(b) Within thirty (30) days after receipt of the Closing Date Net
Book Value, Purchaser shall inform Seller in writing that either the
Closing Date Net Book Value is acceptable or object to the Closing Date
Net Book Value in writing setting forth a specific description of
Purchaser's objections (it being agreed that the failure of Purchaser
to deliver such written notice to Seller within such thirty (30) day
period shall be deemed acceptance by Purchaser). If Purchaser objects
as provided above and if Seller does not agree with Purchaser's
objections, if any (it being agreed that the failure of Seller to
deliver written notice to the Purchaser of Seller's disagreement with
Purchaser's objections within thirty (30) days of Seller's receipt of
Purchaser's objections shall be deemed acceptance by Seller), or such
objections are not resolved on a mutually agreeable basis within thirty
(30) days after Seller's receipt of Purchaser's objections, any such
disagreement shall be promptly submitted to Xxxxxx Xxxxxxxx. Xxxxxx
Xxxxxxxx shall resolve within thirty (30) days after said firm's
engagement by the parties the differences regarding the Closing Date
Net Book Value in accordance with generally accepted accounting
principles consistently applied (except as set forth in Section 2.6(d)
below) and this Agreement. Xxxxxx Xxxxxxxx'x determination of the
Closing Date Net Book Value shall be deemed to be final.
(c) The fees, expenses and costs of Xxxxxx Xxxxxxxx pursuant to
this Section 2.6 shall be borne by the party (Purchaser or Seller)
whose estimation of the Closing Date Net Book Value, taking into
account any changes made prior to submission to Xxxxxx Xxxxxxxx, is
farthest from the amount of the Closing Date Net Book Value as finally
determined by Xxxxxx Xxxxxxxx. Seller and Purchaser shall each bear the
fees, costs and expenses of its own accountants.
(d) The book value of the Inventory, shall be determined by:
(i) taking a physical count of the Inventory on the Friday
before the Closing Date,
(ii) including only those items which are on hand, in
appropriate quantities, usable and saleable in the Ordinary Course
of Business as of the Closing Date,
(iii) excluding cigarette excise tax indicia, the transfer of
which is statutorily prohibited, and
16
(iv) using Seller's cost of such items on a first-in, first-out
basis less an allowance for active manufacturers' deals and
allowances which are based on inventory purchases (as opposed to
sales) and cash discounts (exclusive of all manufacturer individual
programs such as the Xxxxxx Xxxxxx Xxxxxxx Program); provided,
however, such allowance shall be limited to (A) zero if such
allowance before reduction is less than $250,000 or (B) the
allowance before reduction less $250,000.
The physical inventory shall be conducted by Seller (who may be accompanied by a
representative of Purchaser, in its sole discretion) and shall be conducted in a
manner consistent with Seller's practice in prior periods, including such
periods' methods of counting, except as otherwise provided in this Agreement.
Each Party shall be responsible for their own individual costs incurred to
conduct the physical inventory. In determining whether inventory is on hand, in
appropriate quantities, usable and saleable in the Ordinary Course of Business
as of the Closing Date, the following items shall not be included: (i)
perishable food which is not fresh; and (ii) items which cannot be sold in the
Ordinary Course of Business by Seller prior to their stated expiration date,
consistent with Seller's past practice.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Seller hereby jointly and severally represents and warrants to Purchaser
that the statements contained in this Article III are correct and complete as of
the date of this Agreement and will be correct and complete as of the Closing
Date (as though made then and as though the Closing Date were substituted for
the date of this Agreement throughout this Article III). The representations and
warranties of Seller under this Agreement shall extend to and include each of
the entities defined as Seller.
3.1 ORGANIZATION. Seller is duly organized, validly existing and in
good standing under the laws of the State of Indiana and has all necessary power
and authority to conduct its business as it is now being conducted, and to own,
operate and lease the properties and assets it currently owns, operates or holds
under lease and to perform its obligations under all of its contracts. Seller is
duly qualified or licensed to do business and is in good standing in each
jurisdiction where the character of its business or the nature of its properties
makes such qualification or licensing necessary, except where the failure to so
qualify or be licensed would not have a Material Adverse Effect. Neither Seller
nor any of their respective members has ever approved, commenced any proceedings
or made any election contemplating, the dissolution or liquidation of Seller, or
the winding up or cessation of Seller's business or affairs.
3.2 AUTHORIZATION. Seller has all requisite power and authority to
execute and deliver this Agreement and each of the other agreements contemplated
by this Agreement (the "Seller Closing Documents"), and to perform its
obligations under this Agreement and the Seller Closing Documents. The execution
and delivery of this Agreement and the Seller Closing Documents and the
consummation of the transactions contemplated by this Agreement and the
17
performance by Seller of its obligations hereunder have been duly authorized by
all necessary action and by law on the part of Seller. This Agreement and each
of the other agreements contemplated by this Agreement have been (or, with
respect to Agreements to be delivered at Closing, will be) duly executed and
delivered by Seller and constitute the legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with their terms (except as the
enforceability thereof may be limited by any applicable bankruptcy, insolvency
or other laws affecting creditors' rights generally or by general principles of
equity, regardless of whether such enforceability is considered in equity or at
law).
3.3 NO VIOLATION. Except as set forth in Disclosure Schedule 3.3, the
execution and delivery of this Agreement by Seller does not, and the
consummation by Seller of the transactions contemplated hereby and compliance
with the terms hereof will not, (a) conflict with, or result in any violation of
or default or loss of any benefit under, any provision of Seller's
organizational documents or any resolution adopted by Seller's or Seller's
stockholders or Boards of Directors or members; (b) conflict with, or result in
any violation of or default or loss of any benefit under, any permit,
concession, grant, franchise, law, rule or regulation, or any judgment, decree
or order of any court or other governmental agency or instrumentality to which
Seller is a party or to which it or any of its property is subject; (c) conflict
with, or result in a breach or violation of or default or loss of any benefit
under, or accelerate the performance required by, the terms of any agreement,
contract, indenture or other instrument to which Seller is a party or to which
any of its property is subject, or constitute a default or loss of any right
thereunder or an event which, with the lapse of time or notice or both, might
result in a default or loss of any right thereunder or the creation of any
Security Interest upon any of the Assets.
3.4 APPROVALS. Except as set forth in Disclosure Schedule 3.4, the
execution and delivery of this Agreement or any of the other agreements
contemplated hereto, and the consummation of the transactions contemplated
hereby and thereby by Seller shall not require the consent, approval, order or
authorization of any Governmental Authority or any other Person under any
statute, law, rule, regulation, permit, license, agreement, indenture or other
instrument or contract to which Seller is a party or to which any of its or
their properties are subject, and no declaration, filing or registration with
any Governmental Authority or is required by Seller in connection with the
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby, or the performance by Seller and its affiliates, or
respective obligations hereunder.
3.5 FINANCIAL STATEMENTS AND OTHER INFORMATION.
(a) Seller has delivered to Purchaser (i) true, correct and
complete copies of the unaudited balance sheet of Seller as of March
31, 2001, and the unaudited related statements of operations for such
year (the "Annual Financial Statements") and (ii) true, correct and
complete copies of the unaudited balance sheet of Seller as of August
18, 2001, and the related unaudited statements of operations for the
period ended August 18, 2001 (the "Interim Financial Statements"). The
Annual Financial Statements and Interim Financial Statements are herein
collectively referred to as the "Financial Statements".
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(b) The Financial Statements have been prepared in accordance with
the books and records of Seller and have been prepared in accordance
with generally accepted accounting principles consistently applied
throughout the periods covered thereby, except for the absence of
footnotes, and other presentation items and except for year-end
adjustments in the Interim Financial Statements and the balance sheets
included therein present fairly as of their respective dates the
financial condition of Seller. The statements of operations included in
the Financial Statements present fairly the results of operations of
Seller for the periods indicated. The statements of operations included
in the Financial Statements do not contain any items of special or
non-recurring income or other income not earned in the ordinary course
of business except as expressly specified therein.
(c) The books, records and accounts of Seller maintained with
respect to its business accurately and fairly reflect, in reasonable
detail, the transactions and their assets and liabilities with respect
to their business. Seller has not engaged in any transaction with
respect to its business, maintained any bank account for its business
or used any of its funds in the conduct of its business except for
transactions, bank accounts and funds which have been and are reflected
in its normally maintained books and records.
(d) Since August 18, 2001, there has been (i) no Material Adverse
Change in Seller, whether as a result of any legislative or regulatory
change, revocation of any license or right to do business, fire,
explosion, accident, casualty, labor trouble, flood, drought, riot,
storm, condemnation or act of God or otherwise, and (ii) to the
Knowledge of Seller, no fact or condition exists or is contemplated or
threatened which could reasonably be anticipated to cause such a change
in the future.
3.6 NO UNDISCLOSED LIABILITIES. Except as set forth in the Financial
Statements, the Liabilities on the latest balance sheet consist solely of
accrued obligations and Liabilities incurred by Seller in the Ordinary Course of
Business or related to the Business to Persons which are not affiliates of
Seller. To the Knowledge of Seller, there are no Liabilities of Seller or
related to the Business of any kind whatsoever, whether or not accrued and
whether or not contingent or absolute, determined or determinable or otherwise,
including without limitation documentary or standby letters of credit, bid or
performance bonds, or customer or third party guarantees, and no existing
condition, situation or set of circumstances that could reasonably result in
such a Liability, other than (i) Liabilities disclosed in the Financial
Statements or (ii) Liabilities which have arisen after August 18, 2001 in the
Ordinary Course of Business and consistent with past practice (none of which is
a Liability for breach of contract, breach of warranty, tort, infringement claim
or lawsuit). Seller is not aware of any facts or circumstances that might
reasonably give rise to the assertion of such a claim against Seller or related
to the Business thereunder.
3.7 EVENTS SUBSEQUENT TO AUGUST 18, 2001. Since August 18, 2001, other
than as set forth on Disclosure Schedule 3.7, Seller has conducted its business
only in the Ordinary Course of Business and there has not been any:
19
(a) Change in Seller's authorized or issued limited liability
company interests, grant of any stock option or right to purchase
limited liability company interests of Seller or issuance of any
security convertible into such limited liability company interests;
(b) Payment (except in the Ordinary Course of Business) or increase
by Seller of any bonuses, salaries or other compensation to any member,
director, officer or employee or entry into any employment, severance,
deferred compensation, collective bargaining or similar contract with
any director, officer or employee;
(c) Adoption of, amendment to or increase in the payments to or
benefits under any ERISA Plan of Seller;
(d) Damage to or destruction or loss of any Asset not covered by
insurance;
(e) Termination of or receipt of written notice of termination of
any contract or transaction involving a total remaining commitment by
Seller of at least $25,000;
(f) Sale (other than sales of Inventories in the Ordinary Course of
Business), lease or disposition of any Asset or property of Seller
(including the Intellectual Property Assets) or creation of any
Security Interest on any Asset, except where such sale would not
reasonably be expected to have a Material Adverse Effect on Seller;
(g) Delay or postponement of the payment of accounts, payable and
other Liabilities outside the Ordinary Course of Business; or
(h) Action, suit, litigation, contest, arbitration or other
proceeding commenced by or against Seller or settled by Seller expected
to have a Material Adverse Effect on Seller.
