Exhibit 2.9
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is
made and entered into this 2nd day of MayApril, 2003, by and
between Xxxxxxx Companies, Inc., an Oklahoma corporation
("Xxxxxxx"), Rainbow Food Group, Inc., a Nevada corporation
("Rainbow," and together with Xxxxxxx, "Seller"), RBF Corp., a
Wisconsin corporation ("Buyer"), and Xxxxxx'x, Inc., a Wisconsin
corporation ("Parent"). (Each of Buyer, Seller and Parent shall
be referred to herein individually as a "Party" and collectively
as the "Parties").
W I T N E S S E T H
WHEREAS, Seller is either the fee owner or the lessee
of certain real property and improvements identified on Annex I
hereto (each, a "Store Property" and collectively, the "Store
Properties") where Seller operates retail supermarkets;
WHEREAS, Seller desires to sell, convey, transfer and
assign to Buyer, and Buyer desires to acquire from Seller, the
Acquired Assets, and Buyer has agreed to assume certain
liabilities of Seller relating to the Acquired Assets and the
operation of the Store Properties, all on the terms and subject
to the conditions set forth herein;
WHEREAS, Parent is the owner of all of the outstanding
capital stock of Buyer, and Parent is willing to guarantee the
obligations of Buyer under this Agreement.
NOW THEREFORE, the Parties hereto agree as follows:
ARTICLE 1
Definitions and Interpretation
1.1 Definitions.
"AAA" is defined in Section 17.3(b).
"Acquired Assets" is defined in Section 2.1.
"Acquired Contracts" means the Leases, the Subleases, the
Union Contracts and the other agreements that are listed and
identified on Schedule 1.1(a) as "Acquired Contracts."
"Acquired Intellectual Property" is defined in Section
2.1(j).
"Acquisition Proposal" means a proposal (other than by Buyer
or its Affiliates) relating to any merger, consolidation,
business combination, sale or other disposition of 20% or more of
the Acquired Assets pursuant to one or more transactions, the
sale of 20% or more of the outstanding shares of capital stock or
equity interests of Rainbow (including, without limitation, by
way of a tender offer, foreclosure or plan of reorganization or
liquidation) or a similar transaction or business combination
involving one or more Third Parties and Rainbow.
"Affiliate" means any Person who, directly or indirectly,
controls, is controlled by or is under common control with the
relevant Party.
"Agreement" is defined in the introductory paragraph and
Section 17.5 of this Agreement.
"Allocation" is defined in Section 4.4.
"Ancillary Agreements" means the Assignment and Assumption
Agreement(s), the Xxxx of Sale, the Deed, the Indemnity Escrow
Agreement, the Purchase Price Adjustment Escrow Agreement, the
Intellectual Property Assignment, and the License Agreement.
"Asset Purchase Price" is defined in Section 4.1(a).
"Assignment and Assumption Agreement" means the Assignment
and Assumption Agreement, dated as of the Closing Date, in
substantially the form of Exhibit B.
"Assignment Motion" shall have the meaning set forth in
Section 7.10(c) hereof.
"Assumed Liabilities" is defined in Section 3.1(a).
"Auction" means the auction conducted by Seller pursuant to
the Bidding Procedures Order and Section 11.14 hereof.
"Avoidance Action(s)" is defined in Section 2.2(f).
"Bankruptcy Code" means title 11 of the United States Code.
"Bankruptcy Court" means the United States Bankruptcy Court
for the District of Delaware.
"Bidding Procedures Order" means the order of the Bankruptcy
Court, substantially in the form of Annex II attached hereto,
containing the terms specified in Sections 11.14(c) hereof and
approving and implementing the provisions of Sections 11.14
hereof.
"Bids" is defined in Section 7.12.
"Bidders" is defined in Section 7.12.
"Xxxx of Sale" means the Xxxx of Sale of Seller, dated as of
the Closing Date, in substantially the form of Exhibit A.
"Breakup Fee" is defined in Section 11.14(c).
"Business" means the retail sale of groceries and related
products typically sold in full-line retail grocery stores and
supermarkets including the Store Properties.
"Business Day" means a day other than a Saturday, Sunday or
legal holiday for commercial banking institutions in any of the
States of Delaware, Texas, Wisconsin or Minnesota.
"Buyer" is defined in the introductory paragraph of this
Agreement.
"Buyer Ancillary Agreements" is defined in Section 6.2.
"Buyer's 401(k) Plan" is defined in Section 9.1(b).
"Buyer's Benefit Plans" is defined in Section 9.1(b).
"Buyer's Medical Plans" is defined in Section 9.1(b).
"Cash On Hand" is defined in Section 2.1(c).
"Cash Purchase Price" is defined in Section 4.1(a).
"Chapter 11 Cases" means the cases commenced by Seller under
the Bankruptcy Code in the Bankruptcy Court and jointly
administered under Case No. 03-10945 (MFW).
"Claim" has the meaning set forth in Section 101(5) of the
Bankruptcy Code.
"Closing" and "Closing Date" are defined in Section 12.1(a).
"Closing Cash Amount" is defined in Section 4.3(a).
"Closing Excess Amount" is defined in Section 4.6(b).
"COBRA" means Part 6 of Subtitle B of Title I of ERISA,
Section 4980B of the Code, and any similar state law.
"Confidential Information" means any information that is not
generally known to the public or in the retail and wholesale
grocery industry and that is or has been used, developed or
obtained by Seller and its Affiliates to the extent it relates
specifically to one or more of the Store Properties including,
without limitation, (i) products or services, (ii) fees, costs
and pricing structures, (iii) designs and specifications, (iv)
analyses, (v) drawings, photographs and reports, (vi) computer
software, including, without limitation, electronic mail,
operating systems, applications and program listings, (vii) flow
charts, transaction summaries and models, manuals and
documentation, (viii) databases, (ix) financial reports,
investment summaries, and accounting and business methods, (x)
ideas, formulas, compositions, inventions, devices, new
developments, methods and processes, whether patentable or
unpatentable and whether or not reduced to practice, (xi)
customers and clients and customer, contact or client lists and
other marketing data or plans, (xii) know-how, (xiii)
manufacturing and production processes and techniques, (xiv)
research and development information; (xv) Files and Records, and
(xvi) all similar and related information in whatever form,
except that Confidential Information shall not include any
information that has been published in a form generally available
to the public, other than as a result of a disclosure by the
Parties or their respective representatives.
"Code" means the United States Internal Revenue Code of
1986, as amended.
"Contract" means any written contract, agreement, lease,
license, commitment or other legally binding written agreement.
"Creditor's Committee" means the Official Committee of
Unsecured Creditors appointed by the Bankruptcy Court in the
Chapter 11 Cases.
"Cure Costs" is defined Section 3.3.
"Deed" means a special or limited warranty deed (as
customary in the applicable jurisdiction) with respect to the
Owned Real Property, conveying to Buyer fee simple title to such
Owned Real Property, subject only to matters disclosed on the
Title Commitment (hereafter defined) that are Permitted
Exceptions, and in form and substance reasonably satisfactory to
Buyer.
"Delinquent Sales and Property Taxes" means all sales and/or
use taxes payable by Seller to the states of Minnesota or
Wisconsin on account of sales made by Seller from the Store
Properties prior to the Closing Date (except to the extent paid
prior to the Closing Date), and any real property taxes
attributable to the Owned Real Property that are due and payable,
but have not been paid, as of the Closing Date, and that do not
constitute Cure Costs.
"Determination Date" shall have the meaning defined in
Section 4.6(b).
"DIP Order" means the Interim Order (as the same may be
amended or modified from time to time) Authorizing: (I) Post
Petition Financing Pursuant to 11 U.S.C. Section 364 and
Bankruptcy Rule 4001(c); (II) Use of Cash Collateral Pursuant to
11 U.S.C. Section 363 and Bankruptcy Rules 4001(b) and (d); (III)
Grant of Adequate Protection Pursuant to 11 U.S.C. Section 361
and 363; and (IV) Approving Secured Inventory Trade Credit
Program and Granting Subordinate Liens Pursuant to 11 U.S.C.
Sections 105 and 364(c)(3) and Rule 4001(c) entered by the
Bankruptcy Court on April 25, 2003.
"Employee" means, as of the Closing, (i) each active
employee, full-time or part-time, of Seller (or an Affiliate of
Seller) who has performed (during the 12-month period immediately
preceding the date of this Agreement (or the period of the
employee's employment with Seller and its Affiliates, if less))
substantially all of such employee's services in connection with
or for the benefit of the Store Properties, and (ii) each former
employee of each Store Property who has the right to return to
the employment of Seller (or an Affiliate of Seller) pursuant to
the provisions of the Uniformed Services Employment and
Reemployment Rights Act of 1994 ("USERRA").
"Employee Benefit Plan" means any of the following
arrangements (whether formal or informal, and whether written or
unwritten) under which an employer has any liability to provide
benefits or compensation to or on behalf of any current or former
employee, officer or director, or the spouse or dependents of any
current or former employee, officer or director:
(a) any employee benefit plan within the meaning of
Section 3(3) of ERISA, and
(b) any other material profit-sharing, deferred
compensation, incentive compensation, bonus, commission, stock
option, stock purchase, severance pay, unemployment benefit,
vacation pay, savings, dependent care, scholarship, accident,
disability, weekly income, salary continuation or other
compensation or fringe benefit plan or program.
"Employee Obligations" is defined in Section 9.1(a).
"Environmental Laws" means the Comprehensive Environmental
Response, Compensation, and Liability Act ("CERCLA"), the
Emergency Planning and Community Right-to-Know Act, the Water
Pollution Control Act, the Air Pollution Control Act, the Toxic
Substances Control Act, and the Resource Conservation and
Recovery Act ("RCRA"), as well as all other federal, state or
local laws (including common law), regulations or requirements,
or such portions thereof, that are similar to the above-
referenced laws or that otherwise govern the generation,
manufacture, use, transportation, treatment, cleanup, storage or
disposal of, or exposure to Hazardous Substances, noise, odor or
radiation.
"Environmental Report" is defined in Section 11.13.
"Equipment" is defined in Section 2.1(e).
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated
thereunder.
"ERISA Affiliate" means any entity that with the subject
Person is:
(a) a member of a controlled group of corporations
within the meaning of Section 414(b) of the Code;
(b) a member of a group of trades or businesses under
common control within the meaning of Section 414(c) of the Code;
(c) a member of an affiliated service group within the
meaning of Section 414(m) of the Code; or
(d) a member of a group of organizations required to
be aggregated under Section 414(o) of the Code.
