ASSET PURCHASE AGREEMENT
between
CONTINENTAL GRAIN COMPANY
AND
AMERICAN FOOD SERVICE DISTRIBUTORS
Dated September 26, 1997
THIS AGREEMENT, dated as of September 26, 1997, is between CONTINENTAL
GRAIN COMPANY (the "SELLER"), a Delaware corporation and AMERICAN FOOD SERVICE
DISTRIBUTORS, (the "BUYER") a(n) California corporation.
RECITALS
WHEREAS, Seller is engaged in the operation of a commercial meat processing
and distribution business in Opa Locka, Florida and Riviera Beach, Florida
commonly referred to as Southern Foods (the "PURCHASED BUSINESS").
WHEREAS, Seller proposes to sell to Buyer, and Buyer proposes to purchase
from Seller, certain assets of Seller on the terms and subject to the conditions
contained in this Agreement.
NOW, THEREFORE, in consideration of the foregoing recitals and the
agreements contained herein, Seller and Buyer agree as follows:
1. Agreement to Sell and Purchase.
------------------------------
On the terms and subject to the conditions of this Agreement, Seller agrees
to sell and transfer to Buyer, and Buyer agrees to purchase from Seller, on and
as of the close of business on the day immediately preceding the Closing Date
(as defined in Section 9 hereof), the following property and assets of Seller
(the "PURCHASED ASSETS"):
1.1 The real property of Seller located in or near the Southern Foods
facility at 00000 Xxxxxxxxx 00xx Xxxxxx, Xxx Xxxxx, Xxxxxxx, 00000, legally
described in SCHEDULE 1.1 hereto (the "REAL PROPERTY"), together with all
buildings, structures, installations, fixtures and other improvements situated
thereon (hereinafter collectively referred to as the "PURCHASED FACILITY");
1.2 All equipment, machinery, spare machinery and parts, motor vehicles
and other rolling stock, tools, accessories, office equipment, furniture and
furnishings and other miscellaneous tangible personal property owned by Seller
and used at the Purchased Facility and at the Southern
Foods facility located at 0000 Xxxx 00xx Xxxxxx, Xxxxxxx Xxxxx, Xxxxxxx, 00000,
including without limitation any such assets that have been fully depreciated
and accordingly are not reflected in Seller's books and records (hereinafter
collectively referred to as the "EQUIPMENT");
1.3 All merchantable inventory, supplies and the like (hereinafter
collectively referred to as the "INVENTORY");
1.4 All open purchase orders entered into in the ordinary course of
business pursuant to which Seller has committed to purchase goods in connection
with the Purchased Business (hereinafter collectively referred to as the "OPEN
PURCHASE ORDERS");
1.5 All customer orders entered into in the ordinary course of business
pursuant to which Seller has committed to sell goods or inventory (hereinafter
collectively referred to as the "OPEN CUSTOMER ORDERS") upon terms and
conditions set forth in SCHEDULE 1.5;
1.6 All rights of Seller under all other contracts, leases, commitments,
license and permits (to the extent transferrable), and agreements entered into
in the course of the Purchased Business and identified in SCHEDULE 1.6
(hereinafter collectively referred to as the "CONTRACTS AND LEASES") hereto;
1.7 All current accounts, notes and other amounts receivable arising from
the operation of the Purchased Business and existing as of the close of business
on the day immediately preceding Closing Date (hereinafter collectively referred
to as the "RECEIVABLES" and each individually as a "RECEIVABLE");
1.8 All accounts, notes and other amounts payable and all accrued
liabilities arising from the operation of the Purchased Business and existing as
of the close of business on September 27, 1997, (hereinafter collectively
referred to as the "PAYABLES" and each individually as a "PAYABLE".)
1.9 All rights of Seller to the use of the name "Southern Foods".
Except as hereinafter specifically provided, the Purchased Assets will be
transferred by Seller to Buyer in accordance with this Agreement free and clear
of all liens, charges or encumbrances, and with respect to the Real Property,
subject to: (i) obligations for taxes for the current year not yet due and
payable, (ii) liens, charges, and encumbrances reflected in the real estate
title insurance commitments delivered by Seller to Buyer pursuant to Section 8.1
hereof, and (iii) easements, conditions, covenants, reservations and
restrictions of record (hereinafter collectively referred to as the "PERMITTED
EXCEPTIONS").
2. Excluded Assets.
---------------
The Purchased Assets exclude, among other assets of Seller, the following:
2.1 Cash and bank accounts (other than Customer Prepayments);
2.2 Tax refunds and insurance premium refunds arising from policy
cancellations;
2.3 General ledgers, tax returns, minute books and similar records of
Seller;
2.4 All trademarks, trade names, patents, service marks, copyright and
other intangibles, except the name "Southern Foods"; and,
2.5 The real property of Seller located in or near the Southern Foods
facility at 0000 Xxxx 00xx Xxxxxx, Xxxxxxx Xxxxx, Xxxxxxx, 00000, together with
all buildings, structures, installations, fixtures and other improvements
situated thereon excepting those non-fixed assets referred to in 1.2, above
(hereinafter collectively referred to as the "EXCLUDED FACILITY");
(2.1 through 2.5 hereinafter collectively referred to as the "EXCLUDED ASSETS").
3. Purchase Price.
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3.1 Generally.
---------
The total purchase price to be paid to Seller for the Purchased Assets
(hereinafter referred to as the "PURCHASE PRICE") shall be the sum total of the
following:
3.1.1 The amount of Two Million Four Hundred Twenty-Seven Thousand
Dollars ($ 2,427,000.00) for the Purchased Facility and the
Equipment (the "PROPERTY AND EQUIPMENT PRICE"); PLUS,
3.1.2 An amount equal to the net book value of the Inventory as of
September 27, 1997, determined in accordance with SCHEDULE 3.1.2
hereto (the "INVENTORY PRICE"); PLUS,
3.1.3 An amount equal to the net book value of the Receivables as of
September 27, 1997, together with accrued interest thereon, if
any, to be determined in accordance with SCHEDULE 3.1.3 hereto
(the "RECEIVABLES PRICE");
3.1.4 LESS an amount equal to the net book value of the
Payables as of September 27, 1997, and accrued liabilities, to be
determined in accordance with SCHEDULE 3.1.4 hereto (the
"PAYABLES PRICE");
3.1.5 LESS the sum of One Million One Hundred Thousand Dollars
($1,100,000.00).
