ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of the 26th day of September, 1997, by and among (i) AMERICAN
FOODSERVICE DISTRIBUTORS, a California corporation (the "Buyer"), (ii) ORLANDO
FOODSERVICE, INC. and CAPRICORN FOODS OF CENTRAL FLORIDA, INC., each of which is
a Florida corporation (the "Companies"), (iii) XXXXXXX X. XXXXX ("Xxxxx"), and
(iv) XXXXXXXXX XXX ("Xxx") (Xxxxx and Xxx, collectively, the "Shareholders").
RECITALS
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A. The Shareholders own all of the outstanding shares of the
Companies.
B. The Companies are engaged in the wholesale distribution of food
and related equipment and supplies in Central Florida (the "Business") and is
interested in selling substantially all of its assets and discontinuing the
Business.
C. Buyer desires to purchase and the Companies desires to sell
substantially all of the Companies' assets, on the terms and conditions set
forth below.
ACCORDINGLY, in consideration of the foregoing and the mutual
covenants set forth below, the parties agree as follows:
AGREEMENT
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1. PURCHASE AND SALE OF ASSETS.
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1.1 Transfer of Purchased Assets. In consideration of the payment of the
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purchase price set forth in Section 1.5 below, the Companies shall sell, assign
and deliver to Buyer, on the Closing Date (as defined in Section 2.1 below),
free and clear of any and all liens, charges, claims, encumbrances, pledges,
security interests, community property rights, equities, liabilities, debts,
obligations, restrictions on transfer or other defects in title of any kind or
nature, whether known or unknown, fixed or contingent, except for the Assumed
Liabilities (as defined in Section 1.3 below), and Buyer shall purchase and
accept, all assets, properties, rights, titles and interests of every kind and
nature owned or leased by the Companies and used in connection with the Business
as of the Closing Date, whether tangible or intangible, real or personal, and
wherever located and by whomever possessed (the "Purchased Assets"), including,
without limitation, the following, but excluding the Excluded Assets (as defined
in Section 1.2 below):
(a) all deposits, cash and cash equivalents, securities and investments;
(b) all accounts and notes receivable, whether or not evidenced by a note;
(c) all prepayments, prepaid taxes and expenses, credits and deferred
charges;
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(d) all interests in real property (including, without limitation, land,
buildings, fixtures and improvements thereon, and easements, licenses,
rights of way, permits and other appurtenants thereto) whether owned
in fee, leased, subleased or otherwise;
(e) all raw materials, packaging, spare parts, work-in-process, finished
goods, inventories and supplies;
(f) all machinery, equipment, computers, telephone systems, furniture,
automobiles, trucks, tractors, trailers, vehicles and other tangible
personal property;
(g) all rights, title and interests in and to all patents, copyrights,
trademarks, trade names, service marks, service names, logos, and
identifying marks and styles, including, without limitation, the names
"Orlando Foodservice" and "Capricorn Foods of Central Florida" and any
variant thereof;
(h) all rights under the contracts, agreements, orders, leases, licenses
and arrangements listed on Schedule 1.1(h) hereto, to the extent
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assignable;
(i) all rights under all permits, licenses, variances, approvals and other
authorizations obtained from foreign, federal, state or local
governments or governmental agencies or other similar rights, to the
extent assignable;
(j) all claims, insurance, warranties, guarantees, refunds, causes of
action, rights of recovery, rights of set-off and rights of recoupment
of every kind and nature, other than those relating exclusively to the
Excluded Assets or the Excluded Liabilities;
(k) all insurance, warranty and condemnation proceeds received after the
date hereof with respect to damage, non-conformance or loss to the
Purchased Assets;
(l) all books, ledgers, files, documents, correspondence, brochures,
lists, studies, reports, data, business records and other printed or
written materials (including, without limitation, records pertaining
to past and current customer accounts, suppliers, distributors,
personnel and agents);
(m) all rights to receive mail and other communications addressed to the
Companies (including, without limitation, the payments for accounts or
notes receivable);
(n) all rights, title and interests in and to all confidential business
and technical information, trade secrets and proprietary rights of the
Business; and
(o) the Business and all goodwill associated therewith.
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1.2 Excluded Assets. Notwithstanding the foregoing, the following
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assets are expressly excluded from the purchase and sale contemplated hereby
(the "Excluded Assets") and, as such, are not included in the Purchased Assets:
(a) the Companies' and the Shareholders' rights under or pursuant to this
Agreement;
(b) all minute books, stock books, corporate seal and other corporate
records that relate exclusively to the Companies' organization,
existence and capitalization;
(c) all contracts, agreements, orders, leases, licenses and arrangements
which are not expressly specified to be assumed by the Buyer or which
are not transferable to Buyer;
(d) all claims, insurance, warranties, guarantees, refunds, causes of
action, rights of recovery, rights of set-off and rights of recoupment
that relate exclusively to the Excluded Assets or the Excluded
Liabilities; and
(e) certain notes payable listed on Schedule 3.5 hereto which are marked
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"not included"; and
(f) the right to receive mail and other communications addressed to the
Companies that relates exclusively to the Excluded Assets or the
Excluded Liabilities.
1.3 Limited Assumption of Liabilities. Subject to the terms and
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conditions of this Agreement, from and after the Closing Date, Buyer shall
assume and agree to pay, defend, discharge and perform as and when due only the
following specific liabilities and obligations of the Companies which relate
exclusively to the Business (the "Assumed Liabilities"):
(a) certain of the Companies' notes payable listed on Schedule 1.3(b)
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hereto;
(b) all liabilities and obligations under the contracts, agreements,
orders, leases, licenses and arrangements expressly assumed by and
transferred to Buyer on the Closing Date, but excluding any
liabilities or obligations relating to or arising out of (i) any
breach or default occurring thereunder on or prior to the Closing
Date, (ii) any violation of law, tort or infringement occurring with
respect thereto on or prior to the Closing Date, or (iii) any related
action, complaint, proceeding, investigation, claim or demand; and
(c) all current liabilities of the Companies, reflected on the Companies'
balance sheet as at the Financials Date (as defined below) which have
not been discharged or paid and such additional liabilities of the
same kind and type which have subsequently arisen in the ordinary
course of business consistent with past business practices.
1.4 Excluded Liabilities. Notwithstanding anything to the contrary
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contained in this Agreement and regardless of whether such liability or
obligation is disclosed herein or on any Exhibit or
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Schedule hereto, Buyer shall not assume or in any way be responsible or liable
for any liabilities or obligations of the Companies or the Shareholders or any
other liabilities or obligations whatsoever related to the operation of the
Business or condition of the Purchased Assets at any time on or prior to the
Closing Date (the "Excluded Liabilities"), except as specifically provided in
subsections (a) - (c) of Section 1.3 above. Without limiting the generality of
the foregoing, the Excluded Liabilities shall include, without limitation:
(a) all obligations, commitments or liabilities of or claims against the
Companies and/or the Shareholders, arising out of or in connection
with the transfer and sale of the Purchased Assets hereunder;
(b) all license fees, sales taxes, and the documentary stamps on the
promissory note described in Section 1.5(c) below shall be at the
expense of the new division of Buyer;
(c) all liabilities and obligations for foreign, federal, state or local
taxes arising from the operation of the Business on or prior to the
Closing Date or as a result of the consummation of the transactions
contemplated by the Agreement;
(d) all liabilities and obligations for any damage or injury to person or
property arising from the ownership, possession or use of any products
manufactured or sold by the Companies on or prior to the Closing Date;
(e) all liabilities and obligations arising from the operation of the
Business on or prior to the Closing Date in connection with any law,
statute, rule, regulation, order or decree of any foreign, federal,
state or local governmental or regulatory authority (including,
without limitation, those relating to business conduct, public health
and safety, occupational health and safety and the environment);
(f) all liabilities and obligations related to employees, agents,
independent contractors and consultants of the Companies incurred on
or prior to the Closing Date (including, without limitation, all
accrued vacation and sick pay and all other obligations under any
employee benefit plans); and
(g) all liabilities and obligations of the Companies and/or any
Shareholder whatsoever not expressly assumed by Buyer in accordance
with subsections (a) - (c) of Section 1.3 above.
1.5 Purchase Price. The total purchase price (the "Purchase Price") for
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the Purchased Assets to be acquired by Buyer on the Closing Date shall consist
of the following:
(a) the sum of the assumption of the Assumed Liabilities;
(b) A check for One Million Three Hundred Twenty-Five Dollars
($1,325,000.00) to be delivered at the Closing;
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(c) Five Hundred Thousand Dollars ($500,000) in the form of a promissory
note bearing interest at the rate of six and one-half percent (6.5%)
per annum, guaranteed by AFD's parent corporation, Smart & Final Inc.,
due and payable in four equal annual installments commencing on the
first anniversary date of the closing of the transaction; and
(d) the additional amounts to be calculated and paid as provided on
Exhibit A hereto (the "Additional Purchase Price Payments"), there
being no certainty or guarantee that any Additional Purchase Price
Payments shall be payable hereunder.