3.8 TAXES.
(a) All Taxes owed by Seller (whether or not shown on any Tax
Return) have been paid. No claim has ever been made by an authority in
a jurisdiction where Seller, any of its Subsidiaries and any Tax
affiliate do not file Tax Returns that they are or may be subject to
taxation by that jurisdiction. There are no liens for Taxes on any of
the Assets of Seller.
(b) Seller has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third
party.
(c) Each of the entities referred to as "Seller" is treated as a
partnership for federal income tax purposes.
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(d) There is no dispute or claim concerning any Tax Liability of
Seller. Disclosure Schedule 3.8 lists all federal, state, local and
foreign income Tax Returns filed with respect to Seller for taxable
periods ended on or after April 1, 2000.
3.9 LITIGATION. Except as set forth on Disclosure Schedule 3.9, there
is no claim, action, prosecution, inquiry, suit, investigation, arbitration or
proceeding pending or, threatened against or affecting Seller or any of its
respective properties or rights, the Business or the Assets (including without
limitation no charge of patent and/or trademark infringement), or which
questions or challenges the validity of this Agreement or any document
contemplated herein or any action to be taken by Seller or Purchaser pursuant to
this Agreement or in connection with the transactions contemplated hereby, by or
before any Governmental Authority, or any Basis in fact therefor known to
Seller, against or involving Seller or any of its officers, directors or
employees (in their capacity as such), Assets, Business or products, whether at
law or in equity. None of the actions, suits, proceedings, hearings and
investigations set forth on Disclosure Schedule 3.9 could reasonably be expected
to result in any Material Adverse Change in Seller. Seller, the Business and the
Assets are not subject to any outstanding injunction, judgment, order, decree,
ruling or charge which could reasonably be expected to have a Material Adverse
Effect.
3.10 COMPLIANCE WITH LAWS. Seller is and at all times has been in
compliance in all material respects with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings and
charges thereunder) of any Governmental Authority relating to or affecting the
operation, conduct or ownership of their respective property or business, and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand or notice has been filed or commenced or, to Seller's Knowledge,
threatened against any of them alleging any failure so to comply. Neither Seller
nor, to the Knowledge of Seller, any of Seller's directors, officers,
consultants or employees (in their capacity as such), is in default in any
material respect with respect to any order, writ, injunction or decree known to
or served upon Seller of any Governmental Entity. There is no existing law,
rule, regulation or order, whether Federal, state, local or foreign, which would
prohibit or materially restrict Seller from, or otherwise Materially Adversely
Effect Seller in, conducting its business in any jurisdiction in which it is now
conducting business or in which it currently proposes to conduct business.
3.11 TITLE TO AND CONDITION OF PROPERTY.
(a) Disclosure Schedule 3.11 identifies all of the rights and
interests in Real Property and leasehold estates owned or used by
Seller and relating to the Business and the nature and amount of its
respective interest therein. Seller has or at Closing will have,
Defensible Title to all Real Property. Seller, has, or at Closing shall
have, valid, subsisting and enforceable leases to all leasehold estates
held by Seller (individually, a "Leased Property" and collectively the
"Leased Properties"). The Real Property and Leased Property are
sometimes collectively referred to herein as "Seller Property."
(b) With respect to each parcel of Real Property:
21
(i) there are no pending or, to Seller's Knowledge,
threatened condemnation proceedings, lawsuits or
administrative actions relating to the property or other
matters affecting adversely the current use, occupancy or
value thereof;
(ii) the legal description for the parcel contained
in Disclosure Schedule 3.11 is the same as that contained in
the deed by which Seller or its affiliates (as applicable)
acquired such parcel and describes such parcel fully and
adequately, to Seller's Knowledge, the Improvements are
located within the boundary lines of the described parcels of
land, are not in violation of applicable setback requirements,
zoning laws and ordinances (and none of the properties or
buildings or improvements thereon are to Seller's Knowledge,
subject to "permitted non-conforming use" or "permitted
non-conforming structure" classifications), and do not
encroach on any easement which may burden the land, and, to
Seller's Knowledge, the land does not serve any adjoining
property for any purpose inconsistent with the use of the
land, and the property is not located within any flood plain
or subject to any similar type restriction for which any
permits or licenses necessary to the use thereof and fully
transferable to Purchaser at Closing have not been obtained;
(iii) to Seller's Knowledge, all Improvements and
other facilities on the parcel have received all approvals of
Governmental Entities (including licenses and permits)
required in connection with the ownership or operation thereof
and have been operated and maintained in all material respects
in accordance with all applicable Governmental Requirements;
(iv) Seller has not granted any leases, subleases,
licenses, concessions or other agreements, written or oral,
granting to any party or parties the right of use or occupancy
of any portion of the parcel of Real Property;
(v) Seller has not granted any outstanding options or
rights of first refusal to purchase the parcel of Real
Property, or any portion thereof or interest therein;
(vi) to Seller's Knowledge, there are no parties
(other than Seller) in possession of the parcel of Real
Property, other than tenants under any leases disclosed in the
Disclosure Schedule which are in possession of space to which
they are entitled under such leases;
(vii) all facilities located on the parcel of Real
Property are supplied with utilities and other services
necessary for the operation of such facilities, including,
without limitation, gas, electricity, water, telephone,
sanitary sewer and storm sewer, all of which services are, to
Seller's Knowledge, adequate in accordance with all applicable
laws, ordinances, rules and regulations and enter
22
the parcel of Real Property directly via public roads or via
permanent, irrevocable, appurtenant easements benefiting the
parcel of Real Property; and
(viii) each parcel of Real Property abuts on and has
direct vehicular access to a public road, or has access to a
public road via a permanent, irrevocable, appurtenant easement
benefiting the parcel of Real Property, and access to the
property is provided by paved public right-of-way with
adequate curb cuts available.
(c) With respect to each parcel of Leased Property:
(i) Seller as lessee has the right under valid leases
to occupy, use, possess and control all property leased by
Seller or relating to the Business or any of the other Assets
as now occupied, used, possessed and controlled by Seller or
its affiliates.
(ii) Seller has not assigned, transferred, conveyed,
mortgaged, deeded in trust or encumbered any interest in the
leasehold;
(iii) to Seller's Knowledge, all leased facilities
have received all approvals of Governmental Entities
(including licenses and permits) required in connection with
the operation thereof and have been operated and maintained in
all material respects in accordance with all applicable
Governmental Requirements; and
(iv) all leased facilities are supplied with
utilities and other services necessary for the operation of
said facilities.
(d) Each lease or agreement under which Seller is a lessee or
lessor of any property, real or personal, is a valid and binding
agreement of Seller and, to the Knowledge of Seller, the other party
thereto, without any default by Seller thereunder and, to the Knowledge
of Seller, without any default thereunder by any other party thereto
(with such exceptions as are, individually or in the aggregate, not
material and do not, individually or in the aggregate, materially
interfere with the use made and proposed to be made of such properties
by Seller). No event has occurred and is continuing which, with due
notice or lapse of time or both, would constitute a default or event of
default by Seller under any such lease or agreement or, to the
Knowledge of Seller, by any other party thereto. Seller's possession of
such property has not been disturbed and no claim has been asserted in
writing against Seller adverse to its rights in such leasehold
interests. None of the real property related to the Business leased by
Seller is subject to any leases or rights of occupancy by any third
party. There are no options, rights of first refusal, rights of first
offer or other similar rights in favor of any Person with respect to
the real property used in connection with the Business.
23
(e) All Tangible Assets (as herein defined) are, to the Knowledge
of Seller, in good operating condition and repair, normal wear and tear
excepted, free (in the case of buildings or structures) of any
structural or engineering defects, are subject to continued repair and
replacement in accordance with past practice and all applicable laws
and regulations, are usable in the Ordinary Course of Business as
conducted on the date hereof, are adequate and suitable for the uses to
which they are being put and conform in all material respects to all
applicable laws, ordinances, codes, rules, regulations and
authorizations relating to their construction, use and operation. To
Seller's Knowledge, none of the Tangible Assets that are being used in,
or could reasonably be expected to be used in, the Business are in need
of maintenance or repairs other than ordinary routine maintenance and
repairs which are not material, individually or in the aggregate, in
nature or cost.
(f) Except for Improvements, Vehicles and Equipment (collectively,
the "Tangible Assets") not of a material amount, Disclosure Schedules
2.1(b)(iii)(A) and 2.1(b)(iii)(B) set forth all Improvements, Vehicles
and Equipment, respectively. For purposes of this subsection only, "not
of a material amount" shall mean Tangible Assets that individually or
in the aggregate do not exceed $25,000.00. Seller owns and has good,
valid and marketable title to, all Tangible Assets purported to be
owned by it or used in the Business, including all assets reflected on
the Financial Statements and all assets acquired since August 18, 2001,
and all other assets reflected in Seller's books and records as being
owned by Seller. Seller holds or has the right to use in the Business
all of the assets and properties (including all licenses and
agreements) currently being used or which are reasonably necessary to
permit the operation of the Business in the manner currently conducted
and in a manner consistent with at least the same standards of quality
and reliability as have been achieved as of the date hereof. Seller and
the Purchaser acknowledge and agree that it is their intent that the
Purchaser have possession of all real estate used in, usable with or
related to the operation of the Business that is owned or leased by
Seller.
3.12 ENVIRONMENTAL MATTERS.
(a) With respect to permits and licenses, (i) all licenses,
permits, consents or other approvals required under Environmental Laws
that are necessary to the operations of the Business have been obtained
and are in full force and effect and Seller is not aware of any Basis
for revocation or suspension of any such licenses, permits, consents or
other approvals; (ii) to the Knowledge of Seller, no Environmental Laws
impose any obligation upon Purchaser, as a result of any transaction
contemplated hereby, requiring prior notification to any Governmental
Authority of the transfer of any permit, license, consent or other
approval which is necessary to the operations of the Business; (iii)
all of the facilities and operations of the Business were constructed,
and have been operated, in all material respects in accordance with the
representations and conditions made or set forth in the permit
applications and the permits for the Business; and (iv) the Business
has at all times been operated in full compliance in all material
respects with such permits,
24
licenses, consents or approvals, and within the production levels or
emission levels specified in such permits, licenses, consents or
approvals.
(b) Seller has at all times operated the Business and Assets in
compliance in all material respects with all applicable limitations,
restrictions, conditions, standards, prohibitions, requirements and
obligations of Environmental Laws and related orders of any court or
other Governmental Authority.
(c) There are not any existing, pending or, to the Knowledge of
Seller, threatened actions, suits, claims, investigations, inquiries or
proceedings by or before any court or any other Governmental Authority
directed against Seller in connection with the operation of the
Business or Assets which pertain or relate to (i) any remedial
obligations under any applicable Environmental Law, (ii) violations by
Seller of any Environmental Law, (iii) personal injury or property
damage claims relating to a release of chemicals or Hazardous Materials
by Seller or (iv) response, removal or remedial costs under the
Comprehensive Environmental Response, Compensation, and Liability Act
or any similar state law.
(d) No portion of the Real Property or any other real property
previously owned or leased by Seller or used in the Business is listed
on any Contaminated Site List.
(e) There has been no Release of any Hazardous Materials on or
underlying any Real Property or any other real property previously
owned or leased by Seller or used or previously used in connection with
the Business.