3.1.6 Less the sum of Twelve Thousand Dollars ($12,000.00),
which represents estimated funds necessary for the informational
system to become operational.
3.2 Payment.
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At the Closing, Buyer shall pay Seller an amount equal to the Purchase
Price, plus or minus prorations, adjustments and closing costs as set forth
herein by wire transfer of immediately available funds.
3.3 Allocation.
----------
The parties agree that $800,000 of the total Purchase Price shall be
allocated to the land and building.
4. Assumption of Liabilities.
-------------------------
Subject to the conditions of this Agreement, Buyer shall assume the
following liabilities and obligations of Seller as set forth on Seller's balance
sheet as of the Closing Date as set forth on SCHEDULE 4, which shall be agreed
to and finalized at anytime prior to closing:
4.1 Liabilities and obligations arising before and after the Closing Date
under Open Purchase Orders;
4.2 Liabilities and obligations arising before and after the Closing Date
under Open Customer Orders;
4.3 Liabilities and obligations arising from and after the Closing Date
under the Contracts and Leases.
4.4 Liabilities and obligations arising before and after the Closing Date
under the Payables.
5. Labor and Employment Matters.
----------------------------
5.1 Generally.
---------
Without limiting the generality of Section 4 hereof, Buyer shall not assume
any employment obligation, wage or salary payment obligation, accrued or earned
vacation obligation, or employee benefit obligation of Seller or any workers
compensation claim arising from injuries sustained by or incidents involving
employees of Seller occurring prior to the Closing Date.
5.2 Employment Offers.
-----------------
Buyer hereby represents and warrants that it will, prior to the Closing
Date, offer employment to all persons currently employed by Seller at the Opa
Locka location and to five individuals currently employed at the Riviera Beach
location, such employment upon such terms and conditions as Buyer in its sole
discretion may choose to offer to be effective immediately as of the
Closing Date. Buyer further acknowledges that Seller is relying on such
representation and warranty for purposes of assessing its obligation to give
notice of the transactions contemplated hereby to its employees or to take any
other action that may be required under applicable federal, state and local
laws. To facilitate the making of such employment offers, Seller shall afford
Buyer a reasonable opportunity to interview its employees for prospective
employment by Buyer. Buyer may in its discretion offer employment to any
person, on terms and conditions established by Buyer. Notwithstanding anything
to the contrary contained in this Agreement, no employee of Seller, whether or
not hired by Buyer from and after the Closing Date, shall be construed as a
third party beneficiary under this Agreement. Nothing contained herein shall
constitute a guarantee of employment or continued employment to seller's
employees.
5.3 Employment Transition Provisions.
--------------------------------
Effective as of the close of business on the day immediately preceding the
Closing Date and upon occurrence of the Closing, Seller shall terminate the
employment of each person employed by Seller at the Purchased Facilities unless
transferred to another location by agreement between such employee and Seller.
As soon as practicable after the Closing, Seller shall pay each such person all
accrued wages, salary, accrued and earned vacation and other employee
compensation payments for all periods prior to the Closing Date. In addition,
Seller shall pay or provide for all other employee benefits maintained by Seller
for all periods prior to the Closing Date, all in accordance with applicable
law.
6. Riviera Beach Closing.
----------------------
The Seller shall use its best efforts to coordinate the closing of the
Excluded Facility with the Buyer to coincide with the Closing Date. The sale of
the Equipment and Inventory to Buyer from the Excluded Facility pursuant to
Sections 1.2 and 1.3 hereof shall be F.O.B. the Riviera Beach Facility as of the
Closing Date. Buyer may elect, but shall not be obligated, to determine which
Equipment and Inventory from the Riviera Beach Facility it shall retain,
provided that Buyer shall (a) be responsible for all costs and expenses of
removing such Equipment and Inventory from its current location at such Excluded
Facilities and transporting such to Buyer's desired destination, and (b) repair
any damage caused by such removal. Buyer shall be entitled to remove such
Equipment and Inventory within thirty (30) days of the Closing Date provided
that Buyer has given Seller at least two (2) business days prior written notice
of its intent to remove such Equipment and Inventory.
7. Closing Prorations.
------------------
On the Closing Date, utility charges, rents under assumed leases, payments
under assumed agreements, real property taxes payable on the Real Property,
heavy vehicle use taxes and other similar obligations to third parties shall be
prorated between Seller and Buyer on the basis of the actual number of calendar
days elapsed before and from and after the Closing Date. Without limiting the
generality of the foregoing, Seller shall pay that portion of the real estate
taxes for calendar year 1997 attributable to the actual number of calendar days
elapsed before the Closing Date, and Buyer shall pay the balance of such taxes
from and including the Closing Date and all real estate taxes payable in
subsequent years.
8. Title Examination.
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8.1 Delivery of Commitments, Etc.
-----------------------------
As soon as reasonably practicable after the execution of this Agreement,
Seller shall, cause to be prepared and delivered to Buyer commitments for
American Land Title Association ("ALTA") Owner's Policy Form B-1970, (the "TITLE
COMMITMENTS") or equivalent title insurance policies covering the Real Property,
such commitments to be issued by a title insurance company (the "TITLE COMPANY")
selected by Seller and reasonably satisfactory to Buyer and to be in a form
reasonably acceptable to Buyer. Seller and Buyer shall each pay one-half (1/2)
of the examination and premium for the policies (of title insurance issued
pursuant to the title insurance commitments, the amount of the coverage to be
based upon that portion of the Purchase Price allocable to the Purchased
Facilities). Buyer shall be solely responsible for the cost of extended
coverage and any endorsements to the title policy required by Buyer.