1.6 Allocation of Purchase Price. The parties agree to allocate the
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Purchase Price among the Purchased Assets for purposes of federal and state
income and franchise taxes in the manner provided on Exhibit B hereto.
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2. THE CLOSING.
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2.1 The Closing. The purchase and sale of the Purchased Assets shall
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take place at 10:00 a.m. (local time) on September 26, 1997, at the offices of
Buyer or at such other time and place as may be mutually agreed upon in writing
by Buyer, the Companies and the Shareholders. The time and date of purchase and
sale, as the same may be postponed or accelerated from time to time, are
referred to in this Agreement as the "Closing" and the "Closing Date,"
respectively.
2.2 Deliveries to be Made at Closing. On the Closing Date, the
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Companies and the Shareholders shall deliver to Buyer such deeds, warranty bills
of sale, assignments and other instruments satisfactory to Buyer and its counsel
as are necessary or desirable to transfer the Purchased Assets, against receipt
of such assumption agreements satisfactory to the Companies and the Shareholders
and their counsel as are necessary or desirable to assume the Assumed
Liabilities, and the parties shall deliver the other items contemplated by
Sections 6 and 7. All deliveries shall be considered to have taken place
simultaneously as a single transaction, and no delivery shall be considered to
have been made until all deliveries are completed. With respect to any Purchased
Assets sold hereunder which cannot be physically delivered at the Closing
because they are in the possession of third parties, the Companies shall give
irrevocable instructions to such third parties that all rights, title and
interests in such Purchased Assets have been vested in Buyer.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS.
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The Companies and each Shareholder, jointly and severally,
represents and warrants to Buyer as follows:
3.1 Ownership of the Purchased Assets. The Companies have good and
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marketable title to all the Purchased Assets. The Purchased Assets are owned by
the Companies, and at the Closing will be delivered to Buyer, free and clear of
any and all liens, charges, claims, encumbrances, pledges, security interests,
community property rights, equities, liabilities, debts, obligations,
restrictions on
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transfer or other defects in title of any kind or nature, whether known or
unknown, fixed or contingent, except for the Assumed Liabilities.
3.2 Authority to Enter Agreement; Enforceability. The Companies and
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each Shareholder have the right, power, legal capacity and authority to enter
into and to carry out the terms and provisions of this Agreement (including,
without limitation, the sale and delivery of the Purchased Assets being sold
pursuant to this Agreement) and the other agreements to be entered into by the
Companies and/or that Shareholder in connection with the consummation of this
Agreement without obtaining the approval or consent of any other party or
authority, and this Agreement and such other agreements constitute the legal,
valid and binding agreements of each of the Companies and each of the
Shareholders, enforceable against it or him in accordance with their respective
terms.
3.3 Organization and Standing. The Companies are each corporations duly
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organized, validly existing and in good standing under the laws of the State of
Florida with full power and authority (corporate and other) to own, lease and
operate its property and carry on the Business as now conducted. The Companies
are currently doing business in those jurisdictions set forth on Schedule 3.3A,
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and are qualified to do business in each such jurisdiction. The Companies'
books and records (including, without limitation, the minute books, stock books
and stock ledger) are complete and correct in all material respects and fairly
reflect the conduct of the Business. Attached hereto as Schedule 3.3B are
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complete copies of the Companies' Articles of Incorporation and By-Laws, as
amended to date.
3.4 Subsidiaries. The Companies have no subsidiaries (that is, a
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corporation or other entity in which it has an equity interest or over which it
is in a position to exercise control, directly or indirectly).
3.5 Financial Statements. Schedule 3.5 to this Agreement contains the
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Companies' consolidated balance sheets as at June 30, 1997, and its related
consolidated statements of income and retained earnings and statements of cash
flows for the period ended June 30, 1997. The foregoing financial statements
(i) are in accordance with the books and records of the Companies and were
prepared in accordance with generally accepted accounting principles applied on
a basis consistent with prior periods and (ii) fairly present the Companies'
financial condition and results of operations and cash flows as at the dates and
for the periods specified. The Companies have no liabilities or obligations,
whether contingent or absolute, direct or indirect, matured or unmatured, which
are not shown or provided for on Schedule 3.5, except those incurred in the
ordinary course of business since June 30, 1997, and the Companies and the
Shareholders know of no basis for the assertion of any such liabilities or
obligations. June 30, 1997, which is the date of the most recent unaudited
balance sheet, is sometimes referred to below as the "Financials Date".
3.6 Absence of Certain Changes. Since the Financials Date, except as
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disclosed on Schedule 3.6 to this Agreement, there has not been:
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(a) any change in the condition (financial or other), net worth, assets,
liabilities, capitalization, prospects, business, properties or results of
operations of the Companies other than
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changes (i) described in the Schedules to this Agreement or (ii) made
or incurred in the ordinary course of business;
(b) any employment or other contracts or commitments entered into by the
Companies, except as described in the Schedules to this Agreement;
(c) any sale, assignment, transfer or other disposition of any assets or
properties, the latest cost of which on the accounting records of the
Companies exceeds $10,000, excluding any inventory or supplies
disposed of in the ordinary course of business consistent with past
practices;
(d) any capital expenditure, capital addition or capital improvement
involving an amount in excess of $10,000;
(e) any mortgage, lien, pledge, encumbrance, or security interest created
on any property or asset, tangible or intangible, except purchase
money security interests created in the ordinary course of business
consistent with past practices;
(f) any dividend or other distribution declared, paid or made or agreed to
on any shares of common stock of the Companies, or any purchase or
redemption of, or any agreement for the purchase or redemption of, any
such shares;
(g) any damage, destruction or loss (whether or not covered by insurance)
adversely affecting the properties, Business or prospects of the
Companies;
(h) any increase in the compensation payable or to become payable by the
Companies to any officer, director or other employee, agent,
independent contractor or consultant or any Shareholder, or any
declaration, payment, commitment or obligation of any kind for the
payment by the Companies of any bonus, additional salary or
compensation, any worker compensation claims or any retirement,
termination or severance benefits, to officers, directors, employees,
agents, independent contractors, consultants or Shareholders, other
than pursuant to existing written commitments of the Companies
otherwise disclosed in the Schedules to this Agreement;
(i) any change in the amount of any notes or other obligations payable by
the Companies to officers, directors, employees, agents, independent
contractors, consultants or Shareholders;
(j) any labor disturbances adversely affecting or threatening the Business
or operations of the Companies;
(k) any revocation or termination, or any notice of any threatened
revocation or termination, of any permit or license issued to the
Companies or, to the extent the Companies' Busi-
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ness or prospects may be materially and adversely affected by such
termination, to any of its employees, independent contractors,
consultants or agents;
(l) any loan by the Companies to any person or entity (except for normal
extension of trade credit and reasonable and customary advances for
business related expenses incurred in the ordinary course of business)
or any guaranty by the Companies of any loan;
(m) any change or anticipated change in the relationship between the
Companies and any of its customers, vendors, suppliers, employees,
agents, independent contractors or consultants which materially and
adversely affects the properties, prospects or business of the
Companies;
(n) any other event or condition which has adversely affected the
properties, business or prospects of the Companies; or
(o) any agreement or commitment obligating the Companies to do any of the
things set forth in this Section 3.6.
3.7 Accounts Receivable. Schedule 3.7 to this Agreement contains a
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complete and accurate list of the Companies' accounts receivable as at the
Financials Date, together with an accurate aging thereof. Said accounts
receivable and all accounts receivable which have arisen since the Financials
Date (i) are valid and enforceable claims for the sales and services which give
rise to such accounts, and (ii) are subject to no defenses or offsets and are
fully collectible in the ordinary course of business without resort to legal
proceedings, subject to any reserves contained in the financial statements
contained in Schedule 3.5 to this Agreement.
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3.8 Inventories. All inventories reflected on the Companies' unaudited
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balance sheet as at the Financials Date and all inventories which have been
acquired since that date are stated on the Companies' books and records at the
lower of average cost or market and are in good and salable condition and are
not obsolete.
3.9 Prepaid Items, Accounts Payable and Accrued Expenses. The
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Companies' unaudited balance sheet as at the Financials Date presents fairly the
prepaid items, accounts payable and accrued expenses of the Companies as at and
for the Financials Date. All prepaid items, accounts payable and accrued
expenses incurred after the Financials Date were incurred in the ordinary course
of business and are usual and normal in amount, both individually and in the
aggregate.
3.10 Tax Matters. The Companies have each properly prepared and filed
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returns for and paid in full all federal, state, local and foreign taxes,
assessments, additions to taxes, penalties and interest with respect thereto, to
the extent such filings and payments are required prior to the Closing Date and
there is no known outstanding or proposed deficiency or assessment by any
federal, state, local or foreign government with respect to any tax period.
