Exhibit 10.32
Execution Copy
SHARE PURCHASE AGREEMENT
Dated as of August 6, 2003
by and between
SMART & FINAL INC.,
a Delaware corporation
and
AMERICAN FOODSERVICE DISTRIBUTORS
a California corporation
(the "Sellers")
and
GFS HOLDING, INC.,
a Delaware corporation
(the "Buyer")
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 Sale and Purchase of the Shares........................................2
1.2 Purchase Price and Payment.............................................2
1.3 Adjustment of Purchase Price...........................................2
1.4 Adjustment Procedure...................................................2
1.5 Accounts Receivable Purchase Price Adjustment..........................4
1.6 Accounts Receivable Purchase Price Adjustment Procedure................4
1.7 Adjustment Allocations.................................................5
1.8 Closing................................................................5
1.9 Closing Deliveries.....................................................6
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
2.1 Organization and Qualification of the Company..........................8
2.2 Authority; No Conflict.................................................9
2.3 Capitalization........................................................10
2.4 Financial Statements..................................................10
2.5 Books and Records.....................................................10
2.6 No Undisclosed Liabilities............................................11
2.7 Compliance with Legal Requirements; Governmental Authorizations.......11
2.8 Absence of Certain Changes............................................12
2.9 Personal Property.....................................................14
2.10 Inventory.............................................................14
2.11 Accounts Receivable...................................................15
2.12 Contracts; No Defaults................................................15
2.13 Guaranties............................................................17
2.14 Employee Benefits.....................................................18
2.15 Employees.............................................................22
2.16 Labor Relations; Compliance...........................................22
2.17 Litigation............................................................23
2.18 Real Property.........................................................24
2.19 Taxes.................................................................25
2.20 Insurance.............................................................25
2.21 Environmental Matters.................................................26
2.22 Relationships with Related Persons....................................27
2.23 Subsidiaries..........................................................27
2.24 Warranties............................................................27
2.25 Change in Business Relationships......................................27
2.26 Brokers...............................................................27
2.27 True and Correct Information..........................................27
2.28 Intellectual Property.................................................27
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
3.1 Organization and Good Standing........................................28
3.2 Authority; No Violation...............................................28
3.3 Investment Intent.....................................................29
3.4 Certain Proceedings...................................................29
3.5 Brokers or Finders....................................................29
3.6 Sufficiency of Funds..................................................29
3.7 Knowledge of Claims...................................................29
ARTICLE IV
COVENANTS OF SELLERS PRIOR TO CLOSING DATE
4.1 Access and Investigation..............................................29
4.2 Operation of the Business of the Company..............................30
4.3 Negative Covenant.....................................................30
4.4 Required Approvals....................................................30
4.5 Notification..........................................................30
4.6 No Negotiation........................................................30
4.7 Commercially Reasonable Efforts.......................................31
4.8 Intercompany Balances.................................................31
4.9 Synthetic Lease Agreement.............................................31
4.10 Disposition of Subsidiaries...........................................31
4.11 Sellers' Environmental Investigation..................................31
ARTICLE V
COVENANTS OF BUYER AND SELLERS PRIOR TO CLOSING DATE
5.1 Approvals of Governmental Bodies......................................31
5.2 Commercially Reasonable Efforts.......................................31
5.3 Cooperation...........................................................32
ARTICLE VI
POST-CLOSING COVENANTS OF BUYER AND SELLERS
6.1 General...............................................................32
6.2 Litigation Support....................................................32
6.3 Transition............................................................33
6.4 Non-Company Employees Engaged in the Foodservice Business.............33
6.5 Employee Benefits.....................................................33
6.6 Certain Employees.....................................................34
6.7 Company 401(k) Plan...................................................34
6.8 Real Property Consents................................................34
6.9 Insurance Matters.....................................................34
6.10 Tax Covenant..........................................................35
6.11 Accounts Receivable Collection........................................35
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6.12 Tax Matters...........................................................35
6.13 Environmental Testing.................................................36
ARTICLE VII
CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
7.1 Accuracy of Representations...........................................37
7.2 Buyer's Performance...................................................37
7.3 Additional Documents..................................................37
7.4 No Injunction.........................................................38
7.5 Closing of Asset Purchase Transaction.................................38
7.6 Consents..............................................................38
ARTICLE VIII
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
8.1 Accuracy of Representations...........................................38
8.2 Sellers' Performance..................................................38
8.3 Consents..............................................................38
8.4 Additional Documents..................................................38
8.5 No Injunction.........................................................38
8.6 No Proceedings........................................................39
8.7 No Claim Regarding Stock or Sale Proceeds.............................39
8.8 No Prohibition........................................................39
8.9 Closing of Asset Purchase Transaction.................................39
8.10 Execution and Closing of the Real Estate Purchase Agreement...........39
8.11 Release of Guaranty...................................................39
ARTICLE IX
TERMINATION
9.1 Termination Events....................................................39
9.2 Effect of Termination.................................................40
ARTICLE X
INDEMNIFICATION
10.1 Indemnity by Sellers..................................................40
10.2 Indemnity by Buyer....................................................41
10.3 Procedure and Payment.................................................41
10.4 Calculation of Losses.................................................42
10.5 Survival of Representations and Warranties of Sellers.................43
10.6 Survival of Representations and Warranties of Buyer...................43
10.7 Escrow................................................................43
10.8 Indemnified Environmental Matters.....................................43
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ARTICLE XI
DEFINITIONS
ARTICLE XII
GENERAL PROVISIONS
12.1 Expenses With Respect to Transaction..................................56
12.2 Public Announcements..................................................56
12.3 Confidentiality.......................................................56
12.4 Notices...............................................................57
12.5 Jurisdiction..........................................................58
12.6 Further Assurances....................................................59
12.7 Waiver................................................................59
12.8 Entire Agreement and Modification.....................................59
12.9 Assignments, Successors, and No Third-Party Rights....................59
12.10 Severability..........................................................60
12.11 Section Headings, Construction........................................60
12.12 Preamble; Preliminary Statement.......................................60
12.13 Governing Law.........................................................60
12.14 No Strict Construction................................................60
12.15 Dispute Resolution....................................................60
12.16 Supplemental Disclosure...............................................61
12.17 Reliance..............................................................61
12.18 Counterparts..........................................................61
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SCHEDULES
Schedule 1.3 Accounting Policies and Practices
Schedule 2.1 Qualified to do Business
Schedule 2.2 Notices; Consents
Schedule 2.4(a) Financial Statements
Schedule 2.4(b) Other Financial Statements
Schedule 2.4(c) Financial Statement Exceptions
Schedule 2.6 Undisclosed Liabilities
Schedule 2.7 Compliance with Legal Requirements
Schedule 2.7(b) Governmental Authorizations
Schedule 2.8 Absence of Certain Changes
Schedule 2.9 Personal Property
Schedule 2.11 Accounts Receivable
Schedule 2.12(a) List of Contracts
Schedule 2.12(b) Contracts; No Limitations
Schedule 2.12(c) Contracts in Full Force and Effect
Schedule 2.12(d) Compliance with Contracts
Schedule 2.13 Guaranties
Schedule 2.14(b)(i) Employee Benefits-Company Plans
Schedule 2.14(b)(ii) Multi-Employer Plans
Schedule 2.14(d) Compliance with Plans
Schedule 2.15 Employees
Schedule 2.16 Labor Relations; Compliance
Schedule 2.17(a) Litigation Proceedings
Schedule 2.17(b) Litigation Orders
Schedule 2.17(c) Litigation-Compliance with Orders
Schedule 2.18 List of Real Property
Schedule 2.19 Taxes
Schedule 2.20(a) Insurance Policy Loss Experience
Schedule 2.20(b) Insurance Premiums
Schedule 2.21 Environmental Matters
Schedule 2.22 Relationships with Related Persons
Schedule 2.23 List of Subsidiaries
Schedule 2.25 Changes in Business Relationships
Schedule 2.28 Trademarks and Tradenames
Schedule 6.4 Employees of Seller to be Offered Employment
Schedule 6.6 List of Severance Agreements
Schedule 6.8 Certain Leases
Schedule 6.11 Accounts Receivable Collection Practices
Schedule 8.3 Material Consents
Schedule 10.1(a) Indemnified Matters
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EXHIBITS
Exhibit A Escrow Agreement
Exhibit B Noncompetition Agreement
Exhibit C Software License and Support Agreement
Exhibit D Tradename and Trademark License Agreements
Exhibit E Release
Exhibit F Transitional Services Agreement
Exhibit G Employee Leasing Agreement
Exhibit H Opinion of Counsel
Exhibit I Real Estate Purchase Agreement
Exhibit J Vendor Contract Participation Agreement
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SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (this "Agreement") is dated as of August
6, 2003, by and among SMART & FINAL INC., a Delaware corporation ("SFI"),
AMERICAN FOODSERVICE DISTRIBUTORS, a California corporation ("AFD" and together
with SFI, the "Sellers"), and GFS HOLDING, INC., a Delaware corporation (the
"Buyer"). Capitalized terms used, but not otherwise defined herein, shall have
the meaning set forth in Article XI hereof.
PRELIMINARY STATEMENT
SFI is the record and beneficial owner of all of the issued and
outstanding equity securities of AFD. AFD is the record and beneficial owner of
all of the issued and outstanding equity securities of Xxxxx Xxx Company, a
Florida corporation (the "Company"), through which AFD conducts a foodservice
distribution business in the State of Florida (the "Foodservice Business"). The
Foodservice Business does not, however, include any business conducted directly
or indirectly by either of the Sellers under the name "Southern Foods".
In addition to the Foodservice Business, AFD also operates, among
other things, a fresh meat processing business in the state of Florida under the
name "Orlando Food Service" (the "Meat Processing Business"). SFI is the record
and beneficial owner of all of the issued and outstanding equity securities of
Smart & Final Stores Corporation, a California corporation ("SF Stores" and,
together with SFI and AFD, the "Seller Parties"). SF Stores is engaged in the
retail food store business in the State of Florida and operates from several
locations within that state.
In a separate but related transaction, Buyer's wholly-owned
subsidiaries, GFS Orlando, LLC, a Delaware limited liability company ("GFS
Orlando"), and GFS Stores, LLC, a Delaware limited liability company ("GFS
Stores" and, together with Buyer and GFS Orlando, the "Buyer Parties"), will
acquire from AFD and SF Stores, respectively, all of the assets that are used by
AFD and SF Stores, respectively, in the operation of the Meat Processing
Business and the Retail Store Business and located in the state of Florida
pursuant to an Asset Purchase Agreement dated the date hereof by and among Buyer
Parties and Seller Parties (the "Asset Purchase Agreement").
This Agreement is being entered into by Buyer and Sellers to set forth
the terms and conditions upon which Buyer will purchase from Sellers all of the
issued and outstanding equity securities of the Company (the "Shares"). SFI
joins in this Agreement for the purpose of making certain representations and
warranties to, agreeing to perform certain covenants for the benefit of, and
providing indemnification to Buyer as provided herein.
NOW, THEREFORE, in consideration of the mutual agreements and
covenants herein contained and intending to be legally bound hereby, the parties
hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF SHARES
1.1 Sale and Purchase of the Shares. On the Closing Date (as such term
is defined in Section 1.5), AFD shall sell to Buyer, and Buyer shall acquire
from AFD, the Shares, free and clear of all Encumbrances, on the terms and
subject to the conditions set forth in this Agreement.
1.2 Purchase Price and Payment. The purchase price to be paid by Buyer
to Sellers on the Closing Date for the Shares shall be Twenty-Four Million Two
Hundred Eighty Two Thousand Eight Hundred Sixty-Eight Dollars ($24,282,868),
subject to adjustment for changes in the Net Working Capital of the Company as
described in Section 1.3 below (the "Purchase Price"). The Net Working Capital
of the Company as of March 23, 2003, is Thirty Million Seven Hundred Seventy
Three Thousand Two Hundred Forty-Eight Dollars ($30,773,248) (the "March 23,
2003 Net Working Capital"). In order to establish a reasonable estimate of the
Purchase Price at Closing, Sellers shall prepare and deliver to Buyers, not less
than five (5) business days prior to the Closing Date, a detailed written
statement (the "Preliminary Purchase Price Statement") of Sellers' reasonable
good faith calculation of the Company's Net Working Capital as of the Closing
Date (the "Preliminary Net Working Capital"). If the Preliminary Net Working
Capital is less than the March 23, 2003 Net Working Capital, the Purchase Price
shall be reduced dollar for dollar by such difference and if the Preliminary Net
Working Capital is greater than the March 23, 2003 Net Working Capital the
Purchase Price shall be increased dollar for dollar by such difference. The
Purchase Price shall be paid at Closing as follows:
(a) an amount equal to the Purchase Price (based on the
Preliminary Purchase Price Statement) less the sum of One Million Dollars
($1,000,000) shall be paid to Sellers by wire transfer of immediately available
funds (the "Closing Payment"); and
(b) the sum of One Million Dollars ($1,000,000) (the "Escrow
Payment") shall be delivered to Xxxxx Fargo Bank (the "Escrow Agent") to be held
in escrow on the terms and subject to the conditions set forth in an escrow
agreement substantially in the form attached hereto as Exhibit A (the "Escrow
Agreement").
1.3 Adjustment of Purchase Price. The Purchase Price shall be adjusted
on a dollar-for-dollar basis to reflect any increases or decreases in the
Preliminary Net Working Capital as of the Closing Date. For purposes of this
Agreement, the term "Net Working Capital" means the difference between (a) the
sum of cash, cash equivalents, temporary investments, accounts receivable,
inventories and prepaid expenses and other current assets and (b) the sum of
accounts payable and accrued expenses and other current liabilities, in each
case with respect to the Company and in each case computed in accordance with
GAAP utilizing the accounting policies and practices set forth on Schedule 1.3.
1.4 Adjustment Procedure.
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(a) Sellers shall prepare the Closing Financial Statement (as
defined below) and shall cause Ernst & Young, LLP to undertake a balance sheet
audit (the "Balance Sheet Audit") as of the Closing Date and compute the Net
Working Capital of the Company as of the Closing Date and the adjustment, if
any, to the Purchase Price required by Section 1.3, and Ernst & Young LLP shall,
and Sellers shall cause Ernst & Young, LLP to, deliver to Buyer, within
forty-five (45) days of the Closing Date, a detailed written statement with
reasonable supporting documentation (the "Closing Financial Statement")
reflecting the result of its audit. Buyer and Seller shall have access to, and
will have the opportunity to present to Ernst & Young, LLP any material relating
to, the Closing Financial Statement, and to discuss the audit of the Closing
Financial Statement with Ernst & Young, LLP. The parties agree that with respect
to the audit contemplated in this Agreement and by Section 1.5(a) of the Asset
Purchase Agreement, (i) Sellers cost shall not exceed, in the aggregate Thirty
Five Thousand Dollars ($35,000) and that any amount in excess of $35,000 shall
be the obligation of Buyer and (ii) Sellers shall cause Ernst & Young LLP to
limit the scope of such audit upon receiving a reasonable written request from
Buyer setting forth the scope of such restrictions within five (5) days of Ernst
& Young LLP commencing such audit. For the avoidance of doubt, other than (A)
the adjustment of the Purchase Price to reflect changes in the Preliminary Net
Working Capital pursuant to Section 1.3 and (B) claims for breaches of the
representations and warranties contained in this Agreement that require the
Sellers to indemnify Buyer pursuant to Article X, the Balance Sheet Audit shall
have no effect on any adjustment to the Purchase Price. If within thirty (30)
days following delivery of the Closing Financial Statement Buyer has not given
Sellers notice of its objection to the Closing Financial Statement (which notice
must contain a reasonable statement of the basis of the objection), then the
Closing Financial Statement shall be deemed to be the "Final Closing Financial
Statement" and the Net Working Capital amount set forth therein shall be deemed
to be the "Final Net Working Capital". If Buyer gives such notice of objection,
then the issues in dispute will be submitted to one of the "Big Four" national
accounting firms (other than Ernst & Young, LLP) mutually acceptable to Buyer
and Sellers (the "Accountants") for resolution. If issues in dispute are
submitted to the Accountants for resolution, (i) each party will furnish to the
Accountants such work papers and other documents and information relating to the
disputed issues as the Accountants may reasonably request and are available to
that party (or its independent public accountants), and will be afforded the
opportunity to present to the Accountants any material relating to the
determination and to discuss the determination with the Accountants; (ii) the
determination by the Accountants, as set forth in a notice delivered to both
parties by the Accountants, will be binding and conclusive on the parties; and
(iii) Buyer will bear fifty percent (50%) and Sellers will bear fifty percent
(50%) of the fees of the Accountants for such determination. If Buyer has given
a notice of objection in accordance with this Section 1.4(a), the Closing
Financial Statement, as modified by resolution of any such disputes with respect
thereto by the Accountants, shall be the "Final Closing Financial Statement" and
the Net Working Capital amount set forth therein shall be the "Final Net Working
Capital".
(b) On the fifth (5th) business day following the final
determination of the Final Closing Financial Statement, if the Final Net Working
Capital is greater than the Preliminary Net Working Capital, Buyer will pay such
difference to Sellers in immediately available funds and the Escrow Agent shall,
and Buyer shall cause the Escrow Agent to, deliver to Sellers Five Hundred
Thousand Dollars ($500,000) from the Escrow Payment in accordance with the
Escrow Agreement.
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(c) On the fifth (5th) business day following the final
determination of the Final Closing Financial Statement, if the Final Net Working
Capital is less than the Preliminary Net Working Capital (such difference, the
"Difference") and such Difference is less than or equal to Five Hundred Thousand
Dollars ($500,000), Sellers shall direct the Escrow Agent to deliver to Buyer,
from the amounts held pursuant to the Escrow Agreement, the Difference, and
Buyer shall direct the Escrow Agent to deliver to Sellers, from the Escrow
Payment Five Hundred Thousand Dollars ($500,000) less the Difference, all in
accordance with the Escrow Agreement.
(d) On the fifth (5th) business day following the final
determination of the Final Closing Financial Statement, if the Difference is
greater than Five Hundred Thousand Dollars ($500,000), Sellers shall direct the
Escrow Agent to deliver to Buyer, from the Escrow Payment, Five Hundred Thousand
Dollars ($500,000) in accordance with the Escrow Agreement and shall pay to
Buyer, in immediately available funds, the Difference less Five Hundred Thousand
Dollars ($500,000).
(e) Unless otherwise specifically provided for herein, any item
which is contained within the Final Net Working Capital or the Balance Sheet
Audit that has been reviewed as part of the adjustment process in arriving at
the Final Net Working Capital shall not serve as a basis for an indemnification
claim for a breach of a representation, warranty, covenant or agreement under
this Agreement.
1.5 Accounts Receivable Purchase Price Adjustment. The aggregate
Purchase Price (the sum of the Purchase Price as defined herein and in the Asset
Purchase Agreement) shall be reduced by an amount equal to Sixty Five Cents
($0.65) on the dollar for each dollar amount of the Accounts Receivable not
collected by the Buyer (but excluding those Accounts Receivable from customers
who are as of the first anniversary of the Closing Date paying currently on
negotiated extended payment terms) as of the first anniversary of the Closing
Date, as modified below (the "Accounts Receivable Settlement Date"), but only in
the event and to the extent that such uncollected amount exceeds the amount of
the allowance for doubtful accounts set forth on the Final Closing Financial
Statement (as defined herein and in the Asset Purchase Agreement) (the aggregate
dollar amount that exceeds such allowance for doubtful accounts is referred to
herein as the "Uncollected Amount"); provided, however, that the Uncollected
Amount or the Final Uncollected Accounts Receivable (as defined below), as
applicable, shall not include any amounts that the Buyer is unable to collect as
a result of its failure to comply with Section 6.11 or as a result of a Force
Majeure Event; provided, further, that in the event an account is uncollectible
as a result of a Force Majeure Event that occurs on or prior to the first
anniversary of the Closing Date, the collection period for such account shall be
extended to sixty (60) days from the date of occurrence of the Force Majeure
Event (the "60 Day Period") and if such 60 Day Period extends beyond the first
anniversary of the Closing Date, then the Accounts Receivable Settlement Date
shall be the last day of such 60 Day Period.
1.6 Accounts Receivable Purchase Price Adjustment Procedure.
(a) Buyer shall prepare the Accounts Receivable Statement (as
defined below) and deliver to Sellers, within fifteen (15) days of the Accounts
Receivable Settlement Date, a detailed written statement setting forth the
Uncollected Amount with reasonable
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supporting documentation (the "Accounts Receivable Statement"). If within
fifteen (15) days following delivery of the Accounts Receivable Statement
Sellers have not given Buyer notice of their objection to the Accounts
Receivable Statement (which notice must contain a reasonable statement of the
basis of the objection), then the Accounts Receivable Statement shall be deemed
to be the "Final Accounts Receivable Statement" and the amount of uncollected
Accounts Receivable (less the allowance for doubtful accounts and excluding
Accounts Receivable from customers who are as of the first anniversary of the
Closing Date paying currently on negotiated extended payment terms) set forth
therein shall be deemed to be the "Final Uncollected Accounts Receivable". If
Sellers give such notice of objection, then the issues in dispute will be
submitted to one of the "Big Four" national accounting firms (other than Ernst &
Young, LLP) mutually acceptable to Buyer and Sellers for resolution. If issues
in dispute are submitted to the Accountants for resolution, (i) each party will
furnish to the Accountants such work papers and other documents and information
relating to the disputed issues as the Accountants may reasonably request and
are available to that party (or its independent public accountants), and will be
afforded the opportunity to present to the Accountants any material relating to
the determination and to discuss the determination with the Accountants; (ii)
the determination by the Accountants, as set forth in a notice delivered to both
parties by the Accountants, will be binding and conclusive on the parties; and
(iii) Buyer will bear fifty percent (50%) and Sellers will bear fifty percent
(50%) of the fees of the Accountants for such determination. If Sellers have
given a notice of objection in accordance with this Section 1.6(a), the Final
Accounts Receivable Statement, as modified by resolution of any such disputes
with respect thereto by the Accountants, shall be the "Final Accounts Receivable
Statement" and the uncollected Accounts Receivable amount (less the allowance
for doubtful accounts and excluding Accounts Receivable from customers who are
as of the first anniversary of the Closing Date paying currently on negotiated
extended payment terms) set forth therein shall be the "Final Uncollected
Accounts Receivable ".
(b) On the fifth (5th) business day following the final
determination of the Final Accounts Receivable Statement, Sellers shall pay to
Buyer in immediately available funds the product of (i) $0.65 and (ii) the Final
Uncollected Accounts Receivable.
(c) Any item which is contained within the Final Uncollected
Accounts Receivable or that has been reviewed as part of the adjustment process
in arriving at the Final Uncollected Accounts Receivable shall not serve as a
basis for an indemnification claim for a breach of a representation, warranty,
covenant or agreement under this Agreement.
1.7 Adjustment Allocations. The parties agree that the allocation of
any adjustment of the Purchase Price pursuant to Sections 1.3 and 1.5 between
this Agreement and the Asset Purchase Agreement shall be performed in good faith
and consistent with the allocation methodology used with respect to the March
23, 2003 Orlando Balance Sheet, the March 23, 2003 SF Stores Balance Sheet and
the Company's March 23, 2003 Balance Sheet.
1.8 Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") will take place at the offices of Xxxxx & Xxxxxxx,
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000, within
three (3) business days following the satisfaction or waiver by Buyer or Sellers
(as applicable) of all of the conditions set forth in Articles VII and VIII, or
at such other time and place as may be mutually agreed upon by Buyer
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and Sellers (such time and date being hereinafter referred to as the "Closing
Date"). The parties currently intend the Closing Date to be as of September 7,
2003.
1.9 Closing Deliveries.
(a) Closing Deliveries By Sellers. On the Closing Date, Sellers
shall deliver, and cause to be delivered, to Buyer:
(i) Assignment Documents. The certificate or certificates
representing the Shares, duly endorsed in blank or accompanied by an
irrevocable stock power duly endorsed in blank, sufficient to transfer and
assign to Buyer good and marketable title to the Shares, free and clear of
any and all Encumbrances;
(ii) Resignation. The resignation of each person that is a
director or officer of the Company as a director and officer of the Company
effective as of the Closing;
(iii) Consents. Copies of all notices or Consents listed on
Schedule 2.2, duly executed by the appropriate parties thereto;
(iv) Bring-Down Certificate. A certificate signed by a duly
authorized officer of each of the Sellers dated the Closing Date certifying
that the conditions contained in Sections 8.1 and 8.2 have been satisfied;
(v) Certificates of Good Standing. A Certificate of Good
Standing with respect to the Company and each of the Sellers issued by the
appropriate state official for its jurisdiction of organization, each dated
not more than twenty (20) days prior to the Closing Date;
(vi) Escrow Agreement. The Escrow Agreement contemplated by
Section 1.2(b);
(vii) Noncompetition Agreement. A Noncompetition Agreement
signed by the Sellers in the form attached as Exhibit B;
(viii) Software License and Support Agreement. A Software
License and Support Agreement signed by Sellers substantially in the form
attached as Exhibit C;
(ix) Tradename and Trademark License Agreements. The
Tradename and Trademark License Agreements signed by the Sellers
substantially in the form attached as Exhibit D;
(x) Release. A Release signed by Sellers substantially in
the form attached as Exhibit E;
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(xi) Transitional Services Agreement. A Transitional
Services Agreement signed by Sellers substantially in the form attached as
Exhibit F;
(xii) Employee Leasing Agreement. An Employee Leasing
Agreement signed by Sellers substantially in the form attached as Exhibit
G;
(xiii) Opinion of Counsel. An opinion of Sellers' counsel,
dated the Closing Date, substantially in the form attached as Exhibit H;
(xiv) Estoppel Certificates. Estoppel Certificates from each
of the landlords of the properties referenced in Items 1-4 of Schedule
2.18, provided, however, that if Sellers are unable to obtain an Estoppel
Certificate from any landlord after reasonable efforts to do so, Sellers
may instead certify the status of the specific lease to Buyer by delivery
of a Sellers' Estoppel Certificate in a form reasonably acceptable to Buyer
and indemnify Buyer from the inaccuracy of any of the information contained
in Sellers' Estoppel Certificate;
(xv) Real Estate Purchase Agreement. A Real Estate Purchase
Agreement with respect to the Frozen Food Facility and Parking Lot signed
by Sellers and the necessary lenders and other parties to the Synthetic
Lease Agreement substantially in the form attached as Exhibit I;
(xvi) Vendor Contract Participation Agreement. A Vendor
Contract Participation Agreement signed by the appropriate Sellers
substantially in the form attached as Exhibit J; and
(xvii) Further Documents. Such other documents as Buyer may
reasonably request in good faith at least ten (10) days prior to the
Closing Date for the purpose of facilitating the consummation of the
Contemplated Transactions.
(b) Closing Deliveries By Buyer. On the Closing Date, Buyer shall
deliver, or cause to be delivered, to Sellers:
(i) Closing Payment. The Closing Payment by delivery of
immediately available funds;
(ii) Escrow Payment. Evidence of payment of the Escrow
Payment to the Escrow Agent;
(iii) Escrow Agreement. The Escrow Agreement contemplated by
Section 1.2(b);
(iv) Noncompetition Agreement. A Noncompetition Agreement
signed by Buyer in the form attached as Exhibit B;
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(v) Software License and Support Agreement. A Software
License and Support Agreement signed by the Company substantially in the
form attached as Exhibit C;
(vi) Tradename and Trademark License Agreements. The
Tradename and Trademark License Agreements signed by the Company
substantially in the forms attached as Exhibit D;
(vii) Transitional Services Agreement. A Transitional
Services Agreement signed by the Company substantially in the form attached
as Exhibit F;
(viii) Employee Leasing Agreement. An Employee Leasing
Agreement signed by the Company substantially in the form attached as
Exhibit G;
(ix) Real Estate Purchase Agreement. A Real Estate Purchase
Agreement signed by Buyer with respect to the Frozen Food Facility and
Parking Lot substantially in the form attached as Exhibit I;
(x) Vendor Contract Participation Agreement. A Vendor
Contract Participation Agreement signed by Buyer substantially in the form
attached as Exhibit J; and
(xi) Further Documents. Such other documents as Sellers may
reasonably request in good faith at least ten (10) days prior to the
Closing Date for the purpose of facilitating the consummation of the
Contemplated Transactions.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
The Sellers, jointly and severally, represent and warrant to Buyer as
follows:
2.1 Organization and Qualification of the Company. The Company is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Florida. AFD is a corporation duly organized, validly
existing and in good standing under the laws of the State of California. SFI is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. SFI, AFD and the Company each has full power and
authority to carry on its business as it is now being conducted, to own or hold
under lease the properties and assets it now owns or holds under lease, and
perform all of its obligations under the Applicable Contracts, except for such
failures which would not have a Material Adverse Effect. The Company is duly
qualified to do business and is in good standing as a foreign corporation in the
jurisdictions listed on Schedule 2.1 and there are no other jurisdictions in
which the conduct of its businesses or activities or its ownership of assets
requires such qualification under applicable law, except for such failures which
would not have a Material Adverse Effect. Copies of minute books, records and
Organizational Documents of the
8
Company as currently in effect have been delivered to Buyer and in the form so
delivered are true and complete in all material respects.
2.2 Authority; No Conflict.
(a) This Agreement constitutes the legal, valid, and binding
obligation of Sellers, enforceable against each of the Sellers in accordance
with its terms. Upon the execution and delivery by Sellers of the Escrow
Agreement, the Noncompetition Agreement, the Software License and Support
Agreement, the Tradename and Trademark License Agreement, the Transitional
Services Agreement, the Employee Leasing Agreement, the Release, the Real Estate
Purchase Agreement, the Vendor Contract Participation Agreement, the documents
of assignment and conveyance contemplated by Section 1.9(a)(i) and any other
documents delivered pursuant to Section 1.9(a)(xvii) (the "Related Agreements"),
the Related Agreements will constitute the legal, valid, and binding obligations
of Sellers, enforceable against each of the Sellers in accordance with their
respective terms. Sellers have the right, power, and authority to execute and
deliver this Agreement and the Related Agreements and to perform their
obligations under this Agreement and the Related Agreements.
(b) Except as set forth in Schedule 2.2, neither the execution
and delivery of this Agreement and the Related Agreements nor the consummation
or performance of any of the Contemplated Transactions will (with or without
notice or lapse of time):
(i) contravene, conflict with, or result in a violation of
any provision of the Organizational Documents of Sellers or the Company;
(ii) contravene, conflict with, or result in a violation of,
or give any Governmental Body or other Person the right to challenge any of
the Contemplated Transactions or to exercise any remedy or obtain any
relief under, any Legal Requirement or any Order to which the Company or
either of the Sellers, or any of the assets owned or used by the Company,
are subject, except for such failures, contraventions, violations or
conflicts which would not have a Material Adverse Effect;
(iii) contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate, or modify, any
Governmental Authorization that is held by the Company or that otherwise
relates to the business of, or any of the assets owned or used by the
Company, except for such failures which would not have a Material Adverse
Effect;
(iv) contravene, conflict with, or result in a violation or
breach of any provision of, or to Sellers' Knowledge give any Person the
right to declare a default or exercise any remedy under, or to accelerate
the maturity or performance of, or to cancel, terminate, or modify, in any
material respect, any Applicable Contract; or
(v) result in the imposition or creation of any Encumbrance
(other than Permitted Encumbrances) upon or with respect to any of
9
the assets owned or used by Sellers or the Company in connection with the
Foodservice Business.
Except as set forth in Schedule 2.2, neither Sellers nor the Company
is required to give any notice to or obtain any Consent from any Person in
connection with the execution and delivery of this Agreement or the consummation
of any of the Contemplated Transactions.
2.3 Capitalization. The authorized equity securities of the Company
consists solely of (i) 24,000 Class A non-cumulative, non-voting preferred
stock, $.01 par value, (ii) 24,000 Class B non-cumulative, non-voting preferred
stock, $.01 par value, (iii) 60,000 Class B common stock, $1.00 par value, and
(iv) 7,500 Class A common shares, $1 par value per share, of which 5000 Class A
common shares are issued and outstanding. AFD is the record and beneficial owner
and holder of all of the Shares, free and clear of all Encumbrances. Upon
consummation of the transactions provided for in this Agreement in accordance
with the terms hereof, Sellers will deliver to Buyer good title to the Shares
free and clear of all Encumbrances. All of the outstanding equity securities of
the Company have been duly authorized and validly issued and are fully paid and
nonassessable. Neither the Sellers nor the Company is bound by any agreement
relating to the issuance, sale, or transfer of any equity securities or other
securities of the Company. None of the equity securities or other securities of
the Company was issued in violation of the Securities Act or any other material
Legal Requirement. The Company does not own, or have any Contract to acquire,
any equity securities of any Person or any direct or indirect equity or
ownership interest in any other business.
2.4 Financial Statements. Schedule 2.4(a) contains (i) the unaudited
balance sheets of the Company as of December 29, 2002, March 23, 2003 and June
15, 2003 (the "Balance Sheets") and (ii) the unaudited statements of profits and
losses of the Company for the fiscal year ended December 29, 2002 and the fiscal
year-to-date period ended June 15, 2003 (the "P&L Statements" and, together with
the Balance Sheets, the "Financial Statements"). Except as set forth on Schedule
2.4(b), no financial statements of any Person other than the Company are
required by GAAP to be included in the financial statements of the Company. The
Financial Statements have been extracted from the books and records of the
Company and on the basis of the presentation as reflected on Schedule 1.3.
Except as set forth on Schedule 2.4(c), the Financial Statements are true,
correct and complete in all material respects fairly present the financial
position of the Company and the results of its operations and changes in
stockholders' equity as of the dates thereof or for the periods covered thereby,
and have been prepared in conformity with GAAP applied consistently throughout
the periods indicated.
2.5 Books and Records. The books of account, minute books, stock
record books and other records of the Company, all of which have been made
available to Buyer, are complete and correct in all material respects and have
been maintained in accordance with Sellers' customary practices. The minute
books of the Company contain accurate and complete records in all material
respects of all meetings of, and action taken by, the shareholders and board of
directors (and committees thereof), as the case may be, of the Company, and no
such meeting has been held for which minutes have not been prepared and are not
contained in such minute books. At the Closing, to the Sellers' Knowledge all
such books and records will be in the possession of the Company.
10
2.6 No Undisclosed Liabilities. Except as set forth on Schedule 2.6,
neither the Sellers (with respect to the Foodservice Business) nor the Company
has any material liabilities or obligations of any nature (whether known or
unknown and whether absolute, accrued, contingent, or otherwise) except for
liabilities or obligations reflected or reserved against in the Balance Sheets
and liabilities incurred in the Ordinary Course of Business since the respective
dates thereof none of which, individually, or in the aggregate would have a
Material Adverse Effect .
2.7 Compliance with Legal Requirements; Governmental Authorizations.
(a) Except as set forth on Schedule 2.7 and except for those
violations or failures that would not have a Material Adverse Effect:
(i) Each of the Sellers (with respect to the Foodservice
Business) and the Company is, and at all times since January 1, 2000, has
been, in compliance with each Legal Requirement that is applicable to it or
to the conduct or operation of the Foodservice Business or the ownership or
use of any of its assets;
(ii) no event has occurred or circumstance exists that (with
or without notice or lapse of time), to Sellers' Knowledge (A) would
constitute or result in a violation by Sellers or the Company of, or a
failure on the part of Sellers or the Company to comply with, any Legal
Requirement applicable to the Foodservice Business, or (B) give rise to any
obligation on the part of Sellers or the Company to undertake, or to bear
all or any portion of the cost of, any remedial action of any nature; and
(iii) neither Sellers nor the Company has received, at any
time since January 1, 2000, any written notice or other written
communication, or to Sellers' Knowledge, any other notice or communication,
from any Governmental Body or any other Person regarding (A) any actual,
alleged or potential violation of, or failure to comply with, any Legal
Requirement applicable to the Foodservice Business, or (B) any actual,
alleged or potential obligation on the part of Sellers (as it relates to
the Foodservice Business) or the Company to undertake, or to bear all or
any portion of the cost of, any remedial action of any nature.
(b) Schedule 2.7(b) contains a complete and accurate list of each
material Governmental Authorization that is held by each of the Sellers (with
respect to the Foodservice Business) or the Company or that otherwise relates to
the Foodservice Business, or to any of the assets owned or used by Sellers (with
respect to the Foodservice Business) or the Company. Each material Governmental
Authorization listed on Schedule 2.7(b) is valid and in full force and effect.
Except as set forth on Schedule 2.7(b) and except for those violations or
failures that would not have a Material Adverse Effect:
(i) each of the Sellers (with respect to the Foodservice
Business) and the Company is, and at all times since January 1, 2000, has
been, in
11
compliance in all material respects with all of the terms and requirements
of each Governmental Authorization identified on Schedule 2.7(b);
(ii) no event has occurred or circumstance exists that would
(with or without notice or lapse of time) (A) constitute or result in a
violation of or a failure to comply with any term or requirement of any
Governmental Authorization listed on Schedule 2.7(b), or (B) result in the
revocation, withdrawal, suspension, cancellation, or termination of, or any
modification to, any Governmental Authorization listed on Schedule 2.7(b);
(iii) neither Sellers (with respect to the Foodservice
Business) nor the Company has received, at any time since January 1, 2000,
any written notice or other written communication, or to Sellers'
Knowledge, any other notice or communication, from any Governmental Body or
any other Person regarding (A) any actual, alleged or potential violation
of or failure to comply with any term or requirement of any Governmental
Authorization listed on Schedule 2.7(b), or (B) any actual, proposed,
possible, or potential revocation, withdrawal, suspension, cancellation,
termination of, or modification to, any Governmental Authorization listed
on Schedule 2.7(b); and
(iv) all applications legally required to have been filed
for the renewal of the Governmental Authorizations listed on Schedule
2.7(b) have been duly filed on a timely basis with the appropriate
Governmental Bodies, and all other filings required to have been made with
respect to such Governmental Authorizations have been duly made on a timely
basis with the appropriate Governmental Bodies.
The Governmental Authorizations listed on Schedule 2.7(b) collectively
constitute all of the Governmental Authorizations necessary to permit each of
the Sellers and the Company to lawfully conduct and operate the Foodservice
Business in the manner they currently conduct and operate the Foodservice
Business and to permit each of the Sellers (with respect to the Foodservice
Business) and the Company to own and use their assets in the manner in which
they currently own and use such assets.
2.8 Absence of Certain Changes. Except as disclosed on Schedule 2.8,
since December 30, 2002, each of the Sellers (as it relates to the Foodservice
Business) and the Company has conducted its business only in the Ordinary Course
of Business and there has not been any Material Adverse Effect. Without limiting
the generality of the foregoing, and except as otherwise disclosed on Schedule
2.8, since December 30, 2002, there has not been:
(a) Any change in the authorized or issued shares of the Company,
grant of any option or right to purchase shares or other equity interests of the
Company, issuance of any security convertible into such shares or equity
interests, grant of any registration rights, purchase, redemption, retirement or
other acquisition by the Company of any such shares or equity interests or
declaration or payment of any distribution or payment in respect of such shares
or equity interests;
12
(b) Any amendment to the Organizational Documents of the Company;
(c) Any damage, destruction, casualty or other similar occurrence
or event (whether or not insured against) affecting Sellers (with respect to the
Foodservice Business) or the Company which either singly or in the aggregate
materially adversely affects their respective assets, liabilities, earnings,
business or operations;
(d) Any mortgage or pledge of or encumbrance on any of the
properties or assets of Sellers (that are used primarily in the conduct of the
Foodservice Business) or the Company;
(e) Any incurrence or creating by Sellers (with respect to the
Foodservice Business) or the Company of any liability, commitment, or obligation
in excess of $25,000, except unsecured current liabilities incurred in the
Ordinary Course of Business and Contracts entered into in the Ordinary Course of
Business;
(f) Any sale, lease, transfer, or other disposition of the
Company's or Sellers' (with respect to the Foodservice Business) assets in
excess of $25,000, except assets sold, leased, transferred or otherwise disposed
of in the Ordinary Course of Business;
(g) Any payment or increase in compensation (including, without
limitation, bonuses, salaries, commissions, profit sharing, or pension) to any
shareholder, officer, or director or (except in the Ordinary Course of Business)
employee involved in the Foodservice Business or entry into any employment,
severance, or similar Contract with any officer, director, or employee involved
primarily in the Foodservice Business other than increases or changes in the
Ordinary Course of Business;
(h) Any material change from the past practice, of Sellers (with
respect to the Foodservice Business) or the Company regarding the incurrence and
timing of payment of trade payables;
(i) Any loan or advance by Sellers (with respect to the
Foodservice Business) or the Company to, or guarantee by Sellers (with respect
to the Foodservice Business) or the Company for the benefit of, any party with
respect to the Foodservice Business other than sales to customers of the
Foodservice Business on credit in the Ordinary Course of Business consistent
with past custom and practices;
(j) Any cancellation, waiver, or release by Sellers (with respect
to the Foodservice Business) or the Company of any material debts, rights, or
claims;
(k) Any material modification, amendment, or termination of any
Contract to which Sellers (with respect to the Foodservice Business) or the
Company is a party, other than expiration of Contracts in accordance with their
terms;
(l) Any loss or adverse modification of the relationship of
Sellers (with respect to the Foodservice Business) or the Company with any
material customer, supplier, or key employee of the Foodservice Business or
receipt of notification (with respect to the Foodservice Business) to such
effect;
13
(m) Any material change from past practices in the application of
accounting principles, methods, or practices (including, but without limitation,
any change in depreciation or amortization policies or rates) utilized by
Sellers (with respect to the Foodservice Business) or the Company;
(n) Any capital expenditures or commitments therefor by Sellers
(with respect to the Foodservice Business) or the Company in each case in excess
of $25,000, other than capital expenditures or commitments therefor to replace
obsolete or unrepairable equipment used in the Foodservice Business in the
Ordinary Course of Business;
(o) Any Encumbrance, other than Permitted Encumbrances, on any
asset of Sellers (with respect to the Foodservice Business) or the Company used
primarily in the conduct of the Foodservice Business other than the items
described on Schedule 2.8 (the "Permitted Exceptions")
(p) Any entry into, termination of, or receipt of notice of
termination of (i) any license, distributorship, dealer, sales representative,
joint venture, credit, or similar agreement relating to the Foodservice
Business, or (ii) any Contract or transaction involving a total remaining
commitment to or by Sellers or the Company of at least $25,000 relating to the
Foodservice Business other than in the Ordinary Course of Business; or
(q) Any agreement, whether oral or written, by Sellers or the
Company to do any of the foregoing.
2.9 Personal Property. Schedule 2.9 contains (a) a list of all
material leases (other than real property leases), pursuant to which either of
the Sellers or the Company is either a lessor or lessee of tangible personal
property used in the conduct of the Foodservice Business and located in Florida
and (b) a list of all material tangible and intangible personal property owned
or used by each of the Sellers and the Company primarily in connection with the
Foodservice Business and located in Florida. Except as set forth in Schedule
2.9, the Company has title to, or a valid leasehold interest in, each of the
items listed on Schedule 2.9, in each case free and clear of any Encumbrances,
except for Permitted Encumbrances. The Company owns or leases all tangible or
intangible personal property, rights, and assets necessary for the operation by
the Company of the Foodservice Business as now conducted. Except as set forth in
Schedule 2.9, none of the personal property listed on Schedule 2.9 is held under
any material lease, security agreement, conditional sales contract or other
title retention or security arrangement or is located other than on the premises
owned or used by the Company. The assets used in the conduct of the Foodservice
Business are being sold in "as is" condition and, to Sellers' Knowledge, such
assets are not subject to any known defects or conditions that would require
Buyer to expend a material amount of funds to repair other than routine
maintenance.
2.10 Inventory.
(a) All items included in the inventory of the Company, whether
or not reflected on the Balance Sheets, are (a) of good and standard quality and
(b) saleable in the Ordinary Course of Business. The Company has provided for
slow moving and obsolete inventory by establishing a reserve for the slow moving
and obsolete inventory and a reserve for
14
shrinkage. Such reserves, based on the Sellers' Knowledge, are considered
adequate. Inventories reflected on the Balance Sheets have been priced at the
lower of cost or, net realizable value.
(b) The aggregate amount of the reserves for slow-moving and
obsolete inventory and shrinkage with respect to the Foodservice Business, the
Meat Processing Business and the Retail Store Business (as such terms are
defined in the Asset Purchase Agreement) is no less than Eight Hundred Thousand
Dollars ($800,000) in the aggregate.
2.11 Accounts Receivable. All of the Accounts Receivable (not
including the Meat Processing and the Retail Store Business) reflected on the
Balance Sheets represent valid obligations arising from sales actually made or
services actually performed by Sellers in the Ordinary Course of Business. The
allowance for doubtful accounts reflected on the Balance Sheets has been
calculated on a consistent basis with past practice based on the Knowledge of
Sellers' management at those dates and are considered adequate. Schedule 2.11
contains a complete and accurate list of all Accounts Receivable (not including
the Meat Processing and the Retail Store Business) as of the dates set forth on
the Balance Sheets, which list sets forth the aging of such Accounts Receivable
(not including the Meat Processing and the Retail Store Business).
2.12 Contracts; No Defaults.
(a) Schedule 2.12(a) contains a complete and accurate list, and
Sellers have delivered to Buyer true and complete copies (except for the Vendor
Agreements as set forth on Annex 1 of the Schedule attached hereto) of:
(i) each Applicable Contract that involves the performance
of services or delivery of goods or materials to the Company of an amount
or value in excess of $25,000;
(ii) each Applicable Contract that was not entered into in
the Ordinary Course of Business and that involves expenditures or receipts
of the Company in excess of $25,000;
(iii) each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable Contract
affecting the ownership of, leasing of, title to, use of, or any leasehold
or other interest in, any real or personal property used primarily in the
conduct of the Foodservice Business (except personal property leases and
installment and conditional sales agreements having a value per item or
aggregate payments of less than $25,000 and with terms of less than one
year);
(iv) each licensing agreement or other Applicable Contract
with respect to patents, trademarks, copyrights, or other intellectual
property used primarily in the conduct of the Foodservice Business,
including agreements with current or former employees, consultants, or
contractors regarding the appropriation or the nondisclosure of any of the
Intellectual Property Rights;
15
(v) each collective bargaining agreement and other
Applicable Contract to or with any labor union or other employee
representative of a group of employees of the Foodservice Business.
(vi) each joint venture, partnership, investment or other
agreement involving a sharing of profits, losses, costs, or liabilities by
Sellers or the Company with any other Person relating to the Foodservice
Business;
(vii) each Applicable Contract containing covenants that
restrict the business activity of Sellers (with respect to the Foodservice
Business) or the Company or limits the freedom of Sellers (with respect to
the Foodservice Business) or the Company to engage in any line of business
or to compete with any Person;
(viii) each Applicable Contract providing for payments to or
by any Person based on sales, purchases, or profits, other than direct
payments for goods;
(ix) each power of attorney that is currently outstanding;
(x) each Applicable Contract entered into other than in the
Ordinary Course of Business that contains or provides for an express
undertaking by Sellers (as it relates to the Foodservice Business) or the
Company to be responsible for consequential damages;
(xi) each Applicable Contract for capital expenditures or
for the purchase of intangible assets in excess of $25,000;
(xii) each written warranty, guaranty, and or other similar
undertaking with respect to contractual performance extended by Sellers
with respect to the Foodservice Business or the Company other than in the
Ordinary Course of Business; and
(xiii) each material amendment, supplement, and modification
in respect of any of the foregoing.
(b) Except as set forth in Schedule 2.12(b), no officer,
director, agent, employee, consultant, or contractor of Sellers (with respect to
the Foodservice Business) or the Company is bound by any Contract that limits
the ability of such officer, director, agent, employee, consultant, or
contractor to (A) engage in or continue any conduct, activity, or practice
relating to the Foodservice Business, or (B) assign to the Company or to any
other Person any rights to any invention, improvement, or discovery.
(c) Except as set forth in Schedule 2.12(c), each Applicable
Contract identified or required to be identified in Schedule 2.12(a) is in full
force and effect and is valid and enforceable in accordance with its terms.