(f) No asbestos-containing materials or polychlorinated biphenyls
are present on or underlying any of the Real Property or any other real
property previously owned or leased by Seller or used or previously
used in connection with the Business.
(g) Except as set out in Disclosure Schedule 3.12, there are no
underground storage tanks for Hazardous Materials, active or abandoned,
at any of the Real Property or any other real property previously owned
or leased by Seller or used or previously used in the Business.
(h) Seller has provided to Purchaser all engineering, geologic,
environmental and other documents or maps in the possession of Seller
relating to (i) any Environmental Conditions existing on the Real
Property, or (ii) any violations by Seller of any Environmental Laws,
or Seller or its affiliates' violation of any Environmental Laws with
respect to the Real Property.
(i) All Hazardous Materials, if any, generated by the Business have
been transported, stored, treated and disposed of by transporters or
carriers, or at treatment, storage and disposal facilities, authorized
or maintaining valid permits under all applicable Environmental Laws.
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(j) Seller is not aware of any Environmental Remediation Costs
which are required or have been planned relating to the operation of
the Business for which Seller reasonably anticipates payment or
accrual.
3.13 INVENTORIES. Seller has good and marketable title to all of the
Inventories. Upon Seller's execution and delivery of the Xxxx of Sale, Purchaser
shall own good and marketable title to the Inventory, free and clear of all
Security Interests.
3.14 CONTRACTS.
(a) Disclosure Schedule 3.14 sets forth a true, complete and
accurate list of each contract, agreement, arrangement or commitment,
written or oral included in the Assets (a "Contract") to which Seller
is a party relating to the Business or the Assets, or by or to which
the Business or Assets may be subject, of a type described below and
Seller has made available to Purchaser for its review true and complete
copies of each:
(i) employee agreement;
(ii) employee collective bargaining agreement or other contract
with any labor union;
(iii) covenant of Seller not to compete or other covenant of
Seller restricting the development, manufacture, marketing or
distribution of the products and services of Seller or relating to
the Business;
(iv) contract with (A) Seller or (B) any current or former
officer, director or employee of Seller (other than employee
agreements);
(v) lease, sublease or similar agreement with any Person under
which Seller is a lessor or sublessor of, or makes available for
use to any Person any Seller Property;
(vi) lease, sublease or similar agreement with any Person under
which (A) Seller is lessee of, or holds or uses, any machine,
equipment, vehicle or other tangible personal property owned by any
Person and used in the Business, except for short-term rentals of
equipment in the Ordinary Course of Business not exceeding a
material amount individually or in the aggregate, and an indication
whether any such Scheduled Contract constitutes a capital lease, or
(B) Seller is a lessor or sublessor of, or makes available for use
by any Person, any tangible personal property owned or leased by
Seller and used in the Business, in any such case which has a
material future liability or receivable (for purposes of this
subsection only, "material" shall mean in excess of $10,000.00);
26
(vii) continuing Contract for the future purchase of materials
or products which has a material aggregate future liability to any
Person (for purposes of this subsection only, "material" shall mean
in excess of $10,000.00);
(viii) continuing Contract for the future purchase of supplies
or equipment, management, service, consulting or other similar type
of Contract or advertising agreement or arrangement, in any such
case which has a material aggregate future liability to any Person
(for purposes of this subsection only, "material" shall mean in
excess of $10,000.00);
(ix) license option or other agreement relating in whole or in
part to Intellectual Property Rights (including any license or
other agreement under which Seller or its affiliates is licensee or
licensor of any such Intellectual Property Rights and relates to
the Business or the Assets) or to trade secrets, confidential
information or proprietary rights and processes of Seller, the
Business or any other Person or entity;
(x) Mortgage, pledge, security agreement, deed of trust or
other instrument granting a Security Interest upon any Seller
Property, which Security Interest is described in reasonable detail
on Disclosure Schedule 3.14;
(xi) Agreement or instrument providing for indemnification of
any person with respect to liabilities relating to any current or
former business of Seller or any predecessor Person;
(xii) Contract or other arrangement that involves performances
of services or delivery of goods or materials by Seller or its
affiliates of a material amount or value other than any Contract or
other arrangement entered into in the Ordinary Course of Business
consistent (in amount and kind) with past practice (for purposes of
this subsection only, "material" shall mean in excess of
$10,000.00);
(xii) Contract or other arrangement of Seller including,
without limitation, any partnership or joint venture agreement, any
stock or asset acquisition agreement, any joint venture agreement
and any strategic marketing or alliance agreement;
(xiv) Contract or other arrangement relating to the sale or
purchase by any Seller of any properties, assets or business
operations, other than the sale of inventory in the Ordinary Course
of Business, or for the grant of any option relating to any of the
foregoing;
(xv) Other agreement, contract, lease, license, commitment or
instrument to which Seller is a party or by or to which it or any
of the Assets or Business is bound or subject which has a material
aggregate future liability to any
27
Person (for purposes of this subsection only, "material" shall mean
in excess of $10,000.00).
(b) With respect to each Scheduled Contract: (i) the agreement is
legal, valid, binding, enforceable by the Seller as applicable, and in
full force and effect; (ii) the agreement shall continue to be legal,
valid, binding, enforceable by the Purchaser and in full force and
effect following the consummation of the transactions contemplated
hereby; (iii) neither Seller nor, to the Knowledge of Seller, any other
party thereto, is in breach or default, and no event has occurred which
with notice or lapse of time would constitute a breach or default, or
permit termination, modification or acceleration, under the agreement;
and (iv) no party has repudiated any provision of the agreement. There
are no Liabilities of Seller or, to the best Knowledge of Seller, any
other party to any of the Contracts arising from any breach of or
default in any provision thereof, nor has there occurred any breach or
default thereof by Seller which would permit the acceleration of any
obligation of any party thereto or the creation of a Security Interest
upon any Assets. There are no negotiations pending or in progress to
revise any material terms of such Contracts.
3.15 EMPLOYEE AND LABOR MATTERS AND PLANS.
(a) Disclosure Schedule 3.15(a) sets forth the names and title of
all members of the board of managers and officers of Seller and all
employees of Seller earning in excess of $100,000 per annum, and the
annual rate of compensation (including bonuses) being paid by Seller to
each such member of the board of managers, officer and employee of
Seller as of the most recent practicable date.
(b) Disclosure Schedule 3.15(b) hereto lists each employment,
bonus, deferred compensation, pension, stock option, stock appreciation
right, profit-sharing or retirement plan of Seller, copies of which
have heretofore been made available to Purchaser. Seller does not have
any commitment: (i) to create any additional agreement, plan,
arrangement or practice; or (ii) to modify or change any such
agreement, plan, arrangement or practice.
(c) Except as set forth in Disclosure Schedule 3.15(c), each of the
plans or arrangements listed in Disclosure Schedule 3.15(b) complies
and has complied, in form and operation, in all respects with the
applicable requirements of ERISA, the Code and other applicable laws.
(d) Seller does not sponsor, participate in or contribute to, and
has not sponsored, participated in, or contributed to a Pension Plan.
No Pension Plan of an ERISA Affiliate has been completely terminated;
neither Seller nor any ERISA Affiliate has incurred or presently owes
any liability to the PBGC or otherwise under Title IV of ERISA
(including PBGC premiums past due or excise taxes under Section 4971 of
the Code), or in connection with an "accumulated funding deficiency"
within the meaning of Section 302 of ERISA and Section 412 of the Code,
whether or not waived; there has
28
been no "Reportable Event" as defined in Section 4043 of ERISA with
respect to any Pension Plan that has not been waived by the PBGC.
(e) Seller has no obligation to provide retiree medical or life
insurance benefits to any currently retired or future retired or former
employee of the Business other than pursuant to COBRA.
(f) For each Benefit Plan which is a multiemployer plan (as defined
in Section 3(37) of ERISA) (which includes each welfare benefit plan
which, pursuant to its trust agreement, contract, or otherwise, imposes
any post-withdrawal liability or contribution obligations upon
employers withdrawing from such plan) to which such Seller or any ERISA
Affiliate has or has had, an obligation to contribute, such Seller has
provided Buyer with a copy of the most recent letter from the
administrator of the multiemployer plan (as defined in Section 3(37) of
ERISA) setting forth the estimated withdrawal liability which would be
imposed by the Benefit Plan if the Business, such Seller or any ERISA
Affiliate were to withdraw from such Benefit Plan in a complete
withdrawal, as of the most recently-available information, and the
factors used to determine such estimate.
3.16 INSURANCE POLICIES. Disclosure Schedule 3.16 contains a correct
and complete description of all insurance policies covering Seller and the
Business, employees, agents and Assets and a list and brief description of all
claims made by Seller since January 1, 2000 against any of its insurance
policies.
3.17 BOOKS AND RECORDS. All the Books and Records and accounts of
Seller are in all material respects true and complete, are maintained in
accordance with good business practice and all laws applicable to the Business,
and accurately present and reflect in all material respects all of the
transactions therein described.
3.18 NO ILLEGAL OR IMPROPER TRANSACTIONS. Neither Seller nor any of its
officers, directors, employees, or agents has offered, paid or agreed to pay to
any person or entity (including any governmental official) or solicited,
received or agreed to receive from any such person or entity, directly or
indirectly, any money or anything of value for an illegal purpose; and there
have been no false or fictitious entries made in the books or records of Seller.
3.19 BROKERAGE FEES. Seller has not retained any financial advisor,
broker, agent or finder or paid or agreed to pay any financial advisor, broker,
agent or finder on account of this Agreement or any transaction contemplated
hereby or any transaction of like nature that would be required to be paid by
Purchaser.
3.20 NO PRODUCT LIABILITIES; PRODUCT WARRANTIES.
(a) Seller has not incurred, nor does Seller know of or have any
reason to believe there is any Basis for alleging, any liability,
damage, loss, cost or expense as a result of any defect or other
deficiency ("Product Liability") with respect to any service
29
rendered or product sold, manufactured or distributed by Seller or
related to the Assets or Business, whether such Product Liability is
incurred by reason of any express or implied warranty (including,
without limitation, any warranty of merchantability or fitness), any
doctrine of common law (tort, contract or other), any statutory
provision or otherwise and irrespective of whether such Product
Liability is covered by insurance. Seller will not incur or otherwise
become subject to any liability arising directly or indirectly from any
product manufactured or sold, or any repair services or other services
performed by, Seller on or at any time prior to the Closing Date. No
product manufactured or sold by Seller and its affiliates and related
to the Business has been the subject of any recall or similar action.
(b) Seller has furnished Purchaser with the standard forms of
warranties or guarantees of the products and services of Seller or
relating to the Business that are in effect or proposed to be used by
them, which forms contain all warranties and guarantees given by Seller
or relating to the Business, to the customers of Seller or the Business
with respect to their services or product sold, manufactured or
distributed, except for those warranties imposed by law and all other
warranties or guarantees granted or proposed to be granted by Seller or
relating to the Business. There are no pending or, to the Knowledge of
Seller, threatened claims under any warranty or guaranty against Seller
or relating to the Business. Disclosure Schedule 3.20(b) lists all
payments or settlements made in respect of any such warranty or
guaranty (including without limitation any returns or allowances) in
excess of $10,000 since January 1, 2000, indicating the name of each
customer, the amount of each payment and a brief description of the
facts relating thereto.