The amounts set up as reserves for taxes on the financial statements contained
in Schedule 3.5 to this Agreement are sufficient for the payment of all accrued
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and unpaid federal income, accumulated earnings or other federal taxes, and
state, local
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or foreign income, franchise, real property, personal property, sales, use,
withholding and all other taxes imposed on the either of the Companies or their
property or payable by either of them, including interest, additions to taxes
and penalties, if any, with respect thereto, whether known or unknown and
whether disputed or not, as of the Closing Date, the dates of the respective
financial statements and for all periods prior thereto. The Companies' federal,
state and local tax returns have not been audited , and neither the Companies
nor either Shareholder are aware of any proposed audit by the Internal Revenue
Service or any foreign, state or local taxing authority. The Companies have not
made a Section 341(f) election under the Internal Revenue Code of 1986, as
amended. The Companies have provided Buyer with true and complete copies of all
federal, state, local and foreign tax returns filed by the Companies as of
December 31, 1996, including all amendments and adjustments, if any, to such
returns.
3.11 Employees, Agents, Independent Contractors and Consultants;
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Collective Bargaining Agreements. Schedule 3.11 to this Agreement contains a
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true and complete list of all employees, agents, independent contractors and
consultants of the Companies, their respective rates of compensation, any
increases in such rates contemplated by existing contractual arrangements and
all bonuses, deferred compensation, profit-sharing, pension, retirement,
vacation or other compensation benefits to which they are, or may in the future
become, entitled pursuant to existing contractual arrangements or Companies
practices. The Companies have paid in full to all employees, agents, independent
contractors and consultants all wages, salaries, commissions, bonuses and other
direct compensation for all services performed by them, except for such payments
as are not yet due. The Companies are in compliance with all laws and
regulations respecting employment and employment practices, terms and conditions
of employment, wages and hours, employee benefit plans and taxes (including
withholding taxes) relating to employment or to personal services provided to
the Companies. No employee, agent, independent contractor or consultant of the
Companies is in material violation of any employment agreement, consulting
agreement, proprietary information nondisclosure agreement or any other contract
or agreement with the Companies or, to the best of the Companies' and the
Shareholders' knowledge, such an agreement or contract with any previous
employer or other third party. Neither the Companies nor any Shareholder have
any knowledge or information to the effect that any of the Companies' employees
intend to terminate his or her employment relationship with the Companies or
that any of the Companies' agents, independent contractors or consultants intend
to terminate his or her contractual relationship with the Companies. There are
no agreements, commitments or other obligations of the Companies, whether oral
or written, which would prevent or obstruct the dismissal of any of the
Companies' employees, agents, independent contractors or consultants.
3.12 Real Property. Schedule 3.12A to this Agreement contains a true and
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complete description of all land, easements, rights-of-way, plants, warehouses,
office buildings, stores and other buildings and real property owned, leased,
rented or occupied by the Companies. All such real property owned, leased,
rented or occupied by the Companies is owned, leased, rented or occupied free
and clear of all mortgages, security interests, liens, pledges, charges,
encumbrances, claims, liabilities, debts, equities, restrictions on transfer or
other defects in title of any kind or nature. All such real property owned,
leased, rented or occupied by the Companies complies in all material respects
with all applicable federal, state and local land use, zoning, subdivision,
building, earthquake hazard
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reduction, health, safety, environmental and other laws, statutes, ordinances,
rules and regulations. All buildings and all fixtures, mechanical systems and
roofs and structural systems in such buildings are in good operating condition
and repair, ordinary wear and tear excepted. Schedule 3.12B to this Agreement
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contains a true and complete list of all leases entered into by the Companies
with respect to such property. Such leases are in full force and effect and are
enforceable in accordance with their terms. Except as set forth on Schedule
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3.12B to this Agreement, none of such leases have been amended or modified.
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Neither the Companies nor, to the best of the Companies' and the Shareholders'
knowledge, the other parties thereto are in material breach or default under any
of such leases; and no event has occurred which with notice or lapse of time, or
both, could constitute a material breach or default by the Companies or, to the
best of the Companies' and the Shareholders' knowledge, the other parties
thereto under such leases or could accelerate any obligation or create any lien
or encumbrance under such leases. The Companies have not assigned any of their
interests in such leases or sublet any portion of the leased premises covered by
such leases. No claim has been asserted or, to the best of the Companies' and
the Shareholders' knowledge, exists that is adverse to the rights of the
Companies to the continued possession of the leased premises under such leases.
The existing Lease to the Companies' premises at 0000 Xxxxxx Xxxx, Xxxxxxx,
Xxxxxxx, has expired and the Companies are currently on a month-to-month lease.
3.13 Tangible Personal Property. Section 3.13A to this Agreement contains
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a true and complete list describing and specifying the location of all vehicles,
equipment, furniture, fixtures, leasehold improvements and all other tangible
personal property or assets, used, owned, possessed or leased by, or in the
possession of, the Companies in connection with the Business that have book
values of $10,000 or more. Except as set forth in Schedule 3.13B to this
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Agreement, all personal property owned, used, possessed or leased by the
Companies is owned, used, possessed or leased by the Companies free and clear of
all material liens, claims, charges, pledges, security interests, encumbrances,
liabilities, debts, equities, restrictions on transfer or other defects in title
of any kind or nature. All items of personal property owned, used, possessed or
leased by the Companies are in good operating condition and repair, normal wear
and tear excepted. All leases pursuant to which the Companies holds any items
of personal property are listed on Schedule 3.13B to this Agreement and are in
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full force and effect and are enforceable in accordance with their terms.
Except as set forth on Schedule 3.13B, none of such leases have been amended or
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modified. Neither the Companies nor, to the best of the Companies' and the
Shareholders' knowledge, the other parties thereto are in material breach or
default under any of such leases; and no event has occurred which with notice or
lapse of time, or both, could constitute a material breach or default by
Companies or, to the best of the Companies' and the Shareholders' knowledge, the
other parties thereto under such leases or could accelerate any obligation or
create any lien or encumbrance under such leases. The Companies has not
assigned any of its interest in such leases. No claim has been asserted or, to
the best of the Companies' and the Shareholders' knowledge, exists that is
adverse to the rights of the Companies to the continued possession of the leased
property under such leases.
3.14 Intangible Property. Section 3.14 to this Agreement contains a true
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and complete list of all patents, copyrights, trademarks, service marks, trade
names, logos and identifying marks and styles used by the Companies in
connection with the Business (the "Intangible Property"). Except as disclosed
on Schedule 3.14 to this Agreement, each of the Companies owns and has the full
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right to
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use its name and all the Intangible Property in each jurisdiction in which it
conducts business. Neither of the Companies has infringed or is currently
infringing any trade xxxx, service xxxx, trade name, patent, copyright, logo or
identifying xxxx, or wrongfully using any trade secret, of any third party.
3.15 Contracts and Agreements. Schedule 3.15 contains a true and
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complete list of the following agreements, contracts, leases (other than the
leases already listed on Schedule 3.12 and Schedule 3.13 to this Agreement) or
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other obligations or commitments, whether written or oral (collectively
"Contracts"), to which either or both of the Companies is a party or by which it
or its property is bound, including (i) contracts with employees, agents,
independent contractors, consultants, advisors, salespersons or sales
representatives not cancelable at will without cost or other liability by reason
of such termination; (ii) contracts with customers; (iii) contracts with
suppliers or manufacturers of products sold by the Companies in the ordinary
course of business; (iv) bonus, deferred or incentive compensation, group
insurance or other employee benefit plans; (v) collective bargaining contracts;
(vi) leases as lessor or lessee; (vii) advertising or public relations
contracts; (viii) conditional sales contracts, security agreements, pledge
agreements, trust receipts or any other agreements or arrangements whereby any
of the assets of the Companies are subject to a lien, encumbrance, charge or
other restriction; (ix) mortgages, indentures, notes or other instruments for or
relating to any borrowing of money or the extension of credit or the deferred
purchase of property; (x) guarantees of any obligations for the borrowing of
money or otherwise, or any other agreements of guarantee or indemnification
(other than endorsements made for collection in the ordinary course of
business); (xi) agreements or arrangements for the purchase or sale of any
assets other than in the ordinary course of business; (xii) continuing contracts
for future purchase of materials, supplies or equipment; (xiii) agreements,
contracts or commitments relating to the issuance of any securities; (xiv)
agreements, contracts or commitments relating to the acquisition of assets,
capital stock or ownership interests of any business enterprise; (xv)
agreements, contracts, or commitments with any officer, director or Shareholder
of the Companies; (xvi) contracts restricting doing business in any areas or in
any way limiting competition; and (xvii) any other contracts (other than
contracts entered into in the ordinary course of business) to be performed in
whole or in part more than 30 days from the date hereof calling for aggregate
payments by the Companies in excess of $3,000 per month and which are not
terminable without cost or liability on 30-days' notice. Except as set forth
on Schedule 3.15, none of the Contracts have been amended or modified. Each of
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the Contracts is in full force and effect and is enforceable in accordance with
its terms. Neither the Companies nor, to the best of the Companies' and the
Shareholders' knowledge, the other parties thereto are in material breach or
default under any such Contracts and no event has occurred which with notice or
lapse of time, or both, could constitute a material breach or default under any
such Contract or could accelerate any obligation or create any lien or
encumbrance under any such Contract. The Companies has not assigned any of its
interest in the Contracts. No claim has been asserted or, to the best of the
Companies' and the Shareholders' knowledge, exists that is adverse to the rights
of the Companies under any of the Contracts.
