EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement"), has been entered into
as of February 8, 2001 by and between AMCON DISTRIBUTING COMPANY., a
Delaware corporation ("Buyer"), MERCHANTS WHOLESALE INC., an Illinois
corporation ("Seller"), and XXXXXX X. XXXXXXX AND XXXXXX X. XXXXXXX,
the sole shareholders of Seller (the "Shareholders").
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, substantially all of the business assets of
Seller on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants, and agreements contained
herein, the parties hereto, intending to be bound, hereby agree as
follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS
Section 1.01 PURCHASE AND SALE OF ASSETS. On the terms and subject to
the conditions set forth herein, Seller agrees to sell, convey,
transfer, and assign and deliver to Buyer, and Buyer agrees to
purchase, receive, assume, and accept, good and marketable title to
all of the assets used or otherwise useful to the business of the
Seller, whether tangible or intangible, real, personal, or mixed,
including without limitation:
(a) all good, saleable and turning inventory held for resale by
Seller as of the Valuation Date (as defined herein)(the "Inventory").
For purposes hereof "good, saleable and turning inventory" is defined
as inventory items that are merchantable and fit for sale, not
damaged, defective or obsolete and that the Seller has been
consistently able to sell within a three-month period. Buyer shall
provide written notice to Seller at Closing (defined herein) detailing
all items excluded from Inventory;
(b) all accounts receivables, other trade receivables, merchandise
credits, rebates receivable, vendor receivables and return credits of
the Seller that are current and within terms as of the Valuation Date
(as defined herein), but not including items that are to be paid by
electronic funds transfer directly to Seller's account (the "Accounts
Receivable") that will be guaranteed by the Seller and the
Shareholders as provided in Section 1.06 hereof;
(c) all machinery, equipment, telephone and computer systems (both
hardware and software), fixtures, plant and structures, improvements
to leased property and plant and structures located thereon, vehicles,
trailers, furniture, tools, office supplies, warehouse supplies,
accessories and miscellaneous items of personal property used by the
Seller in the business (the "Fixed Assets");
(d) all agreements and contracts (except those set forth in
Schedule 1.01 which are specifically not assigned to, or assumed by,
the Buyer), leases (including equipment and capital leases),
instruments, security interests, guaranties, warranties and other
intangible property of the Seller (the "Intangible Property");
(e) all trademarks, service marks, logos, trade names (including,
without limitation, the name "Merchants Wholesale Inc.") and all
derivations thereof and all applications, registrations, and renewals
in connection therewith), copyrights (including applications,
registrations, and renewals in connection therewith, plus any trade
secrets and confidential business information (including ideas,
research and development, know-how, formulas, processes and
techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and
business and marketing plans and proposals relating to the business
activities of the Seller (in whatever form or medium) and records
related thereto (the "Intellectual Property");
(f) all permits, licenses, orders, registrations, certificates,
variances, and similar rights obtained from governments and
governmental agencies relating to the business of the Seller (the
"Permits"); (such assets being collectively referred to herein as the
"Assets"). Notwithstanding the foregoing, the Seller is not selling,
and the Buyer is not buying cash and marketable securities, prepaid
expenses or deposits of Seller as of the Closing Date, contracts or
agreements set forth in Schedule 1.01, or shares of stock or other
interests in any subsidiary of the Seller (the "Excluded Assets").
Section 1.02 ASSUMPTION OF LIABILITIES. In connection with the sale
of the Assets to Buyer, Buyer will assume those liabilities of the
Seller specifically set forth in Schedule 1.02 hereto. Buyer will not
be responsible for any liabilities, liens, claims, obligations, or
encumbrances of Seller, contingent or otherwise, other than those
specifically described in Schedule 1.02 and the Assets shall be sold
and conveyed to Buyer free and clear of all liabilities, liens,
claims, obligations, and encumbrances, except as set forth on
Schedule 1.02. Without limiting the generality of the foregoing and,
except as set forth on Schedule 1.02, in no event will Buyer assume or
otherwise be responsible or liable for any or the following types of
liabilities or obligations:
(a) any costs or expenses of the Seller or the Shareholders
incurred in negotiating, entering into and carrying out its or their
obligations under this Agreement;
(b) any income, sales, property, franchise, use or other tax of
Seller or any Shareholder arising out of or resulting from the sale of
the Assets pursuant to this Agreement or any transaction of Seller or
any Shareholder prior to or subsequent to the execution of this
Agreement;
(c) any costs and expenses incurred by Seller or any Shareholder
in connection with the operation of the Seller after the Closing (as
defined herein) or the liquidation and dissolution of the Seller;
(d) any liability relating to, or arising out of the use or
ownership of the Excluded Assets;
(e) any obligations or liabilities arising under any employment
agreements or employee incentive plans (including, but not limited to
any accrued vacation or sick leave) or any other employee cost of
Seller including any obligation to contribute to, or any liability in
connection with, any employee benefit plans maintained by the Seller
for its employees, former employees, retirees, their beneficiaries or
any other person ("Employee Benefit Plans"), and any continuation
coverage (including any penalties, excise taxes or interest resulting
from the failure to provide continuation coverage) required by
Section 4980B of the Internal Revenue Code of 1986 ("Code"), due to
qualifying events as defined therein, occurring on or before the
Closing or any liability arising out of any disputes, claims or
threatened claims between the Seller and its employees or former
employees;
(f) any noncompliance by the Seller with any applicable laws,
rules and regulations, including without limitation, those relating to
employment and labor management relations and provisions thereof
relating to wages and the payment thereof, hours of work, collective
bargaining agreements, and workers' compensation laws;
(g) any claim arising out of violations of any environmental laws
or out of any events, actions or omissions, of whatever nature or
type, occurring or existing prior to Closing;
(h) any contingent or unknown liability of the Seller;
(i) any liability, obligation or cost resulting from any claim or
lawsuit or other proceeding relating to the Assets or naming Seller,
or any successor thereof, or the Shareholders as a party arising out
of events, transactions or circumstances occurring or existing prior
to Closing; or
(j) any claim against Buyer or Seller, which claim is based, in
whole or in part, upon the failure of Seller or Buyer to comply with
laws applicable to bulk transfers.
Section 1.03 PURCHASE PRICE. The purchase price (the "Purchase
Price") for the Assets will be payable by Buyer to Seller as follows:
(a) an amount in cash, payable at the Closing, equal to the sum
of:
(i) the aggregate manufacturers' wholesale list price (less
applicable cash discounts) for all good, saleable and turning
Inventory held by Seller as of the Valuation Date;
(ii) the book value , determined as of the Valuation Date, of
all current Accounts Receivable; and
(iii) the depreciated book value of the Fixed Assets as of the
end of the last monthly accounting period ending prior to the
Valuation Date, less any capitalized labor costs and less any debt or
capital lease obligations assumed by Buyer relating thereto.
