ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement") dated as of November 10,
1995, by and between UNITED GROCERS, INC., an Oregon corporation (the
"Purchaser"), and BAY AREA FOODS, INC., an Illinois corporation (the
"Company").
A. The Company, through its Market Wholesale Grocers division, is
engaged in the wholesale distribution of dry, frozen and refrigerated
grocery products and general merchandise (the "Business").
B. The Company desires to sell, assign and transfer, and the
Purchaser desires to purchase and acquire specific assets of the
Business, subject to the assumption by the Purchaser of substantially all
of the specific liabilities and obligations relating to the Business, all
on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties and covenants contained herein, the parties
agree as follows:
Article I
Purchase and Sale of Assets
Section 1.1 Purchase and Sale. Upon the terms and subject to the
conditions of this Agreement, at the Closing (as defined in Section 3.1),
the Purchaser shall purchase from the Company, and the Company shall sell
and transfer to the Purchaser (and in the case of Section 1.1(C)(n),
cause Bay Area Holdings, Inc., to sell and transfer), all right, title
and interest of the Company in the specific assets, properties or rights
used in or forming a part of the Business (collectively, the "Transferred
Assets"), including the following:
A. Current Transferred Assets:
(a) the specific salable and merchantable inventories
(exclusive of liquor, beer and wine) and supplies located at the Leased
Properties (as defined in Section 4.9);
(b) all accounts receivable relating to products sold or
services rendered in connection with the Business, including non-invoiced
sales;
(c) the receivables representing customer loans of the Company
with respect to the Business;
(d) the specific prepaid expenses, advances and deposits
relating to the Business;
B. Other Tangible Assets:
(e) the machinery, equipment and furnishings used in or forming
a part of the Business not otherwise held by BAFS, L.P. (the
"Partnership");
(f) the improvements, fixtures (including underground storage
tanks) and leasehold interests not otherwise held by the Partnership in
real property used in or forming a part of the Business;
C. Other Considerations:
(g) the Contracts (as defined in Section 4.10) relating to the
Business;
(h) all causes of action, demands, judgments, claims (including
insurance claims) or other rights relating to the Transferred Assets or
the Business or arising under express or implied warranties from
suppliers with respect to the Transferred Assets;
(i) all Intellectual Property (as defined in Section 4.8) used
exclusively in connection with the Business;
(j) the computer software set forth on attached Schedule 1(j)
used in connection with order entry and operational systems;
(k) all governmental permits, licenses, consents and
authorizations relating to the Business and not otherwise utilized by the
Company to the extent the same are transferable;
(l) copies of all books and records relating to the Business,
including but not limited to correspondence, employment records,
accounting records, property records, mailing lists and customer and
vendor lists;
(m) all rights to the "Market Wholesale Grocers" trade name and
the other trade names set forth on attached Schedule 1(m); and
(n) the outstanding partnership interests in the Partnership.
The only assets held by the Partnership as of the Closing Date shall
consist of furniture, fixtures and equipment constituting part of the
Business on the date hereof. For purposes of the representations and
warranties contained in Article IV only, such furniture, fixtures and
equipment shall be deemed to be "Transferred Assets." Such furniture,
fixtures and equipment shall constitute all of the furniture, fixtures
and equipment of the Company used in or forming a part of the Business.
The Partnership shall have no liabilities of whatsoever nature.
Section 1.2 Excluded Assets. Notwithstanding Section 1.1, the
Company is not selling, and the Purchaser is not purchasing, any of the
following assets, all of which shall be retained by the Company
(collectively, the "Excluded Assets"):
(a) all cash and cash-equivalents;
(b) the Company's management information systems (including
hardware and software) and all Intellectual Property used in connection
therewith, other than as set forth in Section 1.1(C)(i);
(c) the real property improvements, fixtures and leaseholds
forming a part of the Company's principal executive offices located at ▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇;
(d) any and all employee benefit, health or welfare plan,
profit sharing or pension plans of Company and policies entered into or
issued under the employee benefit, profit sharing or pension plans;
(e) any asset of the type described in Sections 1.1A(i), (C)(k)
and (C)(l) that is not used exclusively in connection with the Business;
(f) any beer, wine and liquor inventories;
(g) any governmental permits, licenses, consents and
authorizations relating to beer, wine or liquor; and
(h) the Settlement Agreement and Release between Sobrato
Development Companies, Sobrato Development Company #871, PVO Real Estate
Corp. and Provigo Corporation.
Section 1.3 Assumed Liabilities. In connection with the
purchase and sale of the Transferred Assets pursuant to Section 1.1, the
Purchaser shall assume all liabilities and obligations (both known and
unknown) of the Company with respect to the Business of any nature
whatsoever, except for those liabilities and obligations expressly
retained by the Company pursuant to Section 1.4 and except for
liabilities and obligations with respect to which the Company is
obligated to indemnify the Purchaser pursuant to Section 9.2(a),
including without limitation the following (collectively, the "Assumed
Liabilities"):
(a) all liabilities reflected on the Closing Date Statement
(as defined in Section 2.2);
(b) all obligations of the Company under (i) unfilled purchase
orders entered into in the ordinary course of the Business, (ii) the
leases set forth on Schedule 4.9, and (iii) the Contracts set forth on
Schedule 4.10 and other Contracts not required to be disclosed on
Schedule 4.10 because of the disclosure thresholds set forth in
Section 4.10;
(c) liabilities or obligations arising from the operation of
the Business subsequent to the Closing Date; and
(d) liability for any severance pay, if any, incurred as a
result of this transaction for any union employees at the Leased
Properties and any non-union employees hired pursuant to Section 6.4.
Section 1.4 Retained Liabilities. The Purchaser does not assume, and
shall not be responsible for, any of the following liabilities or
obligations of the Company or any affiliate of the Company (collectively,
the "Retained Liabilities"):
(a) expenses of the Company (other than severance pay) payable
to third parties arising in connection with the Company's execution,
delivery and performance of this Agreement or any of the transactions
contemplated hereby (including, without limitation, legal, accounting,
brokerage, investment banking or finder's fees);
(b) liabilities or obligations for Taxes (as defined below)
that relate to the Business for periods or portions thereof ending on or
prior to the Closing Date including without limitation any and all sales
or use taxes generated by the transfer of the Transferred Assets and the
Partnership interest incident to this transaction;
(c) liabilities resulting from the Company's failure to comply
with "bulk transfer" or similar laws in connection with the transactions
contemplated hereby;
(d) liabilities for any severance pay incurred as a result of
this transaction for any union employees not located at the Leased
Properties and any severance pay for non-union employees except for those
non-union employees hired pursuant to Section 6.4; and
(e) liabilities arising from (i) the Company's ownership of
the fee interest in any of the Leased Properties at any time prior to the
Closing Date (including any liabilities arising under any Environmental
Law (as defined in Section 4.12) with respect to the Company's operations
prior to the Closing Date) and (ii) the Company's operation or use of any
real property not constituting a Leased Property.