8.2 Title Objections.
----------------
In the event that the Title Commitment contains exceptions other than the
Permitted Exceptions (the "UNPERMITTED EXCEPTIONS"), within ten (10) days after
receipt of the Title Commitment, Buyer shall give Seller written notice of any
Unpermitted Exceptions to which Buyer objects. Seller shall be given a period
of fifteen (15) days (the "CURE PERIOD") following such notice to cause the
Unpermitted Exceptions to be waived or removed from the Title Commitment, or to
obtain a commitment from the Title Company or any other title insurance company
licensed to do business in the State of Florida (the "SUBSTITUTE TITLE COMPANY")
to insure the Buyer against loss or damage resulting from the Unpermitted
Exceptions. In the event that, within the Cure Period, the Seller is unable or
unwilling to cause the Unpermitted Exceptions to be removed from the Title
Commitment, or to obtain a commitment from the Title Company or the Substitute
Title Company to insure the Buyer against loss or damage resulting from the
Unpermitted Exceptions, Buyer may, in its sole discretion, elect to terminate
this Agreement within ten (10) days following the expiration of the Cure Period
and Buyer shall receive the return of the Xxxxxxx Money Deposit. In the event
that the Buyer does not so notify the Seller of its election to terminate this
Agreement, the Buyer shall purchase the Purchased Assets subject to such
Unpermitted Exceptions without diminution or reduction of, or setoff against,
the Purchase Price.
8.3 Cooperation.
-----------
Seller shall cooperate, without additional cost to Seller, with Buyer both
before and after the Closing in connection with the efforts of Buyer, if any, to
cure any objections to title raised by Buyer which are not cured before the
Closing Date, if Buyer elects to close notwithstanding such objections.
9. Closing, Costs and Deliveries.
-----------------------------
9.1 Closing.
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The closing of the transactions contemplated by this Agreement (the
"CLOSING") shall take place at the offices of Seller's local counsel on or about
October 1, 1997, or such other date (but no later than November 1, 1997) or
alternate location as Buyer and Seller may mutually agree (the "CLOSING DATE").
9.2 Buyer's Payments.
----------------
Buyer shall pay:
9.2.1 Recording fees for the documents to be given by Seller pursuant
to this Agreement;
9.2.2 Vehicle transfer fees for motor vehicles and rolling stock to be
transferred pursuant to this Agreement;
9.2.3 One-half of the expense of the title examinations and title
policy premium plus the cost of any additional insurance or
endorsements;
9.2.4 One-half of the fee for the Closing Escrow, if any; and
9.2.5 The fees and expenses of its own counsel.
9.3 Seller's Payments.
-----------------
Seller shall pay:
9.3.1 Any real estate transfer or stamp taxes imposed by the State of
Florida or Dade County upon the transactions contemplated by this
Agreement;
9.3.2 One-half of the expense of the title examinations and title
policy premiums under Section 8;
9.3.3 Recording fees for documents necessary to remove Unpermitted
Exceptions, if any;
9.3.4 One-half of the fee for the Closing Escrow, if any; and
9.3.5 The fees and expenses of a Phase I environmental audit and any
remediation connected therewith; and
9.3.6 The fees and expenses of its own counsel.
9.4 Buyer's Deliveries.
------------------
At the Closing, Buyer shall deliver to Seller:
9.4.1 A copy of the resolutions of the Board of Directors of Buyer
authorizing and approving the execution and delivery of the documents
to consummate the
transactions contemplated hereby, certified by the Secretary or
Assistant Secretary of the Buyer as of the Closing Date;
9.4.2 The cash payment specified in Section 3.2 hereof; and
9.4.3 Such other instruments as may be required by the Title Company.
9.5 Seller's Deliveries.
-------------------
At the Closing, Seller shall deliver or cause to be delivered to Buyer:
9.5.1 A copy of the resolutions of the Board of Directors of Seller
authorizing and approving the execution and delivery of the documents to
consummate the transactions contemplated hereby, certified by the
Secretary or an Assistant Secretary of Seller as of the Closing Date;
9.5.2 One or more special warranty deeds conveying the Purchased
Facilities to Buyer, substantially in the form of SCHEDULE 9.5.2
hereto;
9.5.3 A Xxxx of Sale with respect to the Equipment and Inventory;
9.5.4 An Assignment Agreement or Agreements with respect to the items
set forth in Sections 1.4 through 1.9 together with the originals of all
documents identified therein;
9.5.5 Such other instruments as may be required by the Title Company;
and
9.5.6 Possession of the Purchased Assets.
10. Representations and Warranties of Seller.
----------------------------------------
Seller hereby represents and warrants to Buyer as follows:
10.1 Corporate.
---------
10.1.1 Good Standing. Seller is a corporation duly incorporated,
--------------
validly existing and in good standing under the laws of the State of
Delaware.
10.1.2 Corporate Power.
---------------
Seller has the corporate power to own its properties and conduct the
Purchased Business and to execute and deliver this Agreement and to
consummate the transactions contemplated hereby.
10.1.3 Authorization
-------------
The execution and delivery of this Agreement by Seller, and the
consummation of the transactions contemplated hereby, have been duly
authorized by all necessary corporate action of Seller and this
Agreement constitutes a valid and binding legal obligation, enforceable
against Seller in accordance with its terms.
10.1.4 Qualification.
-------------
Seller is qualified to do business and is in good standing as a foreign
corporation under the laws of each state where the nature of the Purchased
Business or the Purchased Assets requires qualification and where failure
to qualify would have a material adverse effect on its business or
financial condition.
10.1.5 No Violations of Articles, By-laws or Agreements.
------------------------------------------------
There are no prohibitions in the Articles of Incorporation or By-laws of
Seller or in any indenture, contract or agreement to which Seller is a
party or by which Seller is bound, which prohibit the execution and
delivery by Seller of this Agreement or the consummation by Seller of the
transactions contemplated hereby.