(b) an additional $5,750,000 payable in cash in installments of
$900,000 on each of the first four anniversaries of the Closing Date
and in a final installment of $2,150,000 on the fifth anniversary of
the Closing Date; provided, that the payment of each such installment
on the due date thereof shall be subordinated to Buyer's obligations
under its various credit facilities with its primary lending
institution; and
(c) a contingent amount (the "Earnout Consideration") which will
be payable pursuant to the terms and conditions of Section 1.04
hereof.
Section 1.04 EARNOUT CONSIDERATION. The Earnout Consideration will
be payable in cash on the fifth anniversary of the Closing Date and
will be equal to $250,000 if, but only if, the installation of all
rack, track and associated computerization equipment to be installed
in the building located at 0000 Xxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxx (the
"Property") has been completed in accordance with the plans and
specifications delivered by the Seller and is operating to the
reasonable satisfaction of the Buyer on or before the later of
(i) May 1, 2001, or (ii) the date of Closing.
Section 1.05 PAYMENT FOR ADDITIONAL CUSTOMERS AND RELATED ITEMS.
(a) In addition to the payment of the Purchase Price, Buyer and
Seller agree that Buyer will pay Seller an amount equal to 1.5% of:
(i) the annual net sales generated by customers of Seller or
its affiliates which, as of the date of this Agreement, are not
presently receiving products shipped from the Property ("Transitioning
Customers") but that Seller transitions to the Property between the
date of this Agreement and May 1, 2001, inclusive (the "Transition
Period"), and which continue to use Buyer as their primary supplier
for a period of at least six months after the Closing Date
("Transitioning Customer Sales"), less
(ii) annual net sales generated by customers of Seller as of
December 2, 2000 that are no longer customers of the Seller on the
Closing Date, other than Wareco, Western Oil and any customer who
generated gross margin of less than 4.5%, less $10,000,000 ("Lost
Customer Sales").
(b) For purposes of this Section 1.05, the annual net sales of a
Transitioning Customer or a Lost Customer will be determined from the
Seller's accounting records and will be equal to the net sales
actually made by the Seller (or Seller's Subsidiary, Merchants
Wholesale of Iowa, Inc.) to (i) such Transitioning Customer during the
twelve calendar months ending prior to the date on which such
Transitioning Customer first purchases product from Buyer (the
"Customer Transition Date") or (ii) to such Lost Customers during the
twelve calendar months ended December 2, 2000. For Transitioning
Customers and Lost Customers that were not a customer of the Seller or
Seller's Subsidiary for twelve full months, annual net sales will be
equal to the annualized sales made to such Transitioning Customer of
Lost Customer by Seller or Seller's Subsidiary during the period
ending prior to the Customer Transition Date or December 2, 2000,
respectively. Unless otherwise agreed by the Buyer and the Seller, no
amount will be due with respect to any Transitioning Customer if the
sales from Seller or the Subsidiary to such Transitioning Customer
from which annual net sales are calculated did not generate a gross
margin of at least 4.5% for the Seller or its Subsidiary. The amount
due under this Section 1.05 will be payable in cash on the fifth
anniversary of the Closing Date.
Section 1.06 COLLECTION AND GUARANTEE OF ACCOUNTS RECEIVABLE.
(a) Seller and Buyer acknowledge and agree that Buyer is
purchasing the Accounts Receivable. For purposes of determining
whether an Account Receivable owed by a particular customer has been
collected, payments received from that customer by Buyer shall be
credited and applied on a "first-in, first-out" basis unless the
customer disputes in writing the previous amount owed on or before the
date payment is made and designates the application of the payment to
a specific invoice. Absent such written dispute and designation by the
customer, the payment shall be applied to the oldest outstanding
Account Receivable.
(b) If any Accounts Receivable is not collected by Buyer within
sixty (60) days of the Closing Date, then Buyer shall give the Seller
and the Shareholders written notice thereof. The Seller and the
Shareholders shall reimburse a portion of the Purchase Price to the
Buyer in an amount equal to the full amount of such uncollected
Accounts Receivable within five (5) days of such notice.
(c) Seller shall have the right to inspect the books and records
of Buyer to verify the application of customer payments to the
Accounts Receivable. Buyer shall provide Seller notice of any changes
to customer payment terms presently existing between Seller and its
customers. Buyer agrees to maintain adequate records of the
transactions contemplated by this Agreement and shall provide access
to its records in the event of a discrepancy.
(d) In the event that the Buyer subsequently receives payment with
respect to Accounts Receivable for which it has been reimbursed by
Seller or the Shareholders under this Section 1.06, Buyer shall hold
such payments in trust for the benefit of the Seller and/or
Shareholders and promptly remit such payments to the Seller and/or
Shareholders, as the case may be.
(e) Buyer agrees to assign to Seller any uncollected Accounts
Receivable contemporaneous with Seller's reimbursement to Buyer for
such uncollected Accounts Receivable.
(f) The obligations of the Seller and the Shareholders under this
Section 1.06 shall be several, and not joint.
Section 1.07 ALLOCATION OF CONSIDERATION. Buyer and Seller agree to
cooperate in preparing and filing IRS Form 8594 reflecting the
allocation of the Purchase Price with respect to the Assets and agree
that such allocation will be determined by arm's-length negotiations
and that neither Buyer nor Seller will take a position inconsistent
with such allocation on any income tax return, before any governmental
agency charged with the collections of any income tax or in any
judicial proceeding. Buyer and Seller will agree upon the allocation
of the Purchase Price with respect to the Assets on or before the
Closing Date.
Section 1.08 THE CLOSING.
(a) Time and Place. Subject to the terms and conditions of this
Agreement, the closing under this Agreement (the "Closing") will take
place on or before May 1, 2001, at the offices of the Seller at 0000
Xxxxxxxxx Xxxx, Xxxxxx, Xxxxxxxx, at 9:00 a.m., or at such other time,
date or place as Buyer and Seller may agree. The Closing will take
place on a Monday (or another day which is the first business day of a
week) (the "Closing Date"). The Friday (or other business day
immediately prior to the Closing Date) is referred to herein as the
"Valuation Date."
(b) Parties' Obligations at Closing. At the Closing, (i) the
Seller will deliver to the Buyer the various certificates, instruments
and documents referred to in Section 5.01 hereof; (ii) the Buyer will
deliver to the Seller the various certificates, instruments and
documents referred to in Section 5.02 hereof; (iii) the Seller will
execute, acknowledge (if appropriate) and deliver to the Buyer all
documents and take such other actions as is necessary for the
effective sale, transfer, conveyance and assignment to the Buyer of
the Assets and put Buyer in effective possession thereof; (iv) the
Buyer will execute, acknowledge (if appropriate) and deliver to the
Seller all documents necessary for the effective assumption of the
Assumed Liabilities and (v) the Buyer will deliver to the Seller good
funds for the full amount of the purchase price specified in
Section 1.03(a) above.
