1
Exhibit 2.2
STOCK PURCHASE AGREEMENT
dated as of November 30, 2000
among
GLACIER DISTRIBUTION COMPANY, INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇,
and
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
2
TABLE OF CONTENTS
Page
No.
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1. Definitions................................................................................................. 1
2. Purchase and Sale of Company Shares......................................................................... 4
(a) Basic Transaction...................................................................................... 4
(b) Purchase Price......................................................................................... 4
(c) Payment................................................................................................ 4
(d) Purchase Price Adjustments; Process.................................................................... 5
(e) The Closing............................................................................................ 6
(f) Deliveries at the Closing.............................................................................. 6
3. Representations and Warranties Concerning the Transaction................................................... 6
(a) Representations and Warranties of the Sellers.......................................................... 6
(b) Representations and Warranties of the Buyer............................................................ 8
4. Representations and Warranties Concerning the Company....................................................... 9
(a) Organization, Qualification, and Corporate Power....................................................... 9
(b) Capitalization......................................................................................... 9
(c) Noncontravention....................................................................................... 9
(d) Brokers' Fees.......................................................................................... 10
(e) Title to Assets........................................................................................ 10
(f) Subsidiaries........................................................................................... 10
(g) Financial Statements................................................................................... 10
(h) Events Subsequent to Most Recent Fiscal Year End....................................................... 10
(i) Undisclosed Liabilities................................................................................ 12
(j) Legal Compliance....................................................................................... 12
(k) Tax Matters............................................................................................ 12
(l) Real Property.......................................................................................... 13
(m) Intellectual Property.................................................................................. 13
(n) Tangible Assets........................................................................................ 14
(o) Inventory.............................................................................................. 14
(p) Contracts.............................................................................................. 14
(q) Notes and Accounts Receivable.......................................................................... 15
(r) Powers of Attorney..................................................................................... 16
(s) Insurance.............................................................................................. 16
(t) Litigation............................................................................................. 16
(u) Product Warranty....................................................................................... 17
(v) Product Liability...................................................................................... 17
(w) Employees.............................................................................................. 17
(x) Employee Benefits...................................................................................... 17
(y) Guaranties............................................................................................. 17
(z) Environmental, Health, and Safety Matters.............................................................. 17
(aa) Certain Business Relationships with the Company........................................................ 18
(bb) Disclosure............................................................................................. 18
5. Pre-Closing Covenants....................................................................................... 18
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(a) General................................................................................................ 18
(b) Operation of Business.................................................................................. 19
(c) Preservation of Business............................................................................... 19
(d) Full Access............................................................................................ 19
(e) Notice of Developments................................................................................. 19
(f) Exclusivity............................................................................................ 19
(g) Debt Repayment......................................................................................... 19
(h) Refinancing of SBA Loan................................................................................ 19
6. Post-Closing Covenants...................................................................................... 20
(a) General................................................................................................ 20
(b) Litigation Support..................................................................................... 20
(c) Transition............................................................................................. 20
(d) Confidentiality........................................................................................ 20
(e) Covenant Not to Compete................................................................................ 21
(f) Consulting Relationship................................................................................ 21
(g) Promissory Notes....................................................................................... 21
(h) Collection of Accounts Receivable; Reassignment to Sellers............................................. 22
(i) Lapsed Customer Credits................................................................................ 22
(j) Change of Company Name................................................................................. 23
7. Conditions to Obligation to Close........................................................................... 23
(a) Conditions to Obligation of the Buyer.................................................................. 23
(b) Conditions to Obligation of the Sellers................................................................ 24
8. Remedies for Breaches of This Agreement..................................................................... 25
(a) Survival of Representations and Warranties............................................................. 25
(b) Indemnification Provisions for Benefit of the Buyer.................................................... 25
(c) Indemnification Provisions for Benefit of the Sellers.................................................. 25
(d) Matters Involving Third Parties........................................................................ 26
(e) Recoupment Under Offset Note........................................................................... 27
(f) Other Indemnification Provisions....................................................................... 28
9. Tax Matters................................................................................................. 28
(a) Tax Periods Ending on or Before the Closing Date....................................................... 28
(b) Tax Periods Beginning Before and Ending After the Closing Date......................................... 28
(c) Cooperation on Tax Matters............................................................................. 29
10. Termination.............................................................................................. 30
(a) Termination of Agreement............................................................................... 30
(b) Effect of Termination.................................................................................. 30
11. Miscellaneous............................................................................................ 31
(a) Nature of Certain Obligations.......................................................................... 31
(b) Press Releases and Public Announcements................................................................ 31
(c) No Third-Party Beneficiaries........................................................................... 31
(d) Entire Agreement....................................................................................... 31
(e) Succession and Assignment.............................................................................. 31
(f) Counterparts; Execution................................................................................ 31
(g) Headings............................................................................................... 32
(h) Notices................................................................................................ 32
(i) Governing Law.......................................................................................... 32
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(j) Amendments and Waivers................................................................................. 32
(k) Severability........................................................................................... 33
(l) Expenses............................................................................................... 33
(m) Construction........................................................................................... 33
(n) Incorporation of Exhibits and Schedules................................................................ 33
(o) Specific Performance................................................................................... 33
(p) Submission to Jurisdiction............................................................................. 33
Exhibit A-1 Form of Buyer Note
Exhibit A-2 Form of Offset Note
Exhibit B-1 Form of Security Agreement
Exhibit B-2 Form of Financing Statement
Exhibit B-3 Form of Pledge Agreement
Exhibit C Historical Financial Statements
Exhibit D Form of Noncompetition Agreement
Exhibit E Form of Consulting Agreement
Exhibit F Form of Amendment No. 2 to Lease
Sellers' Disclosure Schedule
Buyer's Disclosure Schedule
Company Disclosure Schedule
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is entered into as of
November 30, 2000, by and among Glacier Distribution Company, Inc., a Colorado
corporation (the "Buyer"), ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, an individual, and ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, an individual (▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ are collectively
referred to as the "Sellers"). Buyer and Sellers are referred to collectively
herein as the "Parties."
WITNESSETH:
A. Sellers own all of the issued and outstanding capital stock of the
▇▇▇▇▇ ▇▇▇▇▇ Family Corp., d/b/a Cal Fresh Produce, a California corporation (the
"Company").
B. This Agreement contemplates a transaction in which Buyer will
purchase from Sellers, and Sellers will sell to Buyer, all of the issued and
outstanding capital stock of the Company in return for the consideration
described herein.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows:
1. DEFINITIONS.
"Accredited Investor" has the meaning set forth in Regulation D
promulgated under the Securities Act.
"Actual Knowledge" means actual knowledge without any actual or implied
investigation.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act.
"Buyer" has the meaning set forth in the preface above.
"Buyer Note" has the meaning set forth in Section 2(c) below.
"Buyer's Disclosure Schedule" has the meaning set forth in Section 3(b)
below.
"Closing" has the meaning set forth in Section 2(c) below.
"Closing Date" has the meaning set forth in Section 2(c) below.
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"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preface above.
"Company Disclosure Schedule" has the meaning set forth in Section 4
below.
"Company Share" means any share of the Common Stock, no par value, of
the Company.
"Confidential Information" means any information concerning the
business and affairs of the Company that is not already generally available to
the public.
"Environmental, Health, and Safety Requirements" shall mean all
federal, state, local and foreign statutes, regulations, ordinances and other
provisions having the force or effect of law, all judicial and administrative
orders and determinations, all contractual obligations and all common law
concerning public health and safety, worker health and safety, and pollution or
protection of the environment, including without limitation all those relating
to the presence, use, production, generation, handling, transportation,
treatment, storage, disposal, distribution, labeling, testing, processing,
discharge, release, threatened release, control, or cleanup of any hazardous
materials, substances or wastes, chemical substances or mixtures, pesticides,
pollutants, contaminants, toxic chemicals, petroleum products or byproducts,
asbestos, polychlorinated biphenyls, noise or radiation, each as amended and as
now or hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Financial Statement" has the meaning set forth in Section 4(g) below.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"Indemnified Party" has the meaning set forth in Section 8(d) below.
"Indemnifying Party" has the meaning set forth in Section 8(d) below.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications, registrations, and renewals in connection
therewith, (c) all copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask works and all
applications, registrations, and renewals in connection therewith, (e) all trade
secrets and confidential business information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and
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supplier lists, pricing and cost information, and business and marketing plans
and proposals), (f) all computer software (including data and related
documentation), (g) all other proprietary rights, and (h) all copies and
tangible embodiments regarding the foregoing (in whatever form or medium).
"Knowledge" means knowledge after reasonable investigation.
"Liability" means 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.
"Most Recent Balance Sheet" means the balance sheet contained within
the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth in Section
4(g) below.
"Most Recent Fiscal Month End" has the meaning set forth in Section
4(g) below.