"Escrow Agent" means Bank One Trust Company, National
Association.
"Estimated Cash Purchase Price" means the Asset Purchase
Price, plus the Inventory Purchase Price, as estimated mutually
by Seller and Buyer in good faith on the second Business Day
prior to the Closing Date (the "Estimated Inventory Purchase
Price"), plus the Cash On Hand, as estimated mutually by Seller
and Buyer in good faith as of 11:59 p.m. on the day prior to the
Closing Date (the "Estimated Closing Cash Amount"), minus the
Cure Costs and minus the Delinquent Sales and Property Taxes.
"Estimated Excess Amount" is defined in Section 4.6(b).
"Estimated Excess Amount Shortfall" is defined in Section
4.6(b).
"Estoppel Certificates" is defined in Section 7.3(a).
"Excluded Assets" is defined in Section 2.2.
"Excluded Inventory" is defined in Section 2.2(c).
"Excluded Liabilities" is defined in Section 3.2.
"Expense Reimbursement" is defined in Section 11.14(c).
"Expiration Date" is defined in Section 16.1.
"Files and Records" is defined in Section 2.1(f).
"Final Order" is an order entered by the Bankruptcy Court
(i) that has not been reversed, modified or withdrawn and that
remains in full force and effect, (ii) as to which the time to
appeal or seek rehearing has expired and no appeal or request for
rehearing is pending, and (iii) that is not the subject of a
stay.
"Financial Information" is defined in Section 5.12.
"FIRPTA Affidavit" is defined in Section 11.12.
"Xxxxxxx" is defined in the introductory paragraph of this
Agreement.
"Governmental Entity" means any court, administrative agency
or commission or other governmental authority or instrumentality,
domestic or foreign.
"Hazardous Substances" means any contaminant, pollutant,
effluent or waste, or other material whose presence, nature,
quantity and/or intensity of existence, use, manufacture,
disposal, transportation, emission, discharge, spill, release or
effect, either by itself or in combination with other materials
regulated or monitored by any Governmental Entity, including
without limitation petroleum and refined petroleum products,
asbestos, asbestos-containing products and presumed asbestos-
containing material (as defined in 29 C.F.R. 1910.1001(b)),
flammable explosives, radioactive materials, radon, and
polychlorinated biphenyls, whether contained or not. The term
"Hazardous Substances" shall include, but not be limited to, (A)
any "hazardous substance" as defined in CERCLA, (B) any
"regulated substance" as defined in RCRA, or (C) any substance
subject to regulation pursuant to the Toxic Substances Control
Act.
"Highest and Best Bid" is defined in Section 11.14(c).
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Anti-Trust
Improvements Act of 1974, as amended.
"Income Statements" is defined in Section 5.12.
"Indemnifiable Losses" is defined in Section 16.3(a).
"Indemnification Cap" is defined in Section 16.3(d).
"Indemnification Payment" is defined in Section 16.3(a).
"Indemnification Threshold" is defined in Section 16.3(c).
"Indemnifying Party" is defined in Section 16.3(a).
"Indemnitee" is defined in Section 16.3(a).
"Indemnity Escrow Agreement" means an agreement between
Seller, Buyer, and Escrow Agent, to be entered into in accordance
with Section 13.5.
"Indemnity Escrow Amount" means Eight Million Five Hundred
Thousand Dollars ($8,500,000).
"Intellectual Property" means any and all rights that may
exist from time to time in this or any other jurisdiction under
patent law, copyright law, publicity rights law, moral rights
law, trade secret law, unfair competition law or other similar
protections, including but not limited to: (i) United States and
foreign patents and patent applications of any kind, United
States and foreign works of authorship, mask-works, copyrights,
and copyright and mask work registrations and applications for
registration, and any rights or licenses in the foregoing, and
(ii) unpatented inventions (whether or not patentable), trade
secrets, know-how and proprietary information, including but not
limited to (in whatever form or medium), discoveries, ideas,
compositions, formulas, computer programs (including source and
object codes), computer software and computer software
documentation (except for Pharmacy Records), database, drawings,
designs, plans, proposals, specifications, photographs, samples,
models, processes, procedures, data, information, manuals,
reports, financial, marketing and business data, and pricing and
cost information, correspondence and notes, and any rights or
licenses in the foregoing which may be sublicensed to any Person
who is not an Affiliate of Seller without the payment of
compensation or other consideration to any Person.
"Intellectual Property Assignment" means an instrument or
instruments, reasonably acceptable in form and substance to
Seller and Buyer and their respective counsel, pursuant to which
Seller will convey to Buyer ownership of the Acquired
Intellectual Property.
"Inventory" is defined in Section 2.1(d).
"Inventory Count" is defined in Section 4.2(c).
"Inventory Date" is defined in Section 4.2(c).
"Inventory Purchase Price" is defined in Section 4.1(a).
"Inventory Service" is defined in Section 4.2(c).
"Law" means any federal, state, provincial, local or
foreign law, statute, rule, regulation or ordinance of any
Governmental Entity.
"Leasehold Improvements" is defined in Section 2.1(b).
"Leases" means those leases listed as "Store Leases" on
Schedule 1.1(a) hereto.
"Lenders' Consents" is defined in Section 11.5.
"Liability" or "Liabilities" means any liability (whether
known or unknown, whether asserted or not asserted, whether
absolute or contingent, whether liquidated or unliquidated, and
whether due or to become due), including any liability for Taxes.
"License Agreement" is defined in Section 13.4.
"Lien" means any lien, charge, mortgage, option, security
interest, restriction or other encumbrance affecting title.
"Material Adverse Effect" means, any event, change,
condition or matter that individually or in the aggregate results
in or could reasonably be expected to result in a material
adverse effect or change in the results of operations or
condition (financial or otherwise) of the Store Properties in
the aggregate or the Acquired Assets taken as a whole, other than
(A) general changes in the U.S. economy, (B) general changes in
the industries in which Seller does business, or (C) changes
arising from the announcement of the transaction contemplated
hereby; provided, that in the event any reduction in the Cash
Purchase Price occurs under Section 4.7 of this Agreement, the
materiality of any matter, event, change or condition shall
thereafter be evaluated by taking into account such reduction.
"MEPPA" is the Multiemployer Pension Plan Amendments Act of
1980, as amended.
"Non-Competition Period" is defined in Section 9.2(a).
"Non-Lease Acquired Contracts" is defined in Section 5.9.
"Order" means any writ, judgment, decree, injunction or
similar order, writ, ruling, directive or other requirement of
any Governmental Entity (in each such case whether preliminary or
final).
"Out of date or out of code" is defined in item 8(b) of
Schedule 4.2(b).
"Owned Real Property" means Store Number 11 and all
buildings, structures, fixtures, fittings, systems and other
improvements located on such real property and all easements,
privileges, licenses, rights of way, permits, riparian and other
water rights, hereditaments, appurtenances and other rights
pertaining to or accruing to the benefit of such owned real
property (including all appurtenant rights in and to public
streets, whether or not vacated) owned by Seller.
"Parent" is defined in the introductory paragraph of this
Agreement.
"Parties" and "Party" are defined in the introductory
paragraph of this Agreement.
"Pending Claims" is defined in Section 16.3(h).
"Periodic Taxes" is defined in Section 15.5.
"Perishable Merchandise" means the following fresh products:
(a) meat, (b) produce, (c) bakery, (d) dairy and (e) deli.
"Permits" is defined in Section 2.1(g).
"Permitted Exceptions" means (a) any Lien for Taxes not yet
due or payable or being contested in good faith by appropriate
proceedings (including any interest, penalties or additions to
any such taxes or assessments), (b) mechanics', carriers',
workmen's, repairmen's and other like Liens imposed by law
arising or incurred in the ordinary course of business consistent
with past practices from which Acquired Assets shall be free and
clear at Closing, (c) utility easements for electricity, gas,
water, sanitary sewer, surface water drainage or other general
easements granted to Governmental Entities in the ordinary course
of developing or operating a retail store in the manner such
activities are conducted by Seller as of the date of this
Agreement, (d) encumbrances consisting of zoning restrictions,
easements and other restrictions on the use of any Store
Property, provided that such items do not materially adversely
impair the continued use and operation of such Store Property by
Buyer in the same manner as such activities are conducted by
Seller as of the date of this Agreement, (e) any laws, rules,
regulations, statutes or ordinances affecting any Store Property
which do not materially adversely impair the continued operation
of such Store Property by Buyer in the same manner as such
activities are conducted by Seller as of the date of this
Agreement, (f) any utility company rights, easements and
franchises and similar rights or easements granted to third
parties for electricity, water, steam, gas, telephone or other
service or the right to use and maintain poles, lines, wires,
cables, pipes, boxes and other fixtures and facilities in, over,
under and upon the Store Properties, provided that the same do
not materially adversely affect the use of any Store Property in
the same manner as such activities are conducted by Seller as of
the date of this Agreement, (g) the Subleases, (h) rights of
landlords under Leases, and (i) rights of secured lenders under
mortgages or deeds of trust encumbering fee interests in leased
property.
"Person" means any individual, corporation, partnership,
joint venture, trust, limited liability company, business
association or other entity.
"Prohibited Area" is defined in Section 9.2(a).
"Proration Periods" is defined in Section 15.5.
"Purchase Price Adjustment Escrow Agreement" means an
agreement between Buyer, Seller and the Escrow Agent, entered
into in accordance with Section 13.5.
"Purchase Price Adjustment Escrow Amount" means One Million
Dollars ($1,000,000).
"Qualifying Bid" is defined in Section 11.14(c).
"Qualifying Bidder" is defined in Section 11.14(c).
"Rainbow" is defined in the introductory paragraph of this
Agreement.
"Rainbow Financial Statements" is defined in Section 5.12.
"Regulation" means any law, statute, regulation, ruling, or
Order of, administered or enforced by or on behalf of, any
Governmental Entity.
"Remaining Escrow Amount" is defined in Section 16.3(h).
"Remediation Costs" is defined in Section 11.13.
"Requisite Licenses" is defined in Section 11.9.
"Retail Food Store" is defined in Section 9.2(a).
"Rule" or "Rules" means the Federal Rules of Bankruptcy
Procedure.
"Sale Hearing" means the hearing of the Bankruptcy Court to
approve this Agreement and the transactions contemplated hereby.
"Sale Motion" is defined in Section 7.10(b).