(c) Further Assurances. From time to time after the Closing, the
Seller shall execute and deliver to the Buyer, without further
consideration, such instruments of sale, transfer, conveyance,
assignment and delivery, consents, assurances, powers of attorney and
other instruments as may be reasonably requested by the Buyer in order
to vest in the Buyer all right, title and interest in and to the
Assets, or otherwise necessary in order to carry out the purpose and
intent of this Agreement.
Section 1.09 CONTINUING OBLIGATIONS OF BUYER.
(a) Lansing's Novelty, Inc Buyer acknowledges that Xxxxxx X.
Xxxxxxx is the sole shareholder of Lansing's Novelty, Inc., an
Illinois corporation ("Lansing's"), a wholesale distributor of non-
perishable merchandise for convenience stores. Buyer agrees that it
will provide Lansing's with access to Buyer's trade shows and exhibits
for the purpose of exhibiting its products and services; provided that
after two years from the date of Closing, Lansing's annual sales to
customers of the Buyer during the twelve calendar months prior to such
trade show or exhibit exceeded $1,000,000. Buyer agrees that as long
as Lansing's annual sales exceed $1 million to customers of the Buyer,
competitors of Lansing's will be excluded from participation in such
trade shows.
(b) T & M Tobacco, Inc. Buyer acknowledges that Xxxxxx X. Xxxxxxx
is a shareholder of T & M Tobacco, Inc., a manufacturer and
distributor of cigarettes currently marketed under the label "Xxx
Xxxxxx." Buyer agrees to assist T & M Tobacco, Inc. with tax stamp
processing of cigarettes for T & M Tobacco, Inc.
(c) The obligations of Buyer under the Section 1.09 are personal
to Xxxxxx X. Xxxxxxx and may not be assigned or otherwise transferred
by him to any other party without the prior written consent of the
Buyer.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER AND THE SHAREHOLDERS
Except as set forth in the disclosure schedules attached hereto (the
"Seller Disclosure Schedules"), Seller and the Shareholders, jointly
and severally, represent, warrant, and agree as follows:
Section 2.01 ASSETS. Seller is the lawful owner of the Assets free
and clear of all liens, claims, charges, restrictions, security
interests, pledges or encumbrances of any kind and has the full right,
power, authority and capacity to sell and transfer the Assets. By
virtue of the transfer of the Assets to Buyer, Buyer will obtain full
title to the Assets free and clear of all liens, claims, charges,
restrictions, security interests, pledges and encumbrances of any
kind.
(a) Inventories. The items included in the Inventory are
merchantable and fit for the purpose for which they were procured or
manufactured, and are not obsolete, damaged or defective. The Buyer
will not be required to accept the return of any material portion of
Inventory sold by the Seller to others prior to the Closing Date
pursuant to the Seller's regular return policy or otherwise;
(b) Accounts Receivable. All Accounts Receivable represent valid
obligations arising from sales actually made in the ordinary course of
business. The Accounts Receivable are current and collectible in the
full amount thereof and there is no contest, claim or right of set-off
with any maker of an Account Receivable relating to the amount or
validity of such Account Receivable.
(c) Fixed Assets. All Fixed Assets are in good working condition
and repair, normal wear and tear excepted, and are adequate for the
uses for which they are intended and conform in all material respects
to applicable health, sanitation, fire, environmental (including air
and water pollution laws and regulations), safety, labor, zoning and
building laws and ordinances.
(d) Intangible Property. Each item of Intangible Property is
legal, valid, binding, enforceable and in full force and effect and
will continue to be legal, valid, binding, enforceable and in full
force and effect on identical terms following the consummation of the
transaction contemplated hereby. The Seller is not in breach or
default under any item of Intangible Property and no event has
occurred which, with notice or lapse of time, would constitute a
breach or default of an item of Intangible Property by the Seller or
permit termination, modification or acceleration thereof by the
respective counter party and no party to any item of Intangible
Property has repudiated any provision thereof. There are no disputes,
oral agreements or forbearance programs in effect as to any item of
Intangible Property and no event has occurred or circumstance exists
that (with or without notice or lapse of time) may contravene,
conflict with or result in a violation or breach of, or give any
person the right to declare a default or exercise any remedy under, or
to accelerate the maturity or performance of, or to cancel, terminate,
or modify, any item of Intangible Property. There are no
renegotiations of, attempts to renegotiate, or outstanding rights to
renegotiate any amounts paid or payable under any item of Intangible
Property with any person.
(e) Intellectual Property. The Seller owns or has the right to
use pursuant to license, sublicense, agreement, or permission each
item of the Intellectual Property free and clear of any restriction
and has taken all necessary action to maintain and protect each item
of Intellectual Property. No item of Intellectual Property is subject
to any outstanding injunction, judgment, order, decree, ruling or
charge limiting its use by the Seller or Seller's ability to convey
such Intellectual Property to the Buyer hereunder. No action, suit,
proceeding, hearing, investigation, charge, complaint, claim or demand
is pending or threatened which challenges the legality, validity,
enforceability, use, or ownership of any item of the Intellectual
Property; and Seller has never received any charge, complaint, claim,
demand or notice alleging any such interference, infringement,
misappropriation or violation (including any claim that it license or
refrain from using any intellectual property rights of any third
party). No third party has interfered with, infringed upon,
misappropriated or otherwise come into conflict with any item of the
Intellectual Property and no item of the Intellectual Property
interferes with, infringes upon, misappropriates or otherwise comes
into conflict with any intellectual property rights of third parties.
(f) Permits. Each Permit is in full force and effect and will
continue to be in full force and effect on identical terms following
the consummation of the transaction contemplated hereby. The Seller
is not in breach or default under any Permit and no event has occurred
which, with notice or lapse of time, would constitute a breach or
default by the Seller of any Permit or result in the revocation
thereof. There are no disputes, oral agreements or forbearance
programs in effect as to any Permit. Seller has not received any
notification of any violation of any applicable ordinance or
regulation of building, zoning or other law, in respect of its plants,
structures, properties, or operations.
Section 2.02. EXISTENCE; GOOD STANDING; CORPORATE POWER AND
AUTHORITY. Seller is a corporation duly organized, validly existing
and in good standing under the laws of the State of Illinois. Seller
has all requisite corporate power and authority to own, operate and
lease its properties and to carry on its business as now conducted.
Section 2.03. AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS.
Seller has the requisite corporate power and authority and the
Shareholders have the requisite power and authority to execute and
deliver this Agreement and all agreements and documents contemplated
hereby. This Agreement and the transactions contemplated hereby have
been approved by Seller's Board of Directors and Shareholders and the
consummation by Seller of the transactions contemplated hereby has
been duly authorized by all requisite corporate action. This
Agreement constitutes, and all agreements and documents contemplated
hereby (when executed and delivered pursuant hereto) will constitute,
the valid and legally binding obligations of Seller and the
Shareholders, enforceable in accordance with their respective terms.