3.16 Insurance. Schedule 3.16 to this Agreement contains a true and
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complete list of all life, fire, casualty, liability and all other insurance
policies maintained by the Companies, all of which are in full force and effect
in the amounts provided therein. To the best of the Companies' and the
Shareholders' knowledge, there is no threat by any of the insurers to terminate
or materially increase the premiums payable under any such insurance policies
due to the activities or loss experience of the
11
Companies, and each of the Companies is in compliance in all respects with the
conditions contained in such policies. Such policies cover the property and
assets of the Companies in amounts and against losses and risks such as are
generally maintained for comparably situated businesses.
3.17 Litigation. Except as set forth on Schedule 3.17 to this Agreement,
---------- -------------
there is no suit, action or legal, administrative, arbitration or other
proceeding pending, filed or initiated by, against or affecting the Companies or
its properties, and neither the Companies nor any Shareholder knows of any suit,
action or legal, administrative, arbitration or other proceeding threatened by,
against or affecting the Companies or their properties or, with respect to
matters arising out of the Business, pending or threatened by, against or
affecting the Shareholders or any of the Companies' officers or directors.
Neither the Companies nor any Shareholder knows of any event or circumstance
which could form the basis of any such suit, action, proceeding or
investigation.
3.18 Compliance with Law and Other Instruments. The business and
-----------------------------------------
operations of the Companies have been and are being conducted in accordance with
all applicable laws, statutes, ordinances, rules and regulations of all
authorities (including, without limitation, those relating to business conduct,
public health and safety, occupational health and safety and the environment).
Neither of the Companies is in violation or breach of, or in default under, any
term or provision of its Articles of Incorporation or its Bylaws or of any
order, judgment, writ, injunction, decree, license or permit of any court or any
governmental or regulatory authority or of any indenture, mortgage, deed of
trust, lease, contract, instrument, commitment or other agreement or
arrangement, or subject to any restriction of any kind or character, which might
materially and adversely affect the Companies or their properties, business or
prospects. Neither the execution and delivery of this Agreement or the other
agreements to be entered into by the Companies and/or any Shareholder pursuant
to this Agreement, nor the consummation of the transactions contemplated by this
Agreement and such other agreements, will conflict with, or result in a
violation or breach of, or constitute a default under, any term or provision of
the Companies' Certificate of Incorporation or Bylaws or any order, judgment,
writ, injunction, decree, license, permit, law, statute, ordinance, rule or
regulation of any court or any governmental or regulatory authority or any
indenture, mortgage, deed of trust, lease, contract, instrument, commitment or
other agreement or arrangement to which the Companies or any Shareholder is a
party or by which they or their properties are bound.
3.19 Conflicts of Interest. Except as set forth on Schedule 3.19 to this
--------------------- -------------
Agreement, no Shareholder or any entity controlled by any Shareholder or, to the
best of the Companies' and the Shareholders' knowledge, no director, officer or
employee of the Companies or any relative of a Shareholder (i) owns, directly or
indirectly, any interest in excess of 5% in, or is an employee or representative
of or consultant to, any corporation, firm, association or other business entity
or organization which is, or is engaged in business as, a competitor, customer
or supplier of the Companies; (ii) owns, directly or indirectly, in whole or in
part, any tangible or intangible property which the Companies is using or the
use of which is necessary for the conduct of the Business (including, without
limitation, any inventory, buildings, machinery or equipment); or (iii) has any
cause of action or other claim whatsoever against or owes any amount to the
Companies. Altif has disclosed to Buyer that he owns more than five percent (5%)
of the capital stock of Floriana Pasta Company, to which ownership Buyer hereby
consents provided Altif remains a passive investor in such company.
12
3.20 Licenses and Permits. Schedule 3.20 to this Agreement contains a
--------------------
true and complete list of all licenses, permits, orders, approvals and other
authorizations issued to the Companies and its employees, which are in full
force and effect and which in any way relate to the Business. The Companies and
its employees or agents have all licenses, permits, orders, approvals and other
authorizations required for the conduct of the Business as presently conducted
and, to the best of the Companies' and the Shareholders' knowledge, no
suspension or cancellation of any of them is threatened. The Shareholders hereby
agree to reasonably cooperate with Buyer in transferring the USDA permit and any
other licenses or permits which require signatures or other evidence of the
Shareholders' agreement to such transfer after the Closing Date.
3.21 Benefit Plans.
-------------
(a) Schedule 3.21 to this Agreement contains a true and complete
-------------
list of all group insurance programs and other benefit plans provided for the
Companies' employees. Except as disclosed in Schedule 3.21, neither of the
-------------
Companies has any Employee Plans. For purposes of this Section, the term
"Employee Plan" includes all present (including those terminated or transferred
within the past two years) plans involving the Companies providing any benefits
to any current or former employee of the Companies which are subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). The term
Employee Plan includes, but is not limited to, pension, retirement, profit
sharing and stock bonus plans and includes any Employee Plan that is a multi-
employer plan as defined in Section 3(37) of ERISA.
(b) Neither the Companies nor any other person or entity which
together with the Companies would be considered a single employer under Section
4001(b)(1) of ERISA is or has been a party to or has any employees who are
covered by any multiemployer plan as defined in Section 3(37) of ERISA.
(c) Each Employee Plan is now, and has always been, established,
maintained and operated in all material respects in accordance with all
applicable laws (including but not limited to ERISA and the Internal Revenue
Code of 1986, as amended, and regulations thereunder) and in accordance with the
plan documents. All communications with respect to any Employee Plan by any
person acting or purporting to act on behalf of the Companies (including but
limited to the members of any plan committee, all plan fiduciaries, plan
administrators, the Companies and the Companies' employees) accurately reflect,
and have always accurately reflected, in all material respects the documents and
operations of any Employee Plan. There is no unfunded liability for vested or
nonvested benefits under any Employee Plan. All material reports, forms and
other documents required to be filed with any governmental entity with respect
to any Employee Plan have been timely filed and are accurate. There is no
pending or, to the best knowledge of the Companies and the Shareholders,
threatened litigation or arbitration concerning or involving any Employee Plan
by any employee of the Companies covered under such Employee Plan.
(d) No complaints by any governmental entity have been filed or,
to the best of the Companies' and the Shareholders' knowledge, have been
threatened with respect to any Employee
13
Plan. To the best of the Companies' and the Shareholders' knowledge, no
complaints by an employee have been filed or are threatened to be filed with
respect to any Employee Plan.
3.22 Brokerage and Finders' Fees. Neither the Companies nor any
---------------------------
Shareholder has incurred any liability to any broker, finder or agent for any
brokerage fees, finders' fees or commissions with respect to the transactions
contemplated by this Agreement.
3.23 Suppliers and Customers. No single supplier or customer listed on
-----------------------
Schedule 3.23, nor any supplier who is a material source of supply of any goods
-------------
essential to the Business, has (i) canceled or otherwise terminated, or made any
threat to cancel or otherwise terminate, its relationship with the Companies or
(ii) materially decreased its sale of services or supplies to the Companies or
its purchase of products therefrom or made any threat with respect thereto.
Schedule 3.23 contains a true and complete list of the principal customers and
-------------
suppliers of the Companies.
3.24 Bank and Financial Accounts. Schedule 3.24 is a true and complete
--------------------------- -------------
list of all names and locations of all banks and other financial institutions at
which the Companies maintains accounts, the account number of each such account,
and the names of all persons authorized to make withdrawals therefrom.
3.25 Powers of Attorney. Except as set forth on Schedule 3.25, there are
------------------ -------------
no persons holding a power of attorney on behalf of the Companies.
3.26 Officers and Directors. The officers and directors of the Companies
----------------------
are as set forth on Schedule 3.26 to this Agreement.