"Most Recent Fiscal Year End" has the meaning set forth in Section 4(g)
below.
"Net Worth" has the meaning set forth in Section 2(d) below.
"Notes" means, collectively, the Buyer Note and the Offset Note.
"Notice" has the meaning set forth in Section 2(d) below.
"Offset Note" has the meaning set forth in Section 2(b) below.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Preliminary Balance Sheet" has the meaning set forth in Section 2(d)
below.
"Purchase Price" has the meaning set forth in Section 2(b) below.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other
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security interest, other than (a) mechanic's, materialmen's, and similar liens,
(b) liens for Taxes not yet due and payable or for Taxes that the taxpayer is
contesting in good faith through appropriate proceedings, (c) purchase money
liens and liens securing rental payments under capital lease arrangements, and
(d) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Seller's Disclosure Schedule" has the meaning set forth in Section
3(a) below.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or has the
power to vote or direct the voting of sufficient securities to elect a majority
of the directors.
"Tax" means any federal, state, local, or foreign income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, 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, or other
tax of any kind whatsoever, including any interest, penalty, or addition
thereto, whether disputed or not.
"Tax Return" means 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.
"Third Party Accounting Firm" has the meaning set forth in Section 2(d)
below.
"Third Party Claim" has the meaning set forth in Section 8(d) below.
2. PURCHASE AND SALE OF COMPANY SHARES.
(a) Basic Transaction. On and subject to the terms and conditions of
this Agreement, Buyer agrees to purchase from each of the Sellers, and each of
the Sellers agrees to sell to Buyer, all of his Company Shares for the
consideration specified below in this Section 2.
(b) Purchase Price. The Purchase Price for the Company Shares shall be
$4,575,000 subject to upward or downward adjustment as provided herein (the
"Purchase Price"). The Purchase Price shall be allocated among the Sellers in
proportion to their respective holdings of Company Shares as set forth in
Section 4(b) of the Company Disclosure Schedule.
(c) Payment. The Purchase Price shall be paid as follows:
(i) $1,575,000 shall be delivered to Sellers at the Closing by
wire transfer of immediately available funds to the bank accounts
designated by Sellers;
(ii) $2,300,000 shall be delivered to Sellers at the Closing
in the form of a
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promissory note in substantially the form attached hereto as Exhibit
A-1 (the "Buyer Note") issued by Buyer, bearing interest at a rate of
9.0% per annum, payable, principal and interest, in sixty (60) equal
monthly installments; the Buyer Note will be secured by a first lien on
all of the assets of Company pursuant to a Security Agreement in
substantially the form attached as Exhibit B-1 (the "Security
Agreement"), to be perfected by the filing of a UCC-1 Financing
Statement in the form attached as Exhibit B-2 (the "Financing
Statement") and by a pledge of the stock of the Company pursuant to a
Pledge Agreement in the form attached as Exhibit B-3 (the "Pledge
Agreement");
(iii) $400,000 shall be delivered to Sellers at the Closing in
the form of a promissory note in substantially the form attached hereto
as Exhibit A-2 (the "Offset Note") issued by Buyer, bearing interest at
a rate of 9.0% per annum, payable, interest only for the first
twenty-four (24) months following the Closing Date, and thereafter,
payable principal and interest, in thirty-six (36) equal monthly
installments; the Offset Note will be secured by a first lien on all of
the assets of the Company pursuant to the Security Agreement, to be
perfected by the filing of the Financing Statement and by a pledge of
the stock of the Company pursuant to the Pledge Agreement; and
(iv) $300,000 shall be delivered to Sellers in the form of the
forgiveness by Buyer and Company concurrent with the Closing, of notes
receivable from Sellers in the outstanding principal amount of
$300,000.
(d) Purchase Price Adjustments; Process.
(i) Post-Closing Adjustments. The Parties acknowledge and
agree that the Purchase Price will be subject to adjustment, upward or
downward, on the Closing Date in an amount equal to the difference
between one million dollars ($1,000,000) and the net worth of the
Company as of the Closing Date (the "Net Worth Adjustment"), determined
on the basis of a preliminary balance sheet of the Company to be
delivered by Sellers to Buyer within 15 days after the Closing Date
(the "Preliminary Balance Sheet"). The Parties agree that the actual
Net Worth shall be increased by $75,000 to account for certain Company
tax liabilities assumed by Buyer. Buyer will have a reasonable amount
of time after receipt of the Preliminary Balance Sheet (not to exceed
sixty (60) days) to verify the accuracy of the Preliminary Balance
Sheet and adjustments may be made based upon such calculations. Buyer
shall deliver to Sellers a statement setting forth in reasonable detail
the circumstances giving rise to the proposed adjustments, together
with the calculation of such adjustments (the "Adjustment Notice"). Any
adjustments to the purchase price will be reflected in an increase or
decrease in the principal amount due under the Buyer Note. For purposes
of such calculations, "Net Worth" shall mean, as of a given date, the
total assets minus the total liabilities of the Company, all as
determined in accordance with GAAP applied on a consistent basis. The
Parties acknowledge and agree that the Net Worth for the Company as of
June 30, 2000 is $622,919, as determined on the basis of the audited
Company financial statements prepared by Buyer's independent
accountants.
(ii) Objection Process. If Sellers do not agree with the Net
Worth Adjustment
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as set forth in the Adjustment Notice, Sellers shall notify Buyer in
writing within thirty (30) days of receipt by Sellers of the Adjustment
Notice, setting forth in specific detail the basis for the objection
and its proposal for any adjustments to the Net Worth Adjustment (the
"Objection Notice"). Buyer and Sellers shall use their reasonable best
efforts to reach agreement as to any such proposed adjustment or that
no such adjustment is necessary. If agreement is reached as to all
proposed adjustments, the Parties shall make such adjustments and the
Net Worth Adjustment shall be based thereon. If Buyer and Sellers are
unable to reach agreement within ninety (90) days after Buyer's receipt
of the Objection Notice, then ▇▇▇▇▇▇▇ & Company LLP or such other
accounting firm as agreed upon by Buyer and Sellers (the "Third Party
Accounting Firm") shall be engaged to review the proposed adjustments
as to which agreement has not been reached and shall make a
determination as to the resolution of the proposed adjustments to cause
the Net Worth Adjustment to have been properly prepared in accordance
with the position taken by Buyer or Sellers or a compromise of such
positions. The determination of the Third Party Accounting Firm shall
be final, conclusive and binding upon Buyer and Sellers with respect to
the Net Worth Adjustment. If the Net Worth Adjustment results in
reduction or increase in the principal amount of the Buyer Note, as the
case may be, the Buyer Note shall be amended accordingly. If no Net
Worth Adjustment is necessary, Buyer shall acknowledge such fact in
writing to Sellers. Buyer and Sellers shall share equally the costs of
the Third Party Accounting Firm hereunder.
(e) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLC in Denver, Colorado, commencing at 9:00 a.m. local time
on the second business day following the satisfaction or waiver of all
conditions to the obligations of the Parties to consummate the transactions
contemplated hereby (other than conditions with respect to actions the
respective Parties will take at the Closing itself) or such other date as the
Buyer and the Sellers may mutually determine (the "Closing Date"). The Parties
shall use their best efforts to cause the Closing to occur on November 30, 2000,
and in no event shall the Closing Date be later than December 15, 2000, unless
mutually agreed in writing by the Parties. The Parties need not be physically
present at the Closing.
(f) Deliveries at the Closing. At the Closing, (i) Sellers will deliver
to Buyer the various certificates, instruments, and documents referred to in
Section 7(a) below, (ii) the Buyer will deliver to the Sellers the various
certificates, instruments, and documents referred to in Section 7(b) below,
(iii) each of the Sellers will deliver to the Buyer stock certificates
representing all of his Company Shares, endorsed in blank or accompanied by duly
executed assignment documents, and (iv) the Buyer will deliver to each of the
Sellers the consideration specified in Section 2(c) above (as adjusted pursuant
to Section 2(d) above).
3. REPRESENTATIONS AND WARRANTIES CONCERNING THE TRANSACTION.
(a) Representations and Warranties of the Sellers. Each of the Sellers
represents and warrants to the Buyer that the statements contained in this
Section 3(a) 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
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throughout this Section 3(a)) with respect to himself or herself, except as set
forth in the disclosure schedule delivered by Sellers to Buyer on the date
hereof (the "Sellers' Disclosure Schedule").
(i) Authorization of Transaction. Each of the Sellers has full
power and authority to execute and deliver this Agreement and to
perform his obligations hereunder. This Agreement constitutes the valid
and legally binding obligation of Sellers, enforceable in accordance
with its terms and conditions. The Sellers need not give any notice to,
make any filing with, or obtain any authorization, consent, or approval
of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
(ii) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court
to which the Sellers are subject or, or (B) conflict with, result in a
breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which the Sellers are a
party or by which Sellers are bound or to which any of the Sellers'
assets are subject.