For purposes of this Agreement, the term "Taxes" shall include any tax
based upon, or measured by, income or gross receipts, and any sales, use,
ad valorem, transfer, franchise, withholding, payroll, employment,
excise, occupation, premium, property or other taxes (including any
interest or penalties or additional amounts imposed by any tax
authority).
(f) liabilities for any and all workmen's compensation claims
arising from acts or events occurring prior to Closing.
Section 1.5. Collective Bargaining Agreements. Notwithstanding any
other language in this Agreement, the Purchaser shall have no obligation
under this Agreement to assume any collective bargaining agreement or to
offer employment to any employees at the Leased Properties except with
respect to those non-union employees as provided in Section 6.4.
Article II
Consideration
Section 2.1 Purchase Price. In consideration of the transfer,
conveyance and assignment of the Transferred Assets at Closing, the
Purchaser shall:
2.1.1 Pay to the Company a cash purchase price equal to the net
working capital of the Business as of October 7, 1995 as shown on
Schedule 2.1.1 (the "Estimated Net Working Capital Amount");
2.1.2. Pay to the Company the sum of $3,000,000 plus 100% of
the out-of-pocket capital expenditures incurred by the Company from
August 12, 1995 until the Closing Date, which capital expenditures are
set forth on Schedule 2.1.2 (collectively, the "Capital Costs");
2.1.3. Commencing with the fiscal quarter ended December 31,
1995, pay to the Company within 5 days after the end of each fiscal
quarter of the Purchaser an amount equal to 2.56% of the purchases made
by any Purchasing Party during such fiscal quarter (as defined in the
Supply Agreement delivered pursuant to Section 3.2.2); provided that in
no event shall the aggregate payments pursuant to this Section 2.1.3
exceed the Earned Rebate Amount. For purposes hereof, the "Earned Rebate
Amount" shall be $6,000,000; provided that in the event that Lucky
Stores, Inc. (i) does not consent to the assignment to the Purchaser of
its Distribution Agreement dated March 15, 1995 (the "Lucky Agreement")
and (ii) fails to agree to extend the term of the Lucky Agreement on
substantially the same terms for a period of at least one year following
the expiration of the current expiration of the Lucky Agreement, the
"Earned Rebate Amount" shall be reduced to $4,700,000; and
2.1.4. Assume the Assumed Liabilities.
Section 2.2 Purchase Price Adjustment.
2.2.1. As soon as practicable, but in no event later than 30
days following the Closing Date, the Company shall prepare and deliver to
the Purchaser a statement of the net working capital amount (the "Final
Working Capital Amount") on the Closing Date (the "Closing Date
Statement"). The Closing Date Statement will be prepared and the Final
Working Capital Amount (including the value of the amount of the
inventory determined pursuant to the physical inventory referred to
below) shall be calculated on a basis consistent with the accounting
principles used in the preparation of the October 7, 1995 Financial Data
(as defined in Section 4.3) and in the preparation and calculation of the
Estimated Net Working Capital Amount and Schedule 2.1.1 (including as to
the use of materiality thresholds, the calculation of reserves and other
accounting principles) and consistent with the allocation of the
liabilities between the parties as set forth in Sections 1.3 and 1.4. On
the Saturday and Sunday immediately preceding the Closing Date, the
Company shall cause the Leased Properties to be closed for the purpose of
causing a physical inventory to be taken. The physical inventory shall
be taken by the employees at the Leased Properties, and the Company and
the Purchaser shall have the right to cause their independent auditors to
observe the taking of such physical inventory. The physical inventory
shall count all saleable and merchantable product (excluding damaged,
obsolete, out-of-date and ZOLA merchandise). The inventory shall further
exclude all beer, wine and liquor inventories. The calculation of the
amount of the inventory determined pursuant to the physical inventory
shall be conclusive and binding upon the parties. The Company's and the
Purchaser's independent auditors shall agree upon the procedures for
observing the taking of the physical inventory prior to the taking of
such physical inventory. Notwithstanding the foregoing, accrued vacation
and sick pay set forth on the Closing Date Statement shall be adjusted to
appropriately reflect those employees of the Business actually hired by
the Purchaser on and following the Closing Date.
The Purchaser shall have the period of 15 days following delivery of
the Closing Date Statement to object to the Closing Date Statement. If
no objection is made within such 15 day period, the Closing Date
Statement shall be binding upon the parties. If an objection is made
that cannot be resolved by the parties within 10 days from the date of
notification, the San Francisco office of KPMG Peat Marwick shall be
engaged to resolve such dispute, the fees and expenses of which shall be
borne equally by the Purchaser and the Company and the determination of
such accounting firm shall be conclusive and binding upon the parties.
2.2.2. If the Final Net Working Capital Amount is greater
or less than the Estimated Net Working Capital Amount, such excess or
deficiency (as applicable) shall be payable by the Purchaser or the
Company within 5 business days after the Closing Date Statement becomes
conclusive and binding.
2.2.3 Any amount payable by either the Purchaser or the
Company pursuant to Sections 2.1 or 2.2 shall be paid by wire transfer of
immediately available funds.
2.2.4 To the extent that it is not reasonably practicable
to cause bills relating to utility charges or real property or other ad
valorem taxes or business occupancy taxes associated with the Transferred
Assets to be rendered by the appropriate utilities or governmental
authorities as of the Closing Date, such utility charges and taxes shall
be apportioned as of the Closing Date and reflected on the Closing Date
Statement.
Section 2.3 Payroll Tax Compliance. The Purchaser and the Company
agree to use the alternative procedure set forth in Section 5 of Revenue
Procedure 84-77, 1984 Cum. Bull. 753, to treat employees of the Company
who are employed by the Purchaser immediately after the Closing Date as
having one employer for payroll tax and compliance purposes during the
entire calendar year 1995, and the Purchaser shall assume the Company's
obligation to furnish a Form W-2 to each of the employees of the Business
for the 1995 calendar year.
Article III
Closing
Section 3.1 Closing. The closing of the purchase and sale of the
Transferred Assets pursuant to Section 1.1 (the "Closing") shall be held
at the offices of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, P.C., ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ at 10:00 a.m. (local time) on
December 3, 1995 (the "Closing Date"), or at such other place and time as
the Purchaser and the Company may mutually agree.
Section 3.2 Deliveries at Closing. At the Closing, the parties shall
make the deliveries described below, provided that the obligation of each
to do so shall depend upon the performance by the other party of its
obligations hereunder.