"Sale Order" means the order of the Bankruptcy Court,
substantially in the form of Annex III attached hereto, but in
any event, in form and substance reasonably acceptable to Buyer
and Seller, to be entered by the Bankruptcy Court pursuant to
Sections 363, 365 and 1146(c) of the Bankruptcy Code: (a)
approving this Agreement and the transactions contemplated
hereby; (b) approving the sale of the Acquired Assets to Buyer
free and clear of any and all Liens (other than Permitted
Exceptions) pursuant to Section 363(f) of the Bankruptcy Code;
(c) approving the assumption and assignment to Buyer of the
Acquired Contracts solely on the terms of such Acquired
Contracts; (d) transferring and assigning the Acquired Contracts
such that the Acquired Contracts will be in full force and effect
from and after the Closing with non-debtor parties being barred
and enjoined from asserting against Buyer, among other things,
defaults, breaches or claims of pecuniary losses existing as of
the Closing or by reason of the Closing; (e) finding that Buyer
is a good-faith purchaser entitled to the protections of Section
363(m) of the Bankruptcy Code; (f) confirming that Buyer is
acquiring the Acquired Assets free and clear of the Excluded
Liabilities and providing for an injunction of the assertion
and/or prosecution against the Buyer of the Excluded Liabilities;
(g) providing that under Section 1146(c) of the Bankruptcy Code
there will be no transfer or similar tax incurred by either
Seller or Buyer to the extent contemplated by Section 15.4
hereof; (h) providing that the provisions of Rules 6004(g) and
6006(d) of the Rules are waived and there will be no stay of
execution of the Sale Order under Rule 62(a) of the Federal Rules
of Civil Procedure; (i) subject to Section 17.3 hereof, retaining
jurisdiction of the Bankruptcy Court to interpret and enforce the
terms and provisions of this Agreement; and (j) authorizing and
approving the results of the Auction.
"Second Bid" is defined in Section 11.14(c).
"Section 365 Deemed Consent" is defined in Section 2.3.
"Seller" is defined in the introductory paragraph of this
Agreement.
"Seller Ancillary Agreements" is defined in Section 5.2.
"Seller Benefit Plans" is defined in Section 5.13(a).
"Seller's 401(k) Plan" is defined in Section 9.1(b).
"Seller's Knowledge" (or any similar phrase) means the
actual knowledge (after reasonable inquiry) of the individuals
listed on Schedule 1.1(b).
"Seller's Medical Plan" is defined in Section 9.1(b).
"Seller's Pension Plan" is defined in Section 9.1(b).
"Seller's Pension Plan Withdrawal Obligations" is defined in
Section 9.1(a).
"Specific Store Property Value Schedule" is defined in
Section 4.5.
"Store Employees" is defined in Section 9.1(a).
"Store Property" and "Store Properties" are defined in the
recitals of this Agreement and includes the Owned Real Property
and the property subject to the Leases.
"Subleases" is defined in Section 2.1(i).
"Subsequent Closing" is defined in Section 4.5.
"Subsequent Closing Date" is defined in Section 4.5.
"Supplies" is defined in Section 2.1(h).
"Surveys" is defined in Section 11.11.
"Tax" and "Taxes" means all federal, state, provincial,
local and foreign taxes, including any income, alternative or
minimum, business and occupation, gross receipts, disability,
unemployment compensation, social security, sales, use, ad
valorem, value-added, transfer, franchise, profits, withholding,
wage, payroll, employment, excise, stamp, real and personal
property, environmental or other tax of any type whatsoever,
together with all interest, penalties and additions with respect
thereto, whether disputed or not.
"Tax Indemnitee" is defined in Section 15.3(c).
"Tax Indemnitor" is defined in Section 15.3(c).
"Tax Returns" means all federal, state, local and foreign
tax returns, reports, forms, certificates and declarations of
estimated tax reports, including attachments and schedules
thereto or amendments thereof.
"Third Party" means any Person other than Seller, Buyer or
any of their respective Affiliates.
"Third Party Claim" is defined in Section 16.4(a).
"Title Commitments" is defined in Section 11.10.
"Title Company" is defined in Section 11.10.
"Title Defect" means any matter disclosed in the Title
Commitments and Surveys obtained by Buyer under Sections 11.10
and 11.11 hereof, other than Permitted Exceptions, which is
objectionable to Buyer.
"Title Policies" is defined in Section 11.10.
"Trade Creditor Lien Order" has the same meaning as DIP
Order.
"Trademarks" means trademarks, trade names, applications for
trademark registration, service marks, applications for service
xxxx registration, domain names, registrations and applications
for registrations pertaining to the foregoing owned by Seller or
an Affiliate of Seller or licensed to Seller or an Affiliate of
Seller by any Person, any derivations of the foregoing, and all
goodwill associated therewith.
"Transaction Taxes" is defined in Section 15.4.
"Transferred Employee(s)" means a Store Employee(s) who
accepts an offer of employment from Buyer pursuant to Section
9.1(a) hereof.
"Unassignable Contract" is defined in Section 2.3.
"Union Contracts" means those collective bargaining
agreements (and obligations thereunder) listed on Schedule
5.13(d) insofar as such agreements pertain to the Store
Employee(s).
"Union Pension Plan" means a multiemployer pension plan as
defined in Section 3(37) of ERISA that provides pension benefits
to Store Employees.
"Union Welfare Plan" means any health or welfare plan that
provides health or welfare benefits to Store Employees pursuant
to an obligation established under the Union Contracts.
"WARN Act" is defined in Section 9.1(a).
"Welfare Plan Withdrawal Obligations" is defined in Section
9.1(a).
1.2 Interpretation. When a reference is made in this Agreement
to a Section, Schedule, Annex or Exhibit, such reference shall be
to a Section, Schedule, Annex or Exhibit of this Agreement unless
otherwise indicated. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. Whenever the
words "included, "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the phrase
"without limitation." When used in this Agreement, the word
"primarily" shall be deemed to be followed by the phrase "or
exclusively." Unless otherwise indicated, all references to
dollars refer to United States dollars. The Parties acknowledge
that the Parties have participated in the drafting and
preparation of this Agreement and the Ancillary Agreements and
agree that any rule of construction to the effect that
ambiguities are to be construed against the drafting party shall
not be applied to the construction or interpretation of this
Agreement or the Ancillary Agreements.
ARTICLE 2
Purchase and Sale of Acquired Assets
2.1 Acquired Assets Subject to Agreement. Effective as of the
Closing and upon the terms and subject to the conditions of this
Agreement, Seller shall sell, assign, transfer, convey and
deliver to Buyer, and Buyer shall purchase, assume and acquire
from Seller, all of Seller's right, title and interest in, to and
under the Acquired Assets (as defined hereafter), as the same
shall exist on the Closing Date. "Acquired Assets" shall mean
the property described below (in each case, other than the
Excluded Assets):
(a) Acquired Contracts. All of Seller's interest in the
Acquired Contracts (including the Union Contracts).
(b) Leasehold Improvements. The leasehold improvements owned by
Seller that are situated in or on the Store Properties (the
"Leasehold Improvements").
(c) Cash. All cash and cash equivalents of the Seller located
at or on the Store Properties on the Closing Date ("Cash on
Hand").
(d) Inventory. All saleable merchandise inventory located in or
held for sale at the Store Properties on the Closing Date
delivered to and held in the Store Properties in the ordinary
course of business (collectively, the "Inventory"); excluding,
however, the Excluded Inventory.
(e) Equipment. All of the machinery, equipment, point-of-sale
equipment, front-end equipment, back-end equipment, shopping
carts, tools, furniture, furnishings, fixtures, forklifts,
construction in progress, spare parts, shelf tags, aisle markers,
electronic surveillance equipment and other tangible personal
property owned by Seller and located at the Store Properties
together with all rights of Seller against the manufacturers
and/or suppliers of such equipment (collectively, the
"Equipment").
(f) Files and Records. All files, documents, papers, computer
files and books and business records of Seller in any media to
the extent the same relates to the Acquired Assets and the
Assumed Liabilities located at the Store Properties (collectively
the "Files and Records").
(g) Permits. All assignable permits, licenses, consents and
authorizations, related to the operation of the Store Properties
(collectively, the "Permits"). A list of the material permits
and licenses related to the operation of the Store Properties is
attached as Schedule 2.1(g).
(h) Supplies. All supplies located at the Store Properties (the
"Supplies").
(i) Subleases. All of Seller's interest in the leases and
subleases listed on or referred to Schedule 2.1(i) pursuant to
which Seller is providing retail space within Store Properties to
unrelated third parties (the "Subleases").
(j) Intellectual Property and Trademarks. All Intellectual
Property and Trademarks of the Seller relating to the name
"Rainbow", "Rainbow Foods" or variations thereof (whether or not
used in the operation of the Store Properties) described on
Schedule 2.1(j) (the "Acquired Intellectual Property").
(k) Claims. All rights of Seller to proceeds of claims under
Seller's property insurance with respect to casualty losses
occurring after execution of this Agreement and prior to Closing,
except to the extent Seller has repaired, restored or rectified
the damage which gave rise to such claim.
(l) Signs and Logos. All signs or personal property owned by
Seller which contain any of the Acquired Intellectual Property
(including, without limitation, the name (or trade derivative
thereof) or logo of "Rainbow" or variations thereof), including
all uniforms supplied to Seller's employees that contain or
display any of the Acquired Intellectual Property.
(m) Owned Real Property. The Owned Real Property.
2.2 Excluded Assets. Buyer shall acquire from Seller only the
Acquired Assets. Notwithstanding anything contained in Section
2.1 hereof to the contrary, the properties, assets and rights of
Seller described below (the "Excluded Assets") are expressly
excluded from the transactions contemplated by this Agreement and
do not comprise the Acquired Assets being transferred:
(a) Securities and Accounts. Certificates of deposit, bank or
savings and loan accounts, U.S. government securities, and any
other marketable securities of any kind or nature.
(b) Accounts Receivable. All accounts receivable, notes
receivable and other receivables with respect to the Acquired
Assets or the operation of the Store Properties attributable to
the operation of the Store Properties that accrued prior to the
Closing Date. In the event that after the Closing, Buyer
receives any payment at any Store Property or otherwise in
respect of any accounts receivable, notes receivable or other
receivable that accrued prior to the Closing Date, Buyer shall
segregate such payment from its own assets and shall promptly
remit the same to Seller, without any deduction or set-off. Any
such payment shall at all times remain the property of Seller,
and Buyer acknowledges that it has no rights or interests with
respect thereto.