Section 2.04. NO VIOLATION. Neither the execution and delivery by
Seller and the Shareholders of this Agreement nor the consummation by
Seller and the Shareholders of the transactions contemplated hereby in
accordance with the terms hereof will: (i) conflict with or result in
a breach of any provisions of the articles of incorporation or bylaws
of Seller; (ii) conflict with, result in a breach of any provision of
or the modification or termination of, constitute a default under or
result in the creation or imposition of any lien, security interest,
charge or encumbrance upon any of the assets of Seller or any
Shareholder pursuant to any material commitment, lease, contract or
other material agreement or instrument to which Seller or any
Shareholder is a party; or (iii) violate or result in a change in any
rights or obligations under any governmental permit or license or any
order, arbitration award, judgment, writ, injunction, decree, statute,
rule or regulation applicable to Seller or any Shareholder or
affecting the assets of Seller.
Section 2.05 REGULATORY CONSENTS AND APPROVALS. Seller has obtained,
or will obtain by Closing, all consents, approvals, authorizations or
orders of third parties, including governmental authorities, necessary
for the authorization, execution and performance of this Agreement by
Seller and the Shareholders, which consents, approvals, authorizations
and orders are listed on Seller Disclosure Schedule 2.05, including
any consent required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and regulations
thereunder (the "HSR Act").
Section 2.06 PREMISES. Seller is now in possession of the Property
and there is no adverse claim against the Property and there are no
pending or threatened proceedings which might interfere with the
quiet enjoyment of the Property.
Section 2.07 FINANCIAL STATEMENTS. Prior to the date hereof, Seller
has delivered to Buyer its audited financial statements for the fiscal
years ended January 31 and December 31, 1999 and unaudited financial
statements for the twelve periods ended December 2, 2000 ("Seller
Financial Statements"). The Seller Financial Statements (including
the related notes and schedules) fairly presents the financial
position of Seller as of their dates and the results of operations,
stockholders' equity and cash flows of Seller for the periods set
forth therein, in each case in accordance with generally accepted
accounting principles consistently applied, except as may be noted
therein. Seller Financial Statements have been prepared from the
books and records of Seller which accurately and fairly reflect the
transactions and the acquisitions and dispositions of the assets of
Seller.
Section 2.08. NO MATERIAL ADVERSE CHANGES. Since December 2, 2000,
with the exception of the loss of business from Wareco and Western
Oil, there has not been (i) any material adverse change in the
financial condition, results of operations, business, assets or
liabilities (contingent or otherwise, whether due or to become due,
known or unknown) of Seller; (ii) any increases in salary, bonus or
other compensation to any employees of Seller; (iii) any pending or
threatened labor disputes or other labor problems against or
potentially affecting Seller; or (iv) any other transaction entered
into by Seller, except in the ordinary course of business and
consistent with past practice.
Section 2.09. TAX MATTERS. There are no tax liens upon any
properties or assets of Seller (whether real, personal, or mixed,
tangible or intangible), and, except as reflected in the financial
statements, there are no pending or threatened audits or examinations
relating to, or claims asserted for, Taxes or assessments against
Seller, and the Shareholders are aware of no substantial basis for any
such claims. Seller has not granted or been requested to grant any
extension of the limitation period applicable to any claim for taxes
or assessments with respect to taxes. Seller has withheld and paid
all taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor,
creditor or shareholder, where failure to do so would have a material
adverse effect on the Seller or its assets or business operations
("Seller Material Adverse Effect").
Section 2.10. EMPLOYEES AND FRINGE BENEFIT PLANS.
(a) Seller Disclosure Schedule 2.10 sets forth the names, ages and
titles of all employees of Seller and the annual rate of compensation
(including bonuses) being paid to each such employee as of the most
recent practicable date.
(b) Seller Disclosure Schedule 2.10 lists each employment, bonus,
deferred compensation, pension, stock option, stock appreciation
right, profit-sharing or retirement plan, arrangement or practice,
each medical, vacation, retiree medical, severance pay plan and each
other agreement or fringe benefit plan, arrangement, or practice, of
Seller, whether legally binding or not, that affects one or more of
Seller's employees, including all "employee benefit plans" as defined
by Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA") (collectively, the "Plans"). Seller does
not have, sponsor or participate in any Plan that is subject to
Title IV of ERISA or the minimum funding standards of Section 412 of
the Code.
(c) For each Plan that is an "employee benefit plan" under
Section 3(3) of ERISA, Seller has delivered to Buyer correct and
complete copies of the plan documents and summary plan descriptions,
the most recent determination letter received from the Internal
Revenue Service, the most recent Form 5500 Annual Report and all
related trust agreements, insurance contracts and funding agreements
that implement each such Plan.
(d) Seller has no commitment, whether formal or informal and
whether legally binding or not, (i) to create any additional Plan;
(ii) to modify or change any Plan; or (iii) to maintain for any period
of time any Plan.
(e) Seller has no unfunded past service liability in respect of
any of its Plans; neither Seller or any Plan, or any trustee,
administrator, fiduciary or sponsor of any Plan, has engaged in any
prohibited transaction as defined in Section 406 of ERISA or
Section 4975 of the Code for which there is no statutory exemption in
Section 408 of ERISA or Section 4975 of the Code; all filings, reports
and descriptions as to such Plans (including Form 5500 Annual Reports,
summary plan descriptions and summary annual reports) required to have
been made or distributed to participants, the Internal Revenue
Service, the United States Department of Labor and other governmental
agencies have been made in a timely manner; there is no material
litigation, disputed claim, governmental proceeding or investigation
pending or threatened with respect to any of the Plans, the related
trusts or any fiduciary, trustee, administrator or sponsor of the
Plans; the Plans have been established, maintained and administered in
all material respects in accordance with their governing documents and
applicable provisions of ERISA and the Code and Treasury Regulations
promulgated thereunder; and each Plan that is intended to be a
qualified plan under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service with
respect to the current terms of the Plan.
(f) Except where failure to do so would not have a Seller Material
Adverse Effect, Seller has complied in all respects with all
applicable federal, state and local laws, rules and regulations
relating to employees' employment and employment relationships,
including, without limitation, wage related laws, anti-discrimination
laws, employee safety laws and COBRA (defined herein to mean the
requirements of Code Section 4980B, Proposed Treasury Regulation
Section 1.162-26 and Part 6 of Subtitle B of Title I of ERISA).
(g) The consummation of the transactions contemplated by this
Agreement will not (i) result in the payment or series of payments by
Seller to any employee or other person of an "excess parachute
payment" within the meaning of Section 280G of the Code; (ii) entitle
any employee or former employee of Seller to severance pay,
unemployment compensation or any other payment; or (iii) accelerate
the time of payment or vesting of any stock option, stock appreciation
right, deferred compensation, or other employee benefits under any
Plan (including vacation and sick pay).