(d) Except as set forth in Schedule 2.12(d):
16
(i) Sellers (with respect to the Foodservice Business) and
the Company is, and at all times since January 1, 2000, has been, in
compliance in all material respects with all applicable terms and
requirements of each Contract relating to the Foodservice Business under
which Sellers (with respect to the Foodservice Business) or the Company has
or had any obligation or liability or by which Sellers (with respect to the
Foodservice Business) or the Company or any of the assets owned or used by
Sellers (with respect to the Foodservice Business) or the Company is or was
bound;
(ii) to Sellers' Knowledge, each other Person that has or
had any obligation or liability under any Contract under which Sellers
(with respect to the Foodservice Business) or the Company has or had any
rights relating to the Foodservice Business is, and at all times since
January 1, 2000, has been, in material compliance with all applicable terms
and requirements of such Contract;
(iii) no event has occurred or circumstance exists that
(with or without notice or lapse of time) may contravene, conflict with, or
result in a violation or breach of, or give Sellers (with respect to the
Foodservice Business) or the Company or other Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable
Contract; and
(iv) neither Sellers (with respect to the Foodservice
Business) nor the Company has given to or received from any other Person,
at any time since January 1, 2000, any notice or other communication
(whether oral or written) regarding any actual, alleged, possible, or
potential violation or breach of, or default under, any Contract relating
to the Foodservice Business.
(e) There are no renegotiations of, attempts to renegotiate, or
outstanding rights to renegotiate any material amounts paid or payable to
Sellers or the Company under current or completed Contracts relating to the
Foodservice Business with any Person and no such Person has made written demand
for such renegotiation.
(f) The Contracts relating to the sale, production, manufacture,
or provision of products or services by Sellers and the Company with respect to
the Foodservice Business have been entered into in the Ordinary Course of
Business and have been entered into without the commission of any act alone or
in concert with any other Person, or any consideration having been paid or
promised, that is or would be in violation of any Legal Requirement.
(g) To Sellers' Knowledge, there are no material oral contracts
with respect to the Foodservice Business.
2.13 Guaranties. Except as set forth in Schedule 2.13, neither Sellers
(with respect to the Foodservice Business) nor the Company is a guarantor or
otherwise liable for any material liability or obligation (including
indebtedness) of any other Person.
17
2.14 Employee Benefits.
(a) The following terms have the meanings set forth below:
"Company Other Benefit Obligation" means an Other Benefit Obligation
owed, adopted, or followed by the Company or an ERISA Affiliate of the Company
to any employee of the Company.
"Company Plan" means all Plans of which the Company or an ERISA
Affiliate of the Company is or was a Plan Sponsor, or to which the Company or an
ERISA Affiliate of the Company otherwise contributes or has contributed for the
benefit of any employee or former employee of the Company, or in which the
Company or an ERISA Affiliate of the Company otherwise participates or has
participated for the benefit of any employee or former employee of the Company,
within the last 6 years prior to the date hereof. All references to Plans are to
Company Plans unless the context requires otherwise.
"Company VEBA" means a VEBA whose members include employees of the
Company.
"ERISA Affiliate" means, with respect to the Company, any other Person
that, together with the Company, would be treated as a "single employer" within
the meaning of Section 4001(b) of ERISA.
"Multi-Employer Plan" has the meaning given in ERISA (S) 3(37)(A).
"Other Benefit Obligations" means all obligations, arrangements, or
customary practices, whether or not legally enforceable, to provide benefits,
other than salary, as compensation for services rendered, to present or former
directors, employees and agents of the Company, other than such obligations,
arrangements, and practices that are Plans. Other Benefit Obligations include
consulting agreements under which the compensation paid does not depend upon the
amount of service rendered, sabbatical policies, severance payment policies, and
fringe benefits within the meaning of IRC (S) 132.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Pension Plan" has the meaning given in ERISA (S) 3(2)(A).
"Plan" has the meaning given in ERISA (S) 3(3).
"Plan Sponsor" has the meaning given in ERISA (S) 3(16)(B).
"Qualified Plan" means any Plan that meets or purports to meet the
requirements of IRC (S) 401(a).
"Title IV Plans" means all Pension Plans that are subject to Title IV
of ERISA, 29 U.S.C. (S) 1301 et seq., other than Multi-Employer Plans.
18
"VEBA" means a voluntary employees' beneficiary association under IRC
(S) 501(c)(9).
"Welfare Plan" has the meaning given in ERISA (S) 3(1).
(b) (i) Schedule 2.14(b)(i) contains a complete and accurate list
of all Company Plans, Company Other Benefit Obligations, and Company VEBAs.
(ii) Schedule 2.14(b)(ii) sets forth, each Multi-Employer
Plan.
(iii) There are no Company VEBAs.
(c) Sellers have delivered to Buyer, or will deliver to Buyer
within ten (10) days of the date of this Agreement:
(i) all documents that set forth the terms of the Company
Plans, or Company Other Benefit Obligations and of any related trusts,
including (A) all plan descriptions and summary plan descriptions of
Company Plans for which Sellers or the Company is required to prepare,
file, and distribute plan descriptions and summary plan descriptions, and
(B) all summaries and descriptions furnished to participants and
beneficiaries regarding Company Plans, and Company Other Benefit
Obligations for which a plan description or summary plan description is not
required;
(ii) all personnel, payroll, and employment manuals and
policies;
(iii) all collective bargaining agreements pursuant to which
contributions have been made or obligations incurred (including both
pension and welfare benefits) by the Company and the ERISA Affiliates of
the Company, and all collective bargaining agreements pursuant to which
contributions are being made or obligations are owed by such entities;
(iv) a written description of any Company Plan or Company
Other Benefit Obligation that is not otherwise in writing;
(v) all insurance policies purchased by or to provide
benefits under any Company Plan;
(vi) all contracts with third party administrators,
actuaries, investment managers, consultants, and other independent
contractors that relate to the Company Plans or Company Other Benefit
Obligations;
(vii) all reports submitted within the two (2) years
preceding the date of this Agreement by third party administrators,
actuaries, investment managers, consultants, or other independent
contractors with respect to the Company Plans or Company Other Benefit
Obligations;
19
(viii) the Form 5500 filed for each of the most recent two
(2) plan years with respect to each Company Plan, including all schedules
thereto and the opinions of independent accountants;
(ix) all notices that were given by the Company or any ERISA
Affiliate of the Company or any Company Plans to the IRS, the PBGC,
pursuant to statute, within the four (4) years preceding the date of this
Agreement, that are not expressly mentioned elsewhere in this Section 2.14;
(x) all notices that were given by the IRS, the PBGC, or the
Department of Labor to the Company, any ERISA Affiliate of the Company, or
any Company Plan within the four (4) years preceding the date of this
Agreement;
(xi) with respect to Qualified Plans, the most recent
determination letter for each Plan of the Company that is a Qualified Plan;
and
(xii) with respect to Title IV Plans, the Form PBGC-1 filed
for each of the two (2) most recent years.
(d) Except as set forth in Schedule 2.14(d):
(i) To the Knowledge of Sellers the Company has performed,
in all material respects, all of its respective obligations under all
Company Plans, and Company Other Benefit Obligations. The Company has made
appropriate entries in its financial records and statements for all
obligations and liabilities under such Plans and Obligations that have
accrued but are not due.
(ii) To the Knowledge of Sellers, no written statement has
been made by the Company to any Person with regard to any Plan or Other
Benefit Obligation that was not in accordance with the Plan or Other
Benefit Obligation and that could have a material adverse economic
consequence to the Company, the Foodservice Business or the Buyer.
(iii) The Company, with respect to all Company Plans and
Company Other Benefit Obligations, are, and each Company Plan and Company
Other Benefit Obligation, is, in full material compliance with ERISA, the
IRC, the privacy requirements of the Health Insurance Portability and
Accountability Act of 1996, and other applicable Legal Requirements
including the provisions of such Legal Requirements expressly mentioned in
this Section 2.14, and with any applicable collective bargaining agreement.
(A) To the Knowledge of Sellers no transaction
prohibited by ERISA (S) 406 and no "prohibited transaction" under
IRC (S) 4975(c) have occurred with respect to any Company Plan.
20
(B) Neither Sellers nor the Company has any material
liability to PBGC with respect to any Plan or has any liability under
ERISA (S) 502 or (S) 4071.
(iv) Other than claims for benefits submitted by
participants or beneficiaries, no claim against, or legal proceeding
involving any Company Plan or Company Other Benefit Obligation is pending
or, to Sellers' Knowledge, is threatened.
(v) Any Company Plan intended to be a Qualified Plan has
received a determination letter from the IRS or has applied for a
determination letter from the IRS stating that it is so qualified. To the
Knowledge of the Sellers, each Plan intended to be a Qualified Plan, in
form and operation, is so qualified.
(vi) The Company and each ERISA Affiliate of the Company has
met the minimum funding standard, and has made all contributions required,
under ERISA (S) 302 and IRC (S) 402.
(vii) The Company has paid all amounts due to the PBGC
pursuant to ERISA (S) 4007.
(viii) Neither the Company nor any ERISA Affiliate of the
Company has withdrawn from any Title IV Plan in a manner that would that
could be reasonably expected to subject any entity or Sellers to liability
under ERISA (S) 4062(e), (S) 4063 or (S) 4064.
(ix) Neither the Company nor any ERISA Affiliate of the
Company has filed a notice to terminate any Plan, and neither the Company
nor any ERISA Affiliate of the Company has adopted any amendment to treat a
Plan as terminated. The PBGC has not instituted proceedings to treat the
Company Plan as terminated. No event has occurred or circumstance exists
that would constitute grounds under ERISA (S) 4042 for the termination of,
or the appointment of a trustee to administer, any Company Plan.
(x) No amendment has been made, or is reasonably expected to
be made, to any Plan that has required or could require the provision of
security under ERISA (S) 307 or IRC (S) 401(a)(29).
(xi) Neither Sellers nor the Company has Knowledge of any
facts or circumstances that would give rise to any liability of Sellers,
the Company, or Buyer to the PBGC under Title IV of ERISA.
(xii) Neither the Company nor any ERISA Affiliate of the
Company has ever established, maintained, or contributed to or otherwise
participated in, or had an obligation to maintain, contribute to, or
otherwise participate in, any Multi-Employer Plan.
21
(xiii) Except to the extent required under ERISA (S) 601 et
seq. and IRC (S) 4980B, the Company does not provide health or welfare
benefits for any retired or former employee and the Company is not
obligated to provide health or welfare benefits to any active employee
following such employee's retirement or other termination of service.
(xiv) The Company has the right to modify and terminate
benefits to retirees (other than pensions) with respect to both retired and
active employees.
(xv) No payment that is owed or becomes due to any director,
officer, employee, or agent of the Company will be non-deductible to the
Company or subject to tax under IRC (S) 280G or (S) 4999; nor will the
Company be required to "gross up" or otherwise compensate any such person
because of the imposition of any excise tax on a payment to such person.
(xvi) The consummation of the Contemplated Transactions will
not result in the payment, vesting, or acceleration of any benefit.
2.15 Employees.
(a) Schedule 2.15 contains a complete and accurate list of the
following information for each employee, officer or director of each of the
Sellers (with respect to the Foodservice Business) and of the Company who earned
more than $75,000 in calendar year 2002, or is reasonably expected to earn more
than $75,000 in calendar year 2003, including each employee on leave of absence
or layoff status: name; job title; current compensation paid or payable and any
change in compensation since December 30, 2002.
(b) To Sellers' Knowledge, no employee, officer or director of
Sellers or the Company is a party to, or is otherwise bound by, any agreement or
arrangement, including any confidentiality, noncompetition, or proprietary
rights agreement, between such employee, officer or director and any other
Person ("Proprietary Rights Agreement") that in any way adversely affects or
will affect (i) the performance of his or her duties as an employee, officer or
director of either of the Sellers or the Company, or (ii) the ability of the
Company to conduct the Foodservice Business, including any Proprietary Rights
Agreement with either of the Sellers or the Company by any such employee or
director. To the Knowledge of Sellers, no director, officer, or other key
employee of the Company intends to terminate his or her employment with the
Company prior to the Closing Date.
(c) Schedule 2.15 also contains a complete and accurate list of
the following information for each retired employee, officer or director of the
Company or their dependents receiving benefits or scheduled to receive benefits
in the future: name, pension benefit, pension option election, retiree medical
insurance coverage, retiree life insurance coverage, and other benefits.
2.16 Labor Relations; Compliance. Except as set forth in Schedule 2.16
neither Sellers ( with respect to the Foodservice Business) nor the Company
during the past three years has been, or presently is, a party to, any
collective bargaining or other labor Contract.
22
During the past three years there has not been, and presently there is no
pending or existing, and to Sellers' Knowledge there is not threatened (a) any
strike, slowdown, picketing, work stoppage, or employee grievance process, (b)
any material proceeding against or affecting the Company or the Foodservice
Business relating to the alleged violation of any Legal Requirements pertaining
to labor relations or employment matters, including any charge or complaint
filed by an employee or union with the National Labor Relations Board, the Equal
Employment Opportunity Commission, or any comparable Governmental Body,
organizational activity, or other labor or employment dispute against or
affecting the Foodservice Business, the Company or their premises, or (c) any
application for certification of a collective bargaining agent. To Sellers'
Knowledge, no event has occurred or circumstance exists that could provide the
basis for any work stoppage or other labor dispute. There is no lockout of any
employees of the Foodservice Business by Sellers or the Company, and no such
action is contemplated by Sellers or the Company. Each of the Sellers (with
respect to the Foodservice Business) and the Company has complied in all
material respects with all Legal Requirements relating to employment, equal
employment opportunity, nondiscrimination, immigration, wages, hours, benefits,
collective bargaining, the payment of social security and similar taxes,
occupational safety and health, and plant closing. Neither Sellers (with respect
to the Foodservice Business) nor the Company is liable for the payment of any
compensation, damages, taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements.
2.17 Litigation.
(a) Except as set forth on Schedule 2.17(a), there is no pending
Proceeding:
(i) that has been commenced by or against Sellers (as it
relates to the Foodservice Business) or the Company or any of the assets
owned or used by Sellers (as it relates to the Foodservice Business) or the
Company; or
(ii) that challenges or that would reasonably be expected to
prevent, delay, or make illegal any of the Contemplated Transactions.
To the Knowledge of Sellers, (1) no such Proceeding has been
threatened and (2) no event has occurred or circumstance exists that would give
rise to or serve as a basis for the commencement of any such Proceeding. Sellers
have made available to Buyer the attorneys representing Sellers in the
Proceedings and such attorneys have made available to Buyer summaries of all
pleadings, correspondence, and other documents relating to each Proceeding
listed on Schedule 2.17(a). The Proceedings listed on Schedule 2.17(a) would
not, individually or in the aggregate, have a Material Adverse Effect.
(b) Except as set forth on Schedule 2.17(b):
(i) there is no Order to which the Company or any of the
assets used primarily in the Foodservice Business is subject;
(ii) the Sellers are not subject to any Order that relates
to the Foodservice Business or any of the assets owned or used by, the
Company; and
23
(iii) no officer, director, agent, or employee of the
Company is subject to any Order that prohibits such officer, director,
agent, or employee from engaging in or continuing any material conduct,
activity, or practice relating to the Foodservice Business.
(c) Except as set forth on Schedule 2.17(c):
(i) Sellers (with respect to the Foodservice Business) and
the Company, is, and at all times since January 1, 2000, has been, in
material compliance with all of the terms and requirements of each Order to
which it, or any of the assets owned or used by it, is or has been subject;
(ii) no event has occurred or circumstance exists that would
constitute or result in (with or without notice or lapse of time) a
violation of or failure to comply with any term or requirement of any Order
to which Sellers (with respect to the Foodservice Business) or the Company,
or any of the assets owned or used by Sellers (with respect to the
Foodservice Business) or the Company, is subject; and
(iii) neither Sellers (with respect to the Foodservice
Business) nor the Company has received, at any time since January 1, 2001,
any written notice or other written communication, or to the Knowledge of
Sellers any oral communication, from any Governmental Body regarding any
actual, alleged or potential violation of, or failure to comply with, any
term or requirement of any Order to which Sellers (with respect to the
Foodservice Business) or the Company, or any of the assets owned or used by
Sellers (with respect to the Foodservice Business) or the Company, is or
has been subject.
2.18 Real Property. Schedule 2.18 contains a complete and accurate
list of all real property, leaseholds, or other interests therein owned by
Sellers or the Company in connection with the Foodservice Business. Sellers have
delivered to Buyer copies of the leases and other instruments (as recorded) by
which Sellers or the Company acquired such real property interests, and copies
of all title insurance policies, opinions, abstracts, and surveys in the
possession or control of Sellers or the Company and relating to such property or
interests. The Company owns the leasehold interests and all the properties and
assets (whether real, personal, or mixed and whether tangible or intangible)
related thereto that it purports to lease in connection with the conduct of the
Foodservice Business and are located in the facilities owned or operated by the
Company or reflected as leased in the books and records of the Company,
including all of the properties and assets reflected in the Balance Sheets
(except for assets held under capitalized leases disclosed or not required to be
disclosed in Schedule 2.18 and personal property sold since the date of the
Financial Statements, as the case may be, in the Ordinary Course of Business),
and all of the properties and assets purchased or otherwise acquired by the
Company since the date of the Balance Sheets (except for personal property
acquired and sold since the date of the Balance Sheets in the Ordinary Course of
Business and consistent with past practice), which subsequently purchased or
acquired properties and assets (other than inventory and short-term investments)
are listed in Schedule 2.18. Except as set forth in the preliminary title
reports for the properties leased by the Company and previously delivered to
Buyer, all material properties
24
and assets reflected in the Balance Sheets are free and clear of all
Encumbrances and are not, in the case of real property, subject to any rights of
way, building or use restrictions, exceptions, variances, reservations, or
limitations of any nature.
2.19 Taxes. The Company and each affiliated group of which the Company
is a member has filed all Tax Returns required to be filed by it within the time
period required by law, including, without limitation, returns of federal,
state, local and foreign income taxes, and all such Tax Returns are true and
correct in all material respects as they relate to the Company and its
Subsidiaries. The Company and each affiliated group of which the Company is a
member has paid in full all Taxes, interest, penalties, assessments, or
deficiencies shown to be due or claimed to be due on such Tax Returns. The
amount set forth on the Balance Sheet as the accrual for Taxes will be
sufficient for the payment of all unpaid Taxes of the Company, and all interest
and penalties in respect thereof, accrued or applicable or attributable to the
period ended December 30, 2002, and all years and periods prior thereto. All
monies required to be withheld by the Company from employees or collected from
customers for income taxes, social security and unemployment insurance taxes and
sales, excise and use taxes, and the portion of any such taxes to be paid by the
Company to Governmental Bodies or set aside in accounts for such purpose have
been approved, reserved against and entered upon the books and financial
statements of the Company. All material Taxes payable by the Company with
respect to the period up to the Closing Date shall be paid prior to the Closing
Date or an adequate reserve for the payment of such Taxes shall be reflected on
the Final Closing Financial Statement. Except as disclosed in Schedule 2.19,
there are no material contested Taxes, interest, penalties, assessments or
deficiencies outstanding for the Company. True and complete copies of all
material Tax Returns for the Company for the past three (3) years (together with
copies of any examination reports of federal, state, local and foreign tax
authorities relating thereto) have been furnished to Buyer. Except as set forth
on Schedule 2.19, no federal income tax returns of the Company has been examined
by the IRS for any past years, nor, to the Knowledge of Sellers, is any
examination currently pending. Any deficiencies proposed as a result of any
governmental audits have been paid or settled by the Company and there are no
present inquiries by or disputes with any Governmental Body (received in
writing) with respect to Taxes payable by the Company or its Subsidiaries and,
to the Knowledge of Sellers, any other present inquiries or disputes with any
Governmental Body with respect to Taxes payable by the Company or its
Subsidiaries. Neither the Company nor any other member of the affiliated group
of which the Company is a member has waived or granted any extension to any
taxing authority of the limitation period during which any Tax liability may be
asserted.
2.20 Insurance.
(a) Schedule 2.20(a) sets forth, by year, for the current policy
year and each of the two (2) preceding policy years:
(i) a summary of the loss experience under each policy that
provides coverage to the Company.
(b) Except as set forth in Schedule 2.20(b):
25
(i) Sellers have paid all premiums due under each policy
that provides coverage to the Company and its assets.
(c) The Company does not have in effect a separate insurance
policy.
(d) Each of the Company and its Subsidiaries has been
continuously covered during the past five (5) years by insurance in scope and
amount customary and reasonable for the businesses in which it has engaged
during such period. All such coverage is provided by reputable insurers.
(e) All policies providing coverage to the Company are in full
force and effect and provide coverage on an "occurrence" basis.
2.21 Environmental Matters.
To the Knowledge of Sellers or except as would not be reasonably
likely to result in a Material Adverse Effect or except as set forth on Schedule
2.21:
(a) Compliance with Environmental Laws. The Company is in
compliance with all applicable Environmental Laws, and is not in violation of or
liable under, any applicable Environmental Law in connection with the operation
of the Foodservice Business. Neither the Company nor any other Person for whose
conduct it is held responsible, received any notice of any violation or alleged
violation of any material Environmental Laws in connection with the operation of
the Foodservice Business, with the exception of notices of violation or alleged
liability that have been fully resolved with no future obligations on the
Foodservice Business or the Company. The Company possesses all permits,
licenses, certificates and registrations required of it under applicable
Environmental Laws.
(b) No Hazardous Substances. None of the Sellers has released,
and to Sellers' Knowledge no Hazardous Substances have been released in, under
or upon any real property at any time owned, leased, used or operated by Sellers
or the Company in connection with the Foodservice Business except in compliance
with all applicable Environmental Laws. There are no underground storage tanks
under any real property now or heretofore owned, leased, used or operated by
Sellers or the Company in connection with the Foodservice Business.
(c) No Actions or Proceedings. Neither Sellers nor the Company is
subject to, nor have they received any notice of, any private, administrative or
judicial action, or notice of any intended private, administrative, or judicial
action, relating to the presence or alleged presence of Hazardous Substances in,
under or upon any real property, equipment or other personal property now or
heretofore owned, leased, used or operated by Sellers or the Company in
connection with the Foodservice Business or any predecessor or any property,
whether or not it was owned, leased, used or operated by Sellers or the Company
in connection with the Foodservice Business, which was used by Sellers or the
Company for the storage of inventory or production of finished goods or for the
storage, treatment or disposal of any waste, product or by-product. There are no
pending, or to Sellers' Knowledge any threatened actions or proceedings or
notices of potential actions or proceedings from any Governmental Body or any
other entity against Sellers or the Company regarding any matter relating to
applicable Environmental Law.
26
2.22 Relationships with Related Persons. Except as set forth on
Schedule 2.22, none of Sellers or the Company has a controlling ownership
interest in, or any other right to control or direct the management or operation
of, any material competitor, supplier or customer of the Company or the
Foodservice Business or in any Person from whom or to whom the Company leases
any real or material personal property.
2.23 Subsidiaries. Schedule 2.23 contains a complete and accurate list
of each Subsidiary owned or operated by the Company during the last five (5)
years. None of the Subsidiaries listed on Schedule 2.23 has been liquidated or
otherwise disposed of by the Company.
2.24 Warranties. Neither Sellers (with respect to the Foodservice
Business) nor the Company makes any material express written warranties
independent of, or in addition to, warranties made by suppliers or manufacturers
of products sold or disturbed in connection with the operation of the
Foodservice Business. Neither Sellers nor the Company has received any material
warranty claims as they relate to the Foodservice Business.
2.25 Change in Business Relationships. Except as set forth on Schedule
2.25, neither Sellers (with respect to the Foodservice Business) nor the Company
has received any written notice or communication, or to Sellers' Knowledge, any
other notice or communication that (a) any material customer or supplier with a
material business relationship with Sellers (with respect to the Foodservice
Business) or the Company intends to discontinue or materially diminish or change
its relationship with the Company or the Foodservice Business, or (b) any
management employee of the Company intends to terminate his or her employment
prior to the Closing Date.
2.26 Brokers. None of the Company, the Sellers, nor their Affiliates
has employed or used the services of, or incurred any obligation or liability
to, any broker, agent or finder in connection with the transactions contemplated
by this Agreement.
2.27 True and Correct Information. No representation or warranty of
the Sellers in this Agreement and no statement in the schedules hereto omits to
state a material fact necessary to make the statements herein or therein, in
light of the circumstances in which they were made, not misleading.
2.28 Intellectual Property.
(a) Schedule 2.28 attached hereto constitutes a complete and
accurate list and summary description of all registered trademarks and
tradenames that are owned by Sellers (with respect to the Foodservice Business)
and the Company.
(b) Sellers (with respect to the Foodservice Business) and the
Company do not own or use any patents, patent applications, or inventions or
discoveries that may be patentable.
(c) Sellers (with respect to the Foodservice Business) and the
Company do not own or use any rights in mask works.
27
(d) Sellers (with respect to the Foodservice Business) and the
Company do not own or use any registered copyrights.
(e) Sellers (with respect to the Foodservice Business) and the
Company have taken reasonable precautions to protect the secrecy,
confidentiality and value of any trade secrets which Sellers (with respect to
the Foodservice Business) and the Company may own, and Sellers (with respect to
the Foodservice Business) and the Company own such trade secrets and have the
valid right to use same. To the Knowledge of Sellers, the trade secrets are not
part of the public knowledge or literature and have not been used, divulged or
appropriated either for the benefit of any person (other than Sellers with
respect to the Foodservice Business or the Company) or to the detriment of
Sellers (with respect to the Foodservice Business) or the Company. To the
Knowledge of Sellers, no material trade secret is subject to any adverse claim
or has been challenged or threatened in any way. For purposes of this Agreement,
trade secrets are defined as all know-how, trade secrets, confidential
information, customer lists, software, technical information, data, process
technology, plans, drawings, and blueprints used in the conduct of the
Foodservice Business.
(f) Other than pursuant to the Tradename and Trademark License
Agreements to be entered into between Sellers and the Company, Sellers (with
respect to the Foodservice Business) and the Company are not a party to any
contract or arrangement whereby royalties are paid or received by Sellers or the
Company with respect to trademarks, tradenames, copyrights, rights in mask
works, patents, or trade secrets.
(g) None of the current employees of Sellers (with respect to the
Foodservice Business) or the Company have executed written contracts with
Sellers or the Company that assign to Sellers or the Company any and all rights
to any inventions, improvements, discoveries or information relating to the
Foodservice Business. To the Knowledge of Sellers, no employee of Sellers (with
respect to the Foodservice Business) or the Company has entered into any
contract that restricts or limits in any material way the scope or type of work
in which the employee may be engaged, or requires the employee to transfer,
assign or disclose information concerning his or her work to anyone other than
Sellers or the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Sellers as follows:
3.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
Delaware.
3.2 Authority; No Violation. Buyer has the requisite right, power and
authority to execute, deliver, and perform Buyer's obligations under this
Agreement and the other agreements contemplated by this Agreement to which such
Buyer is a party ("Buyer's Other Agreements"). Upon the execution and delivery
by Buyer of this Agreement and Buyer's Other Agreements, this Agreement and
Buyer's Other Agreements will constitute the legal, valid, and binding
obligations of Buyer, enforceable against Buyer in accordance with their
respective
28
terms. Neither the execution, delivery, and performance by Buyer of this
Agreement and the Buyer's Other Agreements, nor the consummation of the
Contemplated Transactions will (a) violate any of Buyer's Organizational
Documents, (b) violate, conflict with, result in any breach of, constitute a
default under, result in the termination or acceleration of, create in any party
the right to accelerate, terminate, modify or cancel, or require any notice
under any Contract, license, or permit to which Buyer is a party or by which it
is bound, (c) require any authorization, consent, approval, exemption or other
action by or notice to any court, other Governmental Body, or other person or
entity under, the provisions of any Legal Requirement or any Contract or permit
to which it is subject, bound, or affected, or (d) violate or require any
consent or notice under any Legal Requirement or other restriction of any
Governmental Body to which it is subject, bound, or affected.
3.3 Investment Intent. Buyer is acquiring the Shares for its own
account and not with a view to, or for offer or sale in connection with, any
distribution within the meaning of Section 2(11) of the Securities Act.
3.4 Certain Proceedings. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, this
Agreement or Buyer's Other Agreements. To Buyer's Knowledge, no such Proceeding
has been threatened.
3.5 Brokers or Finders. Buyer and its officers and agents have
incurred no obligation or liability, contingent or otherwise, for brokerage or
finders' fees or agents' commissions or other similar payment in connection with
this Agreement and will indemnify and hold Sellers harmless from any such
payment alleged to be due by or through Buyer as a result of the action of Buyer
or its officers or agents.
3.6 Sufficiency of Funds. Buyer has and at Closing will have
sufficient funds for the payment of the Purchase Price.
3.7 Knowledge of Claims. To the actual knowledge of Buyer, there is no
claim that could be brought against Sellers as a result of any of the Sellers'
breach of any representation or warranty, or as a result of any of the Sellers'
failure to comply with any covenant or agreement contained in this Agreement.
ARTICLE IV
COVENANTS OF SELLERS PRIOR TO CLOSING DATE
4.1 Access and Investigation. Between the date of this Agreement and
the earlier of the Closing Date and the termination of this Agreement pursuant
to Article IX, upon receipt of reasonable notice, Sellers will, and will cause
the Company and its Representatives to (a) afford Buyer and its Representatives
and prospective lenders and their Representatives (collectively, "Buyer's
Advisors") reasonable access to their personnel, properties, contracts,
customers, books and records, and other documents and data relating to the
Foodservice Business, (b) furnish Buyer and Buyer's Advisors with copies of all
such contracts, books and records, and other existing documents and data as
Buyer may reasonably request, and (c) furnish
29
Buyer and Buyer's Advisors with such additional financial, operating, and other
data and information as Buyer may reasonably request.
4.2 Operation of the Business of the Company. Between the date of this
Agreement and the Closing Date, Sellers will, and will cause the Company to:
(a) conduct the Foodservice Business only in the Ordinary Course
of Business;
(b) use commercially reasonable efforts to, preserve intact the
current business organization of the Company and the Foodservice Business
(except as necessary to accommodate the transactions contemplated hereby), keep
available the services of the current officers, key employees, and agents of the
Company, and maintain the relations and goodwill with suppliers, customers,
landlords, creditors, employees, agents, and others having business
relationships with the Company;
(c) confer with Buyer concerning operational matters of a
material nature; and
(d) otherwise discuss periodically with Buyer the status of the
business, operations, and finances of the Company and the operation of the
Foodservice Business.
4.3 Negative Covenant. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, Sellers will
not, and will cause the Company not to, without the prior written consent of
Buyer, take any affirmative action or fail to take any reasonable action within
their or its control as a result of which any of the changes or events listed in
Section 2.8 is likely to occur, including, but not limited to, incurring on
behalf of Sellers any long-term indebtedness or engaging in any transaction that
would be required to be recorded as a long-term liability on a balance sheet of
Sellers prepared in accordance with GAAP.
4.4 Required Approvals. As promptly as practicable after the date of
this Agreement, Sellers will, and will cause the Company to, make all filings
required by Legal Requirements to be made by them in order to consummate the
Contemplated Transactions. Between the date of this Agreement and the Closing
Date, Sellers will, and will cause the Company to, cooperate with Buyer with
respect to all filings that Buyer is required by Legal Requirements to make in
connection with the Contemplated Transactions.
4.5 Notification. Between the date of this Agreement and the Closing
Date, Sellers will promptly notify Buyer in writing if Sellers or the Company
becomes aware of any fact or condition that causes or constitutes a breach of
any of Sellers' representations and warranties as of the date of this Agreement.
During the same period, Sellers will promptly notify Buyer of the occurrence of
any breach of any covenant of Sellers in this Article IV or of the occurrence of
any event that would reasonably be expected to make the satisfaction of the
conditions in Article VIII impossible or unlikely.
4.6 No Negotiation. Until such time, if any, as this Agreement is
terminated pursuant to Article IX, Sellers will not, and will cause the Company
and each of its
30
Representatives not to, directly or indirectly solicit, initiate, or encourage
any inquiries or proposals from, discuss or negotiate with, provide any
non-public information to, or consider the merits of any unsolicited inquiries
or proposals from, any Person (other than Buyer) relating to any transaction
involving the sale of the Foodservice Business or assets (other than in the
Ordinary Course of Business) of the Company, or any of the capital stock of the
Company, or any merger, consolidation, business combination, or similar
transaction involving the Company.
4.7 Commercially Reasonable Efforts. Between the date of this
Agreement and the Closing Date, Sellers will use their commercially reasonable
efforts to cause the conditions in Article VIII to be satisfied.
4.8 Intercompany Balances. At or prior to the Closing, all
intercompany balances between the Company and any Affiliate of the Company shall
be cancelled and shall be treated as a net contribution to the capital of the
Company.
4.9 Synthetic Lease Agreement. Between the date of this Agreement and
the Closing Date, Sellers shall perform, at their sole cost and expense, all of
the "Lessee's" (as such term is defined in the Synthetic Lease Agreement)
obligations under the Synthetic Lease Provisions and the Participation Agreement
Provisions, but only to the extent that such obligations relate to the Frozen
Food Facility and Parking Lot.
4.10 Disposition of Subsidiaries. Prior to the Closing Date, AFD shall
have caused the Company to distribute its entire interest in each of its
Subsidiaries.
4.11 Sellers' Environmental Investigation. Nothing in this Agreement
shall be interpreted to prohibit Sellers' from undertaking their own
environmental investigation, including environmental testing, of the owned real
property or leased real property of the Company, prior to the Closing Date.
ARTICLE V
COVENANTS OF BUYER AND SELLERS PRIOR TO CLOSING DATE
5.1 Approvals of Governmental Bodies. As promptly as practicable after
the date of this Agreement, Buyer will, and will cause each of its Related
Persons to, make all filings required by Legal Requirements to be made by it to
consummate the Contemplated Transactions. Between the date of this Agreement and
the Closing Date, Buyer will, and will cause each Related Person to, (a)
cooperate with Sellers with respect to all filings that Sellers are required by
Legal Requirements to make in connection with the Contemplated Transactions, and
(b) cooperate with Sellers in obtaining all consents identified in Schedule 2.2;
provided, however, that this Agreement will not require Buyer to dispose of or
make any change in any portion of its business or to incur any other material
burden to obtain a Governmental Authorization.
5.2 Commercially Reasonable Efforts. Except as set forth in the
proviso to Section 5.1, between the date of this Agreement and the Closing Date,
Buyer will use its commercially reasonable efforts to cause the conditions in
Article VII to be satisfied.
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5.3 Cooperation. Between the date of this Agreement and the Closing
Date, each of the Sellers and Buyer shall cooperate, and use their reasonable
commercial efforts, to make all filings and obtain all licenses, permits,
consents, approvals, authorizations, qualifications and orders of governmental
authorities and other third parties necessary to consummate the Contemplated
Transactions. In addition to the foregoing, Buyer agrees to provide such
assurances as to financial capability, resources and creditworthiness as may be
reasonably requested by any third party whose consent or approval is sought
hereunder. Notwithstanding the foregoing, nothing herein shall obligate or be
construed to obligate (A) Sellers or Buyer to make any payment to any third
party in order to obtain the consent or approval of such third party or to
transfer any contract, license or permit in violation of its terms or (B) Buyer
to provide any financial information that is not publicly available. Sellers
shall use commercially reasonable efforts to obtain such third party consents as
Buyers may reasonably deem necessary in connection with the transfer of the
leases set forth on Schedule 6.8 and the consents set forth on Schedule 2.2, it
being understood that (i) nothing in this Section 5.3 is intended to be a
covenant that Sellers shall in fact obtain on Buyer's behalf any such consents,
(ii) obtaining such consents shall not be a condition to Closing (except as
provided in Section 8.3) and (iii) Sellers' failure to obtain such consents as a
result of Buyer's failure or inability to provide financial information pursuant
to the exemption provided in the prior sentence shall not be regarded as a
breach by Sellers of its obligations to obtain such consents pursuant to this
Agreement. Buyer shall cooperate and use commercially reasonable efforts to
assist Sellers in obtaining such consents.
ARTICLE VI
POST-CLOSING COVENANTS OF BUYER AND SELLERS
Buyer and Sellers agree as follows with respect to the period
following the Closing:
6.1 General. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each of
the parties will take such further action (including the execution and delivery
of such further instruments and documents) as any other party may request, all
at the sole cost and expense of the requesting party (unless the requesting
party is entitled to indemnification therefore under Article X below). Sellers
acknowledge and agree that from and after the Closing the Buyer will be entitled
to possession of all documents, books, records, agreements, and financial data
relating to the Company and the Foodservice Business; provided, however, that
notwithstanding anything to the contrary contained herein, Buyer shall not be
entitled to possession of any of Sellers' Tax records, but Buyer shall be
provided access to such Tax records to the extent necessary to comply with all
applicable Legal Requirements.
6.2 Litigation Support. In the event and for so long as any party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(a) any transaction contemplated under this Agreement or (b) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving the Company or the Foodservice Business, each of
the other parties will reasonably
32
cooperate with such party and its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be reasonably necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending party
(unless the contesting or defending party is entitled to indemnification
therefore under Article X below).
6.3 Transition. Sellers will not take any action that is designed or
intended or may reasonably be expected to discourage any lessor, licensor,
customer, supplier, employee, or other business associate of the Company or the
Foodservice Business from maintaining substantially the same business
relationships with the Company and the Foodservice Business after the Closing as
it maintained with the Company or Sellers (with respect to the Foodservice
Business) prior to the Closing. Sellers will use commercially reasonable efforts
to refer all customer inquiries relating to the Foodservice Business to Buyer
from and after the Closing.
6.4 Non-Company Employees Engaged in the Foodservice Business.
Effective as of the Closing Date, Buyer shall cause the Company or an Affiliate
of the Company to offer employment to each of the employees of Seller who
immediately prior to the Closing Date are primarily engaged in the Company's
Foodservice Business, as set forth in Schedule 6.4 (the "Foodservice
Employees"). The terms of such employment for each such Foodservice Employee
shall be substantially equivalent in base salary, bonus compensation, and
benefits in the aggregate to those provided on the Closing Date to such
Foodservice Employees. Those Foodservice Employees who accept such offers of
employment, combined with all Persons employed by the Company on the Closing
Date who continue to be employed by the Company following the Closing Date shall
be referred to herein as "Continuing Employees."
6.5 Employee Benefits.
(a) Buyer shall take all necessary actions to provide that all
Continuing Employees shall, through December 31, 2003, be allowed to participate
without an increase in cost to such employees, in either the employee welfare
benefit plans or arrangements in which such employees participated immediately
prior to the Closing Date or in substantially similar employee benefit plans or
arrangements.
(b) Buyer shall take all necessary actions to provide that, with
respect to any welfare benefits provided to Continuing Employees on or after the
Closing Date, (i) service accrued by Continuing Employees during employment with
the Company or its Affiliates prior to the Closing Date shall be recognized, to
the extent such service was recognized under comparable Company Plans, for
purposes of (A) eligibility for benefits and (B) application of any and all
pre-existing condition limitations and (ii) Continuing Employees shall be given
credit for amounts paid under a Company Plan during the applicable period for
purposes of applying deductibles, co-payments and out-of-pocket maximums as
though such amounts had been paid in accordance with the terms and conditions of
the employee welfare plans in which any Continuing Employee becomes entitled to
participate; provided, however, that nothing in this Section 6.5(b) shall
require the payment of duplicative benefits. Further, nothing in this Section
6.5(b), whether express or implied, shall confer upon any Person who is not a
party to this Agreement, including any Continuing Employee, any right to
employment or recall, any right to
33
continued employment, any right to compensation or benefits, or any other right
of any kind or nature whatsoever.
6.6 Certain Employees. On or before the date of this Agreement,
Sellers have entered into, caused the Company to enter into, or expressed an
intention to enter into or cause the Company to enter into employment, severance
or similar agreements (collectively, "Severance Agreements") with certain key
employees of the Foodservice Business, all of whom are listed on Schedule 6.6
(each a "Covered Employee"). The Severance Agreements provide, among other
things, for the payment of a severance benefit to each Covered Employee if his
or her employment is terminated on certain conditions. In the event that the
employment of a Covered Employee is terminated, directly or indirectly, by Buyer
on or before December 31, 2003, and the termination triggers the obligation to
pay a severance benefit under such Covered Employee's Severance Agreement,
Sellers, jointly and severally, shall pay all severance benefits payable to such
Covered Employee and shall defend and indemnify Buyer with respect to the
payment as provided in Section 10.1. In the event that the employment of a
Covered Employee is terminated, directly or indirectly, by Buyer on or after
January 1, 2004, Buyer shall pay or cause to be paid all amounts payable to such
Covered Employee under his or her Severance Agreement and shall defend and
indemnify Sellers with respect to the payment as provided in Section 10.2.
6.7 Company 401(k) Plan. Sellers shall use their reasonable best
efforts to cause the operational failures of the Xxxxx Xxx Second Profit Sharing
Plan and Trust (the "Company 401(k) Plan") to be corrected prior to the Closing
Date through use of the Employee Plans Compliance Resolution System of the IRS
(the "EPCRS"). It is intended that the filing under the EPCRS be made by Sellers
before the Closing Date. To the extent that such failures have not been
corrected prior to the Closing Date, Sellers shall reimburse Buyer for the
reasonable costs of correcting such failures, including but not limited to any
fees or penalties assessed by the IRS and attorney fees. Sellers shall also
fully cooperate with Buyer to complete any corrections not made before the
Closing Date. Sellers shall indemnify and hold harmless the Buyer, its officers,
directors, employees and agents and Affiliates, from and against any and all
liabilities arising out of or related to the operational failures of the Company
401(k) Plan which occurred prior to the Closing Date.
6.8 Real Property Consents. Sellers shall cooperate with Buyer and
shall use their commercially reasonable efforts to obtain all consents, permits,
approvals and authorizations necessary to transfer the leases set forth on
Schedule 6.8 to Buyer as soon as is commercially practicable.
6.9 Insurance Matters.
(a) Sellers shall remit to Buyer or the Company any monies
received by Sellers under its insurance policies (net of deductibles) as a
result of any worker's compensation claims relating to the Company or the
Foodservice Business that arise out of events that occur on or prior to the
Closing Date. Sellers shall use their commercially reasonable efforts to file
all worker's compensation claims relating to the Foodservice Business or the
Company that arise out of events that occur on or prior to the Closing Date.
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(b) After the Closing Date, Buyer shall cause the Company to
maintain and provide insurance policies for the Company (including, property,
general liability and workers compensation) that provide coverages that are
comparable to those provided to the Company prior to the Closing Date.
(c) After the Closing Date, Buyer shall be responsible for all
worker's compensation claims with respect to the Foodservice Business or the
Company (regardless of the date of occurrence or the date any such claim was
reported).
(d) After the Closing Date, Sellers shall be responsible for all
insurance claims (other than worker's compensation claims) with respect to the
Foodservice Business or the Company that arise from events that occur on or
prior to the Closing Date and shall pay to Buyer any amounts that Buyer or the
Company is required to pay with respect to such claims to the extent such claims
exceed in the aggregate the reserve for such claims reflected as a current
liability on the Final Closing Financial Statement, which reserve shall not be
less than One Hundred Thousand Dollars ($100,000).
(e) Sellers and Buyer shall cooperate with one another and use
their commercially reasonable efforts to assist each other in the administration
of any claim that is the responsibility of the other party under this Section
6.9.
6.10 Tax Covenant. Buyer shall not (and shall not cause or permit its
Affiliates or the Company to) amend, refile or otherwise modify any Tax Return
or change any accounting method relating in whole or in part to the Company with
respect to any taxable year or period ending on or before or which includes the
Closing Date without the prior written consent of the Sellers. Any refunds or
credits of Taxes of the Company with respect to any Tax Return amended or
refiled by Sellers with respect to any taxable period ending on or before or
which includes the Closing Date shall be for the account of Sellers and, if
received by Buyer, shall be paid by Buyer to Seller within 10 business days
after Buyer receives such refund or after the relevant Tax Return is filed in
which the credit is applied against Buyer's liability for Taxes. Any refunds or
credits of Taxes of the Company with respect to any taxable period beginning
after the Closing Date shall be for the account of Buyer.
6.11 Accounts Receivable Collection. Between the Closing Date and the
Accounts Receivable Settlement Date, Buyer shall follow consistent historical
practices (as practiced by Sellers) as set forth on Schedule 6.11 with respect
to determination of allowance for doubtful accounts, collection efforts,
continuous service and offering of extended payment terms to delinquent
customers and write-off of Accounts Receivable.
6.12 Tax Matters.
(a) Tax Sharing Agreements. Any tax sharing agreement between
Sellers and any of the Company and its Subsidiaries is terminated as of the
Closing Date and will have no further effect for any taxable year (whether the
current year, a future year, or a past year).
(b) Taxes of Other Persons. Each of the Sellers agrees to
indemnify the Buyer from and against any Losses the Buyer may suffer resulting
from, arising out of, relating
35
to, in the nature of, or caused by any liability of any of the Company and its
Subsidiaries for Taxes of any Person other than any of the Company and its
Subsidiaries (i) under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local, or foreign law), (ii) as a transferee or successor,
(iii) by contract, or (iv) otherwise.
(c) Returns for Periods Through the Closing Date. SFI will
include the income of the Company and its Subsidiaries on the SFI consolidated
federal income Tax Returns for all periods through the Closing Date and pay any
federal income Taxes attributable to such income. The Company and its
Subsidiaries will furnish Tax information to SFI for inclusion in SFI's federal
consolidated income Tax Return for the period which includes the Closing Date in
accordance with the Company's past custom and practice. SFI will take no
position on such returns that relate to the Company and its Subsidiaries that
would adversely affect the Company after the Closing Date. The income of the
Company and its Subsidiaries will be apportioned to the period up to and
including the Closing Date and the period after the Closing Date by closing the
books of the Company and its Subsidiaries as of the end of the Closing Date.
(d) Audits. SFI will allow the Company and its counsel to
participate at its own expense in any audits of SFI consolidated federal income
Tax Returns to the extent that such returns relate to the Company and its
Subsidiaries. SFI will not settle any such audit in a manner which would
adversely affect the Company after the Closing Date without the prior written
consent of the Buyer, which consent shall not be unreasonably withheld.
(e) Retention of Carryovers. SFI will not elect to retain any net
operating loss carryovers or capital loss carryovers of the Company and its
Subsidiaries under Treasury Regulation Section 1.1502-20(g).
6.13 Environmental Testing.
(a) Subject to the conditions set forth herein, Sellers have the
right to conduct environmental testing, at their own expense, at any of the Real
Property by providing written notice to the Buyer within ninety (90) days after
the Closing Date. The Buyer and the Company agree to provide access to said Real
Property to Sellers and Sellers' consultants and contractors, and to reasonably
cooperate with Sellers and Sellers' consultants, with respect to said
environmental testing, including, but not limited to, providing all relevant
information to Sellers and their consultants and contractors relating to any
potential obstructions that may interfere with environmental testing or cause
property damage or personal injury.
(b) If Sellers determine that they desire to conduct
environmental testing as set forth above, Sellers shall provide written notice
to Buyer at least five business days prior to the date Sellers desire to conduct
such environmental testing. Sellers' written notice shall include a copy of the
proposed sampling plan with respect to each property at which they proposed to
conduct testing. The sampling plan shall include, at a minimum, a reasonable
approximation of where samples will be collected; the environmental media to be
sampled; and the analyses which Sellers proposed to perform on said samples.
(c) Prior to being allowed access to the Real Property, Sellers'
consultants or contractors shall provide to Buyer copies of insurance
certificates demonstrating
36
that said consultants or contractors have appropriate insurance (in amounts
consistent with customary industry standards) to insure against property damage
or personal injury claims that may result from the performance of the
environmental testing.
(d) Sellers agree that they shall be responsible for ensuring
that after the completion of environmental testing, their consultants or
contractors shall restore the Real Property to its prior condition, including,
but not limited to, taking all steps required to properly abandon any monitoring
xxxxx that have been installed in connection with the environmental testing.
(e) Sellers agree that they shall promptly provide Buyer with
copies of any sampling results and related reports with respect to the
environmental testing conducted pursuant to this provision. Sellers also agree
that if, as a result of the environmental testing, reporting to a Governmental
Authority is required, Sellers shall notify Buyer prior to reporting its
findings to said Governmental Authority.
(f) Buyer may accompany and monitor the environmental testing
performed by Sellers pursuant to this Section 6.13, including, without
limitation, retaining, at its own expense, its own consultants, attorneys or
other professionals to monitor said environmental testing. In addition, Sellers
agree that they will allow Buyer to collect split samples at Buyer's request if
it is reasonably practicable given the amount of sample collected in any
particular instance.
ARTICLE VII
CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the other actions
required to be taken by Sellers at the Closing is subject to the satisfaction,
at or prior to the Closing, of each of the following conditions (any of which
may be waived by Sellers, in whole or in part):
7.1 Accuracy of Representations. The representations and warranties of
Buyer contained herein shall be true and correct at the date hereof and as of
the Closing Date, except to the extent that such representations and warranties
are made as of a specified date, in which case such representations and
warranties shall be true and correct as of such date, and except for such
failures to be true and correct which, in each case or in the aggregate would
not have a material adverse effect on the ability of Buyer to consummate the
Contemplated Transactions.