(c) Excluded Inventory. All merchandise in the "excluded"
categories identified in item 8 on Schedule 4.2(b) and quantities
of any item of merchandise at any Store that are materially in
excess of quantities customarily maintained in such Store in the
ordinary course of business (all of the foregoing herein referred
to as the "Excluded Inventory"). All Excluded Inventory will be
removed by Seller from the Store Properties in accordance with
Schedule 4.2(b), and after the expiration of the period therein
specified for Seller to remove the Excluded Inventory, Buyer
shall have no responsibility therefor (provided that Buyer will
not destroy or sell or otherwise dispose of the Excluded
Inventory). None of the Excluded Inventory will comprise any
part of the Inventory to be acquired by Buyer hereunder and will
be excluded from any Inventory Count.
(d) Tax Refunds and Insurance Claims. Rights to any (i) Tax
refunds or credits for Tax periods (or portions thereof) ending
prior to the Closing Date, and (ii) insurance claims or rights to
payment arising with respect to the Acquired Assets on or before
the Closing Date (provided, that the Acquired Assets shall
include any such insurance claims transferred to Buyer pursuant
to or described in Section 2.1(k) to the extent relating to
damage to or destruction of any Acquired Assets occurring prior
to the Closing Date and which has not, by that date, been
repaired, restored or rectified by Seller).
(e) Records of Sale. All records prepared in connection with
the sale of the Acquired Assets, including bids received from
third parties and analyses relating to the Acquired Assets.
(f) Avoidance Actions. Any and all rights under this Agreement
and avoidance claims or causes of action arising under the
Bankruptcy Code or applicable state law, including, without
limitation, all rights and avoidance claims of Seller arising
under chapter 5 of the Bankruptcy Code (an "Avoidance Action",
and collectively the "Avoidance Actions")
(g) Excluded Liabilities. All rights related to the Excluded
Liabilities.
2.3 Assignment of Contracts; Deemed Consents and Cures. For all
purposes of this Agreement (including all representations and
warranties of Seller contained herein), Seller shall be deemed to
have obtained all required consents in respect of the assignment
of any Acquired Contract if, and to the extent that, pursuant to
the Sale Order or other Bankruptcy Court Order, Seller is
authorized to assume and assign Acquired Contracts to Buyer
pursuant to Section 365 of the Bankruptcy Code, any applicable
cure cost has been satisfied by Buyer on behalf of Seller as
provided in Section 3.3 hereof, and Buyer and Parent shall be
deemed to have provided adequate assurance of future performance
solely on the term of such Acquired Contracts under Section
365(f)(2) of the Bankruptcy Code (a "Section 365 Deemed
Consent").
ARTICLE 3
Assumption of Liabilities
3.1 Assumption of Liabilities. On the Closing Date, Buyer shall
assume, pay, perform and discharge when due the following
liabilities, responsibilities and obligations relating to the
Acquired Assets and the operation of the Store Properties.
(a) Acquired Contracts. All of Seller's Liabilities,
responsibilities and obligations under the Acquired Contracts
accruing from and after the Closing Date and any Liabilities
assumed by Buyer under Section 9.1 (the "Assumed Liabilities");
provided, that the Assumed Liabilities shall not in any event
include any Liability or obligation attributable to or arising as
a result of any breach, violation or non-performance of any
Acquired Contract by Seller prior to the Closing Date, including,
without limitation, any breach or violation arising as a result
of the transactions contemplated by this Agreement.
(b) No Limitation On Claims. Nothing in this Section 3.1 shall
be deemed to limit any claims or defenses Buyer may have against
any party other than Seller. The transactions contemplated by
this Agreement shall in no way expand the rights or remedies of
any Third Party against Buyer or Seller as compared to the rights
and remedies which such Third Party would have had against Seller
absent the Chapter 11 Cases had Buyer not assumed such Assumed
Liabilities.
3.2 Excluded Liabilities. Buyer shall not assume or in any way
be responsible for any Liability of, or incurred by or on behalf
of, Seller other than the Assumed Liabilities (all such other
Liabilities being referred to herein collectively as the
"Excluded Liabilities"), regardless of whether such other
Liability is disclosed herein or on any Schedule hereto.
3.3 Cure Costs. To the extent that any Acquired Contract is
subject to a cure (pursuant to Section 365 of the Bankruptcy Code
and described in the Sale Order or any Order of the Bankruptcy
Court relating to such cure liability), Seller shall be
responsible for any such cure (in the aggregate, the "Cure
Costs"); however, the Cure Costs shall be paid by Buyer and
deducted from the amount payable to Seller at Closing.
ARTICLE 4
Consideration
4.1 Consideration.
(a) The consideration (subject to adjustment as provided in
Section 4.7 below) to be paid by Buyer to Seller for the Acquired
Assets (the "Cash Purchase Price") shall be equal to:
(i) cash in an amount equal to Forty-Two Million Five Hundred
Thousand Dollars ($42,500,000) (the "Asset Purchase Price"),
subject to adjustment as provided in Section 4.5, plus
(ii) cash in an amount equal to the purchase price for the
Inventory (the "Inventory Purchase Price") as determined in
accordance with Section 4.2 and subject to adjustment as provided
in Section 4.5, plus
(iii) Cash On Hand, minus
(iv) the Cure Costs, minus
(v) the Delinquent Sales and Property Taxes.
(b) As further consideration for the Acquired Assets, Buyer
shall assume the Assumed Liabilities.
4.2 Sale of the Inventory and Computation of the Inventory
Purchase Price.
(a) Sale of Inventory. The legal title to the Inventory, except
for any Excluded Inventory, shall be transferred to Buyer at
Closing pursuant to this Agreement and the Xxxx of Sale.
(b) Inventory Purchase Price. The Inventory Purchase Price
shall be the amount determined in accordance with the inventory
procedures set forth on Schedule 4.2(b) hereto. Should there be
any conflict or inconsistency between the provisions contained in
this Agreement and the provisions of Schedule 4.2(b), the
provisions of this Agreement shall control.
(c) Inventory Count. A physical count of the Inventory (other
than the Excluded Inventory) shall be made by Buyer, Seller and
an independent inventory service mutually agreed to by the
Parties (the "Inventory Service") on dates mutually agreeable to
Buyer and Seller on or as near as practicable to the day before
the Closing Date. The Inventory Service shall make a physical
accounting of the Inventory (the "Inventory Count") at each Store
Property on and as of the date of the count (the "Inventory
Date"), in accordance with mutually agreed upon instructions
consistent with the inventory procedures set forth on Schedule
4.2(b). Both Parties shall have their respective representatives
present and available during the Inventory Count. These
representatives will attempt, in good faith, to resolve any
disputes respecting quantity or pricing which may arise during
the Inventory Count in accordance with Schedule 4.2(b). With
respect to any Store Property for which the Inventory Date
precedes the close of business on the day before the Closing
Date, the Inventory Purchase Price shall be determined on the
basis of the value of the Inventory (determined in accordance
with Schedule 4.2(b)) determined during the Inventory Count,
adjusted for sales and purchases of inventory between the
Inventory Date and the Closing Date based on purchase and sales
records of the Seller, as mutually agreed between Buyer and
Seller. The value of the Inventory (as finally determined in
accordance with Schedule 4.2(b) and the provisions of this
Section 4.2(c)) as of the Closing Date shall be the Inventory
Purchase Price. Buyer and Seller shall each pay one half (1/2)
of the cost of the Inventory Service and will be invoiced
separately. Departments not inventoried by the Inventory Service
shall be inventoried by appropriate store personnel, as specified
on Schedule 4.2(b), at mutually agreed upon times and in the
presence of representatives of Buyer and Seller.
(d) Inventory Count Documentation. The Inventory Service shall
provide to each Party inventory extension documentation at the
conclusion of the Inventory Count, which documentation shall be
used by the Parties to calculate the Inventory Purchase Price.
(e) Inventory In Transit. Any inventory which is in transit but
not received at the Store Properties on or prior to the Closing
Date shall not constitute a part of the Acquired Assets
hereunder.
4.3 Payment of Cash Purchase Price.
(a) Buyer shall pay the Estimated Cash Purchase Price (adjusted,
if applicable, pursuant to Section 4.5 and/or 4.7), minus the
Purchase Price Adjustment Escrow Amount and the Indemnity Escrow
Amount (the "Closing Cash Amount") to Seller at the Closing by
wire transfer of immediately available funds to an account
designated by Seller.
(b) Buyer shall pay the Purchase Price Adjustment Escrow Amount
and the Indemnity Escrow Amount to the Escrow Agent at the
Closing by wire transfer of immediately available funds in
accordance with the terms of the Purchase Price Adjustment Escrow
Agreement and the Indemnity Escrow Agreement.
4.4 Allocation of Cash Payments. Prior to or at the Closing
Date, the Parties shall agree to the allocation of the
appropriate portions of the Cash Purchase Price, Assumed
Liabilities and other relevant items (including, for example,
adjustments to the Cash Purchase Price) among the Acquired
Assets, including goodwill and other assets, in accordance with
Code Section 1060 and the Treasury regulations promulgated
thereunder and any comparable provisions of state or local law,
as appropriate (the "Allocation"), which Allocation shall be
binding upon the Parties and which will be attached to this
Agreement as Schedule 4.4. Buyer and Seller and their respective
Affiliates shall report, act and file Tax Returns (including, but
not limited to Internal Revenue Service Form 8594) in all
respects and for all purposes consistent with such Allocation.
Each Party shall furnish the other Party with such cooperation
and existing information as is reasonably requested by the other
Party in connection with the preparation of the Allocation
described in this Section 4.4. Buyer and Seller covenant and
agree that (i) neither Buyer nor Seller shall assert that this
Section 4.4 was not separately bargained for at arm's length and
in good faith, and (ii) neither Buyer nor Seller will take any
position before any Governmental Entity, in any judicial
proceeding, or in any Tax Return that is in any way inconsistent
with such Allocation unless otherwise required by Law.