(h) None of the Plans that are "welfare benefit plans," within the
meaning of Section 3(l) of ERISA, provide for continuing benefits or
coverage after termination or retirement from employment, except for
COBRA rights under a "group health plan" as defined in Code
Section 4980B(g) and ERISA Section 607.
(i) Neither Seller nor any member in a "controlled group" with
Seller (as defined in ERISA) has ever contributed to, participated in
or withdrawn from a multi-employer plan as defined in
Section 4001(a)(3) of Title IV of ERISA, and Seller has not incurred
and does not owe any liability as a result of any partial or complete
withdrawal by any employer from such a multi-employer plan as
described under Section 4201, 4203 or 4205 of ERISA.
Section 2.11. LAWFUL OPERATIONS. Seller has been and currently is
conducting its business, and each of the premises leased or owned by
Seller have been and now are being used and operated, in compliance
with all statutes, regulations, orders, covenants, restrictions and
plans of federal, state, regional, county or municipal authorities,
agencies or boards applicable to the same, except where the failure to
so comply would not have a Seller Material Adverse Effect.
Section 2.12. LITIGATION. There is no suit, action or proceeding
pending or threatened against or affecting Seller, which, if
adversely determined, could have a Seller Material Adverse Effect.
Seller is not subject to any currently existing order, writ,
injunction or decree relating to its operations.
Section 2.13. ENVIRONMENTAL MATTERS.
(a) Seller has not authorized nor conducted nor has knowledge of
the generation, transportation, storage, presence, use, treatment,
disposal, release or handling of (in an amount or of a type that has
been or must be reported to any governmental agency, violates any
Environmental Law (as defined below) or has required or could require
remediation expenditures) any hazardous substance, asbestos, radon,
polychlorinated biphenyls ("PCBs"), petroleum product or waste
(including crude oil or any fraction thereof), natural gas, liquefied
gas, synthetic gas or other material defined, regulated, controlled or
potentially subject to any remediation requirement under any
environmental law (collectively, "Hazardous Materials"), on, in or
under any real property owned, leased or by any means controlled by
it;
(b) Seller is in compliance with all federal, state and local
laws, ordinances, rules, regulations and other governmental
requirements relating to pollution, control of chemicals, management
of waste, discharges of materials into the environment, health,
safety, natural resources and the environment (collectively,
"Environmental Laws");
(c) Seller has, and is in compliance with, all licenses, permits,
registrations and government authorizations necessary to operate under
all applicable Environmental Laws;
(d) Seller has not received any written or oral notice from any
governmental entity or any other person and there is no pending or
threatened claim, litigation or any administrative agency proceeding
that: alleges a violation of any Environmental Law by Seller; alleges
Seller is a liable party or a potentially responsible party under the
Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. Section 9601, et seq., or any state superfund law; has
resulted in or could result in the attachment of an environmental lien
on any real property owned, leased or controlled by Seller; or alleges
the occurrence of contamination of any of such real property, damage
to natural resources, property damage or personal injury based on its
activities or the activities of Seller's predecessors or third parties
(whether at the real property or elsewhere) involving Hazardous
Materials, whether arising under the Environmental Laws, common law
principles or other legal standards.
Section 2.14. NO BROKERS. Seller has not entered into any contract,
arrangement or understanding with any person or firm that may result
in the obligation of Seller or Buyer to pay any finder's fees,
brokerage or agent's commissions or other like payments in connection
with the negotiations leading to this Agreement or the consummation of
the transactions contemplated hereby.
Section 2.15. FULL DISCLOSURE. All of the information provided by
Seller and the Shareholders herein or in the Seller Disclosure
Schedules is true, correct and complete in all material respects, and
no representation, warranty or statement made by the Shareholders in
or pursuant to this Agreement or the Seller Disclosure Schedules
contains any untrue statement of a material fact or omits or will omit
to state any material fact necessary to make such representation,
warranty or statement not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Except as set forth in the disclosure schedules attached hereto Buyer
Represents, warrants and agrees as follows:
Section 3.01. EXISTENCE; GOOD STANDING; CORPORATE AUTHORITY. Buyer
is duly incorporated, validly existing and in good standing under the
laws of the State of Delaware. Buyer has all requisite corporate
power and authority to own, operate, and lease its properties and
carry on its business as now conducted.
Section 3.02. AUTHORIZATION, VALIDITY AND EFFECT OF AGREEMENTS.
Buyer has the requisite corporate power and authority to execute and
deliver this Agreement and all agreements and documents contemplated
hereby. The consummation by Buyer of the transactions contemplated
hereby has been duly authorized by all requisite corporate action.
This Agreement constitutes, and all agreements and documents
contemplated hereby (when executed and delivered pursuant hereto) will
constitute, the valid and legally binding obligations of Buyer,
enforceable in accordance with their respective terms.
Section 3.03. NO VIOLATION. Neither the execution and delivery by
Buyer of this Agreement, nor the consummation by Buyer of the
transactions contemplated hereby in accordance with the terms hereof,
will: (i) conflict with or result in a breach of any provisions of the
charter or bylaws of Buyer; (ii) conflict with, result in a breach of
any provision of or the modification or termination of, constitute a
default under, or result in the creation or imposition of any lien,
security interest, charge or encumbrance upon any of the assets of
Buyer pursuant to any material commitment, lease, contract or other
material agreement or instrument to which Buyer is a party; or
(iii) violate or result in a change in any rights or obligations,
under any governmental permit or license or any order, arbitration
award, judgment, writ, injunction, decree, statute, rule or regulation
applicable to Buyer.
Section 3.04. NO BROKERS. Buyer has not entered into any contract,
arrangement or understanding with any person or firm that may result
in the obligation of Buyer or Seller or the Shareholders to pay any
finder's fees, brokerage or agent's commissions, or other like
payments in connection with the negotiations leading to this Agreement
or the consummation of the transactions contemplated hereby. Buyer is
not aware of any claim for payment of any finder's fees, brokerage or
agent's commissions or other like payments in connection with the
negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby.
ARTICLE IV
COVENANTS
Section 4.01. PRE-CLOSING COVENANTS. The parties agree as follows
with respect to the period between the execution of this Agreement and
the Closing Date:
(a) General. Each of the Parties will use its best efforts to
take all action and to do all things necessary in order to consummate
and make effective the transactions contemplated by this Agreement.
(b) Notices and Consents. Each of the Parties will provide such
notices to, make such filings, and use its best efforts to obtain any
authorizations, consents and approvals of any governmental or
regulatory agency or third parties necessary to the consummation of
the transaction contemplated by this Agreement. In addition to and
not in limitation of the foregoing, each of the parties will (i) take
promptly all actions necessary to make the filings required of the
Seller and the Buyer under the HSR Act; (ii) comply at the earliest
practicable date with any request for additional information received
by such party or its affiliates from the Federal Trade Commission (the
"FTC") or the Antitrust Division of the Department of Justice (the
"Antitrust Division") pursuant to the HSR Act, and (iii) cooperate
with the other party in connection with such party's filings under the
HSR Act and in connection with resolving any investigation or other
inquiry concerning this transaction or the other matters contemplated
by this Agreement commenced by either the FTC or the Antitrust
Division or state attorneys general.