10.1.6 Material Litigation.
--------------------
Seller warrants and represents that there is no material litigation or
government action, threatened or pending which would affect the conduct or
continued operation of the Purchased Business, or the Purchased Assets or
any of the representatives on the Seller's Balance Sheet.
10.2 Receivables.
-----------
All Receivables have arisen and will arise in the ordinary course of the
Purchased Business, and all Receivables constitute or will constitute valid and
binding obligations of the account debtors or other obligors enforceable in
accordance with their terms. The receivables balance on Seller's books are
stated in accordance with General Accepted Accounting Principles and have
adequate reserve or provision for potential bad debt.
10.3 Inventory.
---------
All Inventory reflected in the determination of the Purchase Price will be
of a saleable quality usable in the ordinary course of the Purchased Business
and are not "adulterated" or "misbranded" as those terms are defined in the
Food, Drug and Cosmetic Act.
10.4 Title to Property.
-----------------
10.4.1 Real Property.
-------------
Schedule 1.1 hereto correctly identifies the Real Property included in the
Purchased Assets. On the Closing Date Seller will have good title to the
Real Property, free and clear of all mortgages, liens, pledges, charges,
easements and encumbrances other than Permitted Exceptions.
10.4.2 Equipment.
---------
On the Closing Date, Seller will have good title to all Equipment included
in the Purchased Assets, free and clear of all mortgages, liens, pledges,
charges and encumbrances. Pursuant to Section 3.1.6, Seller is issuing
Buyer a $12,000.00 credit for potential additional charges to its
informational system.
10.4.3 Environmental.
--------------
Seller warrants and represents that, with respect to the Opa Locka
facility, (a) there is no known or suspected environmental hazards
of any kind or character, (b) that it has or will perform a Phase I
environmental audit prior to closing, and (c) that it has provided
the results of those tests to Buyer prior to closing.
10.5 Employee Plans.
--------------
There is no collective bargaining agreement, similar agreement, or union
representative covering the Purchased Business.
10.6 Future Product Sales.
--------------------
Seller agrees to continue to sell Dutch Quality and Xxxxx Farms branded
product to the Purchased Facility pursuant to the terms and conditions offered
to other customers, with the same marketing programs (provided such programs are
not discontinued as to all customers) and pricing terms currently offered to
Southern Foods.
10.7 Survival of Representations and Warranties.
------------------------------------------
Each of the representations and warranties made and given by Seller in this
Agreement shall survive for a period of six (6) months following the Closing
Date except 10.4.3 and 10.6, which shall survive for 36 months,
11. Representations and Warranties of Buyer.
---------------------------------------
Buyer hereby represents and warrants to Seller as follows:
11.1 Corporate.
---------
11.1.1 Good Standing. Buyer is a corporation duly organized, validity
-------------
existing and in good standing under the laws of the State of California.
11.1.2 Corporate Power.
---------------
Buyer has the corporate power to own its properties and conduct the
Purchased Business and to execute and deliver this Agreement and to
consummate the transactions contemplated hereby.
11.1.3 Authorization
-------------
The execution and delivery of this Agreement by Buyer, and the consummation
of the transactions contemplated hereby, have been duly authorized by all
necessary corporate action of Buyer and this Agreement constitutes a valid
and binding legal obligation, enforceable against Buyer in accordance with
its terms.
11.1.4 Qualification.
-------------
Buyer is qualified to do business and is in good standing as a foreign
corporation under the laws of each state where the nature of the Purchased
Business or the Purchased Assets requires qualification and where failure
to qualify would have a material adverse effect on its business or
financial condition.
11.1.5 No Violations of Articles, Operating Agreement or Agreements.
------------------------------------------------------------
There are no prohibitions in the Articles of Organization or Operating
Agreement of Buyer or in any indenture, contract or agreement to which
Buyer is a party or by which Buyer is bound, which prohibit the execution
and delivery by Seller of this Agreement or the consummation by Buyer of
the transactions contemplated hereby.
11.2 Pending Litigation.
------------------
There are no actions, suits or proceedings pending or, to the knowledge of
Buyer, threatened against Buyer in any court or before any federal, state,
municipal or other governmental agency which, if decided adversely to Buyer,
would have a material adverse effect upon the ability of Buyer to consummate the
transactions contemplated by this Agreement.
11.3 As Is.
-----
Buyer acknowledges and agrees that it has had or will have had prior to the
Closing, adequate opportunity to investigate and inspect the conditions of the
Purchased Assets and, except for the representations, warranties, covenants and
indemnities made by Seller in this Agreement, Buyer is purchasing the Purchased
Assets in their "AS IS, WHERE IS CONDITION WITH ALL FAULTS, INCLUDING BUT NOT
LIMITED TO BOTH LATENT AND PATENT DEFECTS." EXCEPT AS EXPRESSLY SET FORTH IN
THIS AGREEMENT, NO WARRANTIES, EXPRESS OR IMPLIED, ARE MADE BY SELLER OR ANY OF
ITS AFFILIATES CONCERNING THE PURCHASED ASSETS, INCLUDING BUT NOT LIMITED TO,
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. Buyer
further acknowledges and agrees that it has had an opportunity to review and to
discuss with various agents and/or representatives of Seller the environmental
condition of the Purchased Assets. Buyer has investigated and has knowledge
of operative or
proposed governmental laws and regulations including, without limitation,
environmental laws and regulations to which the Purchased Assets are or may be
subject and Buyer is purchasing the Purchased Assets upon the basis of its
review and determination of the applicability and effect of such laws and
regulations and the representations, warranties, covenants and indemnities made
by the Seller in this Agreement.
11.4 Survival of Representations and Warranties.
------------------------------------------
Each of the representations and warranties made and given by Buyer in this
Agreement shall survive for a period of six months following the Closing Date.