(c) Seller does not have any notice or Knowledge of any
statements, citations or decisions by any Governmental Authority
specifically stating that any product or Inventory item of Seller or
relating to the Business, or any third-party product distributed by
Seller or relating to the Business, that is held for sale by Seller or
relating to the Business to the customers of the Business or otherwise
utilized in Seller or the Business (collectively, a "Product") is
defective or unsafe or fails to meet any standards promulgated by any
such Governmental Authority. Seller does not have any notice or
Knowledge of any recalls ordered by any such Governmental Authority
with respect to any Product. Seller does not have any notice or
knowledge of any (i) fact relating to any Product that may impose a
duty to recall any Product or a duty to warn customers of a defect in
any Product, (ii) latent or overt design, manufacturing or other defect
in any Product that could be reasonably be expected to have a Material
Adverse Effect or (iii) liability for warranty claims or returns with
respect to any Company Product not otherwise disclosed herein in excess
of that historically experienced by any of Seller or relating to the
Business consistent (in amount and kind) with past practice.
3.21 SUPPLIERS AND CUSTOMERS.
(a) Disclosure Schedule 3.21 lists (i) all suppliers of Seller or
relating to the Business to which Seller made payments greater than
$25,000 during the year ended
30
March 31, 2001, or to which Seller expects to make payments greater
than $25,000 during the year ending March 31, 2002, and (ii) all
customers that paid Seller or made payments with regard to the Business
greater than $25,000 during the year ended March 31, 2001, or that
Seller expects will pay to Seller or with regard to the Business during
the year ending March 31, 2002.
(b) Neither the Seller nor to the knowledge of Seller, or any of
its respective officers, directors, or any relative or spouse (or
relative of such spouse) of any such officer, director or affiliate,
nor any entity controlled by one of more of the foregoing:
(i) owns, directly or indirectly, any interest in (excepting
less than 1% stock holdings for investment purposes in securities
of publicly held and traded companies), or is an officer, director,
employee or consultant of, any Person (other than Xxxxx
Supermarkets, Inc.) which is, or is engaged in business as, a
competitor, lessor, lessee, supplier, distributor, sales agent,
customer or client of Seller or the Business; or
(ii) has any cause of action or other claim whatsoever against,
or owes any amount to, Seller or the Business, except for claims in
the Ordinary Course of Business such as for accrued vacation pay,
accrued benefits under employee benefit plans, and similar matters
and agreements existing on the date hereof.
3.22 INTELLECTUAL PROPERTIES.
(a) Disclosure Schedule 3.22(a) sets forth any and all
Intellectual Property Rights. Disclosure Schedule 3.22(a) sets forth,
with respect to each trademark included in the Intellectual Property
Rights, (i) an identification of such Intellectual Property Right and
(ii) the names of the jurisdictions covered by the applicable
registration or application. Disclosure Schedule 3.22(a) identifies
each Intellectual Property Right licensed to or by Seller or used in
the Business by or to any Person, and identifies the license agreement
under which such Intellectual Property Right is being licensed to or by
Seller. Seller has (1) good and valid title to all of the Intellectual
Property Rights identified on Disclosure 3.22(a), free and clear of all
Security Interests, (2) the right to use, transfer, license or encumber
such Intellectual Property Rights, except as disclosed on Schedule
3.22(a) and (3) a valid right to use all Intellectual Property Rights
identified on Disclosure Schedule 3.22(a). Seller is not obligated to
make any payment to any Person for the use of any Intellectual Property
Right, nor is Seller subject to any restriction related thereto, except
pursuant to the license agreements specified on Disclosure Schedule
3.22(a).
(b) All trademarks and other rights included in Intellectual
Property Rights and held by Seller or used in the Business and that are
to be acquired by Purchaser are valid and subsisting. To the Knowledge
of Seller there are no other patents, registered copyrights, service
marks or copyrights or other Intellectual Property Rights which are
owned by Seller and which are related to the Business. To the Knowledge
of Seller none
31
of the Intellectual Property Rights currently infringes or conflicts
with any Intellectual Property Right owned or used by any other Person.
Seller is not infringing, misappropriating or making any unlawful use
of, and Seller has not at any time infringed, misappropriated or made
any unlawful use of, any Intellectual Property Right owned or used by
any other Person, nor is Seller aware of any grounds for any bona fide
claim thereof. Seller has not received any notice or other
communication (in writing or otherwise) of any actual, alleged,
possible or potential infringement, misappropriation or unlawful use of
any Intellectual Property Right owned or used by any other Person. To
the Knowledge of Seller, no other Person is infringing,
misappropriating or making unlawful use of, and no Intellectual
Property Right owned or used by any other Person infringes or conflicts
with, any Intellectual Property Right. Seller has not entered into any
agreement to indemnify any other Persons against any charge of
infringement of any Intellectual Property Right, other than
indemnification provisions contained in license agreements as
identified on Disclosure Schedule 3.22(b).
(c) The Intellectual Property Rights owned and identified on
Disclosure Schedule 3.22(a) constitute all the Intellectual Property
Rights used by Seller or necessary to conduct the Business in the
manner in which the Business is being conducted, except as set forth on
Disclosure Schedule 3.22(a). The Intellectual Property Rights have not
been licensed by Seller to any third party Person on an exclusive
basis.
3.23 LICENSES. Seller has all licenses, permits and other governmental
certificates, authorizations and approvals required by every Federal, state,
local and foreign Governmental Authority that are material for the conduct of
the Business and the use of its properties and the properties used in the
Business as presently conducted or used including, without limitation, all
licenses required under Environmental Laws and any Federal, state, local or
foreign law relating to transportation, distribution, public health and safety,
or employee health and safety (collectively, "Licenses"). Disclosure Schedule
2.1(b)(v)(A) contains a true and complete list of Licenses, exclusive of any
Licenses with respect to state or local sales, use or other Taxes. All of the
Licenses are in full force and effect and no action or claim is pending nor, to
the Knowledge of Seller, is threatened to revoke, modify, cancel or terminate
any License or declare any License invalid in any material respect and Seller
has no reason to believe, after due inquiry, that any Governmental Authority or
any other Person intends to cancel, suspend, modify or terminate any such
License or that valid grounds for any cancellation, suspension, modification or
termination currently exist and no proceeding is pending, or to the Knowledge of
Seller threatened with respect to any alleged failure to hold all Licenses
required to conduct the business of Seller.
3.24 SOLVENCY. Seller is not now insolvent, nor shall the Seller be
rendered insolvent by the occurrence of the transaction contemplated hereby. As
used in this Section, (x) "insolvent" means, for any Person, that the sum of the
present fair saleable value of its assets does not and/or will not exceed its
debts and other probable liabilities, and (y) the term "debts" includes any
legal liability, whether matured or unmatured, liquidated or unliquidated,
absolute, fixed or contingent, disputed or undisputed or secured or unsecured.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller that the statements contained
in this Article IV are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Article IV).
4.1 ORGANIZATION. Purchaser is duly organized, validly existing and in
good standing under the laws of the State of Texas.
4.2 DUE AUTHORIZATION. Purchaser has all requisite corporate authority
to execute and deliver this Agreement and each of the other agreements
contemplated by this Agreement (the "Purchaser Closing Documents") and to
perform fully its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery of this
Agreement and the Purchaser Closing Documents by Purchaser, the performance by
Purchaser of its obligations hereunder and thereunder, and the transactions
contemplated hereby and thereby have been duly and validly authorized by all
necessary corporate or equivalent action on the part of Purchaser. This
Agreement and each of the Purchaser Closing Documents have been (or with respect
to the agreements to be delivered at Closing, will be) duly executed by
Purchaser, and this Agreement and each of the Purchaser Closing Documents is a
legal, valid and binding obligation of Purchaser enforceable against Purchaser
in accordance with its terms (except as the enforceability thereof may be
limited by any applicable bankruptcy, insolvency or other laws affecting
creditors' rights generally or by general principles of equity, regardless of
whether such enforceability is considered in equity or at law).
4.3 BROKERS. Neither Purchaser nor any of its affiliates has paid or
become obligated to pay any fee or commission to any broker, finder, investment
banker or other intermediary in connection with the transactions contemplated by
this Agreement for which Seller or its affiliates is responsible.
4.4 NON-CONTRAVENTION. Neither the execution and delivery of this
Agreement by Purchaser nor consummation or performance of any of the
transactions contemplated by this Agreement by Purchaser will give any Person
the right to prevent, delay or otherwise interfere with any of the contemplated
transactions pursuant to any legal requirement or order to which Purchaser may
be subject, any contract to which Purchaser is a party or by which Purchaser may
be bound, any provision of Purchaser's charter or bylaws, or any resolution
adopted by the board of directors or shareholders of Purchaser.
4.5 CERTAIN PROCEEDINGS. There is no proceeding that has been commenced
or threatened in writing against Purchaser which challenges, or may have the
effect of preventing, delaying, making illegal or otherwise interfering with,
any of the transactions contemplated by this Agreement.
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ARTICLE V
PRE-CLOSING COVENANTS
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing:
5.1 GENERAL. Each of the Parties will use all reasonable efforts to
take all action and to do all things necessary, proper, or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the closing conditions set forth in
Article VII below).
5.2 NOTICES AND CONSENTS. Each of the Parties, as promptly as
practicable, (a) will make, or cause to be made, all filings and submissions
required under laws, rules and regulations applicable to it, or to its
Subsidiaries , as may be required for it to consummate the transactions
contemplated hereby; (b) will use their respective reasonable efforts to obtain,
or cause to be obtained, all authorizations, approvals, consents and waivers
from all Persons, Governmental Entities and Regulatory Authorities necessary to
be obtained by each of them, or any of their respective Subsidiaries, in order
for each of them, respectively, to consummate such transactions; and (c) will
use all reasonable efforts to take, or cause to be taken, all other actions
necessary, proper or advisable in order for each of them to fulfill their
respective obligations hereunder.
5.3 OPERATION OF BUSINESS. Except as set forth on Disclosure Schedule
5.3, Seller will not engage in any practice, take any action, or enter into any
transaction outside the Ordinary Course of Business. Without limiting the
generality of the foregoing, Seller will not take any action or omit to take any
action which act or omission would result in the inaccuracy of any of its
representations and warranties set forth in Section 3.7 above if such
representations or warranties were to be made immediately after the occurrence
of such act or omission, without the prior written approval of Purchaser.
5.4 PRESERVATION OF BUSINESS. Seller will use reasonable efforts to (a)
keep the Business and Assets substantially intact, including the present
operations, physical facilities, working conditions and relationships with
lessors, licensors, suppliers, customers and employees and (b) comply in all
respects with all laws, ordinances, rules, regulations and orders applicable to
the Business.
5.5 FULL ACCESS. Seller will permit representatives of Purchaser, upon
not less than 24 hours notice to Seller, to have full access at all reasonable
times, and in a manner so as not to interfere with the normal business
operations of Seller to all of Seller's premises, properties, personnel and
Books and Records.