7.2 Buyer's Performance. Buyer shall have performed in all material
respects all obligations and agreements and complied in all material respects
with all covenants required by this Agreement to be performed or complied with
by Buyer prior to or at the Closing.
7.3 Additional Documents. Each of the following documents shall have
been delivered to the Sellers:
(a) each document required to be delivered pursuant to Section
1.9(b); and
37
(b) evidence, satisfactory to the Sellers in their reasonable
discretion, that Buyer is in good standing in its state of incorporation and
that the Buyer has the requisite authority to enter into the Agreement and to
consummate the transactions contemplated thereby.
7.4 No Injunction. There is not in effect any Legal Requirement or any
injunction or other Order that prohibits the sale of the Shares by Sellers to
Buyer.
7.5 Closing of Asset Purchase Transaction. The closing of the
transactions contemplated in the Asset Purchase Agreement shall have occurred
simultaneously with the Closing.
7.6 Consents.
Each of the material Consents identified in Schedule 8.3 shall have
been obtained.
ARTICLE VIII
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the other
actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Buyer, in whole or in part):
8.1 Accuracy of Representations. The representations and warranties of
Sellers contained herein shall be true and correct at the date hereof and as of
the Closing Date, except to the extent that such representations and warranties
are made as of a specified date, in which case such representations and
warranties shall be true and correct as of such date, and except for such
failures to be true and correct which, in each case or in the aggregate would
not have a Material Adverse Effect.
8.2 Sellers' Performance. Sellers shall have performed in all material
respects all obligations and agreements and complied in all material respects
with all covenants required by this Agreement to be performed or complied with
by Sellers prior to or at the Closing.
8.3 Consents. Each of the material Consents identified in Schedule 8.3
shall have been obtained.
8.4 Additional Documents. Each of the following documents shall have
been delivered to Buyer:
Each document required to be delivered pursuant to Section 1.9(a)(i),
1.9(a)(ii), 1.9(a)(iv), 1.9(a)(v), 1.9(a)(vi), 1.9(a)(vii), 1.9(a)(viii),
1.9(a)(ix), 1.9(a)(x), 1.9(a)(xi), 1.9(a)(xii),1.9(a)(xiii), 1.9(a)(xv),
1.9(a)(xvi) and 1.9(a)(xvii).
8.5 No Injunction. There is not in effect any Legal Requirement or any
injunction or other Order that prohibits the sale of the Shares by Sellers to
Buyer.
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8.6 No Proceedings. Since the date of this Agreement, there shall not
have been commenced or threatened against Sellers or Buyer any Proceeding
involving any challenge to or seeking damages or other relief in connection with
any of the Contemplated Transactions that would have a Material Adverse Effect.
8.7 No Claim Regarding Stock or Sale Proceeds. There shall not have
been made by any Person any claim, which would have a Material Adverse Effect,
asserting that such Person (a) is the holder or the beneficial owner of, or has
the right to acquire or to obtain beneficial ownership of, any stock of, or any
other voting, equity or ownership interest in, the Company, or (b) is entitled
to all or any portion of the Purchase Price payable for the Shares.
8.8 No Prohibition. Neither the consummation nor the performance of
any of the Contemplated Transactions shall, (with or without notice or lapse of
time), materially contravene, or conflict with, or result in a material
violation of, (a) any applicable Legal Requirement or Order, or (b) any Legal
Requirement or Order that has been published, introduced, or otherwise proposed
by or before any Governmental Body, and such contravention, conflict or
violation would have a Material Adverse Effect.
8.9 Closing of Asset Purchase Transaction. The closing of the
transactions contemplated in the Asset Purchase Agreement shall have occurred
simultaneously with the Closing.
8.10 Execution and Closing of the Real Estate Purchase Agreement. The
Real Estate Purchase Agreement shall have been executed and delivered by all
necessary parties thereto and the closing of the transactions contemplated
thereby shall have occurred simultaneously with the Closing
8.11 Release of Guaranty. The Company's guarantee granted pursuant to
the Synthetic Lease Agreement shall have been completely and unconditionally
released without liability or obligation to Buyer or the Company.
ARTICLE IX
TERMINATION
9.1 Termination Events. This Agreement may, by notice given prior to
or at the Closing, be terminated:
(a) By either Sellers or Buyer if a material breach of any
provision of this Agreement has occurred or been committed by the other party
and such breach has not been waived or cured within thirty (30) days of receipt
of written notice of such breach by the other party and failure to cure such
breach would have a Material Adverse Effect; or
(b) By the mutual written consent of Buyer and Sellers; or
(c) By either Buyer or Sellers if the Closing has not occurred
(other than through the failure of any party seeking to terminate this Agreement
to comply fully with its obligations under this Agreement) on or before October
5, 2003 (the "Termination Date"), or at
39
such later date as the parties may agree upon in writing; provided, however,
that in the event either party provides a notice to terminate this Agreement
pursuant to Section 9.1(a) the Termination Date will be extended, if necessary,
to allow for the 30 day cure or waiver period set forth therein.
9.2 Effect of Termination. Each party's right of termination under
Section 9.1 is in addition to any other rights it may have under this Agreement
or otherwise. Any exercise of a right of termination will not be an election of
remedies. If this Agreement is terminated pursuant to Section 9.1, all further
obligations of the parties under this Agreement will terminate, except that the
obligations of Sections 12.1 and 12.3 will survive; provided, however, that if
this Agreement is terminated by a party because of a willful breach of the
Agreement by the other party or because one or more of the conditions to the
terminating party's obligations under this Agreement is not satisfied as a
result of the other party's willful failure to comply with its obligations under
this Agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
ARTICLE X
INDEMNIFICATION
10.1 Indemnity by Sellers.
(a) Sellers shall, from and after the Closing, jointly and
severally, indemnify Buyer and its Affiliates, directors, officers, employees,
controlling persons, agents and representatives and their successors and assigns
(collectively, the "Buyer Indemnified Parties") against and hold each of them
harmless from any and all Losses incurred or suffered by the Buyer Indemnified
Parties (whether originally asserted against or imposed on the Buyer Indemnified
Parties by a third party or originally incurred or suffered directly by the
Buyer Indemnified Parties) arising directly out of (i) any breach of any
representation or warranty, covenant or agreement made or to be performed by
Sellers pursuant to this Agreement, (ii) the matters described in Schedule
10.1(a) and (iii) subject to the terms set forth in Section 10.8, Indemnified
Environmental Matters (such breach, a "Seller Breach"), which breach shall be
determined giving effect to any and all amendments and supplements of the
schedules of the Sellers and the Company pursuant to Section 12.16.
(b) Sellers' obligations to indemnify the Buyer Indemnified
Parties pursuant to Section 10.1 are subject to the following limitations:
(A) No indemnification shall be made by Sellers unless the amount of Losses
under this Agreement, the Asset Purchase Agreement, the Real Estate Purchase
Agreement for the Frozen Food Facility and Parking Lot,, and the Real Estate
Purchase Agreement for the Fort Lauderdale Store (as such term is defined in the
Asset Purchase Agreement) exceed in the aggregate an amount equal to $560,000,
it being understood that such amount shall be a "deductible" for Sellers (the
"Seller Deductible"); provided, however, that the Seller Deductible shall be
inapplicable to any Losses incurred or suffered by the Buyer Indemnified Parties
as a result of (i) fraud by Sellers (as determined by a court of law), (ii)
Sellers' breach of the representation set forth in Section 2.3, (iii) Sellers'
failure to perform their covenants in Section 6.6, Section 6.7
40
and Section 6.9 and (iv) liabilities and obligations arising in connection with
the matters described in Schedule 10.1(a); and (B) in no event shall Sellers'
obligations to indemnify the Buyer Indemnified Parties under this Agreement, the
Asset Purchase Agreement, the Real Estate Purchase Agreement for the Frozen Food
Facility and Parking Lot and the Real Estate Purchase Agreement for the Fort
Lauderdale Store exceed Fifty Million Dollars ($50,000,000) in the aggregate.
10.2 Indemnity by Buyer.
(a) Buyer shall, from and after the Closing indemnify Sellers and
their Affiliates, directors, officers, employees, controlling persons, agents
and representatives and their successors and assigns (collectively, the "Seller
Indemnified Parties") against and hold each of them harmless from any and all
Losses incurred or suffered by the Seller Indemnified Parties (whether
originally asserted against or imposed on the Seller Indemnified Parties by a
third party or originally incurred or suffered directly by the Seller
Indemnified Parties) arising directly out of any breach of any representation,
warranty, covenant or agreement made or to be performed by Buyer pursuant to
this Agreement (such breach, a "Buyer Breach").
(b) Buyer's obligations to indemnify the Seller Indemnified
Parties pursuant to Section 10.2 are subject to the following limitations:
(A) No indemnification shall be made by Buyer unless the amount of Losses under
this Agreement, the Asset Purchase Agreement, the Real Estate Purchase Agreement
for the Frozen Food Facility and Parking Lot and the Real Estate Purchase
Agreement for the Fort Lauderdale Store exceed in the aggregate an amount equal
to $560,000, it being understood that such amount shall be a "deductible" for
Buyer (the "Buyer Deductible"); provided, however, that the Buyer Deductible
shall be inapplicable to any Losses incurred or suffered by the Seller
Indemnified Parties as a result of fraud by Buyer (as determined by a court of
law) and (B) in no event shall Buyer's obligations to indemnify the Seller
Indemnified Parties under this Agreement, the Asset Purchase Agreement, the Real
Estate Purchase Agreement for the Frozen Food Facility and Parking Lot and the
Real Estate Purchase Agreement for the Fort Lauderdale Store exceed Fifty
Million Dollars ($50,000,000) in the aggregate.
10.3 Procedure and Payment.
(a) The person seeking indemnification under Section 10.1, and
10.2 (the "Indemnified Party") agrees to give prompt notice to the Person
against whom indemnity is sought (the "Indemnifying Party") of the assertion of
any claim, or the commencement of any suit, action or proceeding, in respect of
which indemnity may be sought under such Section and will provide the
Indemnifying Party such information with respect thereto as the Indemnifying
Party may reasonably request. The failure to so notify the Indemnifying Party
shall not relieve the Indemnifying Party of its obligations hereunder, except to
the extent such failure shall have materially and adversely prejudiced the
Indemnifying Party.
(b) The Indemnifying Party shall be entitled to defend any claim
asserted by any third party ("Third Party Claim") with counsel of its choice
reasonably satisfactory to the Indemnified Party so long as (i) the Indemnifying
Party notifies the
41
Indemnified Party in writing within fifteen (15) days after the Indemnified
Party has given notice of the Third Party Claim that it will indemnify the
Indemnified Party from and against all Losses that the Indemnified Party may
suffer resulting from, arising out of, relating to, or caused by the Third Party
Claim, (ii) the Indemnifying Party provides the Indemnified Party with evidence
reasonably acceptable to the Indemnified Party that the Indemnifying Party will
have the financial resources to defend against the Third Party Claim and fulfill
its indemnification obligations under this Agreement, (iii) the Third Party
Claim involves only money damages and does not seek an injunction or other
equitable relief, (iv) settlement of, or an adverse judgment with respect to,
the Third Party Claim is not, in the good faith judgment of the Indemnified
Party, likely to establish a precedential custom or practice materially adverse
to the continuing business interests of the Indemnified Party and (v) the
Indemnifying Party conducts the defense of the Third Party Claim actively and
diligently.
(c) So long as the Indemnifying Party is conducting the defense
of any Third Party Claim in accordance with the provisions of this Section 10.3,
the Indemnified Party shall be entitled to participate in the defense of such
Third Party Claim and to employ separate counsel of its choice for such purpose.
The fees and expenses of such separate counsel shall be paid by the Indemnified
Party.
(d) Each party shall cooperate, and cause its Affiliates to
cooperate, in the defense or prosecution of any Third Party Claim and shall
furnish or cause to be furnished such records, information and testimony, and
attend such conferences, discovery proceedings, hearings, trials or appeals, as
may be reasonably requested by any other party in connection therewith.
10.4 Calculation of Losses.
(a) The amount of any Losses payable under Section 10.1 and 10.2
by the Indemnifying Party shall be net of any amounts recovered by the
Indemnified Party under applicable insurance policies and the Indemnified Party
shall use commercially reasonable efforts to collect any amounts available under
such insurance policies.
(b) If the Indemnified Party receives an amount under insurance
coverage or from a third party with respect to Losses at any time subsequent to
any indemnification provided by the Indemnifying Party pursuant to Section 10.1
and 10.2, then such Indemnified Party shall promptly reimburse the Indemnifying
Party for any payment made or expense incurred by such Indemnifying Party in
connection with providing such indemnification up to such amount received by
such Indemnified Party, but net of any expenses incurred by such Indemnified
Party in collecting such amount.
(c) In no event shall either Buyer or Sellers be liable to the
other party for any consequential damages unless such amounts are actually paid
or awarded in connection with a Third Party Claim.
(d) The parties hereto shall treat any indemnity payment made
under this Agreement and any payment made as a result of any Final Uncollected
Accounts Receivable as
42
an adjustment to the Purchase Price unless required by law to treat such payment
as other than an adjustment to the Purchase Price.
(e) The parties shall take into account the time value of money
(using a variable rate equal to the prime rate of interest as published in the
Money Rates section of the Wall Street Journal) in determining Losses for
purposes of this Article X beginning the day after notice of an indemnification
claim is made.
10.5 Survival of Representations and Warranties of Sellers. Absent
fraud by Sellers (as determined by a court of law), all representations and
warranties made by Sellers in this Agreement shall survive the Closing for a
period of two (2) years after the Closing Date, except for (a) the
representations and warranties contained in Sections 2.19 and 2.21, which shall
survive for one (1) month after the maximum period permitted by law and (b) the
representations and warranties contained in Section 2.3, which shall survive
indefinitely; provided, however, that any representation, warranty, covenant or
agreement pertaining to a claim for which Buyer shall have given written notice
to Sellers describing in reasonable detail the facts relating to such claim on
or prior to the expiration of the applicable period specified above shall
survive (solely for the purpose of resolving such claim) until the resolution of
such claim.
10.6 Survival of Representations and Warranties of Buyer. Absent fraud
by Buyer (as determined by a court of law), all representations and warranties
made by Buyer in this Agreement shall survive the Closing for a period of two
(2) years after the Closing Date; provided, however, that any representation,
warranty, covenant or agreement pertaining to a claim for which Sellers shall
have given written notice to Buyer describing in reasonable detail the facts
relating to such claim on or prior to the expiration of the period specified
above shall survive (solely for the purpose of resolving such claim) until the
resolution of such claim.
10.7 Escrow. Payments (under this Article X) to be made to the Buyer
Indemnified Parties as a result of Losses arising out of the breaches of
representations, warranties and covenants of Sellers shall be made pursuant to
the terms set forth in the Escrow Agreement.
10.8 Indemnified Environmental Matters.
(a) (1) Sellers hereby agree to indemnify the Buyer Indemnified
Parties in respect of any and all Losses incurred by the Buyer Indemnified
Parties, including, without limitation, Losses relating to Remediation or for
third party claims for property damage or personal injury, in connection with
Hazardous Substances that were disposed of or released into soils, groundwater,
surface water, sediments or similar environmental media, prior to the Closing
Date, at any of the real property that is or has been owned, leased or operated
by the Company (the "Real Property").
(2) Sellers hereby agree to indemnify the Buyer Indemnified Parties
with respect to any fines and penalties that may be asserted against Buyer
Indemnified Parties with respect to any violation of applicable Environmental
Law by the Company prior to the Closing Date, including, but not limited, any
fines and penalties that may be asserted with respect to a release of ammonia
from the facility located at 0000 XX 000xx Xxxxxx, Xxxxx, Xxxxxxx that was
reported
43
in June 2003. For purposes of clarification, the indemnity set forth herein does
not include any costs or expenses associated with any corrective actions that
may be required with respect to such violations or release of ammonia.
(3) The matters described in Sections 10.8(a)(1) and (2) are the
"Indemnified Environmental Matters."
(b) Sellers' obligation to indemnify the Buyer Indemnified
Parties with respect to the Indemnified Environmental Matters shall be subject
to the provisions of Article X, including, without limitation, Section 10.1(b)
and Section 10.8. Furthermore, any matter subject to indemnity pursuant to
Section 10.1(a) which by its nature also falls within the scope of Section
10.8(a)(1) or 10.8(a)(2) also shall be governed by the provisions of Section
10.8 to the extent applicable.
(c) (1) With respect to the matters identified in Section
10.8(a)(1) that relate to Remediation of Real Property, Sellers shall only be
required to defend, indemnify and hold harmless Buyer Indemnified Parties with
respect to such Indemnified Environmental Matters to the extent that: (A) the
Remediation of the Hazardous Substances is required pursuant to an applicable
Environmental Law that is in effect as of the Closing; (B) the Remediation
Standards applicable to the Remediation are the least stringent Remediation
Standards that would be applicable based on the use of the Real Property as of
the Closing Date; and (C) the Remediation shall be conducted in a reasonable,
cost effective manner consistent with applicable Environmental Law. Buyer
Indemnified Parties agree that they shall accept appropriate engineering
controls or institutional controls, including, if necessary, deed restrictions
or limitations on the drilling and use of water xxxxx, if such controls are
needed in order for the parties to complete a Remediation consistent with the
use of the least stringent Remediation Standards; provided, that Buyer
Indemnified Parties shall not be obligated to accept engineering or
institutional controls that unreasonably interfere with Buyer Indemnified
Parties' operations on the Real Property if such operations are materially the
same as the operations of the Company as of the Closing Date on said properties.
(2) Notwithstanding anything to the contrary herein, Sellers shall
have no obligation to defend, indemnify and hold harmless the Buyer Indemnified
Parties to the extent that any Remediation with respect to such Indemnified
Environmental Matters results from the cessation of all or substantially all of
the operations at the Real Property or a material change in the use of the Real
Property.
(d) Notwithstanding anything to the contrary herein, with respect
to claims arising pursuant to Section 10.8, Sellers shall not be obligated to
indemnify Buyer Indemnified Parties for any costs or expenses of Buyer
Indemnified Parties related to the time spent on any indemnified matter by
employees or management of Buyer Indemnified Parties.
(e) If Buyer Indemnified Parties or any of their affiliates
intend to sell, lease, sublease or otherwise convey the Real Property, Buyer
Indemnified Parties or said affiliate shall include, as a condition of such
sale, lease, sublease or other agreement terms and conditions that will ensure
that any institutional or engineering controls that have been accepted with
respect to the Real Property are not disturbed (or, if such controls will be
disturbed, will be
44
restored at the expense of the party causing the disturbance or, if additional
Remediation is required as a result of the disturbance of such controls, that
such additional Remediation will be performed at the sole cost and expense of
the party causing the disturbance).
(f) For purposes of this Agreement: (1) the term "Remediation
Standard" means a numerical or narrative standard (whether resulting from an
enacted statute, promulgated regulation, guidance or policy document issued by a
regulatory agency, or developed on a case-by-case basis through a risk
assessment or other methodology authorized pursuant to an applicable
Environmental Law) that defines the concentrations of Hazardous Substances that
may be permitted to remain in any environmental media after an investigation,
remediation or containment of a release of Hazardous Substances; and (2) the
term "Remediation" means any action of any kind to investigate and/or clean up a
release of Hazardous Substances into an environmental medium, including, but not
limited to, the following activities: (A) monitoring, investigation, assessment,
treatment, cleanup, containment, removal, mitigation, response or restoration
work; (B) obtaining any permits, consents, approvals or authorizations of any
governmental authority necessary to conduct any such activity; (C) preparing and
implementing any plans or studies for any such activity; and (D) obtaining a
written notice from a Governmental Authority with jurisdiction over the site
being investigated and/or cleaned up under Environmental Laws that no additional
work is required by such Governmental Authority.
(g) (1) Buyer Indemnified Parties, consistent with the provisions
of this Section 10.8, shall be entitled to control Remediations with respect to
the Indemnified Environmental Matters to the extent that such Remediations are
necessary. Buyer Indemnified Parties shall promptly provide copies to Sellers of
all notices, correspondence, draft reports, submissions, work plans, and final
reports. Buyer Indemnified Parties shall provide Sellers a reasonable
opportunity (at Sellers' own expense) to comment on any submissions Buyer
Indemnified Parties intend to deliver or submit to the appropriate regulatory
body prior to said submission. Further, Buyer Indemnified Parties and Sellers
agree to work together in good faith to agree on the legal, regulatory,
investigatory and remedial strategy and actions with respect to such
Remediations. Sellers may, at their own expense, hire their own consultants,
attorneys or other professionals to monitor the work performed by Buyer
Indemnified Parties, including any field work undertaken by Purchaser.
Notwithstanding the above, Sellers shall not take any actions that shall
unreasonably interfere with Buyer Indemnified Parties. If Buyer Indemnified
Parties' performance of any Remediation with respect to Indemnified
Environmental Matters does not substantially conform with the requirements of
this section, including, without limitation, Section 10.8(c), Sellers shall have
no obligation to defend, indemnify and hold harmless Buyer Indemnified Parties
with respect to the Indemnified Environmental Matters.
(2) Buyer Indemnified Parties acknowledge that with respect to the
former underground storage tank areas and/or former fuel dispenser areas at 0000
XX 000xx Xxxxxx, Xxxxx, Xxxxxxx) (the "Dry Warehouse Facility"), the Florida
Department of Environmental Protection ("FDEP") has or may have issued no
further action letters or their equivalent in March 1994 and December 1995.
Accordingly, it is possible that the levels of Hazardous Substances detected in
the environment in or in the vicinity of these areas in the Phase I/II
Environmental Site Assessment, dated July 24, 2003, prepared by Hydro-Logic
Associates, Inc., on behalf of Buyer Indemnified Parties, may be consistent with
the prior approvals of the FDEP.
45
To the extent that the Hazardous Substances detected at the former underground
storage tank area and/or the former fuel dispensers at the Dry Warehouse are
consistent with prior approvals from the FDEP, Buyer Indemnified Parties shall
not have a right to indemnification from Sellers with respect to any areas that
are covered by such prior approvals.
(3) Buyer Indemnified Parties acknowledge that with respect to the
former underground storage tanks and fuel dispensing areas at 0000 XX 000xx
Xxxxxx, Xxxxx, Xxxxxxx ("Truck Maintenance Facility"), the Truck Maintenance
Facility is on a ranked waiting list for state funded cleanup activities.
Accordingly, Buyer Indemnified Parties agree that no action will be required
with respect to the findings in the Phase I/II Environmental Site Assessment,
dated July 24, 2003, prepared by Hydro-Logic Associates, Inc., in connection
with the Truck Maintenance Facility, to the extent that such findings are
covered by the Truck Maintenance Facility's listing on the state waiting list,
until such time as the FDEP or such other relevant governmental agency approves
funding for the Remediation of such site.
(4) In addition to any other limitations on Buyer Indemnified Parties'
right to indemnification with respect to the Indemnified Environmental Matters,
Sellers' obligation to defend, indemnify and hold harmless Buyer Indemnified
Parties with respect to the Indemnified Environmental Matters shall terminate at
such time as the aggregate limits set forth in Section 10.8(b) have been reached
or, with respect to any individual Environmental Matter, a no further action
letter or equivalent approval has been issued by the FDEP, Dade County
Environmental Resources Management or other relevant Governmental Authority,
whichever comes first.
(h) Exclusive Remedy for Environmental Matters; Indemnification
by Buyer.
Notwithstanding anything to the contrary in this Agreement, Buyer
Indemnified Parties hereby agree that their sole and exclusive remedy against
Sellers and their officers, managers, members, employees, Affiliates, successors
and assigns) (collectively, the "Seller Parties"), with respect to any and all
matters arising under or related to Environmental Law or Hazardous Substances,
in connection with the Company, shall be the indemnity set forth in this Section
10.8 and a claim for breach of representation pursuant to Section 10.1(a)(i).
Except with respect to the remedy referred to in the preceding sentence, the
Buyer Indemnified Parties hereby waive, to the fullest extent permitted under
applicable law, and forever release the Seller Parties, in connection with the
Company, and indemnify and hold harmless the Seller Parties against, any and all
claims or Losses arising under or related to Environmental Laws, Hazardous
Substances or the environment.
ARTICLE XI
DEFINITIONS
For purposes of this Agreement, the following terms have the meaning
set forth below:
"AAA" is defined in Section 12.15(a) of this Agreement.
"Accountants" is defined in Section 1.4(a) of this Agreement.
46
"Accounts Receivable" means the trade receivables as reflected on the
Final Closing Balance Sheet with respect to the Foodservice Business, the Retail
Store Business and the Meat Processing Business (as such terms are defined in
the Asset Purchase Agreement).
"Accounts Receivable Statement" is defined in Section 1.6(a) of this
Agreement.
"Accounts Receivable Settlement Date" is defined in Section 1.5 of
this Agreement.
"AFD" is defined in the preamble of this Agreement.
"Affiliate" means, with respect to any party, any Person directly or
indirectly controlling, controlled by, or under common control with such party,
and any officer, director or executive employee of such party.
"Agreement" is defined in the preamble of this Agreement.
"Agreement Disputes" is defined in Section 12.15 of this Agreement.
"Applicable Contract" means any Contract (a) under which either of the
Sellers or the Company has or has the option to acquire any material rights
relating to the Foodservice Business, (b) under which either of the Sellers or
the Company has or is subject to any obligation or liability relating to the
Foodservice Business, or (c) by which either of the Sellers (with respect to the
Foodservice Business) or the Company or any of the assets owned or used by the
Company in connection with the Foodservice Business is bound.
"Asset Purchase Agreement" is defined in the Preliminary Statement of
this Agreement.
"Balance Sheets" is defined in Section 2.4.
"Buyer" is defined in the first paragraph of this Agreement.
"Buyer Breach" is defined in Section 10.2(a) of this Agreement.
"Buyer Deductible" is defined in Section 10.2(b) of this Agreement.
"Buyer Indemnified Parties" is defined in Section 10.1(a) of this
Agreement.
"Buyer Parties" is defined in the Preliminary Statement of this
Agreement.
"Buyer's Advisors" is defined in Section 4.1 of this Agreement.
"Buyer's Other Agreements" is defined in Section 3.2 of this
Agreement.
"Closing" is defined in Section 1.8 of this Agreement.
"Closing Date" is defined in Section 1.8 of this Agreement.
47
"Closing Financial Statement" is defined in Section 1.4(a) of this
Agreement.
"Closing Payment" is defined in Section 1.2 of this Agreement.
"Company" is defined in the Preliminary Statement of this Agreement.
"Confidentiality Agreement" is defined in Section 12.3 of this
Agreement.
"Consent" means any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
"Contemplated Transactions" means all of the transactions contemplated
by this Agreement.
"Continuing Employees" is defined in Section 6.3 of this Agreement.
"Contract" means any material written agreement, contract,
obligations, promise, or undertaking that is legally binding.
"Covered Employee" is defined in Section 6.4 of this Agreement.
"Difference" is defined in Section 1.4(c) of this Agreement.
"Dispute Notice" is defined in Section 12.15(a) of this Agreement.
"Dry Warehouse" is defined in Section 10.8(g)(2) of this Agreement.
"Encumbrance" means any charge, claim, community property interest,
condition, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
"Environmental Laws" means all applicable federal, state and local
laws, rules, regulations and ordinances relating to public health and safety,
worker health and safety and pollution and protection of the environment,
including, without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C. (S)9601 et seq., the
Resource Conservation and Recovery Act of 1976 ("RCRA"), 42 U.S.C. (S)6901 et
seq., the Emergency Planning and Community Right-to-Know Act ("Right-to-Know
Act"), 00 X.X.X. (X)00000 et seq., the Clean Air Act ("CAA"), 42 U.S.C. (S)7401
et seq., the Federal Water Pollution Control Act ("Clean Water Act"), 33
U.S.C.(S)1251 et seq., the Toxic Substances Control Act ("TSCA"), 15 U.S.C.
(S)2601 et seq., the Safe Drinking Water Act, 42 U.S.C. (S)300f et seq., the
Occupational Safety and Health Act ("OSHA"), 42 U.S.C. (S)651 et seq., and the
Hazardous Materials Transportation Act, 49 U.S.C. (S)1801, all as amended, and
any regulations, rules or ordinances adopted promulgated pursuant thereto.
"EPCRS" is defined in Section 6.7 of this Agreement.
48
"ERISA" means the Employee Retirement Income Security Act of 1974 or
any successor law, and regulations and rules issued pursuant to that Act or any
successor law.
"Escrow Agent" is defined in Section 1.2 of this Agreement.
"Escrow Agreement" is defined in Section 1.2 of this Agreement.
"Escrow Payment" is defined in Section 1.2 of this Agreement.
"FDEP" is defined in Section 10.8(g)(2) of this Agreement.
"Final Accounts Receivable Statement" is defined in Section 1.6(a) of
this Agreement.
"Final Closing Financial Statement" is defined in Section 1.4(a) of
this Agreement.
"Final Net Working Capital" is defined in Section 1.4(a) of this
Agreement.
"Financial Statements" is defined in Section 2.4.
"Final Uncollected Accounts Receivable" is defined in Section 1.6(a)
of this Agreement.
"Foodservice Business" is defined in the Preliminary Statement of this
Agreement.
"Foodservice Employees" is defined in Section 6.3 of this Agreement.
"Force Majeure Event" means any of the following causes beyond Buyer's
reasonable control: acts of war or terrorism, acts of God, earthquake, flood,
hurricane, embargo, riot, sabotage or governmental act.
"Frozen Food Facility and Parking Lot" means the premises located at
0000 XX 000xx Xxxxxxx, Xxxxx, Xxxxxxx, together with certain items of equipment
located therein and the parking lot nearby which is located on a separate parcel
of land.
"GAAP" means generally accepted United States accounting principles,
applied on a consistent basis.
"GFS Orlando" is defined in the Preliminary Statement of this
Agreement.
"GFS Stores" is defined in the Preliminary Statement of this
Agreement.
"Governmental Authorization" means any material approval, consent,
license, permit, waiver, or other authorization issued, granted, given, or
otherwise made available by or under the authority of any Governmental Body or
pursuant to any Legal Requirement.
"Governmental Body" means any:
49
(a) nation, state, county, city, town, village, district, or
other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental authority of any nature (including any governmental
agency, branch, department, official, or entity and any court or other
tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory, or taxing authority or
power of any nature.
"Hazardous Substances" means any pollutant or contaminant (as that
term is defined in 42 U.S.C. (S)9601(33)), toxic pollutant (as that term is
defined in 33 U.S.C. (S)1362(13)), hazardous substance (as that term is defined
in 42 U.S.C. (S)(S)9601 et seq. and the regulations promulgated thereunder),
hazardous chemical (as that term is defined by 29 C.F.R. (S)1910.1200(c)),
hazardous waste (as that term is defined in 42 U.S.C. (S)6202(2)), radioactive
material, including without limitation any source, special nuclear or by-product
material as defined in 42 U.S.C. (S)(S)2011 et seq., friable asbestos and
asbestos containing material, regulated levels of polychlorinated biphenyls,
petroleum and petroleum waste, including crude oil or any petroleum derived
substance, waste or breakdown or decomposition product thereof, or any
constituent of any such petroleum substance or waste, or any substance or
material which because of its toxicity, corrosiveness, ignitability, reactivity
or infectious characteristics may pose a threat to human health or the
environment.
"Indemnified Environmental Matters" is defined in Section 10.8(a)(3)
of this Agreement.
"Indemnified Party" is defined in Section 10.3(a) of this Agreement.
"Indemnifying Party" is defined in Section 10.3(a) of this Agreement.
"IRC" means the Internal Revenue Code of 1986 or any successor law,
and regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
"IRS" means the United States Internal Revenue Service or any
successor agency, and to the extent relevant, the United States Department of
the Treasury.
"Knowledge" means (i) in the case of an individual, such individual's
actual knowledge; or (ii) in the case of a Person (other than an individual or
the Sellers) the actual knowledge of any executive officer of such Person. In
addition to the foregoing, Sellers will be deemed to have "Knowledge" of a
particular fact or matter if any executive officer of SFI or AFD or any of Xxxxx
Samples, Xxx Xxxxxxxx, Xxxxx Xxxxxx, Xxx XxXxxxxx or Xxxx Xxxxx has actual
knowledge of such fact or matter or should have known of such fact or matter
after undertaking reasonable inquiry.
50
"Legal Requirement" means any federal, state, local, municipal,
foreign, international, or other administrative order, constitution, principle
of common law, treaty, law, rule, ordinance, or regulation (including, but not
limited to, building and zoning ordinances, occupational health and safety laws
and regulations, and Environmental Laws, statutes, and ordinances).
"Losses" means any and all liabilities, obligations, demands, claims,
actions, causes of actions, losses (including diminution in value), assessments,
costs, damages, fines or expenses, including, without limitation, interest,
penalties, reasonable attorney fees and all amounts paid in investigation,
defense or settlement of any of the foregoing.
"Material Adverse Effect" means any condition, event, circumstance,
change or effect that, individually or in the aggregate, has had or would
reasonably be expected to have a material adverse effect on the business,
assets, properties, results of operation or financial condition or Prospects of
the Foodservice Business, the Meat Processing Business (as such term is defined
in the Asset Purchase Agreement) and the Retail Store Business (as such term is
defined in the Asset Purchase Agreement) in the aggregate, it being understood
that none of the following shall be deemed by itself or by themselves, either
alone or in combination, to constitute a material adverse effect: (i) any
changes resulting from the announcement of the transactions contemplated hereby
or from any action taken by the terms hereof, (ii) any changes in general
economic conditions in industries in which the Foodservice Business, the Meat
Processing Business or the Retail Store Business operates, which conditions do
not affect the Foodservice Business, the Meat Processing Business or the Retail
Store Business (as applicable) disproportionately relative to other entities
operating in such industries, (iii) any changes in the United States or global
economy as a whole, (iv) any changes arising as a result of any action taken by
the Buyer and (v) the departure of any employee or employees involved primarily
in the Foodservice Business, Meat Processing Business or Retail Store Business
as a result of any action taken by the Buyer at any time prior to the Closing.
"Meat Processing Business" is defined in the Preliminary Statement of
this Agreement.
"Net Working Capital" is defined in Section 1.3 of this Agreement.
"Noncompetition Agreement" is defined in Section 1.9(a)(vii) of this
Agreement.
"Order" means any award, decision, injunction, judgment, order,
ruling, subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body.
"Ordinary Course of Business" is defined such that an action taken by
a Person will be deemed to have been taken in the "Ordinary Course of Business"
only if:
(a) such action is consistent with the past practices of such
Person and is taken in the ordinary course of the normal day-to-day operations
of such Person;
51
(b) such action is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority);
(c) such action is substantially similar in nature and magnitude
to actions customarily taken, without any authorization by the board of
directors (or by any Person or group of Persons exercising similar authority),
in the ordinary course of the normal day-to-day operations of other Persons that
are in the same line of business as such Person.
"Organizational Documents" means, as applicable, (a) the articles or
certificate of incorporation and the bylaws of a corporation; (b) the
partnership agreement and any statement of partnership of a general partnership;
(c) the limited partnership agreement and the certificate of limited partnership
of a limited partnership; (d) the articles or certificate of organization and
the operating or limited liability company agreement of a limited liability
company; (e) any charter or similar document adopted or filed in connection with
the creation, formation, or organization of a Person; and (f) any amendment to
any of the foregoing.
"P & L Statements" is defined in Section 2.4.
"Participation Agreement" means the agreement dated as of November 30,
2001 among Smart & Final, Inc., as lessee, the parties identified therein as
"Guarantors," Xxxxx Fargo Bank Northwest, National Association, not individually
except as expressly stated therein but solely as the Owner Trustee under the S&F
Trust 1998-1, the various parties identified therein as "Holders," the various
parties identified therein as "Lenders, and Fleet Capital Corporation, as the
agent for the Lenders and, in respect of the Security Documents (as defined
therein), as agent for the Lenders and the Holders.
"Participation Agreement Provisions" means Section 11 of such
agreement (Indemnification).
"Permitted Encumbrances" means (i) any statutory liens for current
Taxes not yet due and payable and (ii) Encumbrances arising in the Ordinary
Course of Business with respect to the Foodservice Business since the date of
the most recent Financial Statements, none of which, individually or in the
aggregate, would have a Material Adverse Effect.1
"Permitted Exceptions" is defined in Section 2.8(o) of this Agreement.
"Person" means any individual, sole proprietorship, partnership,
limited partnership, joint venture, estate, trust, unincorporated association,
organization, labor union, limited liability company, corporation or other
entity or any Governmental Body.
"Preliminary Net Working Capital" is defined in Section 1.2 of this
Agreement.
"Preliminary Purchase Price Statement" is defined in Section 1.2 of
this Agreement.
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/1/ SMF to confirm.
52
"Proceeding" means any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal, administrative or
investigative) commenced, brought, conducted, or heard by or before any
Governmental Body or arbitrator.
"Proprietary Rights Agreement" is defined in Section 2.15(b) of this
Agreement.
"Prospects" means, to the Sellers' knowledge, the prospects as of the
date of this Agreement of the Foodservice Business, the Retail Store Business
and the Meat Processing Business (as such term is defined in the Asset Purchase
Agreement) in the aggregate.
"Purchase Price" is defined in Section 2.2 of this Agreement.
"Real Estate Purchase Agreement for the Frozen Food Facility and the
Parking Lot" is defined in Section 1.9(xv) of this Agreement.
"Real Property" is defined in Section 10.8(a)(1) of this Agreement.
"Related Agreements" is defined in Section 2.2(a) of this Agreement.
"Related Person" means with respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by such
individual;
(c) any Person in which such individual or members of such
individual's Family hold (individually or in the aggregate) a Material Interest;
and
(d) any Person with respect to which such individual or one or
more members of such individual's Family serves as a director, officer, partner,
executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly
or indirectly controlled by, or is directly or indirectly under common control
with such specified Person;
(b) any Person that holds a Material Interest in such specified
Person;
(c) each Person that serves as a director, officer, partner,
executor, or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material
Interest;
(e) any Person with respect to which such specified Person serves
as a general partner or trustee (or in a similar capacity); and
53
(f) any Related Person of any individual described in clause (b)
or (c).
For purposes of this definition, (a) the "Family" of an individual
includes (i) the individual, (ii) the individual's spouse, (iii) any other
natural person who resides permanently with such individual, and (b) "Material
Interest" means direct or indirect beneficial ownership (as defined in Rule
13d-3 under the Securities Exchange Act of 1934) of voting securities or other
voting interests representing at least 25% of the outstanding voting power of a
Person or equity securities or other equity interests representing at least 25%
of the outstanding equity securities or equity interests in a Person.
"Remediation" is defined in Section 10.8(f)(2) of this Agreement.
"Remediation Standard" is defined in Section 10.8(f)(1) of this
Agreement.
"Representative" means with respect to a particular Person, any
director, officer, employee, agent, consultant, advisor, or other representative
of such Person, including legal counsel, accountants, and financial advisors.
"Retail Store Business" means the retail food store business engaged
in by SF Stores at the properties referenced in Items 1-9 of Schedule 2.17 to
the Asset Purchase Agreement.
"Schedule" means the disclosure schedules attached hereto, as amended
and supplemented in accordance with Section 12.16.
"Securities Act" means the Securities Act of 1933, or any successor
law, and regulations and rules issued pursuant to that Act or any successor law.
"Seller Deductible" is defined in Section 10.1(b) of this Agreement.
"Sellers" is defined in the first paragraph of this Agreement.
"Seller Breach" is defined in Section 10.1(a) of this Agreement.
"Seller Indemnified Parties" is defined in Section 10.2(a) of this
Agreement.
"Seller Parties" is defined in the Preliminary Statement of this
Agreement.
"Seller Parties" with respect to Indemnified Environmental Matters is
defined in Section 10.8(h) of this Agreement.
"Severance Agreements" is defined in Section 6.4 of this Agreement.
"SF Stores" is defined in the Preliminary Statement of this Agreement.
"Shares" is defined in the Preliminary Statement of this Agreement.
"60 Day Period" is defined in Section 1.5 of this Agreement.
54
"Software License and Support Agreement" is defined in Section
1.9(a)(viii) of this Agreement.
"Subsidiary" of any entity means, at any date, any Person: (i) the
accounts of which would be consolidated with those of the applicable entity in
such entity's consolidated financial statements if such financial statements
were prepared in accordance with GAAP as of such date; or (ii) of which
securities, membership interests or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or, in the
case of a partnership, more than 50% of the general partnership interests or
more than 50% of the profits or losses of which are, as of such date, owned,
controlled or held by the applicable entity or one or more direct or indirect
subsidiaries of such entity.
"Synthetic Lease Agreement" means the Agreement, dated as of November
30, 2001 between Xxxxx Fargo Bank Northwest, National Association, not
individually but solely as the Owner Trustee under S&F Trust 1998-1, as lessor,
and Smart & Final Inc., as lessee.
"Synthetic Lease Provisions" means the following provisions of the
Synthetic Lease Agreement: (i) Section 4.1 (Taxes; Utility Charges); (ii)
paragraphs (a), (c) and (e) of Section 8.2 (Possession and Use of the
Properties); (iii) Section 8.3 (Integrated Properties); (iv) Section 9.1
(Compliance with Legal Requirements, etc.); (v) Section 10.1 (Maintenance and
Repair; Return); (vi) Section 11.1 (Modifications); (vii) Article XIII
(Permitted Contests and Payment of Impositions, Utility Charges and other
Matters); (viii) Article XIV (insurance); (ix) Section 28.2(a) (Compliance with
Laws); (x) Section 28.2(b) (Payment of Taxes); (xi) Section 28.2(c) (Compliance
with Environmental Laws); and (xii) Section 28.2(f) (Inspection Rights).
"Tax" and "Taxes" means all taxes, charges, withholdings, fees, levies
or other assessments, including, without limitation, all net income, gross
income, gross receipts, real or personal property, tollgate, capital, net worth,
sales, use, ad valorem, single business, transfer, franchise, profits, license,
leasing, withholding, payroll, employment, social security, unemployment,
excise, estimated, severance, stamp, occupation, services, property or other
taxes, customs duties, fees, assessments or charges of any kind whatsoever,
together with any interest and any penalties, additions to tax or additional
amounts imposed by any federal, state, local or other taxing authority, domestic
or foreign.
"Tax Return" means any return (including any information return),
report, statement, schedule, notice, form, or other document or information
filed with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection,
or payment of any Tax or in connection with the administration, implementation,
or enforcement of or compliance with any Legal Requirement relating to any Tax.
"Termination Date" is defined in Section 9.1(d).
"Third Party Claim" is defined in Section 10.3(b) of this Agreement.
"Tradename and Trademark License Agreement" is defined in Section
1.9(a)(ix) of this Agreement.
55
"Truck Maintenance Facility" is defined in Section 10.8(g)(3) of this
Agreement.
"Uncollected Amount" is defined in Section 1.5 of this Agreement.
"Vendor Agreements" means the agreements listed in Annex 1 of Schedule
2.12(a).
ARTICLE XII
GENERAL PROVISIONS
12.1 Expenses With Respect to Transaction. Except as otherwise
expressly provided in this Agreement, each party to this Agreement will bear its
respective expenses incurred in connection with the preparation, execution, and
performance of this Agreement and the Contemplated Transactions, including all
fees and expenses of agents, representatives, counsel and accountants.
12.2 Public Announcements. Prior to the signing of this Agreement,
Sellers and Buyer shall prepare a mutually agreeable release announcing the
Contemplated Transactions. Except for such press release, neither Sellers nor
Buyer shall, without the approval of the other, make any press release or other
announcement concerning the existence of this Agreement or the terms of the
Contemplated Transactions, except as and to the extent that any such party shall
be so obligated by Legal Requirements, in which case the other party shall be
advised and the parties shall use their reasonable best efforts to cause a
mutually agreeable release or announcement to be issued; provided, however, that
the foregoing shall not preclude communications or disclosures necessary to
comply with accounting, stock exchange or federal securities law disclosure
obligations. Sellers and Buyer will consult with each other concerning the means
by which the employees, customers, and suppliers of the Company and others
having dealings with the Company will be informed of the Contemplated
Transactions.
12.3 Confidentiality. Buyer and Sellers shall abide by and comply with
all of the terms and conditions of the Non-Disclosure Agreement entered into by
and among SFI and Buyer and dated as of February 10, 2003, as amended (the
"Confidentiality Agreement"). Notwithstanding the foregoing, if required by
Legal Requirements, Sellers and Buyer (and each of their respective employees,
representatives, or other agents) may disclose to any and all persons, without
limitation of any kind, the tax treatment and any facts that may be relevant to
the tax structure of the Contemplated Transactions beginning on the earliest of
(i) the date of the public announcement of discussions relating to the
Contemplated Transactions, (ii) the date of public announcement of the
Contemplated Transactions, or (iii) the date of the execution of an agreement
(with or without conditions) to enter into the Contemplated Transactions,
provided, however, that neither Sellers nor Buyer (nor any of their respective
Representatives) may disclose any other information that is not relevant to
understanding the tax treatment and tax structure of the Contemplated
Transactions (including the identity of any party and any information that could
lead another to determine the identity of any party), or any other information
to the extent that such disclosure could result in a violation of any federal or
state securities law.
56
12.4 Notices. All necessary notices, demands, requests and other
communications required or permitted to be given hereunder shall in every case
be in writing and shall be deemed duly given (a) when delivered personally, (b)
upon receipt or refusal of receipt, if sent by registered or certified mail, in
all such cases with postage prepaid, return receipt requested, or (c) the next
business day if delivered by a recognized overnight courier service, airbill
prepaid, designated for next business day delivery, to the parties at the
addresses as set forth below or at such other addresses as may be furnished in
writing:
If to Buyer: Xxxxx Xxxxxxxxx
Xxxxxx Food Service, Inc.
X.X. Xxx 0000 Xxxxx Xxxxxx,
Xxxxxxxx 00000
and to: Xxxxx X. Xxxx
00000 Xxxx Xxxxxxxx Xxxxx
X.X. Xxx 000 Xxxxxx,
Xxxxxxxx 00000-0000
With a copy to: Miller, Johnson, Xxxxx & Xxxxxxxxx, P.L.C.
000 Xxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
If to Sellers: Xxxxxx Xxxxxxxxx
Smart & Final, Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
With a copy to: Legal Department
Smart & Final, Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
And a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
And a copy to: Xxxxx & Xxxxxxx
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx XX
57
12.5 Jurisdiction.
(a) In the event any dispute arises out of this Agreement or any
of the transactions contemplated by this Agreement, each of the parties hereto
consents to submit itself to the personal jurisdiction of any federal court in
the state of Delaware and, in case such court refuses jurisdiction then each of
the parties consents to submit itself to the personal jurisdiction of any state
court in the state of Delaware. Each of the parties further agrees that it will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from such courts, and agrees that, except as permitted
pursuant to this Section 12.5, it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any other
court other than a federal court in the state of Delaware.
(b) In the event the state court specified in Section 12.5(a)
refuses to exercise jurisdiction over the parties hereto or the subject matter
at issue, then with respect to any legal action or proceeding brought by any of
the Sellers against the Buyer arising out of or relating to this Agreement or
any of the transactions contemplated by this Agreement, each party to this
Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of any federal court within the jurisdiction of the United
States District Court for the Western District of Michigan (and each
appellate court thereof) or any state court in the state of Michigan;
(ii) agrees that any federal court within the jurisdiction
of the United States District Court for the Western District of Michigan or
any state court in the state of Michigan shall be deemed to be a convenient
forum; and
(iii) agrees not to assert (by way of motion, as a defense
or otherwise), in any such legal proceeding commenced in any federal court
within the jurisdiction of the United States District Court for the Western
District of Michigan or any state court in the state of Michigan, any claim
that such party is not subject personally to the jurisdiction of such
court, that such legal proceeding has been brought in an inconvenient
forum, or that the venue of such proceeding is improper.
(c) In the event the state court specified in Section 12.5(a)
refuses to exercise jurisdiction over the parties hereto or the subject matter
at issue, then with respect to any legal action or proceeding brought by the
Buyer against any of the Sellers arising out of or relating to this Agreement or
any of the transactions contemplated by this Agreement, each party to this
Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of any federal court within the jurisdiction of the United
States District Court for the Central District of California (and each
appellate court thereof) or any state court in the state of California;
(ii) agrees that any federal court within the jurisdiction
of the United States District Court for the Central District of California
or any
00
xxxxx xxxxx xx xxx xxxxx xx Xxxxxxxxxx shall be deemed to be a convenient
forum; and
(iii) agrees not to assert (by way of motion, as a defense
or otherwise), in any such legal proceeding commenced in any federal court
within the jurisdiction of the United States District Court for the Central
District of California or any state court in the state of California, any
claim that such party is not subject personally to the jurisdiction of such
court, that such legal proceeding has been brought in an inconvenient
forum, or that the venue of such proceeding is improper.