12. Conditions to Obligation of Buyer to Close.
------------------------------------------
The obligation of Buyer to effect the closing of the transactions
contemplated by this Agreement is subject to the satisfaction prior to or at the
Closing of the following conditions, any one or more of which may be waived by
Buyer:
12.1 Representations and Warranties.
------------------------------
The representations and warranties of Seller contained in this Agreement
shall be true and correct on the Closing Date, as if made on the Closing Date.
12.2 Observance and Performance.
--------------------------
Seller shall have observed and performed all covenants and agreements
required by this Agreement to be observed or performed by it on or prior to the
Closing Date.
12.3 Closing Documents.
-----------------
Buyer shall have received such special warranty deeds, in recordable form,
bills of sale, assignments, releases and other documents of transfer, including
without limitation assignments of certificates of title to all motor vehicles
constituting Purchased Assets in form suitable for transfer in the State of
Florida, required to transfer to Buyer the interests of Seller in the Purchased
Assets and to satisfy the other requirements of this Agreement consistent with
the terms of this Agreement.
12.4 Survey.
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Buyer shall at its option and expense, obtain a survey of the Real Property
included in the Purchased Facilities.
12.5 Due Diligence.
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Buyer shall have completed due diligence relative to the Purchased Assets
and the results of such due diligence shall not disclose risks of ownership of
the Purchased Assets materially greater than contemplated by Buyer at the date
hereof. Unless Buyer gives written notice to Seller on or before the closing
date to the contrary, Buyer shall accept the condition of the Purchased Assets
and this Section 12.5 shall be waived by Buyer. In the event Buyer gives written
notice of termination
within the time specified and in accordance with the criteria of this Section
12.5, this Agreement shall be null and void.
13. Conditions to Obligation of Seller to Close.
-------------------------------------------
The obligation of Seller to effect the transactions contemplated by this
Agreement is subject to the satisfaction prior to or at the Closing of the
following conditions, any one or more of which may be waived by Seller:
13.1 Representations and Warranties.
------------------------------
The representations and warranties of Buyer contained in this Agreement
shall be true and correct on the Closing Date, as if made on the Closing Date.
13.2 Observance and Performance.
--------------------------
Buyer shall have observed and performed all covenants and agreements
required by this Agreement to be observed or performed by Buyer on or prior to
the Closing Date.
13.3 Board Approval.
--------------
Seller shall have obtained the due authorization and approval of its Board
of Directors for sale of the Purchased Assets and the transactions contemplated
by this Agreement.
14. Operation of Business Prior to Closing.
--------------------------------------
Seller agrees that, except with the prior written consent of Buyer, from
the date of this Agreement to the Closing or any Escrow Closing:
14.1 Maintenance of Business.
-----------------------
Seller will use reasonable efforts to (i) preserve intact the business
organization of the Purchased Business, (ii) keep available the services of key
employees on terms no less favorable to the Seller than those on which such
employees are presently employed, and (iii) preserve for Buyer the good will of
suppliers, customers and others having business relationships with the Purchased
Business. Seller will maintain its books and records during such period in a
manner consistent with past practice.
14.2 Employees.
---------
Seller will not hire any new employees for the Purchased Business other
than in the ordinary course of the business, or effect any increase in
compensation or employee benefits for its employees engaged in operating the
Purchased Business other than the right, but not the obligation, of Seller to
issue stay bonuses at its discretion.
14.3 No Disposition of Assets.
------------------------
Seller will not sell, transfer, dispose of or abandon any portion of the
Purchased Assets, except for the sale of assets in the ordinary course of
business and consistent with past practice and of assets not material in value
or to the operation of the Purchased Business.
14.4 No Additional Liens.
-------------------
Seller will not permit any of the Purchased Assets to become subject to any
mortgage, charge or encumbrance, other than Permitted Exceptions.
14.5 No Modification of Agreements.
-----------------------------
Seller will not modify or amend any material contract, lease, commitment or
agreement to be assigned to or assumed by Buyer hereunder, or waive or assign to
any third party any of its rights under any such contract, lease, commitment or
agreement.
14.6 Certain Agreements.
------------------
Seller will not enter into any contract or agreement which relates to the
Purchased Business, which will not be fully performed on or before the Closing
Date other than contracts and agreements in the ordinary course of business
required to be assumed by Buyer pursuant to Section 4 hereof. In addition,
Seller will not enter into any contract or agreement which relates to the
Purchased Business and which contains terms or provisions inconsistent with past
business practices of Seller or the continued operation of the Purchased
Business as a going concern.
14.7 Maintenance of Insurance.
------------------------
Seller will continue to carry all existing policies of insurance relating
to the Purchased Assets, or will effect renewals or replacements thereof in
substantially the same form and amount, and providing substantially the same
coverage, as such existing policies.
14.8 Ordinary Course Operations.
--------------------------
Without limiting the generality of the foregoing, Seller will in all other
respects operate the Purchased Business in the ordinary course of business.
15. Bulk Sales Law.
--------------
Buyer hereby waives compliance by Seller with the requirements of any
applicable laws relating to bulk sales and transfers and Seller hereby agrees to
indemnify Buyer and hold Buyer harmless from any and all claims, liabilities or
costs arising with respect thereto, including reasonable attorneys' fees.
16. Taxes and Fees.
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Buyer shall pay all recording fees, vehicle title transfer fees and any
sales taxes with respect to the sale of the Purchased Assets. Seller shall pay
all deed taxes and real estate transfer fees, if any.