(iii) Brokers' Fees. Sellers have no Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which
the Buyer or the Company could become liable or obligated.
(iv) Investment. Sellers (A) understand that the Notes have
not been, and will not be, registered under the Securities Act, or
under any state securities laws, and are being offered and sold in
reliance upon federal and state exemptions for transactions not
involving any public offering, (B) are acquiring the Notes solely for
their own account for investment purposes, and not with a view to the
distribution thereof, (C) are sophisticated investors with knowledge
and experience in business and financial matters, (D) have received
certain information concerning the Buyer and have had the opportunity
to obtain additional information as desired in order to evaluate the
merits and the risks inherent in holding the Notes, (E) are able to
bear the economic risk and lack of liquidity inherent in holding the
Notes for an indefinite period of time, (F) are Accredited Investors
for the reasons set forth on the Sellers' Disclosure Schedule, and (G)
are NOT subject to the backup withholding provisions of Section
3406(a)(i)(C) of the Internal Revenue Code.
(v) Company Shares. Each of the Sellers holds of record and
owns beneficially the number of Company Shares set forth next to his
name in Section 4(b) of the Company Disclosure Schedule, free and clear
of any restrictions on transfer (other than any restrictions under the
Securities Act and state securities laws), Taxes, Security Interests,
options, warrants, purchase rights, contracts, commitments, claims, and
demands. Neither of the Sellers is a party to any option, warrant,
purchase right, or other
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contract or commitment that could require such Seller to sell,
transfer, or otherwise dispose of any capital stock of the Company
(other than this Agreement). Neither of the Sellers is a party to any
voting trust, proxy, or other agreement or understanding with respect
to the voting of any capital stock of the Company.
(b) Representations and Warranties of the Buyer. Buyer represents and
warrants to Sellers that the statements contained in this Section 3(b) are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date (as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section
3(b)), except as set forth in the disclosure schedule delivered by Buyer to
Sellers on the date hereof (the "Buyer's Disclosure Schedule").
(i) Organization of the Buyer. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the
jurisdiction of its incorporation.
(ii) Authorization of Transaction. The Buyer has full power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of Buyer, enforceable in accordance with its terms
and conditions. Buyer need not give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any
government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
(iii) Noncontravention. Neither the execution and the delivery
of this Agreement, nor the consummation of the transactions
contemplated hereby, will (A) violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge,
or other restriction of any government, governmental agency, or court
to which the Buyer is subject or any provision of its charter or bylaws
or (B) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under
any agreement, contract, lease, license, instrument, or other
arrangement to which the Buyer is a party or by which it is bound or to
which any of its assets is subject.
(iv) Brokers' Fees. The Buyer has no Liability or obligation
to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement for which
Sellers could become liable or obligated.
(v) Investment. The Buyer is not acquiring the Company Shares
with a view to or for sale in connection with any distribution thereof
within the meaning of the Securities Act.
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4. REPRESENTATIONS AND WARRANTIES CONCERNING THE COMPANY. The Sellers
represent and warrant to the Buyer that the statements contained in this Section
4 are correct and complete as of the date of this Agreement and will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 4), except as set forth in the disclosure schedule delivered by Sellers
to Buyer on the date hereof (the "Company Disclosure Schedule"). Nothing in the
Company Disclosure Schedule shall be deemed adequate to disclose an exception to
a representation or warranty made herein, however, unless the Company Disclosure
Schedule identifies the exception with particularity and describes the relevant
facts in reasonable detail. Without limiting the generality of the foregoing,
the mere listing (or inclusion of a copy) of a document or other item shall not
be deemed adequate to disclose an exception to a representation or warranty made
herein (unless the representation or warranty has to do with the existence of
the document or other item itself). The Company Disclosure Schedule will be
arranged in paragraphs corresponding to the lettered and numbered paragraphs
contained in this Section 4.
(a) Organization, Qualification, and Corporate Power. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. The Company is duly authorized to
conduct business and, to the best of Sellers' Actual Knowledge, is in good
standing under the laws of each jurisdiction where such qualification is
required. The Company has full corporate power and authority and, to the best of
Sellers' Actual Knowledge, all licenses, permits, and authorizations necessary
to carry on the businesses in which it is engaged and to own and use the
properties owned and used by it. Section 4(a) of the Company Disclosure Schedule
lists the directors and officers of the Company. Sellers have delivered to Buyer
correct and complete copies of the charter and bylaws of the Company (as amended
to date). The minute books (containing the records of meetings of the
stockholders, the board of directors, and any committees of the board of
directors), the stock certificate books, and the stock record books of the
Company are correct and complete. The Company is not in default under or in
violation of any provision of its charter or bylaws.
(b) Capitalization. The entire authorized capital stock of the Company
consists of 50,000 Company Shares, of which 15,000 Company Shares are issued and
outstanding. All of the issued and outstanding Company Shares have been duly
authorized, are validly issued, fully paid, and nonassessable, and are held of
record by the respective Sellers as set forth in Section 4(b) of the Company
Disclosure Schedule. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require the Company to issue, sell, or
otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to the Company. There are no
voting trusts, proxies, or other agreements or understandings with respect to
the voting of the capital stock of the Company.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Company is subject or any provision
of the charter or bylaws of the Company or (ii) conflict with, result in a
breach of,
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constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which the Company is a party or by which it is bound or to which any of its
assets is subject (or result in the imposition of any Security Interest upon any
of its assets). The Company is not required to give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order for the Parties to consummate the transactions
contemplated by this Agreement.
(d) Brokers' Fees. The Company does not have any Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the transactions contemplated by this Agreement.
(e) Title to Assets. The Company has good and marketable title to, or a
valid leasehold interest in, the properties and assets used by it, located on
its premises, or shown on the Most Recent Balance Sheet or acquired after the
date thereof, free and clear of all Security Interests, except for properties
and assets disposed of in the Ordinary Course of Business since the date of the
Most Recent Balance Sheet.
(f) Subsidiaries. The Company does not have any subsidiaries or
affiliated entities.
(g) Financial Statements. Attached hereto as Exhibit C are the
following financial statements (collectively the "Financial Statements"): (i)
unaudited balance sheets and statements of income, changes in stockholders'
equity, and cash flow as of and for the fiscal years ended June 30, 1998, 1999
and 2000 (the latter shall be referred to as the "Most Recent Fiscal Year End")
for the Company; and (ii) unaudited balance sheets and statements of income,
changes in stockholders' equity, and cash flow (the "Most Recent Financial
Statements") as of and for the six-months ended June 30, 2000 (the "Most Recent
Fiscal Month End") for the Company. The Financial Statements (including the
notes thereto) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby, present fairly the
financial condition of the Company as of such dates and the results of
operations of the Company for such periods, are correct and complete, and are
consistent with the books and records of the Company (which books and records
are correct and complete).
(h) Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any material adverse change in the
business, financial condition, operations, results of operations, or future
prospects of the Company. Without limiting the generality of the foregoing,
since that date:
(i) the Company has not sold, leased, transferred, or assigned
any of its assets, tangible or intangible, other than for a fair
consideration in the Ordinary Course of Business;
(ii) the Company has not entered into any agreement, contract,
lease, or license (or series of related agreements, contracts, leases,
and licenses) either involving more than $2,500 or outside the Ordinary
Course of Business;
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(iii) no party (including the Company) has accelerated,
terminated, modified, or cancelled any agreement, contract, lease, or
license (or series of related agreements, contracts, leases, and
licenses) involving more than $2,500 to which the Company is a party or
by which it is bound;
(iv) the Company has not imposed any Security Interest upon
any of its assets, tangible or intangible;
(v) the Company has not made any capital expenditure (or
series of related capital expenditures) either involving more than
$2,500 or outside the Ordinary Course of Business;
(vi) the Company has not made any capital investment in, any
loan to, or any acquisition of the securities or assets of, any other
Person (or series of related capital investments, loans, and
acquisitions) either involving more than $2,500 or outside the Ordinary
Course of Business;
(vii) the Company has not issued any note, bond, or other debt
security or created, incurred, assumed, or guaranteed any indebtedness
for borrowed money or capitalized lease obligation either involving
more than $2,500 singly or $20,000 in the aggregate;
(viii) the Company has not delayed or postponed the payment of
accounts payable or other Liabilities outside the Ordinary Course of
Business;
(ix) the Company has not cancelled, compromised, waived, or
released any right or claim (or series of related rights and claims)
either involving more than $2,500 or outside the Ordinary Course of
Business;
(x) the Company has not granted any license or sublicense of
any rights under or with respect to any Intellectual Property;
(xi) there has been no change made or authorized in the
charter or bylaws of the Company;
(xii) the Company has not issued, sold, or otherwise disposed
of any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange, or
exercise) any of its capital stock;
(xiii) the Company has not declared, set aside, or paid any
dividend or made any distribution with respect to its capital stock
(whether in cash or in kind) or redeemed, purchased, or otherwise
acquired any of its capital stock;
(xiv) the Company has not experienced any damage, destruction,
or loss (whether or not covered by insurance) to its property;
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(xv) the Company has not made any loan to, or entered into any
other transaction with, any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xvi) the Company has not entered into any employment contract
or collective bargaining agreement, written or oral, or modified the
terms of any existing such contract or agreement;
(xvii) the Company has not granted any increase in the base
compensation of any of its directors, officers, and employees outside
the Ordinary Course of Business;
(xviii) the Company has not adopted, amended, modified, or
terminated any bonus, profit-sharing, incentive, severance, or other
plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to any
other employee benefit plan);
(xix) the Company has not made any other change in employment
terms for any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xx) the Company has not made or pledged to make any
charitable or other capital contribution outside the Ordinary Course of
Business;
(xxi) there has not been any other material occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary
Course of Business involving the Company; and
(xxii) the Company has not committed to any of the foregoing.