3.2.1 The Company shall deliver, or cause to be delivered, to
the Purchaser the following documents:
(i) a ▇▇▇▇ of Sale in the form of Exhibit A hereto;
(ii) a General Assignment in the form of Exhibit B
hereto;
(iii) a Leasehold Assignment together with Lessor's
Consent to Assignment in the form of Exhibit C hereto with respect to
each of the Leased Properties (as defined in Section 4.9);
(iv) a Transition Services Agreement in the form of
Exhibit D hereto (the "Transition Services Agreement");
(v) a Sublease in the form of Exhibit E hereto (the
"Sublease");
(vi) a Liquor Handling Agreement in the form of Exhibit F
hereto (the "Handling Agreement");
(vii) a Supply Agreement in the form of Exhibit G hereto
(the "Supply Agreement"); and
(viii) a Partnership Interest Assignment in the form of
Exhibit H hereto (the "Assignment"); and
(ix) UCC termination statements establishing the release
of the filings set forth on Schedule 4.11 (other than notice filings for
leased equipment).
3.2.2. The Purchaser shall deliver to the Company the
following:
(i) the cash Purchase Price;
(ii) an Assumption Agreement in the form of Exhibit I
hereto;
(iii) the Supply Agreement;
(iv) the "Letter of Credit" (as defined in Section 6.6);
(v) the Sublease;
(vi) the Handling Agreement; and
(vii) the Assignment.
Article IV
Representations and Warranties of the Company
The Company represents and warrants to the Purchaser as follows:
Section 4.1 Organization and Qualification. The Company (i) is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Illinois, and (ii) has the requisite corporate
power to carry on the Business as now being conducted. The Company is
duly qualified as a foreign corporation, and is in good standing, in each
jurisdiction where the conduct of the Business makes such qualification
necessary.
The Partnership is a limited partnership, duly organized under the
laws of the State of Delaware. The Company is the sole limited partner
of the Partnership and Bay Area Holdings, Inc., is the sole general
partner of the Partnership.
Section 4.2 Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby are within the Company's corporate
powers and have been duly authorized by all necessary corporate action.
This Agreement constitutes a valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, fraudulent conveyance and
transfer, and moratorium or other similar laws of general application
affecting the enforcement of creditors' rights generally.
Section 4.3 Financial Data. The Company has previously furnished to
the Purchaser copies of the unaudited financial data of the Business set
forth on Schedule 4.3 as of January 28, 1995, and the thirty-six week
period ended October 7, 1995, (collectively, the "Financial Data"). The
Financial Data (i) fairly presents the assets, liabilities and income
statement of the Business as of the dates thereof and the results of
operations of the Business for the periods covered thereby; and (ii) has
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis, except as set forth on Schedule 4.3. With
respect to the thirty-six week period ended October 7, 1995, to the
Company's knowledge, there are no adjustments that would be required for
the Company's audit that would individually or in the aggregate have a
Material Adverse Effect upon the Business' reported financial condition.
Section 4.4 Consents and Approvals. Except as set forth on Schedule
4.4, the execution, delivery and performance by the Company of this
Agreement and the consummation of the transactions contemplated hereby
require no action by or in respect of, or filing with or notice to, any
governmental or regulatory body, agency or official which, if not
obtained or made, would have a Material Adverse Effect. Except as set
forth on Schedule 4.4, neither the execution, delivery and performance by
the Company of this Agreement, nor the consummation of the transactions
contemplated hereby, will (a) violate, conflict with, or result in a
breach of, any provision of the charter or bylaws of the Company or of
any applicable law which is material to the operations of the Business,
or (b) result in a default (or give rise to any right of termination,
cancellation or acceleration) under, any of the terms, conditions or
provisions of any Material Contract (as defined in Section 4.10) to which
the Company is a party, or by which the Company or any of the Transferred
Assets may be bound, except for such violations, breaches or defaults
which would not, individually or in the aggregate, have a Material
Adverse Effect.
Section 4.5 Litigation. Except as set forth on Schedule 4.5, to the
Company's knowledge there are no claims, actions, suits, approvals,
investigations, informal objections, complaints or proceedings pending
against the Company before any court, arbitrator or administrative,
governmental or regulatory authority or body with respect to the
Business, nor to the Company's knowledge is the Company subject to any
order, judgment, writ, injunction or decree with respect to the Business,
except in either case for matters which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
Section 4.6 Compliance with Law. Except as set forth on Schedule 4.6,
the Company is not in violation of any statute, law, ordinance,
regulation, rule or order of any federal, state or local governmental
authority or any judgment, decree or order of any court which relates to
the Business, except where any such violation would not, individually or
in the aggregate, have a Material Adverse Effect. Except as set forth on
Schedule 4.6, the Company has all permits, approvals, licenses and
franchises from governmental authorities required to conduct the Business
as now being conducted, except for such permits, approvals, licenses and
franchises the absence of which would not, individually or in the
aggregate, have a Material Adverse Effect.
Section 4.7 Employee Benefit Plans.
4.7.1 The Company will, within five days from date of
execution, make available to the Purchaser true and complete copies of
each pension, profit-sharing, bonus, incentive, deferred compensation,
severance pay, retirement or other material employee benefit plan,
agreement or arrangement within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")
(each, a "Plan"), currently maintained or contributed to by the Company
(or its parent) for the benefit of any officer or employee of the
Business, all of which are set forth on Schedule 4.7 attached hereto.
4.7.2 Except as set forth on Schedule 4.7, (i) each such
Plan that is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA is being operated and administered in compliance
with Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), except where any such failure to comply would not have a
Material Adverse Effect, and a favorable determination letter has been
obtained from the Internal Revenue Service (the "IRS") for such Plan;
(ii) no such Plan is subject to the minimum funding requirements of
Section 412 of the Code or Section 302 of ERISA or is otherwise subject
to Title IV of ERISA; (iii) except where such events would not,
individually or in the aggregate, have a Material Adverse Effect, there
has been no non-exempt "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Code involving the assets of
such Plan; (iv) all required employer contributions to such Plan have
been made (or, in the case of contributions not yet due, have been
accrued on the Company's financial statements and records); (v) the
Company has made available to the Purchaser as to each such Plan a true
and correct copy of (a) the most recent annual report (Form 5500) filed
with the IRS and (b) each plan, trust agreement, group annuity contract
and insurance contract, if any, relating to such Plan; and (vi) each such
Plan is in compliance with ERISA and the terms of such Plan, except where
any such failure to comply would not have a Material Adverse Effect. The
Company has made available to the Purchaser the information available to
it regarding any actual or potential withdrawal liability with respect to
any "multi-employer pension plan" as defined in Section 3(37) of ERISA.
4.7.3 Except as set forth on Schedule 4.7, the Company
does not have any obligation to provide any welfare or compensation
benefits to terminated, retired or former employees of the Business other
than continuation of insurance coverage required by applicable law.
Section 4.8 Intellectual Property. The Company possesses ownership of
all trade names, trademarks, service marks, trade secrets and other
proprietary intellectual property rights (the "Intellectual Property")
used in the operation of the Business, as set forth on Schedule 4.8,
except where the failure of the Company to own or have the right to use
any Intellectual Property would not, individually or in the aggregate,
have a Material Adverse Effect. The Company is not, to the Company's
knowledge, infringing upon the intellectual property rights of others in
connection with the Business and has not received any notice of conflict
with respect to the intellectual property rights of others.