-------------
3.27 Hazardous Materials. During any period in which either of the
-------------------
Companies has owned, leased, rented or occupied any real property (the "Real
Property") and, to the best of the Companies' and the Shareholders' knowledge,
during any period prior to the period in which the Companies has owned, leased,
rented or occupied the Real Property, there has been no storage, use,
manufacture, generation, disposal, treatment or release of any Hazardous
Materials (as defined below) on, under or about the Real Property or transport
of Hazardous Materials to or from the Real Property. For the purposes of this
Section, the term "Hazardous Materials" shall mean flammable explosives,
radioactive materials, hazardous wastes, toxic substances or any other materials
which are included within the definition of "hazardous materials", "hazardous
substances", "hazardous wastes", or "toxic substances", under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended,
(42 U.S.C. (S)(S) 9601 et seq.) or any other federal, state and local laws or
-- ---
ordinances pertaining to industrial hygiene, soil and ground water or
environmental conditions, including, without limitation, asbestos in
any form and urea formaldehyde insulation. The use of the Real Property is in
compliance with all local, state and federal statutes, laws, ordinances, rules
and regulations regarding Hazardous Materials. Without limiting the generality
of the foregoing, neither any of the Shareholders nor the Companies has, with
respect to the Real Property:
(a) Received any notice from the Environmental Protection Agency, the
Occupational Safety and Health Agency, or any other federal, state
or local governmental or regulatory agency
14
or regional office with responsibility for health, environmental
protection, waste disposal, toxic materials, underground tanks,
water quality, sanitation, public works or industrial hygiene of any
violation or potential violation of any applicable federal, state or
local statutes, laws, rules, ordinances or regulations relating to
any Hazardous Materials; or
(b) Been the subject of an enforcement, cleanup, removal, closure,
quarantine or other governmental or regulatory action instituted,
completed or, to the best of the Companies' and the Shareholders'
knowledge threatened, with respect to any Hazardous Materials; or
(c) Received or, to the best of the Companies' and the Shareholders'
knowledge, been threatened with a claim by a third party against the
Companies or its assets relating to damage, contribution, cost
recovery compensation, loss or injury resulting from any Hazardous
Materials; or
(d) Imposed or had imposed on the Real Property, at any time for any
period of time, a condition to or restriction on the use, ownership,
occupancy or transferability of the Real Property or any part thereof,
including, without limitation, a closure or limitation of access, due
to the use, manufacture, storage, disposal or transport of Hazardous
Materials on, under, about or across the Real Property; or
(e) Conducted, or learned of the conduct by a third person or governmental
body of, any environmental audit or other investigation into the
presence or condition of Hazardous Materials on, under, about,
neighboring or affecting the Real Property, which audit or
investigation concluded, directly or indirectly, that there existed
actual or potential liability or obligation under any of the laws,
regulations or ordinances regarding Hazardous Materials to remove,
repair, clean-up, detoxify, quarantine, or otherwise remedy a
condition involving Hazardous Materials on the Real Property; or
(f) Received any information regarding any of the properties bordering or
surrounding the Real Property, or any of the properties containing
water or other materials used in connection with the Business, that
any of the events described in items (a) through (e) has occurred with
respect to those properties.
3.28 Full Disclosure. At the date of this Agreement the Companies and
---------------
the Shareholders have, and at the Closing Date the Companies and the
Shareholders will have, disclosed to Buyer all material events, conditions and
facts known to the Companies and/or either Shareholder which affect the
Business, operations and prospects of the Companies and which are reasonably
required for Buyer to evaluate the acquisition of the Purchased Assets and the
related assumption of the Assumed Liabilities. No representations or warranties
by the Companies or either Shareholder contained in this Agreement or in any
document, statement, certificate, exhibit, report or schedule furnished or to be
furnished hereunder contain or will contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statement and facts
contained therein not misleading.
15
4. REPRESENTATIONS AND WARRANTIES OF BUYER.
---------------------------------------
Buyer represents and warrants to the Companies and the Shareholders as
follows:
4.1 Organization and Standing. Buyer is a corporation duly organized,
-------------------------
validly existing and in good standing under the laws of the State of California,
with full power and authority (corporate and other) to carry on its business and
to enter into and carry out the terms of this Agreement.
4.2 Authority to Enter Agreement; Enforceability. Except for the
--------------------------------------------
requirement that the terms and conditions of this Agreement and the other
agreements to be entered into by Buyer in connection with the consummation of
this Agreement be approved by Buyer's Board of Directors, which approval has not
yet been obtained, (i) Buyer has the right, power and authority to enter into
and to carry out the terms of this Agreement and such other agreements, without
obtaining the approval or consent of any other party or authority, and (ii) this
Agreement and such other agreements constitute the legal, valid and binding
agreements of Buyer, enforceable against it in accordance with their respective
terms.
4.3 Compliance with Law and Other Instruments. Except for the
-----------------------------------------
requirement that the terms and conditions of this Agreement and the other
agreements to be entered into by Buyer in connection with the consummation of
this Agreement be approved by Buyer's Board of Directors, which approval has not
yet been obtained, neither the execution and delivery of this Agreement or such
other agreements, nor the consummation of the transactions contemplated by this
Agreement and such other agreements, will conflict with, or result in a
violation or breach of, or constitute a default under, any term or provision of
Buyer's Articles of Incorporation or Bylaws or any order, judgment, writ,
injunction, decree, license, permit, law, statute ordinance, rule or regulation
of any court or any governmental or regulatory authority or any indenture,
mortgage, deed of trust, lease, contract, instrument, commitment or other
agreement or arrangement to which Buyer is a party or by which it or its
properties are bound.
4.4 Brokerage and Finders' Fees. Buyer has not incurred any liability
---------------------------
to any broker, finder or agent for any brokerage fees, finders' fees or
commissions with respect to the transactions contemplated by this Agreement.
5. COVENANTS OF THE PARTIES.
------------------------
5.1 Operation of the Business of the Companies. During the period from
------------------------------------------
and after the date of this Agreement and until the Closing Date, the Companies
and the Shareholders covenant and agree that, unless they obtain Buyer's prior
written consent to the contrary, or except as specifically authorized in this
Agreement, the Companies shall, and the Shareholders shall cause the Companies
to,:
16
(a) make, amend and terminate contracts only in the ordinary course of
business;
(b) refrain from suffering or refrain from creating any security interest,
encumbrance or restriction on its properties or assets, except in the
ordinary course of business consistent with past practices;
(c) refrain from disposing of any of its properties or assets, except in
the ordinary course of business consistent with past practices;
(d) refrain from entering into or becoming a party to any employment,
consulting or sales representation agreement, except in the ordinary
course of business consistent with past practices;
(e) refrain from increasing the rate of compensation paid or payable by it
to any of its officers, directors, employees, agents, independent
contractors or consultants, except pursuant to existing contractual
obligations, and from making loans or advances to officers, directors,
agents, employees, independent contractors, consultants or the
Shareholders, or any member of the families of any of them, except for
advances for reasonable business expenses in accordance with past
practices;
(f) refrain from paying or agreeing to pay any bonus, extra compensation,
pension or severance pay under any pension plan or otherwise, except
pursuant to existing contractual obligations;
(g) maintain its books accounts and records in the usual, regular and
ordinary manner and in compliance with all applicable laws;
(h) meet its obligations under all contracts and not become in default
thereunder;
(i) maintain all of its assets in good repair, order and condition,
ordinary wear and tear excepted;
(j) refrain from granting or committing to grant any options, warrants,
conversion or other rights to subscribe, purchase or otherwise acquire
any shares of stock of the Companies or other ownership interest of
the Companies or issuing or committing to issue any stock of the
Companies or other securities convertible into shares of the stock of
the Companies or other ownership interest;
(a) not declare, set aside, or pay any dividend or distribution with
respect to the stock or other ownership interest of the Companies;
(b) not directly or indirectly redeem, purchase or otherwise acquire or
commit to acquire any stock or other ownership interest of the
Companies;
(c) refrain from changing its Certificate of Incorporation or Bylaws;
17
(d) refrain from borrowing or agreeing to borrow any funds other than
under existing banking relationships, in the ordinary course of
business consistent with past practices;
(e) refrain from guaranteeing or agreeing to guarantee the obligations of
others;
(f) refrain from waiving or committing to waive any rights of substantial
value except for good and valuable consideration;
(g) refrain from cancelling or materially amending any insurance policy
except in exchange for a new policy with at least the same coverage;
(h) refrain from entering into any transaction which would in any
significant respect change the character of the business conducted by
the Companies; and
(i) operate in such manner as to assure that the representations and
warranties of the Companies and the Shareholders set forth in this
Agreement will be true, correct and complete on and as of the Closing
Date.
5.2 Access to Information and Records. Each of the Companies covenants
---------------------------------
and agrees, and the Shareholders covenant and agree to cause the Companies, to
give Buyer and its counsel, accountants and other representatives (collectively,
"Buyer's Representatives") full access, during normal business hours, throughout
the period prior to the Closing Date, to all of the Companies' assets,
properties, contracts, commitments, books and records, and to cause the
Companies to furnish Buyer and Buyer's Representatives during such period with
all information concerning its affairs as they reasonably may request. No
investigation or inquiry made by Buyer or Buyer's Representatives hereunder
shall in any way affect or lessen the representations and warranties made by the
Companies and the Shareholders under this Agreement.