(i) Undisclosed Liabilities. The Company does not have any Liability
(and there is no basis for any present or future action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand against any of them
giving rise to any Liability), except for (i) Liabilities set forth on the face
of the Most Recent Balance Sheet (rather than in any notes thereto) and (ii)
Liabilities which have arisen after the Most Recent Fiscal Month End in the
Ordinary Course of Business (none of which results from, arises out of, relates
to, is in the nature of, or was caused by any breach of contract, breach of
warranty, tort, infringement, or violation of law).
(j) Legal Compliance. To the best of Sellers' Actual Knowledge, the
Company, and its predecessors and Affiliates has complied with all applicable
laws (including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal, state, local, and
foreign governments (and all agencies thereof), and no action, suit, proceeding,
hearing, investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against any of them alleging any failure so to comply.
(k) Tax Matters.
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(i) The Company has filed all Tax Returns that it was required
to file. All such Tax Returns were correct and complete in all
respects. All Taxes owed by the Company (whether or not shown on any
Tax Return) have been paid. The Company is not currently the
beneficiary of any extension of time within which to file any Tax
Return. No claim has ever been made by an authority in a jurisdiction
where the Company does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction. There are no Security
Interests on any of the assets of the Company that arose in connection
with any failure (or alleged failure) to pay any Tax.
(ii) The Company 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.
(l) Real Property.
(i) Section 4(l)(i) of the Company Disclosure Schedule lists
and describes briefly all real property that the Company owns. With
respect to each such parcel of owned real property:
(ii) the Company has good and marketable title to the parcel
of real property, free and clear of any Security Interest, easement,
covenant, or other restriction, except for installments of special
assessments not yet delinquent and recorded easements, covenants, and
other restrictions which do not impair the current use, occupancy, or
value, or the marketability of title of the property subject thereto;
(iii) there are no 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; and
(iv) there are no outstanding options or rights of first
refusal to purchase the parcel of real property, or any portion thereof
or interest therein;
(v) Section 4(l)(ii) of the Company Disclosure Schedule lists
and describes briefly all real property leased or subleased to the
Company. The Sellers have delivered to the Buyer correct and complete
copies of the leases and subleases listed in Section 4(l)(ii) of the
Company Disclosure Schedule (as amended to date). To the Knowledge of
any of the Sellers, each lease and sublease listed in Section 4(l)(ii)
of the Company Disclosure Schedule is legal, valid, binding,
enforceable, and in full force and effect, except where the illegality,
invalidity, nonbinding nature, unenforceability, or ineffectiveness
would not have a material adverse effect on the financial condition of
the Company.
(m) Intellectual Property.
(i) To the best of Sellers' Actual Knowledge, the Company owns
or has the right to use pursuant to license, sublicense, agreement, or
permission all Intellectual
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Property necessary or desirable for the operation of the business of
the Company as presently conducted. Each item of Intellectual Property
owned or used by the Company immediately prior to the Closing hereunder
will be owned or available for use by the Company on identical terms
and conditions immediately subsequent to the Closing hereunder. The
Company has taken all necessary action to maintain and protect each
item of Intellectual Property that it owns or uses.
(ii) To the best of Sellers' Actual Knowledge, the Company has
not interfered with, infringed upon, misappropriated, or otherwise come
into conflict with any Intellectual Property rights of third parties,
and none of the Sellers and the directors and officers (and employees
with responsibility for Intellectual Property matters) of the Company
have ever received any charge, complaint, claim, demand, or notice
alleging any such interference, infringement, misappropriation, or
violation (including any claim that the Company must license or refrain
from using any Intellectual Property rights of any third party). To the
Knowledge of any of the Sellers and the directors and officers (and
employees with responsibility for Intellectual Property matters) of the
Company, no third party has interfered with, infringed upon,
misappropriated, or otherwise come into conflict with any Intellectual
Property rights of the Company.
(n) Tangible Assets. To the best of Sellers' Actual Knowledge, the
Company owns or leases all buildings, machinery, equipment, and other tangible
assets necessary for the conduct of its business as presently conducted. To the
best of Sellers' Actual Knowledge, each such tangible asset has been maintained
in accordance with normal industry practice, and is suitable for the purposes
for which it presently is used. Except for express representations and
warranties set forth in this Agreement, Sellers make no other representations or
warranties, express or implied, with respect to the tangible assets of the
Company.
(o) Inventory. To the best of Sellers' Actual Knowledge, the inventory
of the Company consists of raw goods, materials and supplies, manufactured and
purchased goods, goods in process, and finished goods, all of which is
merchantable and fit for the purpose for which it was procured or manufactured,
and none of which is obsolete, damaged, or defective (subject to normal spoilage
as customary in Company's industry), subject only to the reserve for inventory
write down set forth on the face of the Most Recent Balance Sheet as adjusted
for the passage of time through the Closing Date in accordance with the past
custom and practice of the Company.
(p) Contracts. Section 4(p) of the Company Disclosure Schedule lists
the following contracts and other agreements to which the Company is a party:
(i) any agreement (or group of related agreements) for the
lease of personal property to or from any Person providing for lease
payments in excess of $5,000 per annum;
(ii) any agreement (or group of related agreements) for the
purchase or sale of raw materials, commodities, supplies, products, or
other personal property, or for the furnishing or receipt of services,
the performance of which will extend over a period of
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more than one year, result in a loss to the Company, or involve
consideration in excess of $5,000;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under
which it has created, incurred, assumed, or guaranteed any indebtedness
for borrowed money, or any capitalized lease obligation, in excess of
$2,500 or under which it has imposed a Security Interest on any of its
assets, tangible or intangible;
(v) any agreement concerning confidentiality or
noncompetition;
(vi) any agreement with any of the Sellers and their
Affiliates (other than the Company);
(vii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors,
officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $50,000 or providing severance benefits;
(x) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, and employees;
(xi) any agreement under which the consequences of a default
or termination could have a material adverse effect on the business,
financial condition, operations, results of operations, or future
prospects of the Company; or
(xii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $5,000.
The Sellers have delivered to Buyer a correct and complete copy of each written
agreement listed in Section 4(p) of the Company Disclosure Schedule (as amended
to date). With respect to each such agreement: (A) the agreement is legal,
valid, binding, enforceable, and in full force and effect; (B) the agreement
will continue to be legal, valid, binding, enforceable, and in full force and
effect on identical terms following the consummation of the transactions
contemplated hereby; (C) no party 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 (D) no party has repudiated any provision of the agreement.
(q) Notes and Accounts Receivable. All notes and accounts receivable of
the Company are reflected properly on its books and records, are valid
receivables subject to no
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setoffs or counterclaims, are, to the best of Sellers' Actual Knowledge, current
and collectible, subject only to the reserve for bad debts set forth on the face
of the Most Recent Balance Sheet as adjusted for the passage of time through the
Closing Date in accordance with the past custom and practice of the Company.
(r) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Company.
(s) Insurance. Section 4(s) of the Company Disclosure Schedule sets
forth the following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which the Company is, or during
the past 4 years, has been, a party, a named insured, or otherwise the
beneficiary of coverage:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder,
and the name of each covered insured;
(iii) the policy number and the period of coverage; and
(iv) the scope (including an indication of whether the
coverage is on a claims made, occurrence, or other basis) and amount of
coverage.
With respect to each such insurance policy, to the best of Sellers' Actual
Knowledge: (A) the policy is legal, valid, binding, enforceable, and in full
force and effect; (B) the policy will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms following the
consummation of the transactions contemplated hereby; (C) neither the Company
nor any other party to the policy is in breach or default (including with
respect to the payment of premiums or the giving of notices), and no event has
occurred which, with notice or the lapse of time, would constitute such a breach
or default, or permit termination, modification, or acceleration, under the
policy; and (D) no party to the policy has repudiated any provision thereof.