Section 4.9 Real Property. The Company does not own any real property
in fee which is utilized in connection with the Business. Schedule 4.9
attached hereto sets forth a complete list of all real property leased by
the Company and utilized exclusively in the Business (individually, a
"Leased Property" and collectively, the "Leased Properties"). The
Company has a valid leasehold interest in its Leased Properties, in each
case free and clear of all mortgages, liens, security interests,
easements, restrictive covenants, rights-of-way and other encumbrances,
except (i) liens for taxes, fees, levies, duties or other governmental
charges of any kind which are not yet delinquent; (ii) liens for
mechanics, material, laborers, employees or similar liens arising by
operation of law; (iii) mortgages, liens, security interests, easements,
restrictive covenants, rights-of-way and other encumbrances and/or
defects, whether or not of record, against the fee title or other estate
held by the landlord with respect to any Leased Property;
(iv)(A) platting, subdivision, zoning, building and other similar legal
requirements, (B) easements, restrictive covenants, rights-of-way,
encroachments and other similar encumbrances, whether or not of record,
and (C) reservations of coal, oil, gas, minerals and mineral interests,
whether or not of record, and (v) other mortgages, liens, security
interests, easements, restrictive covenants, rights-of-way and
encumbrances, if any, described on Schedule 4.9. To the Company's
knowledge, there are no eminent domain proceedings pending or threatened
against any Leased Property. The Company has paid and/or performed all
obligations and liabilities to be performed or paid under said leases and
no defaults or events which, with the giving of notice and the passage of
time, would constitute a default thereunder.
Section 4.10 Material Contracts. Except as listed or described
on Schedule 4.10, as of the date hereof, the Company is not a party to or
bound by any written or oral leases, agreements or other contracts or
legally binding contractual commitments ("Contracts") relating to the
operation or ownership of the Business that are of a type described below
(collectively, the "Material Contracts"):
(i) the Company is not a party to any collective bargaining or
other labor or employment agreements;
(ii) any Contract for capital expenditures or the acquisition
or construction of fixed assets in excess of $10,000;
(iii) any Contract for the purchase or sale of inventory,
materials, supplies, merchandise, machinery, equipment, parts or other
property or services requiring aggregate future payments or costs in
excess of $25,000;
(iv) any Contract relating to the borrowing of money by the
Company, or the Company's guaranty of another person's borrowing of
money;
(v) any Contract granting any person a lien on all or any part
of the Transferred Assets;
(vi) any Contract granting to any person a first refusal, first
offer or similar preferential right to purchase or acquire any of the
Transferred Assets;
(vii) any Contract under which the Company is (a) a lessee or
sublessee of any machinery, equipment, vehicle (including fleet
equipment) or other tangible personal property relating to the Business,
or (b) a lessor of any property owned by the Company relating to the
Business, in either case having, an original value in excess of $100,000;
(viii) any Contract limiting, restricting or prohibiting the
Company from conducting the Business anywhere in the United States or
elsewhere in the world;
(ix) any joint venture or partnership Contract relating to the
Business; and
(x) any Contract relating to the Business having an original
value in excess of $100,000 and requiring consent of the other party
thereto in connection with the transactions contemplated hereby.
The Company has made available to the Purchaser with a true and
complete copy of each written Material Contract, including all amendments
or other modifications thereto. Except as set forth on Schedule 4.10,
each Material Contract is a valid and binding obligation of the Company
enforceable in accordance with its terms, and is in full force and
effect, subject only to bankruptcy, reorganization, receivership and
other laws affecting creditors' rights generally. Except as set forth on
Schedule 4.10, the Company has performed all obligations required to be
performed by it under the Material Contracts and the Company is not in
breach or default thereunder, except for breaches or defaults which will
not, individually or in the aggregate, have a Material Adverse Effect.
Section 4.11 Personal Property. Except as set forth on Schedule
4.11, the Company has or the Partnership will have on Closing good and
marketable title to the Transferred Assets reflected on the books and
records of the Company as owned by it free and clear of all liens,
security interests and encumbrances. Except for the Excluded Assets, the
Transferred Assets include all of the assets, properties and other rights
owned by the Company presently used in the conduct of the Business.
Section 4.12 Environmental and Safety Matters. Except as set
forth on Schedule 4.12 hereto and except for such of the following as,
individually or in the aggregate, would not reasonably be expected to
have a Material Adverse Effect: (i) the Business is in compliance with
all applicable Environmental Laws; (ii) the Company has received no
notice, report or information regarding any liabilities (whether accrued,
absolute, contingent, unliquidated or otherwise), or any corrective,
investigatory or remedial obligations, arising under applicable
Environmental Laws with respect to the past or present operations or
properties of the Business; (iii) the Company has obtained, and is and
has been in compliance with all terms and conditions of, all permits,
licenses and other authorizations required pursuant to Environmental Laws
for the occupation of the Leased Properties and the conduct of the
Business, and (iv) the transactions contemplated by this Agreement do not
impose any obligations under Environmental Laws for site investigation or
cleanup or notification to or consent of any government agencies or third
parties. The Company has made available to the Purchaser true, complete
and correct copies of all environmental reports, analyses, tests or
monitoring in the possession of the Company during the past two years
pertaining to any property owned or leased and utilized by the Business.
As used in this Agreement, "Environmental Laws" shall mean all material
federal, state or local statutes, laws, codes, rules, regulations,
ordinances, orders, standards, permits, licenses or requirements
(including consent decrees, judicial decisions and administrative
orders), presently in force, as amended or reauthorized, pertaining to
the protection, preservation, conservation or regulation of the
environment, or imposing requirements relating to public or employee
health and safety, including without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., the Resource Conservation and Recovery Act of 1976,
42 U.S.C. Section 6901 et seq., the Emergency Planning and Community
Right to Know Act, 42 U.S.C. Section 11001 et seq., the Clean Air Act, 42
U.S.C. Section 7401 et seq., the Federal Water Pollution Control Act, 33
U.S.C. Section 1251 et seq., the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq., the Safe Drinking Water Act, 42 U.S.C. Section 300F
et seq., and the Occupational Safety and Health Act, 29 U.S.C. Section
651 et seq.
Section 4.13 Employee Relations. Within the last two years the
Company has not experienced any strike, picketing, boycott, work stoppage
or slowdown or other labor dispute, allegation, charge or complaint of
unfair labor practice, employment discrimination or other matters
relating to the employment of labor nor, to the Company's knowledge, has
any such event been threatened against the Company.
Section 4.14 Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of the Company.
Section 4.15 Disclaimer. EXCEPT AS EXPRESSLY SET FORTH IN THIS
ARTICLE IV, THE COMPANY MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, WITH RESPECT TO THE ASSETS BEING SOLD HEREBY WHICH ARE BEING
SOLD TO THE PURCHASER ON AN "AS IS WHERE IS" BASIS ON THE CLOSING DATE,
IN THEIR THEN PRESENT CONDITION, AND THE PURCHASER SHALL RELY ON ITS OWN
EXAMINATION THEREOF.