(d) The parties hereby waive any right to a jury trial.
12.6 Further Assurances. From time to time after the Closing Date, at
the request of the other party hereto and at the expense of the party so
requesting (unless the requesting party is entitled to indemnification therefor
under Article X), each of the parties hereto shall execute and deliver to such
requesting party such documents and take such other action as such requesting
party may reasonably request in order to consummate more effectively the
transactions contemplated hereby. Sellers and Buyer shall provide each other
with such cooperation and information as either of them may reasonably request
of the other in filing the Tax Returns relating to the Company.
12.7 Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in the Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
12.8 Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the parties other than the Confidentiality Agreement
with respect to its subject matter (including the Letter of Intent between Buyer
and SFI dated May 29, 2003, as amended) and constitutes (along with the
documents referred to in this Agreement) a complete and exclusive statement of
the terms of the agreement between the parties with respect to its subject
matter. This Agreement may not be amended except by a written agreement executed
by the parties to be charged with the amendment.
12.9 Assignments, Successors, and No Third-Party Rights. Neither party
may assign any of its rights under this Agreement without the prior consent of
the other parties except that Buyer may assign any of its rights under this
Agreement to any Affiliate of Buyer.
59
Subject to the preceding sentence, this Agreement will apply to, be binding in
all respects upon, and inure to the benefit of the benefit of the successors and
permitted assigns of the parties. Nothing expressed or referred to in this
Agreement will be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with respect
to this Agreement or any provision of this Agreement. This Agreement and all of
its provisions and conditions are for the sole and exclusive benefit of the
parties to this Agreement and their successors and assigns.
12.10 Severability. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
12.11 Section Headings, Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
12.12 Preamble; Preliminary Statement. The Preliminary Statement set
forth in the Preamble hereto is hereby incorporated and made a part of this
Agreement.
12.13 Governing Law. This Agreement will be governed by the internal
laws of the State of Delaware without regard to conflicts of laws principles.
12.14 No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party hereto by virtue of having drafted this Agreement or otherwise.
12.15 Dispute Resolution. Except as hereinafter provided in this
Section 12.15 and subject to the provisions set forth in Article X , from and
after the Closing, all claims, controversies, differences, or disputes between
or among any of the parties hereto arising from or relating to this Agreement,
including claims by one party that another party or parties hereto have failed
to perform any of their obligations hereunder (collectively, "Agreement
Disputes"), shall be resolved as follows:
(a) Facilitative Mediation. The parties to an Agreement Dispute
shall first attempt to resolve such Agreement Dispute by means of a mediation
conducted in the following manner. A party desiring mediation of any Agreement
Dispute shall give or shall have given a written notice, in the manner set forth
in Section 12.4 hereof (a "Dispute Notice"), to the other party or parties
setting forth the nature of the dispute and the relief intended to be sought and
shall submit such Agreement Dispute for resolution by facilitative mediation in
Chicago, Illinois, under the Commercial Mediation Rules (but not otherwise under
the auspices) of the American Arbitration Association (the "AAA") in effect on
the date of this Agreement,
60
unless the parties have agreed, in writing, to resolve any such dispute by other
means. Each party agrees that it will submit to and shall not challenge or
object to the jurisdiction (either personal or subject matter) or the venue of
such mediation in Chicago, Illinois.
(b) Legal Proceedings. If any Agreement Dispute has not been
resolved by mediation as provided above within sixty (60) days after submission
thereof, then either party may commence a suit or legal action or an action at
equity to enforce its rights or the other party's obligations or recover any
damages arising from the other party's breach or such other relief as may be
appropriate under the circumstances.
(c) Attorney Fees and Other Costs. The prevailing party in any
mediation or any action or legal or other proceeding brought with respect to an
Agreement Dispute shall be entitled to recover the reasonable fees and
disbursements of its attorneys, accountants, and expert witnesses in connection
with any such mediation or any action or legal or other proceeding brought in
accordance with the provisions hereof.
(d) Exceptions for Equitable Relief. Notwithstanding the
foregoing or anything to the contrary contained elsewhere in this Agreement, a
party may bring a proceeding against any other party hereto for specific
performance or injunctive or other forms or equitable relief in the state or
federal courts pursuant to the procedures set forth in Section 12.5 without
having to submit the matter or Agreement Dispute in question to mediation as
hereinabove set forth, provided, however, that such party shall not seek any
monetary award or relief in such action or proceeding unless its failure to do
so would prejudice such party's rights or ability to seek such monetary award or
relief in another action or proceeding.
12.16 Supplemental Disclosure. Sellers shall have the right from time
to time up to seven (7) days prior to the Closing to supplement or amend the
disclosure schedules with respect to any matter hereafter arising that, if
existing or known at the date of this Agreement, would have been required to be
set forth or described in such disclosure schedule. Any such supplemental or
amended disclosure shall be deemed to have cured any breach of any
representation or warranty made in this Agreement for purposes of Article X, but
will not be deemed to have cured any such breach made in this Agreement or to
have been disclosed as of the date of this Agreement for purposes of Article
VIII.
12.17 Reliance. All covenants, warranties and representations made
herein by any party (including the disclosures made on the Schedules hereto)
shall be deemed to be relied upon by the other party notwithstanding any
investigation or actual knowledge of such by the other party.
12.18 Counterparts. This Agreement may be executed in two or more
counterparts, each or which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[Remainder of page intentionally left blank]
61
IN WITNESS WHEREOF, the parties have each executed and delivered this
Agreement as of the day and year first above written.
SELLERS:
SFI:
SMART & FINAL INC.
By /s/ XXXXXX XXXXXXXXX
-----------------------------------
Its EVP
----------------------------------
By /s/ XXXXXX X. XXXXXXXX
-----------------------------------
Its SVP
----------------------------------
AFD:
AMERICAN FOODSERVICE DISTRIBUTORS
By /s/ XXXXXX XXXXXXXXX
-----------------------------------
Its EVP
----------------------------------
By /s/ XXXXXX X. XXXXXXXX
-----------------------------------
Its SVP
----------------------------------
BUYER:
GFS HOLDING, INC.
By /s/ XXXX XXXXXX
-----------------------------------
Its AUTHORIZED AGENT
----------------------------------
62
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (this "Agreement") is entered into and effective
as of August , 2003 (the "Effective Date"), by and between SMART & FINAL INC.,
--
a Delaware corporation ("SFI"), AMERICAN FOODSERVICE DISTRIBUTORS, a California
corporation ("AFD"), SMART & FINAL STORES CORPORATION, a California corporation
("SF Stores" and, together with SFI and AFD, collectively, the "Sellers"), GFS
HOLDING, INC., a Delaware corporation ("GFS Holding"), XXXXX XXX COMPANY, a
Florida corporation ("Xxxxx Xxx"), GFS STORES, LLC, a Delaware limited liability
company ("GFS Stores"), and GFS Orlando, LLC, a Delaware limited liability
company ("GFS Orlando" and, together with GFS Holding, Xxxxx Xxx and GFS Stores,
collectively, the "Buyers"), and XXXXX FARGO BANK, N.A., solely in its capacity
as Escrow Agent as is set forth herein (the "Escrow Agent"). Capitalized terms
not otherwise defined herein shall have the respective meanings set forth in the
Share Purchase Agreement (as defined below).
RECITALS
A. Pursuant to that certain Share Purchase Agreement (the "Share
Purchase Agreement"), dated of even date herewith, by and between SFI, AFD and
GFS Holding, GFS Holding will purchase all of the issued and outstanding common
shares of Xxxxx Xxx; and pursuant to that certain Asset Purchase Agreement (the
"Asset Purchase Agreement"), dated of even date herewith, by and among GFS
Holding, GFS Orlando and GFS Stores, and Sellers, GFS Stores and GFS Orlando
will, directly or indirectly, acquire from Sellers certain of the assets of SF
Stores and all of the assets of the Orlando Foodservice division of AFD
(collectively, the "Assets" and, together with Xxxxx Xxx, the "Companies").
B. Following the consummation of the transactions contemplated by the
Share Purchase Agreement and the Asset Purchase Agreement, Buyers will continue
to operate the Companies.
C. The Asset Purchase Agreement requires that the Buyers deposit with
the Escrow Agent the sum of Two Million Dollars ($2,000,000) and the Share
Purchase Agreement requires that the Buyers deposit with the Escrow Agent the
sum of One Million Dollars ($1,000,000), for an aggregate deposit of Three
Million Dollars ($3,000,000) (the "Escrow Fund").
D. An aggregate amount equal to One Million Five Hundred Thousand
Dollars ($1,500,000) (the "Purchase Price Escrow Deposit") of the Escrow Fund
shall be a fund against which claims by the Buyers may be made with respect to
adjustments to the Purchase Price pursuant to Sections 1.4 and 1.5 of the Asset
Purchase Agreement and Sections 1.3 and 1.4 of the Share Purchase Agreement.
E. An aggregate amount equal to One Million Five Hundred Thousand
Dollars ($1,500,000) (the "Indemnity Escrow Deposit") of the Escrow Fund shall
be a fund against which claims for indemnification against the Sellers may be
made by the Buyers pursuant to Article X of the Asset Purchase Agreement and
pursuant to Article X of the Share Purchase Agreement.
AGREEMENT
In consideration of the premises set forth above and other good and
valuable consideration, the receipt of which is hereby acknowledged, the Buyers,
the Sellers and the Escrow Agent agree as follows:
1. Appointment of Escrow Agent.
(a) The Escrow Agent is hereby appointed escrow agent in
accordance with the instructions set forth in this Agreement and hereby agrees
to act as the Escrow Agent under this Agreement. The Escrow Agent shall have no
duty to enforce any provision hereof requiring performance by any other party
hereunder.
(b) The Escrow Agent hereby acknowledges receipt of the Escrow
Fund.
(c) The Escrow Agent shall not have any interest in the Escrow
Fund, but shall serve as escrow holder only and have only possession thereof.
The Escrow Agent expressly waives any right to set off and appropriate any
amounts under the Escrow Fund.
2. Distribution of Purchase Price Escrow Deposit. The Buyers and the
Sellers shall, not more than five (5) business days after the final
determination of the Final Closing Financial Statement and the adjustments to
the Purchase Price, if any, pursuant to Sections 1.4 and 1.5 of the Asset
Purchase Agreement and Sections 1.3 and 1.4 of the Share Purchase Agreement,
provide the Escrow Agent with a written notice (the "Distribution Notice") with
respect to the disposition of the Purchase Price Escrow Deposit. The
Distribution Notice shall be signed by authorized officers of the Buyers and the
Sellers, and shall describe the portions of the Purchase Price Escrow Deposit to
be distributed to the Buyers or to the Sellers, as the case may be. Not more
than five (5) business days after the delivery of the Distribution Notice, the
Escrow Agent shall distribute the Purchase Price Escrow Deposit in the manner
described in the Distribution Notice, together with any interest and income
earned on the portion so distributed. The parties acknowledge that no
distributions shall be made under this Section 2 until the Final Closing
Financial Statement, and adjustments to the Purchase Price with respect to the
determination of the Final Net Working Capital, if any, have been determined
under both the Asset Purchase Agreement and the Share Purchase Agreement, and
that any such distribution will be of the net amount under both the Asset
Purchase Agreement and the Share Purchase Agreement.
3. Claim Certificates With Respect to the Indemnity Escrow Deposit.
The Buyers, from time to time on or prior to the first anniversary of the
Closing Date, may make an indemnification claim against the Indemnity Escrow
Deposit under and pursuant to Article X of
2
the Asset Purchase Agreement and/or Article X of the Share Purchase Agreement
(as applicable), on behalf of themselves or another Buyer Indemnified Party, for
up to all of the Indemnity Escrow Deposit (a "Claim") by delivering to the
Escrow Agent a certificate (a "Claim Certificate") signed by authorized officers
of the Buyers stating:
(a) That the Buyers or another Buyer Indemnified Party are
entitled to be indemnified under Section 10.1 of the Asset Purchase Agreement
and/or Section 10.1 of the Share Purchase Agreement (as applicable);
(b) The reasons therefore, set forth in reasonable detail;
(c) The amount of the Claim by the Buyers or such other Buyer
Indemnified Party, provided, however, that where the amount of the Claim is not
a liquidated sum, the amount of the Claim shall be the amount reasonably
estimated by the Buyers in good faith; and
(d) That the Buyers have delivered a copy of such Claim
Certificate to the Sellers and their legal counsel and the date on which such
copy was delivered.
Whenever a Claim Certificate is delivered to the Escrow Agent, the
Escrow Agent shall thereupon promptly deliver a copy to the Sellers and their
legal counsel.
4. Disputed Claims With Respect to the Indemnity Escrow Deposit. The
Sellers may dispute any Claim in whole or in part (hereinafter a "Disputed
Claim"), by delivering to the Escrow Agent a written notice (an "Objection
Notice") within twenty (20) days of receipt of the Claim Certificate from the
Buyers stating:
(a) That the Sellers dispute or object in good faith to such
Claim in whole or in part;
(b) A reasonably detailed description of the reasons for such
good faith objection or dispute;
(c) That the Sellers have delivered a copy of the Objection
Notice to the Buyers and their legal counsel and the date on which such copy was
delivered;
(d) The portion of the Claim set forth in the Claim Certificate
to which there is a good faith dispute or objection, including a reasonable
estimate of the dollar amount of such portion of the Claim (the "Disputed Claims
Amount"); and
(e) The portion of the Claim set forth in the Claim Certificate,
if any, to which there is no dispute or objection, including a reasonable
estimate of the dollar amount of such portion of the Claim (hereinafter referred
to as an "Undisputed Claim").
Whenever there shall be delivered to the Escrow Agent an Objection
Notice, the Escrow Agent shall thereupon promptly deliver a copy to the Buyers
and their legal counsel.
3
5. Payment of Claims With Respect to the Indemnity Escrow Deposit.
(a) If the Escrow Agent does not receive an Objection Notice
within twenty (20) days of the date that the Sellers receive a Claim Certificate
from the Buyers, the Escrow Agent shall thereupon promptly pay to the Buyers
from the Indemnity Escrow Deposit an amount equal to the amount of the Claim
specified in the Claim Certificate plus interest on the amount so paid, computed
from the date of the Claim Certificate.
(b) If the Escrow Agent receives from the Sellers an Objection
Notice which consents or agrees to all or part, or does not dispute a portion,
of a Claim, the Escrow Agent shall thereupon promptly pay to the Buyers from the
Indemnity Escrow Deposit an amount equal to the aggregate amount of such
Undisputed Claim as specified in such notice from the Sellers plus interest on
the amount so paid, computed from the date of the Claim Certificate.
(c) If the Indemnity Escrow Deposit is not sufficient to pay in
full any amounts payable to the Buyers under the preceding Section 5(a) or 5(b),
the Escrow Agent shall pay to the Buyers the full amount of the Indemnity Escrow
Deposit and all interest thereon and this escrow shall thereupon terminate.
6. Distribution of Indemnity Escrow Deposit. Except as provided in
Section 5 hereof, the Escrow Agent shall not make any distribution of the
Indemnity Escrow Deposit with respect to any Claim made by the Buyers hereunder
until:
(a) it receives the written consent or agreement from the Sellers
with respect to such distribution; or
(b) there is a Final Decision with respect to a Disputed Claim.
As used herein, "Final Decision" means a resolution of the Disputed Claim by
facilitative mediation pursuant to Section 12.15 of the Asset Purchase Agreement
and/or Section 12.15 of the Share Purchase Agreement (as the case may be) or, if
the Disputed Claim is not resolved by facilitative mediation, a final decision,
order, judgment or decree of a court having jurisdiction which is either not
subject to appeal or as to which notice of appeal has not been timely filed or
served.
7. Administration of Escrow.
(a) So long as the Escrow Fund is held in escrow, it shall be
invested and reinvested by the Escrow Agent solely in Investments, pursuant to
written instructions signed by the Buyers and the Sellers. Neither the Escrow
Agent, the Buyers, nor the Sellers shall be liable or responsible for any loss
resulting from any investment or reinvestment made pursuant to this Section
7(a). All investments of the Escrow Fund shall be held by, or registered in the
name of, Escrow Agent or its nominee.
As used herein "Investments" means:
(i) direct obligations of, or obligations fully guaranteed
by, the United States of America or any agency thereof with any residual
amount being invested in the Federal Treasury Obligations Money Market
Fund;
4
(ii) any taxable publicly traded money market fund;
(iii) certificates of deposit whether negotiable or
nonnegotiable, issued by any bank, trust company or national banking
association, including the Escrow Agent, provided that such certificates of
deposit shall (A) be issued by a bank, trust company or national banking
association having a capital stock and surplus of more than Five Hundred
Million Dollars ($500,000,000), (B) be fully insured by the Federal Deposit
Insurance Corporation or (C) be fully and continuously secured by direct
obligations of, or obligations unconditionally guaranteed by, the United
States of America, which (1) shall have a market value (exclusive of
accrued interest) at all times at least equal to the principal amount of
such certificates of deposit, (2) shall be lodged with the Escrow Agent (or
any correspondent bank or trust company designated by the Escrow Agent), as
custodian, by the bank, trust company or national banking association
issuing such certificate of deposit, and (3) the bank, trust company or
national banking association issuing each certificate of deposit required
to be so secured shall furnish the Escrow Agent with an undertaking
satisfactory to it that the aggregate market value of such obligations
securing each such certificate of deposit will at all times be an amount
equal to the principal amount of each such certificate of deposit (and the
Escrow Agent shall be entitled to rely on each such undertaking); or
(iv) in the absence of written direction, the Escrow Fund
may be invested in Xxxxx Fargo 100% Treasury Money Market, a money market
fund.
(b) Maturities or unexpired terms of maturities of instruments in
which the Escrow Fund is invested shall not exceed ninety (90) days. The Escrow
Agent is authorized to sell any such Investments as may be required to make any
payment required to be made under this Agreement, and the Escrow Agent shall not
be liable for any loss due to early redemption. In the event that no written
instructions are given by the Buyers and the Sellers as to any uninvested
portion of the Escrow Fund, such portion shall be invested by the Escrow Agent
in United States treasury bills for a thirty (30) day period; provided, however
that if such period is not available, such portion shall be invested for the
closest period of shorter duration.
(c) Not less than ten (10) nor more than fifteen (15) business
days prior to the termination of this Agreement, the Escrow Agent shall deliver
to the Buyers and the Sellers a report outlining (i) the total amount of the
Escrow Fund as of such date and the total amount of interest earned on the
Escrow Fund prior thereto and not distributed pursuant to the terms of this
Agreement and (ii) copies of or a description of all Claim Certificates pursuant
to which payments from the Escrow Fund have been made and a description of all
other payments made from the Escrow Fund during the preceding twenty-three (23)
month period and all pending Claim Certificates as of such date.
(d) At the prior written request of either the Buyers or the
Sellers at any time, the Escrow Agent shall deliver to the Buyers and the
Sellers such information as shall be
5
reasonably requested with respect to the Escrow Fund and any interest earned
thereon or payments made therefrom.
(e) Net profits resulting from, and interest and income produced
by investments of, the Escrow Fund shall be deemed a part of the Escrow Fund and
reinvested by Escrow Agent.
8. Reliance. Escrow Agent may act upon any instrument or other writing
believed by it in good faith to be genuine and to be signed or presented by the
proper person or persons and shall not be liable in connection with the
performance by it of its duties pursuant to the provisions hereof, except for
its own bad faith, fraud, willful misconduct or gross negligence. The Buyers on
the one hand and the Sellers on the other shall indemnify and hold harmless the
Escrow Agent for one half (1/2) of all losses, costs, and expenses which may be
incurred by it without bad faith, fraud, gross negligence or willful misconduct
on the part of the Escrow Agent, arising out of or in connection with its
entering into this Agreement and carrying out its duties hereunder. Such
indemnification provisions shall survive the termination of this Agreement or
the removal or resignation of the Escrow Agent.
9. Distribution of Funds; Termination of Escrow. Unless earlier
terminated pursuant to Section 5(c):
On the first anniversary of the Closing Date, the Indemnity
Escrow Deposit held by the Escrow Agent pursuant to the terms of this Agreement
less (i) all amounts previously distributed pursuant to Section 5 hereof and
(ii) an amount equal to One Hundred Percent (100%) of the Disputed Claims Amount
(including, for purposes hereof, all Claims with respect to which the Sellers
have not submitted an Objection Notice), shall be paid by the Escrow Agent to
the Sellers for the benefit of the Sellers, together with any interest and
income earned on the funds so distributed.
Upon settlement of all Disputed Claims outstanding as of the
first anniversary of the Closing Date, this escrow shall thereupon terminate,
and the remainder of the Indemnity Escrow Deposit held by the Escrow Agent after
any payment due to the Buyers shall be paid by the Escrow Agent to the Sellers
for the benefit of the Sellers, together with any interest and income earned on
the funds so distributed, in accordance with such settlement, written notice of
which shall be delivered to the Escrow Agent.
10. Fees and Expenses. The Escrow Agent shall be entitled to
compensation for its services as stated in the schedule attached as Annex I,
which compensation shall be paid one-half (1/2) by the Sellers and one-half
(1/2) by the Buyers. The fee agreed upon for the services rendered hereunder is
intended as full compensation for the Escrow Agent's services as contemplated by
this Agreement; provided, however, that in the event that the conditions for the
disbursement of funds under this Agreement are not fulfilled, or the Escrow
Agent tenders any material service not contemplated in this Agreement or there
is any assignment of interest in the subject matter of this Agreement not
contemplated herein, or any material modification hereof, or if any material
controversy arises hereunder, or the Escrow Agent is made a party to any
litigation pertaining to this Agreement, or the subject matter hereof, then the
Escrow Agent shall
6
be reasonably compensated for such extraordinary services and reimbursed for all
costs and expenses, including reasonable attorney fees, occasioned by any delay,
controversy, litigation or event, and the same shall be recoverable one-half
(1/2) from the Sellers and one-half (1/2) from the Buyers.
11. Liability of the Escrow Agent.
(a) The Escrow Agent shall hold, invest and disburse the Escrow
Fund and any interest, dividends, or other income accrued thereon only in
accordance with (a) this Agreement or (b) written instructions accompanied by a
certificate signed by the Buyers and the Sellers confirming that such written
instructions are being given in conformity with this Agreement. The Escrow Agent
shall not be bound in any way by, or be deemed to have knowledge of, the Asset
Purchase Agreement and the Share Purchase Agreement or any other agreement
between or among the parties hereto, other than this Agreement. The Escrow Agent
shall have no duties other than those expressly imposed on it herein and shall
not be liable with respect to any action taken by it, or any failure on its part
to act, except to the extent that such actions constitute a breach of this
Agreement, bad faith, fraud, gross negligence, or willful misconduct.
(b) The Escrow Agent makes no representations and has no
responsibility as to the validity, genuineness or sufficiency of any of the
documents or instruments delivered to it hereunder. Subject to Section 11(a)
hereof, the Escrow Agent (i) shall be entitled to rely upon any order, judgment,
certification, demand, notice, instrument or other writing delivered to it
hereunder without being required to determine the authenticity or the
correctness of any fact stated therein or the propriety or validity of the
service thereof and (ii) may act in reliance upon any instrument or signature
reasonably believed by it to be genuine and may assume that any person
purporting to give notice, receipt or advice or make any statement or execute
any document in connection with the provisions hereof has been duly authorized
to do so. The Escrow Agent may act in reliance upon the written advice of
counsel satisfactory to it in reference to any matter in connection with this
Agreement and shall not incur any liability for any action taken in good faith
in accordance with such written advice.
(c) In the event of any disagreement between the other parties
hereto resulting in adverse claims or demands being made in connection with the
Escrow Fund, or in the event that the Escrow Agent in good faith is in doubt as
to what action it should take hereunder, the Escrow Agent shall be entitled to
refrain from acting until the Escrow Agent shall have received (i) a final
nonappealable order of a court of competent jurisdiction directing delivery of
the amount of the Escrow Fund in dispute or (ii) written instructions jointly
executed by the Sellers and the Buyers directing delivery of the amount of the
Escrow Fund in dispute, in which event the Escrow Agent shall deliver the amount
of the Escrow Fund in dispute in accordance with such order or instructions. Any
court order referred to in clause (i) above shall be accompanied by a legal
opinion by counsel for the presenting party reasonably satisfactory to the
Escrow Agent to the effect that said order or determination is final and
nonappealable. The Escrow Agent shall act on such court order and legal opinion
without further questions.
7
12. Resignation; Removal.
(a) The Escrow Agent may resign upon thirty (30) days advance
written notice to the parties. If a successor escrow agent is not appointed by
the mutual agreement of the Buyers and the Sellers within the thirty (30) day
period following such notice, the Escrow Agent may petition any court of
competent jurisdiction to name a successor escrow agent or may tender into the
registry or custody of any court of competent jurisdiction any part or all of
the Escrow Fund, whereupon Escrow Agent's duties hereunder shall terminate.
(b) The Escrow Agent shall be entitled to its compensation earned
prior to its resignation hereunder.
(c) The Buyers and the Sellers may, at any time substitute a new
escrow agent by giving thirty (30) days notice thereof to the existing Escrow
Agent and paying all fees and expenses of such Escrow Agent incurred to the date
of the substitution. Upon the effective date of the substitution of a successor
escrow agent, the Escrow Agent shall deposit all of the Escrow Fund with such
successor.
13. Tax Reporting.
(a) Any payments of income from the Escrow Fund shall be subject
to withholding regulations then in force with respect to United States taxes.
For federal and state income tax purposes, all interest earned on the Escrow
Fund shall be considered the currently reportable income of the party who
receives the distribution with respect thereto. The Escrow Agent shall file
annually all information returns with the Internal Revenue Service and other
governmental authorities documenting such interest income.
(b) Prior to Closing, the Buyers and the Sellers shall provide
the Escrow Agent with certified tax identification numbers by furnishing
appropriate forms W-9 or W-8 and other forms and documents that the Escrow Agent
may reasonably request. The Buyers and the Sellers understand that if such tax
reporting documentation is not so certified to the Escrow Agent, the Escrow
Agent may be required by the Internal Revenue Code of 1986, as amended, to
withhold a portion of any interest or other income earned on the investment of
monies or other property held by the Escrow Agent pursuant to this Agreement.
(c) To the extent that the Escrow Agent becomes liable for the
payment of any taxes in respect of income derived from the investment of funds
held or payments made hereunder, the Escrow Agent shall satisfy such liability
to the extent possible from the Escrow Fund. The Buyers and the Sellers agree to
indemnify and hold the Escrow Agent harmless from and against any taxes,
additions for late payment, interest, penalties and other expenses that may be
assessed against the Escrow Agent on or with respect to any payment or other
activities under this Agreement unless any such tax addition for late payment,
interest, penalties and other expenses shall arise out of or be caused by the
actions of, or failure to act by, the Escrow Agent.
8
14. Miscellaneous Provisions.
(a) Confidentiality. Each of Sellers and Buyers (as appropriate,
the "Promisor") covenant and agree to and will cause their respective authorized
agents, representatives, affiliates, employees, officers, directors,
accountants, counsel and other designated representatives (collectively,
"Representatives") to (i) treat and hold as confidential (and not disclose or
provide access to any person to) all records, books, contracts, instruments,
computer data and other data and information (collectively, "Information")
concerning the other party (the "Promisee") and the Escrow Fund in the
Promisor's possession or furnished by the Promisee or its Representatives
pursuant to this Agreement, (ii) in the event that Promisor or its
Representatives become legally compelled to disclose any such Information,
provide the Promisee with prompt written notice of such requirement so that the
Promisee may seek a protective order or other remedy or waive compliance with
this Section 14(a), and (iii) in the event that such protective order or other
remedy is not obtained, or the Promisee waives compliance with this Section
14(a), furnish only that portion of such Information which is legally required
to be provided and exercise Promisor's best efforts to obtain assurances that
confidential treatment will be accorded such Information; provided, however,
that this sentence shall not apply to any Information that, at the time of
disclosure, is available publicly and was not disclosed in breach of this
Agreement by such party or its Representatives; and provided further, however,
that the provisions of clauses (i) and (ii) above shall not preclude a party
from disclosing Information to its Representatives (provided that each such
Representative shall be advised of the confidential nature of such Information)
or from disclosing Information to or filing Information with any governmental
authority or agency with jurisdiction over such party. Each party agrees and
acknowledges that remedies at law for any breach of its obligations under this
Section 14(a) are inadequate and that in addition thereto the other party shall
be entitled to seek equitable relief, including injunction and specific
performance, in the event of any such breach, without the necessity of
demonstrating the inadequacy of monetary damages. The provisions of this Section
14(a) shall not apply to the extent any such Information is required to be
disclosed by applicable law.
(b) Notices. All necessary notices, demands, requests and other
communications required or permitted to be given hereunder shall in every case
be in writing and shall be deemed duly given (a) when delivered personally, (b)
upon receipt or refusal of receipt, if sent by registered or certified mail, in
all such cases with postage prepaid, return receipt requested, or (c) the next
business day if delivered by a recognized overnight courier service, airbill
prepaid, designated for next business day delivery, to the parties at the
addresses as set forth below or at such other addresses as may be furnished in
writing:
If to Buyers: Xxxxx Xxxxxxxxx
Xxxxxx Food Service, Inc.
X.X. Xxx 0000
Xxxxx Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
9
and to: Xxxxx X. Xxxx
00000 Xxxx Xxxxxxxx Xxxxx
X.X. Xxx 000
Xxxxxx, Xxxxxxxx 00000-0000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Miller, Johnson, Xxxxx & Xxxxxxxxx, P.L.C.
000 Xxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Sellers: Xxxxxx Xxxxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Xxx Xxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
With a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
10
And a copy to: Xxxxx & Xxxxxxx
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx XX
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to Escrow Agent: Xxxxx Fargo Bank, N.A.
Corporate Trust Services
000 Xxxxxxxx Xxxx., 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(c) Jurisdiction.
(1) In the event any dispute arises out of this Agreement or
any of the transactions contemplated by this Agreement, each of the parties
hereto consents to submit itself to the personal jurisdiction of any federal
court in the state of Delaware and, in case such court refuses jurisdiction then
each of the parties consents to submit itself to the personal jurisdiction of
any state court in the state of Delaware. Each of the parties further agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from such court, and agrees that, except as permitted
pursuant to this Section 14(c), it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any other
court other than a federal court in the state of Delaware.
(2) In the event the state court specified in Section
14(c)(1) refuses to exercise jurisdiction over the parties hereto or the subject
matter at issue, then with respect to any legal action or proceeding brought by
any of the Seller Parties against any of the Buyer Parties arising out of or
relating to this Agreement or any of the transactions contemplated by this
Agreement, each party to this Agreement:
(i) expressly and irrevocably consents and submits to
the jurisdiction of any federal court within the jurisdiction of the United
States District Court for the Western District of Michigan (and each
appellate court thereof) or any state court in the state of Michigan;
(ii) agrees that any federal court within the
jurisdiction of the United States District Court for the Western District
of Michigan or any state court in the state of Michigan shall be deemed to
be a convenient forum; and
11
(iii) agrees not to assert (by way of motion, as a
defense or otherwise), in any such legal proceeding commenced in any
federal court within the jurisdiction of the United States District Court
for the Western District of Michigan or any state court in the state of
Michigan, any claim that such party is not subject personally to the
jurisdiction of such court, that such legal proceeding has been brought in
an inconvenient forum, or that the venue of such proceeding is improper.
(3) In the event the state court specified in Section
14(c)(1) refuses to exercise jurisdiction over the parties hereto or the subject
matter at issue, then with respect to any legal action or proceeding brought by
any of the Buyer Parties against any of the Seller Parties arising out of or
relating to this Agreement or any of the transactions contemplated by this
Agreement, each party to this Agreement:
(i) expressly and irrevocably consents and submits to
the jurisdiction of any federal court within the jurisdiction of the United
States District Court for the Central District of California (and each
appellate court thereof) or any state court in the state of California;
(ii) agrees that any federal court within the
jurisdiction of the United States District Court for the Central District
of California or any state court in the state of California shall be deemed
to be a convenient forum; and
(iii) agrees not to assert (by way of motion, as a
defense or otherwise), in any such legal proceeding commenced in any
federal court within the jurisdiction of the United States District Court
for the Central District of California or any state court in the state of
California, any claim that such party is not subject personally to the
jurisdiction of such court, that such legal proceeding has been brought in
an inconvenient forum, or that the venue of such proceeding is improper.
(4) The parties hereby waive any right to a jury trial.
(d) Further Assurances. From time to time, at the request of the
other party hereto and at the expense of the party so requesting, each of the
parties hereto shall execute and deliver to such requesting party such documents
and take such other action as such requesting party may reasonably request in
order to consummate more effectively the transactions contemplated hereby.
(e) Waiver. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor any delay
by any party in exercising any right, power, or privilege under this Agreement
or the documents referred to in this Agreement will operate as a waiver of such
right, power, or privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of such right,
power, or privilege or the exercise of any other right, power, or privilege. To
the maximum extent
12
permitted by applicable law, (a) no claim or right arising out of this Agreement
or the documents referred to in this Agreement can be discharged by one party,
in whole or in part, by a waiver or renunciation of the claim or right unless in
writing signed by the other party; (b) no waiver that may be given by a party
will be applicable except in the specific instance for which it is given; and
(c) no notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
(f) Entire Agreement and Modification. This Agreement supersedes
all prior agreements between the parties with respect to its subject matter and
constitutes a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the parties to be charged
with the amendment.
(g) Assignments, Successors, and No Third-Party Rights. Neither
party may assign any of its rights or obligations under this Agreement without
the prior consent of the other parties, except that (i) GFS Holding may assign
any of its rights under this Agreement to any Affiliate of GFS Holding, and (ii)
any entity into which the Escrow Agent may be merged or converted or with which
it may be consolidated, or entity resulting from any merger, conversion or
consolidation to which the Escrow Agent shall be a party, or any entity
succeeding to the business of the Escrow Agent shall be the successor of the
Escrow Agent hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. Subject to the preceding sentence, this Agreement will
apply to, be binding in all respects upon, and inure to the benefit of the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns.
(h) Severability. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the other
provisions of this Agreement will remain in full force and effect. Any provision
of this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or unenforceable.
(i) Section Headings, Construction. The headings of Sections in
this Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or "Sections" refer
to the corresponding Section or Sections of this Agreement. All words used in
this Agreement will be construed to be of such gender or number as the
circumstances require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
(j) Preamble; Recitals. The Recitals set forth in the Preamble
hereto are hereby incorporated and made a part of this Agreement.
13
(k) Governing Law. This Agreement will be governed by the
internal laws of the State of Delaware without regard to conflicts of laws
principles.
(l) No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party hereto by virtue of having drafted this Agreement or otherwise.
(m) Dispute Resolution. Except as hereinafter provided in this
Section 14(m) all claims, controversies, differences, or disputes between or
among any of the parties hereto arising from or relating to this Agreement,
including claims by one party that another party or parties hereto have failed
to perform any of their obligations hereunder (collectively, "Agreement
Disputes"), shall be resolved as follows:
(1) Facilitative Mediation. The parties to an Agreement
Dispute shall first attempt to resolve such Agreement Dispute by means of a
mediation conducted in the following manner. A party desiring mediation of any
Agreement Dispute shall give or shall have given a written notice, in the manner
set forth in Section 14(b) hereof (a "Dispute Notice"), to the other party or
parties setting forth the nature of the dispute and the relief intended to be
sought and shall submit such Agreement Dispute for resolution by facilitative
mediation in Chicago, Illinois, under the Commercial Mediation Rules (but not
otherwise under the auspices) of the American Arbitration Association (the
"AAA") in effect on the date of this Agreement, unless the parties have agreed,
in writing, to resolve any such dispute by other means. Each party agrees that
it will submit to and shall not challenge or object to the jurisdiction (either
personal or subject matter) or the venue of such mediation in Chicago, Illinois.
(2) Legal Proceedings. If any Agreement Dispute has not been
resolved by mediation as provided above within sixty (60) days after submission
thereof, then either party may commence a suit or legal action or an action at
equity to enforce its rights or the other party's obligations or recover any
damages arising from the other party's breach or such other relief as may be
appropriate under the circumstances.
(3) Attorney Fees and Other Costs. The prevailing party in
any mediation or any action or legal or other proceeding brought with respect to
an Agreement Dispute shall be entitled to recover the reasonable fees and
disbursements of its attorneys, accountants, and expert witnesses in connection
with any such mediation or any action or legal or other proceeding brought in
accordance with the provisions hereof.
(4) Exceptions for Equitable Relief. Notwithstanding the
foregoing or anything to the contrary contained elsewhere in this Agreement, a
party may bring a proceeding against any other party hereto for specific
performance or injunctive or other forms or equitable relief in the state or
federal courts pursuant to the procedures set forth in Section 14(c) of Delaware
without having to submit the matter or Agreement Dispute in question to
mediation as hereinabove set forth, provided, however, that such party shall not
seek any monetary award or relief in such action or proceeding unless its
failure to do so would prejudice such party's rights
14
or ability to seek such monetary award or relief in another action or
proceeding.
(n) Counterparts. This Agreement may be executed in two or more
counterparts, each or which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
IN WITNESS WHEREOF, Sellers and Buyers and Escrow Agent have executed
this Agreement as of the date set forth in the first paragraph hereof.
SELLERS:
SFI:
SMART & FINAL INC.
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Its: XXXXXX X. XXXXXXXX
-----------------------------------
Senior Vice President and Secretary
SF STORES:
SMART & FINAL STORES CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Its: XXXXXX X. XXXXXXXX
-----------------------------------
Senior Vice President and Secretary
AFD:
AMERICAN FOODSERVICE DISTRIBUTORS
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Its: XXXXXX X. XXXXXXXX
-----------------------------------
Senior Vice President and Secretary
15
BUYERS:
GFS HOLDING:
GFS HOLDING, INC.
By: /s/ Xxxxx X. Xxxx
------------------------------------
Its:
-----------------------------------
GFS ORLANDO:
GFS ORLANDO, LLC
By: /s/ Xxxxx X. Xxxx
------------------------------------
Its:
-----------------------------------
GFS STORES:
GFS STORES, LLC
By: /s/ Xxxxx X. Xxxx
------------------------------------
Its:
-----------------------------------
ESCROW AGENT:
XXXXX FARGO BANK, N.A.
By: /s/ Xxxxx Xxxx
------------------------------------
Its: Xxxxx Xxxx
-----------------------------------
Vice Presidnet
16
ANNEX I
FEE SCHEDULE
1. Annual escrow fee $2,000
2. Reimbursement of expenses $1,000 advance
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT (this "Agreement") is entered into as of
September 7, by and between SMART & FINAL INC., a Delaware corporation ("SFI"),
AMERICAN FOODSERVICE DISTRIBUTORS, a California corporation ("AFD"), SMART &
FINAL STORES CORPORATION, a California corporation ("SF Stores" and, together
with SFI and AFD, collectively, the "Sellers"), and GFS HOLDING, INC., a
Delaware corporation ("GFS Holding"), XXXXX XXX COMPANY, a Florida corporation
("Xxxxx Xxx"), GFS STORES, LLC, a Delaware limited liability company ("GFS
Stores"), and GFS ORLANDO, LLC, a Delaware limited liability company ("GFS
Orlando" and, together with GFS Holding, Xxxxx Xxx and GFS Stores, collectively,
the "Buyers"). Capitalized terms used but not otherwise defined herein shall
have the meanings assigned to them in the Share Purchase Agreement (as defined
below).
RECITALS
A. Pursuant to that certain Share Purchase Agreement (the "Share
Purchase Agreement"), dated August 6, 2003, by and between SFI, AFD and GFS
Holding, GFS Holding will purchase all of the issued and outstanding equity
securities of Xxxxx Xxx; and pursuant to that certain Asset Purchase Agreement
(the "Asset Purchase Agreement"), dated August 6, 2003, by and among Sellers and
GFS Holding, GFS Stores and GFS Orlando, GFS Holding, GFS Stores and GFS Orlando
will, directly or indirectly, acquire from Sellers certain of the assets of SF
Stores and all of the assets of the Orlando Foodservice division of AFD ("OFS")
(collectively, the "Assets").
X. Xxxxxxx are, directly or indirectly, respectively, the owners of
all of the issued and outstanding equity securities of Xxxxx Xxx, and of the
Assets.
C. Xxxxx Xxx, SF Stores and OFS are engaged in the foodservice
distribution, retail food store, and meat processing business in the State of
Florida (collectively, the "Business").
D. Following the consummation of the transactions contemplated by the
Share Purchase Agreement and the Asset Purchase Agreement, Buyers will continue
to operate the Business.
E. Buyers have required as a material condition to the closing of the
transactions contemplated by the Share Purchase Agreement and the Asset Purchase
Agreement that Sellers agree to the restrictions and covenants contained in this
Agreement.
AGREEMENT
In consideration of the recitals set forth above and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Non-Competition.
(a) Definition of Competitor. As used in this Agreement,
"Competitor" means any person, corporation, partnership, association, joint
venture or other organization or entity that now or hereafter engages in or
attempts to engage in any aspect of the Business in the states of Florida,
Michigan, Illinois, Indiana and Ohio, or any aspect of the foodservice business
in the Caribbean, Central America or South America (specifically excluding
Mexico from this definition) (the "Territory").
(b) Covenant Not To Compete. The Sellers covenant and agree that
they will not, during the Non-Competition Period (as defined below), directly or
indirectly:
(i) engage in, continue in, or carry on, invest in, own,
manage, operate, finance or control, or participate in the ownership,
management, operation, finance or control, of any business that competes in any
aspect of the Business in the Territory, including, without limitation, owning
or controlling any financial interest in any Competitor in the Territory; or
(ii) be retained by, employed by, consult with, advise or
assist in any way, whether or not for consideration, any Competitor in any
aspect of the Business in the Territory; or
(iii) neither for itself or any other Person, induce or
attempt to induce any customer, supplier, licensee or business relation of
Buyers or any entity controlled by or under common control with any Buyer entity
that may subsequently operate the Business to cease doing business with Buyers
with respect to the Business in the Territory or in any way interfere with the
relationship between any customer, supplier, licensee or business relation of
Buyers with respect to the Business in the Territory;
(iv) neither for itself or any other Person, solicit the
business of any Person known to be a customer of Buyers with respect to the
Business in the Territory, whether or not Sellers had prior contact with such
Person; or
(v) engage in any practice the purpose of which is to evade
the provisions of this covenant not to compete;
provided, however, that the none of the foregoing shall prohibit the ownership
of securities of a corporation that is listed on a national securities exchange
or traded in the national over-the-counter market in an amount that does not
exceed five percent (5%) of the outstanding shares of any such corporation.
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2. Term.
(a) The covenants stated in Section 1 (the "Covenants") shall be
effective from the date of this Agreement to and including the second (2nd)
anniversary of the Closing Date of the Share Purchase Agreement (the
"Non-Competition Period").
(b) In the event of a material breach by Sellers of any covenant
set forth above, the Noncompetition Period shall be extended by the amount of
time during which such breach continues.
3. Remedies. All remedies, either under this Agreement or by law or
otherwise afforded to Buyers and their respective successors and assigns, shall
be cumulative and not alternative. Sellers acknowledge and agree that the
provisions and restrictions contained in Sections 1 and 2 are not overbroad, are
not overlong, and are reasonably necessary to protect the legitimate continuing
business interests of Buyers, that any violation or breach of such provisions
and restrictions will result in irreparable injury to Buyers for which a remedy
at law would be inadequate and that, in addition to any relief for damages that
may be available to Buyers for such violation or breach, and regardless of any
other provision contained in this Agreement, Buyers shall be entitled to such
injunctive and other equitable relief as a court may grant after considering the
intent of Sections 1 and 2.
4. Enforceability. If any court determines that any of the Covenants,
or any parts thereof, are invalid or unenforceable, the other Covenants and the
remainder of any of the Covenants so impaired shall not thereby be affected and
shall be given full effect, without regard to the invalid portions. If any court
determines that any of the Covenants, or any parts thereof, are unenforceable
because of the duration or geographic scope thereof, the parties agree that the
duration or geographic scope of such Covenants, or any parts thereof, shall be
the maximum duration or geographic scope, as the case may be, provided by law,
of such Covenants, and, in such reduced form, such Covenants shall then be
enforceable.
5. Notices. All necessary notices, demands, requests and other
communications required or permitted to be given hereunder shall in every case
be in writing and shall be deemed duly given (a) when delivered personally, (b)
upon receipt or refusal of receipt, if sent by registered or certified mail, in
all such cases with postage prepaid, return receipt requested, or (c) the next
business day if delivered by a recognized overnight courier service, airbill
prepaid, designated for next business day delivery, to the parties at the
addresses as set forth below or at such other addresses as may be furnished in
writing:
If to Buyers: Xxxxx Xxxxxxxxx
Xxxxxx Food Service, Inc.
X.X. Xxx 0000
Xxxxx Xxxxxx, Xxxxxxxx 00000
and to: Xxxxx X. Xxxx
00000 Xxxx Xxxxxxxx Xxxxx
X.X. Xxx 000
Xxxxxx, Xxxxxxxx 00000-0000
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With a copy to: Miller, Johnson, Xxxxx & Xxxxxxxxx, P.L.C.
000 Xxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
If to Sellers: Xxxxxx Xxxxxxxxx
Smart & Final, Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
With a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
and a copy to: Xxxxx & Xxxxxxx
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx XX
6. Jurisdiction.
(a) In the event any dispute arises out of this Agreement or any
of the transactions contemplated by this Agreement, each of the parties hereto
consents to submit itself to the personal jurisdiction of any federal court in
the state of Delaware and, in case such court refuses jurisdiction then each of
the parties consents to submit itself to the personal jurisdiction of any state
court in the state of Delaware. Each of the parties further agrees that it will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from such court, and agrees that, except as permitted pursuant
to this Section 6, it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any other court other
than a federal court in the state of Delaware.
(b) In the event the state court specified in Section 6(a)
refuses to exercise jurisdiction over the parties hereto or the subject matter
at issue, then with respect to any legal action or proceeding brought by any of
the Seller Parties against any of the Buyer Parties arising out of or relating
to this Agreement or any of the transactions contemplated by this Agreement,
each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of any federal court within the jurisdiction of the United
States District Court for the Western District of Michigan (and each
appellate court thereof) or any state court in the state of Michigan;
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(ii) agrees that any federal court within the jurisdiction
of the United States District Court for the Western District of Michigan or
any state court in the state of Michigan shall be deemed to be a convenient
forum; and
(iii) agrees not to assert (by way of motion, as a defense
or otherwise), in any such legal proceeding commenced in any federal court
within the jurisdiction of the United States District Court for the Western
District of Michigan or any state court in the state of Michigan, any claim
that such party is not subject personally to the jurisdiction of such
court, that such legal proceeding has been brought in an inconvenient
forum, or that the venue of such proceeding is improper.
(c) In the event the state court specified in Section 6(a)
refuses to exercise jurisdiction over the parties hereto or the subject matter
at issue, then with respect to any legal action or proceeding brought by any of
the Buyer Parties against any of the Seller Parties arising out of or relating
to this Agreement or any of the transactions contemplated by this Agreement,
each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of any federal court within the jurisdiction of the United
States District Court for the Central District of California (and each
appellate court thereof) or any state court in the state of California;
(ii) agrees that any federal court within the jurisdiction
of the United States District Court for the Central District of California
or any state court in the state of California shall be deemed to be a
convenient forum; and
(iii) agrees not to assert (by way of motion, as a defense
or otherwise), in any such legal proceeding commenced in any federal court
within the jurisdiction of the United States District Court for the Central
District of California or any state court in the state of California, any
claim that such party is not subject personally to the jurisdiction of such
court, that such legal proceeding has been brought in an inconvenient
forum, or that the venue of such proceeding is improper.
(d) In the event the state court specified in Section 6(a)
refuses to exercise jurisdiction over the parties hereto or the subject matter
at issue, then in addition to the jurisdictions available to the parties under
Sections 6(b) and 6(c) above, any party also may commence a proceeding for
damages or equitable relief for alleged breach of this Agreement in any state or
federal court of the jurisdiction where the alleged breach occurs.
(e) The parties hereby waive any right to a jury trial.
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7. Further Assurances. From time to time, at the request of the other
party hereto and at the expense of the party so requesting, each of the parties
hereto shall execute and deliver to such requesting party such documents and
take such other action as such requesting party may reasonably request in order
to consummate more effectively the transactions contemplated hereby.
8. Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in the Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
9. Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the documents referred to in this Agreement) a complete
and exclusive statement of the terms of the agreement between the parties with
respect to its subject matter. This Agreement may not be amended except by a
written agreement executed by the parties to be charged with the amendment.
10. Assignments, Successors, and No Third-Party Rights. Neither party
may assign any of its rights under this Agreement without the prior consent of
the other parties except that Buyer may assign any of its rights under this
Agreement to any Affiliate of Buyer. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give any
Person other than the parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
11. Severability. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
12. Section Headings, Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or
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Sections of this Agreement. All words used in this Agreement will be construed
to be of such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding words or
terms.
13. Preamble; Recitals. The Recitals set forth in the Preamble hereto
are hereby incorporated and made a part of this Agreement.
14. Governing Law. This Agreement will be governed by the internal
laws of the State of Delaware without regard to conflicts of laws principles.
15. No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party hereto by virtue of having drafted this Agreement or otherwise.
16. Dispute Resolution. Except as hereinafter provided in this Section
16, all claims, controversies, differences, or disputes between or among any of
the parties hereto arising from or relating to this Agreement, including claims
by one party that another party or parties hereto have failed to perform any of
their obligations hereunder (collectively, "Agreement Disputes"), shall be
resolved as follows:
(a) Facilitative Mediation. The parties to an Agreement Dispute
shall first attempt to resolve such Agreement Dispute by means of a mediation
conducted in the following manner. A party desiring mediation of any Agreement
Dispute shall give or shall have given a written notice, in the manner set forth
in Section 5 hereof (a "Dispute Notice"), to the other party or parties setting
forth the nature of the dispute and the relief intended to be sought and shall
submit such Agreement Dispute for resolution by facilitative mediation in
Chicago, Illinois, under the Commercial Mediation Rules (but not otherwise under
the auspices) of the American Arbitration Association (the "AAA") in effect on
the date of this Agreement, unless the parties have agreed, in writing, to
resolve any such dispute by other means. Each party agrees that it will submit
to and shall not challenge or object to the jurisdiction (either personal or
subject matter) or the venue of such mediation in Chicago, Illinois.
(b) Legal Proceedings. If any Agreement Dispute has not been
resolved by mediation as provided above within sixty (60) days after submission
thereof, then either party may commence a suit or legal action or an action at
equity to enforce its rights or the other party's obligations or recover any
damages arising from the other party's breach or such other relief as may be
appropriate under the circumstances.
(c) Attorney Fees and Other Costs. The prevailing party in any
mediation or any action or legal or other proceeding brought with respect to an
Agreement Dispute shall be entitled to recover the reasonable fees and
disbursements of its attorneys, accountants, and expert witnesses in connection
with any such mediation or any action or legal or other proceeding brought in
accordance with the provisions hereof.
(d) Exceptions for Equitable Relief. Notwithstanding the
foregoing or anything to the contrary contained elsewhere in this Agreement, a
party may bring a proceeding against any other party hereto for specific
performance or injunctive or other forms or equitable
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relief in the state or federal courts pursuant to the procedures set forth in
Section 6 without having to submit the matter or Agreement Dispute in question
to mediation as hereinabove set forth, provided, however, that such party shall
not seek any monetary award or relief in such action or proceeding unless its
failure to do so would prejudice such party's rights or ability to seek such
monetary award or relief in another action or proceeding.
17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
IN WITNESS WHEREOF, Sellers and Buyers have executed this
Non-Competition Agreement as of the date set forth in the first paragraph
hereof.
"SFI"
SMART & FINAL INC.
a Delaware corporation
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------------
Its:
---------------------------------
"AFD"
AMERICAN FOODSERVICE DISTRIBUTORS
a California corporation
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------------
Its:
---------------------------------
"SF Stores"
SMART & FINAL STORES CORPORATION
a California corporation
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------------
Its:
---------------------------------
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"GFS Holding"
GFS HOLDING, INC.
a Delaware corporation
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its:
---------------------------------
"Xxxxx Xxx"
XXXXX XXX COMPANY
a Florida corporation
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its:
---------------------------------
"GFS Stores"
GFS STORES, LLC
a Delaware limited liability company
By: GFS HOLDING, INC.
Its: Manager
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its:
---------------------------------
9
"GFS Orlando"
GFS Orlando, LLC
a Delaware limited liability company
By: GFS HOLDING, INC.
Its: Manager
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its:
---------------------------------
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SOFTWARE LICENSE, USE AND SUPPORT AGREEMENT
THIS SOFTWARE LICENSE, USE AND SUPPORT AGREEMENT (this "Agreement"),
effective as of the 7th day of September, 2003, is made by and between SMART &
FINAL INC., a Delaware corporation ("SFI"), AMERICAN FOODSERVICE DISTRIBUTORS, a
California corporation ("AFD"), SMART & FINAL STORES CORPORATION, a California
corporation ("SF Stores" and, together with SFI and AFD, the "Licensors"), and
GFS HOLDING, INC., a Delaware corporation ("GFSH"), XXXXX XXX COMPANY, a Florida
corporation ("Xxxxx Xxx"), GFS ORLANDO, LLC, a Delaware limited liability
company ("GFS Orlando"), and GFS STORES, LLC, a Delaware limited liability
company ("GFS Stores" and, together with GFSH, Xxxxx Xxx and GFS Orlando, the
"Licensees").
RECITALS
A. SFI is the record and beneficial owner of all of the issued and
outstanding equity securities of AFD and SF Stores. SF Stores is engaged in the
retail food store business in the State of Florida and operates from several
locations within that state (the "Retail Store Business").
B. AFD is the record and beneficial owner of all of the issued and
outstanding common shares of Xxxxx Xxx, through which AFD conducts a foodservice
distribution business in the State of Florida (the "Foodservice Business").
C. In addition to the Foodservice Business, AFD also operates, among other
things, a fresh meat processing business in the State of Florida under the name
"Orlando Food Service" (the "Meat Processing Business" and, together with the
Retail Store Business and the Foodservice Business, the "Florida Business").
D. Licensors have historically used both proprietary and commercially
available computer software from their California operations in the conduct of
the Florida Business. Licensors have also provided technical support to the
Florida Business with respect to this software.
E. Pursuant to a Share Purchase Agreement dated August 6, 2003 (the "Share
Purchase Agreement"), GFSH is on the date of this Agreement acquiring from SFI
and AFD all of the issued and outstanding equity securities of Xxxxx Xxx.
F. In a separate related transaction, GFSH's wholly-owned subsidiaries, GFS
Orlando and GFS Stores, will acquire from AFD and SF Stores, respectively,
substantially all of the assets used or useful in the operation of the Meat
Processing Business and the Retail Store Business pursuant to an Asset Purchase
Agreement dated August 6, 2003 (the "Asset Purchase Agreement" and, together
with the Share Purchase Agreement, the "Purchase Agreements").
G. One of the conditions to the closing of the transactions contemplated by
each of the Purchase Agreements is the granting by Licensors to Licensees of a
fee-free license to use the
Smart & Final proprietary computer software identified on the attached Exhibit A
(the "Licensor Proprietary Software"), as well as the right to use certain
third-party computer operating systems (the "OEM Software" and, together with
the Licensor Proprietary Software, the "Software") identified on the attached
Exhibit A used in the conduct of the Florida Business, under Licensors' licenses
with the third-party vendors, for a limited period of time. This Agreement does
not operate to grant any license in the OEM Software. This Agreement is being
entered into by the parties as required by the Purchase Agreements.
AGREEMENT
In consideration of the premises set forth above and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Licensors and Licensees agree as follows:
1. Grant of License for Licensor Proprietary Software. Licensors grant to
Licensees, and Licensees accept, subject to the restrictions set forth in this
Agreement, a non-transferable, non-exclusive license (the "License") to use the
Licensor Proprietary Software and related Documentation as identified on the
attached Exhibit A, including any updates or new releases related thereto that
are developed by or at the request of the Licensors during the Term to ensure
the reliability and continued functionality thereof. The scope and limitations
of the License are set forth on Exhibit A. For purposes of this Agreement, the
term "Documentation" shall mean all of the system specifications, help files
(including online help materials accessible through the Licensor Proprietary
Software), and technical manuals, and all other user instructions regarding the
capabilities, operation, and use of the Licensor Proprietary Software.
2. Permission to Use OEM Software. Licensors grant to Licensees permission
to use the OEM Software (hereinafter the "OEM Software"), for the Term and
subject to all of the terms and conditions of Licensors' licenses with the third
party manufacturers of the OEM Software that are applicable to Licensors.
3. License Restrictions Neither Licensees nor their agents shall (i)
reverse engineer, decompile, or disassemble the Software (except as may be
reasonably necessary to provide compatibility with Licensees' software for use
solely in the Florida Business); (ii) assign, sublicense, rent, timeshare, loan,
lease or otherwise transfer the Software; or (iii) remove any proprietary
notices (e.g., copyright and trademark notices) from the Software. Except as may
be provided herein, Licensors reserve all right, title, and interest in and to
the Licensor Proprietary Software and all derivative works. The vendors of the
OEM Software reserve all right, title and interest in and to the OEM Software.
4. Technical Support. During the Term and subject to third party OEM
vendors' approval (in the case of the OEM Software only), Licensors will provide
Licensees with updates, modifications or changes to the Software which are
developed by or at the request of Licensors or become available from applicable
third party vendors during the Term and are reasonably necessary to correct
errors, and ensure continued efficient operation of the Software. All such
updates, enhancements, modifications or changes shall be included in the
definitions of Software. In addition, Licensors shall provide or cause to be
provided to Licensees reasonable technical support (which may be provided via
e-mail, telephone, or other reasonable means of communication) in order to
ensure the continued efficient operation of the Software.
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5. Confidentiality
5.1 Definition. Each party agrees that all confidential or proprietary
information supplied by one party and its affiliates and agents (collectively,
the "Disclosing Party") to the other (the "Receiving Party") in connection with
this Agreement, including, without limitation, (i) source and object code,
prices, trade secrets, business processes, mask works, databases, hardware,
software, designs and techniques, programs, engine protocols, models, displays
and manuals, and the selection, coordination, and arrangement of the contents of
such materials and (ii) any unpublished information concerning research
activities and plans, customers, marketing or sales plans, sales forecasts or
results of marketing efforts, pricing or pricing strategies, costs, operational
techniques, strategic plans, customer information, and unpublished financial
information, including information concerning revenues, profits and profit
margins that does not relate to the Florida Business, will be deemed
confidential and proprietary to the Disclosing Party, regardless of whether such
information was disclosed intentionally or unintentionally or marked as
"confidential" or "proprietary" ("Confidential Information"). Neither party
shall have any obligation with respect to Confidential Information which: (i) is
or becomes generally known to the public by any means other than a breach of the
obligations of the Receiving Party; (ii) was previously known to the Receiving
Party or rightly received by the Receiving Party from a third party; (iii) is
independently developed by the Receiving Party; or (iv) is subject to disclosure
under court order or other lawful process.
5.2 Obligations of Licensees. Licensees agree not to make Licensors'
Confidential Information available in any form to any unauthorized third party
or to use Licensors' Confidential Information for any purpose other than as
specified in this Agreement. Licensees agree to take all reasonable steps to
ensure that Confidential Information of Licensors is not disclosed or
distributed by its employees, agents or contractors in violation of the
provisions of this Agreement. Licensors' Confidential Information shall remain
its sole and exclusive property. Licensees acknowledge that any use or
disclosure of Licensors' Confidential Information other than as specifically
provided for in this Agreement may result in irreparable injury and damage to
the Licensors. Accordingly, Licensees hereby agree that, in the event of use or
disclosure other than as specifically provided for in this Agreement, Licensors
may be entitled to equitable relief as granted by any appropriate judicial body.
5.3 Obligations of Licensors. Licensors agree not to make Licensees'
Confidential Information available in any form to any unauthorized third party
or to use Licensees' Confidential Information for any purpose other than as
specified in this Agreement. Licensors agree to take all reasonable steps to
ensure that Confidential Information of Licensees is not disclosed or
distributed by its employees, agents or contractors in violation of the
provisions of this Agreement. Licensees' Confidential Information shall remain
its sole and exclusive property. Licensors acknowledge that any use or
disclosure of Licensees' Confidential Information other than as specifically
provided for in this Agreement may result in irreparable injury and damage to
the Licensees. Accordingly, Licensors hereby agree that, in the event of use or
disclosure other than as specifically provided for in this Agreement, Licensees
may be entitled to equitable relief as granted by any appropriate judicial body.
6. Term. The term of this Agreement (the "Term") shall commence on the date
hereof and shall continue for a period not to exceed one hundred eighty (180)
days, or until
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terminated as provided in Section 7 herein, or by mutual written agreement of
the parties. Upon termination or expiration of this Agreement, Licensees agree
to immediately discontinue all use of, and deliver to Licensors, the Licensor
Proprietary Software, Documentation, and the OEM Software, and acknowledge that
all rights in the Licensor Proprietary Software, Documentation and OEM Software
shall remain the property of Licensors, or the applicable third-party vendors.
7. Termination If either party materially defaults in the performance of
any of its obligations under this Agreement, which default is not substantially
cured within thirty (30) days after written notice is given to the defaulting
party specifying the default, the party not in default may, by giving written
notice thereof to the defaulting party, terminate this Agreement and pursue all
remedies for such breach available at law or in equity.
8. Licensors' Warranties. Licensors, jointly and severally, warrant to
Licensees as follows:
(a) Licensors warrant that they have the full power, capacity and
authority to enter into and perform this Agreement and to make the grant of
rights contained herein and that to the best of Licensors' knowledge, and
provided that Licensees do not exceed the scope of the license and
permissions granted hereunder, Licensees' use of the Software as permitted
hereunder will not infringe the patent, copyright, trade xxxx, trade
secret, or other proprietary rights of any third party, and further warrant
that there is currently no actual or, to the best of their knowledge,
threatened suit by any such third party based on an alleged violation of
such right by Licensors.
(b) Licensors warrant that during the Term, the Software shall
materially conform to the requirements set forth in this Agreement and, to
the extent not inconsistent with the foregoing, the Documentation
(collectively, the "Specifications") and function in a manner consistently
with its functionality prior to the date of this Agreement.
9. Licensors' Indemnification. Licensors shall indemnify, defend, and hold
harmless Licensees and their shareholders, directors, officers, managers,
members, agents, employees, members, subsidiaries and successors in interest
from any claim, liability and expense, including reasonable attorneys' fees,
arising out of any claim that Licensees' permitted use of the Software infringes
the patent, copyright, trade xxxx, trade secret or other proprietary rights of a
third party. In the event a claim of infringement is asserted, Licensors shall
procure for Licensees the right to continue using the Software pursuant to this
Agreement. Any costs associated with implementing either of the above
alternatives will be borne by Licensors.
10. Licensees' Indemnification. Licensees shall indemnify, defend, and hold
harmless Licensors and their directors, officers, agents, employees, members,
subsidiaries and successors in interest from any claim, liability and expense,
including reasonable attorneys' fees, arising out of Licensee's exceeding the
scope of the License and the permissions granted hereunder with respect to
Licensees' use of the OEM Software including, but not limited to, Licensees'
continuing to use the OEM Software beyond the Term of this Agreement.
4
11. DISCLAIMER.
(a) EXCEPT AS EXPRESSLY STATED IN THIS AGREEMENT, LICENSORS MAKE NO
OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE
IMPLIED WARRANTIES OF FITNESS FOR A PARTICULAR PURPOSE, MERCHANTABILITY,
QUIET ENJOYMENT, QUALITY OF INFORMATION, OR TITLE/NON-INFRINGEMENT AND ALL
SUCH WARRANTIES ARE HEREBY SPECIFICALLY DISCLAIMED.
(b) LICENSEE UNDERSTANDS AND ACKNOWLEDGES THAT THE SYSTEMS ARE NOT
GTIN 2005 OR RSS COMPLIANT, AND LICENSOR WILL NOT PROVIDE UPDATES TO THE
SYSTEMS AND HARDWARE TO ALLOW THEM TO MEET GTIN 2005 AND RSS REQUIREMENTS.
IN ADDITION, THE ELECTRONIC PAYMENT SYSTEMS ARE NOT TRIPLE DES/DUKPT
COMPLIANT, AND LICENSOR WILL NOT PROVIDE UPDATES TO THE SYSTEMS AND
HARDWARE TO ALLOW THEM TO MEET TRIPLE DES/DUKPT REQUIREMENTS.
12. License Fees. Provided Licensees do not exceed the scope of the License
and permissions granted under this Agreement, there shall be no license fees
owed or payable to Licensors.
13. Notices. All notices, requests, demands or other communications
required or permitted to be given under this Agreement shall be in writing and
shall be effective when delivered if personally delivered or three (3) days
after mailing if mailed by registered or certified mail with postage prepaid,
return receipt requested, and addressed to the parties at the addresses set
forth in Section 12.4 of each of the Purchase Agreements or at such other
addresses as the parties may designate in writing by providing notice thereof in
compliance with this paragraph.
14. Amendment. No provision of this Agreement may be modified except by a
written document signed by a duly authorized representative of each of the
parties.
15. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties and to their respective assigns. This Agreement cannot be
assigned by any party except upon the express prior written consent of the other
parties hereto, which shall not be unreasonably withheld, conditioned or
delayed.
16. Severability. If any provisions of this Agreement shall be prohibited
or unenforceable by any applicable law, the provision shall be ineffective only
to the extent and for the duration of the prohibition of unenforceability,
without invalidating any of the remaining provisions.
17. Governing Law. This Agreement will be governed by the internal laws of
the State of Delaware without regard to conflicts of laws principles. Any
dispute arising out of this Agreement shall be resolved in accordance with the
procedures set forth in Section 12.5 of each of the Purchase Agreements.
5
18. Entire Agreement. The terms and conditions of this Agreement, together
with the terms and conditions of the attached Exhibits, constitute the entire
agreement between Licensees and Licensors with respect to the subject matter of
this Agreement and supersedes all earlier agreements and understandings, oral
and written, between the parties.
19. Counterparts. This Agreement may be executed in counterparts, each of
which, when so executed, shall be deemed to be an original and such counterparts
shall together constitute one and the same instrument.
20. Construction. This Agreement shall be deemed to represent the mutual
intent of the parties hereto and no rule of strict construction shall be applied
against any party by virtue of having drafted this Agreement.
21. Survival The following provisions shall survive any termination or
expiration of this Agreement: Sections 5 (Confidentiality), 9 (Licensors'
Indemnification), 10 (Licensees' Indemnification), 18 (Entire Agreement), 21
(Survival).
Licensors and Licensees have caused this Agreement to be signed as of the
day and year first above written.
LICENSORS:
SFI:
SMART & FINAL INC.
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Its:
-----------------------------
AFD:
AMERICAN FOODSERVICE DISTRIBUTORS
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Its:
-----------------------------
SF STORES:
SMART & FINAL STORES CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Its:
-----------------------------
[Signatures Continued On Next Page]
6
LICENSEES:
GFSH:
GFS HOLDING, INC.
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its:
-----------------------------
XXXXX XXX:
XXXXX XXX COMPANY
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its:
-----------------------------
GFS ORLANDO:
GFS ORLANDO, LLC
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its:
-----------------------------
GFS STORES:
GFS STORES, LLC
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its:
-----------------------------
7
EXHIBIT "A"
Licensor Proprietary Software
Cash Proof
DSD
POS End of Day Processing
Inventory Adjustment
Price Change System
Host Price Verify
shelf Tags
Pricing Method Labels
OEM Software
DEX
ACS 4.0
COPS
Shelf Tag Audit
TRADENAME AND TRADEMARK LICENSE AGREEMENT
THIS TRADENAME AND TRADEMARK LICENSE AGREEMENT (this "Agreement") is
entered into and effective as of September 7, 2003 (the "Effective Date"), by
and between SMART & FINAL INC., a Delaware corporation ("SFI"), SMART & FINAL
STORES CORPORATION, a California corporation ("SF Stores"), and AMERICAN
FOODSERVICE DISTRIBUTORS, a California corporation ("AFD" and, together with SFI
and SF Stores, the "Licensors"), GFS HOLDING, INC., a Delaware corporation ("GFS
Holding"), XXXXX XXX COMPANY, a Florida corporation ("Xxxxx Xxx"), GFS STORES,
LLC, a Delaware limited liability company ("GFS Stores"), and GFS ORLANDO, LLC,
a Delaware limited liability company ("GFS Orlando" and, together with GFS
Holding, Xxxxx Xxx and GFS Stores, the "Licensees").
RECITALS
A. Xxxxx Xxx, SF Stores and AFD (through a division operated under the
name "Orlando Foodservice") are engaged in the foodservice distribution, retail
food store, and meat processing businesses, respectively, in the State of
Florida (the "Businesses").
B. Pursuant to that certain Share Purchase Agreement (the "Share
Purchase Agreement"), dated August 6, 2003, by and between SFI and AFD and GFS
Holding, GFS Holding will purchase all of the issued and outstanding equity
securities of Xxxxx Xxx. In a separate related transaction and pursuant to that
certain Asset Purchase Agreement (the "Asset Purchase Agreement") dated August
6, 2003, by and among GFS Holding, GFS Orlando and GFS Stores, and Licensors,
GFS Stores and GFS Orlando will, directly or indirectly, acquire from Licensors
certain of the assets of SF Stores related to the retail food store business in
the State of Florida and all of the assets of AFD used in the operation of the
meat processing business in the State of Florida.
C. Following the consummation of the transactions contemplated by the
Share Purchase Agreement and the Asset Purchase Agreement, Licensees will
operate the Businesses.
D. Licensors are the owners of the trademarks (collectively, the
"Trademarks") and the tradenames (collectively, the "Tradenames") described in
Exhibit "A" attached hereto.
E. Licensees desire to obtain a license to use the Trademarks and the
Tradenames on the terms set forth below for a period of two (2) years after the
consummation of the transactions contemplated by the Share Purchase Agreement
and the Asset Purchase Agreement.
F. Licensees have required as a condition to the execution of the
Share Purchase Agreement and the Asset Purchase Agreement that Licensors enter
into this Agreement.
NOW THEREFORE, in consideration of the premises set forth above, the
representations and warranties set forth herein, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
Licensors and Licensees agree as follows:
AGREEMENT
1. Grant of License. On the terms and subject to the conditions set
forth herein, Licensors hereby grant to Licensees a limited, non-transferable
(except as may be provided herein) license ("License") to Use (as defined in
Section 11 below) the Trademarks and Tradenames solely for purposes of
conducting the Businesses. Licensees shall not have any right to sublicense the
right to use the Trademarks or Tradenames to any third party.
2. Exclusivity. Licensors grant to Licensees the exclusive right to
Use the Trademarks and the Tradenames within the Territory (as defined in
Section 11 below) during the term of this Agreement. Licensors covenant and
agree not to use the Trademarks or the Tradenames, or any combination thereof,
during the term of this Agreement within the Territory without the prior written
consent of Licensees. The parties acknowledge that Licensor's use of the
Internet, television and radio for advertising or other purposes in connection
with its business outside the Territory shall not constitute a violation of the
rights granted to Licensee hereunder.
3. Restrictions. Except as expressly provided for herein, nothing
contained in this Agreement will be deemed to grant to Licensees any right,
title or interest in or to the Trademarks and Tradenames. Subject only to the
License, Licensors shall own all right, title and interest in and to the
Trademarks and Tradenames, including all Intellectual Property Rights and
goodwill therein and thereto. Licensees shall not use the Trademarks and/or
Tradenames with any activity that (a) disparages, or may be reasonably expected
to have a disparaging effect on, Licensors or any of their affiliates, or any
products or services of Licensors or their affiliates; or (b) violates or
infringes any Intellectual Property Rights of Licensors or any third party.
Licensees will not challenge or contest Licensors' ownership in, or the validity
or scope of, any of the Trademarks or Tradenames in any jurisdiction, nor the
validity of any licenses to any of the Trademarks and Tradenames granted by
Licensors to any third party in any jurisdiction, and will not do anything
inconsistent with Licensors' title, right and interest in and to the Trademarks
and Tradenames, including any attempted registration of any of them, or any use
or any attempted registration of any other trademark or service xxxx that is
confusingly similar to any of the Trademarks or Tradenames.
4. Form of Use. Licensees agree to use the Trademarks and the
Tradenames in form and manner not materially inconsistent with Licensors' use
immediately prior to the date hereof. Licensees further agree to use
commercially reasonable efforts to maintain the quality of the products sold by
each of them in connection with the Businesses at a level reasonably consistent
with the level of quality typical of Licensors' products.
5. Term. The term of this Agreement and the License granted herein
shall
2
commence on the Effective Date and shall continue for a period of two (2) years,
unless sooner terminated as set forth in Section 6 or unless extended by mutual
agreement by the parties.
6. Termination. In the event that either party breaches this
Agreement, then the non-breaching party may provide written notice to the
breaching party indicating: (a) the nature and basis of such default with
reference to the applicable provisions of this Agreement; (b) instructions for
cure; and (c) the non-defaulting party's intention to terminate this Agreement.
In the event that such default is not cured within thirty (30) days after such
notice (or such longer cure period as the parties may agree upon), the
non-defaulting party may terminate this Agreement upon written notice effective
immediately to the breaching party.
7. Effect of Termination. The terms and conditions of the following
Sections will survive termination or expiration of this Agreement: Sections 3,
6, 8, 9, 12.1 through 12.3, and 13 through 21. In addition, the termination or
expiration of this Agreement shall not relieve either party of any liability
that accrued prior to such termination or expiration. Except as expressly
provided in this Section 7, all other provisions of this Agreement shall
terminate upon the expiration or termination hereof. Upon termination or
expiration of this Agreement, Licensees' license and right to Use the Trademarks
and Tradenames shall immediately and automatically terminate, all rights granted
hereunder shall automatically revert to Licensors, Licensees shall immediately
cease, completely and permanently, to Use the Trademarks and Tradenames and any
name confusingly similar thereto in any manner or for any purpose, delete the
same from their corporate or business name, and destroy all printed materials
bearing the Trademarks and the Tradenames. Notwithstanding the foregoing, in the
event of termination, Licensees shall have the right to Use the Trademarks and
the Tradenames (a) to sell products that are on hand at the date of termination
or expiration of this Agreement and with respect to those products that
Licensees are obligated to purchase at such date, and (b) to carry out marketing
projects to which Licensees have committed at the date of termination or
expiration of this Agreement.
8. Royalty-Free. The License shall be royalty-free. The License is
being granted in consideration of the transactions described in the Asset
Purchase Agreement and the Share Purchase Agreement and no further consideration
shall be payable.
9. Indemnification
9.1 Licensors shall defend Licensees and their affiliates, and
their respective employees, officers, directors, managers, members,
stockholders, consultants and other agents (collectively the
"Licensees' Indemnified Parties") from any and all third-party Claims
and Losses (as defined below) imposed on, incurred by or asserted
against any of the Licensees' Indemnified Parties as a result of any
alleged infringement by the Trademarks or Tradenames on any third
party's legally enforceable Intellectual Property Rights. Licensors
shall indemnify and hold the Licensees' Indemnified Parties harmless
from any and all such Claims and Losses imposed on, incurred by or
asserted against them. Licensors' obligation to defend and indemnify
under this subsection shall be conditioned on
3
the following: (a) Licensees shall promptly notify Licensors in
writing of the claim, action or allegation (but, in any event, in a
time frame that does not prejudice the rights of Licensors); (b)
Licensees shall provide all reasonable cooperation, at Licensors'
expense, with Licensors in the defense thereof; and (c) Licensors
shall have sole control of the defense and all related settlement
negotiations, but shall apprise Licensees of the status of any
proceedings or negotiations, provided, however, that no such
settlement shall materially and adversely affect Licensees right to
Use the Trademarks and Tradenames in the Territory during the term of
this Agreement.
9.2 Licensors shall not have the obligation to defend, indemnify
and hold the Licensees' Indemnified Parties harmless to the extent
Claims and Losses imposed on, incurred by or asserted against the
Licensees' Indemnified Parties as a result of (a) Licensees' gross
negligence or willful tortious misconduct; or (b) any allegation of
infringement to the extent such infringement is attributable to the
fact that the Trademarks or Tradenames have not been Used in
accordance with this Agreement.
9.3 Licensees shall defend Licensors and their affiliates, and
their respective employees, officers, directors, consultants and other
agents (collectively the "Licensors' Indemnified Parties") from any
and all third-party Claims and Losses imposed on, incurred by or
asserted against any of the Licensors' Indemnified Parties arising out
of Licensees' Use of the Trademarks and Tradenames in violation of
this Agreement. Notwithstanding any of the foregoing, Licensors shall
have the right, at their option and expense, to participate in the
defense and related settlement negotiations of any claim, action or
allegation to the extent it relates to the Trademarks and Tradenames,
provided, however, that Licensors shall not settle any claim or action
without Licensees' prior written consent, which consent shall not be
unreasonably withheld, conditioned, or delayed. If Licensors choose
not to participate in the defense and related settlement negotiations
as provided above, Licensees shall have the right to control the
defense and related settlement negotiations, provided, however that
Licensees shall not settle any claim or action without Licensors'
prior written consent, which consent shall not be unreasonably
withheld, conditioned, or delayed. In the event Licensors choose not
to participate in the defense and related settlement negotiations
pursuant to this Section 9.3, Licensors shall use their best efforts
to cooperate with Licensees in the defense thereof and Licensees shall
be liable to Licensors for Licensors' reasonable expenses incurred in
providing such cooperation.
9.4 Unless otherwise stated herein, "Claims or Losses" means any
and all liabilities, obligations, losses, damages, penalties, claims,
actions, suits, judgments, and reasonable costs and expenses awarded
to, or agreed to be paid to, a third party of whatever nature
including, without limitation, (a) indirect, special, punitive,
consequential or incidental loss or damage awarded to a third party
4
(including, without limitation, by way of settlement) against a party
entitled to indemnification under this Section, and (b) reasonable
administrative costs, litigation costs, and auditors' and attorneys'
fees, both in-house and outside counsel, and related disbursements.
9.5 This Section 9 sets forth the entire liability of the Parties
with respect to Claims or Losses arising out of or relating to any
claims, actions, suits or other proceedings in connection with alleged
infringement of Intellectual Property Rights by the Trademarks or
Tradenames or the Use thereof by Licensees, and the exclusive remedy
of the Licensees' Indemnified Parties and the Licensors' Indemnified
Parties in connection with such Claims or Losses.
10. Maintenance and Enforcement of Registrations. Licensors shall have
the right and obligation to undertake such actions, including making applicable
registrations and filings with the appropriate authorities, as are reasonably
necessary to establish and protect the Trademarks and Tradenames in the
Territory or in any other jurisdiction in the world. Licensors shall pay all
costs or fees associated with any such actions, and Licensee shall provide all
reasonable cooperation to Licensors with respect to such actions. Moreover,
Licensors shall have the right to defend or prosecute any trademark infringement
actions as may be necessary to protect the Trademarks or Tradenames in the
Territory. Licensors shall have sole control of any such actions and all related
settlement negotiations. Licensees shall, at Licensors' expense, provide all
reasonable cooperation to Licensors (a) in assisting Licensors with respect to
such actions and any related settlement negotiations upon Licensors' request,
and (b) in protecting Licensors' rights in the Trademarks and Tradenames by
giving prompt notice to Licensors of any infringement that Licensee becomes
aware of.
11. Certain Definitions. For purposes of this Agreement, the following
capitalized terms shall have the meanings assigned to them below:
11.1 "Territory" shall mean the States of Florida, Michigan,
Illinois, Indiana and Ohio, the Caribbean, Central America and South
America (specifically excluding Mexico from this definition).
11.2 "Intellectual Property Rights" shall mean all intellectual
property rights in any jurisdiction, including, without limitation,
all common law rights, state registrations, and federal registrations
in and to trademarks, service marks, brand names, certification marks,
trade dress, trade names and other indications of origin.
11.3 "Use" means the use of the Trademarks and Tradenames within
the Territory for the purpose of conducting the Businesses in
accordance with the terms hereof and any trademark usage guidelines
that may be provided by Licensors to licensees from time to time.
12. Disclaimers/Limitations of Liability.
5
12.1 EXCEPT FOR THE WARRANTIES EXPRESSLY STATED IN SECTION 13
BELOW NEITHER PARTY MAKES ANY OTHER REPRESENTATIONS OR WARRANTIES OF
ANY KIND, WHETHER EXPRESS, IMPLIED OR STATUTORY (INCLUDING, WITHOUT
LIMITATION, ANY IMPLIED WARRANTIES ARISING FROM TRADE USAGE, COURSE OF
DEALING, OR COURSE OF PERFORMANCE, OR THE IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE), AND BOTH
PARTIES HEREBY EXPRESSLY DISCLAIM ALL SUCH WARRANTIES.
12.2 EXCEPT FOR BOTH PARTIES' INDEMNIFICATION OBLIGATIONS UNDER
SECTION 9, NEITHER PARTY NOR ANY OF EITHER PARTY'S AFFILIATES SHALL BE
LIABLE TO THE OTHER PARTY OR TO ANY OTHER INDIVIDUAL OR ENTITY FOR ANY
INDIRECT, SPECIAL, PUNITIVE, EXEMPLARY, CONSEQUENTIAL, OR INCIDENTAL
LOSS OR DAMAGE OF ANY KIND OR NATURE, RELATING TO OR ARISING OUT OF
THIS AGREEMENT, INCLUDING BUT NOT LIMITED TO ANY LOSS OF REVENUES,
ANTICIPATED PROFITS OR SAVINGS, LOSS BY REASON OF SHUTDOWN IN
OPERATION OR FOR INCREASED EXPENSES OF OPERATION, EVEN IF THEY OR ANY
OF THEIR AFFILIATES HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH
LOSSES OR DAMAGES.
12.3 NO LIMITATION SET FORTH IN THIS SECTION 12 SHALL RELIEVE
EITHER PARTY AND THEIR AFFILIATES FROM LIABILITY FOR DAMAGES THAT
RESULT FROM (I) THEIR OWN GROSS NEGLIGENCE OR WILLFUL TORTIOUS
MISCONDUCT; OR (II) PERSONAL INJURY OR WRONGFUL DEATH CLAIMS.
13. Representations and Warranties of Licensors. Licensors jointly and
severally represent and warrant to Licensees as follows:
13.1 Licensors represent and warrant to Licensees that they own
all right, title and interest in the Trademarks and Tradenames and have the
absolute and unrestricted right, power, and authority to grant the rights
hereunder.
13.2 Licensors represent and warrant to Licensees that they are
authorized to enter into this Agreement and that their license of the
Trademarks and Tradenames under the terms of this Agreement shall not
violate any other agreements, or obligations of Licensors, or any Federal,
state, local, or foreign laws, rules, or regulations relating to Licensors
or Licensors' use of the Trademarks and Tradenames.
13.3 Exhibit A attached hereto constitutes a complete and
accurate list and summary description of all U.S. and Puerto Rico
registered trademarks and tradenames owned by Licensors and used by
Licensors in the conduct of the Businesses.
6
13.4 Licensors do not own or use any patents, patent
applications, or inventions or discoveries that may be patentable in
connection with the Businesses.
13.5 Licensors do not own or use any registered copyrights in
connection with the Businesses.
13.7 Licensors have taken reasonable precautions to protect the
secrecy, confidentiality and value of any trade secrets which Licensors may
own, and Licensors own such trade secrets and have the valid right to use
same. To the best of Licensors' knowledge, the trade secrets are not part
of the public knowledge or literature and have not been used, divulged or
appropriated either for the benefit of any person (other than Licensors) or
to the detriment of Licensors. To the best of Licensors' knowledge, no
material trade secret is subject to any adverse claim or has been
challenged or threatened in any way. For purposes of this Agreement, trade
secrets are defined as all know-how, trade secrets, confidential
information, customer lists, software, technical information, data, process
technology, plans, drawings, and blueprints used in the conduct of the
Businesses.
13.8 Licensors are not a party to any contract or arrangement
whereby royalties are paid or received by Licensors with respect to
trademarks, tradenames, copyrights, rights in mask works, patents, or trade
secrets.
13.9 None of the current employees of Licensors that are involved
in the Businesses have executed written contracts with Licensors that
assign to Licensors any rights to any inventions, improvements, discoveries
or information relating to the Businesses. To the best of Licensors'
knowledge, no employee of Licensors that is involved in any of the
Businesses has entered into any contract that restricts or limits in any
material way the scope or type of work in which the employee may be
engaged, or requires the employee to transfer, assign or disclose
information concerning his or her work to anyone other than Licensors.
14. Notices. All notices, requests, demands or other communications
required or permitted to be given under this Agreement shall be in writing and
shall be effective when delivered if personally delivered or three (3) days
after mailing if mailed by registered or certified mail with postage prepaid,
return receipt requested, and addressed to the parties at the addresses set
forth in Section 12.4 of the Share Purchase Agreement or at such other addresses
as the parties may designate in writing by providing notice thereof in
compliance with this paragraph.
15. Amendment. No provision of this Agreement may be modified except
by a written document signed by a duly authorized representative of each of the
parties.
16. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties and to their respective assigns. This Agreement
cannot be assigned by any party except upon the express prior written consent of
the other parties hereto, which shall not be unreasonably withheld, conditioned
or delayed, provided, however, that Licensees may assign
7
their rights and obligations hereunder to any person controlled by or under
common control with GFS Holding or any purchaser of any portion of the
Businesses without first obtaining the consent of Licensors. Any assignee or
transferee (voluntary or involuntary) of rights in the Trademarks and the
Tradenames shall be subject to the terms of this Agreement.
17. Severability. If any provisions of this Agreement shall be
prohibited or unenforceable by any applicable law, the provision shall be
ineffective only to the extent and for the duration of the prohibition of
unenforceability, without invalidating any of the remaining provisions.
18. Governing Law. This Agreement will be governed by the internal
laws of the State of Delaware without regard to conflicts of laws principles.
Any dispute arising out of this Agreement shall be resolved in accordance with
the procedures set forth in Section 12.5 of the Asset Purchase Agreement.
19. Entire Agreement. This Agreement constitutes the entire agreement
between Licensees and Licensors with respect to the subject matter of this
Agreement and supersedes all earlier agreements and understandings, oral and
written, between the parties.
20. Counterparts. This Agreement may be executed in counterparts, each
of which, when so executed, shall be deemed to be an original and such
counterparts shall together constitute one and the same instrument.
21. Construction. This Agreement shall be deemed to represent the
mutual intent of the parties hereto and no rule of strict construction shall be
applied against any party by virtue of having drafted this Agreement.
8
IN WITNESS WHEREOF, Licensors and Licensees have caused this Agreement
to be signed the day and year first above written.
LICENSORS:
SFI:
SMART & FINAL INC.
a Delaware corporation
By: Xxxxxx X. Xxxxxxxx
----------------------------------
Its:
----------------------------------
AFD:
AMERICAN FOODSERVICE DISTRIBUTORS
a California corporation
By: Xxxxxx X. Xxxxxxxx
----------------------------------
Its:
----------------------------------
SF Stores:
SMART & FINAL STORES CORPORATION
a California corporation
By: Xxxxxx X. Xxxxxxxx
----------------------------------
Its:
----------------------------------
9
LICENSEES:
GFS Holding:
GFS HOLDING, INC.
a Delaware corporation
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its:
----------------------------------
Xxxxx Xxx:
XXXXX XXX COMPANY
a Florida corporation
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its:
----------------------------------
GFS Stores:
GFS STORES, LLC
a Delaware limited liability company
By: GFS HOLDING, INC.
Its: Manager
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its:
----------------------------------
10
GFS Orlando:
GFS Orlando, LLC
a Delaware limited liability company
By: GFS HOLDING, INC.
Its: Manager
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its:
----------------------------------
11
U.S. TRADE MARKS
------------------------------------------------------------------------------------------------------------------------------
CPH Docket Xxxx Type SERIAL NO. FILED
XXXX Country Class REG. NO. ISSUED Owner/Registrant STATUS
------------------------------------------------------------------------------------------------------------------------------
AMBIANCE 47307-USA TM 76/314099 09/18/2001 Smart & Final Stores Corporation REGISTERED
UNITED STATES 30 2634835 10/15/2002
------------------------------------------------------------------------------------------------------------------------------
AMBIANCE (and design) 47308-USA TM 76/314098 09/18/2001 Smart & Final Stores Corporation REGISTERED
UNITED STATES 30 2631245 10/08/2002
------------------------------------------------------------------------------------------------------------------------------
XXX XXXXXX 00000-XXX TM 76/349677 12/17/2001 Smart & Final Stores Corporation REGISTERED
UNITED STATES 29 2704013 04/08/2003
------------------------------------------------------------------------------------------------------------------------------
DAVIS LAY 32998-USA TM 78/023061 08/25/2000 American Foodservice Distributors REGISTERED
UNITED STATES 31 2684702 02/04/2003
------------------------------------------------------------------------------------------------------------------------------
DAVIS LAY 40276-USA SM 74/030062 02/20/1990 American Food Service Distributors REGISTERED
UNITED STATES 42 1626437 12/04/1990
------------------------------------------------------------------------------------------------------------------------------
DEC-O-TOPPES 30856-USA TM 74/056158 05/07/1990 Smart & Final Stores Corporation REGISTERED
UNITED STATES 30 1809395 12/07/1993
------------------------------------------------------------------------------------------------------------------------------
Design (caricature) 28792-USA SM 75/065063 02/29/1996 Smart & Final Stores Corporation REGISTERED
UNITED STATES I 42 2045799 03/18/1997
------------------------------------------------------------------------------------------------------------------------------
XXXX 00000-XXX TM 268609 07/01/1980 Smart & Final Stores Corporation REGISTERED
UNITED STATES 01, 03, 1232379 03/29/1983
04, 06,
08, 16,
21, 29,
30, 32
------------------------------------------------------------------------------------------------------------------------------
XXXX 00000-XXX TM 596917 05/05/1950 Smart & Final Stores Corporation REGISTERED
UNITED STATES 29 553059 01/08/1952
------------------------------------------------------------------------------------------------------------------------------
XXXX 00000-XXX TM 949445 08/13/1971 Smart & Final Stores Corporation REGISTERED
UNITED STATES I 46 949445 12/26/1972
------------------------------------------------------------------------------------------------------------------------------
XXXX 00000-XXX TM 190554 10/24/1978 Smart & Final Iris Corporation REGISTERED
UNITED STATES 29, 30, 1138499 08/05/1980
32
------------------------------------------------------------------------------------------------------------------------------
XX XXXXXXXXX 00000-XXX TM 74/711131 08/04/1995 American Foodservice Distributors REGISTERED
UNITED STATES 29, 30 2046604 03/18/1997
------------------------------------------------------------------------------------------------------------------------------
XX XXXXXXXXX 00000-XXX TM 76/164959 11/14/2000 American Foodservice Distributors REGISTERED
UNITED STATES 29 2712588 05/06/2003
------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXX 00000-XXX TM 73/777077 01/27/1989 Smart & Final Stores Corporation REGISTERED
UNITED STATES 30 1596691 05/15/1990
------------------------------------------------------------------------------------------------------------------------------
XXXXXXXXX 00000-XXX TM 76/141669 10/05/2000 Smart & Final Stores Corporation REGISTERED
UNITED STATES 29 2611751 08/27/2002
------------------------------------------------------------------------------------------------------------------------------
U. S. TRADE MARKS
------------------------------------------------------------------------------------------------------------------------------
CPH Docket Xxxx Type SERIAL NO. FILED
XXXX Country Class REG. NO. ISSUED Owner/Registrant STATUS
------------------------------------------------------------------------------------------------------------------------------
MONTECITO 40610-USA TM 76/141668 10/05/2000 Smart & Final Stores Corporation REGISTERED
UNITED STATES 30 2597177 07/23/2002
------------------------------------------------------------------------------------------------------------------------------
PRO PRIDE 49311-USA TM 78/180287 10/30/2002 Smart & Final Stores Corporation PENDING ITU
UNITED STATES
------------------------------------------------------------------------------------------------------------------------------
PRO PRIDE 49312-USA TM 78/180288 10/30/2002 Smart & Final Stores Corporation PENDING ITU
UNITED STATES 05
------------------------------------------------------------------------------------------------------------------------------
PRO PRIDE 49313-USA TM 78/180290 10/30/2002 Smart & Final Stores Corporation PENDING ITU
UNITED STATES
------------------------------------------------------------------------------------------------------------------------------
PRO VALUE 50005-USA TM 78/224380 03/11/2003 Smart & Final Stores Corporation PENDING ITU
UNITED STATES 03
------------------------------------------------------------------------------------------------------------------------------
PRO VALUE 50006-USA TM 78/224385 03/11/2003 Smart & Final Stores Corporation PENDING ITU
UNITED STATES 05
------------------------------------------------------------------------------------------------------------------------------
PRO VALUE 50007-USA TM 78/224388 03/11/2003 Smart & Final Stores Corporation PENDING ITU
UNITED STATES 21
------------------------------------------------------------------------------------------------------------------------------
XXXXXXX XXXXXX 41590-USA TM 76/217999 03/01/2001 Smart & Final Stores Corporation REGISTERED
UNITED STATES 32 2668095 12/31/2002
------------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 28814-USA TM 396652 09/30/1982 Smart & Final Stores Corporation REGISTERED
UNITED STATES 1260298 12/06/1983
------------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 28998-USA TM 75/228178 01/21/1997 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES I 01 2180065 08/11/1998
------------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 28999-USA TM 75/147695 08/09/1996 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES 03 2128362 01/13/1998
------------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 29000-USA TM 75/156279 08/26/1996 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES I 04 2070012 06/10/1997
------------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 29001-USA TM 75/191220 11/01/1996 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES 05 2130164 01/20/1998
------------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 29002-USA TM 75/228186 01/21/1997 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES I 08 2180066 08/11/1998
------------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 29003-USA TM 75/147698 08/09/1996 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES I 03, 16 2130003 01/20/1998
------------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 29004-USA TM 75/281472 04/25/1997 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES 21 2199487 10/27/1998
------------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 29005-USA TM 75/147697 08/09/1996 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES 29, 30 2130002 01/20/1998
------------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 29006-USA TM 75/228185 01/21/1997 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES 30 2187207 09/08/1998
------------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 29007-USA TM 75/481270 05/07/1998 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES 31 2232366 03/16/1999
------------------------------------------------------------------------------------------------------------------------------
U.S. TRADE MARKS
------------------------------------------------------------------------------------------------------------------------------
CPH Docket Xxxx Type SERIAL NO. FILED
XXXX Country Class REG. NO. ISSUED Owner/Registrant STATUS
------------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 29008-USA TM 75/147696 08/09/1996 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES I 32 2069962 06/10/1997
------------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 30857-USA SM 1797359 06/30/1992 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES 42 1797359 10/05/1993
------------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 30858-USA SM 74/290045 06/30/1992 Smart & Final Stores Corporation REGISTERED
(stylized) UNITED STATES 42 1797358 10/05/1993
------------------------------------------------------------------------------------------------------------------------------
SMART & FINAL 28814-TRI SM 31900676 01/29/96 Smart & Final Stores Corporation REGISTERED
(words only) XXXXXX XXXX 00 00000 01/1996
------------------------------------------------------------------------------------------------------------------------------
SMART ADVANTAGE 29752-USA SM 75/191219 11/01/1996 Smart & Final Stores Corporation REGISTERED
UNITED STATES 35 2327520 03/14/2000
------------------------------------------------------------------------------------------------------------------------------
SMART AND FINAL 30853-USA SM 396652 09/30/1982 Smart & Final Stores Corporation REGISTERED
UNITED STATES I 42 1260298 12/06/1983
------------------------------------------------------------------------------------------------------------------------------
SMART AND FINAL IRIS 30852-USA SM 396650 09/30/1982 Smart & Final Stores Corporation REGISTERED
CO. UNITED STATES I 42 1260297 12/06/1983
------------------------------------------------------------------------------------------------------------------------------
SMART BUY 30854-USA TM 535967 05/06/1985 Smart & Final Stores Corporation REGISTERED
UNITED STATES I 03, 1393707 05/20/1986
05, 06,
08, 16,
29, 30,
31, 32
------------------------------------------------------------------------------------------------------------------------------
SMART CASH 47010-USA TM 76/300244 08/10/2001 Smart & Final Stores Corporation ALLOWED ITU
UNITED STATES 09
09/10/2002
------------------------------------------------------------------------------------------------------------------------------
SMART PARTNERS 26588-USA SM 74/513818 04/18/1994 Smart & Final Stores Corporation REGISTERED
UNITED STATES 42 1927296 10/17/1995
------------------------------------------------------------------------------------------------------------------------------
SMART PRO 39633-USA SM 76/164822 11/14/2000 Smart & Final Stores Corporation REGISTERED
UNITED STATES 42 2618821 09/10/2002
------------------------------------------------------------------------------------------------------------------------------
SMART TRACK 29713-USA TM 75/239138 00/00/0000 Xxxxx Xxx Xxxxxxx XXXXXXXXXX
XXXXXX XXXXXX 36 2134349 02/03/1998
------------------------------------------------------------------------------------------------------------------------------
SMART U 30860-USA SM 74/371407 03/24/1993 Smart & Final Stores Corporation REGISTERED
UNITED STATES 41 1811196 12/14/1993
------------------------------------------------------------------------------------------------------------------------------
SMART UNIVERSITY 30859-USA SM 74/371244 03/24/1993 Smart & Final Stores Corporation REGISTERED
UNITED STATES 41 1811195 12/14/1993
------------------------------------------------------------------------------------------------------------------------------
SMARTY 30861-USA TM 74/430367 08/27/1996 Smart & Final Stores Corporation REGISTERED
UNITED STATES 31 1840778 06/21/1994
------------------------------------------------------------------------------------------------------------------------------
SNACK'RS 34829-USA TM 76/034048 04/25/2000 Smart & Final Stores Corporation REGISTERED
UNITED STATES 30 2633979 10/15/2002
------------------------------------------------------------------------------------------------------------------------------
U.S. TRADE MARKS
------------------------------------------------------------------------------------------------------------------------------
CPH Docket Xxxx Type SERIAL NO. FILED
XXXX Country Class REG. NO. ISSUED Owner/Registrant STATUS
------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------
TENDER-XXX 30855-USA TM 515539 12/28/1984 Casino USA, Inc. REGISTERED
UNITED STATES I 29 1348349 07/09/1985
------------------------------------------------------------------------------------------------------------------------------
RELEASE
THIS RELEASE (this "Release") is being executed and delivered in
accordance with Section 1.9(a)(x) of the Share Purchase Agreement dated as of
August 6, 2003 (the "SPA"), by and between GFS HOLDING, INC., a Delaware
corporation ("Buyer"), SMART & FINAL INC., a Delaware corporation ("S&F"), and
AMERICAN FOODSERVICE DISTRIBUTORS, a California corporation ("AFD", and together
with S&F, "Sellers"). Capitalized terms not otherwise defined herein shall have
the respective meanings set forth in the SPA.