4.5 Delayed Closing or Exclusion of Certain Stores.
Notwithstanding anything to the contrary contained herein, in the
event that, with respect to any Store Property, either (a) a
Section 365 Deemed Consent for such Store Property is not
obtained on or before the Closing Date or (b) Buyer has not
received an Environmental Report that complies with the condition
set forth in Section 11.13, or (c) Buyer notifies Seller of a
Title Defect then Buyer may elect, by written notice delivered to
Seller on or prior to the Closing Date, to delay the Closing for
such Store Property(ies), in which case the Closing shall occur
as provided herein for all other Store Properties and the payment
made by Buyer at the Closing shall be reduced by that portion of
the Closing Cash Amount that otherwise would have been paid in
respect of such Store Property(ies) (including the value as set
forth on Schedule 4.5 (the "Specific Store Property Value
Schedule") proportionately adjusted for any price reduction
required by Section 4.7) for such Store Property(ies), the
Inventory Purchase Price attributable to such Store Property(ies)
and the amount of Cash on Hand with respect to such Store
Property(ies). If a Section 365 Deemed Consent for such Store
Property is obtained, and/or Buyer has received an Environmental
Report complying with Section 11.13, and/or the Title Defect is
cured, in any case on or before the sixtieth (60th) day after
Closing Seller shall promptly notify Buyer of such Section 365
Deemed Consent, the receipt of the Environmental Report, or the
curing of the Title Defect as the case may be, and the closing
for such Store Property (the "Subsequent Closing") shall occur
within two (2) Business Days (the "Subsequent Closing Date")
following receipt of the Section 365 Deemed Consent, Buyer's
receipt of an Environmental Report complying with Section 11.13
or the curing of the Title Defect. At the Subsequent Closing,
Buyer agrees to pay to Seller by wire transfer of immediately
available funds (i) the value of such Store Property as set forth
on Schedule 4.5 (proportionately adjusted for any price reduction
required by Section 4.7), (ii) the Inventory Purchase Price for
such Store Property as calculated pursuant to Section 4.2 in a
manner consistent with Schedule 4.2(b), and (iii) the Cash on
Hand for such Store Property (with the Inventory Purchase Price
and Cash on Hand being determined as of the close of business on
the day preceding the Subsequent Closing), minus the Cure Costs
applicable to such Store Property(ies) as set forth in Section
3.3. The Specific Store Value Schedule shall reflect the portion
of the Asset Purchase Price to be deferred to the Subsequent
Closing Date but does not reflect any agreement between the
Parties as to the value of such Store Property on an individual
basis. In the event a Section 365 Deemed Consent for such lease
and/or an Environmental Report complying with Section 11.13 is
not obtained or a Title Defect is not cured as provided above
within 60 days after the Closing Date, Buyer or Seller may elect
to terminate this Agreement with respect to such Store Property.
4.6 Final Price Adjustment and Payment.
(a) Within fifteen (15) Business Days after the Closing Date, or
any Subsequent Closing Date, Seller shall deliver to Buyer a
written statement of its final calculation of Cash On Hand and
the Inventory Purchase Price. If Buyer disputes Seller's
calculations, Buyer shall respond to Seller in writing within ten
(10) Business Days after receipt of Seller's calculation and
provide a written statement of Buyer's calculation of Cash On
Hand and the Inventory Purchase Price. If Buyer and Seller are
unable to agree on a final calculation of the Cash on Hand or the
Inventory Purchase Price by the tenth Business Day after the
Seller's receipt of Buyer's response to the proposed final
calculation of Cash on Hand and Inventory Purchase Price, then
either Party shall be entitled to submit the matter to the
Bankruptcy Court for resolution of the dispute.
(b) When Cash On Hand and the Inventory Purchase Price are
finally determined in accordance with this Article 4 (the
"Determination Date"), the Cash Purchase Price shall be
determined and the Closing Cash Amount shall be adjusted as
follows:
(i) if the Estimated Cash Purchase Price is greater than the
Cash Purchase Price (the "Estimated Excess Amount"), Buyer and
Seller shall direct the Escrow Agent to pay to Buyer from the
Purchase Price Adjustment Escrow Amount the lesser of the
Estimated Excess Amount or the entire Purchase Price Adjustment
Escrow Amount; and if the Estimated Excess Amount is greater than
the Purchase Price Adjustment Escrow Amount (such excess, the
"Estimated Excess Amount Shortfall"), Seller shall promptly, but
in any event within five (5) Business Days after the
Determination Date, pay to Buyer by wire transfer of immediately
available funds, cash in an amount equal to such Estimated Excess
Shortfall Amount. If the Purchase Price Adjustment Escrow Amount
is greater than the Estimated Excess Amount, Buyer and Seller
shall instruct the Escrow Agent to pay such excess to the Seller
promptly, but in any event within five (5) Business Days after
the Determination Date, by wire transfer of immediately available
funds; and
(ii) if the Cash Purchase Price is greater than the Estimated
Cash Purchase Price (the "Closing Excess Amount"), Buyer and
Seller shall instruct the Escrow Agent to pay the entire Purchase
Price Adjustment Escrow Amount to the Seller promptly, but in any
event within five (5) Business Days after the Determination Date,
by wire transfer of immediately available funds, and if the
Closing Excess Amount is greater than the Purchase Price
Adjustment Escrow Amount, the Buyer shall pay to Seller the
amount of such excess, promptly, but in any event within five (5)
Business Days after the Determination Date, by wire transfer of
immediately available funds.
4.7 Delay in Bankruptcy Court Approval. If this Agreement and
the transactions contemplated hereby are not approved by the
Bankruptcy Court, on or before June 11, 2003, and solely as a
result of such delay the Closing does not take place on or before
2 Business Days after June 11, 2003 then the Asset Purchase Price
will be reduced by an amount equal to $500,000 as of such date
and on each successive one week anniversary thereafter for the
next three weeks (being a total of four $500,000 reductions), and
then by an amount equal to $1,000,000 on each successive one week
anniversary thereafter for the next four weeks, up to a maximum
adjustment under this Section 4.7 of $6,000,000 (prorated for any
partial week).
ARTICLE 5
Representations and Warranties of Seller
Seller represents and warrants to Buyer as follows:
5.1 Organization, Standing and Power. Xxxxxxx is a corporation
duly organized, validly existing and in good standing under the
laws of the State of Oklahoma. Rainbow is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Nevada. Seller has the requisite power and
authority to own, lease, operate and transfer its properties,
including the Acquired Assets, and to conduct the business
conducted by the Store Properties as currently conducted.
5.2 Authority. Subject to any necessary authorization from the
Bankruptcy Court, Seller has all corporate power and authority
necessary to execute and deliver this Agreement and the Ancillary
Agreements to which it is or will be a party (the "Seller
Ancillary Agreements") and to consummate the transactions
contemplated thereby and by this Agreement and to perform its
obligations hereunder and thereunder. The execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby by Seller have been or by May 6, 2003 will
have been duly authorized by all necessary corporate action, and
the execution and performance of the Seller Ancillary Agreements
by Seller will be authorized by all necessary corporate action
prior to the Closing. This Agreement constitutes, and upon
execution of each of the Seller Ancillary Agreements such
agreements will constitute, valid and binding obligations of
Seller, enforceable against Seller in accordance with their
respective terms, such enforcement subject to bankruptcy,
insolvency, reorganization, moratorium, or similar laws of
general application affecting creditors' rights and the
application of general principles of equity.
5.3 No Breach or Conflict. Subject to any necessary
authorization from the Bankruptcy Court and except as set forth
on Schedule 5.3, neither the execution, delivery or performance
of this Agreement and the Seller Ancillary Agreements, nor the
consummation of the transactions contemplated hereby and thereby,
will (a) cause Seller to breach any material Law or Order that is
applicable to the Store Properties, (b) conflict with or result
in a violation of Seller's Certificate of Incorporation or
Bylaws, (c) except as would not have a Material Adverse Effect,
result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under, any
Acquired Contract or (d) result in the creation of any material
Lien (other than a Permitted Exception), or, give to others any
material interest or rights, in or with respect to any of the
Acquired Assets.
5.4 Owned Real Property. Schedule 5.4 sets forth the address
and description of the Owned Real Property. With respect to such
Owned Real Property: (A) Seller has good and marketable
indefeasible fee simple title to such Owned Real Property, free
and clear of all Liens created by, through or under Seller,
except Permitted Exceptions and except for Liens granted to
Seller's prepetition and postpetition creditors pursuant to the
DIP Order and the Trade Creditor Lien Order in connection with
the Chapter 11 Cases which will not encumber the Acquired Assets
after Closing; (B) except as set forth in Schedule 5.4, Seller
has not leased or otherwise granted to any Person the right to
use or occupy such Owned Real Property or any portion thereof;
and (C) other than the right of Buyer pursuant to this Agreement,
there are no outstanding options, rights of first offer or rights
of first refusal to purchase such Owned Real Property or any
portion thereof or interest therein created by, through or under
Seller. Other than Store #11, Seller does not own the real
estate comprising any of the Store Properties.
5.5 Leased Real Property.
(a) Seller has delivered to Buyer a true and complete copy of
each Lease and all amendments thereto, including, without
limitation all superior leases. Seller is not a party to any
oral real property leases with respect to the Store Properties.
With respect to each Lease (i) such Lease is valid, binding,
enforceable and in full force and effect; (ii) to Seller's
Knowledge, except for matters resulting from the commencement of
the Chapter 11 Cases, there are no material disputes with respect
to such Lease except as set forth on Schedule 5.5(a); (iii) no
security deposit or portion thereof deposited by Seller with
respect to such Lease has been applied in respect of a breach or
default by Seller under such Lease which has not been re-
deposited in full; (iv) to Seller's Knowledge, no other party is
in material breach or default under such Lease; and (v) except as
set forth on Schedule 5.5(a), Seller has not assigned, subleased,
mortgaged, deeded in trust or otherwise transferred or encumbered
such Lease or any interest therein, except for any Permitted
Exceptions and except for Liens granted to Seller's prepetition
and postpetition creditors pursuant to the DIP Order and the
Trade Creditor Lien Order in connection with the Chapter 11 Cases
which will not encumber the Acquired Assets after Closing.
(b) Except as set forth on Schedule 5.5(b), to Seller's
Knowledge, there are no pending condemnation or eminent domain
proceedings with respect to any of the Store Properties.
(c) To Seller's Knowledge, the current use of, and the manner of
operation of the Business at, the Store Properties does not
violate in any material respect any instrument of record or
agreement affecting any of the Store Properties (including,
without limitation, any restrictions or limitations imposed under
the Leases). To Seller's Knowledge there is no violation of any
covenant, condition, restriction, easement, agreement or Order of
any Governmental Entity having jurisdiction over the Store
Properties that affects the use or occupancy thereof.
5.6 Tangible Assets. All tangible Acquired Assets used in the
operation of the Store Properties, whether owned or leased, are
being transferred to Buyer "as is," "where is" and "with all
faults."
5.7 Title to Assets. At the Closing, subject to entry of the
Sale Order, Seller will convey to Buyer title to all of the
Acquired Assets, free and clear of all Liens except the Permitted
Exceptions.