5.6 NOTICE OF DEVELOPMENTS. At all times prior to the Closing Date,
each Party shall promptly give written notice to the other Party of, to the
extent a Party has Knowledge of such events, (a) any fact or circumstances or
the occurrence of any event or the failure of any event to occur, which will or
may result in, (i) an adverse effect on either Party's ability to consummate
34
the transactions contemplated hereby or by the agreements to be entered into in
connection herewith or to satisfy its obligations hereunder, or (ii) a breach of
any representation or warranty made by a Party in this Agreement or in any
agreements to be entered into in connection herewith, if such representation and
warranty had been made as of the time of the occurrence, existence or discovery
of such fact, circumstance or occurrence, or such fact or circumstance had
occurred or arisen or existed on or prior to the date of this Agreement, (b) any
failure by either Party to comply with any covenant, condition or agreement
contained in this Agreement, (c) any complaints, investigations or hearings (or
communications indicating that the same may be contemplated) of any Governmental
Authority with respect to this Agreement, the business of Seller or the
transactions contemplated hereby or by the agreements to be entered into in
connection herewith, (d) the institution or the threat of institution of any
litigation or similar action with respect to this Agreement, the business of
Seller, or the consummation of the transactions contemplated hereby and (e) the
occurrence of any event which will or may result in the failure to satisfy any
condition set forth in Article VII. During the period from the date of this
Agreement to the Closing Date, Seller will cause one or more if its
representatives to confer on a regular basis with representatives of Purchaser
to report on the general status of the ongoing operations of the Business. No
notification given by a Party to the other Party pursuant to this Section 5.6
shall limit or otherwise affect any of the representations, warranties,
covenants or obligations of the Parties contained in this Agreement, except as
set forth in 8.1(b).
5.7 CUSTOMER CONTACTS. Seller, at Seller's cost, shall make Xxx Xxxxxx,
and any other Seller personnel reasonably requested by Purchaser, available to
Purchaser upon reasonable notice during customary business hours to assist
Purchaser in, coordinating, arranging, and meeting with all customers of Seller.
ARTICLE VI
POST-CLOSING COVENANTS
The 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 reasonably may
request, all at the sole cost and expense of the requesting Party (unless the
requesting Party is entitled to indemnification therefor under Article VIII
below). Seller acknowledges and agrees that from and after the Closing,
Purchaser will be entitled to possession of the Assets, including all Books and
Records. Purchaser will afford to Seller reasonable access to, and copies of,
the records of Seller transferred to Purchaser at the Closing during normal
business hours after the Closing.
6.2 TRANSITION. Seller will not take any action that is designed or
intended to have the effect of discouraging any lessor, licensor, customer,
supplier or other business associate of Seller or the Business from maintaining
the same business relationships with Seller or the Business after the Closing as
it maintained with Seller or the Business prior to the Closing.
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Seller will use commercially reasonable efforts to refer all customer inquiries
relating to the Business to Purchaser from and after the Closing.
6.3 CONFIDENTIALITY. Seller recognizes and acknowledges that it has and
will have access to certain Confidential Information related to the Business
that, after the consummation of the transactions contemplated hereby, will be
valuable, special and unique property of Purchaser. Seller agrees that it will,
and will cause Seller's officers, employees and representatives to, keep
confidential and not disclose to any other Person or use the Confidential
Information for Seller's or Seller's own benefit or for the benefit of any other
Person, and Seller will use its reasonable efforts to prevent disclosure by any
other Person under Seller's control of any such Confidential Information to any
Person for any purpose or reason whatsoever, except to authorized
representatives of Purchaser; provided, however, such limitation shall not apply
to any information which (a) is then generally known to the public; (b) becomes
generally known to the public through no fault of Seller or its affiliates or
representatives; or (c) is disclosed in accordance with an order of a court of
competent jurisdiction, subpoena, legal process or applicable law. In the event
of a breach or a threatened breach of any of the provisions contained in this
Section 6.3, Seller acknowledges that Purchaser will suffer irreparable damage
or injury not fully compensable by money damages, or the exact amount of which
may be impossible to obtain, and, therefore, will not have an adequate remedy
available at law. Accordingly, Purchaser shall be entitled to obtain such
injunctive relief or other equitable remedy, from any court of competent
jurisdiction as may be necessary or appropriate to prevent or curtail any such
breach, threatened or actual. The foregoing shall be in addition to and without
prejudice to any other rights that the Purchaser may have to seek indemnity
pursuant to Article VIII of this Agreement.
6.4 PURCHASE PRICE ALLOCATION. Seller and Purchaser agree that with
respect to preparation of Form 8594 to be filed with the IRS, for tax purposes,
allocation will reflect value allocated on final balance sheet of Seller.
6.5 LIMITATION ON ASSIGNMENTS. Notwithstanding any other provision
hereof, this Agreement shall not constitute nor require an assignment to
Purchaser of any Scheduled Contract, License, permit or other right if an
attempted assignment of the same without the consent of any party would
constitute a breach thereof or a violation of any law or any judgment, decree,
order, writ, injunction, rule or regulation of any Governmental Authority unless
and until such consent shall have been obtained. In the case of any such
Scheduled Contract, Scheduled Lease, License, permit or other right that cannot
be effectively transferred to Purchaser without such consent (a "Consent
Required Contract"), the Seller agrees that between the date hereof and the
Closing Date it will use all reasonable efforts to obtain or cause to be
obtained the necessary consents to the transfer of any Consent Required
Contract. Purchaser agrees to cooperate with the Seller in obtaining such
consents and to enter into such arrangement of assumption as may be reasonably
requested by each required consenting party under a Consent Required Contract.
Disclosure Schedule 6.5 sets forth each Consent Required Contract. In the event
that the Seller shall have failed prior to the Closing Date to obtain consents
to the transfer of any Consent Required Contract and Purchaser shall have waived
the conditions set forth in Section 7.1(d), the terms of this Section 6.5 shall
govern the transfer of the benefits of each such contract. Seller
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and Purchaser shall use their best efforts after the Closing Date to obtain any
required consent to the assignment to, and assumption by, Purchaser of each
Consent Required Contract that is not transferred to Purchaser at the Closing (a
"Nonassigned Contract"). With respect to the Nonassigned Contracts and any of
the Assets that are not assignable by the terms thereof or consents to the
assignment thereof cannot be obtained as provided herein. Seller shall use its
reasonable best efforts to keep the relevant Nonassigned Contract in effect and
shall give Purchaser the benefit of such Nonassigned Contract to the same extent
if it had not been excluded from the Assets, and Purchaser shall timely perform
the obligations under such Nonassigned Contract. If after the Closing such
consent is obtained, Purchaser shall assume such Nonassigned Contract as of the
date of such consent. Nothing herein shall be construed as an attempt to assign
any agreement or other instrument that is by its terms not assignable without
the consent of the other party thereto.
6.6 TAX MATTERS. The Parties agree that inasmuch as the Assets include
substantially all the operating assets of Seller, the sale and purchase of the
Assets, other than the Vehicles, may be exempt from sales and use taxes in the
jurisdictions in which the Assets are located pursuant to the bulk sale,
occasional sale or similar provisions in the applicable statutes in such
jurisdictions, and all Parties hereto shall treat the transfer of the Assets
provided for herein as a bulk, occasional or similar sale for all purposes;
provided, however, that to the extent it shall be determined after the date of
the Agreement that, through no fault or misrepresentation on the part of any
Seller or its affiliates, the sale by Seller, and the purchase by Purchaser of
all or any portion of the Assets (including the Vehicles) is subject to a sale,
use or other transfer tax, then such tax shall be paid by Purchaser. The Parties
shall cooperate with each other in the preparation, execution and filing of any
Tax Returns that may be required in connection with such Taxes and any related
filing fees, notarial fees and other costs.
6.7 WARN ACT. Purchaser covenants that it will not, on or within ninety
(90) days of the Closing Date, take any action or fail to take any action that
would cause a Plant Closing or Mass Layoff resulting in Employment Loss at any
of the employment sites to be acquired from Seller, as those terms are defined
by the Worker Adjustment and Retaining Notification Act, ss. 2101 et seq. (the
"WARN Act"). Purchaser agrees to offer comparable employment to employees of
Seller in numbers sufficient to avoid any WARN Act liability upon Seller as a
result of any actions taken pursuant to this Agreement (without considering any
closings or layoffs by Seller at any location unrelated to this Agreement).
ARTICLE VII
CONDITIONS TO OBLIGATION TO CLOSE
7.1 CONDITIONS TO OBLIGATION OF PURCHASER. The obligation of Purchaser
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(a) all representations and warranties of Seller contained in this
Agreement (including the Certificates and Disclosure Schedules hereto)
shall have been true and
37
accurate as of the date of this Agreement and shall be true and
accurate in all respects on and as of the Closing Date with the same
force and effect as though such representations and warranties were
made on and as of the Closing Date without giving any effect to any
update to the Disclosure Schedule and the Seller Disclosure Schedule;
(b) Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(c) there shall have been no Material Adverse Change in the
Business or Assets from the date hereof to the Closing Date not
consented to by Purchaser in writing;
(d) all consents, approvals, orders, or authorizations of,
registrations or filings with, declarations of, or exemptions or
waivers by, any Governmental Authority or any other Person including,
without limitation, approvals or consents under the Consent Required
Contracts and those listed in on Disclosure Schedule 3.4 (collectively,
"Consents"), reasonably satisfactory in form and substance to Purchaser
and its counsel, which are reasonably required for the consummation of
the transactions contemplated hereby (including, without limitation,
pursuant to the documents to be executed in connection herewith or for
preventing the termination of any material right, privilege, License or
any material loss or disadvantage to Purchaser or Seller upon the
consummation of the transactions contemplated hereby), shall have been
obtained, made or filed, as the case may be, and all notices to third
parties of such assignments shall have been sent in accordance with the
provisions of such Consent Required Contract;
(e) no law shall be promulgated or enacted nor any action, suit or
proceeding shall be pending or threatened before any court or
quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator involving any
challenge to, or seeking damages or other relief in connection with,
any of the transactions contemplated herein, or wherein an unfavorable
law, injunction, judgment, order, decree, ruling or charge would (i)
prevent or interfere with consummation of any of the transactions
contemplated by this Agreement or (ii) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation;
(f) Seller shall have delivered to Purchaser a Certificate to the
effect that each of the conditions specified above in Section 7.1(a)
through (d) is satisfied in all respects;
(g) the Xxxx of Sale, the Assignment and Assumption Agreement and
the Intellectual Property Rights Assignment shall have been executed
and delivered by Seller;
(h) Purchaser shall have received the Phase I (and, if applicable
pursuant to the provisions on Article XII, Phase II) ESAs establishing
to Purchaser's satisfaction the absence of any evidence of
noncompliance with any Environmental Laws that could materially affect
the Business or Assets to be acquired;
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(i) a Transition Services Agreement between the Purchaser and Xxxxx
Supermarkets, LLC ("Xxxxx") shall have been entered into in the form
substantially as set out in Schedule 7.1(i) for operation system
support, financial and accounting support information systems support
and consultation in connection with systems problems related to
Seller's information systems.
(j) Purchaser and Xxxxx Supermarket, LLC shall have executed a
Distribution Service Agreement on Xxxxx'x convenience and supermarket
retailing businesses containing mutually acceptable terms and
conditions substantially in the form attached as Schedule 7.1(j) to
this Agreement.