(c) Operation of Business. The Seller will not engage in any
practice, take any action or enter into any transaction with respect
to its business operations that are outside the ordinary course of
business with respect thereto. Without limiting the scope of the
foregoing, the Seller agrees that it will not (i) sell or otherwise
dispose of any Assets, except for sales of Inventory in the ordinary
course of business, (ii) mortgage, pledge or subject to any lien,
security or encumbrance any of the Assets, (iii) fail to comply with
the terms of any material contract, lease or other agreement or seek
to cancel or terminate any such contract, lease or agreement prior to
its stated expiration date, (iv) make any change in the rate of
compensation for any employee or commissioned salesperson; (v) fail to
replenish its inventories or supplies, or make any purchase commitment
in excess of, its normal and customary business practice or (v) fail
to comply with laws and regulations applicable to the business of the
Seller.
(d) Preservation of Assets. The Seller will maintain, keep and
preserve the Assets in good condition and repair and maintain
insurance thereon in accordance with its normal and customary
practices, and the Seller and the Shareholders will use their best
efforts (i) to preserve the business and organization of Company
intact, (ii) to keep available to Buyer the services of Company's
present employees, agents and independent contractors, (iii) to
preserve for the benefit of Buyer the Seller's favorable relations
with suppliers, customers, lessors and others having business
relations with it.
(e) Full Access. The Seller will provide representatives of the
Buyer with full access at all reasonable times, and in a manner so as
not to interfere with the normal business operations of the Seller, to
books, records and facilities of the Seller as shall be reasonably
necessary to conduct Buyer's due diligence investigation.
(f) Notice of Developments. Each party will give prompt written
notice to the other parties of any material adverse development
causing, or which could cause, a breach of any of its own
representations and warranties contained herein. No disclosure by any
party pursuant to this Section 4.01(f), however, shall be deemed to
amend or supplement any Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty or breach of covenant.
(g) Exclusivity. The Seller will not (i) solicit, initiate or
encourage the submission of any proposal or offer from any person
relating to the acquisition of any of its assets (other than sales of
inventories made in the ordinary course of business), 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. The Seller will notify the Buyer
immediately if any person makes any proposal, offer, inquiry or
contact with respect to any of the foregoing.
Section 4.02. POST-CLOSING COVENANTS. The parties agree as follows
with respect to the period following the Closing Date.
(a) General. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this
Agreement, each of the parties will take such further action
(including the execution and delivery of such further instruments and
documents) as the other party or parties may reasonably request, all
at the sole cost and expense of the requesting party (unless the
requesting party is entitled to indemnification therefor under the
terms hereof).
(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) the 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 any of the assets acquired hereunder, the other party will
cooperate with the contesting or defending party and its counsel in
the contest or defense thereof, make available its personnel and
provide such testimony and access to its books and records as shall be
reasonably necessary in connection with the contest or defense
thereof, 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 the terms hereof).
(c) Transition. Neither the Seller nor any Shareholder will take
any action that is designed or intended to have the effect of
discouraging any lessor, licensor, customer, supplier or other
business associate from maintaining the same business relationships
with the Buyer after the Closing as such party maintained with the
Seller prior to the Closing. Buyer and Seller shall each use their
best efforts to cooperate with the other, and to cause their
respective employees to act accordingly, in order to fulfill the
intent and purpose of this Agreement.
(d) Confidentiality. The Seller and each Shareholder will treat
and hold as such all information relating to the business to be
conducted by Buyer with the Assets acquired from Seller hereunder (the
"Confidential Information") as proprietary and confidential and will
not use, or allow anyone else to use any of the Confidential
Information except in connection with the transaction contemplated by
this Agreement. Seller and the Shareholders agree to deliver promptly
to the Buyer or destroy, at the request and option of the Buyer, all
tangible embodiments (and all copies) of the Confidential Information
which are in their possession. In the event that the Seller or any
Shareholder 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 Information, the Seller or Shareholder 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 4.02(d). If, in the absence of a
protective order or the receipt of a waiver hereunder, the Seller or
Shareholder is, on the advice of counsel, compelled to disclose any
Confidential Information to any tribunal or else stand liable for
contempt, the Seller or Shareholder may disclose the Confidential
Information to the tribunal; provided, however, that the Seller or
Shareholder shall use its or his best 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.
(e) Accounts Receivable. The Seller and the Shareholders will use
their reasonable best efforts to assist the Buyer in collecting
Accounts Receivable and Subsidiary Accounts Receivable, including, but
not limited to, promptly notifying customers of the Buyer's
acquisition of such Accounts Receivable and directing such customers
to make future payments to the Buyer. In the event that the Seller
receives payment with respect to any Accounts Receivable, it shall
hold such payments in trust for the benefit of the Buyer and promptly
remit such payments to Buyer.
(f) Employees of Seller. Immediately after the Closing, Buyer
will employ selected employees of Seller, and Buyer will provide such
employees with employment benefits substantially similar to those
generally afforded to the employees of Buyer.
(g) Change of Name of Seller. Within seven calendar days after
the Closing Date, the Seller shall deliver to Buyer all executed
documents as may be required to change Seller's name to another name
bearing no similarity to "Merchants Wholesale Inc." including, but not
limited to, a name change document with the Secretary of State of
Illinois and an appropriate name change notice for each state where
Seller is qualified to do business. The Shareholders hereby appoint
the Buyer as their attorney-in-fact to file all such documents on or
after the Closing Date. From and after the Closing Date, the
Shareholders will sign such consents and take such other actions as
Buyer shall reasonably request in order to permit Buyer to use the
name "Merchant Wholesale Inc." and any variation thereof. From and
after the Closing Date, neither Seller nor the Shareholders will use
the name "Merchants Wholesalers, Inc." or any names similar thereto or
variants thereof, except that they may continue to use the name
Merchant Wholesale of Iowa, Inc. in connection with the business
operations of the Subsidiary as and to the extent conducted on the
Closing Date.
ARTICLE V
CONDITIONS TO THE PARTIES'
OBLIGATIONS TO CLOSE
Section 5.01. 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:
(a) the representations and warranties of the Seller and the
Shareholders set forth in Article II hereof shall be true and correct
in all material respects at and as of the Closing Date;
(b) the Seller shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(c) the Seller shall have procured all of the third party consents
specified in Schedule 2.05;
(d) any waiting period (and any extension thereof) applicable to
the consummation of this transaction under the HSR Act shall have
expired or been terminated.