17. Indemnification.
---------------
17.1 Indemnification by Seller.
-------------------------
Seller shall indemnify the Buyer and its respective members, directors,
officers, employees and agents from and against any loss, liability, claim,
damage or expense (including court and
arbitration fees and costs, and reasonable fees and expenses of legal counsel,
investigators, expert witnesses, consultants, accountants and other
professionals) (a "LOSS") suffered or incurred by any such indemnified party in
connection with or arising from (i) any breach of any representation or warranty
of Seller contained in this Agreement, (ii) any breach of any covenant or
obligation of Seller contained in this Agreement, (iii) the use, ownership,
possession or operation of any of the Purchased Assets by Seller prior to the
Closing Date provided however that (A) Seller shall not have any liability under
-------- -------
clause (i) above until the aggregate of all Losses for which the Seller would
be liable but for this sentence, exceeds on a cumulative basis a dollar amount
equal to $50,000 (the "BASKET"), and in such case the liability of Seller under
this section shall only be for the amounts of any Loss under this Agreement
which exceed the Basket, (B) in no event shall Seller be liable for any Loss
(including without limitation any and all liabilities of Seller for costs,
expenses and attorneys' fees paid or incurred in connection with the curing of
any and all misrepresentations or breaches of warranties or covenants under this
Agreement) to the extent the aggregate of all indemnification payments by or on
behalf of Seller with respect to such Losses shall have exceeded the Purchase
Price.
17.2 Indemnification by Buyer.
------------------------
Buyer shall indemnify Seller and its respective shareholders, directors,
officers, employees and agents from and against any Loss suffered or incurred by
any such party in connection with or arising from (i) any breach of any
representation or warranty of Buyer contained in this Agreement, (ii) any breach
of any covenant or obligation of Buyer contained in this Agreement, (iii) any
liability assumed under Section 4, or (iv) the use, ownership, possession or
operation of any of the Purchased Assets by Buyer from and after the Closing
Date; provided however that (a) Buyer shall not have any liability under clause
-------- -------
(i) above until the aggregate of all Losses for which Buyer would be liable but
for this sentence, exceeds on a cumulative basis $50,000 (the "BASKET"), and in
such case the liability of Buyer shall only be for the amounts of Loss under
this Agreement which exceed the Basket, and (b) in no event shall Buyer be
liable for any Loss (including without limitation any and all liabilities of
Buyer for costs, expenses and attorney's fees paid or incurred in connection
with the curing of any and all misrepresentations or breaches of warranties or
covenants under this Agreement) to the extent the aggregate of all
indemnification payments by or on behalf of Buyer with respect to such Losses
shall have exceeded the Purchase Price.
17.3 Termination of Indemnification.
------------------------------
The obligations to indemnify and hold harmless an Indemnified Party (as
hereinafter defined) shall terminate when the applicable representation or
warranty terminates, provided, however, that such obligations to indemnify and
-------- -------
hold harmless shall not terminate with respect to any item as to which the
Indemnified Party shall have, before the expiration of the applicable period,
previously made a claim by delivering a written notice (stating in reasonable
detail the basis of such claim) to the Indemnifying Party.
17.4 Procedure Relating to Indemnification Under Section 17.1 or 17.2.
----------------------------------------------------------------
A party seeking indemnification pursuant to Sections 17.1 and 17.2 (an
"INDEMNIFIED PARTY") shall give prompt notice to the party from whom such
indemnification is sought (the "INDEMNIFYING PARTY") of the assertion of any
claim or assessment, or the commencement of any
action, suit, audit or proceeding, by a third party in respect of which
indemnity may be sought hereunder (a "THIRD PARTY CLAIM") and will give the
Indemnifying Party such information with respect thereto as the Indemnifying
Party may reasonably request, but no failure to give such notice shall relieve
the Indemnifying Party of any liability hereunder (except to the extent the
Indemnifying Party has suffered actual prejudice thereby). Thereafter, the
Indemnified Party shall deliver to the Indemnifying Party, within five (5)
business days after the Indemnified Party's receipt thereof, copies of all
notices and documents (including court papers) received by the Indemnified Party
relating to the Third Party Claim. The Indemnifying Party shall have the right,
exercisable by written notice (the "NOTICE") to the Indemnified Party within
thirty (30) days of receipt of notice from the Indemnified Party of the
commencement of or assertion of any Third Party Claim, to assume the defense of
such Third Party Claim, using counsel selected by the Indemnifying Party and
reasonably acceptable to the Indemnified Party. Should the Indemnifying Party
so elect to assume the defense of a Third Party Claim, the Indemnifying Party
shall not be liable to the Indemnified Party for legal expenses subsequently
incurred by the Indemnified Party in connection with the defense thereof.
Regardless of whether the Indemnifying Party elects to assume the defense of any
such Third Party Claim, the Indemnified Party shall not admit any liability with
respect to, or settle, compromise, or discharge or effect the settlement or
compromise or discharge of such Third Party Claim without obtaining the
Indemnifying Party's consent. Neither the Indemnifying Party nor the
Indemnified Party shall, without the written consent of the other, effect the
settlement or compromise of, or consent to the entry of any judgement with
respect to, any pending or threatened action or claim in respect of which
indemnification or contribution could be sought hereunder (whether or not the
other party is an actual or potential party to such action or claim) unless such
settlement, compromise or judgement (a)(i) in the case of an action or claim
against both the Indemnifying and the Indemnified Party, includes an
unconditional release of all parties from all liability arising out of such
action or claim; (ii) in the case of an action or claim against the Indemnified
Party but not the Indemnifying Party, includes an unconditional release of the
Indemnifying Party from all liability arising of the action or the claim; or
(iii) in the case of an action or claim against the Indemnifying Party but not
the Indemnified Party, includes an unconditional release of the Indemnified
Party from all liability arising out of such action or claim; and (B) does not
---
include a statement as to or an admission of fault, culpability or failure to
act, by or on behalf of (i) the Indemnifying Party or the Indemnified Party (in
the case of an action or claim against both of them); (ii) the Indemnifying
Party (in the case of an action or claim against the Indemnified Party but not
the Indemnifying Party); or (iii) the Indemnified Party (in the case of an
action or claim against the Indemnifying Party but not the Indemnified Party).
(a) The Indemnifying Party or the Indemnified Party, as the case may be,
shall in any event have the right to participate, at its own expense,
in the defense of any Third Party Claim which the other is defending.