For valuable consideration received from Buyer and having been
represented by counsel and having been fully and adequately informed as to the
facts, consequences, and circumstances surrounding this Release, Sellers and
their respective shareholders, officers, directors, and affiliates
(collectively, the "Seller Parties"), release and discharge, individually and
collectively, Buyer and the Company (collectively, the "Buyer Parties"), and the
Buyer Parties' shareholders, officers, directors, successors, assigns and
affiliates, and the predecessors, successors, and assigns of all or any of them
(collectively, the "Combined Buyer Parties") from all claims, actions, causes of
action, suits, debts, dues, sums of money, accounts, bonds, bills, covenants,
contracts, controversies, liens, subordinations, agreements, promises,
variances, trespasses, damages, judgments, extents, executions, counterclaims
and offsets, and demands whatsoever, whether known or unknown and whether based
upon facts now known or unknown, direct or derivative, in law, equity, or
bankruptcy, against the Combined Buyer Parties, or any of them, the Seller
Parties, any of the Seller Parties' affiliates, heirs, successors, assigns,
executors, administrators, affiliates, benefactors (including current
beneficiaries, their heirs and assigns, as well as remaindermen, and their
assigns), anyone claiming in a derivative capacity from the Seller Parties, and
the predecessors, successors and assigns of any or all of them ever jointly or
individually had, now have, or hereafter can, shall, or may have against the
Company, provided, however, that nothing contained herein shall operate to
release any obligation of Buyer or the Company arising under the SPA or any
agreement contemplated thereby.
Sellers acknowledge that execution and delivery of this Release is a
condition to Buyer's obligation to purchase the outstanding capital stock of the
Company pursuant to the SPA and that Buyer is relying on this Release in
consummating such purchase.
An "affiliate" of the Buyer Parties or any Seller Party shall mean a
person that directly, or indirectly through one or more intermediaries, controls
or is controlled by, or is under common control with, the person specified.
Whenever the text hereof requires, the use of a singular or plural
number shall include the appropriate singular or plural number as the context
may require.
This Release may not be changed or terminated orally but only in a
written instrument signed by Sellers and Buyer.
This Release may be executed in any number of counterparts, all of
which together shall constitute a single instrument.
This Release shall be governed by and interpreted in accordance with
the laws of the State of Delaware without regard to conflict of laws principles
(whether of the State of Delaware or any other jurisdiction) that would result
in the application of the laws of any jurisdiction other than the State of
Delaware.
Each of the parties to this Release acknowledges that it has been
represented by counsel and that it has read and fully understood the terms
hereof. Each of the parties represents that the individual executing this
Release on its behalf has been duly authorized for this purpose by all necessary
action and that this Release constitutes a valid and binding obligation of each
party enforceable against it in accordance with its terms.
Sellers agree to keep the existence and contents of this Release
confidential, and not to disclose the same except (i) to their management
employees having a need to know the content of this Release, each of whom will
be advised of and required to maintain the confidentiality of the existence and
contents of this Release; or (ii) in response to a subpoena or court order,
after having given Buyer five (5) days prior written notice of such a subpoena
or court order, provided, however, that Sellers shall make commercially
reasonable efforts to limit the amount of disclosure required by such subpoena
or court order.
IN WITNESS WHEREOF, S&F and AFD have executed this Release on
September , 2003.
---
S&F:
SMART & FINAL INC.
By /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Its Senior Vice President and Secretary
-----------------------------------
AFD:
AMERICAN FOODSERVICE DISTRIBUTORS
By /s/ Xxxxxx X. Xxxxxxxx
------------------------------------
Its Secretary
-----------------------------------
2
TRANSITIONAL SERVICES AGREEMENT
THIS TRANSITIONAL SERVICES AGREEMENT (this "Agreement") is entered
into and effective as of September 7, 2003 (the "Effective Date"), by and
between SMART & FINAL INC., a Delaware corporation ("SFI"), AMERICAN FOODSERVICE
DISTRIBUTORS, a California corporation ("AFD"), SMART & FINAL STORES
CORPORATION, a California corporation ("SF Stores" and, together with SFI and
AFD, collectively, the "Sellers"), and GFS HOLDING, INC., a Delaware corporation
("GFS Holding"), XXXXX XXX COMPANY, a Florida corporation ("Xxxxx Xxx"), GFS
STORES, LLC, a Delaware limited liability company ("GFS Stores"), and GFS
Orlando, LLC, a Delaware limited liability company ("GFS Orlando" and, together
with GFS Holding, Xxxxx Xxx and GFS Stores, collectively, the "Buyers").
Capitalized terms not otherwise defined herein shall have the respective
meanings set forth in the Share Purchase Agreement (as defined below).
RECITALS
A. Pursuant to that certain Share Purchase Agreement (the "Share
Purchase Agreement"), dated August 6, 2003, by and between SFI, AFD and GFS
Holding, GFS Holding will purchase all of the issued and outstanding equity
securities of Xxxxx Xxx; and pursuant to that certain Asset Purchase Agreement
(the "Asset Purchase Agreement"), dated August 6, 2003, by and among GFS
Holding, GFS Orlando and GFS Stores, and Sellers, GFS Stores and GFS Orlando
will, directly or indirectly, acquire from Sellers certain of the assets of SF
Stores and all of the assets of the Orlando Foodservice division of AFD
(collectively, the "Assets").
B. Following the consummation of the transactions contemplated by the
Share Purchase Agreement and the Asset Purchase Agreement, Buyers will continue
to operate the businesses conducted by AFD, SF Stores and Xxxxx Xxx in the State
of Florida (the "Business").
C. Buyers desire to engage the services of Sellers and its personnel
to provide transitional support for a period of up to six (6) months after the
consummation of the transactions contemplated by the Share Purchase Agreement
and the Asset Purchase Agreement.
D. Buyers have required as a condition to the consummation of the
transactions contemplated by the Share Purchase Agreement and the Asset Purchase
Agreement that Sellers enter into this Agreement.
AGREEMENT
In consideration of the premises set forth above and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Sellers and Buyers agree as follows:
1. Services for Stores. During the Term of this Agreement, Sellers
will provide the transitional services described in this Section 1 for the
benefit of the stores (the "Stores") being acquired by GFS Stores from SF Stores
in the state of Florida. These transitional services will include the resources
reasonably necessary to maintain continuous operation of the Stores in a manner
substantially consistent with current practices and in the areas described
below. Sellers represent and warrant to Buyers that nothing contained in any of
the agreements to which Sellers are a party prohibits Sellers from providing the
Services, Systems and Support to Buyers as provided in Section 1 of this
Agreement. For purposes of Section 1 of this Agreement, "Systems" is defined as
the hardware and software located in each Store or in SFI's Commerce facility
reasonably necessary to support the transitional service process. "Services" is
defined as providing substantially the same activities currently provided by SFI
from its Commerce facility or by third parties that are necessary to continue
the current business operations in the Stores. "Support" is defined as the
materials, communications and intervention necessary to continue operations
substantially as they are presently conducted in the Stores. All of the
transitional services to be provided by Sellers pursuant to this Section 1 shall
be provided consistent with historical practices at the Stores and at levels
substantially the same as presently provided with no unique services or support
required except as specifically set forth herein. Sellers' obligations under
this Section 1 also are subject to compliance with all applicable laws and
regulations, and with all confidentiality agreements or obligations. Buyers
agree to cooperate with Sellers and use their commercially reasonable efforts to
promptly respond to Sellers' requests for information and action that may be
required in order to facilitate Sellers' provision of transitional services
hereunder. The transitional services to be provided by Sellers pursuant to this
Section 1 are the following:
A. Business Process Systems, Service and Support.
(1) Advertising: Sellers will provide GFS Stores the ability to
influence Hot Sheet advertising direction, materials and
activities during the transition period. This includes the
continuation of mailed and inserted Hot Sheet promotional
services, including logo and graphics materials. GFS Stores
will define the product and pricing within the theme and
format of Sellers' Hot Sheet promotional period and provide
same to Sellers, who then will provide creative design,
layout, SFI name and the processes to produce and deliver
the materials. GFS Stores will identify the customer types
for the mailed Hot Sheet, and Sellers will develop and
deliver the pieces to those customers.
2
Sellers will provide copies of all template, logo and item
art work that may be used in developing and delivering Hot
Sheet promotional pieces during the time period from the
2003 Memorial Day promotion period until the termination of
this Agreement. Such materials will be delivered to Buyers
as soon as they are available. Sellers do not own or have
rights to, and will not provide Buyers with, any radio
jingles or other radio materials utilizing the SFI name.
(2) Xxxxx Xxx support: Continue to provide the systems and data
interfaces to support the existing Xxxxx Xxx/SFI Florida
price/cost, credit authorization and A/R management, item
maintenance, and DSR commissions, so long as Buyer conducts
POS using ACS 4.0 and NCR POS equipment.
(3) Pricing support for all items sold within the Stores
including DSD, warehouse, and corporate brands, provided
that Sellers retain the right to change inventory items
consistent with product changes throughout all of Sellers'
stores, and provided further that if requested by Buyers, a
reasonably limited number of inventory items may be changed,
bearing in mind the restraints on Sellers' Systems. Provide
ability to influence direction, materials, and activities,
including promotional pricing.
(4) Category Management support for all product categories
within the Stores, including procurement, vendor agreements,
and logistics.
(5) Loyalty card program: Subject to compliance with the
existing program and applicable law, all processes and
systems to support use of the Smart Advantage program in the
Stores, including all card benefits (reseller tax
management, tobacco sales management and control, charge on
account privileges, e-discounts/couponing/promotional and
quantity discounts).
(6) Store tagging and in-store signage systems, services, and
support.
(7) Store space management systems, services and support.
(8) Product information maintenance, systems, services and
support, including item setup, modifications, deletions, and
category support, all consistent with current practices.
3
(9) Product order entry systems, services, and support to
maintain a continuous flow of product from existing vendors,
although there can be no assurance of continued vendor
participation.
(10) Electronic communications capability to employees via
e-mail, fax, voice systems, services, and support as
necessary to operate the Stores, provided that Buyers'
employees agree to and sign SFI's computing policy and
Buyers agree to enforce those policies.
(11) Existing-store financial reporting including intranet
reports (a list of which is attached hereto as Exhibit "A"),
used to manage the day-to-day operations of the Stores by
Store managers and regional staff members.
(12) Loss prevention systems, services, and support, including
exception (XBR) reporting, camera systems, and access to
camera systems.
(13) Individual Store level income statement process, including a
period by period, Store by Store, and general ledger
download of each Store account.
(14) Accounts payable systems, services, and support in the
format currently utilized by Sellers.
(15) Store accounts receivable systems, services, and support
during normal East Coast business hours.
(16) Fixed asset management systems, services, and support.
(17) Vendor agreement systems, services, and support.
(18) Check authorization systems, services, and support,
including Telecheck. Buyers agrees to abide by SCAN
reporting and check management processes.
(19) Electronic payments, systems agreements, systems, services,
and support, including Visa, MC, Discover, Debit, Gift Card,
and Xxxxx Xxx charge, including customer dispute management
of charged transactions. Buyers will absorb all transaction
charge backs for Credit, Debit, A/R and check transactions
and will be subject to the settlement fees as defined in
Sellers' transaction agreements. Sellers and Buyers each
will accept financial responsibility for any penalties
assessed to the other party by reason of their actions or
failure to act.
4
(20) Inventory management systems, services, and support,
including RIMA.
(21) Store receiving systems, services, and support to input,
transmit, and maintain invoicing records from vendors,
including the payment process.
(22) Consumables and supplies necessary to operate equipment in
the Stores, including all computer systems.
(23) Armored car pickup/delivery service to Stores.
B. Information.
(1) Item master file information necessary for conversion to GFS
Stores systems: An initial one (1) time download (file
format specification to be provided by Buyers), then a daily
update of changes until conversion to GFS Stores systems is
complete.
(2) Customer identification information necessary for conversion
to GFS Stores systems: An initial one (1) time download
(file format specification to be provided by Buyers), then a
daily update of changes until conversion to GFS Stores
systems is complete. Subject to compliance with the existing
program and applicable law, a complete description of the
customer number layout, any alias customer number
relationships that exist for the Smart Advantage card
program, and/or the Xxxxx Xxx customer number relationship.
(3) Pricing master file information necessary for conversion to
GFS Stores systems: An initial one (1) time download (file
format specification to be provided by Buyers) that
specifies store/item/price, and in the case of Xxxxx Xxx
customer/item/price), then a daily update of changes until
conversion to GFS Stores systems is complete.
(4) Sales information: An initial one (1) time download (file
format specification to be provided by Buyers) of the
available historical sales transaction data extracted from
the Florida POS systems (excluding credit card data) in a
flat file readable format (non-TLOG format, assuming MATRA
output), then a daily update of changes until conversion to
the GFS Stores systems is complete.
(5) Fixed assets: A one (1) time download of all asset data
available, by Store, including the asset description, date
5
placed in service, acquisition cost, accumulated
depreciation and net-book-value.
(6) Store profile: A one (1) time download of all Store specific
information for normal systems operations, including tax
tables/rules and licensing information.
(7) Vendors: A listing of all vendor information unique to Store
operations, with a daily update of changes.
(8) Xxxxx Xxx integration: A one (1) time download of all
interfaces provided to/from Xxxxx Xxx, along with file
format specifications.
(9) Reseller Tax: A one (1) time download of customer/item
reseller tax information.
C. Computer Systems Hardware and Software and Support.
(1) Provide temporary benefit of output from all systems
necessary to continue Store operations as currently in
existence. All maintenance and service agreements to be
provided during this period, including all hardware,
software licensing and support, third party services
provided (AfterBot, ACI, Electronic payment systems, and
telecommunications, both data and voice).
(2) Computer Systems & Support (all consistent with current
practice):
a. Battery backup systems (UPS)
b. Cashier balance, cash proof
c. Copiers
d. Daily sales audit and end-of-day processing
e. Data warehouse reporting provided to Stores
f. Digital receipt via AfterBot
g. DSD receiving/reporting
h. EPS ACI systems support - Debit, Credit, Check
authorization, Gift card, In-house credit (Xxxxx Xxx)
i. FAX
j. Intranet, as needed to operate the Stores and subject
to signed SFI computing policy agreement.
k. Item/price maintenance - store/central
l. Invoice processing
m. Operating systems
n. Order entry, including COPS
o. PBX/in-store voice & communications systems
6
p. PCs
q. POS systems and interfaces and peripherals
r. POS XBR Loss prevention system exception reporting,
client access only for LP rep.
s. Price verification
t. Product lookup
u. Product management maintenance
v. RF network and hand held devices
w. Satellite communications infrastructure
x. Scales
y. Servers
z. Signs/tags printing
aa. Special order entry system
bb. Store/regional manager financial reporting
cc. Time and attendance
dd. Timeclocks, time data capture
ee. Virus protection software
(3) Central Systems - Requiring continued support of
applications (all consistent with current practice):
a. General Ledger (GEAC)
b. Financial Reporting (TM1)
c. Reporting database (RIMA)
d. Accounts Receivable (GEAC/Base 24)
e. Inventory/Costing (RIMA)
f. Inventory Ordering (COPS)
g. Accounts Payable (GEAC)
h. Cash Reconciliation (Daily cash proof)
i. Fixed Assets (GEAC) j. Vendor Support (mainframe)
k. Digital Receipt/Sales Tax (Afterbot).
l. Property Tax (Fixed asset system)
m. Credit Card Processing
n. Resale licensing (Tandem) Subject to Florida stores
completing signup process of resale customers
2. Services for Florida Food Service Operations. During the Term of
this Agreement, Sellers will provide the transitional services described in this
Section 2 for the benefit of the Xxxxx Xxx and/or Orlando Food Service
Operations (collectively, the "Florida Food Service Operations"). These
transitional services will include the resources reasonably necessary to
maintain continuous operation of the Florida Food Service Operations in Florida
in a manner substantially consistent with current practices. Sellers represent
and warrant to Buyers that nothing contained in any of the agreements to which
Sellers are a party prohibits Sellers from providing the Services, Systems and
Support to Buyers as provided in Section 2 of this Agreement. For purposes of
Section 2 of this Agreement, "Systems" is defined as the hardware and software
located in Florida
7
or elsewhere necessary to support the transitional service process. "Services"
is defined as providing substantially the same activities currently provided by
SFI from its Commerce facility or by third parties that are necessary to
continue the current business operations in the Florida Food Service Operations.
"Support" is defined as the materials, communications and intervention necessary
to continue operations substantially as they are presently conducted in the
Florida Food Service Operations. All of the transitional services to be provided
by Sellers pursuant to this Section 2 shall be provided consistent with
historical practices in the Foodservice Operations and at levels substantially
the same as presently provided with no unique services or support required
except as specifically set forth herein. Sellers' obligations under this Section
2 also are subject to compliance with all applicable laws and regulations, and
with all confidentiality agreements or obligations. Buyers agree to cooperate
with Sellers and use their commercially reasonable efforts to promptly respond
to Sellers' requests for information and action that may be required in order to
facilitate Sellers' provision of transitional services hereunder. The
transitional services to be provided by Sellers pursuant to this Section 2 are
the following:
A. Payroll Processing
(1) ADP agreement feed through Commerce, California (Solely for
start-up purposes and transition of payroll processing to
Xxxxx Xxx Company)
B. Network Support
(1) Currently some network and infrastructure support services
are being provided in Stockton, California for the Florida
Food Service Operations. GFS Orlando will require this
support to continue for up to six (6) months.
C. E-mail Addresses
(1) Systems, services and support required to provide continuous
access to the e-mail addresses. Seller to provide e-mail
addresses of Florida Stores, relevant personnel and
transition staff.
D. Wide Area Network
(1) Support of the ordering process from the Stores to Xxxxx
Xxx. These orders are processed in Commerce, California and
sent to Xxxxx Xxx for fulfillment.
E. Fixed Asset Accounting
(1) Continued support of the fixed asset accounting system for
up to six (6) months.
8
3. Personnel Cooperation. Commencing upon execution of this Agreement,
and continuing for two (2) weeks thereafter, at no cost to Buyers, Sellers will
provide Buyers with the use of an office at Sellers' Commerce, California
facility for one (1) designated person ("Point Person"), together with related
telephones, equipment and access (including remote access) to Sellers' systems
that apply to the Stores and the Florida Food Service Operations. Xxx Xxxxxxx is
hereby designated as Sellers' initial contact with the Point Person, and the
Point Person shall be afforded full access to all of Sellers' personnel and
systems to assist in a smooth transition of the Stores and the Florida Food
Service Operations to Buyers. After the expiration of the two (2) week period,
the Point Person also shall be provided with remote access and access at the
Commerce facility for one (1) day per week for follow-up issues, and Sellers'
personnel will also be available by telephone to assist the Point Person in
connection with transition matters.
4. Term. The Term of this Agreement shall commence upon the
consummation of the transactions contemplated by the Share Purchase Agreement
and the Asset Purchase Agreement and, at Buyers' option, shall continue for up
to six (6) months thereafter. The Term of this Agreement may be shortened upon
written notice from Buyers to Sellers; provided, that, if this Agreement is
shortened as to the provision of the Systems services provided hereunder, it
must be shortened as to all Systems services concurrently.
5. Compensation for Services. In consideration of provision of the
transitional services described in Sections 1, 2 and 3 above (the "Basic
Services") to be provided by Sellers to Buyers in connection with the Stores and
the Florida Food Service Operations, Buyers will reimburse Sellers for the
actual out-of-pocket initial start-up and set-up costs incurred in connection
with the e-mail conversion, but in no event shall such reimbursement exceed
$50,000. Sellers shall receive no other compensation for the Basic Services. In
the event Buyers request additional services not included in the Basic Services,
the parties will meet to discuss same and the cost therefor, but Sellers shall
be under no obligation to provide any additional services, except upon terms
acceptable to Sellers.
6. Default; Termination.
A. Sellers' Default. Sellers shall be in default under this Agreement
if Sellers breach any material provision or condition of this Agreement (a
"Sellers' Event of Default"). If a Sellers' Event of Default occurs (i)
which event does not result in a material adverse effect on the provision
of Basic Services, and is not cured by Sellers within thirty (30) days
after receipt of written notice from Buyers to cure such breach, or (ii)
which event results in a material adverse effect on the provision of Basic
Services, and is not cured by Sellers within three (3) business days after
receipt of written notice from Buyers to cure such breach, then, in such
event, in addition to any other right or remedy Buyers may have under this
Agreement, Buyers shall have the right to terminate this Agreement, so long
as such Event of Default is not the result of the action or inaction of a
third-party.
9
B. Buyers' Default. Buyers shall be in default under this Agreement if
Buyers breach any material provision or condition of this Agreement (a
"Buyers' Event of Default"). If a Buyers' Event of Default occurs (i) which
event does not result in a material adverse effect on Sellers' operations
or information systems, and is not cured by Buyers within thirty (30) days
after receipt of written notice from Sellers to cure such breach, or (ii)
which event results in a material adverse effect on Sellers' operations or
information systems, and is not cured by Buyers within three (3) business
days after receipt of written notice from Sellers to cure such breach,
then, in such event, in addition to any other right or remedy Sellers may
have under this Agreement, Sellers shall have the right to terminate this
Agreement, so long as such Event of Default is not the result of the action
or inaction of a third-party.
C. Limitation on Damages; No Offset. In no event shall Sellers or
Buyers be liable to the other party for any consequential damages or lost
profits in excess of $750,000, and in no event shall either party be
entitled to offset against any amounts due under this Agreement any amounts
payable under the Share Purchase Agreement, the Asset Purchase Agreement,
or any other agreement executed in connection therewith.
7. Indemnification.
A. Indemnity by Sellers. Sellers shall, jointly and severally,
indemnify Buyers and their affiliates, directors, officers, managers,
employees, controlling persons, agents and representatives and their
successors and assigns (collectively, the "Buyer Indemnified Parties")
against and hold each of them harmless from any and all damage, loss, cost,
penalty, liability and expense (including, without limitation, reasonable
attorneys' fees and expenses in connection with any action, suit or
proceeding) ("Damages") incurred or suffered by the Buyer Indemnified
Parties (whether originally asserted against or imposed on the Buyer
Indemnified Parties by a third party or originally incurred or suffered
directly by the Buyer Indemnified Parties) arising directly out of any
breach of any representation or warranty, covenant or agreement made or to
be performed by Sellers pursuant to this Agreement (such breach, a "Seller
Breach").
B. Indemnity by Buyers. Buyers shall indemnify Sellers and their
affiliates, directors, officers, employees, controlling persons, agents and
representatives and their successors and assigns (collectively, the "Seller
Indemnified Parties") against and hold each of them harmless from any and
all Damages incurred or suffered by the Seller Indemnified Parties (whether
originally asserted against or imposed on the Seller Indemnified Parties by
a third party or originally incurred or suffered directly by the Seller
Indemnified Parties) arising directly out of any breach of any
representation, warranty, covenant or agreement made or to be performed by
Buyers pursuant to this Agreement, and from any and all liability or
expenses, including fines by any governmental entities, incurred by reason
of providing the Smart Advantage program
10
information to Buyers pursuant to Section 1.A(5) above (such breach, a
"Buyer Breach").
C. Procedure and Payment.
(1) The person seeking indemnification under Section 7.A, and
7.B (the "Indemnified Party") agrees to give prompt notice
to the Person against whom indemnity is sought (the
"Indemnifying Party") of the assertion of any claim, or the
commencement of any suit, action or proceeding, in respect
of which indemnity may be sought under such Section and will
provide the Indemnifying Party such information with respect
thereto as the Indemnifying Party may reasonably request.
The failure to so notify the Indemnifying Party shall not
relieve the Indemnifying Party of its obligations hereunder,
except to the extent such failure shall have materially and
adversely prejudiced the Indemnifying Party.
(2) The Indemnifying Party shall be entitled to defend any claim
asserted by any third party ("Third Party Claim") with
counsel of its choice reasonably satisfactory to the
Indemnified Party so long as (i) the Indemnifying Party
notifies the Indemnified Party in writing within fifteen
(15) days after the Indemnifying Party has given notice of
the Third Party Claim that it will indemnify the Indemnified
Party from and against all Damages that the Indemnified
Party may suffer resulting from, arising out of, relating
to, or caused by the Third Party Claim, (ii) the
Indemnifying Party provides the Indemnified Party with
evidence reasonably acceptable to the Indemnified Party that
the Indemnifying Party will have the financial resources to
defend against the Third Party Claim and fulfill its
indemnification obligations under this Agreement, (iii) the
Third Party Claim involves only money damages and does not
seek an injunction or other equitable relief, and (iv) the
Indemnifying Party conducts the defense of the Third Party
Claim actively and diligently.
(3) So long as the Indemnifying Party is conducting the defense
of any Third Party Claim in accordance with the provisions
of this Section 7.C, the Indemnified Party shall be entitled
to participate in the defense of such Third Party Claim and
to employ separate counsel of its choice for such purpose.
The fees and expenses of such separate counsel shall be paid
by the Indemnified Party.
11
(4) Each party shall cooperate, and cause its Affiliates to
cooperate, in the defense or prosecution of any Third Party
Claim and shall furnish or cause to be furnished such
records, information and testimony, and attend such
conferences, discovery proceedings, hearings, trials or
appeals, as may be reasonably requested by any other party
in connection therewith.
D. Calculation of Damages.
(1) The amount of any Damages payable under Section 7.A and 7.B
by the Indemnifying Party shall be net of any amounts
recovered by the Indemnified Party under applicable
insurance policies and the Indemnified Party shall use
commercially reasonable efforts to collect any amounts
available under such insurance policies.
(2) If the Indemnified Party receives an amount under insurance
coverage or from a third party with respect to Damages at
any time subsequent to any indemnification provided by the
Indemnifying Party pursuant to Section 7.A and 7.B, then
such Indemnified Party shall promptly reimburse the
Indemnifying Party for any payment made or expense incurred
by such Indemnifying Party in connection with providing such
indemnification up to such amount received by such
Indemnified Party, but net of any expenses incurred by such
Indemnified Party in collecting such amount.
(3) In no event shall either Buyers or Sellers be liable to the
other party for any consequential damages or lost profits in
excess of $750,000.
8. Force Majeure. Neither Sellers nor Buyers shall be responsible to
the other for any delay in or failure of performance of their obligations under
this Agreement to the extent such delay or failure is attributable to any cause
beyond their reasonable control, including, without limitation, any act of God,
fire, accident, strike or other labor difficulties, war, embargo or other
governmental act, or riot that, in the case of Sellers, prevents Sellers from
providing services under this Agreement, or, in the case of Buyers, prevents
Buyers from utilizing the services under this Agreement; provided that the party
affected thereby gives the other party prompt notice of the occurrence of any
event which has caused or is likely to cause any such delay or failure, setting
forth its best estimate of the length of any delay and any possibility that it
will be unable to resume performance; and provided further that said affected
party shall use its commercially reasonable efforts to expeditiously overcome
the effects of that event and resume performance or utilization.
12
9. Miscellaneous Provisions.
A. Confidentiality. Each of Sellers and Buyers (as appropriate, the
"Promisor") covenant and agree to and will cause their respective
authorized agents, representatives, affiliates, employees, officers,
directors, accountants, counsel and other designated representatives
(collectively, "Representatives") to (i) treat and hold as confidential
(and not disclose or provide access to any person to) all records, books,
contracts, instruments, computer data and other data and information
(collectively, "Information") concerning the other party (the "Promisee")
in the Promisor's possession or furnished by the Promisee or its
Representatives pursuant to this Agreement, (ii) in the event that Promisor
or its Representatives become legally compelled to disclose any such
Information, provide the Promisee with prompt written notice of such
requirement so that the Promisee may seek a protective order or other
remedy or waive compliance with this Section 9.A, and (iii) in the event
that such protective order or other remedy is not obtained, or the Promisee
waives compliance with this Section 9.A, furnish only that portion of such
Information which is legally required to be provided and exercise
Promisor's best efforts to obtain assurances that confidential treatment
will be accorded such Information; provided, however, that this sentence
shall not apply to any Information that, at the time of disclosure, is
available publicly and was not disclosed in breach of this Agreement by
such party or its Representatives; and provided further, however, that the
provisions of clauses (i) and (ii) above shall not preclude a party from
disclosing Information to its Representatives (provided that each such
Representative shall be advised of the confidential nature of such
Information) or from disclosing Information to or filing Information with
any governmental authority or agency with jurisdiction over such party.
Each party agrees and acknowledges that remedies at law for any breach of
its obligations under this Section 9.A are inadequate and that in addition
thereto the other party shall be entitled to seek equitable relief,
including injunction and specific performance, in the event of any such
breach, without the necessity of demonstrating the inadequacy of monetary
damages. The provisions of this Section 9.A shall not apply to the extent
any such Information is required to be disclosed by applicable law.
B. Notices. All necessary notices, demands, requests and other
communications required or permitted to be given hereunder shall in every
case be in writing and shall be deemed duly given (a) when delivered
personally, (b) upon receipt or refusal of receipt, if sent by registered
or certified mail, in all such cases with postage prepaid, return receipt
requested, or (c) the next business day if delivered by a recognized
overnight courier service, airbill prepaid, designated for next business
day delivery, to the parties at the addresses as set forth below or at such
other addresses as may be furnished in writing:
If to Buyers: Xxxxx Xxxxxxxxx
Xxxxxx Food Service, Inc.
X.X. Xxx 0000
Xxxxx Xxxxxx, Xxxxxxxx 00000
13
and to: Xxxxx X. Xxxx
00000 Xxxx Xxxxxxxx Xxxxx
X.X. Xxx 000
Xxxxxx, Xxxxxxxx 00000-0000
With a copy to: Miller, Johnson, Xxxxx & Xxxxxxxxx, P.L.C.
000 Xxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
If to Sellers: Xxxxxx Xxxxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
With a copy to: Xxxxxx X. Xxxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
With a copy to: Xxx Xxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
With a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
And a copy to: Xxxxx & Xxxxxxx
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx XX
C. Jurisdiction.
(1) In the event any dispute arises out of this Agreement or any
of the transactions contemplated by this Agreement, each of the parties hereto
consents to submit itself to the personal jurisdiction of any federal court in
the state of Delaware and, in case such court refuses jurisdiction then each of
the parties consents to submit itself to the personal jurisdiction of any state
court in the state of Delaware. Each of the parties further agrees that it will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from such court, and agrees that, except as permitted pursuant
to this Section 9.C, it will not bring any action relating to this Agreement or
any
14
of the transactions contemplated by this Agreement in any other court other than
a federal court in the state of Delaware.
(2) In the event the state court specified in Section 9.C(1)
refuses to exercise jurisdiction over the parties hereto or the subject matter
at issue, then with respect to any legal action or proceeding brought by any of
the Seller Parties against any of the Buyer Parties arising out of or relating
to this Agreement or any of the transactions contemplated by this Agreement,
each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of any federal court within the jurisdiction of the United
States District Court for the Western District of Michigan (and each
appellate court thereof) or any state court in the state of Michigan;
(ii) agrees that any federal court within the jurisdiction
of the United States District Court for the Western District of Michigan or
any state court in the state of Michigan shall be deemed to be a convenient
forum; and
(iii) agrees not to assert (by way of motion, as a defense
or otherwise), in any such legal proceeding commenced in any federal court
within the jurisdiction of the United States District Court for the Western
District of Michigan or any state court in the state of Michigan, any claim
that such party is not subject personally to the jurisdiction of such
court, that such legal proceeding has been brought in an inconvenient
forum, or that the venue of such proceeding is improper.
(3) In the event the state court specified in Section 9.C(1)
refuses to exercise jurisdiction over the parties hereto or the subject matter
at issue, then with respect to any legal action or proceeding brought by any of
the Buyer Parties against any of the Seller Parties arising out of or relating
to this Agreement or any of the transactions contemplated by this Agreement,
each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of any federal court within the jurisdiction of the United
States District Court for the Central District of California (and each
appellate court thereof) or any state court in the state of California;
(ii) agrees that any federal court within the jurisdiction
of the United States District Court for the Central District of California
or any state court in the state of California shall be deemed to be a
convenient forum; and
(iii) agrees not to assert (by way of motion, as a defense
or otherwise), in any such legal proceeding commenced in any federal court
within the jurisdiction of the United States District Court for the Central
District of California or any state court in the state of California, any
claim that such party is not subject personally to the
15
jurisdiction of such court, that such legal proceeding has been brought in
an inconvenient forum, or that the venue of such proceeding is improper.
(4) The parties hereby waive any right to a jury trial.
D. Further Assurances. From time to time, at the request of the other
party hereto and at the expense of the party so requesting (unless the
requesting party is entitled to indemnification therefor under Section 7),
each of the parties hereto shall execute and deliver to such requesting
party such documents and take such other action as such requesting party
may reasonably request in order to consummate more effectively the
transactions contemplated hereby.
E. Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by
any party in exercising any right, power, or privilege under this Agreement
or the documents referred to in this Agreement will operate as a waiver of
such right, power, or privilege, and no single or partial exercise of any
such right, power, or privilege will preclude any other or further exercise
of such right, power, or privilege or the exercise of any other right,
power, or privilege. To the maximum extent permitted by applicable law, (a)
no claim or right arising out of this Agreement or the documents referred
to in this Agreement can be discharged by one party, in whole or in part,
by a waiver or renunciation of the claim or right unless in writing signed
by the other party; (b) no waiver that may be given by a party will be
applicable except in the specific instance for which it is given; and (c)
no notice to or demand on one party will be deemed to be a waiver of any
obligation of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in this
Agreement or the documents referred to in this Agreement.
F. Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes a complete and exclusive statement of the terms of the
agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by the
parties to be charged with the amendment.
G. Assignments, Successors, and No Third-Party Rights. Neither party
may assign any of its rights or obligations under this Agreement without
the prior consent of the other parties, except that GFS Holding may assign
any of its rights under this Agreement to any Affiliate of GFS Holding.
Subject to the preceding sentence, this Agreement will apply to, be binding
in all respects upon, and inure to the benefit of the benefit of the
successors and permitted assigns of the parties. Nothing expressed or
referred to in this Agreement will be construed to give any Person other
than the parties to this Agreement any legal or equitable right, remedy, or
claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are
16
for the sole and exclusive benefit of the parties to this Agreement and
their successors and assigns.
H. Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions
of this Agreement will remain in full force and effect. Any provision of
this Agreement held invalid or unenforceable only in part or degree will
remain in full force and effect to the extent not held invalid or
unenforceable.
I. Section Headings, Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its
construction or interpretation. All references to "Section" or "Sections"
refer to the corresponding Section or Sections of this Agreement. All words
used in this Agreement will be construed to be of such gender or number as
the circumstances require. Unless otherwise expressly provided, the word
"including" does not limit the preceding words or terms.
J. Preamble; Recitals. The Recitals set forth in the Preamble hereto
are hereby incorporated and made a part of this Agreement.
K. Governing Law. This Agreement will be governed by the internal laws
of the State of Delaware without regard to conflicts of laws principles.
L. No Strict Construction. The language used in this Agreement will be
deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against
any party hereto by virtue of having drafted this Agreement or otherwise.
M. Dispute Resolution. Except as hereinafter provided in this Section
9.M all claims, controversies, differences, or disputes between or among
any of the parties hereto arising from or relating to this Agreement,
including claims by one party that another party or parties hereto have
failed to perform any of their obligations hereunder (collectively,
"Agreement Disputes"), shall be resolved as follows:
(1) Facilitative Mediation. The parties to an Agreement Dispute
shall first attempt to resolve such Agreement Dispute by
means of a mediation conducted in the following manner. A
party desiring mediation of any Agreement Dispute shall give
or shall have given a written notice, in the manner set
forth in Section 9.B hereof (a "Dispute Notice"), to the
other party or parties setting forth the nature of the
dispute and the relief intended to be sought and shall
submit such Agreement Dispute for resolution by facilitative
mediation in Chicago, Illinois, under the Commercial
Mediation Rules (but not otherwise under the auspices) of
the American Arbitration
17
Association (the "AAA") in effect on the date of this
Agreement, unless the parties have agreed, in writing, to
resolve any such dispute by other means. Each party agrees
that it will submit to and shall not challenge or object to
the jurisdiction (either personal or subject matter) or the
venue of such mediation in Chicago, Illinois.
(2) Legal Proceedings. If any Agreement Dispute has not been
resolved by mediation as provided above within sixty (60)
days after submission thereof, then either party may
commence a suit or legal action or an action at equity to
enforce its rights or the other party's obligations or
recover any damages arising from the other party's breach or
such other relief as may be appropriate under the
circumstances.
(3) Attorney Fees and Other Costs. The prevailing party in any
mediation or any action or legal or other proceeding brought
with respect to an Agreement Dispute shall be entitled to
recover the reasonable fees and disbursements of its
attorneys, accountants, and expert witnesses in connection
with any such mediation or any action or legal or other
proceeding brought in accordance with the provisions hereof.
(4) Exceptions for Equitable Relief. Notwithstanding the
foregoing or anything to the contrary contained elsewhere in
this Agreement, a party may bring a proceeding against any
other party hereto for specific performance or injunctive or
other forms or equitable relief in the state or federal
courts pursuant to the procedures set forth in Section 9.C
without having to submit the matter or Agreement Dispute in
question to mediation as hereinabove set forth, provided,
however, that such party shall not seek any monetary award
or relief in such action or proceeding unless its failure to
do so would prejudice such party's rights or ability to seek
such monetary award or relief in another action or
proceeding.
N. Counterparts. This Agreement may be executed in two or more
counterparts, each or which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to
constitute one and the same agreement.
O. Relationship of Parties. The relationship between Sellers and
Buyers for purposes of this Agreement shall be that of an independent
contractor and not of employment and, except to the extent required to
enable Sellers to perform their duties hereunder, neither party is an agent
of the other. By entering into this
18
Agreement, neither party to this Agreement is, in any way, assuming any
liabilities, debts or obligations of the other party, whether now existing
or hereafter created.
IN WITNESS WHEREOF, Sellers and Buyers have executed this Agreement as of
the date set forth in the first paragraph hereof.
"SFI"
SMART & FINAL INC.
a Delaware corporation
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------------
Its:
---------------------------------
"AFD"
AMERICAN FOODSERVICE DISTRIBUTORS
a California corporation
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------------
Its:
---------------------------------
"SF Stores"
SMART & FINAL STORES CORPORATION
a California corporation
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------------
Its:
---------------------------------
"GFS Holding"
GFS HOLDING, INC.
a Delaware corporation
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its:
----------------------------------
19
"Xxxxx Xxx"
XXXXX XXX COMPANY
a Florida corporation
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its:
---------------------------------
"GFS Stores"
GFS STORES, LLC
a Delaware limited liability company
By: GFS HOLDING, INC.
Its: Manager
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its:
---------------------------------
"GFS Orlando"
GFS Orlando, LLC
a Delaware limited liability company
By: GFS HOLDING, INC.
Its: Manager
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its:
---------------------------------
20
Exhibit "A"
----------------------------------------------------------------------------------------------------------
List of reports
----------------------------------------------------------------------------------------------------------
Type / Source
----------------------------------------------------------------------------------------------------------
Report Name Store Region Mgr .xls File ES9000.pdf
----------------------------------------------------------------------------------------------------------
RMIA X X O'K
----------------------------------------------------------------------------------------------------------
Payroll Distribution X X X Pending
Report (PDR)
----------------------------------------------------------------------------------------------------------
P&L X Paper ???????
----------------------------------------------------------------------------------------------------------
DSD weekly and 52 week X X O'K
recap
----------------------------------------------------------------------------------------------------------
Managers' Special X X O'K
----------------------------------------------------------------------------------------------------------
Lost & Damaged X X X O'K
----------------------------------------------------------------------------------------------------------
Weekly Inventory Summary
(new) X X We need to get report I.D
----------------------------------------------------------------------------------------------------------
Inventory Turns X X O'K Xxx X.
----------------------------------------------------------------------------------------------------------
Perishables Tracking X X O'K Xxxxx
----------------------------------------------------------------------------------------------------------
District Xxxx out X X O'K Xxx X.
----------------------------------------------------------------------------------------------------------
Top 100 Items by Sales /
Margin X X O'K Xxxxx
----------------------------------------------------------------------------------------------------------
Consolidated Operations
RMIA X X O'K Xxx X.
----------------------------------------------------------------------------------------------------------
Labor Reports (period basis) X X ????? Xxx X.
----------------------------------------------------------------------------------------------------------
Weekly Potential Shrink
Report X X O'K Xxx X.
----------------------------------------------------------------------------------------------------------
LP
----------------------------------------------------------------------------------------------------------
XBR is an LP based system that produces ad hoc queries to monitor the POS system (cashier integrity).
----------------------------------------------------------------------------------------------------------
A-1
EMPLOYEE LEASING AGREEMENT
THIS EMPLOYEE LEASING AGREEMENT (this "Agreement") is entered into and
effective as of September 7, 2003 (the "Effective Date"), by and between SMART &
FINAL INC., a Delaware corporation ("SFI"), AMERICAN FOODSERVICE DISTRIBUTORS, a
California corporation ("AFD"), SMART & FINAL STORES CORPORATION, a California
corporation ("SF Stores" and, together with SFI and AFD, collectively, the
"Sellers"), and GFS HOLDING, INC., a Delaware corporation ("GFS Holding"), XXXXX
XXX COMPANY, a Florida corporation ("Xxxxx Xxx"), GFS STORES, LLC, a Delaware
limited liability company ("GFS Stores"), and GFS Orlando, LLC, a Delaware
limited liability company ("GFS Orlando" and together with GFS Holding, Xxxxx
Xxx and GFS Stores, collectively, the "Buyers"). Capitalized terms not otherwise
defined herein shall have the respective meanings set forth in the Share
Purchase Agreement (as defined below).
RECITALS
A. Pursuant to that certain Share Purchase Agreement (the "Share
Purchase Agreement"), dated August 6, 2003, by and between SFI and AFD and GFS
Holding, GFS Holding will purchase all of the issued and outstanding equity
securities of Xxxxx Xxx; and pursuant to that certain Asset Purchase Agreement
(the "Asset Purchase Agreement"), dated August 6, 2003, by and among GFS
Holding, GFS Orlando, and GFS Stores, and Sellers, GFS Stores and GFS Orlando
will, directly or indirectly, acquire from Sellers certain of the assets of SF
Stores and all of the assets of the Orlando Foodservice division of AFD
(collectively, the "Assets").
B. Following the consummation of the transactions contemplated by the
Share Purchase Agreement and the Asset Purchase Agreement, Buyers will continue
to operate the businesses operated by AFD, SF Stores and Xxxxx Xxx in the State
of Florida (the "Business").
C. Buyers desire to lease from Sellers certain employees of Sellers
who are knowledgeable about the certain aspects of the Business and for the
purpose of performing such tasks as are beneficial to the transition and
ownership of the Business.
D. Buyers have required as a condition to the consummation of the
transactions contemplated by the Share Purchase Agreement and the Asset Purchase
Agreement that Sellers enter into this Agreement.
AGREEMENT
In consideration of the premises set forth above and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Sellers and Buyers agree as follows:
1. Lease of Employees.
1.1 Leased Employees. During the period beginning 12:01 a.m. on the
Effective Date and ending on 11:59 p.m. on the first anniversary of the
Effective Date (the "Lease Period"), and subject to the provisions of this
Agreement, Sellers shall furnish to Buyers the full-
time services of the Leased Employees of Sellers listed on Exhibit "A" attached
hereto (the "Leased Employees").
1.2 Location. The location of work to be performed by of each Leased
Employee shall be as set forth on Exhibit "A" attached hereto, unless otherwise
consented to by Sellers.
1.3 Payment and Employment Policies. Sellers shall have sole
responsibility for: (i) establishment and payment of all wages, salaries and
other forms of compensation for the Leased Employees; (ii) payment of all
payroll, social security and unemployment taxes related to the Leased Employees;
(iii) establishing all personnel policies and employee benefit programs for the
Leased Employees; and (iv) determination of work schedules for the Leased
Employees. Buyers shall have full authority to direct the Leased Employees with
respect to the performance by Leased Employees of their respective Services (as
defined below) to Buyers. Sellers shall use their reasonable diligent efforts to
ensure that the Leased Employees perform the Services (as defined below) in the
best interests of Buyers.
1.4 Employment of Leased Employees. Sellers shall have full
responsibility and authority for decisions regarding termination and
reassignment of Leased Employees. In the event that Buyers provide reasonable
evidence to Sellers that the performance of a Leased Employee is unsatisfactory
or if Buyers notify Sellers that the services of a particular Leased Employee
are no longer needed, then Sellers shall reassign the Leased Employee from
Buyers, subject to and in accordance with the personnel policies of Sellers. In
the event Buyers request the reassignment of the services of a Leased Employee,
or in the event of the resignation, retirement or other termination of services
by a Leased Employee for Buyers, such Leased Employee shall be reassigned to
Sellers, who shall be responsible for taking any action with respect to such
Leased Employee's employment by Sellers. Leased Employees who are reassigned
from Buyers or are terminated during the Lease Period are referred to herein as
"Former Leased Employees." Exhibit "A" shall be revised to exclude such Former
Leased Employees from time to time, as appropriate.
1.5 Permanent Hire. Buyers may, in their discretion and at any time
during the Lease Period, offer to permanently hire any of the Leased Employees
without any additional compensation therefor payable to Sellers, other than for
the payments provided pursuant to this Agreement.
2. Payment For Leased Employees.
2.1 Payment Terms. On or before the 25th day of each calendar month,
Sellers shall issue an invoice to Buyers specifying the Reimbursable Amount (as
defined in Section 2.2 below) for the immediately preceding calendar month.
Buyers shall pay the Reimbursable Amount specified in each such invoice within
ten (10) days after receipt of such invoice.