Article V
Representations and Warranties of the Purchaser
The Purchaser represents and warrants to the Company as follows:
Section 5.1 Organization and Qualification. The Purchaser (i) is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Oregon; and (ii) has the requisite corporate
power to carry out the transactions contemplated hereby.
Section 5.2 Corporate Authorization. The execution, delivery and
performance by the Purchaser of this Agreement and the transactions
contemplated hereby are within the corporate powers of the Purchaser and
have been duly authorized by all necessary corporate action. This
Agreement constitutes a valid and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with its terms, subject
to bankruptcy, insolvency, reorganization, fraudulent conveyance and
transfers, and moratorium or other similar laws of general application
affecting the enforcement of creditors' rights generally.
Section 5.3 Consents and Approvals. Except as set forth on Schedule
5.3, the execution, delivery and performance by the Purchaser of this
Agreement and the consummation of the transactions contemplated hereby
require no action by or in respect of, filing with, or notice to any
governmental or regulatory body, agency or official which, if not
obtained or made, will prevent, materially delay or materially burden the
transactions contemplated by this Agreement. Neither the execution,
delivery and performance by the Purchaser of this Agreement, nor the
consummation by the Purchaser of the transactions contemplated hereby,
will (a) violate, conflict with, or result in a breach of, any provision
of the charters or bylaws of the Purchaser or (b) result in a default (or
give rise to any right of termination, cancellation or acceleration)
under, any of the terms conditions or provisions of any note, bond,
mortgage, indenture, license, franchise, permit, lease, agreement or
other instrument or obligation to which the Purchaser is a party, or by
which its properties or assets may be bound; except for such violations,
breaches or defaults which would not prevent or materially delay
consummation of the transactions contemplated hereby.
Section 5.4 Financing. The Purchaser currently has sufficient funds
on hand, or has sufficient borrowing capacity available from responsible
financial institutions, to enable the Purchaser to finance the
consummation of the transactions contemplated hereby and to pay related
fees and expenses.
Section 5.5 Litigation. To Purchaser's knowledge, there are no
claims, actions, suits, approvals, investigations, informal objections,
complaints or proceedings pending against the Purchaser before any court,
arbitrators or administrative, governmental or regulatory authority or
body, nor is the Purchaser, to its knowledge, subject to any order,
judgment, writ, injunction or decree, except in either case for matters
which will not prevent, materially delay or materially burden the
transactions contemplated hereby.
Section 5.6 Brokers. No broker, finder or investment banker, except
for B.A. Partners (which is the sole responsibility of the Purchaser), is
entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of the Purchaser.
Article VI
Covenants
Section 6.1 Conduct of Business of the Company. Except as
contemplated by this Agreement or otherwise consented to in writing by
the Purchaser, during the period from the date of this Agreement to the
Closing Date: (a) the Company shall conduct the Business in the ordinary
course; and (b) the Company will not take any actions that could
reasonably be expected to have an adverse effect upon the Business.
Without limiting the generality of the foregoing, and except as otherwise
expressly provided in this Agreement, prior to the Closing Date and after
the date hereof, the Company will not, without the prior written consent
of the Purchaser, to the extent that any such action would have an
adverse impact on the Business: (i) sell, pledge, dispose of or encumber
its assets, except for (x) sales of inventory and sales of obsolete
assets and assets concurrently replaced with similar assets, in each case
in the ordinary course of the Business, and (y) the transfer of
furniture, fixtures and equipment to the Partnership or (ii) except as
otherwise required by law or by any existing plan, arrangement or
agreement, enter into, adopt or amend in any material respect, any
Material Contract or Plan for the benefit of the employees of the
Business.
Section 6.2 Filings. Each of the Company and the Purchaser shall
exercise commercially reasonable efforts to take or cause to be taken all
actions, and to do or cause to be done all things necessary, proper or
advisable under applicable laws to consummate and make effective, as soon
as reasonably practicable, the transactions contemplated hereby. Without
limiting the generality of the foregoing, each of the Company and the
Purchaser (a) shall make all required filings with or applications to
governmental bodies and other regulatory authorities set forth on
Schedule 6.2 hereto no later than ten business days after the execution
of this Agreement, and (b) shall exercise commercially reasonable efforts
to obtain all necessary waivers, consents and approvals from other
parties to Material Contracts as identified by the Purchaser and set
forth on Schedule 6.2 and to oppose, lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the
parties to consummate the transactions contemplated hereby, and otherwise
fulfill all conditions to this Agreement.
Section 6.3 Access to Information; Confidentiality. Subject to the
terms of the Confidentiality Agreement (as herein defined), from the date
hereof to the Closing Date, the Company shall, and shall cause its
officers, directors, employees and agents to, afford the directors,
officers, employees, agents, representatives and advisors of the
Purchaser complete access at all reasonable times to its officers,
employees, agents, properties, books, records and contracts, in each case
as they relate to the Business, and shall furnish the Purchaser all
financial, operating and other data and information relating to the
Business as the Purchaser may reasonably request. That certain letter
dated August 4, 1995, from the Purchaser to the Company (the
"Confidentiality Agreement") with respect to, among other things,
confidential treatment of information provided by the Company and its
representatives to the Purchaser and its representatives shall remain in
full force and effect and shall survive the execution and delivery of
this Agreement and the termination of this Agreement for any reason
whatsoever.
Section 6.4 Employees. The Purchaser hereby agrees that it shall
offer employment to each active, non-union employee of the Business
employed at the Leased Properties on terms and conditions (including
employee benefits) that are substantially similar in the aggregate to
those currently provided by the Company (but not in excess of the
benefits provided by Purchaser to its current employees in similar
positions); provided that on or prior to the Closing Date, the Purchaser
shall have the right to notify the Company that it does not desire to
hire those active, non-union employees at the Leased Premises set forth
in such notice (not to exceed 17 employees), and the Company shall be
required to terminate such employees set forth in such notice and pay all
amounts owing to such employees as a result of such termination.
Section 6.5 Public Announcements. The Company and the Purchaser shall
consult with each other before issuing any press release or otherwise
making any public statements with respect to this Agreement or the
transactions contemplated hereby and shall not issue any such press
release or make any such public statement prior to such consultation,
except as may be required by law.
Section 6.6 Letter of Credit. At the Closing, the Purchaser will
deliver to the Company a replacement Letter of Credit in the face amount
of $1,500,000 and with terms and from a bank satisfactory to the Company
and Distribution Ventures, L.L.C. to replace the Letter of Credit posted
by the Company pursuant to Section 5 of each of the facility leases for
the Leased Properties (the "Letter of Credit").