Section 4(s) of the Company Disclosure Schedule describes any self-insurance
arrangements affecting the Company.
(t) Litigation. Section 4(t) of the Company Disclosure Schedule sets
forth each instance in which the Company (i) is subject to any outstanding
injunction, judgment, order, decree, ruling, or charge or (ii) is a party or is
threatened to be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or before any
arbitrator. None of the actions, suits, proceedings, hearings, and
investigations set forth in Section 4(t) of the Company Disclosure Schedule
could result in any material adverse change in the business, financial
condition, operations, results of operations, or future prospects of the
Company. None of Sellers and the directors and officers (and employees with
responsibility for litigation matters) of the Company have any reason to believe
that any such action, suit, proceeding, hearing, or investigation may be brought
or threatened against the Company.
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(u) Product Warranty. To the best of Sellers' Actual Knowledge, each
product manufactured, sold, leased, or delivered by the Company has been in
conformity with all applicable contractual commitments and all express and
implied warranties, and the Company does not have any Liability (and there is no
basis for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand giving rise to any Liability)
for replacement or repair thereof or other damages in connection therewith,
subject only to the reserve for product warranty claims set forth on the face of
the Most Recent Balance Sheet (rather than in any notes thereto) as adjusted for
the passage of time through the Closing Date in accordance with the past custom
and practice of the Company. No product manufactured, sold, leased, or delivered
by the Company is subject to any guaranty, warranty, or other indemnity beyond
the applicable standard terms and conditions of sale or lease.
(v) Product Liability. To the best of Sellers' Actual Knowledge, the
Company does not have any Liability (and there is no basis for any present or
future action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand giving rise to any Liability) arising out of any injury to
individuals or property as a result of the ownership, possession, or use of any
product manufactured, sold, leased, or delivered by the Company.
(w) Employees. To the Knowledge of any of the Sellers and the directors
and officers (and employees with responsibility for employment matters) of the
Company, no executive, key employee, or group of employees has any plans to
terminate employment with the Company. The Company is not a party to or bound by
any collective bargaining agreement, nor has it experienced any strikes,
grievances, claims of unfair labor practices, or other collective bargaining
disputes. The Company has not committed any unfair labor practice. None of the
Sellers and the directors and officers (and employees with responsibility for
employment matters) of the Company have any Knowledge of any organizational
effort presently being made or threatened by or on behalf of any labor union
with respect to employees of the Company.
(x) Employee Benefits. Each employee compensation arrangement (and each
related trust, insurance contract, or fund) complies in form and in operation in
all material respects with the applicable requirements of ERISA, the Code and
other applicable laws, rules and regulations.
(y) Guaranties. The Company is not a guarantor or otherwise liable for
any Liability or obligation (including indebtedness) of any other Person.
(z) Environmental, Health, and Safety Matters.
(i) To the best of Sellers' Actual Knowledge, the Company, and
its predecessors and Affiliates, has complied and is in compliance with
all Environmental, Health, and Safety Requirements.
(ii) Neither the Company, nor its predecessors or Affiliates,
has received any written or oral notice, report or other information
regarding any actual or alleged violation of Environmental, Health, and
Safety Requirements, or any liabilities or potential liabilities
(whether accrued, absolute, contingent, unliquidated or otherwise),
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including any investigatory, remedial or corrective obligations,
relating to any of them or its facilities arising under the
Environmental, Health, and Safety Requirements.
(iii) To the best of Sellers' Actual Knowledge, none of the
following exists at any property or facility owned or operated by the
Company: (1) underground storage tanks, (2) asbestos-containing
material in any form or condition, (3) materials or equipment
containing polychlorinated biphenyls, or (4) landfills, surface
impoundments, or disposal areas.
(iv) To the best of Sellers' Actual Knowledge, none of the
Company, or its respective predecessors or Affiliates, has treated,
stored, disposed of, arranged for or permitted the disposal of,
transported, handled, or released any substance, including without
limitation any hazardous substance, or owned or operated any property
or facility (and no such property or facility is contaminated by any
such substance) in a manner that has given or would give rise to
liabilities, including any liability for response costs, corrective
action costs, personal injury, property damage, natural resources
damages or attorney fees, pursuant to Environmental, Health, and Safety
Requirements.
(v) To the best of Sellers' Actual Knowledge, no facts, events
or conditions relating to the past or present facilities, properties or
operations of the Company, or any of its predecessors or Affiliates,
will prevent, hinder or limit continued compliance with any of the
Environmental, Health, and Safety Requirements, give rise to any
investigatory, remedial or corrective obligations pursuant to the
Environmental, Health, and Safety Requirements, or give rise to any
other liabilities (whether accrued, absolute, contingent, unliquidated
or otherwise) pursuant to the Environmental, Health, and Safety
Requirements, including without limitation any relating to onsite or
offsite releases or threatened releases of hazardous materials,
substances or wastes, personal injury, property damage or natural
resources damage.
(aa) Certain Business Relationships with the Company. Other than
employment relationships, none of the Sellers or their Affiliates has been
involved in any business arrangement or relationship with the Company within the
past 12 months, and none of the Sellers and their Affiliates own any asset,
tangible or intangible, which is used in the business of the Company.
(bb) Disclosure. The representations and warranties contained in this
Section 4 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 4 not misleading.
5. PRE-CLOSING COVENANTS. The Parties agree as follows with respect to
the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use its best 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 obtaining all required consents and satisfaction of the closing
conditions set forth in Section 7 below).
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(b) Operation of Business. Sellers will not cause or permit the Company
to engage in any practice, take any action, or enter into any transaction
outside the Ordinary Course of Business. Without limiting the generality of the
foregoing, the Sellers will not cause or permit the Company to declare, set
aside, or pay any dividend or make any distribution with respect to its capital
stock (other than bonuses or distributions paid from net profits resulting from
increased sales to Safeway Inc. during October and November, 2000) or redeem,
purchase, or otherwise acquire any of its capital stock, or otherwise engage in
any practice, take any action, or enter into any transaction of the sort
described in Section 4(h) above.
(c) Preservation of Business. Sellers will cause the Company to keep
its business and properties intact, including its present operations, physical
facilities, working conditions, and relationships with lessors, licensors,
suppliers, customers, and employees.
(d) Full Access. Each of the Sellers will permit, and the Sellers will
cause the Company to permit, representatives of the Buyer to have full access at
times approved by ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, which approval shall not be unreasonably
withheld, and in a manner so as not to interfere with the normal business
operations of the Company, to all premises, properties, personnel, books,
records (including Tax records), contracts, customers and documents of or
pertaining to the Company.
(e) Notice of Developments. Sellers will give prompt written notice to
the Buyer of any material adverse development causing a breach of any of the
representations and warranties in Section 4 above. Each Party will give prompt
written notice to the others of any material adverse development causing a
breach of any of his or its own representations and warranties in Section 3
above. No disclosure by any Party pursuant to this Section 5(e), however, shall
be deemed to amend or supplement the Sellers' Disclosure Schedule, the Buyer's
Disclosure Schedule, or the Company Disclosure Schedule or to prevent or cure
any misrepresentation, breach of warranty, or breach of covenant.
(f) Exclusivity. Prior to January 31, 2001, Sellers will not (and
Sellers will not cause or permit the Company to) (i) solicit, initiate, or
encourage the submission of any proposal or offer from any Person relating to
the acquisition of any capital stock or other voting securities, or any
substantial portion of the assets, of the Company (including any acquisition
structured as a merger, consolidation, or share exchange) or (ii) participate in
any discussions or negotiations regarding, furnish any information with respect
to, assist or participate in, or facilitate in any other manner any effort or
attempt by any Person to do or seek any of the foregoing. None of the Sellers
will vote their Company Shares in favor of any such acquisition. The Sellers
will notify Buyer immediately if any Person makes any proposal, offer, inquiry,
or contact with respect to any of the foregoing.
(g) Debt Repayment. Each of the Sellers shall pay in full all
indebtedness such Seller may owe to the Company, except such indebtedness as is
being forgiven by Buyer pursuant to the terms and conditions of Section 2(c)(iv)
hereof.
(h) Refinancing of SBA Loan. Sellers shall use their best efforts to
refinance, on or
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before January 15, 2001, and in no event later than January 31, 2001, the SBA
Loan to Sellers from ▇▇▇▇▇▇ First Capital Corp., which loan is secured by a
guaranty from the Company (the "SBA Guaranty"), and in connection with such
refinancing shall obtain a full and complete release of such guaranty. Each of
the Sellers agrees, jointly and severally, to indemnify the Buyer from and
against the entirety of any Adverse Consequences Buyer or Company may suffer
after the Closing Date as a result of the existence of the SBA Guaranty,
including without limitation, any payments Buyer or Company may be required to
make pursuant to such Guaranty.