5.3 Best Efforts; Further Assurances. Each party to this Agreement
--------------------------------
shall use his or its best efforts to cause the satisfaction of all conditions to
the consummation of this Agreement which are in the control of such party and to
cooperate as necessary in the satisfaction of all other conditions to the
consummation of this Agreement. Each party hereto will, from time to time after
the execution and consummation of this Agreement, execute and deliver such
instruments, documents and assurances and take such further actions as the other
parties may reasonably request to carry out the purpose and intent of this
Agreement.
5.4 Publicity. All notices to third parties and all other publicity
---------
concerning this Agreement and the transactions contemplated by this Agreement
shall be jointly planned and coordinated between Buyer, on the one hand, and the
Companies and the Shareholders, on the other hand. No party shall make a
unilateral press release or public announcement in this regard without the prior
written approval of the other parties except as may be required by law. The
Confidentiality Agreement previously entered into by the parties shall remain in
effect up through the Closing.
18
5.5 Trade Secrets, Non-Competition, Etc. As a material inducement to
-----------------------------------
Buyer to enter into and consummate this Agreement, the Companies and the
Shareholders agree that, after the Closing Date:
(a) Trade Secrets. The Companies and the Shareholders shall not,
-------------
without the prior written consent of Buyer, except as may be required by law,
governmental rules and regulations or litigation between the parties, disclose
or use, in any way, any confidential business or technical information or trade
secret of the Companies, whether or not conceived of or prepared by the
Companies or either Shareholder (the "Trade Secrets"), including without
limitation any information concerning any procedures, operations, investments,
techniques, data, compilations of information, records, financing, costs,
employees, purchasing, accounting, marketing, merchandising, sales, customers,
salaries, pricing, profits, plans for future development, and the identity,
requirements, preferences, practices and methods of doing business of specific
parties with whom the Companies transacts business, and all other information
which is related to any service or business of the Companies; all of which Trade
Secrets will be the exclusive and valuable property of Buyer.
(b) Tangible Items. All customer lists, patents, copyrights,
--------------
trademarks, trade names, files, records, documents, drawings, plans,
specifications, manuals, books, forms, receipts, notes, reports, memoranda,
studies, data, calculations, recordings, catalogues, compilations of
information, correspondence and all copies, abstracts and summaries of the
foregoing and all physical items related to the business of the Companies, other
than a merely personal item, whether of a public nature or not, and whether
prepared by the Companies or either Shareholder or not, are and shall be the
exclusive property of Buyer and shall not be removed from the premises of Buyer,
without the prior written consent of Buyer.
(c) Solicitation of Customers. During the period commencing on
-------------------------
the Closing Date and ending four years from that date (such period not to
include any period of violation hereof by the Companies or a Shareholder or
period which is required for litigation to enforce this Section 5.5(c)), neither
the Companies nor either Shareholder shall directly or indirectly, either for
its or his own benefit or purposes or for the benefit or purposes of any other
person, solicit, call on, interfere with, accept any business from, attempt to
divert or entice away any person or firm who was or is a customer of the
Companies prior to or on the Closing Date or is a customer of Buyer after the
Closing Date, if such business involves the wholesale distribution of food or
related equipment or supplies.
(d) Solicitation of Employees. During the period commencing on
-------------------------
the Closing Date and ending four years from that date (such period not to
include any period of violation hereof by the Companies or a Shareholder or
period which is required for litigation to enforce this Section 5.5(d)), neither
the Companies nor either Shareholder shall directly or indirectly, employ or
offer to employ, call on, solicit, interfere with, attempt to direct or entice
away any prior or existing employee or independent contractor of the Companies
in any capacity if that person possesses or has knowledge of any Trade Secrets.
19
(e) Noncompetition.
--------------
(i) As used herein, the term "Competitive Activity" shall
mean any participation in, assistance of business from, engagement in business
with, or assistance, promotion or organization of, any person, partnership,
corporation, firm, association or other business organization, entity or
enterprise by the Companies or either Shareholder which, directly or indirectly,
is engaged in, or hereinafter engages in the wholesale distribution of food or
related equipment or supplies.
(ii) During the period commencing on the Closing Date and
ending on four years from that date (any such period not to include any period
of violation hereof by the Companies or either Shareholder or period which is
required for litigation to enforce this Section 5.5(e)), neither the Companies
nor either Shareholder shall engage in any Competitive Activity in any of the
following geographic areas:
(A) the State of Florida;
(B) Aruba;
(C) St. Maarten/St. Xxxxxx;
(D) Nevis;
(E) St. Croix;
(F) Trinidad/Tobago;
(G) Turks/Caicos;
(H) Grenada;
(I) Peru;
(J) El Salvador;
(K) Barbados;
(L) Belize;
(M) Curacao;
(N) St. Eustatius;
(O) Antigua;
20
(P) British Virgin Island;
(Q) Grand Cayman;
(R) Mexico-Cancun;
(S) Colombia;
(T) Nicaragua;
(U) Honduras;
(V) Dominican Republic;
(W) Ecuador;
(X) Bonaire;
(Y) St. Kitts;
(Z) St. Xxxxxx;
(AA) Jamaica;
(BB) Bahamas;
(CC) Anguilla;
(DD) Venezuela;
(EE) Costa Rica; and
(FF) Guatemala.
(f) Exception for Employment Agreements. A Shareholder shall
-----------------------------------
not be deemed to be in breach of his obligations under this Section 5.5, to the
extent that he is performing his duties and obligations to Buyer pursuant to an
Employment Agreement (as defined below).
(g) Injunctive Relief. The Companies and the Shareholders hereby
-----------------
acknowledge and agree that it would be difficult to fully compensate Buyer for
damages resulting from the breach or threatened breach of the foregoing
provisions and, accordingly, that Buyer, without being required to post any
bond, shall be entitled to temporary and injunctive relief, including temporary
restraining orders, preliminary injunctions and permanent injunctions, to
enforce such provisions. This provision
21
with respect to injunctive relief shall not, however, diminish the right of
Buyer to claim and recover damages.
5.6 Repayment of Certain Assumed Loans. Immediately following the Closing,
----------------------------------
Buyer shall assume the note payable listed on Schedule 1.3(b) hereto.
---------------
6. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE.
---------------------------------------------------
Buyer's obligation to consummate this Agreement is expressly subject to the
satisfaction, on or prior to the Closing Date, of all of the following
conditions (compliance with which or the occurrence of which may be waived in
whole or in part by Buyer in writing):
6.1 Representation and Warranties. All representations and warranties of
-----------------------------
the Companies and the Shareholders contained in this Agreement, or any
certificate, schedule, exhibit, statement, report or other document delivered or
furnished by either Shareholder or the Companies pursuant this Agreement, shall
be true, correct and complete as of the Closing Date as if made at and as of
such date.
6.2 Covenants. The Companies and the Shareholders shall have performed
---------
and satisfied all covenants and conditions required by this Agreement to be
performed or satisfied by them on or prior to the Closing Date.
6.3 Certificates.
------------
(a) On the Closing Date, each of the Companies shall have
furnished to Buyer a certificate dated the Closing Date signed by an officer of
the Companies to effect that (i) all of its representations and warranties
contained in this Agreement, or any certificate, schedule, exhibit, statement,
report or other document delivered or furnished by it pursuant to this
Agreement, remain true, correct and complete as of the Closing Date as if made
at and as of such date; and (ii) it has performed and satisfied all covenants
and conditions required by this Agreement to be performed or satisfied by it on
or prior to the Closing Date.
(b) On the Closing Date, each Shareholder shall have furnished
Buyer with a certificate dated the Closing Date signed by him to the effect that
(i) all the representations and warranties of the Companies and the Shareholders
contained in this Agreement, or any certificate, schedule, exhibit, statement,
report or other document delivered or furnished by that Shareholder or the
Companies pursuant to this Agreement, remain true, correct and complete as of
the Closing Date as if made at and as of such date; and (ii) the Companies and
the Shareholder have performed and satisfied all covenants and conditions
required by this Agreement to be performed or satisfied by it or him on or prior
to the Closing Date.
6.4 Material Errors. Buyer shall not have discovered any material error,
---------------
misstatement or omission in any of the representations or warranties made by
either of the Companies and the Shareholders in this Agreement, or any
certificate, schedule, exhibit, statement, report or other documents delivered
or furnished by either Shareholder or the Companies pursuant to this Agreement;
or (ii) fail-
22
ure on the part of either of the Companies or either Shareholder to perform or
satisfy any covenants or conditions required to be performed or satisfied by it
or him under this Agreement.