(e) 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 Assets or to
utilize them in its business operations;
(f) the annualized net sales of the Seller during the two calendar
weeks ending immediately prior to the Closing shall not be less than
$365,000,000;
(g) the Seller shall have delivered to the Buyer a certificate to
the effect that each of the conditions specified above in
Section 5.01(a)-(f) has been satisfied in all respects;
(h) the Seller shall have delivered to the Buyer copies of all
requisite board of directors and shareholder resolutions of Seller
approving the sale of the Assets certificated by its corporate
secretary.
(i) the Buyer shall have received from counsel to the Seller an
opinion, dated as of the Closing Date;
(j) the Buyer shall have received a binding commitment from its
lender with respect to the financing of the Purchase Price;
(k) the Seller shall have delivered an executed Xxxx of Sale
transferring all of the Assets to Buyer free and clear of all liens
and encumbrances, except for any such lien or encumbrance which shall
be expressly assumed by Buyer as part of the Assumed Liabilities;
(l) the Seller shall have endorsed for transfer and delivered to
the Buyer certificates of title for all motor vehicles;
(m) the Seller shall have executed one or more UCC Termination
Statements with respect to any and all of the Assets subject to a
security interest filed and perfected pursuant to the UCC and which
are not subject to an obligation being assumed by Buyer as part of the
Assumed Liabilities, which shall comply with all applicable laws,
rules and regulations;
(n) each of the Shareholders shall have executed a Noncompete,
Nonsolicitation and Nondisclosure Agreement; and
(o) the sale of the Property from the Shareholders to the Buyer
shall have occurred contemporaneously with the Closing.
All actions to be taken by the Seller in connection with consummation
of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the
transactions contemplated hereby will be satisfactory in form and
substance to the Buyer and its counsel. The Buyer may waive any
condition specified in this Section 5.01 if it executes a writing so
stating at or prior to the Closing.
Section 5.02 CONDITIONS TO OBLIGATION OF THE SELLER. The obligation
of the Seller to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the
following conditions:
(a) the representations and warranties of the Buyer set forth in
Article III hereof shall be true and correct in all material respects
at and as of the Closing Date;
(b) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(c) 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 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;
(d) the Buyer shall have delivered to the Seller a certificate to
the effect that each of the conditions specified above in
Section 5.02(a)-(c) has been satisfied in all respects;
(e) the Buyer shall have delivered to the Seller copies of all
requisite board of directors resolutions of Buyer approving the
purchase of the Assets certificated by its corporate secretary;
(f) The Seller shall have received from counsel to the Buyer an
opinion, dated as of the Closing Date;
(g) the sale of the Property from the Shareholders to the Buyer
shall have occurred contemporaneously with the Closing;
(h) the Seller and Shareholders shall have received approval from
LaSalle Business Credit, Inc. with respect to the sale of the assets
and Property to Buyer; and
(i) Buyer has executed and delivered to Seller a second mortgage
on the Property, a first mortgage on the Buyer owned real estate in
Bismarck, North Dakota, and such security agreements and UCC filings
as requested by Seller for the purpose of securing the Buyers
obligations under Sections 1.03(b) and (c) of this Agreement.
All actions to be taken by the Buyer in connection with consummation
of the transactions contemplated hereby and all certificates,
opinions, instruments and other documents required to effect the
transactions contemplated hereby will be satisfactory in form and
substance to the Seller and its counsel. The Seller may waive any
condition specified in this Section 5.02 if it executes a writing so
stating at or prior to the Closing.
ARTICLE VI
SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; INDEMNIFICATION
Section 6.01. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the parties contained in Articles II
and III of this Agreement shall survive for a period of three years
from the effective date hereof.
Section 6.02. INDEMNIFICATION BY SELLER AND THE SHAREHOLDERS.
Subject to the provisions of this Article VI, Seller and the
Shareholders, jointly and severally, agree to indemnify and hold
harmless Buyer, and each officer, director, employee or other agent
thereof and their respective estates (each being a "Buyer Indemnified
Party"), from and against any and all claims, losses, damages,
liabilities and expenses (including, without limitation, settlement
costs and any legal or other fees or expenses for investigating or
defending any actions or threatened actions) reasonably incurred by
such Buyer Indemnified Party in connection with each and all of the
following:
(a) any misrepresentation or breach of any warranty made by Seller
or either of the Shareholders in this Agreement;
(b) the nonfulfillment or breach of any covenant, Agreement or
obligation of Seller or either of the Shareholders contained in or
contemplated by this Agreement;
(c) any misrepresentation or breach of any warranty contained in
any statement, certificate, or other document furnished by Seller or
either of the Shareholders pursuant to this Agreement or in connection
with the transaction contemplated by this Agreement; and
(d) any attempt (whether or not successful) by any person to cause
or require such Buyer Indemnified Party to pay or discharge any debt,
obligation, liability or commitment, the existence of which would
entitle such Buyer Indemnified Party to indemnification pursuant to
clauses (a) through (c) of this Section 6.02 or would constitute a
breach of any such representation, warranty or agreement under this
Agreement.
Section 6.03. INDEMNIFICATION BY BUYER. Subject to the provisions of
this Article VI, Buyer shall indemnify, defend and hold harmless,
Seller and each officer, director, employee, Shareholder or other
agent thereof and their respective estates (each being a "Seller
Indemnified Party"), from and against any and all claims, losses,
damages, liabilities and expenses (including, without limitation,
settlement costs and any legal or other fees or expenses for
investigating or defending any actions or threatened actions)
reasonably incurred by such Seller Indemnified Party in connection
with each and all of the following:
(a) any misrepresentation or breach of any warranty made by Buyer
in this Agreement;
(b) the nonfulfillment or breach of any covenant, agreement or
obligation of Buyer contained in or contemplated by this Agreement;
(c) any misrepresentation or breach of any warranty contained in
any statement, certificate or other document furnished by Buyer
pursuant to this Agreement or in connection with the transactions
contemplated by this Agreement; and
(d) any attempt (whether or not successful) by any person to cause
or require such Seller Indemnified Party to pay or discharge any debt,
obligation, liability or commitment, the existence of which would
entitle such Seller Indemnified Party to indemnification pursuant to
clauses (a) through (c) of this Section 6.03 or would constitute a
breach of any such representation, warranty or agreement under this
Agreement.
Section 6.04. INDEMNIFICATION PROCEDURE. An indemnified party shall
promptly notify the indemnifying party of any claim, demand, action or
proceeding for which indemnification will be sought under
Sections 6.02 or 6.03 of this Agreement, and, if such claim, demand,
action or proceeding is a third party claim, demand, action or
proceeding, the indemnifying party will have the right at its expense
to assume the defense thereof using counsel reasonably acceptable to
the indemnified party. The indemnified party shall have the right to
participate, at its own expense, with respect to any such third party
claim, demand, action or proceeding. In connection with any such
third party claim, demand, action or proceeding, Buyer, Seller and the
Shareholders shall cooperate with each other and provide each other
with access to relevant books and records in their possession. No
such third party claim, demand, action or proceeding shall be settled
without the prior written consent of the indemnified party. If a firm
written offer is made to settle any such third party claim, demand,
action or proceeding and the indemnifying party proposes to accept
such settlement, and the indemnified party refuses to consent to such
settlement, then: (i) the indemnifying party shall be excused from,
and the indemnified party shall be solely responsible for, all further
defense of such third party claim, demand, action or proceeding; and
(ii) the maximum liability of the indemnifying party relating to such
third party claim, demand, action or proceeding shall be the amount of
the proposed settlement if the amount thereafter recovered from the
indemnified party on such third party claim, demand, action or
proceeding is greater than the amount of the proposed settlement.