6. POST-CLOSING COVENANTS. The Parties agree as follows with respect to
the period following the Closing.
(a) General. In case at any time after the Closing any further action
is necessary to carry out the purposes of this Agreement, each of the Parties
will take such further action (including the execution and delivery of such
further instruments and documents) as any other Party may reasonably request,
all at the sole cost and expense of the requesting Party (unless the requesting
Party is entitled to indemnification therefor under Section 8 below). The
Sellers acknowledge and agree that from and after the Closing the Buyer will be
entitled to possession of all documents, books, records (including Tax records),
agreements, and financial data of any sort relating to the Company.
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Company, each of the other Parties will
cooperate with him or it and his or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be necessary in connection with the contest or defense, all
at the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Section 8 below).
(c) Transition. None of the Sellers will take any action that is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of the Company from maintaining
the same business relationships with the Company after the Closing as it
maintained with the Company prior to the Closing. Each of the Sellers will refer
all customer inquiries relating to the business of the Company to the Buyer from
and after the Closing.
(d) Confidentiality. Each of the Sellers will treat and hold as such
all of the Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver promptly to
the Buyer or destroy, at the request and option of Buyer, all tangible
embodiments (and all copies) of the Confidential Information which are in his
possession. In the event that any of the Sellers is requested or required (by
oral question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process) to
disclose any Confidential
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Information, that Seller will notify the Buyer promptly of the request or
requirement so that the Buyer may seek an appropriate protective order or waive
compliance with the provisions of this Section 6(d). If, in the absence of a
protective order or the receipt of a waiver hereunder, any of the Sellers is, on
the advice of counsel, compelled to disclose any Confidential Information to any
tribunal or else stand liable for contempt, that Seller may disclose the
Confidential Information to the tribunal; provided, however, that the disclosing
Seller shall use his reasonable efforts to obtain, at the request of the Buyer,
an order or other assurance that confidential treatment will be accorded to such
portion of the Confidential Information required to be disclosed as the Buyer
shall designate. The foregoing provisions shall not apply to any Confidential
Information which is generally available to the public immediately prior to the
time of disclosure.
(e) Covenant Not to Compete. For a period of five years from and after
the Closing Date, none of the Sellers will engage directly or indirectly in the
fresh or frozen produce distribution business in any geographic area in which
the Company conducts that business as of the Closing Date; provided, however,
that no owner of less than 1% of the outstanding stock of any publicly-traded
corporation shall be deemed to engage solely by reason thereof in any of its
businesses. If the final judgment of a court of competent jurisdiction declares
that any term or provision of this Section 6(e) is invalid or unenforceable, the
Parties agree that the court making the determination of invalidity or
unenforceability shall have the power to reduce the scope, duration, or area of
the term or provision, to delete specific words or phrases, or to replace any
invalid or unenforceable term or provision with a term or provision that is
valid and enforceable and that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this Agreement shall be
enforceable as so modified after the expiration of the time within which the
judgment may be appealed. In the event of a continuing default by Buyer in its
payment obligations under either the Buyer Note or the Offset Note, which
default remains uncured for more than sixty (60) days, the covenant set forth in
this Section 6(e) shall lapse and be of no further force or effect; provided,
however, that an offset by Buyer against payments under the Offset Note shall
not be considered a payment default until sixty (60) days after completion of
any proceeding under Section 8(e) of this Agreement contesting Buyer's right to
offset against such payments, with a finding against Buyer.
(f) Consulting Relationship. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ will enter into a six
(6) month consulting relationship with the Company for no additional
compensation. During the term of the consulting relationship, to the extent
permitted by the applicable benefit plan, ▇▇. ▇▇▇▇▇ will receive benefits
comparable to those made available to the Company's executive level employees.
(g) Promissory Notes.
(i) The Buyer Note and the Offset Note will be imprinted with
a legend substantially in the following form:
This Note has not been registered under the Securities Act of
1933, as amended, or applicable state securities laws. This
Note may not be sold, offered for sale, pledged or
hypothecated in the absence of an effective
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registration statement as to this Note under said act and
applicable state securities laws or an opinion of counsel
reasonably satisfactory to Glacier Distribution Company, Inc.
(the "Issuer"), or other evidence satisfactory to Issuer in
its reasonable judgment, that such registration is not
required.
(ii) The Offset Note shall also be imprinted with a legend
substantially in the following form:
The payment of principal and interest on this Note is subject
to certain recoupment provisions set forth in a Stock Purchase
Agreement dated as of November 30, 2000 (the "Purchase
Agreement") among the Issuer, the person to whom this Note
originally was issued, and certain other persons.
(h) Collection of Accounts Receivable; Reassignment to Sellers. With
respect to notes and accounts receivable of the Company as of the Closing Date:
(i) Within 15 days after the Closing Date, Sellers shall, with
the cooperation of the Company, prepare and deliver to Buyer a schedule
(the "Receivables Schedule") of notes and accounts receivable of the
Company as of the Closing Date (the "Closing Date Receivables"). The
Receivables Schedule shall detail each obligor's name and an aging of
the amounts owed to the Company by each such obligor. The Receivables
Schedule shall also state the reserve for bad debts determined in
accordance with the past custom and practice of the Company (the
"Reserve").
(ii) After the Closing, Buyer shall use its reasonable best
efforts to collect all amounts reflected on the Receivables Schedule.
Amounts collected by Buyer shall be applied on first-in-first-out basis
to the account of the applicable obligor, and shall be applied first to
any accrued interest or penalties, and thereafter to the balance of the
applicable account.
(iii) Sellers agree that the balance of any amount reflected
on the Receivables Schedule (net of the Reserve) that is not collected
within 150 days after the Closing Date shall be assigned to Sellers,
and that the principal amount of the Offset Note shall be reduced by
the balance so assigned to Sellers.
(iv) If the amount of Closing Date Receivables collected
during the 150 day period following the Closing Date exceeds the
balance of Closing Date Receivables less the Reserve, the principal
amount of the Offset Note shall be increased by the amount of such
excess.
(i) Lapsed Customer Credits.
(i) Within 15 days after the Closing Date, Sellers shall, with
the cooperation of the Company, prepare and deliver to Buyer a schedule
(the "Customer Credit Schedule") of customer credits owed by the
Company as of the Closing Date (the "Closing Date Credits"). The
Customer Credit Schedule shall detail each customer's
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name and the credit due each customer, together with the date such
credits lapse.
(ii) The Buyer Note shall be increased on the 150th day
following the Closing Date by the aggregate amount of Closing Date
Credits that lapse during the preceding 150 day period.
(j) Change of Company Name. Within 30 days after the Closing Date,
Buyer shall change the name of the Company to discontinue using the name "▇▇▇▇▇
▇▇▇▇▇" in the name of the Company.
7. CONDITIONS TO OBLIGATION TO CLOSE.
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section
3(a) and Section 4 above shall be true and correct in all material
respects at and as of the Closing Date;
(ii) Sellers shall have performed and complied with all of
their covenants hereunder in all material respects through the Closing;
(iii) Sellers and the Company shall have procured all third
party consents, authorizations, approvals and releases, if any,
necessary to consummate the transactions contemplated by this
Agreement;
(iv) no 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 injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (C) affect adversely the right of the Buyer to own the
Company Shares and to control the Company, or (D) affect adversely the
right of the Company to own its assets and to operate its business (and
no such injunction, judgment, order, decree, ruling, or charge shall be
in effect);
(v) Sellers shall have delivered to Buyer a certificate to the
effect that each of the conditions specified above in Section
7(a)(i)-(iv) is satisfied in all respects;
(vi) Sellers shall have entered into covenants not to compete
in substantially the form as set forth in Exhibit D attached hereto and
the same shall be in full force and effect;
(vii) ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ shall have entered into a consulting
agreement in substantially the form as set forth in Exhibit E attached
hereto and the same shall be in full force and effect;
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(viii) Buyer shall have received from counsel to the Sellers
an opinion in form and substance reasonably acceptable to Buyer and its
counsel, addressed to Buyer, and dated as of the Closing Date;
(ix) Buyer shall have received the resignations, effective as
of the Closing, of each director and officer of the Company other than
those whom the Buyer shall have specified in writing at least five
business days prior to the Closing;
(x) Sellers shall have executed and delivered Amendment No. 2
to Lease, in substantially the form of Exhibit F hereto; and
(xi) all actions to be taken by Sellers in connection with the
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Buyer.
Buyer may waive any condition specified in this Section 7(a) if it executes a
writing so stating at or prior to the Closing. Upon Closing of the transactions
contemplated by this Agreement, all conditions specified in this Section 7(a)
shall be deemed satisfied or to have been waived by Buyer.