Section 6.7 Noncompetition; Nonsolicitation Agreement. For a period
of five years following Closing (the "Noncompete Period"), the Company
shall not, directly or indirectly, own, manage, control, or in any manner
engage in the wholesale distribution of dry, frozen and refrigerated
grocery products and general merchandise (the "wholesale distribution
business") anywhere in the State of California; provided, however, that
in the event that the Company acquires (through the purchase of assets,
by merger or otherwise) all or part of a retail grocery chain and such
chain operates a wholesale distribution business for the purpose of
supplying such chain, the Company shall be permitted to retain and
operate such wholesale distribution business. During the Noncompete
Period, the Company shall not, directly or indirectly, (i) induce or
attempt to induce any employee of the Business to leave the employ of the
Purchaser, or in any way interfere with the relationship between the
Purchaser and any employee thereof, or (ii) induce or attempt to induce
any customer of the Purchaser's wholesale distribution business to cease
doing business with the Purchaser.
Section 6.8 Capital Costs. In the event that the Company receives
reimbursement from a third-party of all or a portion of the Capital
Costs, the Company agrees to promptly pay to the Purchaser the amount of
such reimbursement.
Section 6.9 401(k) Plan. Effective as of the Closing Date, each
employee of the Business who participated in the 401(k) plan of the
Company set forth on Schedule 4.7 (the "Company 401(k) Plan") will no
longer be eligible to participate in the Company 401(k) Plan. As soon as
practicable following the Closing Date, the Company shall cause to be
transferred to a new or existing Section 401(k) plan established by the
Purchaser (the "Purchaser 401(k) Plan") all of the assets (including
participant loans) with respect to the employees of the Business hired by
the Purchaser (the "Transferred Employees") in the Company 401(k) Plan.
Notwithstanding the foregoing, no such transfer will be made until the
Purchaser provides the following to the Company: (i) executed plan and
trust agreements under the Purchaser 401(k) Plan and corporate
resolutions providing for the adoption of the Purchaser 401(k) Plan and
trust agreement and (ii) either (A) a favorable determination letter
issued with respect to the Purchaser 401(k) Plan by the Internal Revenue
Service which covers changes or new provisions designed to comply with
the Tax Reform Act of 1986 and subsequent regulations and legislation or
(B) an opinion of counsel (which opinion and counsel are acceptable to
the Company) that the Purchaser 401(k) Plan is qualified under Section
401(a) of the Code, and its related trust is exempt from taxation under
Section 501(a) of the Code. Prior to the date of such transfer of
assets, the Company will make all contributions (including employee pre-
tax contributions) to the Company 401(k) Plan with respect to the
Transferred Employees which are due or made for periods ending or prior
to the Closing Date. Following such transfer of assets, the Purchaser
shall assume and discharge all liabilities and responsibilities with
respect to such transferred assets on behalf of the Transferred
Employees, and none of the Company nor any of its affiliates shall have
any further liability or responsibility therefor.
Section 6.10 Assistance. The Purchaser agrees to give the
Company access to its books and records following the Closing Date, and
to provide such assistance as the Company may reasonably request, to the
extent that the Company reasonably needs access to such books and records
for periods prior to the Closing Date in anticipation of, or preparation
for, existing or future litigation, tax returns, tax and accounting
audits, or other similar matters in which the Company may be or become
involved.
Section 6.11 Lucky Agreement. The Purchaser agrees to use its
best efforts to cause Lucky Stores, Inc. to agree to at least a one-year
renewal or extension of the Lucky Agreement on substantially the same
terms as in effect on the date hereof.
Section 6.12 Transition Services Agreement. The parties
acknowledge that while the form of the Transition Services Agreement is
attached hereto as an exhibit, Schedule A to the Transition Services
Agreement has not yet been finalized. The parties agree to finalize such
Schedule A prior to Closing.
Article VII
Conditions to Closing
Section 7.1 Conditions to Each Party's Obligation. The respective
obligations of each party to effect the transactions contemplated hereby
are subject to the satisfaction or waiver prior to the Closing Date of
the following conditions:
7.1.1 No Legal Prohibition. No statute, rule, regulation
or order shall be enacted, promulgated, entered or enforced by any court
or governmental authority which would prohibit consummation by such party
of the transactions contemplated hereby.
7.1.2 No Injunction. Such party shall not be prohibited by any
order, ruling, consent, decree, judgment or injunction of a court or
regulatory agency of competent jurisdiction from consummating the
transactions contemplated hereby.
7.1.3 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. The applicable waiting period under
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended,
shall have expired or been terminated.
Section 7.2 Conditions to Obligation of the Purchaser. The obligation
of the Purchaser to effect the transactions contemplated hereby shall be
subject to the fulfillment and satisfaction, prior to or at the Closing,
of the following conditions:
7.2.1 Representations and Covenants. Except as expressly
contemplated by this Agreement, the representations and warranties of the
Company contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date. The Company shall
have performed and complied in all material respects with all covenants
and agreements required by this Agreement to be performed or complied
with by it on or prior to the Closing Date.
7.2.2 Approvals. All governmental and third party approvals,
consents, permits or waivers set forth on Schedule 6.2 shall have been
obtained in form and substance reasonably satisfactory to the Purchaser.
7.2.3 Documents. The Company shall have delivered the documents
required by Section 3.2.1.
7.2.4 Resale Certificate. The Purchaser shall have delivered a
resale certificate with respect to the inventory transferred from the
Company.
Section 7.3 Conditions to Obligation of the Company. The obligation
of the Company to effect the transactions contemplated hereby shall be
subject to the fulfillment and satisfaction, prior to or at the Closing,
of the following conditions:
7.3.1 Representations and Covenants. Except as expressly
contemplated by this Agreement, the representations and warranties of the
Purchaser contained in this Agreement shall be true and correct in all
material respects on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date. The Purchaser shall
have performed and complied in all material respects with all covenants
and agreements required by this Agreement to be performed or complied
with by the Purchaser on or prior to the Closing Date.
7.3.2 Approvals. All governmental and third party approvals,
consents, permits or waivers set forth on Schedule 6.2 shall have been
obtained in form and substance reasonably satisfactory to the Company.
7.3.3 Documents. The Purchaser shall have delivered the
documents required by Section 3.2.2.
7.3.4 Lease Modification. The Company shall have obtained from
the Lessor of the real property at ▇▇▇▇▇, Santa ▇▇▇▇ and Modesto an
agreement to delete or amend, in form acceptable to Purchaser, paragraph
18.10 in each Lease.
Article VIII
Termination
Section 8. Termination. This Agreement may be terminated at any time
prior to the Closing:
8.1.1 By mutual written consent of the Purchaser and the
Company.
8.1.2 By the Company:
(i) if the Closing Date shall not have occurred on or
before December 29, 1995, other than as a result of a breach by the
Company of its representations, warranties or other obligations
hereunder; or
(ii) if, prior to the Closing Date, the Purchaser fails
to perform in any material respect any of its obligations under this
Agreement or the Purchaser has breached any material representation or
warranty, and such failure or breach has not been cured within 15 days
after receipt of notice of such failure or breach from the Company.