6.5 Absence of Litigation. No action or proceeding shall have been
---------------------
instituted or threatened prior to or at the Closing Date before any court or
other governmental body, or instituted or threatened by any public authority,
the result of which could prevent or make illegal the consummation of the
transactions contemplated hereunder or under the other agreements to be entered
into in connection with this Agreement or which could have a material adverse
effect on either of the Companies or its properties, Business or prospects.
6.6 Absence of Damage to Property. The tangible and real properties of
-----------------------------
the Companies shall not have suffered any substantial damage or destruction,
whether by fire or otherwise, and whether or not covered by insurance, which
could have a material adverse effect on either of the Companies or its
properties, Business or prospects.
6.7 Consents. The Companies and the Shareholders shall have obtained the
--------
consent or approval of each person whose consent to or approval of the
transactions contemplated by this Agreement or the other agreements to be
entered into in connection with this Agreement is required in order to
consummate this such other agreements or to continue the operation of the
Business as it is currently conducted. Such consents and approvals shall
include, without limitation, the consent of the Companies' current landlord and
the consents of the Shareholders' spouses, if any, in regard to their community
property rights, in forms satisfactory to Buyer and its counsel.
6.8 Governmental Approvals. The Companies shall have obtained all
----------------------
consents and approvals of all governmental agencies that are necessary to permit
the consummation of the transactions contemplated by this Agreement, the other
agreements to be entered into in connection with this Agreement and the
operation of the Business as it is currently conducted.
6.9 Execution of Employment Agreement. Altif shall have executed and
---------------------------------
delivered to Buyer, an employment agreement in the form attached as Exhibit C to
---------
this Agreement (an "Employment Agreement").
6.10 Intentionally Omitted.
---------------------
6.11 Intentionally Omitted.
---------------------
6.12 Opinion of Counsel. The Companies and the Shareholders shall have
------------------
furnished Buyer with the opinion of Xxxxxxx Xxxxxx, Esq., dated the Closing
Date, in form and substance reasonably satisfactory to Buyer and its counsel,
covering the matters specified in Exhibit D to this Agreement.
---------
6.13 Due Diligence Review. On or prior to the Closing Date, Buyer and
--------------------
Buyer's representatives shall have completed their due diligence review of the
Companies, to their complete satisfaction.
23
6.14 Board Approval. Buyer's Board of Directors, and the Board of
--------------
Directors of Buyer's indirect parent corporation, Smart & Final Inc., shall have
approved of the terms and conditions of this Agreement and the other agreements
to be entered into in connection with this Agreement.
6.15 Corporate Name Change. The Companies and the Shareholders shall have
---------------------
furnished to Buyer an amendment to the Companies' Articles of Incorporation, in
form acceptable for filing with the Florida Secretary of State, changing the
Companies' corporate names to names that are, in the reasonable opinion of Buyer
and Buyer's counsel, not substantially similar to "Orlando Foodservice, Inc." or
"Capricorn Foods of Central Florida, Inc.".
6.16 Approval of Documentation. The form and substance of all opinions,
-------------------------
certificates, instruments of transfer and other documents to be furnished by the
Companies and the Shareholders and their counsel under this Agreement shall be
satisfactory in all reasonable respects to Buyer and its counsel.
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANIES AND THE
----------------------------------------------------------------
SHAREHOLDERS TO CLOSE.
---------------------
The obligations of the Companies and the Shareholders to consummate this
Agreement is expressly subject to the satisfaction, on or prior to the Closing
Date, of all of the following conditions (compliance with which or the
occurrence of which may be waived in whole or in part in writing by all of the
Companies and the Shareholders):
7.1 Representations and Warranties. All representations and warranties of
------------------------------
Buyer contained in this Agreement shall be true, correct and complete as of the
Closing Date as if made at and as of such date.
7.2 Covenants. Buyer shall have performed and satisfied all covenants and
---------
conditions required by this Agreement to be performed or satisfied by it on or
prior to the Closing Date.
7.3 Buyer' Certificate. On the Closing Date, Buyer shall have furnished
------------------
to the Companies and the Shareholders a certificate dated the Closing Date
signed by an officer of Buyer, to the effect that (i) all of its representations
and warranties contained in this Agreement, or any certificate, schedule,
exhibit, statement, report or other document delivered or furnished by it
pursuant to this Agreement, remain true, correct and complete as of the Closing
Date as if made at and as of such date; and (ii) it has performed and satisfied
all covenants and conditions required by this Agreement to be performed or
satisfied by it on or prior to the Closing Date.
7.4 Material Errors, Etc. The Shareholders shall not have discovered any
--------------------
material (i) error, misstatement or omission in any of the representations or
warranties made by Buyer in this Agreement, or any certificate, schedule,
exhibit, statement, report or other document delivered or furnished by Buyer
pursuant to this Agreement; or (ii) failure on the part of Buyer to perform or
satisfy any covenants or conditions required to be performed or satisfied by it
hereunder.
24
7.5 Absence of Litigation. No action or proceeding shall have been
---------------------
instituted prior to or at the Closing Date before any court or other
governmental body, or instituted or threatened by any public authority, the
result of which could prevent or make illegal the consummation of the
transactions contemplated hereunder or under the other agreements to be entered
into in connection with this Agreement.
7.6 Opinion of Counsel. Buyer shall have furnished the Shareholders with
------------------
the opinion of Xxxxxx X. Xxxxxxxx, dated the Closing Date, in form and substance
reasonably satisfactory to the Companies, the Shareholders and their counsel,
covering the matters specified in Exhibit E to this Agreement.
---------
7.7 Approval of Documentation. The form and substance of all opinions,
-------------------------
certificates and other documents to be delivered by Buyer and its counsel under
this Agreement shall be satisfactory in all reasonable respects to the
Companies, the Shareholders and their counsel.
8. TERMINATION AND ABANDONMENT.
---------------------------
8.1 Termination. This Agreement may be terminated on or before the
-----------
Closing Date without liability on the part of any party exercising such right of
termination:
(a) by the mutual consent of Buyer, the Companies and the Shareholders;
(b) by Buyer, with or without cause, on or prior to the Closing Date;
(c) by any party hereto that is not in default hereunder at anytime on or
prior to the Closing Date if, at the time of the notice of such
termination is given, the transactions contemplated by this Agreement
shall not have been effected; provided that for this purpose the
Companies and the Shareholders shall be deemed one party and such
termination by the Companies and the Shareholders may only be made by
all of them; or
(d) by any party hereto if there has been a material misrepresentation or
breach on the part of the other party of the warranties of such other
party as set forth in this Agreement or made pursuant hereto, or if
there has been any material failure on the part of the other party to
perform its obligations or comply with the covenants under this
Agreement; provided that for this purpose the Companies and the
Shareholders shall be deemed one party and such termination by the
Companies and the Shareholders may only be made by all of them.
8.2 Procedure and Effect of Termination. In the event of termination and
-----------------------------------
abandonment by Buyer, as one party, or by the Companies and the Shareholders, as
the other party, or by both parties pursuant to Section 8.1 above, written
notice thereof shall be given to the other party and this Agreement shall
terminate and be abandoned, without further action by any of the parties hereto.
If this Agreement is terminated as provided in Sections 8.1(a) or 8.1(b) above
or because a condition to a party's obligation to consummate the transactions
contemplated by this Agreement has not been satisfied by the Closing Date, and
the other party is not in default, no party hereto shall have any liability or
25
further obligations to any other party to this Agreement; provided, however,
that the existing Confidentiality Agreement between the parties shall survive
any termination hereunder.
9. SURVIVAL AND INDEMNIFICATION.
----------------------------
9.1 Survival of Representations, Warranties and Covenants. All
------------------------------------------- ---------
representations, warranties and agreements made by Buyer, the Companies and the
Shareholders in this Agreement (including statements contained in any schedule,
certificate, exhibit, statement, report or other document delivered by or on
behalf of any party hereto or in connection with the transactions contemplated
hereby) shall survive the execution, delivery and performance of this Agreement
and any investigations, inspections, examinations, or audits made by or on
behalf of the parties. All such representations and warranties shall remain in
full force and effect until the expiration of the applicable statute of
limitations, unless specific claims shall have been made in writing, or an
action at law or in equity shall have been commenced or filed, in good faith, on
or prior to such anniversary dates. Nothing in this Section 9.1 shall affect
the obligations and indemnities of the parties with respect to the covenants and
agreements contained in this Agreement that are permitted or required to be
performed, in whole or in part, after the Closing Date.