(b) Conditions to Obligation of the Sellers. The obligation of the
Sellers to consummate the transactions to be performed by them in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section
3(b) above shall be true and correct in all material respects at and as
of the Closing Date;
(ii) the Buyer shall have performed and complied with all of
its covenants hereunder in all material respects through the Closing;
(iii) no 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 injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or (B) 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);
(iv) the Buyer shall have delivered to the Sellers a
certificate to the effect that each of the conditions specified above
in Section 7(b)(i)-(iii) is satisfied in all respects;
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(v) the Sellers shall have received from counsel to the Buyer
an opinion in form and substance reasonably acceptable to Sellers and
their counsel, addressed to Sellers, and dated as of the Closing Date;
and
(vi) Buyer shall have caused Company to execute and deliver
Amendment No. 2 to Lease, in substantially the form of Exhibit F
hereto;
(vi) all actions to be taken by the Buyer in connection with
the consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to the Sellers.
Sellers may waive any condition specified in this Section 7(b) if they execute a
writing so stating at or prior to the Closing. Upon Closing of the transactions
contemplated by this Agreement, all conditions specified in this Section 7(b)
shall be deemed satisfied or to have been waived by Sellers.
8. REMEDIES FOR BREACHES OF THIS AGREEMENT.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this Agreement shall
survive the Closing hereunder (even if the damaged Party knew or had reason to
know of any misrepresentation or breach of warranty or covenant at the time of
Closing) and continue in full force and effect for a period of two (2) years
thereafter; provided, however, that the representations and warranties of
Sellers set forth in Section 4(k) shall continue in full force and effect for
the period of the applicable statutes of limitations with respect to the matters
contained in such Section.
(b) Indemnification Provisions for Benefit of the Buyer. In the event
any of the Sellers breaches (or in the event any third party alleges facts that,
if true, would mean any of the Sellers has breached) any of their
representations, warranties, or covenants contained herein, and, provided that
the Buyer makes a written claim for indemnification against any of the Sellers
within the survival period, then each of the Sellers agrees to indemnify the
Buyer from and against the entirety of any Adverse Consequences the Buyer may
suffer through and after the date of the claim for indemnification (including
any Adverse Consequences the Buyer may suffer after the end of any applicable
survival period) resulting from, arising out of, relating to, in the nature of,
or caused by the breach (or the alleged breach). Sellers further agree to
indemnify the Buyer from and against the entirety of any Adverse Consequences
the Buyer may suffer at any time after the Closing Date as a result of the use
by the Company of the name "Cal Fresh Produce" during any period of time prior
to the Closing Date.
(c) Indemnification Provisions for Benefit of the Sellers. In the event
(i) the Buyer breaches (or in the event any third party alleges facts that, if
true, would mean the Buyer has breached) any of its representations, warranties,
or covenants contained herein, and, provided that any of the Sellers makes a
written claim for indemnification against the Buyer within the survival period,
or (ii) the Sellers or either of them suffers Adverse Consequences after the
Closing Date resulting from acts or omissions of the Company after the Closing
Date, then in
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either such event, the Buyer agrees to indemnify each of the Sellers from and
against the entirety of any Adverse Consequences such Seller may suffer through
and after the date of the claim for indemnification (including any Adverse
Consequences such Seller may suffer after the end of any applicable survival
period) resulting from, arising out of, relating to, in the nature of, or caused
by the breach (or the alleged breach).
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against any other
Party (the "Indemnifying Party") under this Section 8, 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 is prejudiced thereby.
(ii) 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 (A)
the Indemnifying Party notifies the Indemnified Party in writing within
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, (B) the
Indemnifying Party provides the Indemnified Party with evidence
reasonably acceptable to the Indemnified Party that the Indemnifying
Party will have the financial resources to defend against the Third
Party Claim and fulfill its indemnification obligations hereunder, (C)
the Third Party Claim involves only money damages and does not seek an
injunction or other equitable relief, (D) settlement of, or an adverse
judgment with respect to, the Third Party Claim is not, in the good
faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice materially adverse to the continuing
business interests of the Indemnified Party, and (E) the Indemnifying
Party conducts the defense of the Third Party Claim actively and
diligently.
(iii) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with Section 8(d)(ii)
above, (A) the Indemnified Party may retain separate co-counsel at its
sole cost and expense and participate in the defense of the Third Party
Claim, (B) 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 unreasonably withheld), and (C) 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 unreasonably withheld).
(iv) In the event any of the conditions in Section 8(d)(ii)
above is or becomes unsatisfied, however, (A) the Indemnified Party may
defend against, and consent to the
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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), (B) 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 (C) the
Indemnifying Parties will remain responsible for 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 to the fullest extent provided in this Section 8.
(e) Recoupment Under Offset Note
(i) The Buyer shall have the option, pursuant to the
procedures set forth in the following subparagraphs, of recouping all
or any part of any Adverse Consequences it may suffer (in lieu of
seeking any indemnification to which it is entitled under this Section
8) by notifying the Sellers that the Buyer is reducing the principal
amount outstanding under the Offset Note.
(ii) Prior to any recoupment by Buyer against the Offset Note,
Buyer shall provide a written notice to Sellers specifying in
reasonable detail the circumstances giving rise to the Adverse
Consequences for which Buyer is seeking recoupment. If Sellers do not
agree with the proposed recoupment by Buyer, Sellers shall so notify
Buyer in writing within thirty (30) days after receipt of Buyer's
notice, setting forth in reasonable detail the basis for the objection.
Buyer and Sellers shall use their reasonable best efforts to reach
agreement as to any such proposed recoupment. If agreement is reached,
the Buyer may offset the agreed upon amount against the principal
balance of the Offset Note.
(iii) If Buyer and Sellers are unable to reach agreement
within thirty (30) days after receipt by Buyer of Sellers' objection
notice, then such dispute shall be resolved exclusively by arbitration
in Sacramento, California, in accordance with the applicable rules of
the American Arbitration Association. The Parties shall agree upon the
arbitrator within ten (10) days after expiration of the thirty-day
period set forth in the preceding sentence, and if no such agreement is
reached, within ten days thereafter, Sellers shall appoint one
arbitrator, and Buyer shall appoint one arbitrator; the two arbitrators
so appointed shall appoint a third arbitrator. The Parties shall use
their best efforts to conclude such arbitration proceeding within 45
days following appointment of the arbitrator(s). The fees of the
arbitrator(s) and other costs incurred by the Parties in connection
with such arbitration shall be paid by the unsuccessful party in such
arbitration. The decision of the arbitrator(s) shall be final and
binding upon both Parties. Judgment of the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof.
In the event of submission of any dispute to arbitration, each party
shall, not later than 30 days prior to the date set for hearing,
provide to the other party and to the arbitrator(s) a copy of all
exhibits upon which the party intends to rely at the hearing and a list
of all persons each party intends to call at the hearing.
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(iv) Any permitted recoupment by Buyer against the Offset Note
shall affect the timing and amount of payments required under the
Offset Note in the same manner as if the Buyer had made a permitted
prepayment (without premium or penalty) thereunder.
(v) Buyer shall continue to make scheduled payments of
principal and interest on the portions of the principal balance of the
Offset Note which is not the subject of any dispute pursuant to this
Section 8(e).
(f) Other Indemnification Provisions. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy (including without limitation any such remedy
arising under Environmental, Health, and Safety Requirements) any Party may have
with respect to the Company or the transactions contemplated by this Agreement.
Each of the Sellers hereby agrees that he will not make any claim for
indemnification against the Company by reason of the fact that he was a
director, officer, employee, or agent of any such entity or was serving at the
request of any such entity prior to the Closing Date as a partner, trustee,
director, officer, employee, or agent of another entity (whether such claim is
for judgments, damages, penalties, fines, costs, amounts paid in settlement,
losses, expenses, or otherwise and whether such claim is pursuant to any
statute, charter document, bylaw, agreement, or otherwise) with respect to any
action, suit, proceeding, complaint, claim, or demand brought by the Buyer
against such Seller (whether such action, suit, proceeding, complaint, claim, or
demand is pursuant to this Agreement, applicable law, or otherwise).
9. TAX MATTERS. The following provisions shall govern the allocation of
responsibility as between Buyer and Sellers for certain tax matters following
the Closing Date:
(a) Tax Periods Ending on or Before the Closing Date. Buyer shall
prepare or cause to be prepared and file or cause to be filed all Tax Returns
for the Company for all periods ending on or prior to the Closing Date which are
filed after the Closing Date. Buyer shall permit Sellers to review and comment
on each such Tax Return described in the preceding sentence prior to filing.