8.1.3 By the Purchaser:
(i) if the Closing Date shall not have occurred on or
before December 29, 1995, other than as a result of a breach by the
Purchaser of its representations, warranties or other obligations
hereunder; or
(ii) if, prior to the Closing Date, the Company fails to
perform in any material respect any of its obligations under this
Agreement or the Company has breached any material representation or
warranty, and such failure or breach has not been cured within 15 days
after receipt of notice of such failure or breach from the Purchaser.
Section 8.2 Effect of Termination. In the event of termination of
this Agreement by the Purchaser or the Company as provided in Section 8.1
hereof, all obligations of the parties under this Agreement shall
terminate without liability of any party to any other party, except (i)
that the obligations set forth in Section 10.13 of this Agreement and in
the Confidentiality Agreement shall survive any such termination and (ii)
for liability for any willful breach of this Agreement.
Article IX
Indemnification
Section 9.1 Survival of Representations and Warranties. All
representations and warranties of the parties contained herein,
notwithstanding any investigation by Purchaser, shall survive the
execution and delivery of this Agreement and the Closing but shall
terminate and expire on the eighteenth month anniversary of the Closing
together with any right to indemnification for breach thereof (except to
the extent to which a notice of a claim for indemnification has been
properly made prior to such expiration).
Section 9.2 Indemnification.
(a) By the Company. The Company shall indemnify and hold
harmless the Purchaser and its directors, officers, employees and agents,
at all times from and after the Closing Date, against and in respect of
any and all damages, costs, liabilities, losses, judgments, penalties,
fines, expenses or other costs (including reasonable attorney's fees)
(collectively, "Losses") arising from or relating to (i) any breach of
any of the representations or warranties made by the Company in this
Agreement, (ii) any breach of the covenants and agreements made by the
Company in this Agreement or any other agreement, document or instrument
delivered by the Company in connection with the Closing and (iii) the
Retained Liabilities.
(b) By the Purchaser. The Purchaser shall indemnify and hold
harmless the Company and its directors, officers, employees and agents,
at all times from and after the Closing Date, against and in respect of
any and all Losses arising from or relating to (i) any breach of any of
the representations or warranties made herein by the Purchaser in this
Agreement, (ii) any breach of the covenants and agreements made by the
Purchaser in this Agreement or any other agreement, document or
instrument delivered by the Purchaser in connection with the Closing, and
(iii) the Assumed Liabilities.
Section 9.3 Minimum Amount of Indemnity. No amounts shall be payable
by the Company under this Article IX with respect to any claim for any
Loss unless and until the aggregate amount otherwise payable by the
Company in the absence of this Section 9.3 exceeds $100,000, in which
event such amounts in excess of such amount (but only such amount in
excess) shall be due. With respect to any claim, no amounts shall be
payable by the Company under this Article IX in excess of the lesser of
(i) $3,000,000 minus all amounts previously paid by the Company under
this Article IX and (ii) 50% of the maximum unpaid amount of the Earned
Rebate Amount as of the date of payment by the Company with respect to
such Loss minus all amounts previously paid by the Company under this
Article IX. In no event shall (i) consequential damages or lost profits
constitute a "Loss" for purposes of this Article IX or (ii) the Company
be liable for any breach of any representation, warranty or covenant of
which the Purchaser had actual knowledge as of the Closing. The amount
of any Loss suffered by any person shall be reduced by (i) the amount of
any insurance proceeds which may be received by such person on account of
the event giving rise to such Loss and (ii) any tax benefit which such
person may receive as a result of such Loss.
With respect to any amount payable by the Company under this Article
IX and to the extent that such amount has been finally determined
pursuant to Section 9.5 or otherwise agreed to by the Company and the
Purchaser, the Purchaser shall have the right to offset any amount to be
paid to the Company pursuant to Section 2.1.3 against any such amount.
With respect to any amount payable by the Company under this Article IX
and to the extent that such amount has been finally determined pursuant
to Section 9.5 or otherwise agreed to by the Company and the Purchaser,
the Company shall have the right to offset any amount to be paid to it by
the Purchaser pursuant to Section 2.1.3 against such amount.
Section 9.4 Procedure for Claims By Third Parties.
(a) Any party assessing a right of indemnification provided
for under this Agreement (the "Indemnified Party") in respect of, arising
out of or involving a claim or demand made by any unrelated person, firm,
governmental authority or corporation against the Indemnified Party (a
"Third Party Claim") shall notify the indemnifying party (the
"Indemnifying Party") in writing of the Third Party Claim within twenty
business days after such Indemnified Party becomes aware of such Third
Party Claim. As part of such notice, the Indemnified Party shall furnish
the Indemnifying Party with copies of any pleadings, correspondence or
other documents relating thereto that are in the Indemnified Party's
possession. The Indemnified Party's failure to notify the Indemnifying
Party of any such matter within the time frame specified above shall not
release the Indemnifying Party, in whole or in part, from its obligations
under this Article IX except to the extent that the Indemnified Party's
ability to defend against such claim is actually prejudiced thereby. The
Indemnifying Party agrees (and, at such time as the Indemnifying Party
acknowledges its liability under this Article IX with respect to such
Third Party Claim, the Indemnifying Party shall have the sole and
exclusive right) to defend against, settle or compromise such Third Party
Claim at the expense of such Indemnifying Party. The Indemnified Party
shall have the right (but not the obligation) to participate in the
defense of such claim through counsel selected by it, at its expense. If
the Indemnifying Party has not yet acknowledged its liability under this
Section 9.4 with respect to such Third Party Claim, then the Indemnifying
Party and the Indemnified Party shall cooperate in defending against such
Third Party Claim, and neither party shall have the right, without the
other's consent, to settle or compromise any such third Party Claim.
(b) If any party becomes obligated to indemnify another party
with respect to any Third Party Claim and the amount of liability with
respect thereto shall have been finally determined, the Indemnifying
Party shall pay such amount to the Indemnified Party in immediately
available funds within ten days following written demand by the
Indemnified Party. All amounts paid hereunder shall be paid as an
adjustment to the Purchase Price.
Section 9.5 Procedure for Claims Between the Parties. In the event
that either the Company or the Purchaser desires to assert a claim for
indemnification against the other under this Article IX, such party shall
assert such claim in writing, stating the nature and basis of such claim.
The party making such claim shall, on request, provide all information
and documentation reasonably necessary to support and verify any Losses
which such person believes gives rise to a claim for indemnification and
shall give the indemnifying party reasonable access to its books, records
and personnel for the purpose of investigating and verifying any such
claim. Except as provided in Section 2.2.1, to the extent that a dispute
arises between the parties as to whether a party has suffered a Loss or
the amount of such Loss, the Company and the Purchaser agree to have such
dispute settled by arbitration with the American Arbitration Association
under the Commercial Arbitration Rules. Each party shall share equally
in the cost of such arbitration, but each party shall bear its own legal,
accounting and other similar fees incurred in connection with such
arbitration. Such arbitration and determination shall be final and
binding on the parties and judgment may be entered upon such
determination in any court having jurisdiction thereof. The Company and
the Purchaser agree that any such arbitration shall be conducted in San
Francisco, California.