(k) Purchaser and Village Pantry LLC shall have executed a
Distribution Service Agreement on Xxxxx'x convenience and supermarket
retailing businesses containing mutually acceptable terms and
conditions substantially in the form attached as Schedule 7.1(k) to
this Agreement.
(l) An Assignment to Purchaser of the agreement between CSDC and
its customer, United Dairy Farmers, Inc., has been executed by all
appropriate parties.
(m) Xxxxx Supermarkets, Inc. shall have executed for the benefit of
Purchaser a Guaranty Agreement substantially in the form attached
hereto as Schedule 7.1(m) for the guarantee of Seller's obligations and
liabilities to Purchaser pursuant to this Agreement respecting (i)
indemnity regarding Taxes and Environmental Liabilities, (ii) covenant
not to compete, (iii) all liabilities (other than with respect to sales
taxes) arising from any violation by Seller of any applicable bulk
sales or similar laws, and (iv) purchase price adjustments made
subsequent to Closing.
(o) Seller shall have delivered to the Purchaser a Special Warranty
Deed necessary to convey the Real Property to Purchaser substantially
in the form attached as Schedule 2.4(d) to this Agreement ("Deed").
(p) Seller shall have delivered to Purchaser a title policy
acceptable to Purchaser from a title insurance company acceptable to
Purchaser covering the Real Property; and
(q) Seller shall have delivered to Purchaser an ALTA survey of the
Real Property that is acceptable to Purchaser.
Purchaser may waive any condition specified in this Section 7.1 if Purchaser
executes a writing so stating at or prior to the Closing.
7.2 CONDITIONS TO OBLIGATION OF SELLER. The obligation of Seller to
consummate the transactions to be performed in connection with the Closing is
subject to satisfaction of the following conditions:
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(a) all representations and warranties of Purchaser contained in
this Agreement (including the Certificates and Schedules hereto), any
document to be executed pursuant hereto and all written information
delivered to Seller by Purchaser on or prior to the Closing Date
pursuant to this Agreement, (i) that are qualified as to materiality
shall be true in all respects on and as of the Closing Date and (ii)
that are not qualified as to materiality shall be true in all material
respects on and as of the Closing Date, with the same force and effect
as though such representations and warranties were made, and such
written information was delivered, on and as of the Closing Date;
(b) Purchaser shall have performed and complied with all covenants
hereunder in all material respects through the Closing;
(c) no law shall be promulgated or enacted nor any action, suit or
proceeding shall be pending or threatened before any court or
quasi-judicial or administrative agency of any federal, state, local or
foreign jurisdiction or before any arbitrator wherein an unfavorable
law injunction, judgment, order, decree, ruling or charge would (i)
prevent consummation of any of the transactions contemplated by this
Agreement or (ii) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation (and no such
injunction, judgment, order, decree, ruling or charge shall be in
effect);
(d) Purchaser shall have delivered to Seller a certificate to the
effect that each of the conditions specified above in Section 7.2(a)
through (c) is satisfied in all respects;
(e) the Assignment and Assumption Agreement shall have been
executed and delivered by Purchaser; and
(f) Seller shall have received the Phase I (and, if applicable
pursuant to the provisions on Article XII, Phase II) ESAs establishing
to Seller's satisfaction the absence of any evidence of noncompliance
with any Environmental Laws that could materially affect the Business
or Assets.
Seller may waive any condition specified in this Section 7.2 if Seller executes
a writing so stating at or prior to the Closing.
ARTICLE VIII
INDEMNITY
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
(a) Except as provided in Section 8.1(b) below, all of the
representations and warranties contained in this Agreement (including
the certificates and Disclosure Schedules) shall survive the Closing
hereunder and continue in full force and effect for a period of two
years thereafter, provided, however, that the representations and
warranties
40
relating to (a) environmental matters shall survive and remain in full
force and effect for a period of four years and (b) Taxes and ERISA
shall survive and remain in full force and effect until the expiration
of the applicable statute of limitations with respect to any Taxes. The
covenants and agreements contained herein to be performed or complied
with after the Closing shall survive the Closing for so long as such
covenants and agreements shall remain executory in nature.
(b) If prior to Closing, Purchaser has actual knowledge that a
representation or warranty made by Seller is untrue (which
representation or warranty shall not survive the closing), Purchaser
shall notify Seller in writing as soon as possible and describe such
matter in reasonable detail. Seller shall use commercially reasonable
efforts to cure any such breach prior to the Closing or otherwise reach
a mutually acceptable resolution, provided however unless the Parties
otherwise agree, the representation shall not survive the Closing.
8.2 INDEMNIFICATION PROVISIONS FOR BENEFIT OF PURCHASER.
(a) From and after the Closing, Seller shall jointly and severally
indemnify and hold harmless Purchaser, its respective affiliates,
shareholders, affiliates' shareholders (as applicable), their officers,
directors, employees, agents, representatives, successors and assigns
(the "Purchaser Indemnitees"), from and against any and all Adverse
Consequences incurred by any of them directly or indirectly arising out
of, relating to or resulting from any of the following:
(i) any breach of any of the representations or warranties made
by Seller in this Agreement, the Disclosure Schedules, without
giving effect to any update to the Disclosure Schedule, the
officers' certificates described herein, any conveyance instrument
or any other certificate delivered by Seller or its shareholders
pursuant to this Agreement;
(ii) any failure by Seller to perform any of their covenants or
agreements contained in this Agreement or in any other document,
writing or instrument delivered by Seller or its shareholders
pursuant to this Agreement;
(iii) the legal proceedings listed on Disclosure Schedule 3.9;
(iv) any action taken or not taken in connection with the sale
contemplated hereby and by the documents contemplated hereby
related to (A) the termination of employment of any current, former
or retired employee by Seller or the termination by Seller of any
independent contractor or consulting agreement; or (B) the
employment or retirement status with Seller of any current, former
or retired employee, officer, consultant, independent contractor or
director of Seller or Seller;
41
(v) the funding, operation, administration, amendment,
termination of, or withdrawal or partial withdrawal from, any
Employee Plan (including, but not limited to, any COBRA liability)
established, maintained or contributed to by Seller, any Subsidiary
or ERISA affiliate as of, or prior to, the Closing Date, whether
such Adverse Consequences arise out of or relate to, any event or
state of facts occurring or existing before, on or after the
Closing Date, other than with respect to Assumed Liabilities;
(vi) except as provided in Sections 8.1(b) and 12.2, all
Environmental Liabilities, whenever incurred, based upon, arising
from or related to any conditions, events, circumstances, facts,
activities, practices, incidents, actions or omissions occurring or
existing on or prior to the Closing Date (a) at, on, under, about,
or within any Real Property, or (b) otherwise related to Seller,
any other currently or previously existing Subsidiary or related
entity or affiliate of Seller or any divested entity, business,
facility or property of Seller or any of their predecessors or
related entities, in each case regardless of whether such
Environmental Liabilities are known, unknown, disclosed,
undisclosed, fixed or contingent, or whether such Environmental
Liabilities relate to on-site or off-site Environmental Conditions,
including without limitation any such Environmental Liabilities
arising from the use, storage, handling, treatment, disposal,
generation, transportation or release of any Hazardous Materials on
or prior to the Closing Date;
(vii) arising directly or indirectly out of, or relating to,
any product manufactured, distributed or sold, or any repair
services or other services performed, by Seller or its affiliates
or relating to the Business on or at any time prior to the Closing
Date, or the ownership, management or use of any of the Assets or
conduct of the Business on or prior to the Closing Date, other than
with respect to Assumed Liabilities; and
(viii) any and all Tax liabilities of Seller not assumed by
Purchaser under the terms of this Agreement;
except that any materiality (or correlative meaning) qualifications
included in the representations and warranties set forth in Articles
III and IV shall have no effect on any provisions in this Section 8.2
concerning the indemnities of Seller and its shareholders with respect
to such representations and warranties, each of which is given as
though there were no materiality qualification for purposes of such
indemnities.
(b) The total liability of Seller for those matters for which
Seller is providing an indemnification under this Section 8.2 shall not
exceed the Purchase Price as adjusted; provided, however:
(i) Seller shall have no liability with respect to claims under
this Section 8.2 until the total of all liability with respect to
such matters exceeds
42
$100,000 (and then only for the amount by which such liability
exceeds $100,000);
(ii) the aggregate liability of Seller for those matters set
out in Sections 8.2(a)(i),(ii), (iii), (iv), (v), and (vii) shall
not exceed fifteen percent (15%) of the Purchase Price, as
adjusted;
(iii) the aggregate liability of Seller for those matters set
out in Sections 8.2(a)(vi) and (viii) shall not exceed the Purchase
Price as adjusted; and
(iv) the above 8.2(b)(ii) and 8.2(b)(iii) shall not exceed the
purchase price.
(c) Seller's liability for those matters set out in Sections
8.2(a)(i), 8.2(a)(ii), 8.2(a)(iii), 8.2(a)(iv), 8.2(a)(v), and
8.2(a)(vii) shall be limited to those matters for which Purchaser has
provided notice to Seller within two (2) years from the date of
Closing. Seller's liability for those matters set out in this
8.2(a)(vi) and 8.2(a)(viii) shall be limited to those matters for which
Purchaser has provided notice to Seller within four (4) years from the
date of Closing.
8.3 INDEMNIFICATION PROVISIONS FOR BENEFIT OF SELLER. From and after
the Closing, Purchaser shall indemnify and hold harmless Seller, and its
respective affiliates and respective officers, directors, employees, agents,
consultants, representatives, successors and assigns of any of the foregoing
(the "Seller Indemnitees"), from and against any Adverse Consequences incurred
by any of them arising out of, relating to or resulting from any of the
following:
(a) any breach by Purchaser of any of the representations or
warranties made by Purchaser in this Agreement;
(b) any failure by Purchaser to perform any of their covenants or
agreements contained in this Agreement;
(c) arising directly or indirectly out of, or relating to, any
product manufactured, distributed or sold, or any repair services or
other services performed, by Purchaser or its affiliates or relating to
the Business on or at any time from and after the Closing Date, or the
ownership, management or use of any of the Assets or conduct of the
Business from and after the Closing Date; and
(d) the Assumed Liabilities.
8.4 MATTERS INVOLVING THIRD PARTIES.
(a) If any third party Person shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against any other
Party (the "Indemnifying Party") under this Article
43
VIII, then the Indemnified Party shall promptly notify each
Indemnifying Party thereof in writing; provided, however, that no delay
on the part of the Indemnified Party in notifying any Indemnifying
Party shall relieve the Indemnifying Party from any obligation
hereunder unless (and then solely to the extent) the Indemnifying Party
thereby is prejudiced.
(b) Any Indemnifying Party will have the right to defend the
Indemnified Party against the 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 the Indemnifying Party will indemnify the
Indemnified Party from and against the entirety of any Adverse
Consequences the Indemnified Party may suffer resulting from, arising
out of, relating to, in the nature of or caused by the Third Party
Claim, (ii) the Indemnifying Party provides the Indemnified Party with
the 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
hereunder, (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 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
the Third Party Claim in accordance with Section 8.4(b) above, (i) the
Indemnified Party may retain separate co-counsel at its sole cost and
expense and participate in the defense of the Third Party Claim, (ii)
the Indemnified Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without
the prior written consent of the Indemnifying Party (not to be
withheld, delayed or conditioned unreasonably), and (iii) the
Indemnifying Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without
the prior written consent of the Indemnified Party (not to be withheld,
delayed or conditioned unreasonably). The Indemnifying Party shall keep
the Indemnified Party informed of all material developments in the
defense.