2.2 Reimbursable Amount. The term "Reimbursable Amount" is an amount
equal to the costs paid and expenses accrued (as hereafter provided) by Sellers
during such period, solely with respect to the Leased Employees that are
providing services to Buyers hereunder, including, without limitation, the
reasonable cost of: (i) salaries, wages and incentive, vacation, holiday and
self-funded sick pay; (ii) Seller-paid social security taxes, medicare taxes
-2-
and other payroll taxes; (iii) premiums paid by Sellers on behalf of Leased
Employees for coverage by any long-term disability insurance, insured short-term
disability benefits, group term life insurance, accidental death and disability
insurance, business travel accident insurance requested by Buyers, and insured
group health, dental or vision plans; (iv) other employee welfare benefits,
fringe benefits or perquisites, including, but not limited to, benefits under
any employee welfare benefit plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended), supplemental unemployment
compensation plan benefits or any other fringe benefit arrangement which does
not constitute an employee benefit plan, or Sellers' costs under any employment
agreement not otherwise described in this Section which have been disclosed to
Buyers; (v) Sellers' contributions to any tax-qualified defined contribution
plan on behalf of Leased Employees (other than employee pretax deferral amounts
included in (i) above, as wages); (vi) Sellers' provided benefits under any
tax-qualified defined benefit pension plan; (vii) Sellers' provided self-funded
group health, dental and vision benefits; (viii) Sellers' costs for
administration of any benefit plan, program or arrangement provided to or for
the benefit of the Leased Employees; (ix) any other government charges relating
to the employment of the Leased Employees, including worker's compensation
claims; (x) amounts paid for the insurance coverage required under Section 3
below, (xi) expenses of complying with and administering any collective
bargaining agreement with respect to Leased Employees; and (xii) any amounts due
Sellers pursuant to Section 4 below, in each case to the extent that such
payments and benefits are generally provided to Sellers' employees as a group.
2.3 Late Payment. Any portion of the Reimbursable Amount that is not
paid as and when due pursuant to the payment terms provided in this Section
shall be considered a "Late Payment." Sellers shall notify Buyers of such Late
Payment, in writing, and interest shall accrue on such Late Payment (or any
portion thereof) from the date that such Late Payment was first invoiced to
Buyers until the date such amount is fully paid to Sellers at the rate equal to
the lesser of: (i) the maximum rate allowed by law, or (ii) the prime rate as
announced from time to time by Xxxxx Fargo Bank, N.A. plus five percentage (5%)
points per annum.
2.4 Covenant of Sellers. Sellers covenant and agree not to increase
the levels of compensation and benefits provided to any of the Leased Employees
during the Lease Period, other than for normal increases in compensation and
benefits to similarly-situated employees of Sellers, and in the ordinary course
and operation of Sellers' business.
3. Sellers' Insurance Obligations.
3.1 Insurance. Sellers shall obtain and maintain at their own expense
general liability, worker's compensation, disability and casualty and other
similar employee benefit insurance, in amounts reasonably sufficient to meet
state requirements, including insurance for any claims, losses, costs and
expenses incurred in connection with the injury or death of a Leased Employee
pursuant to this Agreement.
3.2 Additional Insurance. Sellers shall be required to purchase and
maintain such insurance with limits described in Section 3.3 below and as
approved by Buyers as will protect it from claims set forth below which may
arise out of or result from the Leased Employee's provision of Services (as
defined in Section 5.2 below) under this Agreement; provided,
-3-
however, that Sellers shall not be required to obtain errors and omissions
insurance. Coverage shall include, but not be limited to, the following claims:
(a) Claims under Workmen's Compensation;
(b) Claims for damage because of bodily injury, occupational
sickness or disease, or death of employees;
(c) Claims for damages because of bodily injury, sickness or
disease, or death of any person other than employees of Buyers;
(d) Claims for damages insured by usual personal injury liability
coverage which are sustained by any other person;
(e) Claims for damages because of injury to or destruction of
tangible property, including loss of use resulting therefrom; and
(f) Claims for damages because of bodily injury or death of any
person or property damage arising out of the use of any of Buyers' motor
vehicles.
3.3 Insurance Amounts. Sellers' comprehensive General Liability
Insurance shall be in an amount not less than $1,000,000 for property damage,
injuries, including accidental death, to any one person and subject to the same
limit for each person, and in an amount not less than $1,000,000 for one
occurrence. Sellers shall also obtain and maintain Excess Umbrella Liability
Insurance in an amount of at least $1,000,000 for each occurrence and aggregate.
Sellers shall be required to maintain the above coverages for the period of time
extending throughout the Lease Period.
4. Indemnification.
4.1 Indemnification of Sellers. Buyers shall indemnify and hold
harmless Sellers and their Affiliates, directors, officers, employees,
controlling persons, agents and representatives and their successors and assigns
(collectively, the "Seller Indemnified Parties") from and with respect to any
and all Losses incurred by the Seller Indemnified Parties in connection with or
arising out of (i) Buyers' or their Affiliates', or Buyers' or their Affiliates'
employees', acts or omissions relating to the Leased Employees; (ii) the
employment, the failure to employ or the termination of employment of any Leased
Employee with respect to the Lease Period or in relation to Section 1.4 above
taken by Buyers or their Affiliates or Buyers' or their Affiliates' employees,
including, but not limited to, constructive termination, claims arising under
any employment agreement, collective bargaining agreement, employment law or
regulation, including without limitation Title VII of the Civil Rights Act of
1964, as amended; the Age Discrimination in Employment Act of 1967, as amended;
the Internal Revenue Code of 1986, as amended; the Employee Retirement Income
Security Act of 1974, as amended; the Worker Adjustment Retraining and
Notification Act; or claims arising under any other federal, state, or local
civil rights, employee benefit, labor, contract, tort, or common law; (iii) acts
or omissions of Leased Employees taken at the direction of Buyers' or their
Affiliates' employees; or (iv) the negligent acts or omissions or willful
misconduct of the Leased Employees taken at the direction of Buyers' or their
Affiliates' employees. Buyers' indemnification obligations
-4-
under this Section 4.1 shall not extend to any Losses incurred by any of the
Seller Indemnified Parties as a result of the acts or omissions of the Seller
Indemnified Parties relating to the Leased Employees.
4.2 Survival of Provisions. The indemnification obligations of the
Buyers under this Agreement shall survive any termination of this Agreement for
a period of one (1) year.
5. Services.
5.1 General. Leased Employees are Buyers' agents and will act as
directed by and under the supervision of Buyers and their employees, and will
confer with Buyers regarding the Leased Employee's Services (as defined in
Section 5.2 below).
5.2 Services. Buyers and Sellers hereby covenant and agree that in
return for the fee provided for in Section 2 above, Sellers shall cause the
Leased Employees to devote their full time and efforts to the diligent and
faithful performance of such tasks as are beneficial to the transition and
ownership of the Business from Buyers to Sellers (the "Services").
6. Maintenance of Records.
6.1 Buyers and Sellers shall each have the following rights and
obligations with respect to the maintenance of records and the following rights
with respect to the inspection of the records maintained by the other:
(a) Buyers shall maintain accurate records of all hours worked by
each Leased Employee in such form as Sellers shall reasonably request and,
at such times as Sellers shall reasonably request, Buyers shall furnish
such records to Sellers.
(b) All business records and information relating to the business
activities of either Buyers or Sellers shall be the property of that party.
(c) Each of Buyers and Sellers shall safeguard all records
maintained by it pursuant to this Agreement for a period of six years, or
if longer, as required by applicable law.
(d) The parties shall give each other and their respective
counsel, auditors and other authorized representatives reasonable access to
each other's books and records relating to Leased Employees and Former
Leased Employees, including, without limitation, correspondence, accounting
records, personnel files, and legal complaints, upon reasonable notice and
during normal business hours, as may be necessary for the performance of
the respective duties and obligation hereunder; provided, however, that any
review of Sellers' books and records pursuant to this Section shall be
conducted in a manner as not to interfere unreasonably with the conduct of
the business of Sellers.
7. Force Majeure.
7.1 Neither Sellers nor Buyers shall be responsible to the other for
any delay in or failure of performance of its obligations under this Agreement
to the extent such delay or failure
-5-
is attributable to any cause beyond its reasonable control, including, without
limitation, any act of God, fire, accident, strike or other labor difficulties,
war, embargo or other governmental act, or riot that, in the case of Sellers,
prevents Sellers from providing Leased Employees under this Agreement, or, in
the case of Buyers, prevents Buyers from utilizing the services of Leased
Employees under this Agreement; provided that the party affected thereby gives
the other party prompt notice of the occurrence of any event which has caused or
is likely to cause any such delay or failure, setting forth its best estimate of
the length of any delay and any possibility that it will be unable to resume
performance; and provided further that said affected party shall use its
commercially reasonable efforts to expeditiously overcome the effects of that
event and resume performance or utilization.
8. Termination and Replacement.
8.1 Termination. This Agreement may be terminated:
(a) By either Sellers or Buyers upon not less than fifteen (15)
days' prior written notice to the other party in the event that such other
party has materially breached its obligations under this Agreement and has
failed or refused to remedy such breach within fifteen (15) days after
written demand therefor is given by the aggrieved party to the other or in
the event that such other party has materially breached the same obligation
under this Agreement more than once (regardless of whether such breach is
remedied);
(b) By either Sellers or Buyers upon written notice to the other
party, effective immediately, in the event the other party shall become the
subject (voluntarily or involuntarily) of any proceeding relating to
bankruptcy or insolvency, or make an assignment or other arrangement for
the benefit of its creditors, or be dissolved or liquidated (except as a
consequence of a merger, consolidation or other corporate reorganization
not involving the insolvency of such dissolved or liquidated party);
8.2 Obligations Upon Termination. Upon termination or expiration of
this Agreement, Buyers shall be liable to Sellers for all unpaid Reimbursable
Amounts attributable to any period(s) prior to the termination of this
Agreement.
9. Sellers Not Fiduciary.
9.1 Nothing set forth in this Agreement shall be deemed to constitute
Sellers a fiduciary of Buyers, nor shall Sellers have any liability to Buyers
with respect to the service of the Leased Employees provided under this
Agreement other than as expressly set forth in Section 4 above.
10. Limited Warranty; Limitation of Liability; Compliance with Employment Laws.
10.1 Warranties of Compliance with Employment Laws. As an inducement
to the parties to enter into this Agreement, Buyers and Sellers represent,
warrant and covenant to each other that they each will comply in all material
respects with all applicable federal, state and local laws, rules, regulations
and ordinances applicable to the Leased Employees and their services hereunder,
to the extent that such party exclusively controls a matter or supervises a
Leased Employee with respect to a matter, including without limitation, those
relating to
-6-
workers' compensation, labor and employment relations, employee health and
safety, and employment discrimination.
10.2 Limitation of Warranty; Limitation of Liability. Except as
expressly provided in Section 10.1, Leased Employees are provided under this
Agreement without warranty of any kind whatsoever. For breaches of warranty and
other breaches of contract with respect to this Agreement, Seller's liability
shall in no event exceed the total amount paid by Buyers under this Agreement.
Without limitation, Sellers SHALL NOT BE SUBJECT TO AND EXPRESSLY DISCLAIM: (A)
ANY OTHER OBLIGATIONS OR LIABILITIES ARISING OUT OF BREACH OF CONTRACT OR
WARRANTY; (B) ANY OBLIGATIONS OR LIABILITIES WHATSOEVER ARISING FROM TORT CLAIMS
(INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR ARISING UNDER OTHER THEORIES OF
LAW WITH RESPECT TO THE UNDERTAKINGS, ACTS OR OMISSIONS OF LEASED EMPLOYEES
HEREUNDER; AND (C) CONSEQUENTIAL, INCIDENTAL, INDIRECT OR CONTINGENT DAMAGES
WHATSOEVER WITH RESPECT TO THIS AGREEMENT, OR ANY UNDERTAKINGS, ACTS OR
OMISSIONS OF LEASED EMPLOYEES PROVIDED HEREUNDER.
11. Miscellaneous Provisions.
11.1 Confidentiality. Each of Sellers and Buyers (as appropriate, the
"Promisor") covenant and agree to and will cause their respective authorized
agents, representatives, affiliates, employees, officers, directors,
accountants, counsel and other designated representatives (collectively,
"Representatives") to (i) treat and hold as confidential (and not disclose or
provide access to any person to) all records, books, contracts, instruments,
computer data and other data and information (collectively, "Information")
concerning the other party (the "Promisee") or the Leased Employees in the
Promisor's possession or furnished by the Promisee or its Representatives
pursuant to this Agreement, (ii) in the event that Promisor or its
Representatives become legally compelled to disclose any such Information,
provide the Promisee with prompt written notice of such requirement so that the
Promisee may seek a protective order or other remedy or waive compliance with
this Section 11.1, and (iii) in the event that such protective order or other
remedy is not obtained, or the Promisee waives compliance with this Section
11.1, furnish only that portion of such Information which is legally required to
be provided and exercise Promisor's best efforts to obtain assurances that
confidential treatment will be accorded such Information; provided, however,
that this sentence shall not apply to any Information that, at the time of
disclosure, is available publicly and was not disclosed in breach of this
Agreement by such party or its Representatives; and provided further, however,
that the provisions of clauses (i) and (ii) above shall not preclude a party
from disclosing Information to its Representatives (provided that each such
Representative shall be advised of the confidential nature of such Information)
or from disclosing Information to or filing Information with any governmental
authority or agency with jurisdiction over such party. Each party agrees and
acknowledges that remedies at law for any breach of its obligations under this
Section 11.1 are inadequate and that in addition thereto the other party shall
be entitled to seek equitable relief, including injunction and specific
performance, in the event of any such breach, without the necessity of
demonstrating the inadequacy of monetary damages. The provisions of this Section
11.1 shall not apply to the extent any such Information is required to be
disclosed by applicable law.
-7-
11.2 Notices. All necessary notices, demands, requests and other
communications required or permitted to be given hereunder shall in every case
be in writing and shall be deemed duly given (a) when delivered personally, (b)
upon receipt or refusal of receipt, if sent by registered or certified mail, in
all such cases with postage prepaid, return receipt requested, or (c) the next
business day if delivered by a recognized overnight courier service, airbill
prepaid, designated for next business day delivery, to the parties at the
addresses as set forth below or at such other addresses as may be furnished in
writing:
If to Buyers: Xxxxx Xxxxxxxxx
Xxxxxx Food Service, Inc.
X.X. Xxx 0000
Xxxxx Xxxxxx, Xxxxxxxx 00000
and to: Xxxxx X. Xxxx
00000 Xxxx Xxxxxxxx Xxxxx
X.X. Xxx 000
Xxxxxx, Xxxxxxxx 00000-0000
With a copy to: Miller, Johnson, Xxxxx & Xxxxxxxxx, P.L.C.
000 Xxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
If to Sellers: Xxxxxx Xxxxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
With a copy to: Xxxxxx X. Xxxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
With a copy to: Xxx Xxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
With a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
And a copy to: Xxxxx & Xxxxxxx
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx XX
-8-
11.3 Jurisdiction.
(a) In the event any dispute arises out of this Agreement or any of
the transactions contemplated by this Agreement, each of the parties hereto
consents to submit itself to the personal jurisdiction of any federal court
in the state of Delaware and, in case such court refuses jurisdiction then
each of the parties consents to submit itself to the personal jurisdiction
of any state court in the state of Delaware. Each of the parties further
agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from such court, and
agrees that, except as permitted pursuant to this Section 11.3, it will not
bring any action relating to this Agreement or any of the transactions
contemplated by this Agreement in any other court other than a federal
court in the state of Delaware.
(b) In the event the state court specified in Section 11.3(a) refuses
to exercise jurisdiction over the parties hereto or the subject matter at
issue, then with respect to any legal action or proceeding brought by any
of the Seller Parties against any of the Buyer Parties arising out of or
relating to this Agreement or any of the transactions contemplated by this
Agreement, each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of any federal court within the jurisdiction of the
United States District Court for the Western District of Michigan (and
each appellate court thereof) or any state court in the state of
Michigan;
(ii) agrees that any federal court within the jurisdiction of the
United States District Court for the Western District of Michigan or
any state court in the state of Michigan shall be deemed to be a
convenient forum; and
(iii) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any federal
court within the jurisdiction of the United States District Court for
the Western District of Michigan or any state court in the state of
Michigan, any claim that such party is not subject personally to the
jurisdiction of such court, that such legal proceeding has been
brought in an inconvenient forum, or that the venue of such proceeding
is improper.
(c) In the event the state court specified in Section 11.3(a) refuses
to exercise jurisdiction over the parties hereto or the subject matter at
issue, then with respect to any legal action or proceeding brought by any
of the Buyer Parties against any of the Seller Parties arising out of or
relating to this Agreement or any of the transactions contemplated by this
Agreement, each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of any federal court within the jurisdiction of the
United States
-0-
Xxxxxxxx Xxxxx for the Central District of California (and each
appellate court thereof) or any state court in the state of
California;
(ii) agrees that any federal court within the jurisdiction of the
United States District Court for the Central District of California or
any state court in the state of California shall be deemed to be a
convenient forum; and
(iii) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any federal
court within the jurisdiction of the United States District Court for
the Central District of California or any state court in the state of
California, any claim that such party is not subject personally to the
jurisdiction of such court, that such legal proceeding has been
brought in an inconvenient forum, or that the venue of such proceeding
is improper.
(d) The parties hereby waive any right to a jury trial.
11.4 Further Assurances. From time to time, at the request of the
other party hereto and at the expense of the party so requesting (unless the
requesting party is entitled to indemnification therefor under Section 4), each
of the parties hereto shall execute and deliver to such requesting party such
documents and take such other action as such requesting party may reasonably
request in order to consummate more effectively the transactions contemplated
hereby.
11.5 Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
11.6 Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This Agreement may not
be amended except by a written agreement executed by the parties to be charged
with the amendment.
11.7 Assignments, Successors, and No Third-Party Rights. Neither party
may assign any of its rights or obligations under this Agreement without the
prior consent of the
-10-
other parties, except that GFS Holding may assign any of its rights under this
Agreement to any Affiliate of GFS Holding. Subject to the preceding sentence,
this Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the benefit of the successors and permitted assigns of the parties.
Nothing expressed or referred to in this Agreement will be construed to give any
Person other than the parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and conditions are for
the sole and exclusive benefit of the parties to this Agreement and their
successors and assigns.
11.8 Severability. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
11.9 Section Headings, Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
11.10 Preamble; Recitals. The Recitals set forth in the Preamble
hereto are hereby incorporated and made a part of this Agreement.
11.11 Governing Law. This Agreement will be governed by the internal
laws of the State of Delaware without regard to conflicts of laws principles.
11.12 No Strict Construction. The language used in this Agreement will
be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction will be applied against any
party hereto by virtue of having drafted this Agreement or otherwise.
11.13 Dispute Resolution. Except as hereinafter provided in this
Section 11.13 all claims, controversies, differences, or disputes between or
among any of the parties hereto arising from or relating to this Agreement,
including claims by one party that another party or parties hereto have failed
to perform any of their obligations hereunder (collectively, "Agreement
Disputes"), shall be resolved as follows:
(a) Facilitative Mediation. The parties to an Agreement Dispute
shall first attempt to resolve such Agreement Dispute by means of a
mediation conducted in the following manner. A party desiring mediation of
any Agreement Dispute shall give or shall have given a written notice, in
the manner set forth in Section 11.2 hereof (a "Dispute Notice"), to the
other party or parties setting forth the nature of the dispute and the
relief intended to be sought and shall submit such Agreement Dispute for
resolution by facilitative mediation in Chicago, Illinois, under the
Commercial Mediation Rules (but not otherwise under the auspices) of the
American Arbitration Association (the "AAA")
-11-
in effect on the date of this Agreement, unless the parties have agreed, in
writing, to resolve any such dispute by other means. Each party agrees that
it will submit to and shall not challenge or object to the jurisdiction
(either personal or subject matter) or the venue of such mediation in
Chicago, Illinois.
(b) Legal Proceedings. If any Agreement Dispute has not been
resolved by mediation as provided above within sixty (60) days after
submission thereof, then either party may commence a suit or legal action
or an action at equity to enforce its rights or the other party's
obligations or recover any damages arising from the other party's breach or
such other relief as may be appropriate under the circumstances.
(c) Attorney Fees and Other Costs. The prevailing party in any
mediation or any action or legal or other proceeding brought with respect
to an Agreement Dispute shall be entitled to recover the reasonable fees
and disbursements of its attorneys, accountants, and expert witnesses in
connection with any such mediation or any action or legal or other
proceeding brought in accordance with the provisions hereof.
(d) Exceptions for Equitable Relief. Notwithstanding the
foregoing or anything to the contrary contained elsewhere in this
Agreement, a party may bring a proceeding against any other party hereto
for specific performance or injunctive or other forms or equitable relief
in the state or federal courts pursuant to the procedures set forth in
Section 11.3 without having to submit the matter or Agreement Dispute in
question to mediation as hereinabove set forth, provided, however, that
such party shall not seek any monetary award or relief in such action or
proceeding unless its failure to do so would prejudice such party's rights
or ability to seek such monetary award or relief in another action or
proceeding.
11.14 Counterparts. This Agreement may be executed in two or more
counterparts, each or which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
IN WITNESS WHEREOF Sellers and Buyers have executed this Agreement as
of the date set forth in the first paragraph hereof.
"SFI"
SMART & FINAL INC.
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Its:
----------------------------------
-12-
"AFD"
AMERICAN FOODSERVICE DISTRIBUTORS
a California corporation
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Its:
----------------------------------
"SF Stores"
SMART & FINAL STORES CORPORATION
a California corporation
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------------
Its:
---------------------------------
"GFS Holding"
GFS HOLDING, INC.
a Delaware corporation
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its:
----------------------------------
"Xxxxx Xxx"
XXXXX XXX COMPANY
a Florida corporation
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its:
----------------------------------
-13-
"GFS Stores"
GFS STORES, LLC
a Delaware limited liability
company
By: GFS HOLDING, INC.
Its: Manager
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its:
----------------------------------
"GFS Orlando"
GFS Orlando, LLC
a Delaware limited liability
company
By: GFS HOLDING, INC.
Its: Manager
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its:
----------------------------------
-14-
EXHIBIT "A"
TO
EMPLOYEE LEASING AGREEMENT
LEASED EMPLOYEES LOCATION
Xxxx Xxxxxxxx Miami
Xxxxxxx Xxxxxx Miami
A-1
XXXXX & LARDNER
0000 XXXXXXX XXXX XXXX, XXXXX 0000
XXX XXXXXXX, XXXXXXXXXX 00000-0000
000.000.0000 TEL
000.000.0000 FAX
xxx.xxxxxxxxxxxx.xxx
WRITER'S DIRECT LINE
310.277.2223
CLIENT/MATTER NUMBER
024041-0111
September 7, 2003
GFS Holding, Inc.
c/o Xxxxx Xxxxxxxxx
Xxxxxx Food Service, Inc.
X.X. Xxx 0000
Xxxxx Xxxxxx, Xxxxxxxx 00000
Re: Share Purchase Agreement Dated as of August 6, 2003
Ladies and Gentlemen:
We have acted as counsel for Smart & Final Inc., a Delaware
corporation ("Smart & Final"), and American Foodservice Distributors, a
California corporation ("American Foodservice" and, together with Smart & Final,
"Sellers"), in connection with the transactions pursuant to and referenced in
the Share Purchase Agreement (the "Share Purchase Agreement") dated as of August
6, 2003 and executed by and among Sellers and GFS Holding, Inc., a Delaware
corporation ("Buyer"). Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to such terms in the Share Purchase Agreement.
We are rendering this opinion to you pursuant to Section 1.6(a)(xiii) of the
Share Purchase Agreement.
In our capacity as counsel to Sellers, we have examined originals, or
copies identified to our satisfaction as being true copies of such corporate
records, agreements, instruments and other documents of Sellers as in our
judgment are necessary or appropriate to enable us to render the opinions set
forth herein. These records, agreements, instruments and documents include,
without limitation:
a. The Share Purchase Agreement, and the Schedules thereto;
b. An Escrow Agreement (the "Escrow Agreement") dated September ,
---
2003 and executed by and among Sellers, Smart & Final Stores Corporation, a
California corporation ("SF Stores"), Buyer, GFS Stores, LLC, a Delaware
limited liability company ("GFS Stores"), GFS Orlando, LLC, a Delaware
limited liability company ("GFS Orlando"), Xxxxx Xxx Company, a Florida
corporation ("Xxxxx Xxx") and Xxxxx Fargo Bank, N.A., as Escrow Agent;
BRUSSELS DETRIOT MILWAUKEE SAN DIEGO TAMPA
CHICAGO JACKSONVILLE ORLANDO SAN DIEGO/DEL MAR TOKYO
DENVER LOS ANGELES SACRAMENTO SAN XXXXXXXXX XXXXXXXXXX. D.C.
MADISON TALLAHASSEE WEST PALM BEACH
XXXXX & XXXXXXX
ATTORNEYS AT LAW
GFS Holding, Inc.
September 7, 2003
Page 2
c. A Noncompetition Agreement (the "Noncompetition Agreement") dated
September , 2003 and executed by and among Sellers, SF Stores,, Buyer,
---
Xxxxx Xxx, GFS Stores and GFS Orlando;
d. A Software License, Use and Support Agreement (the "Software
License Agreement") dated as of September , 2003 and executed by and
---
among Sellers and SF Stores, and Buyer, Xxxxx Xxx, GFS Stores and GFS
Orlando;
e. A Tradename and Trademark License Agreement (the "Trademark
License Agreement") dated as of September , 2003 and executed by and
---
among Sellers, SF Stores, Buyer, Xxxxx Xxx, GFS Stores and GFS Orlando;
f. A Release (the "Release") dated September , 2003 and executed
---
by Sellers;
g. A Transitional Services Agreement (the "Transitional Services
Agreement") dated as of September , 2003 and executed by and among
---
Sellers, SF Stores, Buyer, Xxxxx Xxx, GFS Stores and GFS Orlando;
h. An Employee Leasing Agreement (the "Employee Leasing Agreement")
dated as of September , 2003 and executed by and among Sellers, SF
---
Stores, Buyer, Xxxxx Xxx, GFS Stores and GFS Orlando;
i. A Real Estate Purchase Agreement (the "Real Estate Purchase
Agreement") dated as of September , 2003 and executed by and between
---
Smart & Final and , with respect to the Frozen
-------------------------
Food Facility and the Parking Lot;
j. A Vendor Contract Participation Agreement (the "Vendor Contract
Participation Agreement") dated as of September , 2003 and executed and
---
among the Sellers, SF Stores, Buyer, Xxxxx Xxx, GFS Stores and GFS Orlando
k. Amendment No. 5 ("Amendment No. 5 to the Lease Agreement"), dated
, 2003, to that certain Lease Agreement (and related documents)
----- ---
dated as of November 30, 2001 between Xxxxx Fargo Bank, NW, N.A., as the
Owner Trustee and Lessor and Smart & Final Inc., as Lessee, as previously
amended by amendments Nos. 1-4 thereto dated June 4, 2002, February 14,
2003, June 1, 2003 and July 11, 2003, respectively;
l. Amendment Xx. 0 ("Xxxxxxxxx Xx. 0 to the Credit Agreement"),
dated , 2003, to that certain Credit Agreement (and related
------ ---
documents), dated as of November 30, 2001, among Smart & Final Inc., as
Borrower, and various parties, as Lenders, BNP Paribas, as Administrative
Agent and Lead Arranger, Xxxxxx Trust & Savings Bank, as Syndication Agent,
and Cooperative Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank
Nederland", as Documentation Agent, as previously amended by amendments
Nos. 1-4 thereto dated June 4, 2002, February 18, 2003, June 1, 2003 and
July 11, 2003, respectively (referred to along with the Escrow Agreement,
the Noncompetition Agreement, the Software
XXXXX & XXXXXXX
ATTORNEYS AT LAW
GFS Holding, Inc.
September 7, 2003
Page 3
License Agreement, the Trademark License Agreement, the Release, the
Transitional Services Agreement, the Employee Leasing Agreement, the Real
Estate Purchase Agreement, the Vendor Contract Participation Agreement,
Amendment No. 5 to the Credit Agreement, and Amendment No. 5 to the Lease
Agreement, collectively, as the "Related Agreements");
m. The Certificate of Incorporation of Smart & Final, certified on
August 27, 2003 by the Delaware Secretary of State;
n. The Articles of Incorporation of American Foodservice, certified
on August 29, 2003 by the California Secretary of State;
o. The Bylaws of Smart & Final, certified by the Secretary or
Assistant Secretary of Smart & Final;
p. The Bylaws of American Foodservice, certified by the Secretary or
Assistant Secretary of American Foodservice;
q. A Certificate of Good Standing as to Smart & Final, certified on
August 21, 2003 by the Delaware Secretary of State;
r. A Certificate of Good Standing as to Smart & Final, certified on
August 29, 2003 by the Florida Secretary of State;
s. A Certificate of Status as to American Foodservice, certified on
September 2, 2003 by the California Secretary of State;
t. A Certificate of Good Standing as to American Foodservice,
certified on August 29, 2003 by the Florida Secretary of State;
u. The resolutions of the Board of Directors of Smart & Final with
respect to the Share Purchase Agreement and the Related Agreements,
certified by the Secretary or Assistant Secretary of Smart & Final;
v. The resolutions of the Board of Directors of American Foodservice
with respect to the Share Purchase Agreement and the Related Agreements,
certified by the Secretary or Assistant Secretary of American Foodservice;
w. The Officer's Certificate of Smart & Final delivered to us in
connection with this opinion, a copy of which is attached hereto as Exhibit
"A"; and
x. The Officer's Certificate of American Foodservice delivered to us
in connection with this opinion, a copy of which is attached hereto as
Exhibit "B".
For the purposes of our opinions, we have assumed the authenticity of
all documents submitted to us as originals, the conformity to the originals of
all documents submitted to us as
XXXXX & LARDNER
ATTORNEYS AT LAW
GFS Holding, Inc.
September 7, 2003
Page 4
copies, and the authenticity of the originals of all documents submitted to us
as copies. We have also assumed the genuineness of the signatures of persons
signing all documents in connection with which these opinions are rendered. We
have further assumed: (i) the authority of such persons signing all documents on
behalf of the parties thereto other than Sellers; (ii) the due authorization of
all documents by the parties thereto other than Sellers; (iii) the due execution
and delivery of all documents by the parties thereto other than Sellers; (iv)
the absence of duress, fraud, undue influence, or mutual mistake of material
fact on the part of the parties; (v) that the choice of law provisions in the
Share Purchase Agreement and the Related Agreements were not made with a view
towards evading otherwise applicable law or the consequences thereof; and (vi)
that the application of Delaware law to the Share Purchase Agreement and the
Related Agreements would not be contrary to a fundamental public policy of a
jurisdiction that has a materially greater interest than the State of Delaware
in the determination of a particular question at issue. As to any facts material
to the opinions set forth herein, which we have not independently established or
verified, we have relied solely upon the representations and warranties of the
officers of Sellers, the representations and warranties of Sellers contained in
the Share Purchase Agreement and the Related Agreements, and upon the Officer's
Certificates from each of the Sellers, but without any further independent
investigation. In addition, we have obtained and relied upon such certificates
from public officials as we have deemed necessary. We have assumed that such
representations and warranties, and such certifications, are true, correct and
complete.
As used in this opinion, the expression "to our knowledge" with
reference to matters of fact: (i) means that, after an examination of documents
made available to us by or on behalf of Sellers and based on the representations
and warranties of the officers of Sellers, the representations and warranties of
Sellers contained in the Share Purchase Agreement and the Related Agreements,
and upon the Officer's Certificates from each of the Sellers, but without any
further independent investigation, we find no reason to believe that the
opinions set forth herein are factually incorrect; and (ii) refers to the
current actual knowledge of the attorneys of this law firm who have worked on
matters for Sellers in connection with the consummation of the transactions
contemplated by the Share Purchase Agreement and the Related Agreements. Except
to the extent expressly set forth hereinabove, we have not undertaken any
independent investigation to determine the existence or absence of any fact, and
no inference as to our knowledge of the existence or absence of any fact should
be drawn from our representation of Sellers or the rendering of the opinions set
forth herein.
In addition to the foregoing, in rendering the opinions set forth
herein, we note that the Share Purchase Agreement and the Related Agreements
state that they are to be governed by Delaware law. We advise you that we are
not admitted to practice in that state, although we are familiar with the
corporate laws of that state.
Based solely upon the foregoing, and subject to the qualifications and
exceptions heretofore and hereinafter set forth, we are of the opinion that:
1. Smart & Final is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Delaware, is qualified to
transact business and is in corporate good standing under the laws of the State
of Florida, and has all corporate power required to carry on
XXXXX & XXXXXXX
ATTORNEYS AT LAW
GFS Holding, Inc.
September 7, 2003
Page 5
its business as now conducted and as proposed to be conducted and to execute,
deliver and perform its obligations under the Share Purchase Agreement and the
Related Agreements.
2. American Foodservice is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of California, is
qualified to transact business and is in corporate good standing under the laws
of the State of Florida, and has all corporate power required to carry on its
business as now conducted and as proposed to be conducted and to execute,
deliver and perform its obligations under the Share Purchase Agreement and the
Related Agreements.
3. American Foodservice is the sole owner of all of the outstanding
shares of capital stock (the "Shares") of Xxxxx Xxx. All the Shares have been
duly authorized and validly issued and are fully paid and non-assessable and,
when transferred to Buyer, will be transferred free and clear of any security
interest, claim, encumbrance, or adverse interest of any nature, except for such
restrictions as may be imposed by state or federal securities law.
4. The execution, delivery and performance by Sellers of the Share
Purchase Agreement and the Related Agreements have been duly authorized by all
necessary corporate action, and do not violate or contravene the Certificate of
Incorporation or Articles of Incorporation, as applicable, or the Bylaws of
Sellers. The Share Purchase Agreement and the Related Agreements have been duly
executed by and delivered on behalf of Sellers.
5. The Share Purchase Agreement and the Related Agreements have been duly
executed and delivered and constitute the legally valid and binding obligation
of Sellers and, other than the Noncompetition Agreement, are enforceable against
Sellers in accordance with their terms, except as enforceability may be limited
by any bankruptcy, insolvency, reorganization, moratorium or other laws or
equitable principles affecting creditors' rights generally, and except as
provided further below in this letter.
6. Except as disclosed in the Schedules to the Share Purchase Agreement,
the execution, delivery and performance by Sellers of the Share Purchase
Agreement and the Related Agreements: (i) requires no approval, filing with,
authorization, consent, adjudication or order of any governmental authority
which has not been obtained; (ii) does not violate any current law or regulation
of the States of California or Delaware, or the federal laws of the United
States of America binding on Sellers which a lawyer, using customary
professional diligence, would reasonably recognize as applicable to Sellers and
the transactions contemplated by the Share Purchase Agreement and the Related
Agreements; (iii) to the best of our knowledge, does not violate any order,
writ, judgment, injunction, decree or award binding on Sellers; and (iv) subject
to the exceptions set forth below, does not violate, contravene or constitute a
default under any material agreement binding upon Sellers.
The foregoing opinions are subject to the following additional
exceptions assumptions and qualifications:
1. We express no opinion as to the applicability of, compliance with, or
effect of:
XXXXX & XXXXXXX
ATTORNEYS AT LAW
GFS Holding, Inc.
September 7, 2003
Page 6
a. any principles of public policy which may limit enforceability of
the Share Purchase Agreement or any of the Related Agreements;
b. the effect of bankruptcy, insolvency, reorganization, fraudulent
transfer, fraudulent conveyance, moratorium or other similar laws or
judicially developed doctrine (such as substantive consolidation or
equitable subordination) now or hereafter in effect relating to or
affecting the rights and remedies of creditors generally;
c. the effect of procedural due process, general principles of
equity including, without limitation, principles of commercial
reasonableness, good faith and fair dealing, whether such enforcement is
considered in a proceeding in equity or at law, and the discretion of the
court before which any proceeding therefor may be brought, including the
court's failure or refusal to enforce provisions of agreements or documents
if enforcement thereof is based upon defaults or breaches which are
immaterial to the ultimate performance contemplated thereby or for other
reasons deemed equitable by the court;
d. the availability of the remedy of specific performance, or of any
other equitable remedy or relief to enforce any right under any agreement
or document; and
e. the enforceability, in any particular circumstance, of any
provision of the Share Purchase Agreement or the Related Agreements which
provides for the severability of illegal or unenforceable provisions.
For purposes of the opinions in paragraphs 1 and 2 above, we have
relied exclusively upon a certificate issued by a governmental authority in each
relevant jurisdiction, and statements and representations of officers of
Sellers. Such opinions are not intended to provide any conclusion or assurance
beyond that conveyed by such certificate. We have assumed without investigation
that there has been no relevant change or development between the date of such
certificate and the date of this letter.
In addition, in rendering the opinions set forth above, we have
assumed that the transactions described in or contemplated by the Share Purchase
Agreement have been or will be consummated consistent with the descriptions of
such transactions as set forth in the Share Purchase Agreement and the Related
Agreements as provided to us, and in accordance with the operative documents
relating to such transactions.
The opinions set forth above are based on the laws of the States of
California and Delaware only as they exist as of the date of this letter, and we
assume no obligation to modify, supplement or update this letter to reflect any
facts or circumstances which may hereafter come to our attention or on account
of changes in such laws or court decisions which may hereafter occur.
Furthermore, we advise you that we are not admitted to practice in the State of
Delaware. As to matters of Delaware law set forth in this letter, we advise you
that, with your permission, we have relied on the opinion of The Bayard Firm.
XXXXX & XXXXXXX
ATTORNEYS AT LAW
GFS Holding, Inc.
September 7, 2003
Page 7
This opinion is expressly limited to the matters set forth above and
we render no opinion, whether by implication or otherwise, as to any other
matter relating to Sellers or to any investment therein, or under any other law.
This opinion is solely for your benefit and, without our prior written
consent, shall not be quoted in whole or in part, summarized or otherwise
referred to, relied upon or filed with or supplied to any other person or
entity.
Very truly yours,
XXXXX & LARDNER
EXECUTION VERSION
AGREEMENT FOR PURCHASE AND SALE OF REAL ESTATE
THIS AGREEMENT FOR PURCHASE AND SALE OF REAL ESTATE (this "Agreement")
is made this day of September, 2003, between SMART & FINAL, INC., a
------
Delaware corporation, of 000 Xxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxxx 00000 (the
"Seller") and XXXXX XXX PROPERTIES, LLC, a Delaware limited liability company,
of 000 - 00xx Xxxxxx, X.X., Xxxxx Xxxxxx, Xxxxxxxx 00000 (the "Buyer").
RECITALS:
A. Seller, American Foodservice Distributors ("AFD") and GFS
Holding, Inc. ("GFS") have heretofore entered into that certain Share Purchase
Agreement dated as of August 6, 2003 (the "SPA"), pursuant to which GFS has
agreed to purchase all of the shares of Xxxxx Xxx Company, a Florida
corporation, from Seller and AFD.
B. Seller currently leases the Subject Property (as defined in
Section 1(b) below) from Xxxxx Fargo Bank Northwest, National Association, not
in its individual capacity but solely as owner trustee under the S&F Trust
1998-1 (the "Owner Trustee") pursuant to that certain Lease Agreement dated as
of November 30, 2001 (as amended and supplemented to date, the "Synthetic
Lease," and together with the Participation Agreement, the Trust Agreement, the
Credit Agreement, and the Mortgage Instruments (as each such term is defined in
Appendix A to the Participation Agreement) relating to the Subject Property,
referred to herein collectively as the "Synthetic Lease Documents"). A copy of
each of the Synthetic Lease Documents, redacted to preserve the confidentiality
of the financial terms of the transaction contemplated thereby, has previously
been provided by Seller to Buyer.
C. This Agreement is being entered into pursuant to and in
contemplation of the consummation of the transactions contemplated by the SPA.
D. Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, the Subject Property, all on the terms and subject to the
conditions set forth below.
IN CONSIDERATION OF THE MUTUAL COVENANTS CONTAINED IN THIS AGREEMENT,
THE PARTIES AGREE AS FOLLOWS:
1. Property Included in Purchase and Sale Agreement.
(a) Seller agrees to sell to Buyer, and Buyer agrees to purchase from
Seller, subject to the terms of this Agreement, the real property, improvements,
fixtures and appurtenances located at 0000 XX 000xx Xxxxxxx, Xxxxx, Xxxxxxx,
together with an unimproved parcel of land located nearby, all of which real
property is more particularly
1
described on attached Exhibit A (the "Real Property"). The legal description for
the Real Property shall be subject to verification by Buyer prior to Closing (as
defined in Section 13 of this Agreement) based on the survey and title
commitment to be provided by Seller under this Agreement.
(b) Also included in this sale at no additional cost to Buyer are the
items of equipment and other personal property associated with the Real Property
and leased to Seller pursuant to the Synthetic Lease (the "Personal Property").
The Real Property and the Personal Property are collectively referred to in this
Agreement as the "Subject Property."
(c) For the avoidance of doubt, Seller and Buyer mutually acknowledge
and agree that the Subject Property shall include all improvements located on
the Real Property, all fixtures affixed to such improvements (including, without
limitation, all shelving, racks and refrigeration units or equipment), all
beneficial easements, including, without limitation, easements relating to
ingress and egress, all rights, permits, licenses and appurtenances pertaining
to the Real Property, if any, and all of Seller's right, title and interest in
all public ways adjoining the same.
2. Purchase Price. The purchase price for the Subject Property shall
be the sum of Eleven Million Two Hundred Forty Thousand Dollars ($11,240,000.00)
(the "Purchase Price").
3. Payment of Purchase Price; Payment by Seller.
(a) The Purchase Price shall be paid by Buyer at Closing in the form
of cashier's check or bank money order or by wire transfer of immediately
available funds.
(b) Concurrently with the payment of the Purchase Price by Buyer at
Closing, Seller shall pay to Buyer the sum of One Million Dollars ($1,000,000)
in the form of cashier's check or bank money order or by wire transfer of
immediately available funds as payment for certain improvements reflected on the
books of Xxxxx Xxx Company.
4. Taxes and Assessment; Utilities and Rents.
(a) Seller shall assume and pay all real estate and personal property
taxes ("Taxes") on the Subject Property which are billed or become due and
payable on or before the Closing Date (as defined in Section 13 of this
Agreement) and all outstanding special assessments, including any certified
municipal or county special assessments, which have been levied or assessed or
which are a lien against the Subject Property as of the Closing Date whether due
or not. All Taxes coming due and payable during the calendar year in which the
Closing occurs shall be prorated between Buyer and Seller as of the Closing Date
with the Seller being responsible for that portion of such Taxes allocable to
the period from January 1 of the year of Closing to the Closing Date and the
Buyer being responsible for the balance of such Taxes. If the precise amount of
such Taxes is not known as of the Closing Date, such Taxes shall be estimated
based
2
upon the best available information. Notwithstanding the foregoing
provisions of this Section 4(a), Seller and Buyer expressly acknowledge and
agree that, as specified in Section 13, Buyer shall be solely responsible for
paying any and all documentary stamps/transfer taxes and surtaxes which are
payable upon the recording of the deed as to the conveyance to Buyer only.
(b) All bills for utility services to the Subject Property shall
either (i) be paid by Seller up to the Closing Date or (ii) be fully accrued up
to the Closing Date as a current liability on the Final Closing Financial
Statement (as defined in the SPA) of Xxxxx Xxx Company (in which case Seller
shall not be obligated to pay such bills because the accrued liability will be
taken into account in determining the Net Working Capital (as defined in the
SPA) of Xxxxx Xxx Company and therefore in adjusting the purchase price payable
by GFS pursuant to the SPA). Any prepaid rents and other amounts paid under any
written and oral leases covering all or any portion of the Subject Property (the
"Leases") shall be prorated to the Closing Date. All claims for unpaid rent
shall be assigned to Buyer without additional consideration.
5. Conveyance of Title; Indemnity by Seller.
(a) Fee simple title to the Subject Property shall be conveyed to
Buyer at Closing pursuant to a deed direct from the Owner Trustee, which deed,
Buyer hereby expressly acknowledges and agrees, may take the form of a quitclaim
deed so long as such quitclaim deed is satisfactory to the Title Company (as
defined in Section 6 below) for purposes of issuing the title insurance policy
referenced therein. Seller hereby acknowledges and agrees that, if such
quitclaim deed is not satisfactory to the Title Company for such purpose, then
Seller shall either cause the Owner Trustee to convey title to Buyer pursuant to
a Special Warranty Deed (as commonly known in Florida real estate transactions),
or shall procure and obtain such other instruments and documents as may
reasonably be required by the Title Company in order to issue the title
insurance policy referenced in Section 6 on the basis of the quitclaim deed from
the Owner Trustee.
(b) Subject to and expressly conditioned upon the occurrence of the
Closing, Seller hereby expressly represents and warrants to Buyer that title to
the Subject Property conveyed by the Owner Trustee pursuant to any quitclaim
deed delivered by the Owner Trustee to Buyer at the Closing will be free and
clear of any and all liens, encumbrances, security interests, easements,
restrictions and rights of third parties created by, through or under either
Seller or the Owner Trustee, other than Permitted Encumbrances (as defined
below), and Seller further undertakes and agrees to defend such title against
all persons claiming by, through or under either Seller or the Owner Trustee.
For purposes of this Section 5(b) and all other purposes of this Agreement,
"Permitted Encumbrances" shall mean and include any and all liens, encumbrances,
security interests, easements, restrictions and rights of third parties
whatsoever that would not materially and significantly impair Buyer's functional
use of the Subject Property for the purposes for which it is currently being
used, including without limitation, all such liens, encumbrances, security
interests, easements, restrictions and rights of third parties which are
specifically identified in this Agreement as constituting "Permitted
Encumbrances."
3
(c) Seller represents and warrants that no work or materials have
been supplied to or incorporated into the Subject Property (other than routine
maintenance and repairs made in the ordinary course of business) which could
give rise to a lien of any kind prior to the date of this Agreement, and that no
such work or materials will be supplied to or incorporated into the Subject
Property prior to surrender of possession to Buyer which have not been paid for
in full or which will not be paid in the ordinary course of business. For the
avoidance of doubt, Seller expressly acknowledges and agrees that it will pay in
full all costs associated with any work performed on or with respect to the
Subject Property prior to the Closing in the ordinary course of business (it
being expressly understood by both parties that such payments may be made after
the Closing). Seller shall provide the following affidavits to the Title Company
that issues the commitment referenced in Section 6.
(i) Seller's Affidavit. An affidavit from Seller attesting that:
(a) no individual, entity or governmental authority (except as to work
performed at the direction of the Buyer) has any claim against the Subject
Property under applicable construction lien laws; (b) no individual, entity
or governmental authority is either in possession of the Subject Property
or has a possessory interest or claim in the Subject Property; and (c) no
improvements to the Subject Property have been made (except as to work
performed at the direction of Buyer) for which payment has not been made,
and (d) containing information necessary to enable the Title Company to
delete exceptions to the title commitment for matters appearing during the
so-called "gap" period and for parties in possession and boundary disputes.
(ii) FIRPTA. A Non-Foreign Transferor Affidavit in accordance
with Section 1445 of the Internal Revenue Code of 1986, as amended (the
"Code").
6. Title Insurance. Seller shall furnish Buyer at Seller's expense
an ALTA owner's title insurance policy issued by Chicago Title Insurance Company
(the "Title Company") covering the Real Property in the amount of the Purchase
Price and insuring good and marketable title to the Real Property and all
beneficial easements, subject only to the Permitted Encumbrances. Such policy
shall have the standard exceptions for gap period, the rights of parties in
possession, matters discoverable by survey, and taxes and assessments other than
for the year of the Closing and thereafter deleted. The commitment for such
policy shall be delivered to Buyer as soon as reasonably practicable but in no
event later than ten (10) days after the execution of this Agreement. Seller
shall furnish Buyer with a "marked up" title insurance commitment conforming to
the standards specified in this Section 6 and Section 8 below at the Closing.
7. Survey; Architectural and Engineering Drawings and Reports;
Service Contracts.
(a) As soon as reasonably possible and in no event later than fifteen
(15) days after the execution of this Agreement, Seller shall provide to Buyer,
at Seller's
4
expense, with a survey of the Real Property showing the area, dimensions and
location of the Real Property to the nearest monuments, streets, the location of
all improvements and encroachments, and the location of all recorded easements
upon or appurtenant to the Real Property, which survey shall be subject to
Buyer's approval and shall:
(i) prepared by a Florida licensed surveyor. The survey must
meet or exceed the minimum standards established under Chapter 61G17 of the
Florida Administrative Code and must be certified by the surveyor to Buyer,
Seller and the Title Company ;
(ii) show the size, location and type of any and all buildings,
structures and improvements on the Real Property;
(iii)show that there are no rights-of-way over, or encroachments
by any buildings, structures or improvements located on adjacent property
onto or uses affecting, the Real Property or easement areas on the Real
Property; and
(iv) confirm that the legal description of the Real Property as
set forth in the title commitment is exactly the same as the legal
description set forth in the survey.