(b) The Indemnifying Party, if it shall have assumed the defense of any
Third Party Claim in accordance with the terms hereof, shall have the
right, upon five (5) days prior written notice to the Indemnified
Party, to consent to the entry of judgement with respect to, or
otherwise settle such Third Party Claim provided the Indemnifying
Party agrees that as between the Indemnifying Party and the
Indemnified Party, the Indemnifying Party shall be solely obligated to
satisfy and discharge such judgement or settlement, unless (i) the
Third Party Claim involves equitable or other non-monetary damages or
(ii) in the reasonable judgment of the Indemnified Party such
settlement would have a continuing material adverse effect on the
Indemnified Party's business (including any material impairment of its
relationships with customers and suppliers), in which case such
settlement only may be made with the written consent of the
Indemnified Party, which consent shall not be unreasonably withheld.
(c) Whether or not the Indemnifying Party chooses to defend or
prosecute any claim involving a third party, all the parties hereto
shall cooperate in the defense or prosecution thereof and shall
furnish such records, information and testimony, and attend such
conferences, discovery proceedings, hearings, trials and appeals as
may be reasonably requested in connection therewith. Such cooperation
shall include access during normal business hours afforded to the
Indemnifying Party to, and reasonable retention by the Indemnified
Party of, records and information which are reasonably relevant to
such Third Party Claim, and making employees available on a mutually
convenient basis to provide additional information and explanation of
any material provided hereunder, and the Indemnifying Party shall
reimburse the Indemnified Party for all its reasonable out-of-pocket
expenses in connection therewith.
17.5 Exclusive Remedy
----------------
The indemnification provided in this Section 17 shall be the sole and
exclusive remedy after the Closing Date for monetary damages available to Buyer
and Seller for breach of any of the terms, conditions, representations,
warranties, covenants, agreements and other provisions of this Agreement. As
between Seller and the Buyer, the rights and obligations set forth in the
Agreement will be the exclusive rights and obligations with respect to this
Agreement, the events giving rise to this Agreement and the transactions
provided for therein or contemplated hereby.
18.4 Consequential and Punitive Damages.
----------------------------------
NOTWITHSTANDING ANYTHING ELSE TO THE CONTRARY CONTAINED HEREIN, NEITHER
PARTY SHALL BE LIABLE TO OR OTHERWISE RESPONSIBLE TO THE OTHER PARTY HERETO OR
ANY OF ITS AFFILIATES FOR PUNITIVE, CONSEQUENTIAL OR INCIDENTAL DAMAGES OR FOR
LOST PROFITS THAT ARISE OUT OF OR RELATE TO THIS AGREEMENT OF THE PERFORMANCE OR
BREACH HEREOF.
19. Public Announcement.
-------------------
Any and all public announcements of any kind or nature whatsoever
concerning the transactions contemplated hereby whether made before, on or after
the Closing Date shall require the prior approval of Seller and Buyer.
20. Pre-Closing Inspection Rights.
-----------------------------
Seller will permit employees and agents of Buyer during normal business
hours and on reasonable notice to Seller to inspect the Purchased Assets. All
information obtained by Buyer pursuant to this Section shall be maintained as
confidential and shall not be disclosed to any third party without the consent
of Seller except in response to legal process or to the extent required to
comply with applicable law.
21. Assignment.
----------
This Agreement may not be assigned by either party hereto without the prior
written consent of the other party. The terms and provisions of this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto,
their successors and permitted assigns, and no person, firm or corporation other
than the parties, their successors and permitted assigns, shall acquire or have
any rights under or by virtue of this Agreement.
22. Further Assurances.
------------------
From time to time after the Closing, at the request of Buyer and at no
additional cost to Seller, Seller will execute and deliver such other
instruments of transfer and take such other actions as Buyer may reasonably
require to transfer the Purchased Assets to, and vest title of the Purchased
Assets, in Buyer.
23. Expenses; Brokers and Finders.
-----------------------------
Each party agrees to bear its own costs and expenses in connection with the
transactions contemplated by this Agreement, including attorneys' fees and
accountants' fees. Each party represents and warrants to the other that it has
not retained any broker, finder or other intermediary in connection with the
transactions contemplated by this Agreement. Seller agrees to indemnify the
Buyer against any and all liability of Buyer resulting from claims for brokerage
commissions relating to the transaction contemplated by this Agreement and which
are made by any party other than the Broker who has not dealt with the Buyer and
alleges to have been employed by the Seller. Buyer agrees to indemnify the
Seller against any and all liability of the Seller resulting from claims for
brokerage commissions relating to the transaction contemplated by this Agreement
and which are made by any party other than the Broker who has not dealt with the
Seller and alleges to have been employed by the Buyer. The indemnification set
forth herein shall extend to all losses, costs,
damages, attorneys' fees, court costs, and expenses which the indemnified party
may incur, and which relate to the matters indemnified hereby and shall survive
the Closing.
24. Entire Agreement.
----------------
This Agreement, including the schedules and exhibits attached to this
Agreement, constitutes the entire agreement and understanding between Seller and
Buyer with respect to the sale and purchase of the Purchased Assets and the
other transactions contemplated by this Agreement, and all prior
representations, understandings and agreements between the parties with respect
to the purchase and sale of the Purchased Assets and the other transactions
contemplated by this Agreement are superseded by the terms of this Agreement.
25. Choice of Law.
-------------
The provisions of this Agreement shall be construed and interpreted in
accordance with the laws of the State of Florida, including for the purpose of
choice of law, as though all acts and omissions related to this Agreement
occurred in the State of Florida.
26. Arbitration.
-----------
Any dispute or claim arising out of this Agreement, or breach thereof,
shall be decided by binding arbitration in the State of Florida, under the
current Commercial Arbitration Rules of the American Arbitration Association,
and, such remedy shall be exclusive. This Agreement to arbitrate shall be
specifically enforceable. Judgment upon the award rendered by the arbitrators
may be entered in any court having jurisdiction thereof. All costs and expenses
of the arbitration shall be borne and paid for by the non-prevailing party.