(d) In the event any of the conditions in Section 8.4(b) above is
or becomes unsatisfied, however, (i) the Indemnified Party may defend
against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Third Party Claim in any manner it
reasonably may deem appropriate (and the Indemnified Party need not
consult with, or obtain any consent from, any Indemnifying Party in
connection therewith), (ii) the Indemnifying Parties will reimburse the
Indemnified Party promptly and periodically for the costs of defending
against the Third Party Claim (including reasonable attorneys' fees and
expenses), and (iii) the Indemnifying Parties will remain responsible
for any Adverse Consequences the Indemnified Party may suffer resulting
44
from, arising out of, relating to, in the nature of, or caused by the
Third Party Claim to the fullest extent provided in this Article VIII.
8.5 OTHER INDEMNIFICATION PROVISIONS. Except for the right to terminate
the Agreement or seek injunctive relief as provided in Section 6.3, Section
14.15, and Articles X, XI, and XII, the foregoing indemnification provisions
shall be Purchaser's sole remedy for breach of, or matters otherwise related or
pertaining to this Agreement, any representation, warranty or covenant contained
herein.
ARTICLE IX
[This Article intentionally omitted]
ARTICLE X
TERMINATION
10.1 TERMINATION BY MUTUAL CONSENT. This Agreement may be terminated at
any time prior to the Closing by the mutual consent of Seller and Purchaser.
10.2 TERMINATION BY EITHER SELLER OR PURCHASER. This Agreement may be
terminated by written notice of either Seller or Purchaser if the transactions
contemplated hereunder shall not have been consummated by November 30, 2001,
(unless the failure to consummate the transactions contemplated hereunder is
attributable to a failure on the part of the Party seeking to terminate this
Agreement to perform any material obligation required to be performed by such
Party at or prior to the Closing).
10.3 OTHER TERMINATION RIGHTS. This Agreement may be terminated at any
time prior to the Closing by written notice given:
(a) by Purchaser, following a breach of any covenant or agreement
of Seller or its shareholders contained in this Agreement, or if any
representation or warranty of Seller or its shareholders contained in
this Agreement shall be or shall have become inaccurate, in either case
such that any of the conditions set forth in Sections 7.1(a) and 7.1(b)
would not be satisfied as of the time of such breach or as of the time
such representation or warranty was or shall have become inaccurate;
provided, however, that: (i) if such breach or inaccuracy is curable by
Seller, then Purchaser may not terminate this Agreement under this
Section 10.3 with respect to the particular breach or inaccuracy prior
to or during the 30-day period commencing upon delivery by Purchaser of
written notice to Seller of such breach or inaccuracy, provided Seller
continues to exercise all reasonable efforts to cure such breach or
inaccuracy; and (ii) the right to terminate this Agreement under this
Section 10.3 shall not be available to Purchaser if the breach is the
result of any willful act on the part of Purchaser designed to impede
the consummation of any transaction contemplated hereby; or
45
(b) by Seller, following a breach of any covenant or agreement of
Purchaser contained in this Agreement, or if any representation or
warranty of Purchaser contained in this Agreement shall be or shall
have become inaccurate, in either case such that any of the conditions
set forth in Sections 7.2(a) and (b) would not be satisfied as of the
time of such breach or as of the time such representation or warranty
was or shall have become inaccurate; provided, however, that: (i) if
such breach or inaccuracy is curable by Purchaser, then Seller may not
terminate this Agreement under this Section 10.3 with respect to the
particular breach or inaccuracy prior to or during the 30-day period
commencing upon delivery by Seller of written notice to Purchaser of
such breach or inaccuracy, provided Purchaser continues to exercise all
reasonable efforts to cure such breach or inaccuracy and (ii) the right
to terminate this Agreement under this Section 10.3 shall not be
available to Seller if the breach is the result of any willful act on
the part of Seller designed to impede the consummation of any
transaction contemplated hereby.
10.4 EFFECT ON OBLIGATIONS. Termination of this Agreement pursuant to
this Article X shall terminate all obligations of the parties hereunder, except
for the obligations under Sections 14.3 and 14.13; provided, however that
termination pursuant to Sections 10.2 or 10.3 shall not relieve any defaulting
or breaching Party or Parties from any liability to the other Parties hereto
except as otherwise set forth in this Agreement.
ARTICLE XI
NON-COMPETITION AGREEMENT
11.1 NON-COMPETITION. In consideration of the benefits of this
Agreement to Seller and its members, and as a material inducement to Purchaser
to enter into this Agreement and pay the Purchase Price, and in order that the
Purchaser may have and enjoy the full benefit of the Assets and the Business,
each of Seller, and its members hereby covenant and agree that, commencing on
the Closing Date and ending on the date four years after the Closing Date,
Seller will not and will cause its Subsidiaries not to, (a) engage, directly or
indirectly, in the wholesale distribution of the products of the Business being
produced or sold by Seller on the date hereof or on the Closing Date, or any
products which compete with such products (the "Competitive Products") to
convenience stores, anywhere in the Territory ("Competitive Activity"), or (b)
directly or indirectly invest in any equity of or manage, operate or control or
become a consultant with respect to any Competitive Activity for any Person that
engages in any Competitive Activity for the period beginning on the Closing Date
and ending on the fourth anniversary of the Closing Date (the "Noncompetitive
Period"). Notwithstanding the foregoing, nothing contained herein shall limit
the right of Seller, Xxxxx Supermarkets, Inc. or their respective affiliates and
Subsidiaries to (a) distribute Competitive Products to stores owned directly or
indirectly by Xxxxx Supermarkets, Inc. in the event of the breach by Purchaser
or the termination of the respective Xxxxx Supermarkets, LLC or Village Pantry,
LLC Distribution Service Agreement ("DSA's") to be executed with Purchaser at
the Closing, (b) distribute specialty products to convenience stores, either
directly or through other wholesalers, including but not limited to (i) coffee
and other complimentary or ancillary products through Crystal Food Services or
its
46
affiliates, or (ii) products manufactured or produced by the Xxxxx central
kitchen, or (c) to hold and make passive investments in securities of any Person
that is registered on a national securities exchange or admitted to trading
privileges thereon or actively traded in a generally recognized over-the-counter
market; provided that Seller's and its members' aggregate beneficial equity
interest therein shall not exceed 5% of the outstanding shares or interests in
such Person.
11.2 JUDICIAL REFORMATION. Seller acknowledge that the covenants
contained in Section 11.1 establish reasonable limitations as to time,
geographic area and scope of activity to be restrained and do not impose a
greater restraint than is reasonably necessary to protect and preserve the
goodwill of the Business and to protect their legitimate business interests. If,
however, Section 11.1 is determined by any court of competent jurisdiction to be
unenforceable by reason of its extending for too long a period of time or over
too large a geographic area or by reason of it being too extensive in any other
respect or for any other reason, it will be interpreted to extend only over the
longest period of time for which it may be enforceable and/or over the largest
geographic area as to which it may be enforceable and/or to the maximum extent
in all other aspects as to which it may be enforceable, all as determined by
such court.
11.3 COVENANTS INDEPENDENT. The covenants contained in Section 11.1 of
this Agreement will be construed as independent of any other provision in this
Agreement, and the existence of any claim or cause of action by Seller or its
members against Purchaser other than the breach by Purchaser of a DSA or the
termination of a DSA will not constitute a defense to the enforcement by
Purchaser of said provisions. Seller agrees that the provisions contained in
Sections 11.1 and 11.2 are essential elements of the transactions contemplated
by this Agreement and, but for the agreement of Seller and its shareholders to
Sections 11.1 and 11.2, Purchaser would not have agreed to enter into this
Agreement and the transactions contemplated herein. Seller and its members have
been advised to consult with counsel in order to be informed in all respects
concerning the reasonableness and propriety of Sections 11.1 and 11.2 with
specific regard to the nature of the business conducted by Seller and Purchaser,
and Seller and its members acknowledge that Sections 11.1 and 11.2 are
reasonable in all respects.
11.4 REMEDIES. In the event of a breach or a threatened breach by
Seller or any of its members of any of the provisions contained in Sections 11.1
and 11.2 of this Agreement, Seller and its members acknowledge that Purchaser
will suffer irreparable damage or injury not fully compensable by money damages,
or the exact amount of which may be impossible to obtain, and, therefore, will
not have an adequate remedy available at law. Accordingly, notwithstanding
Section 8.5, Purchaser shall be entitled to obtain such injunctive relief from
any court of competent jurisdiction as may be necessary or appropriate to
prevent or curtail any such breach, threatened or actual.
ARTICLE XII
ENVIRONMENTAL STUDIES AND REMEDIATION ACTIVITIES
12.1 ENVIRONMENTAL STUDIES.
47
(a) Purchaser, shall, at Purchaser's cost and expense,
undertake a Phase I environmental site assessment ("ESA") with respect
to each parcel of the Real Property utilizing a recognized engineering
firm designated by Purchaser. Should any of such ESAs indicate that a
Phase II environmental site assessment or other further studies and/or
tests are warranted with respect to any of the Real Property,
Purchaser, at Purchaser's expense, may undertake such studies and
tests.
(b) Within five (5) days after the date hereof, Seller shall
provide to Purchaser, at Seller's sole cost and expense, copies of (a)
all existing ESAs (whether Phase I, Phase II or otherwise) covering all
or any portion of the Real Property, to the extent the same are in
Seller's possession or Seller has access to them, and (b) any other
environmental studies, reports and information, including, without
limitation, correspondence from Governmental Authorities, concerning
the environmental condition of the Real Property, to the extent the
same are in Seller's possession or Seller has access to them (all of
the foregoing information, whether obtained by Purchaser or provided by
Seller, being hereinafter referred to as "Environmental Information").
(c) Without in any way limiting the provisions of the preceding
sentence, Purchaser and its contractors and representatives, at
Purchaser's expense, shall have at least 30 days from the date hereof,
but in no event less than 21 days from receipt of the Environmental
Information (the "Feasibility Period") within which to conduct any and
all engineering, environmental and economic feasibility studies and
tests of the Real Property which Purchaser, in Purchaser's sole
discretion, deems necessary to determine whether the Real Property is
environmentally, physically and economically suitable for Purchaser's
intended use. Seller has granted and hereby grants to Purchaser and its
contractors and representatives access to the Real Property for the
purpose of performing such studies or tests after reasonable notice to
Seller and Seller's consent, which will not be unreasonably withheld.
Such persons shall conduct their studies and tests in such a manner as
to minimize interference with Seller's business (and in compliance with
any applicable lease provisions, for all parcels of Real Property which
are leased) and, upon completion of their activities on the Real
Property, shall restore the Real Property as nearly as is reasonably
possible to the condition it was in immediately prior to such
activities.