(b) Buyer's obligation to close this transaction is contingent upon
the Real Property being free from all encroachments and other survey defects
that would materially and significantly impair Buyer's functional use of the
Subject Property for the purposes for which it is currently being used. As soon
as reasonably practicable and in no event later than ten (10) days after the
execution of this Agreement, Seller shall also provide Buyer with copies of: (i)
all existing architectural and engineering drawings and reports concerning the
Real Property currently in Seller's possession or under Seller's control; and
(ii) all service contracts for all or any portion of the Subject Property, each
of which is listed in Exhibit B attached hereto (the "Contracts").
8. Correction of Title or Survey Defects. If the title insurance
commitment or survey discloses any title or survey defects that would materially
and significantly impair Buyer's functional use of the Subject Property for the
purposes for which it is currently being used, Buyer shall notify Seller of
Buyer's objections to the defects within ten (10) days following Buyer's receipt
of such title insurance commitment or survey, as the case may be, and Seller
shall be obligated, as of the Closing, to discharge or obtain title insurance
coverage over any such liens, encumbrances, or mortgages that may be discharged
by the payment of money. If Seller is unable to cure any title or survey defects
that would materially and significantly impair Buyer's functional use of the
Subject Property for the purposes for which it is currently being used, Buyer
may, at its sole option, elect to: (a) terminate its obligation to purchase the
Subject Property and have no further obligation or liability under this
Agreement; or (b) waive any and all such defects and proceed to close this
transaction. For the avoidance of doubt, Seller and Buyer expressly acknowledge
and agree that (i) any title or survey defects that would not materially and
significantly impair Buyer's functional use of the
5
Subject Property for the purposes for which it is currently being used shall be
deemed "Permitted Encumbrances" for all purposes of this Agreement, (ii) Seller
shall have no obligation whatsoever to cure any such Permitted Encumbrances
(except that Seller hereby agrees to cure such Permitted Encumbrances, if any,
which may be cured at no cost whatsoever to Seller), and (iii) Buyer shall be
obligated to purchase the Subject Property and consummate the Closing
notwithstanding the occurrence or existence of any such Permitted Encumbrances.
9. Physical Inspection of Subject Property; Environmental
Assessment.
(a) For a period of ten (10) days after the execution of the SPA (the
"Inspection Period"), Buyer shall have the right to further inspect the Subject
Property, to determine its physical characteristics and suitability for its use
by Buyer. For this purpose, such inspections, investigations, appraisals, tests
and determinations of the Subject Property during the Inspection Period shall
include, but shall not be limited to, inquiring as to the existence of utility
services, public services and access; review of any Leases relating to the
Subject Property; review of the blueprints and "as built" specifications for the
improvements on the Subject Property; and insuring compliance as to applicable
zoning ordinances, use regulations and business codes. Buyer's obligation to
close this transaction is contingent upon Buyer's satisfaction with its
inspection findings. Notwithstanding anything to the contrary set forth above or
elsewhere in this Section 9, however, Buyer hereby expressly acknowledges and
agrees that, prior to the execution of this Agreement, Buyer has performed a
Phase I and Phase II environmental assessment of the Subject Property, and that
Buyer is fully satisfied with the results of such assessments and does not
require, and will not be entitled to perform, any further soil testing, borings
or other tests or inspections of the state of compliance of the Subject Property
with Environmental Laws (as defined in the SPA).
(b) Buyer shall provide reasonable prior notice to Seller of any
proposed inspection or testing by Buyer or any Representative (as defined in the
SPA) of Buyer pursuant to this Section 9 and shall schedule such inspection or
testing so as to not disrupt the normal business operations of Seller at the
Real Property. Seller and its agents and employees shall fully cooperate with
Buyer and shall provide Buyer with such information and records as Buyer may
reasonably request concerning the Real Property. Costs and expenses incurred in
connection with Buyer's inspection and testing of the Real Property shall be
paid by Buyer. Upon completion of its inspections, Buyer shall repair and
restore any damage to the Subject Property caused by such inspections and
testing.
(c) Buyer hereby expressly agrees to indemnify and hold Seller
harmless for any and all Losses (as defined in Section 17(a) below) arising out
of any damage to property or any personal injury or death suffered by any person
(including, but not limited to, Buyer or any Representative (as defined in the
SPA) of Buyer) resulting from or arising out of the negligence of Buyer or any
Representative of Buyer in connection with any of the activities contemplated by
this Section 9.
6
10. Representations and Warranties of Seller. In addition to any
other representations and warranties contained in this Agreement, Seller makes
the following representations and warranties, each of which is expressly
qualified by and subject to any and all disclosures made by Seller pursuant to
the SPA, and each of which, as so qualified and except as otherwise specified
below, shall be true both as of the date of this Agreement and as of the Closing
Date, and each of which shall survive for two years following the Closing
(except that the representations in subsections (a), (b) and (c) (but solely to
the extent relating to notice of any public health or environmental law or
regulation) below shall survive for one month after the maximum period permitted
by law):
(a) To Seller's Knowledge (as defined in Section 29 of this
Agreement), or except as would not be reasonably likely to have a material
adverse effect on the value or the use of the Subject Property by Buyer for the
purposes for which the Subject Property is currently being used, or except as
set forth on Schedule 2.21 to the SPA, no Hazardous Substances have been
released in, under or upon the Subject Property except in compliance with all
applicable Environmental Laws (as defined in the SPA).
(b) To Seller's Knowledge or except as set forth on Schedule 2.21 to
the SPA, there are no underground storage tanks on the Real Property, and, to
Seller's Knowledge, or except as would not be reasonably likely to have a
material adverse effect on the value or the use of the Subject Property by Buyer
for the purposes for which the Subject Property is currently being used, or
except as set forth on Schedule 2.21 to the SPA, no friable asbestos is present
on or in the Subject Property.
(c) Except as set forth on Schedules 2.7 and 2.21 to the SPA and
except for any non-compliance that would not be reasonably likely to have a
material adverse effect on the value or the use of the Subject Property by Buyer
for the purposes for which the Subject Property is currently being used, Seller
has not received any written notice or communication, and to Seller's Knowledge,
Seller has not received any other notice or communication, from any Governmental
Body (as defined in the SPA) asserting that the Subject Property is not in
compliance with any applicable zoning, building, public health or environmental
law or regulation, or any other law or regulation of any Governmental Body
having jurisdiction over the Subject Property, with the exception of notices of
violation or alleged liability that have been fully resolved with no future
obligations on the Foodservice Business (as defined in the SPA), Buyer or Xxxxx
Xxx Company.
(d) To Seller's Knowledge, there are no pending or proposed special
assessments or condemnation proceedings affecting or which may affect the
Subject Property or any part of the Subject Property.
(e) Except as provided pursuant to the terms of the Synthetic Lease
Documents and that certain Credit Agreement dated as of November 30, 2001 among
Seller, as borrower, BNP Paribas as administrative agent and lead arranger, and
certain other parties as defined therein (the "Revolving Credit Agreement," and
together with all Loan Documents as defined therein, the "Revolving Credit
Documents"), there are no
7
agreements of sale, options or other rights of third parties to acquire the
Subject Property, other than this Agreement. To Seller's Knowledge, there are no
unrecorded easements, leases, claims, restrictions, covenants, agreements, or
encumbrances affecting all or any portion of the Subject Property (except the
Leases) or any other agreements which would otherwise affect the Subject
Property.
(f) Subject to the prior receipt of all consents required pursuant to
the terms of the Synthetic Lease Documents and the Revolving Credit Documents,
Seller has the sole power to execute, deliver and carry out the terms and
provisions of this Agreement, and has taken all necessary action to authorize
the execution, delivery, and performance of this Agreement, and this Agreement
constitutes the legal, valid and binding obligation of Seller enforceable in
accordance with its terms.
(g) There are no actions, suits or proceedings which have been
instituted, or to Seller's Knowledge threatened, against or which affect the
Subject Property, at law or in equity, or before any federal, state or municipal
governmental commissions, board, bureau, agency, or instrumentality which may
affect the value, occupancy, or use of the Subject Property. Seller will give
Buyer prompt written notice of any such action, suit or proceeding of which it
obtains Knowledge subsequent to the date of this Agreement and prior to the
Closing, to the extent Seller acquires such Knowledge.
(h) Except as provided in Section 15 below, Seller shall not make or
allow to occur any material change to, or deterioration of, the physical
condition of the Subject Property, or any part thereof, which has not been
corrected as of the date of Closing.
(i) Seller shall pay all debts, charges, taxes and all other
obligations, liabilities, costs and expenses related to Seller's ownership, use
and occupancy of the Subject Property in the ordinary course of business, and
shall timely file all tax returns required to be filed by Seller by any federal,
state or local governmental unit or agency.
(j) Seller shall promptly comply with all governmental laws,
statutes, ordinances and regulations applicable to Seller in connection with
this transaction.
(k) To Seller's Knowledge, except as to items listed in Exhibit C
attached, the improvements located on the Real Property and all fixtures and
equipment, plumbing, well, septic system, heating and electrical systems, are in
good condition and repair, ordinary wear and tear excepted, and, except as to
that portion of the Real Property consisting of unimproved land, the Subject
Property is served by electricity, gas, city water and sewer service sufficient
to operate the Subject Property as of the Closing in the same manner as
presently operated.
(l) Seller is not a "foreign person" as that term is defined in
Section 7701 of the Code, and Seller will provide an affidavit at Closing
attesting to this and including Seller's tax identification number.
8
11. Buyer's Conditions Precedent. Buyer shall not be obligated to
close the transaction contemplated hereunder unless the following conditions
precedent shall each have been satisfied prior to the Closing:
(a) Environmental Matters. There shall not have occurred any change
or circumstance since the date of the Phase II environmental assessment
performed at Buyer's request with respect to the presence or release of any
Hazardous Substances in, on or under the Subject Property that would materially
and significantly impair Buyer's functional use of the Subject Property for the
purposes for which it is currently being used.
(b) No Litigation. There shall be no actions, proceedings or
investigations involving Seller or Buyer which would materially interfere with
Seller's or Buyer's performance of their respective obligations hereunder or
Buyer's intended use of the Subject Property.
(c) Compliance with Laws. There shall be no material uncured
violations, including, without limitation, environmental violations, of any
laws, ordinances, orders, regulations, rules or requirements of any governmental
authority having jurisdiction over the Subject Property.
(d) Good Title and Survey. Except as otherwise provided herein, the
title insurance commitment referred to in Section 6 shall disclose good and
marketable title to the Real Property vested in the Owner Trustee, free and
clear of all title exceptions that would materially and significantly impair
Buyer's functional use of the Subject Property for the purposes for which it is
currently being used, and the survey shall not disclose any encroachments or
other defects that would materially and significantly impair Buyer's functional
use of the Subject Property for the purposes for which it is currently being
used.
(e) Authorizations. Buyer shall have received all such instruments
and documents as Buyer's counsel shall reasonably require (i) to establish the
power and authority of Seller to accept this offer and to carry out Seller's
obligations hereunder, and (ii) to eliminate any title exceptions that are not
permitted hereby, in the title commitment.
(f) Inspection Reports. Buyer shall have completed the inspections
set forth above, or the Inspection Period shall have expired.
(g) Closing of Related Transactions. The closing of the transactions
contemplated by (i) the SPA, (ii) a certain Asset Purchase Agreement between
Seller and certain other parties dated August 6, 2003 (the "APA"), and (iii) a
certain Real Estate Purchase Agreement dated the date hereof between Seller and
GFS Marketplace Realty Four, LLC with respect to the Fort Lauderdale retail food
store shall occur simultaneously with the Closing..
(h) Representations. All Seller representations and warranties are
true and correct as of the Closing.
9
(i) Consent of Seller's Lenders; Release of Guaranty and Related
Matters. All consents required pursuant to the terms of the Synthetic Lease
Documents and the Revolving Credit Documents shall have been obtained,
including, in each instance, such waivers or amendments of any of the terms
thereof as may be required to permit the consummation of the transactions
contemplated by this Agreement and the other agreements described in Section
11(g) and the documents referenced therein. Xxxxx Xxx Company, a Florida
corporation, shall be released from all of its obligations under the Synthetic
Lease Documents and the Revolving Credit Documents, and all documents and
instruments executed in connection therewith including, but not limited to, that
certain Guaranty executed in connection with the Synthetic Lease Documents and
that certain Guaranty included within the Revolving Credit Documents,
concurrently with the Closing of the transactions contemplated by this Agreement
and the related transactions described in Section 11(g) above.
As Buyer shall determine that each of the conditions set forth above
have been satisfied prior to the Closing, Buyer shall so notify Seller in
writing. Buyer may, at its option, terminate this Agreement without liability to
either party, in the absence of such notice as to any condition prior to the
Closing.
12. Seller's Conditions Precedent. Seller shall not be obligated to
close the transaction contemplated hereunder unless the conditions precedent
specified in Section 11(g) and 11(i) above shall each have been satisfied prior
to the Closing
13. Closing and Possession; Transfer of Property. The closing of the
transactions contemplated by this Agreement (the "Closing") shall occur within
three (3) days after all of the conditions precedent specified in Section 11
above (other than such conditions which are to occur simultaneously with the
Closing hereunder) have been satisfied or waived and Buyer gives Seller notice
of its intent to close; provided, however, that the Closing shall not occur
later than the earlier of September 7, 2003 or such later date (but no later
than October 5, 2003) as the date on which the closing of the transactions
described in Section 11(g) occurs. The date of Closing is referred to in this
Agreement as the "Closing Date". The Closing shall occur at the time and place
specified in the SPA for the closing of the transaction contemplated by the SPA
or at such other place as the parties shall mutually agree. Seller shall
surrender possession of the Subject Property to Buyer at Closing. However, prior
to Closing, Buyer and its agents, employees, contractors and consultants shall
have reasonable access to the Subject Property for purposes of the inspections
permitted under Section 9 above.
At the Closing, Seller shall deliver to Buyer each of the following:
(a) A deed (which, subject to the terms and conditions specified in
Section 5(a) above, may be a quitclaim deed) duly executed and in recordable
form, conveying the Real Property to Buyer.
(b) A xxxx of sale (which may be a quitclaim xxxx of sale from the
Owner Trustee, but which shall include Seller's warranty as to title consistent
with the
10
provisions of Section 5(b) above) duly executed conveying the Personal Property
to Buyer.
(c) An assignment, in a form satisfactory to Buyer, assigning to
Buyer all rights and obligations Seller may have under any assignable Contracts
that Buyer desires to assume. All Contracts not assumed by Buyer shall be
terminated by Seller as of the Closing Date.
(d) All books, records and other financial information concerning the
Subject Property which are in Seller's possession or under Seller's control (the
"Books and Records").
In addition, the parties shall execute and deliver to each other at
Closing a closing statement showing the computation of the funds payable to the
Seller pursuant to this Agreement, all of which funds each of Seller and Buyer
expressly acknowledges and agrees shall be released directly to the Owner
Trustee at the Closing. Buyer shall pay all of the documentary stamps/transfer
taxes and surtaxes which are payable upon the recording of the deed as to the
conveyance to Buyer only.
14. Synthetic Lease. At or prior to Closing, Seller shall procure or
obtain such documents or instruments as may be required in order to terminate
the Synthetic Lease with respect to the Subject Property and to release the
Subject Property from all liens and encumbrances created pursuant to the
Synthetic Lease Documents and the Revolving Credit Documents. Any such
instruments of termination or release, as the case may be, with respect to the
Real Property shall be in such form as the Title Company may reasonably require
to be recordable in the real property records of the county in which the Real
Property is located.
15. Condition of Subject Property.
(a) In the event the Subject Property should be damaged by fire or
other casualty or become subject to condemnation proceedings prior to the
Closing, Buyer shall nonetheless proceed to close this transaction, and Seller
shall, subject to the immediately following sentence, assign to Buyer, effective
as of the Closing, all of Seller's rights to any insurance or condemnation
proceeds and to cause the Owner Trustee and the Agent (as defined in the
Synthetic Lease Documents) to assign to Buyer all of their respective rights, if
any, to any such insurance or condemnation proceeds. For the avoidance of doubt,
Seller and Buyer hereby acknowledge and agree that, in the event of any such
casualty or condemnation, (i) Seller shall use any insurance or condemnation
proceeds actually received by Seller (to the extent that Seller is not required
by the terms of the Synthetic Lease to turn over such proceeds to the Owner
Trustee or to the Agent) to repair (or commence repair) of damage to the Subject
Property caused by such casualty or condemnation, and (ii) Seller shall deliver,
or cause to be delivered, to Buyer at the Closing the remaining, unused balance,
if any, of such proceeds (including that portion, if any, of such proceeds paid
to the Owner Trustee or to the Agent pursuant to the terms of the Synthetic
Lease Documents).
11
(b) Each of Seller and Buyer hereby expressly acknowledges and agrees
that, notwithstanding anything to the contrary set forth in Section 15(a) above,
in the event that all of the following conditions shall occur:
(i) any casualty damage to or condemnation of the Subject
Property occurs prior to the Closing;
(ii) any insurance proceeds or condemnation awards are actually
paid to the Owner Trustee or the Agent pursuant to the Synthetic Lease
Documents prior to the Closing (all such proceeds being referred to herein
collectively as the "Actual Proceeds");
(iii)Buyer has provided written notice of the satisfaction of
all conditions precedent specified in Section 11 (other than those which
are to occur simultaneously with the Closing) and Buyer has deposited, in
escrow with instructions for release upon the Closing, the full amount of
the Purchase Price in the form of a cashier's check or wired funds to the
Title Company or such other person as Buyer and Seller may agree in writing
to act as escrow agent for purposes of effecting the closing of the
transaction contemplated by this Agreement (in either case, the "Escrow
Agent"); and
(iv) either the Owner Trustee or the Agent, or both of them,
shall fail to either (x) deposit with the Escrow Agent the full amount of
the Actual Proceeds received by the Owner Trustee or the Agent, as the case
may be, together with written instructions to release the same to Buyer
upon the Closing, or else (y) issue written instructions to the Escrow
Agent authorizing the Escrow Agent to credit the full amount of the Actual
Proceeds against the Purchase Price, to disburse to the Owner Trustee or
the Agent, as the case may be, at Closing only the net amount of the
Purchase Price after giving effect to such credit (and to release any and
all instruments deposited into escrow by the Owner Trustee and/or the Agent
against the disbursement of such amount to the Owner Trustee or the Agent,
as the case may be), and to disburse to Buyer the portion of the funds
deposited by Buyer equal to the amount of the Actual Proceeds at Closing;
then Buyer shall have the right, by written notice to Seller and to the Escrow
Agent, to cancel the proposed purchase of the Subject Property and terminate
this Agreement, and upon such termination, neither party shall have any further
liability to the other hereunder or in connection with the transactions
contemplated hereby.
16. Insurance; Risk of Loss. Until the Closing, Seller shall maintain
in full force and effect all fire and public liability insurance covering the
Subject Property maintained by Seller in the ordinary course of business, and
such insurance with respect to casualty damage shall be for the replacement
value of the Subject Property. The risk of loss shall remain with Seller until
Closing, subject to Buyer's rights under Section 15, above.
12
17 . Seller's Indemnities.
(a) Seller shall indemnify and hold Buyer harmless from any and all
liabilities, obligations, losses (including diminution in value), damages,
claims, charges, costs and expenses, including reasonable actual attorney's fees
(collectively, "Losses") to the extent, if any, such Losses are incurred as the
result of any of the following: (i) the failure of any of the representations
and warranties contained in this Agreement to be true and accurate in all
respects (which, for the avoidance of doubt, shall not include any Losses
arising out of or in connection with exceptions to such representations and
warranties expressly disclosed to Buyer pursuant to this Agreement or the SPA);
(ii) the failure of Seller to perform any of its obligations under this
Agreement; (iii) any act or event occurring on or in connection with the Subject
Property prior to the date of Closing or otherwise attributable (but solely to
the extent so attributable) to the use or operation of the Subject Property
prior to Closing, including, but not limited to, liabilities for environmental
contamination caused by the release of Hazardous Substances in, on or under the
Subject Property prior to Closing; or (iv) the failure of Seller to pay any of
its debts, charges, taxes, liabilities or other obligations, whether accrued,
absolute, contingent, known or unknown as of the date of Closing. The terms of
this Section 17 shall survive for two years following the Closing (except that,
with respect to any matters relating to the representations set forth in
subsections (a), (b) and (c) (to the extent specified in the introductory
paragraph of Section 10) of Section 10 above and any matters relating to
environmental contamination covered by subclause (iii) above, the provisions of
this Section 17 shall survive for one month after the maximum period permitted
by law.
(b) Seller's liability under the indemnity set forth above shall be
subject to all of the terms, conditions and limitations set forth in Section 10
of the SPA, including, without limitation, the application of the Seller
Deductible (as defined in Section 10.1 thereof). In addition, and without
limiting the generality of the immediately preceding sentence, Buyer expressly
acknowledges and agrees that Seller shall have no liability to indemnify Buyer
for any Losses under Section 17(a) above to the extent such Losses arise from or
are attributable to (i) the gross negligence or willful misconduct of any Buyer
Party (as defined in the SPA), or (ii) any act or event occurring on or in
connection with the Subject Property following the Closing.
(c) For the avoidance of doubt, Seller and Buyer hereby acknowledge
and agree that, Sections 17(a)(iii) and 17(b)(ii) above shall be read together
so that, in the event that Buyer incurs any Losses in connection with or as a
result of any release of Hazardous Substances in, on or under the Subject
Property following the Closing, Seller shall indemnify Buyer solely for the
incremental increase, if any, in such Losses incurred by Buyer that is
attributable to any prior record of the release of Hazardous Substances in, on
or under the Subject Property prior to Closing.
18. Seller's Default. In the event of any material default by Seller
under this Agreement (which, for the avoidance of doubt, shall consist of any
default or defaults, which, if uncured, individually or in the aggregate, would
materially and significantly impair Buyer's functional use and/or ownership of
the Subject Property for
13
the purposes for which it is currently used), Buyer shall have the right to
terminate this Agreement by written notice to Seller if such material default is
not cured within thirty (30) days following Seller's receipt of written notice
of such material default from Seller. In addition, Buyer shall have all such
rights and remedies as may be available to it under applicable law or in equity,
including, but not limited to, the right to recover such damages as it may be
entitled to as a result of such material default by Seller (including costs and
attorney's fees), or to specifically enforce Seller's obligations under this
Agreement. For the avoidance of doubt, Buyer acknowledges and agrees that Buyer
shall not have the right to terminate this Agreement in the event of any default
by Seller that is not material, but may still pursue damage remedies, if any,
for such a default.
19. Buyer's Default. In the event of any material default by Buyer
under this Agreement, Seller shall have the right to terminate this Agreement by
written notice to Buyer if such material default is not cured within thirty (30)
days following Buyer's receipt of written notice of such material default from
Seller. In addition, Seller shall have all such rights and remedies as may be
available to it under applicable law or in equity, including, but not limited
to, the right to recover such damages as it may be entitled to as a result of
such material default by Buyer (including costs and attorney's fees). For the
avoidance of doubt, Seller acknowledges and agrees that Seller shall not have
the right to terminate this Agreement in the event of any default by Buyer that
is not material, but may still pursue damage remedies, if any, for such a
default.
20. Survival of Representations and Warranties. All representations
and warranties made in this Agreement shall survive for two years following the
Closing (except that the representations set forth in subsections (a), (b) and
(c) (to the extent specified in the introductory paragraph of Section 10) of
Section 10 above shall survive for one month after the maximum period permitted
by law.
21. Enforceability. Except as otherwise expressly provided, this
Agreement shall inure to the benefit of, be binding upon, and be specifically
enforceable by Seller and Buyer, and their respective successors and assigns.
22. Entire Agreement. This Agreement, together with the SPA, contains
all of the representations and statements by each party to the other and
expresses the entire understanding between the parties with respect to its
subject matter. All prior communications concerning this transaction are merged
in and replaced by this Agreement.
23. Commission. Seller and Buyer each represent to the other that
neither party has engaged the services of a real estate broker or salesperson
and that no other person is entitled to a fee or commission as a result of the
transaction contemplated in this Agreement.
24. Notices. All notices required or given under this Agreement shall
be in writing and either delivered personally by reputable courier or mailed by
regular, first class U.S. mail (postage prepaid) addressed to the parties at
their addresses specified above or such other address as a party may specify by
providing notice thereof in
14
accordance with this Section. Notices delivered personally or by courier shall
be effective upon receipt, and notices mailed by first class U.S. mail shall be
effective three days following deposit in the mail, postage prepaid.
25. Assignment. This Agreement shall be binding upon and inure to the
benefit of the parties and their respective successors and assigns.
26. Construction. This Agreement shall be construed under the laws of
the State of Florida, and shall not be construed against either party as
draftsman.
27. Radon Gas. Section 404.056(7) Florida Statutes requires the
following disclosure in any contract for sale of real estate:
Radon is a naturally occurring radioactive gas that, when it
has accumulated in a building in sufficient quantities, may
present health risks to persons who are exposed to it over
time. Levels of radon that exceed federal and state guidelines
have been found in buildings in Florida. Additional
information regarding radon and radon testing may be obtained
from your county public health unit.
28. Dispute Resolution. All Agreement Disputes (as defined in the
SPA) shall be dealt with as set forth in the SPA.
29. Definition of "Knowledge". The term "Knowledge" as applied to
Seller in this Agreement means that the particular fact or matter is actually
known by any executive officer of Seller or AFD, or any of Xxxxx Samples, Xxx
Xxxxxxxx, or Xxxxx Xxxxxx, or any of the foregoing officers or individuals
should have known of such fact or matter after undertaking reasonable inquiry.
15
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
SMART & FINAL, INC.
By /s/ Xxxxxxx X. Xxxxxxx
----------------------------------
Its Xxxxxxx X. Xxxxxxx
------------------------------
Senior Vice President and
Chief Financial Officer
SELLER
XXXXX XXX PROPERTIES, LLC
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Its: Manager
-----------------------------
BUYER
16
EXHIBIT A
DESCRIPTION OF REAL PROPERTY
PARCEL 1: Xxxx 000 xxx 000, xx XXXXXX ADDITION TO SEABOARD INDUSTRIAL PARK
SECTION 1-A, according to the plat thereof as recorded in Plat Book 104, Page
88, of the public records of Miami-Dade County, Florida.
PARCEL 2: Xxxx 000, 000, 000, 000, 458, 459, 460, 461, 462 and 463, of EIGHT
ADDITION TO SEABOARD INDUSTRIAL PARK, according to the plat thereof as recorded
in Plat Book 142, Page 57, of the public records of Miami-Dade County, Florida.
EXHIBIT B
SERVICE AGREEMENTS
Services Agreement between Rentokil Pest Control and Xxxxx Xxx Company for Pest
Control Services.
Agreement between ADT Security Systems, Inc and Smart & Final dated December 8,
1994.
EXHIBIT C
EXCEPTIONS TO REPRESENTATION IN SECTION 10(K)
None.
VENDOR CONTRACT PARTICIPATION AGREEMENT
THIS VENDOR CONTRACT PARTICIPATION AGREEMENT (this "Agreement") is
entered into and effective as of September 7, 2003 (the "Effective Date"), by
and between SMART & FINAL INC., a Delaware corporation ("SFI"), AMERICAN
FOODSERVICE DISTRIBUTORS, a California corporation ("AFD"), SMART & FINAL STORES
CORPORATION, a California corporation ("SF Stores" and, together with SFI and
AFD, collectively, the "Sellers"), and GFS HOLDING, INC., a Delaware corporation
("GFS Holding"), XXXXX XXX COMPANY, a Florida corporation ("Xxxxx Xxx"), GFS
STORES, LLC, a Delaware limited liability company ("GFS Stores"), and GFS
Orlando, LLC, a Delaware limited liability company ("GFS Orlando" and, together
with GFS Holding, Xxxxx Xxx and GFS Stores, collectively, the "Buyers").
Capitalized terms not otherwise defined herein shall have the respective
meanings set forth in the Share Purchase Agreement (as defined below).
RECITALS
A. Pursuant to that certain Share Purchase Agreement (the "Share
Purchase Agreement"), dated August 6, 2003, by and between SFI, AFD and GFS
Holding, GFS Holding will purchase all of the issued and outstanding equity
securities of Xxxxx Xxx; and pursuant to that certain Asset Purchase Agreement
(the "Asset Purchase Agreement"), dated August 6, 2003, by and among GFS
Holding, GFS Orlando and GFS Stores, and Sellers, GFS Stores and GFS Orlando
will, directly or indirectly, acquire from Sellers certain of the assets of SF
Stores and all of the assets of the Orlando Foodservice division of AFD
(collectively, the "Assets").
B. Following the consummation of the transactions contemplated by the
Share Purchase Agreement and the Asset Purchase Agreement, Buyers will continue
to operate the businesses conducted by AFD, SF Stores and Xxxxx Xxx in the State
of Florida (the "Business").
X. Xxxxxxx are parties to various vendor contracts (the "Vendor
Contracts") described in the Schedules to the Share Purchase Agreement and the
Asset Purchase Agreement and to be assigned to or utilized by Buyers after the
Closing. Many of the Vendor Contracts are multiple party contracts ("Multiple
Party Vendor Contracts") which contain provisions unrelated to the Business, and
therefore Sellers have provided Buyers with summaries of the portions of the
Multiple Party Vendor Contracts which relate to the Business instead of
disclosing the entire contract. Buyers have requested, and Sellers have agreed,
to cooperate with Buyers in the use and operation of the Vendor Contracts,
including the Multiple Party Vendor Contracts, on the terms set forth below.
D. Buyers have required as a condition to the consummation of the
transactions contemplated by of the Share Purchase Agreement and the Asset
Purchase Agreement that Sellers enter into this Agreement.
AGREEMENT
In consideration of the premises set forth above and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Sellers and Buyers agree as follows:
1. Term. The term of this Agreement shall commence upon the Closing of
the Share Purchase Agreement and the Asset Purchase Agreement and shall continue
until expiration of the last of the Vendor Contracts to expire. Buyers expressly
acknowledge that Sellers are under no obligation to renew or extend any of the
Vendor Contracts beyond their stated terms.
2. Cooperation. From time to time after the Closing Date, Sellers
shall cooperate with Buyers in arranging for purchases within the State of
Florida pursuant to the Vendor Contracts. Sellers also shall permit Buyers to
contact the vendors under each of the Vendor Contracts so that Buyers may
establish new relationships with those vendors if Buyers so desire. Sellers also
shall provide Buyers with all correspondence, information and invoices related
to performance of the Vendor Contracts in the State of Florida to enable Buyers
to deal with such vendors on an effective basis.
3. Contract Performance. Buyers may elect to purchase products under
the Vendor Contracts, and if and to the extent that Buyers elect to do so,
Sellers and Buyers each agree to honor the terms of all of the Vendor Contracts,
and to conduct their respective purchases under the Multiple Party Vendor
Contracts in such a manner as to not disrupt the purchasing rights and
obligations of the other parties to the Multiple Party Vendor Contracts. In
particular, Sellers and Buyers each agree to honor any payment terms of the
Vendor Contracts (subject to good faith disputes with such vendors).
4. Indemnification.
A. Indemnity by Sellers. Sellers shall, jointly and severally,
indemnify Buyers and their affiliates, directors, officers, employees,
controlling persons, agents and representatives and their successors and
assigns (collectively, the "Buyer Indemnified Parties") against and hold
each of them harmless from any and all damage, loss, cost, penalty,
liability and expense (including, without limitation, reasonable attorneys'
fees and expenses in connection with any action, suit or proceeding)
("Damages") incurred or suffered by the Buyer Indemnified Parties (whether
originally asserted against or imposed on the Buyer Indemnified Parties by
a third party or originally incurred or suffered directly by the Buyer
Indemnified Parties) arising directly out of any breach of any
representation or warranty, covenant or agreement made or to be performed
by Sellers pursuant to this Agreement, or arising directly out of any
liability or obligations under the Multiple Party Vendor Contracts to the
extent such liability or obligations have not been disclosed to Buyers in
the summaries of the Multiple Party Vendor Contracts (such breach, a
"Seller Breach").
B. Indemnity by Buyers. Buyers shall indemnify Sellers and their
affiliates, directors, officers, employees, controlling persons, agents and
representatives and their
2
successors and assigns (collectively, the "Seller Indemnified Parties")
against and hold each of them harmless from any and all Damages incurred or
suffered by the Seller Indemnified Parties (whether originally asserted
against or imposed on the Seller Indemnified Parties by a third party or
originally incurred or suffered directly by the Seller Indemnified Parties)
arising directly out of any breach of any representation, warranty,
covenant or agreement made or to be performed by Buyers pursuant to this
Agreement (such breach, a "Buyer Breach").
C. Procedure and Payment.
(1) The person seeking indemnification under Section 4.A, and 4.B
(the "Indemnified Party") agrees to give prompt notice to the Person
against whom indemnity is sought (the "Indemnifying Party") of the
assertion of any claim, or the commencement of any suit, action or
proceeding, in respect of which indemnity may be sought under such
Section and will provide the Indemnifying Party such information with
respect thereto as the Indemnifying Party may reasonably request. The
failure to so notify the Indemnifying Party shall not relieve the
Indemnifying Party of its obligations hereunder, except to the extent
such failure shall have materially and adversely prejudiced the
Indemnifying Party.
(2) The Indemnifying Party shall be entitled to defend any claim
asserted by any third party ("Third Party Claim") with counsel of its
choice reasonably satisfactory to the Indemnified Party so long as (i)
the Indemnifying Party notifies the Indemnified Party in writing
within fifteen (15) days after the Indemnified Party has given notice
of the Third Party Claim that it will indemnify the Indemnified Party
from and against all Damages that the Indemnified Party may suffer
resulting from, arising out of, relating to, or caused by the Third
Party Claim, (ii) the Indemnifying Party provides the Indemnified
Party with evidence reasonably acceptable to the Indemnified Party
that the Indemnifying Party will have the financial resources to
defend against the Third Party Claim and fulfill its indemnification
obligations under this Agreement, (iii) the Third Party Claim involves
only money damages and does not seek an injunction or other equitable
relief, and (iv) the Indemnifying Party conducts the defense of the
Third Party Claim actively and diligently.
(3) So long as the Indemnifying Party is conducting the defense
of any Third Party Claim in accordance with the provisions of this
Section 4.C, the Indemnified Party shall be entitled to participate in
the defense of such Third Party Claim and to employ separate counsel
of its choice for such purpose. The fees and expenses of such separate
counsel shall be paid by the Indemnified Party.
(4) Each party shall cooperate, and cause its Affiliates to
cooperate, in the defense or prosecution of any Third Party Claim and
shall furnish or cause to be furnished such records, information and
testimony, and attend such conferences, discovery proceedings,
hearings, trials or appeals, as may be reasonably requested by any
other party in connection therewith.
3
D. Calculation of Damages.
(1) The amount of any Damages payable under Section 4.A and 4.B
by the Indemnifying Party shall be net of any amounts recovered by the
Indemnified Party under applicable insurance policies and the
Indemnified Party shall use commercially reasonable efforts to collect
any amounts available under such insurance policies.
(2) If the Indemnified Party receives an amount under insurance
coverage or from a third party with respect to Damages at any time
subsequent to any indemnification provided by the Indemnifying Party
pursuant to Section 4.A and 4.B, then such Indemnified Party shall
promptly reimburse the Indemnifying Party for any payment made or
expense incurred by such Indemnifying Party in connection with
providing such indemnification up to such amount received by such
Indemnified Party, but net of any expenses incurred by such
Indemnified Party in collecting such amount.
5. Force Majeure. Neither Sellers nor Buyers shall be responsible to
the other for any delay in or failure of performance of their obligations under
this Agreement to the extent such delay or failure is attributable to any cause
beyond their reasonable control, including, without limitation, any act of God,
fire, accident, strike or other labor difficulties, war, embargo or other
governmental act, or riot; provided that the party affected thereby gives the
other party prompt notice of the occurrence of any event which has caused or is
likely to cause any such delay or failure, setting forth its best estimate of
the length of any delay and any possibility that it will be unable to resume
performance; and provided further that said affected party shall use its
commercially reasonable efforts to expeditiously overcome the effects of that
event and resume performance or utilization.
6. Miscellaneous Provisions.
A. Confidentiality. Each of Sellers and Buyers (as appropriate,
the "Promisor") covenant and agree to and will cause their respective
authorized agents, representatives, affiliates, employees, officers,
directors, accountants, counsel and other designated representatives
(collectively, "Representatives") to (i) treat and hold as
confidential (and not disclose or provide access to any person to) all
records, books, contracts, instruments, computer data and other data
and information (collectively, "Information") concerning the other
party (the "Promisee") and the Vendor Contracts in the Promisor's
possession or furnished by the Promisee or its Representatives
pursuant to this Agreement, (ii) in the event that Promisor or its
Representatives become legally compelled to disclose any such
Information, provide the Promisee with prompt written notice of such
requirement so that the Promisee may seek a protective order or other
remedy or waive compliance with this Section 6.A, and (iii) in the
event that such protective order or other remedy is not obtained, or
the Promisee waives compliance with this Section 6.A, furnish only
that portion of such Information which is legally required to be
provided and exercise Promisor's best efforts to obtain assurances
that confidential treatment will be accorded such Information;
provided, however, that this sentence shall not apply to any
Information that, at the time of disclosure, is available publicly and
was not disclosed in
4
breach of this Agreement by such party or its Representatives; and
provided further, however, that the provisions of clauses (i) and (ii)
above shall not preclude a party from disclosing Information to its
Representatives (provided that each such Representative shall be
advised of the confidential nature of such Information) or from
disclosing Information to or filing Information with any governmental
authority or agency with jurisdiction over such party. Each party
agrees and acknowledges that remedies at law for any breach of its
obligations under this Section 6.A are inadequate and that in addition
thereto the other party shall be entitled to seek equitable relief,
including injunction and specific performance, in the event of any
such breach, without the necessity of demonstrating the inadequacy of
monetary damages. The provisions of this Section 6.A shall not apply
to the extent any such Information is required to be disclosed by
applicable law.
B. Notices. All necessary notices, demands, requests and other
communications required or permitted to be given hereunder shall in
every case be in writing and shall be deemed duly given (a) when
delivered personally, (b) upon receipt or refusal of receipt, if sent
by registered or certified mail, in all such cases with postage
prepaid, return receipt requested, or (c) the next business day if
delivered by a recognized overnight courier service, airbill prepaid,
designated for next business day delivery, to the parties at the
addresses as set forth below or at such other addresses as may be
furnished in writing:
If to Buyers: Xxxxx Xxxxxxxxx
Xxxxxx Food Service, Inc.
X.X. Xxx 0000
Xxxxx Xxxxxx, Xxxxxxxx 00000
and to: Xxxxx X. Xxxx
00000 Xxxx Xxxxxxxx Xxxxx
X.X. Xxx 000
Xxxxxx, Xxxxxxxx 00000-0000
With a copy to: Miller, Johnson, Xxxxx & Xxxxxxxxx, P.L.C.
000 Xxxxxx Xxxxxx, X.X., Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
If to Sellers: Xxxxxx Xxxxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
With a copy to: Xxxxxx X. Xxxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
5
With a copy to: Xxx Xxxxxxx
Smart & Final Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
With a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
And a copy to: Xxxxx & Xxxxxxx
0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx XX
C. Jurisdiction.
(1) In the event any dispute arises out of this Agreement or
any of the transactions contemplated by this Agreement, each of
the parties hereto consents to submit itself to the personal
jurisdiction of any federal court in the state of Delaware and,
in case such court refuses jurisdiction then each of the parties
consents to submit itself to the personal jurisdiction of any
state court in the state of Delaware. Each of the parties further
agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from such
court, and agrees that, except as permitted pursuant to this
Section 6.C, it will not bring any action relating to this
Agreement or any of the transactions contemplated by this
Agreement in any other court other than a federal court in the
state of Delaware.
(2) In the event the state court specified in Section 6.C(1)
refuses to exercise jurisdiction over the parties hereto or the
subject matter at issue, then with respect to any legal action or
proceeding brought by any of the Seller Parties against any of
the Buyer Parties arising out of or relating to this Agreement or
any of the transactions contemplated by this Agreement, each
party to this Agreement:
(i) expressly and irrevocably consents and submits to
the jurisdiction of any federal court within the
jurisdiction of the United States District Court for the
Western District of Michigan (and each appellate court
thereof) or any state court in the state of Michigan;
(ii) agrees that any federal court within the
jurisdiction of the United States District Court for the
Western District of Michigan or any state court in the state
of Michigan shall be deemed to be a convenient forum; and
6
(iii) agrees not to assert (by way of motion, as a
defense or otherwise), in any such legal proceeding
commenced in any federal court within the jurisdiction of
the United States District Court for the Western District of
Michigan or any state court in the state of Michigan, any
claim that such party is not subject personally to the
jurisdiction of such court, that such legal proceeding has
been brought in an inconvenient forum, or that the venue of
such proceeding is improper.
(3) In the event the state court specified in Section 6.C(1)
refuses to exercise jurisdiction over the parties hereto or the
subject matter at issue, then with respect to any legal action or
proceeding brought by any of the Buyer Parties against any of the
Sellers arising out of or relating to this Agreement or any of
the transactions contemplated by this Agreement, each party to
this Agreement:
(i) expressly and irrevocably consents and submits to
the jurisdiction of any federal court within the
jurisdiction of the United States District Court for the
Central District of California (and each appellate court
thereof) or any state court in the state of California;
(ii) agrees that any federal court within the
jurisdiction of the United States District Court for the
Central District of California or any state court in the
state of California shall be deemed to be a convenient
forum; and
(iii) agrees not to assert (by way of motion, as a
defense or otherwise), in any such legal proceeding
commenced in any federal court within the jurisdiction of
the United States District Court for the Central District of
California or any state court in the state of California,
any claim that such party is not subject personally to the
jurisdiction of such court, that such legal proceeding has
been brought in an inconvenient forum, or that the venue of
such proceeding is improper.
(4) The parties hereby waive any right to a jury trial.
D. Further Assurances. From time to time, at the request of the
other party hereto and at the expense of the party so requesting
(unless the requesting party is entitled to indemnification therefor
under Section 4), each of the parties hereto shall execute and deliver
to such requesting party such documents and take such other action as
such requesting party may reasonably request in order to consummate
more effectively the transactions contemplated hereby.
E. Waiver. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither the failure nor
any delay by any party in exercising any right, power, or privilege
under this Agreement or the documents referred
7
to in this Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such
right, power, or privilege or the exercise of any other right, power,
or privilege. To the maximum extent permitted by applicable law, (a)
no claim or right arising out of this Agreement or the documents
referred to in this Agreement can be discharged by one party, in whole
or in part, by a waiver or renunciation of the claim or right unless
in writing signed by the other party; (b) no waiver that may be given
by a party will be applicable except in the specific instance for
which it is given; and (c) no notice to or demand on one party will be
deemed to be a waiver of any obligation of such party or of the right
of the party giving such notice or demand to take further action
without notice or demand as provided in this Agreement or the
documents referred to in this Agreement.
F. Entire Agreement and Modification. This Agreement supersedes
all prior agreements between the parties with respect to its subject
matter and constitutes a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject
matter. This Agreement may not be amended except by a written
agreement executed by the parties to be charged with the amendment.
G. Assignments, Successors, and No Third-Party Rights. Neither
party may assign any of its rights or obligations under this Agreement
without the prior consent of the other parties, except that GFS
Holding may assign any of its rights under this Agreement to any
Affiliate of GFS Holding. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to
the benefit of the benefit of the successors and permitted assigns of
the parties. Nothing expressed or referred to in this Agreement will
be construed to give any Person other than the parties to this
Agreement any legal or equitable right, remedy, or claim under or with
respect to this Agreement or any provision of this Agreement. This
Agreement and all of its provisions and conditions are for the sole
and exclusive benefit of the parties to this Agreement and their
successors and assigns.
H. Severability. If any provision of this Agreement is held
invalid or unenforceable by any court of competent jurisdiction, the
other provisions of this Agreement will remain in full force and
effect. Any provision of this Agreement held invalid or unenforceable
only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.
I. Section Headings, Construction. The headings of Sections in
this Agreement are provided for convenience only and will not affect
its construction or interpretation. All references to "Section" or
"Sections" refer to the corresponding Section or Sections of this
Agreement. All words used in this Agreement will be construed to be of
such gender or number as the circumstances require. Unless otherwise
expressly provided, the word "including" does not limit the preceding
words or terms.
J. Preamble; Recitals. The Recitals set forth in the Preamble
hereto are hereby incorporated and made a part of this Agreement.
8
K. Governing Law. This Agreement will be governed by the internal
laws of the State of Delaware without regard to conflicts of laws
principles.
L. No Strict Construction. The language used in this Agreement
will be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction will
be applied against any party hereto by virtue of having drafted this
Agreement or otherwise.
M. Dispute Resolution. Except as hereinafter provided in this
Section 6.M all claims, controversies, differences, or disputes
between or among any of the parties hereto arising from or relating to
this Agreement, including claims by one party that another party or
parties hereto have failed to perform any of their obligations
hereunder (collectively, "Agreement Disputes"), shall be resolved as
follows:
(1) Facilitative Mediation. The parties to an Agreement
Dispute shall first attempt to resolve such Agreement Dispute by
means of a mediation conducted in the following manner. A party
desiring mediation of any Agreement Dispute shall give or shall
have given a written notice, in the manner set forth in Section
6.B hereof (a "Dispute Notice"), to the other party or parties
setting forth the nature of the dispute and the relief intended
to be sought and shall submit such Agreement Dispute for
resolution by facilitative mediation in Chicago, Illinois, under
the Commercial Mediation Rules (but not otherwise under the
auspices) of the American Arbitration Association (the "AAA") in
effect on the date of this Agreement, unless the parties have
agreed, in writing, to resolve any such dispute by other means.
Each party agrees that it will submit to and shall not challenge
or object to the jurisdiction (either personal or subject matter)
or the venue of such mediation in Chicago, Illinois.
(2) Legal Proceedings. If any Agreement Dispute has not been
resolved by mediation as provided above within sixty (60) days
after submission thereof, then either party may commence a suit
or legal action or an action at equity to enforce its rights or
the other party's obligations or recover any damages arising from
the other party's breach or such other relief as may be
appropriate under the circumstances.
(3) Attorney Fees and Other Costs. The prevailing party in
any mediation or any action or legal or other proceeding brought
with respect to an Agreement Dispute shall be entitled to recover
the reasonable fees and disbursements of its attorneys,
accountants, and expert witnesses in connection with any such
mediation or any action or legal or other proceeding brought in
accordance with the provisions hereof.
(4) Exceptions for Equitable Relief. Notwithstanding the
foregoing or anything to the contrary contained elsewhere in this
Agreement, a party may bring a proceeding against any other party
hereto for specific performance or injunctive or other forms or
equitable relief in the state or federal courts pursuant to the
procedures set forth in Section 6.C without having to submit the
matter or
9
Agreement Dispute in question to mediation as hereinabove set
forth, provided, however, that such party shall not seek any
monetary award or relief in such action or proceeding unless its
failure to do so would prejudice such party's rights or ability
to seek such monetary award or relief in another action or
proceeding.
N. Counterparts. This Agreement may be executed in two or more
counterparts, each or which will be deemed to be an original copy of
this Agreement and all of which, when taken together, will be deemed
to constitute one and the same agreement.
O. Relationship of Parties. The relationship between Sellers and
Buyers for purposes of this Agreement shall be that of an independent
contractor and not of employment and, except to the extent required to
enable Sellers to perform their duties hereunder, neither party is an
agent of the other. By entering into this Agreement, neither party to
this Agreement is, in any way, assuming any liabilities, debts or
obligations of the other party, whether now existing or hereafter
created.
IN WITNESS WHEREOF, Sellers and Buyers have executed this Agreement as
of the date set forth in the first paragraph hereof.
"SFI"
SMART & FINAL INC.
a Delaware corporation
By: Xxxxxx Xxxxxxxxx
----------------------------------
Its:
---------------------------------
"AFD"
AMERICAN FOODSERVICE DISTRIBUTORS
a California corporation
By: Xxxxxx Xxxxxxxxx
----------------------------------
Its:
---------------------------------
"SF Stores"
SMART & FINAL STORES CORPORATION
a California corporation
By: Xxxxxx Xxxxxxxxx
----------------------------------
Its:
---------------------------------
10
"GFS Holding"
GFS HOLDING, INC.
a Delaware corporation
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its: Director
---------------------------------
"Xxxxx Xxx"
XXXXX XXX COMPANY
a Florida corporation
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its:
---------------------------------
"GFS Stores"
GFS STORES, LLC
a Delaware limited liability company
By: GFS HOLDINGS, INC.
Its: Manager
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its:
---------------------------------
"GFS Orlando"
GFS Orlando, LLC
a Delaware limited liability company
By: GFS HOLDINGS, INC.
Its: Manager
By: /s/ Xxxxx X. Xxxx
----------------------------------
Its:
---------------------------------
11