Article X
General Provisions
Section 10. Negotiations With Others. Until December 30, 1995, the
Company will not offer the assets of the Business to, entertain offers
for or from, negotiate for their sale to, or make any information about
them available for purposes of sale to any third party.
Section 10.1 Rules of Construction.
10.1.1 Material Adverse Effect. For purposes of this
Agreement, a "Material Adverse Effect" shall mean a material adverse
effect to the extent of $100,000 or more on the operations or financial
condition of the Business or on the Company's ability to consummate the
transactions contemplated by this Agreement.
10.1.2 Knowledge. Where a representation or warranty is
stated to be based on the knowledge of the Company, such phrase shall
refer to the actual knowledge of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ McEntosh and ▇▇▇▇▇▇▇ ▇▇▇▇. As referenced in this Agreement,
knowledge of Purchaser shall refer solely to the actual knowledge of ▇▇▇▇
▇. ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇.
10.1.3 Headings. The headings contained in this agreement
are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
10.1.4 Severability. If any provision of this Agreement,
or the application thereof to any person, place or circumstance, shall be
held by a court of competent jurisdiction to be illegal, invalid,
unenforceable or void, then such provision shall be enforced to the
extent that it is not illegal, invalid, unenforceable or void, and the
remainder of this Agreement, as well as such provision as applied to
other persons, places or circumstances, shall remain in full force and
effect.
Section 10.2 Waiver. With regard to any power, remedy or right
provided in this Agreement or otherwise available to any party, (i) no
waiver or extension of time shall be effective unless expressly contained
in a writing signed by the waiving party, (ii) no alteration,
modification or impairment shall be implied by reason of any previous
waiver, extension of time, delay or omission in exercise or other
indulgence, and (iii) waiver by any party of the time for performance of
any act or condition hereunder does not constitute a waiver of the act or
condition itself.
Section 10.3 Further Assurances. From time to time after the
Closing, at the request of Purchaser, the Company will execute and
deliver to the Purchaser such instruments of sale, transfer, conveyance,
assignment and delivery, and such consents, assurances, powers of
attorney and other instruments, as may be reasonably requested by the
Purchaser or its counsel in order to vest in the Purchaser clear and
unencumbered title to the Transferred Assets and otherwise in order to
carry out the purpose and intent of this Agreement.
Section 10.4 Non-Assignable Assets. Notwithstanding anything
contained in this Agreement to the contrary, this Agreement shall not
constitute an agreement to transfer, sublease or assign any contract,
license, lease, commitment, sales or purchase order or any other
agreement if any such attempted transfer, sublease or assignment without
the consent of any third party would constitute a breach thereof or would
in any way materially and adversely affect the rights of the Purchaser
thereunder following the Closing. The Company shall use commercially
reasonable efforts to obtain the consent of any third party or parties to
such transfer, sublease or assignment in all cases in which such consent
is required as set forth on Schedule 6.2; provided that in no event shall
the Company by required to incur any cost in obtaining any such consent.
If any such consent is not obtained, or if an attempted assignment would
be ineffective or would materially and adversely affect the rights of the
Purchaser thereunder, the Company shall perform such agreement for the
account of the Purchaser to the extent permitted under the terms thereof
or otherwise cooperate with the Purchaser in any reasonable arrangement
necessary or desirable to provide for the Purchaser or its designees the
benefits of any such agreement for a reasonable period of time following
the Closing, including without limitation enforcement for the benefit of
the Purchaser of any and all rights of the Company against the other
party thereto arising out of the breach, termination or cancellation of
such agreement by such other party or otherwise, in each case at the
Purchaser's sole cost and expense. Nothing herein shall be deemed to
waive or modify the provisions of Article VIII or Section 7.2.2.
Section 10.5 Notices. All notices, demands, or other
communications to be given or delivered under or by reason of the
provisions of this Agreement will be in writing and shall be deemed to
have been duly given or delivered (i) when delivered personally, (ii)
mailed by certified or registered mail, return receipt requested and
postage prepaid, (iii) sent by telephone facsimile transmission, or (iv)
sent via a nationally recognized overnight courier to the recipient.
Such notices, demands and other communications will be sent to the
address indicated below:
(i) If to the Company:
Bay Area Foods, Inc.
▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Kohlberg & Company
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Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ Hyatt ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, P.C.
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Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to the Purchaser:
United Grocers, Inc.
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Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Brownstein, Rask, Arenz, Sweeney, ▇▇▇▇ & Grim
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or to such other address as any party may specify by notice given to the
other party in accordance with this Section. The date of giving any such
notice shall be (i) the date of hand delivery, (ii) the date five days
after posting of the mail, (iii) the date sent by telephone facsimile if
a business day or the first business day thereafter or (iv) the business
day after delivery to the overnight courier service.
Section 10.6 Governing Law. This Agreement shall be governed by
and construed in accordance with the domestic laws of the State of
California without giving effect to any choice or conflict of law
provision or rule (whether of the Sate of California or any other
jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of California.
Section 10.7 Entire Agreement. This Agreement (including
attached exhibits and schedules) and the Confidentiality Agreement
constitute the entire agreement among the parties with respect to the
subject matter of this Agreement and supersedes any prior agreement or
understandings, whether written and oral, among the parties or between
any of them with respect to the subject matter of this Agreement. There
are no representations, warranties, covenants, promises or undertakings,
other than those expressly set forth or referred to herein.
Section 10.8 Amendment. This Agreement may be amended, modified
or waived only by a written agreement signed by each of the parties
hereto.
Section 10.9 Assignability. Neither the rights nor the
obligations of any party to this Agreement may be transferred or
assigned. Any purported assignment of this agreement or any of the
rights and obligations hereunder shall be null, void and of no effect.
Section 10.10 Binding Effect. This Agreement shall be binding
upon and shall inure to the benefit of the parties and their respective
successors and, if applicable, permitted assigns.
Section 10.11 Third-Party Beneficiaries. Each party intends that
this agreement shall not benefit or create any right or cause of action
in any person other than the parties or as specifically expressed in this
Agreement.
Section 10.12 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall constitute an original but when
taken together shall constitute but one instrument.
Section 10.13 Expenses. Each party to this Agreement shall bear
all of its own expenses in connection with the execution, delivery and
performance of this Agreement and the transactions contemplated hereby,
including without limitation all fees and expenses of its agents,
representatives, counsel and accountants.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed on the date first written above.
COMPANY: BAY AREA FOODS, INC.
By:____________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
PURCHASER: UNITED GROCERS, INC.
By:____________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: President, CEO