5.8 Claims, Litigation and Disputes. Except as set forth on
Schedule 5.8, and except for actions, proceedings or
investigations affecting the retail food merchandising industry
in general, and except for the Chapter 11 Cases, there is no
claim, litigation, action, grievance, arbitration or other legal
proceeding at law or equity or before any Governmental Entity or,
to Seller's Knowledge, threatened against Seller, adversely
affecting (i) Seller's ability to perform its obligations
hereunder, (ii) the rights granted under the Acquired Contracts,
or (iii) the ownership, use, maintenance or operation of the
Acquired Assets and the Store Properties by Seller, that in any
such case if determined adversely to Seller, would reasonably be
expected to have a Material Adverse Effect.
5.9 Non-Lease Acquired Contracts. Except as set forth in
Schedule 5.9, or except as would not have a Material Adverse
Effect, each Non-Lease Acquired Contract is valid, binding upon
Seller and in full force and effect. The term "Non-Lease
Acquired Contract" means any Acquired Contract other than the
Leases.
5.10 Compliance With Laws. Except as disclosed on Schedule 5.10,
the Store Properties are in compliance with all Laws applicable
to the Store Properties, except in any such case where the
failure to be in compliance would not be deemed a Material
Adverse Effect. Seller has not received any written notice
within the past twelve (12) months relating to any violations or
any alleged violations or defaults under any applicable Law or
Order, where the failure to cure could result in a Material
Adverse Effect. The permits and licenses set forth on Schedule
2.1(g) constitute all material permits and licenses necessary to
conduct the business of the Store Properties, as the same has
heretofore been conducted, in compliance with applicable Laws.
5.11 Taxes. Except as disclosed on Schedule 5.11:
(a) To the extent that under applicable Law the failure of this
representation to be true or correct could result in a Lien upon
or claim against the Acquired Assets or in a claim against Buyer
as transferee or owner of the Acquired Assets: (i) Seller has
filed or has caused to be filed on a timely basis all Tax Returns
that are or were required to be filed with respect to the
Acquired Assets and the operation of the Store Properties; (ii)
all such Tax Returns accurately reflect all liabilities required
to be reflected thereon; and (iii) all Taxes due and payable by
Seller with respect to the Acquired Assets and the operation of
the Store Properties as shown in such Tax Returns have been paid.
(b) To the extent that under applicable Law the failure of this
representation to be true or correct could result in a Lien upon
or claim against the Acquired Assets or in a claim against Buyer
as transferee or owner of the Acquired Assets: (i) Seller has not
requested or consented to extend to a date later than the Closing
Date the time in which any Tax may be assessed or collected by
any Governmental Entity with respect to the Acquired Assets and
the operation of the Store Properties; (ii) no deficiency or
proposed adjustment which has not been settled or otherwise
resolved for any amount of Tax has been proposed, asserted or
assessed by any Governmental Entity against Seller with respect
to the Acquired Assets and the operation of the Store Properties
and there is no action, suit, taxing authority proceeding or
audit now in progress, pending or, to Seller's Knowledge,
threatened against or with respect to Seller with respect
thereto; (iii) there are no Liens for Taxes (other than for
current Taxes not yet due and payable) upon the Acquired Assets;
and (iv) Buyer will not be required to deduct and withhold any
amount pursuant to Section 1445(a) of the Code or section 1146(c)
of the Bankruptcy Code upon the transfer of the Acquired Assets
to Buyer.
5.12 Financial Statements and Related Matters. Seller has
previously provided to Buyer copies of Seller's (a) unaudited
income statements for each of the Store Properties for each of
(i) the fiscal years ended December 28, 2002 and December 29,
2001 and (ii) the twelve weeks ended March 22, 2003 (the "Income
Statements"), and (b) the unaudited combined balance sheets and
statements of income for Rainbow for each of the fiscal periods
referred to in clauses (i) and (ii) of (a) above (the "Rainbow
Financial Statements" and together with the Income Statements,
the "Financial Information"). Subject to the last sentence of
this Section 5.12, the Financial Information is accurate and
complete in all material respects and is consistent with Seller's
books and records (which, in turn, are accurate and complete in
all material respects). The Financial Statements fairly present
the results of operations of the Store Properties as of the dates
and for the periods referred to therein. Notwithstanding the
foregoing, the Store Properties only constitute a portion of the
operations of Rainbow and a smaller portion of the consolidated
operations of Seller, and, therefore, the Financial Information
is based on the extensive use of allocations. Seller believes
these allocations have been performed on a reasonable basis. In
addition, Buyer has been made aware that Xxxxxxx is adjusting its
books and records for the period ended December 28, 2002 to
record an impairment charge to Rainbow's operations to reflect
the current market value of the Store Properties in accordance
with SFAS 144, which, if allocated to Rainbow's Financial
Information, would result in a change to the Financial
Information as a full write-down of goodwill and a partial write-
down of its fixed assets.
5.13 Employees and Related Matters.
(a) Schedule 5.13(a) sets forth a complete and correct list of
all Employee Benefit Plans maintained or contributed to by Seller
or any ERISA Affiliate in respect of or for the benefit of
Employees (the "Seller Benefit Plans"). Seller has made
available to Buyer true, complete and correct copies of the
Seller Benefit Plan documents, summary plan descriptions and all
related documents.
(b) Seller and each of its ERISA Affiliates is in compliance
with COBRA except for such non-compliance as would not result in
a Material Adverse Effect. Except as set forth on Schedule
5.13(b), neither Seller nor any of its ERISA Affiliates has any
liability or potential liability for a partial or complete
withdrawal (as defined in Sections 4205 and 4203 of ERISA) from
any multiemployer plan (as defined in Section 3(37) of ERISA) or
any liability or obligation under Section 4204 of ERISA under a
Union Pension Plan which covers the Store Employees.
(c) Schedule 5.13(c) sets forth a complete and correct list of
all Employees, including their position, hire date and current
salary or hourly rate.
(d) Except as set forth on Schedule 5.13(d), (i) none of the
Employees are represented by a labor union or labor organization;
(ii) Seller is not subject and is not a party to any collective
bargaining agreement or relationship covering any Employee; (iii)
there are (and for the past 18 months have been) no labor
strikes, slowdowns, work stoppages or lockouts currently pending
or, to Seller's Knowledge, threatened against Seller with respect
to any Employees; (iv) to Seller's Knowledge, there is not
presently and during the 12 months preceding the date of this
Agreement there have not been any labor union organizational or
decertification campaigns by or directed at any Employees, and no
other question concerning representation exists; (v) there is no
unfair practice charge or complaint pending against or affecting
Seller or, to Seller's Knowledge, threatened before the National
Labor Relations Board or any other Governmental Entity; and (vi)
there is no material grievance pending against or involving
Seller with respect to any Employees.
(e) Except as would not have a Material Adverse Effect, Seller
is in compliance with all applicable Laws and Contracts
respecting labor relations, employment practices and terms of
employment.
(f) To Seller's Knowledge, the rates of wages and benefits paid
by Seller to its Employees with respect to the Store Properties
in each of the markets in which such Store Properties are located
are competitive with the rates of wages and benefits paid by any
of Cub Foods, Xxxxxx'x or Lunds to employees in such market.
5.14 Environmental Matters. Except as otherwise disclosed on
Schedule 5.14:
(a) Seller has obtained all permits, licenses and other
authorizations required under all applicable Environmental Laws
to operate the Store Properties as they are currently being
operated, except for such permits, licenses or authorizations,
the failure of which to obtain would not reasonably be expected
to have a Material Adverse Effect.
(b) Seller has conducted its operations of the Store Properties
in compliance with all applicable Environmental Laws, except for
such non-compliance that would not reasonably be expected to have
a Material Adverse Effect.
(c) To Seller's Knowledge, within the last 24 months: (i) no
written notice, notification, demand, request for information,
citation, summons, complaint or order under any Environmental Law
has been issued to or filed with respect to any of the Store
Properties, and (ii) no investigation or review is pending or
threatened by any Governmental Entity under any applicable
Environmental Law in connection with Seller's operation of the
Store Properties.
(d) Seller has not generated, used, stored or disposed of
Hazardous Substances on any of the Store Properties in a manner
that will give rise to any material liability under Environmental
Laws.
(e) To Seller's Knowledge, Seller has not generated, stored or
disposed of Hazardous Substances on any of the Store Properties
in a manner that is likely to limit the ability of Buyer to
operate the Store Properties as they are currently being operated
by Seller.
(f) To Seller's Knowledge, none of the Store Properties has been
designated, restricted or investigated by any Governmental Entity
as a result of the actual or suspected presence of Hazardous
Substances, and Seller is not aware of any basis for any such
designation, restriction or investigation.
5.15 Brokerage Fees. Except for Xxxxxx Xxxxxxx & Co.
Incorporated, whose fee will be paid by Seller pursuant to a
separate agreement, no Person acting on behalf of Seller is
entitled to any brokerage or finder's fee or commission in
connection with the transactions contemplated by this Agreement.
5.16 Disclaimer. EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES
CONTAINED IN THIS AGREEMENT AND THE ANCILLARY AGREEMENTS, NEITHER
SELLER NOR ANY OF ITS AFFILIATES MAKES ANY OTHER EXPRESS OR
IMPLIED REPRESENTATION OR WARRANTY WITH RESPECT TO THE STORE
PROPERTIES, THE ACQUIRED ASSETS (INCLUDING THE VALUE, CONDITION
OR USE OF ANY ACQUIRED ASSET) OR OTHERWISE WITH RESPECT TO ANY
OTHER INFORMATION PROVIDED TO BUYER OR PARENT, WHETHER ON BEHALF
OF SELLER OR ITS AFFILIATES, INCLUDING AS TO (A) MERCHANTABILITY
OR FITNESS FOR ANY PARTICULAR USE OR PURPOSE, (B) THE OPERATION
OF THE STORE PROPERTIES BY BUYER AFTER THE CLOSING IN ANY MANNER,
OR (C) THE PROBABLE SUCCESS OR PROFITABILITY OF THE OWNERSHIP,
USE OR OPERATION OF THE ACQUIRED ASSETS BY BUYER OR PARENT AFTER
THE CLOSING. Seller makes no representations or warranties with
respect to any estimates, projections, forecasts or forward-
looking information provided to Buyer or Parent. There is no
assurance that any estimated, projected or forecasted results
will be achieved. Except to the extent of the representations
and warranties made in this Agreement and the Ancillary
Agreements, neither Seller nor any other Person will have or be
subject to any liability or indemnification obligation to Buyer,
Parent or any other Person resulting from the distribution to
Buyer or Parent, or Buyer's or Parent's use of, any such
information, including any information, document or material made
available to Buyer or Parent in "data rooms," management
presentations, functional "break out" discussions, site visits,
responses to questions submitted by or on behalf of Buyer or
Parent, whether orally or in writing, or in any other form in
expectation of the transactions contemplated by this Agreement.