12.2 REMEDIATION. In the event that any of the Environmental
Information or any studies or tests performed on behalf of or commissioned by
Purchaser indicate the existence of any Environmental Conditions on the Real
Property, then the Parties shall attempt to develop a mutually acceptable remedy
or otherwise cure such Environmental Conditions in accordance with all
applicable Governmental Requirements prior to Closing. In the event that any
Environmental Conditions exist or are discovered on the Real Property and the
Parties fail to mutually agree on a remedy or otherwise cure or have cured such
Environmental Conditions prior to the Closing Date, then either Party shall have
the option to terminate this Agreement by written notice thereof given to the
other Party prior to the Closing Date, in which event the parties hereto shall
have no further obligations hereunder other than those set forth in Section
48
10.4. If the Parties mutually agree upon a remedy or cure for the Environmental
Conditions, such remedy shall survive closing. If Environmental Conditions are
known to the Parties prior to closing but are not remedied or cured, by mutual
agreement, the Parties may agree to proceed to Closing and waive the liability
for those particular Environmental Conditions.
12.3 NO WAIVER. Except to the extent that a remedy or cure has been
mutually agreed to by the Parties as set out in Section 12.2 for a specific
Environmental Condition, it is expressly understood and agreed by Purchaser and
Seller that nothing in this Article XII shall in any way operate as a waiver of
or limitation on the environmental or other indemnification obligations of
Seller set forth in this Agreement.
ARTICLE XIII
OTHER TAX AND EMPLOYEE BENEFIT MATTERS
13.1 OTHER TAX MATTERS. At Closing, Seller and each of its shareholders
shall each deliver to Purchaser certificates signed under penalties of perjury
(a) stating that each is not foreign corporation, foreign partnership, foreign
trust or foreign estate, (b) providing its United States Employer Identification
Number and (c) providing its address, all pursuant to Section 1445 of the Code.
13.2 EMPLOYEE BENEFIT PLANS.
(a) Effective as of the Closing Date, those current employees of
Seller who are employed by the Purchaser on and after the Closing Date
(hereinafter referred to as "Transferred Employees") shall cease to
accrue benefits under any Employee Plan maintained or participated in
by Seller subsequent to the Closing Date. Effective on and after the
Closing Date, all such Transferred Employees shall be enrolled in such
plans as may be established by Purchaser effective as of the Closing
Date to provide benefits for the Transferred Employees from and after
the Closing Date. Seller agrees to use its reasonable best efforts to
assist Purchaser in establishing any such plans as may be established
by Purchaser and the transitioning of Transferred Employees to any such
plans.
(b) Prior to the Closing Date, Seller shall provide the Purchaser
with an IRS determination letter relating that the tax qualified status
under Section 401(a) and 501(a) of the Code with respect to its tax
qualified 401(k) Plan set forth in the Disclosure Schedule. In the
absence of such a determination letter, Seller shall, within the
applicable remedial period, apply for a favorable determination letter
regarding said 401(k) Plan's qualification under Section 401(a) of the
Code and shall take all actions necessary in order to obtain such
letter, including making all necessary appropriate changes to the terms
of said 401(k) Plan.
49
(c) Seller shall retain all liability under any retiree medical or
retiree life plan maintained, participated in or contributed to by
Seller with respect to any retiree, former employee or any other
employee of Seller who is not a Transferred Employee.
(d) Seller shall retain all liability with respect to any and all
obligations to its shareholders and Purchaser shall have no obligation
with respect to any of said liabilities arising before the Closing
Date.
ARTICLE XIV
MISCELLANEOUS
14.1 INCORPORATION OF SCHEDULES. The Schedules identified in this
Agreement are incorporated herein by reference and made a part hereof.
14.2 FURTHER ACTIONS. From time to time, at the request of any Party
hereto, the other parties hereto shall execute and deliver such instruments and
take such action as may be reasonably requested to evidence the transactions
contemplated hereby.
14.3 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement prior to the Closing without the prior written approval of
Purchaser and Seller; provided, however, that any Party may make any public
disclosure it believes in good faith is required by applicable law or listing
standards (in which case the disclosing Party will use its reasonable best
efforts to advise the other Parties prior to making the disclosure).
14.4 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
14.5 ENTIRE AGREEMENT. This Agreement (including the documents and
schedules referred to herein) constitutes the entire agreement among the Parties
and supersedes any prior understandings, agreements or representations by or
among the Parties, written or oral, to the extent they related in any way to the
subject matter hereof.
14.6 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of Purchaser and Seller; provided, however, that Purchaser may (i)
assign any or all of its rights and interests hereunder to one or more of its
affiliates and (ii) designate one or more of its affiliates to perform its
obligations hereunder (in any or all of which cases Purchaser nonetheless shall
remain responsible for the performance of all of its obligations hereunder).
50
14.7 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
14.8 HEADINGS. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
14.9 NOTICES. Any notice, request, response, demand, claim or other
communication required or permitted hereunder (or in any document referred to
herein not containing an alternative notice provision) by any party hereto to
any other party shall be in writing and transmitted, delivered or sent by (a)
personal delivery, (b) courier or messenger service, whether overnight or same
day, (c) certified United States mail postage prepaid, return receipt requested,
or (d) prepaid telecopy or facsimile (except, that no request for
indemnification may be provided by telecopy or facsimile).
If to Seller to:
Xxxxx Supermarkets, Inc.
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: Chief Financial Officer
With a copy to:
Xxxxx Supermarkets, Inc.
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Telephone: (000) 000-0000
Telecopier (000) 000-0000
Attention: Corporate Secretary
With a copy to:
XxXxxx Company, Inc.
0000 XxXxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Attention: General Counsel
or at such other address for a party as shall be specified by like notice. Each
communication transmitted, delivered or sent (a) in person, by courier or
messenger service, or by certified
00
Xxxxxx Xxxxxx mail (postage prepaid and return receipt requested) shall be
deemed given, received and effective on the date delivered to or refused by the
intended recipient (with the return receipt or the equivalent record of the
courier or messenger being deemed conclusive evidence of delivery or refusal);
or (b) by telecopy or facsimile transmission or by electronic mail shall be
deemed given, received and effective on the date of actual receipt (with the
confirmation of transmission or the electronic receipt being deemed conclusive
evidence of such receipt, except where the intended recipient has promptly
notified the other party that the transmission is illegible).
Nevertheless, if the date of delivery or transmission is not a Business Day, or
if the delivery or transmission is after 5:00 p.m., local time in Indianapolis,
Indiana, on a Business Day, the communication shall be deemed given, received
and effective on the next Business Day.
14.10 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the domestic laws of the State of Indiana without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Indiana or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Indiana.
14.11 AMENDMENTS AND WAIVERS. This Agreement may be amended or
modified, and any provision of this Agreement may be discharged or waived, only
by a document signed by the party against which the amendment, modification,
discharge or waiver is sought to be enforced. No waiver of any of the provisions
of this Agreement shall be deemed to or shall constitute a waiver of any other
provision hereof (whether or not similar). No delay on the part of any party in
exercising any right, power or privilege hereunder shall operate as a waiver
hereof.
14.12 SEVERABILITY. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
14.13 EXPENSES. Except as otherwise expressly contemplated by this
Agreement, whether or not the transactions contemplated by this Agreement are
consummated, each of the parties hereto shall pay all costs and expenses
incurred by it or on its behalf in connection with the negotiation, preparation,
execution and performance of this Agreement, the documents referred to herein
and the transactions contemplated hereby and thereby, including, without
limitation, fees, expenses and disbursements of its own financial consultants,
accountants and counsel ("Expenses"), and Seller agrees to pay, on behalf of
Seller, any and all of such Expenses that may be incurred by Seller.
14.14 CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless
52
the context requires otherwise. The word "including" shall mean including
without limitation. The Parties intend that each representation, warranty and
covenant contained herein shall have independent significance. If any Party has
breached any representation, warranty or covenant contained herein in any
respect, the fact that there exists another representation, warranty or covenant
relating to the same subject matter (regardless of the relative levels of
specificity) which the Party has not breached shall not detract from or mitigate
the fact that the Party is in breach of the first representation, warranty or
covenant.
14.15 SPECIFIC PERFORMANCE. Solely with respect to a Party's obligation
to close the transaction, the Parties hereto hereby acknowledge that each Party
hereto would suffer irreparable injury and would not have an adequate remedy at
law for money damages if the provisions of this Agreement were not performed in
accordance with their terms. Each Party hereto agrees that the other Parties
hereto shall be entitled to specific enforcement of the terms of this Agreement
in addition to any other remedy to which they are entitled, at law or in equity.
14.16 ACCOUNTS.
(a) Collection. For a period of ninety (90) days after the
Closing Date, Purchaser will use its commercially reasonable efforts to
collect, on behalf of Seller, customer accounts receivable directly
related to the Business or Assets and existing at the time of Closing.
Purchaser shall not attempt to collect any accounts receivable that
have been outstanding for a period of ninety (90) days as of the
Closing Date or any accounts receivable that in the Purchaser's sole
judgment may not be commercially reasonably collected. Purchaser shall
have no obligation whatsoever to commence or pursue any legal or other
proceedings of any type for the collection of any accounts receivable.
(b) Allocation. Payments received shall be applied to accounts
receivable as designated on any accompanying remittance information
from the customer, or in the absence of such remittance information, as
otherwise instructed by the customer. If Purchaser is unable to obtain
such information from the customer, the payment in question shall be
applied to the customer's most recent statement balance first, and any
remaining amounts shall be applied to the accounts receivable balance
owed to Seller.
(c) Disbursement. Disbursement of funds received by Purchaser on
behalf of Seller shall be remitted to Seller by wire transfer on Friday
of the week following collection, with documentation of application
transmitted separately.
(d) Indemnification and Release. Seller shall indemnify, release
and hold harmless Purchaser, its respective affiliates, and their
respective shareholders, officers, directors, employees, agents,
representatives, successors and assigns from the Purchaser's efforts to
collect the accounts receivable on behalf of Seller, and from any and
all claims, demands, liabilities, and causes of action related directly
or indirectly to the Purchaser's efforts to collect the accounts
receivable on behalf of Seller, regardless of the sole or concurrent
negligence of either Seller or Purchaser, except for the Purchaser's
gross negligence or willful misconduct.
53
(e) No Limitation. Nothing in this Section 14.16 shall limit
Seller's right to collect any such accounts.
14.17 BULK SALES LAWS. Purchaser hereby waives compliance by Seller
with the Bulk Sales laws and any other similar laws in any applicable
jurisdiction in respect of the transactions contemplated by this Agreement.
14.18 ENVIRONMENTAL DISCLOSURE STATEMENT. Seller shall provide buyer,
in accordance with Indiana law, an Environmental Disclosure Document for
Transfer of Real Property.
54
IN WITNESS WHEREOF, the undersigned have duly executed this Asset Purchase
Agreement as of the date set forth above.
XXXXXX COMPANY, INC. (PURCHASER)
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
CONVENIENCE STORE DISTRIBUTING
COMPANY, LLC, an Indiana limited
liability company
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Attest:
-----------------------------
X. Xxxxxxxx Butt, Secretary
CONVENIENCE STORE TRANSPORTATION
COMPANY, LLC, an Indiana limited
liability company
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Attest:
-----------------------------
X. Xxxxxxxx Butt, Secretary
CSD PROPERTY, LLC, an Indiana limited
liability company
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
Attest:
-----------------------------
X. Xxxxxxxx Butt, Secretary
55