9.2 Indemnification.
---------------
(a) The Companies and the Shareholders, jointly and severally, agree
to indemnify Buyer and hold it harmless against and in respect of any and all
claims, losses, expenses, obligations and liabilities, including court costs and
reasonable attorneys' fees associated therewith, which arise or result from or
are incident or related to (i) the inaccuracy of any representation or breach of
any warranty of the Companies or either Shareholder, or (ii) any default or
failure of the Companies' or either Shareholder's commitments or obligations
under this Agreement, or (iii) by reason of any act or omission of the Companies
or either Shareholder which constitutes a breach or default under this
Agreement, or (iv) the noncompliance with any applicable bulk transfer or
similar laws, or (v) the Excluded Liabilities. The Companies and each
Shareholder shall reimburse Buyer on demand for any payment made or loss
suffered by Buyer at any time after the execution of this Agreement, based upon
the judgment of any court of competent jurisdiction or pursuant to a bona fide
compromise or settlement of claims, demands or actions, in respect of any
damages to which the foregoing indemnity relates. Notwithstanding the
foregoing, Buyer shall have the right, but shall not be required, to offset or
reduce the amount of any and all payments made as part of the Purchase Price by
the amount of any such payment or loss. Any such offset or reduction shall not
be deemed a waiver of any right or remedy which Buyer may have either under this
Agreement or otherwise. Consummation of the transaction contemplated under this
Agreement shall not be deemed or construed to be a waiver of any right or remedy
of Buyer, nor shall this Section or any other provision of this Agreement be
deemed or construed to be a waiver of any ground of defense by Buyer.
(b) Buyer agrees to indemnify the Companies and the Shareholders and
hold them harmless against and in respect of any and all damages, claims,
losses, expenses, costs, obligations and liabilities, including court costs and
reasonable attorneys' fees, which arise or result from or are incident or
related to (i) the inaccuracy of any representation or breach of any warranty of
Buyer, or (ii) any
26
default of the commitments or obligations of Buyer under this Agreement, or
(iii) by reason of any act or omission of Buyer which constitutes a breach or
default under this Agreement, or (iv) the Assumed Liabilities. Buyer shall
reimburse the Companies and the Shareholders on demand for any payment made or
loss suffered by them at any time after the execution of the Agreement, based on
the judgment of any court of competent jurisdiction or pursuant to a bona fide
compromise or settlement of claims, demands or actions, in respect of any
damages to which the foregoing indemnity relates. Consummations of the
transaction contemplated under this Agreement shall not be deemed or construed
to be a waiver of any right or remedy of the Companies or the Shareholders, nor
shall this Section or any other provision of this Agreement be deemed or
construed to be a waiver of any ground of defense by them.
(c) The party indemnified hereunder (the "Indemnitee") shall promptly
notify the indemnifying party (the "Indemnitor") of the existence of any claim,
demand, or other matter involving liabilities to third parties to which the
Indemnitor's indemnification obligations would apply and shall give the
Indemnitor 30 days (or such shorter period as required by the contingencies of
such claim, demand or other matter involving liabilities to third parties) in
which to elect to defend the same at its own expense and with counsel its own
selection (who shall be approved by the Indemnitee, which approval shall not be
unreasonably withheld); provided that the Indemnitee shall at all times also
have the right to fully participate in the defense at its own expense. If the
Indemnitor shall, within such 30-day period, fail to defend, the Indemnitee
shall have the right, but not the obligation, to undertake the defense of, and
to compromise or settle (exercising reasonable business judgment) the claim or
other matter on behalf, for the account, and at the risk and expense of the
Indemnitor. Notwithstanding the foregoing, if the matter might have an effect on
the ongoing Business or the Purchased Assets or Buyer's relationship with
customers or suppliers, Buyer shall have first right to defend the same on the
basis set forth in the preceding sentence. Except as provided above, the
Indemnitee shall not compromise or settle the claim or other matter without the
written consent of the Indemnitor, such consent not to be unreasonably withheld.
If the claim is one that cannot by its nature be defended solely by the
Indemnitor, the Indemnitee shall make available all information and assistance
that the Indemnitor may reasonably request; provided that any associated
expenses shall be paid by the Indemnitor.
10. MISCELLANEOUS.
-------------
10.1 Notices. Any notice or other communication required or permitted
-------
hereunder shall be in writing, and shall be deemed to have been given if
personally delivered or delivered by facsimile transmission or 72 hours after
being placed in the United States mail, registered or certified-return receipt
requested, postage prepaid, addressed as follows:
If to the Companies:
Orlando Foodservice, Inc.
Capricorn Foods of Central Florida, Inc.
0000 Xxxxxx Xxxx
Xxxxxxx, XX 00000
Facsimile (000) 000-0000
27
If to Altif:
Xxxxxxx Xxxxx
000 Xxxxxxxxx Xxxxx
Xxxxxx Xxxxxxx, XX 00000
If to Xxx:
Xxxxxxxxx X. Xxx
000 Xxxxx Xxxx
Xxxxxxxx Xxxxxxx, XX 00000
If to Buyer:
American Foodservice Distributors
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Facsimile: (000) 000-0000
With a copy to:
Smart & Final Inc.
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
Facsimile: (000) 000-0000
Each of the parties shall be entitled to specify a different address by
giving notice as aforesaid.
10.2 Entire Agreement. This Agreement, and the Exhibits and Schedules
----------------
hereto, which are incorporated into this Agreement by reference and are made a
part hereof, constitute the entire agreement between the parties hereto
pertaining to the subject matter hereof and supersede all prior agreements,
understandings, negotiations, and discussions, whether oral or written.
10.3 Amendment and Modification. No supplement, modification, waiver or
--------------------------
termination of this Agreement shall be binding unless executed in writing by the
party to be bound. No waiver of any of the provisions of this Agreement shall
be deemed or shall constitute a waiver of any other provisions (whether or not
similar), nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
10.4 Headings. Section and subsection headings are not to be considered
--------
part of this Agreement and are included solely for convenience and reference and
shall not be held to define, construe or limit the meaning of any provision of
this Agreement.
28
10.5 Successors and Assigns. All of the terms, provisions and obligations
----------------------
of this Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, representatives, successors and
assigns. Notwithstanding the foregoing, neither this Agreement nor any rights
or obligations hereunder shall be assigned, pledged, hypothecated or otherwise
transferred by a party without the prior written consent of all other parties,
except (i) by operation of law, or (ii) by Buyer to any entity that Buyer
controls (provided that such assignment shall not relieve Buyer of its
obligations hereunder, if such assignee does not perform such obligations).
10.6 Governing Law; Venue. The validity, construction and interpretation
--------------------
of this Agreement shall be governed by the internal laws of the State of Florida
applicable to contracts made and to be performed wholly within that state.
10.7 Third Parties. Nothing in this Agreement, expressed or implied, is
-------------
intended to confer upon any person other than the parties hereto any rights or
remedies under or by reason of this Agreement.
10.8 Expenses. Each party shall bear the expenses (including, without
--------
limitation, attorneys' fees) incurred by him or it in connection with the
negotiation, execution and delivery of this Agreement and the agreements
contemplated by this Agreement.
10.9 Attorneys' Fees. In the event any party takes legal action to enforce
---------------
any of the terms of this Agreement, the unsuccessful party to such action shall
pay the successful party's reasonable expenses, including attorneys' fees for
pretrial investigation, at trial, and on appeal, incurred in such action.
10.10 Counterparts. This Agreement may be executed simultaneously and in
------------
two or more counterparts, each one of which shall be deemed an original, but all
of which shall constitute one and the same instrument. Facsimile signatures of
this Agreement shall have the same binding effect as original signatures.
10.11 Joint and Several Obligations. All of the obligations of the
-----------------------------
Companies and the Shareholders hereunder shall constitute the joint and several
obligations of each of the Companies and each Shareholder.
10.12 Severable Provisions. If any of the provisions of this Agreement
--------------------
may be determined to be illegal or otherwise unenforceable, in whole or in part,
the remaining provisions, and any partially unenforceable provisions to be the
extent enforceable, shall nevertheless be binding and enforceable. For the
purpose of determining the scope of the covenants set forth in Section
5.5(e)(ii) above, each of the subsections thereof shall be considered a separate
covenant such that if the geographic scope of any such subsections shall be
determined by a court of competent jurisdiction to be excessive and invalid,
such subsections shall be severed and the remaining subsections shall be deemed
enforceable and remain in full force and effect.
29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date and year first set forth above.
BUYER:
-----
AMERICAN FOODSERVICE DISTRIBUTORS, a
California corporation
By /s/ Xxxxxx X. Xxxxx
--------------------
Its Executive Vice President & CFO
------------------------------
By /s/ Xxxxxx X. Xxxxxxxx
----------------------
Its Vice President and Secretary
----------------------------
THE COMPANIES:
-------------
ORLANDO FOODSERVICE, INC., a
Florida corporation
By /s/ Xxxxxxx X. Xxxxx
--------------------
Its President
---------
CAPRICORN FOODS OF CENTRAL FLORIDA,
INC., a Florida corporation
By /s/ Xxxxxxx X. Xxxxx
--------------------
Its President
---------
THE SHAREHOLDERS:
----------------
/s/ Xxxxxxx X. Xxxxx
--------------------
XXXXXXX X. XXXXX
/s/ Xxxxxxxxx Xxx
-----------------
XXXXXXXXX XXX
30