27. Severability.
------------
The provisions of this Agreement shall, where possible, be interpreted in a
manner necessary to sustain their legality and enforceability, and for that
purpose the provisions of this Agreement shall be read as if they cover only the
specific situation to which they are being applied. The unenforceability of any
provision of this Agreement in a specific situation shall not affect the
enforceability of that provision in other situations or of other provisions of
this Agreement.
28. Counterparts.
------------
This Agreement may be executed in counterparts, each of which shall be
considered an original.
29. Notices
-------
All notices given pursuant to this Agreement shall be delivered by hand or
sent by United States registered mail, postage prepaid, addressed as follows (or
to another address or person as a party may specify on notice to the other):
If to Seller: Continental Grain Company
000 Xxxxx Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attn: Xxxxxx Xxxxxxx
with a copy to:
Continental Grain Company
000 Xxxxx Xxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attn: Legal Department
If to Buyer: Xxxxxx Xxxxx
c/o Smart & Final
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
with a copy to:
Legal Department
c/o Smart & Final
0000 Xxxxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
30. Escrow Closing.
--------------
At the election of the Seller or the Buyer, upon notice to the other party,
the transactions, contemplated by this Agreement shall be closed through an
escrow with Title Company (which may be referred to herein alternatively as
"ESCROWEE" or "TITLE COMPANY") in accordance with the general provisions of the
usual form of Deed and Money Escrow Agreement then in use by the Title Company
with such special provisions inserted into each escrow agreement as may be
required to conform with this Agreement ("CLOSING ESCROW"). Upon the creation
of the Closing Escrow, the Purchase Price, and delivery of the deed and other
documents required to be delivered at the Closing shall be made through the
Closing Escrow. Each party authorizes its respective attorneys to execute the
Closing Escrow and any amendments thereto on its respective behalf. In the
event of any inconsistencies between the terms and provisions of the Closing
Escrow and the terms and provisions of this Agreement, the terms and provisions
of this Agreement shall govern and control. The cost of the Closing Escrow
shall be divided equally between Seller and Buyer.
31. Risk of Loss.
------------
In the event that the Purchased Facilities are damaged by fire or other
casualty prior to the Closing, the Seller shall, within five (5) days
thereafter, notify the Buyer of such damage.
31.1 Damage Is Not Material.
----------------------
If such damage is not material, the Seller shall cause the Purchased
Facilities to be rebuilt or restored to the same condition as existed as of the
date of this Agreement, ordinary wear and tear excepted. In the event that such
damage cannot be repaired prior to the Closing, the Closing shall be extended
for a period not to exceed sixty (60) days, during which time the Seller shall
undertake, in good faith, to cause the Purchased Facilities to be so rebuilt or
restored. If the Seller fails to rebuild or restore such damage to the
Purchased Facilities within such sixty (60) day period, the Buyer shall have the
option:
31.1.1 Of taking the Purchased Facilities in their damaged
condition, together with an assignment of any unexpended
insurance proceeds or insurance claims which
relate to such damage, if any, and be afforded a credit against
the Purchase Price for the amount equal to the cost to repair
such damage, less the amount of any insurance proceeds paid or
payable under any insurance policies applicable thereto; or
31.1.2 Of terminating this Agreement on written notice to
Seller.
31.2 Damage Is Material.
------------------
If the Purchased Facilities are materially damaged by fire or other
casualty prior to the Closing, the Buyer shall have the right, exercisable by
giving notice of such election to the Seller within thirty (30) days after the
receipt of notice of such damage from the Seller, to terminate this Agreement.
In the event that the Buyer does not elect to so terminate this Agreement, the
Buyer shall accept the conveyance of the Purchased Facilities in their damaged
condition together with an assignment of any unexpended insurance proceeds or
claims against any insurance carrier relating to such damage, if any.
31.3 "Material Damage."
---------------
For purposes of this Section, the term "material damage" shall mean damage
to the property, of which the cost to repair exceeds ten percent (10%) of the
Purchase Price.
31.4 "Cost to Repair."
--------------
As used in this Section, the term "cost to repair" shall mean the amount of
funds necessary to repair or restore the Purchased Facilities to the condition
which existed as of the date of this Agreement, ordinary wear and tear excepted.
The cost to repair shall include the extra cost of repairing or restoring the
Purchased Facilities to their original condition which is incurred as a result
of the use of building materials, equipment, appliances, fixtures or personal
property other than those commonly used today in connection with the
construction, furnishing, and outfitting of buildings and improvements such as
those making up the Purchased Facilities, and such extra cost as may be incurred
as a result of causing the repair or restoration of the Purchased Facilities to
be in compliance with all applicable laws and regulations.
31.4.1 In the event that the parties cannot agree upon the cost to
repair, the parties agree that, at a cost to be divided equally
between the Buyer and the Seller, an independent engineering firm
shall be retained, and shall be directed to provide an estimate of the
cost to repair, which estimate shall be binding upon the Buyer and the
Seller hereunder.
32. Default.
-------
In the event of default by the Seller in the performance of this Agreement,
Buyer shall have the right to seek specific performance or damages or any other
remedy provided by law. In the event of a default by Buyer in the performance
of this Agreement, Seller shall have the right to seek specific performance
hereof or damages or any other remedy provided by law.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their duly authorized officers on the date and year first above
written.
CONTINENTAL GRAIN COMPANY
By: /s/ Xxxxx X. Xxxxxx
-------------------
Title: Senior Vice President
---------------------
Date: September 25, 1997
------------------
AMERICAN FOOD SERVICE DISTRIBUTORS
By: /s/ Xxxxxx X. Xxxxx
-------------------
Title: Executive Vice President
------------------------
---------------------------------------Date: September 24, 1997
------------------