ARTICLE VII
TERMINATION
Section 7.01. TERMINATION OF AGREEMENT. This Agreement may be
terminated as follows:
(a) the Buyer and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(b) the Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing (i) in the event
the Seller or any Shareholder has breached any material
representation, warranty or covenant contained in this Agreement in
any material respect, the Buyer has notified the Seller of the breach,
and the breach has continued without cure for a period of 10 days
after the notice of breach or (ii) if the Closing shall not have
occurred on or before the date that is 90 days from the date of this
Agreement by reason of the failure of any condition precedent
hereunder (unless the failure results primarily from the Buyer itself
breaching any representation, warranty, or covenant contained in this
Agreement); and
(c) the Seller may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing (i) in the event
the Buyer has breached any material representation, warranty or
covenant contained in this Agreement in any material respect, the
Seller has notified the Buyer of the breach and the breach has
continued without cure for a period of 10 days after the notice of
breach or (ii) if the Closing shall not have occurred on or before the
date that is 90 days from the date of this Agreement by reason of the
failure of any condition precedent hereunder (unless the failure
results primarily from the Seller or a Shareholder breaching any
representation, warranty or covenant contained in this Agreement).
Section 7.02. EFFECT OF TERMINATION. If any Party terminates this
Agreement pursuant to this Article VII, all rights and obligations of
the parties hereunder shall terminate without any liability of any
party to the other party (except for any liability of any party then
in breach); provided, however, that the provisions of Section 4.02(d)
shall survive the termination of this Agreement.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01. PRESS RELEASES AND PUBLIC ANNOUNCEMENTS. No party
shall issue any press release or make any public announcement relating
to the subject matter of this Agreement prior to the Closing without
the prior written approval of the other party; provided, however, that
any party may make any public disclosure it believes in good faith is
required by applicable law in which case the disclosing party will use
its reasonable best efforts to advise the other party prior to making
the disclosure. Seller acknowledges that Buyer is a publicly owned
corporation subject to Security Exchange Commission and American Stock
Exchange rules and regulations and as such will be required to
publicly disclose the subject matter of this Agreement prior to
Closing.
Section 8.02. NOTICES. Any notice required to be given hereunder
shall be sufficient if in writing, by courier service (with proof of
service), hand delivery or certified or registered mail (return
receipt requested and first-class postage prepaid), addressed as
follows:
If to Buyer: Xxxxxxxx X. Xxxxx
President
AMCON Distributing Company.
00000 "X" Xxxxxx
Xxxxx, XX 00000
with a copy to: Xxxxxx X. Xxxx
Xxxxx Xxxx LLP
0000 Xxxxxx Xxxxxx
Xxxxx, XX 00000
If to Seller
or the Shareholders: Xxxxxx X. Xxxxxxx
#0 Xxxxxxxxxxx
Xxxxxx, XX 00000
with a copy to: Xxxxxxx Xxxxx
Westervelt, Johnson, Xxxxxx & Xxxxxx
14th Floor, Associated Bank Plaza
000 Xxxxxxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxx 00000
or to such other address as any party shall specify by written notice
so given, and such notice shall be deemed to have been delivered as of
the date so personally delivered or mailed.
Section 8.03. ASSIGNMENT; BINDING EFFECT; BENEFIT. Neither this
Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and
their respective successors and assigns.
Section 8.04. ENTIRE AGREEMENT. This Agreement, the Exhibits, the
Seller Disclosure Schedules and any documents delivered by the parties
in connection herewith constitute the entire agreement among the
parties with respect to the subject matter hereof and supersede all
prior and contemporaneous agreements and understandings among the
parties with respect thereto. No addition to or modification of any
provision of this Agreement shall be binding upon any party hereto
unless made in writing and signed by all parties hereto.
Section 8.05. CONSTRUCTION. This Agreement has been duly negotiated
and mutually prepared by the parties hereto and shall not be construed
or interpreted against any party as the sole drafting party.
Section 8.06. AMENDMENT. This Agreement may not be amended, except
by an instrument in writing signed on behalf of each of the parties
hereto.
Section 8.07. GOVERNING LAW. The validity of this Agreement, the
construction of its terms and the determination of the rights and
duties of the parties hereto shall be governed by and construed in
accordance with the laws of the State of Nebraska applicable to
contracts made and to be performed wholly within such state.
Section 8.08. COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts
shall together constitute one and the same instrument. Each
counterpart may consist of a number of copies hereof each signed by
less than all, but together signed by all of the parties hereto.
Section 8.09. WAIVERS. Except as provided in this Agreement, no
action taken pursuant to this Agreement, including, without
limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of
compliance with any representations, warranties, covenants or
agreements contained in this Agreement. The waiver by any party
hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or
any other provision hereunder.
Section 8.10. INCORPORATION OF EXHIBITS. The Seller Disclosure
Schedules and the Exhibits attached hereto and referred to herein are
hereby incorporated herein and made a part hereof for all purposes as
if fully set forth herein.
Section 8.11. SEVERABILITY. Any term or provision of this Agreement
that is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the
remaining terms and provisions of this Agreement or affecting the
validity or enforceability of any of the terms or provisions of this
Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
Section 8.12. EXPENSES. Each party to this Agreement shall bear its
own expenses in connection with the transactions contemplated hereby.
Section 8.13. ENFORCEMENT OF AGREEMENT. The parties hereto agree
that irreparable damage would occur in the event that any of the
provisions of this Agreement was not performed in accordance with its
specific terms or was otherwise breached. It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to
prevent breaches of this Agreement and to enforce specifically the
terms and provisions hereof in any court of competent jurisdiction,
this being in addition to any other remedy to which they are entitled
by contract, at law or in equity.
IN WITNESS WHEREOF, the parties have executed this Agreement and
caused the same to be duly delivered on their behalf on the day and
year first written above.
AMCON DISTRIBUTING COMPANY
By: Xxxxxxxx X. Xxxxx
---------------------------
Xxxxxxxx X. Xxxxx, President
MERCHANTS WHOLESALE INC.
By: Xxxxxx X. Xxxxxxx
----------------------------
Xxxxxx X. Xxxxxxx, President
SHAREHOLDERS:
Xxxxxx X. Xxxxxxx
----------------------------
Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
----------------------------
Xxxxxx X. Xxxxxxx