5.17 Recent Events. Except as described in the attached Schedule
5.17, since April 1, 2003, the Store Properties have not
experienced any change that has had or would reasonably be
expected to have a Material Adverse Effect. Since December 28,
2002, without limiting the generality of the foregoing, except as
described on Schedule 5.17 the Seller has not (with respect to
the Store Properties):
(a) mortgaged, pledged or subjected to any Lien any of the
Acquired Assets (including the Owned Real Property), other than
Permitted Exceptions and Liens granted to Seller's prepetition
and postpetition lenders pursuant to the DIP Order and the Trade
Creditor Lien Order, which Liens will not encumber the Acquired
Assets after Closing;
(b) sold, leased, transferred or assigned any of its assets,
except pursuant to this Agreement, other than sales of Inventory
in the ordinary course of business and sales of Equipment in the
ordinary course of business and consistent with customary
practice in the industry;
(c) entered into, amended, modified, waived, extended, renewed
or terminated any Acquired Contract other than in the ordinary
course of business;
(d) suffered any extraordinary loss, damage, destruction or
casualty loss or waived any rights to any Acquired Asset;
(e) merged or consolidated with, or purchased substantially all
of the stock or assets of, or otherwise acquired, any
corporation, partnership, association or other business
organization or entity or division thereof;
(f) acquired or received Inventory or Equipment except in the
ordinary course of business; or
(g) committed to any of the foregoing.
5.18 Inventory. The Inventory is saleable, merchantable and not
out of date or out of code, and none of it is damaged, or
defective, except for individual items to be excluded from the
Inventory pursuant to the procedures described on Schedule 4.2(b)
..
5.19 Cure Amounts. To Seller's Knowledge, Schedule 5.19 attached
hereto sets forth the Cure Costs to be satisfied for purposes of
Seller's assumption and assignment to Buyer of the Acquired
Contracts under section 365 of the Bankruptcy Code and the
Delinquent Sales and Property Taxes.
5.20 Intellectual Property. Schedule 2.2(j) sets forth a
complete and correct list of all Intellectual Property and
Trademarks owned by, registered in the name of or used by Seller
or any Affiliate in the conduct of the Business at the Store
Properties. Except as set forth on Schedule 5.20, Seller owns
the rights to use, in the Business at the Store Properties, all
of the Acquired Intellectual Property, including but not limited
to the name "Rainbow," and any variations thereof, free and clear
of all Liens other than Permitted Encumbrances and Liens granted
to Seller's prepetition and postpetition creditors pursuant to
the DIP Order and the Trade Creditor Lien Order in connection
with the Chapter 11 Cases which will not encumber the Acquired
Assets after Closing, and the use of the Acquired Intellectual
Property in the conduct of the Business, as currently conducted,
does not conflict with the rights of others in any manner.
Except as set forth in Schedule 5.20, there are no licenses,
agreements or commitments outstanding or effective granting any
other person any right to use, operate under, license or
sublicense any of the Acquired Intellectual Property. Seller has
not received any notice or claim that any of the Acquired
Intellectual Property infringes upon or conflicts with the rights
of any other person. Except as set forth in Schedule 5.20, to
Seller's Knowledge there is no infringement or violation by any
other person of the Seller's rights in any of the Acquired
Intellectual Property. Other than the Acquired Intellectual
Property, there is, to Seller's Knowledge, no trademark, trade
name, service xxxx or similar Intellectual Property used in the
Business that is material to the conduct of the Business in
substantially the manner in which it has heretofore been
conducted.
5.21 Governmental and Regulatory Consents and Approvals. Other
than required approval under the HSR Act and by the Bankruptcy
Court, there is no Governmental Entity that must consent to the
execution, delivery or performance of this Agreement by Seller,
except where the failure to obtain any such consent of such
Governmental Entity would not have a Material Adverse Effect or
would not materially adversely effect the ability of Seller to
consummate the transactions contemplated hereby.
5.22 All Necessary Assets. Except for the Excluded Assets and
any Contracts other than the Acquired Contracts, the Acquired
Assets comprise all of those assets (real, personal, tangible and
intangible) used in connection with the ownership and operation
of the Store Properties and required to enable Buyer to own and
operate the Store Properties in the same manner as operated by
and conducted by Seller prior to and as of the Closing Date.
5.23 Accuracy and Completeness of Information Furnished. No
representation or warranty of Seller contained in this Agreement
contains or will contain as of the date such representation and
warranty is made or other document has been, is or will be
furnished, any untrue statement of a material fact or omitted,
omits, or will omit to state as of the date such representation
or warranty is made or such document is or will be furnished, any
material fact which is necessary not to make the statement
contained herein or therein not misleading.
ARTICLE 6
Representations and Warranties of Buyer
Buyer and Parent, jointly and severally, represent and
warrant to Seller as follows:
6.1 Organization, Standing and Power. Buyer is a corporation
duly organized, validly existing and in good standing under the
laws of the state of Wisconsin. Buyer has the requisite power
and authority to conduct its business as currently conducted and
as contemplated by this Agreement, and to own, lease, operate or
hold the Acquired Assets and to conduct the operations of the
Store Properties. Buyer is duly qualified or registered and in
good standing in the State of Wisconsin and will, at or prior to
Closing become duly qualified or registered and in good standing
in the State of Minnesota.
6.2 Authority. Each of Buyer and Parent has all corporate power
and authority necessary to execute this Agreement and the
Ancillary Agreements to which it is or will be a party (the
"Buyer Ancillary Agreements") and to consummate the transactions
contemplated thereby and by this Agreement. The execution and
delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all
necessary corporate action of Buyer and Parent, as the case may
be, and the execution and performance of the Buyer Ancillary
Agreements by Buyer and Parent, as the case may be, will be
authorized by all necessary corporate action prior to Closing.
This Agreement constitutes, and upon execution each of the Buyer
Ancillary Agreements will constitute, valid and binding
obligations of each of Buyer and Parent, as applicable,
enforceable against them in accordance with their respective
terms, such enforcement subject to bankruptcy, insolvency,
reorganization, moratorium, or similar laws of general
application affecting creditors' rights and the application of
general principles of equity.
6.3 No Breach or Conflict. The execution, delivery and
performance of this Agreement and the Buyer Ancillary Agreements
and consummation of the transactions contemplated thereby and by
this Agreement will not (a) cause Buyer or Parent to breach any
Law or Order, (b) conflict with or result in a violation of the
Articles of Incorporation or Bylaws of Buyer or Parent, or (c)
conflict with or result in a material breach of any of the terms,
conditions or provisions of any Contract or Permit to which Buyer
or Parent is a party or by which it may be bound, or constitute a
default thereunder, which breach, conflict, default or creation
would materially affect Buyer's or Parent's ability to perform
its obligations hereunder or under the Buyer Ancillary Agreements
or result in a claim against Seller.
6.4 Third-Party Consents. Other than required approval of the
Bankruptcy Court and under the HSR Act and the Lenders' Consents
referred to in Section 11.5, each Person or Governmental Entity
whose consent to Buyer's or Parent's execution, delivery or
performance of this Agreement and the Buyer Ancillary Agreements
is legally or contractually required has given such consent.
6.5 Claims, Litigation and Disputes. Except for actions,
proceedings or investigations affecting the retail food
merchandising industry in general, there is no claim or
litigation or investigative proceeding pending or, to the
knowledge of Buyer or Parent, threatened against Buyer or Parent
which would materially affect Buyer's or Parent's ability to
perform its obligations hereunder and under the Buyer Ancillary
Agreements.
6.6 Financing. Subject to the receipt of the Lenders' Consent,
Buyer and Parent collectively have adequate cash on hand or
available funding through credit facilities to enable Buyer to
pay the Cash Purchase Price.
6.7 Brokerage Fees. No Person or other entity acting on behalf
of Buyer or Parent is entitled to any brokerage or finder's fee
or commission in connection with the transactions contemplated by
this Agreement or the Buyer Ancillary Agreements.
6.8 Buyer's Investigation. Each of Buyer and Parent represents
that it is a sophisticated entity that was advised by
knowledgeable counsel and financial advisors and hereby
acknowledges that it has conducted an investigation of the
physical plants of the Store Properties which investigation
included evaluation of the condition and performance of such
physical plants. Notwithstanding anything in this Agreement to
the contrary, Buyer acknowledges that it is accepting the
Acquired Assets in their present condition and location and with
their present operating capabilities. Each of Buyer and Parent
acknowledges that Seller makes no warranty, express or implied,
as to the condition of the Acquired Assets except as expressly
set forth in this Agreement. Neither Buyer nor Parent has relied
upon, and Seller shall not be liable for or bound in any manner
by, any express or implied verbal or written information,
warranties, guarantees, promises, statements, inducements,
representations or opinions pertaining to the Store Properties or
the Acquired Assets, except as may be contained in this
Agreement, the Ancillary Agreements, and certificates and other
instruments and documents delivered hereunder.
ARTICLE 7
Seller's Covenants
Except and to the extent Buyer may otherwise permit in
writing, Seller covenants and agrees as follows:
7.1 Access and Right of Inspection. Between the date of this
Agreement and the Closing Date, Seller shall give to Buyer,
Parent, their respective officers, agents, employees, counsel,
accountants and other representatives, reasonable access to the
Store Properties and, to the extent permitted by Law, Seller
shall furnish to Buyer and Parent such nonproprietary,
nonconfidential information related to the Store Properties as
Buyer or Parent shall from time to time reasonably request for
the purposes of preparing for the transition of the Store
Properties from Seller to Buyer and Seller's initial proposal for
Estimated Inventory Purchase Price and Estimated Cash On Hand;
provided, however, that any such investigation shall be conducted
(a) during normal business hours, (b) in such a manner as not to
interfere with the operation of the Store Properties by Seller
and (c) with respect to any physical inspection of any Store
Property, after giving at least one (1) Business Day notice to
Seller. Notwithstanding the foregoing, neither Buyer nor Parent
will contact any employee, customer or supplier of Seller with
respect to this Agreement without the prior written consent of
Seller. Prior to the Closing Date, each of Buyer and Parent
shall have the right to make a physical inspection of each Store
Property, to make a market analysis of each Store Property, and
to make inquiries to Governmental Entities and other appropriate
parties for purposes of its due diligence review. In addition,
prior to the Closing Date, each of Buyer and Parent may, at its
expense, conduct Phase I environmental assessments of each of the
Store Properties, and any report regarding such Phase I
environmental assessment shall contain a statement that the
report was prepared for the benefit of, and may be relied upon by
Seller, Buyer and Parent (and to the extent the reports of the
Phase I investigations recommend or suggest further testing, such
further testing as may be so recommended or suggested). Such
inspections shall be conducted so as not to unreasonably
interfere with the use of each Store Property by Seller. Each of
Buyer and Parent agrees to repair any material damage to each
Store Property due to such inspection and to indemnify and hold
Seller harmless of and from any claim for physical damages or
physical injuries arising from Buyer's or Parent's inspection of
each Store Property, and notwithstanding anything to the contrary
in this Agreement, such obligations to repair and to indemnify
shall survive Closing or any termination of this Agreement.