Sellers shall reimburse Buyer for Taxes of the Company with respect to such
periods within fifteen (15) days after payment by Buyer or the Company of such
Taxes to the extent such Taxes are not reflected in the reserve for Tax
Liability (rather than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) shown on the face of the Most
Recent Balance Sheet.
(b) Tax Periods Beginning Before and Ending After the Closing Date.
Buyer shall prepare or cause to be prepared and file or cause to be filed any
Tax Returns of the Company for Tax periods which begin before the Closing Date
and end after the Closing Date. Sellers shall pay to Buyer within fifteen (15)
days after the date on which Taxes are paid with respect to such periods an
amount equal to the portion of such Taxes which relates to the portion of such
Taxable period ending on the Closing Date to the extent such Taxes are not
reflected in the reserve for Tax Liability (rather than any reserve for deferred
Taxes established to reflect timing differences between book and Tax income)
shown on the face of the Most Recent Balance Sheet. For purposes of this
Section, in the case of any Taxes that are imposed on a periodic basis and are
payable for a Taxable period that includes (but does not end on) the Closing
Date, the portion
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of such Tax which relates to the portion of such Taxable period ending on the
Closing Date shall (x) in the case of any Taxes other than Taxes based upon or
related to income or receipts, be deemed to be the amount of such Tax for the
entire Taxable period multiplied by a fraction the numerator of which is the
number of days in the Taxable period ending on the Closing Date and the
denominator of which is the number of days in the entire Taxable period, and (y)
in the case of any Tax based upon or related to income or receipts be deemed
equal to the amount which would be payable if the relevant Taxable period ended
on the Closing Date. Any credits relating to a Taxable period that begins before
and ends after the Closing Date shall be taken into account as though the
relevant Taxable period ended on the Closing Date. All determinations necessary
to give effect to the foregoing allocations shall be made in a manner consistent
with prior practice of the Company.
(c) Cooperation on Tax Matters.
(i) Buyer, the Company and Sellers shall cooperate fully, as
and to the extent reasonably requested by any other Party, in
connection with the filing of Tax Returns pursuant to this Section and
any audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other Party's
request) the provision of records and information which are reasonably
relevant to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide
additional information and explanation of any material provided
hereunder. The Company and Sellers agree (A) to retain all books and
records with respect to Tax matters pertinent to the Company relating
to any taxable period beginning before the Closing Date until the
expiration of the statute of limitations (and, to the extent notified
by Buyer or Sellers, any extensions thereof) of the respective taxable
periods, and to abide by all record retention agreements entered into
with any taxing authority, and (B) to give the other Party reasonable
written notice prior to transferring, destroying or discarding any such
books and records and, if the other Party so requests, the Company or
Sellers, as the case may be, shall allow the other Party to take
possession of such books and records.
(ii) Buyer and Sellers further agree, upon request, to use
their best efforts to obtain any certificate or other document from any
governmental authority or any other Person as may be necessary to
mitigate, reduce or eliminate any Tax that could be imposed (including,
but not limited to, with respect to the transactions contemplated
hereby).
(d) Certain Taxes. All transfer, documentary, sales, use, stamp,
registration and other such Taxes and fees (including any penalties and
interest) incurred in connection with this Agreement shall be paid by Sellers
when due, and Sellers will, at their own expense, file all necessary Tax Returns
and other documentation with respect to all such transfer, documentary, sales,
use, stamp, registration and other Taxes and fees, and, if required by
applicable law, Buyer will, and will cause its affiliates to, join in the
execution of any such Tax Returns and other documentation.
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10. TERMINATION.
(a) Termination of Agreement. The Parties may terminate this Agreement
as provided below:
(i) Buyer and Sellers may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(ii) Buyer may terminate this Agreement by giving written
notice to the Sellers on or before the 45th day following the date of
this Agreement (or if such day falls on a Saturday, Sunday or legal
holiday, the next business day thereafter) if the Buyer is, in its sole
and absolute discretion, not satisfied with the results of its
continuing business, legal, and accounting due diligence regarding the
finances and operations of the Company;
(iii) Buyer may terminate this Agreement by giving written
notice to the Sellers at any time prior to the Closing (A) in the event
any of the Sellers has breached any representation, warranty, or
covenant contained in this Agreement in any material respect, the Buyer
has notified the Sellers of the breach, and the breach has continued
without cure for a period of fifteen days after the notice of breach or
(B) if the Closing shall not have occurred on or before January 31,
2001, by reason of the failure of any condition precedent under Section
7(a) hereof (unless the failure results primarily from the Buyer itself
breaching any representation, warranty, or covenant contained in this
Agreement); and
(iv) Sellers may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing (A) in the event
the Buyer has breached any representation, warranty, or covenant
contained in this Agreement in any material respect, any of the Sellers
has notified the Buyer of the breach, and the breach has continued
without cure for a period of fifteen days after the notice of breach or
(B) if the Closing shall not have occurred on or before January 31,
2001, by reason of the failure of any condition precedent under Section
7(b) hereof (unless the failure results primarily from any of the
Sellers themselves breaching any representation, warranty, or covenant
contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to Section 10(a) above, all rights and obligations of the Parties
hereunder shall terminate without any Liability of any Party to any other Party
(except for any Liability of any Party then in breach).
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11. MISCELLANEOUS.
(a) Nature of Certain Obligations.
(i) The covenants of each of the Sellers in Section 2(a) above
concerning the sale of his Company Shares to the Buyer and the
representations and warranties of each of the Sellers in Section 3(a)
above concerning the transaction are several obligations. This means
that the particular Seller making the representation, warranty, or
covenant will be solely responsible to the extent provided in Section 8
above for any Adverse Consequences the Buyer may suffer as a result of
any breach thereof.
(ii) The remainder of the representations, warranties, and
covenants in this Agreement are joint and several obligations. This
means that each Seller will be responsible to the extent provided in
Section 8 above for the entirety of any Adverse Consequences the Buyer
may suffer as a result of any breach thereof.
(b) 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 without the prior written approval of the Buyer and the Sellers;
provided, however, that any Buyer shall be permitted to disclose such matters as
are required by applicable law in connection with the preparation and filing of
any registration statement under the Securities Act of 1933, as amended, and
provided further, that any Party may make any public disclosure it believes in
good faith is required by applicable law.
(c) 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.
(d) Entire Agreement. This Agreement (including the documents 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.
(e) 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 his
or its rights, interests, or obligations hereunder without the prior written
approval of the Buyer and Sellers; provided, however, that the Buyer 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 the Buyer nonetheless shall
remain responsible for the performance of all of its obligations hereunder).
(f) Counterparts; Execution. 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. The Parties shall be
entitled to rely on delivery by facsimile machine of an executed copy of this
Agreement and acceptance of such facsimile signatures shall
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be equally effective to create a valid and binding agreement between the Parties
in accordance with the terms hereof.
(g) 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.
(h) Notices. All notices, claims, certificates, requests, demands and
other communications hereunder shall be in writing and shall be deemed to have
been duly given if personally delivered or if sent by nationally recognized
overnight courier, by telecopy, or by registered or certified mail, return
receipt requested and postage prepaid, addressed as follows:
If to Sellers: With a copy to:
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Buyer: With a copy to:
Glacier Distribution Company, Inc. ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇▇ Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇ Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Or to such other address as the Party to whom notice is to be given may have
furnished to the other Parties in writing in accordance herewith. Any such
notice or communication shall be deemed to have been received (a) in the case of
personal delivery, on the date of such delivery, (b) in the case of
nationally-recognized overnight courier, on the next business day after the date
when sent, (c) in the case of telecopy transmission, when received, and (d) in
the case of mailing, on the third business day following that on which the piece
of mail containing such communication is posted.
(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Colorado without giving effect
to any choice or conflict of law provision or rule (whether of the State of
Colorado or any other jurisdiction) that would cause the application of the laws
of any jurisdiction other than the State of Colorado.
(j) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by Buyer
and Sellers. No waiver by any Party of any default, misrepresentation, or breach
of warranty or covenant hereunder,
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whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any prior or subsequent such
occurrence.
(k) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(l) Expenses. Each of the Parties and the Company will bear his or its
own costs and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated hereby. The
Sellers agree that the Company has not borne and will not bear any of the
Sellers' costs and expenses (including any of their legal fees and expenses) in
connection with this Agreement or any of the transactions contemplated hereby.
(m) Construction. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. 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. All
references herein to the masculine gender are deemed to include the feminine
gender.
(n) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
(o) Specific Performance. Each of the Parties acknowledges and agrees
that the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter (subject to the provisions set forth in Section 11(p)
below), in addition to any other remedy to which they may be entitled, at law or
in equity.
(p) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in Sacramento, California, in
any action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each Party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the Parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other Party
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with respect thereto.
*****
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
BUYER:
GLACIER DISTRIBUTION COMPANY, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇
----------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇
Title: President and CEO
SELLERS:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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