7.2 Conduct of Business Pending Closing. Except as described on
Schedule 7.2, until the Closing, Seller shall continue to operate
the Store Properties substantially in the manner as heretofore
conducted. Without limiting the scope of the foregoing, Seller
shall:
(a) Use, preserve and maintain the Acquired Assets on a basis
consistent with past practice and all applicable Laws and shall
use commercially reasonable efforts to maintain satisfactory
relationships with suppliers, customers and others having
business relationships with it and promote the ordinary and
smooth transition of the Store Properties and the Acquired Assets
to Buyer;
(b) Continue to maintain the insurance covering the Acquired
Assets in effect as of the date of this Agreement;
(c) Pay all debts and obligations incurred by it in the
operation of the Store Properties in the ordinary course of
business consistent with Seller's practice since April 1, 2003;
(d) Not commit any act or omit to do any act, nor permit any act
or omission to act, which may cause a material breach of any of
the Acquired Contracts;
(e) Not amend or terminate any Acquired Contract;
(f) Maintain its books, accounts and records with respect to the
Acquired Assets and the Store Properties in the usual manner and
on a basis consistent with past practice;
(g) Not enter into any agreement or agreements for the sale of a
material amount of any of the Acquired Assets, except for sales
of Equipment provided that, unless such item of Equipment is no
longer necessary for the operation of the Store Properties, any
item of Equipment sold shall be replaced with an item of
Equipment of like value and quality;
(h) Not, without prior consent of Buyer, grant any raises to
Employees, except (i) in the ordinary course of business and in
accordance with past practices, (ii) the raises or bonuses set
forth on Schedule 7.2(h), or (iii) raises, bonuses or other
fringe benefits provided under the Xxxxxxx Companies, Inc.
Rainbow Stay Bonus Program adopted by Seller (subject to approval
of the Bankruptcy Court) to retain and ensure the good faith
assistance and cooperation through the Closing Date of certain
Employees who are key associates of Rainbow or who provide
support services to Rainbow; and
(i) Maintain the quantities and mix of Inventory at each Store
Property in a manner consistent with past practice.
7.3 Third-Party Notices, Consents and Certificates.
(a) Seller shall give all notices to Governmental Entities and
any other Person required to be given by it under the Acquired
Contracts or otherwise in connection with the transactions
contemplated hereby. Seller agrees to use commercially
reasonable efforts to obtain an estoppel certificate from each
respective landlord of the Store Properties (the "Estoppel
Certificates," in a form to be provided by Buyer, reasonably
acceptable to Seller). Buyer will cooperate in good faith with
Seller, and will provide reasonable assistance to Seller in a
timely manner, with respect to the matters described in this
Section 7.3.
(b) At such time following the execution of this Agreement as
Buyer and Seller shall reasonably determine, Seller shall file or
cause to be filed, with filing fees split evenly between Seller
and Buyer, with the Federal Trade Commission and the United
States Department of Justice any notifications required to be
filed under the HSR Act and the rules and Regulations promulgated
thereunder with respect to the transactions contemplated hereby.
Seller shall consult with Buyer as to the appropriate time of
filing such notifications and shall use commercially reasonable
efforts to make such filings at the agreed upon time, to respond
promptly to any requests for additional information made by such
agencies, and to cause the waiting periods under the HSR Act to
terminate or expire at the earliest possible date after the date
of filing.
7.4 Title Insurance and Surveys. Seller shall use its
commercially reasonable efforts to assist Buyer in obtaining the
Title Commitments, Title Policies and Surveys in form and
substance as set forth in Sections 11.10 and 11.11 of this
Agreement, within the time periods set forth therein, including
without limitation taking such steps as may reasonably be
required, which do not cause Seller to incur any out-of-pocket
expense or obligation to incur out-of-pocket expense, to remove
any Liens which are not Permitted Exceptions. Seller shall
provide the Title Company with any affidavit, indemnity or other
assurances reasonably requested by the Title Company to issue the
Title Policies.
7.5 Commercially Reasonable Efforts; Further Assurances.
Seller shall execute such documents and use commercially
reasonable efforts to take or cause to be taken all action and do
or cause to be done all things necessary, proper or advisable to
consummate the transactions contemplated by this Agreement
(including, without limitation, to put Buyer in actual possession
and operating control of the Acquired Assets, to effectuate,
record or perfect the transfer of the Acquired Assets to Buyer,
to confirm the title of the Acquired Assets in Buyer and to
assist Buyer in exercising rights relating thereto), and to make
all filings with and give all notices to Third Parties which may
be necessary or required in order to effectuate the transactions
contemplated hereby. Seller shall use commercially reasonable
efforts to fulfill or obtain the fulfillment of the conditions
set forth in Articles 10 and 11 of this Agreement.
7.6 Notification of Certain Matters; Schedules.
(a) Seller shall give notice to Buyer of (i) the occurrence of
any event known to Seller that would be likely to cause either
(A) any representation or warranty of Seller contained in this
Agreement, or in connection with the transactions contemplated
hereunder, to be untrue or inaccurate in any material respect at
any time from the date hereof to the Closing or (B) directly or
indirectly, any Material Adverse Effect on Seller, or (ii) any
material failure of Seller to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied
by them hereunder or (iii) the receipt of any Bid and shall
deliver all written Bids to Buyer immediately upon receipt
thereof. Notwithstanding the foregoing, the delivery of any
notice pursuant to this Section 7.6(a) shall not (x) be deemed to
amend or supplement any of the Disclosure Schedules contemplated
hereby, (y) be deemed to cure any breach of any representation,
warranty covenant or agreement or to satisfy any condition or (z)
limit or otherwise affect the remedies available hereunder to the
party receiving such notice
(b) Seller shall add Buyer and Buyer's counsel to Seller's
"special notice list" and otherwise provide notice to Buyer of
all matters that are required to be served on Seller's creditors
pursuant to the Bankruptcy Code and Rules.
(c) Buyer and Seller acknowledge that certain of the
representations and warranties of Seller affirmatively require
that Seller list certain factual information on the Schedules
attached hereto. Seller shall be permitted to update such
Disclosure Schedules. Such additional disclosures or updates by
Seller pursuant to this Section 7.6(c), shall be deemed to amend
or supplement the Disclosure Schedules attached hereto and the
representations and warranties to which they pertain, unless such
updates reflect changes having or that are likely to have a
Material Adverse Effect.
7.7 Removal of Equipment. Seller agrees that it will not remove
any of the Equipment from the Store Properties prior to the
Closing Date.
7.8 Access; Audit Cooperation. Buyer shall, for a period of
seven years from the Closing Date, have access to, and the right
to copy, at its expense, for bona fide business purposes and
during usual business hours upon reasonable prior notice to
Seller, all books and records of Seller relating to the Acquired
Assets (including, without limitation, the Store Properties and
the Acquired Intellectual Property). Seller shall retain and
preserve all such books and records for such seven-year period.
Seller may discard or destroy any such books or records, provided
that Seller shall so notify Buyer and allow Buyer, within 30 days
of such notification, to elect to take possession of such books
and records. Buyer may request that Seller make copies of (and
Seller shall make copies of) all such materials requested by the
Buyer at any time on or after the Closing Date. To the extent
Buyer is required to obtain an audit of the financial statements
of the Business for periods prior to the Closing Date (for which
Buyer will bear all costs and expenses), Seller will cooperate
with Buyer and its auditors to facilitate such an audit, as
reasonably requested by Buyer.
7.9 Confidentiality. Seller acknowledges that as of the
Closing Date all Confidential Information shall become the
property of Buyer. Seller agrees that, without the prior written
consent of Buyer, Seller shall not disclose or permit to be
disclosed to any Person, or utilize for its own account or permit
to be utilized by any Person, at any time, any Confidential
Information after the Closing, or prior to the Closing, except as
provided in the last sentence of this Section 7.9. Seller shall
take all appropriate steps to safeguard all such Confidential
Information and to protect it against disclosure, misuse,
espionage, loss and theft. As soon as practicable after the
Closing Date, Seller shall promptly deliver to Buyer all copies
and embodiments, in whatever form, of all such Confidential
Information in Seller's possession or within its control,
irrespective of the location or form of such material and, if
requested by Buyer, shall provide Buyer with written confirmation
that all such materials have been delivered to Buyer. In the
event Seller or any of its Affiliates is required to disclose any
such Confidential Information pursuant to applicable law, Sellers
shall promptly notify Buyer in writing, which notification shall
include the nature of the legal requirement and the extent of the
required disclosure, and shall cooperate with Buyer to preserve
the confidentiality of such information consistent with
applicable law. Provided, nothing contained herein shall
prohibit Seller from disclosing Confidential Information to a
bona fide prospective Qualified Bidder in connection with the
sale process described in the Bidding Procedures Order.
7.10 Bankruptcy Actions.
(a) As soon as practicable after the execution of this Agreement
(and in no event later than 2 Business Day(s) thereafter), Seller
will use commercially reasonable efforts to obtain the entry of:
(i) the Bidding Procedures Order as soon as practicable and no
later than May 19, 2003 or within 2 Business Days thereafter; and
(ii) the Sale Order as soon as practicable and no later than June
4, 2003 or within 2 Business Days thereafter.
(b) On or before entry of the Bidding Procedures Order, Seller
shall file with the Bankruptcy Court a motion to approve the
transaction contemplated hereby (the "Sale Motion"), which motion
shall seek the Bankruptcy Court's approval of this Agreement,
Seller's performance under this Agreement and the assumption and
the assignment of the Acquired Contracts solely on the terms of
such Acquired Contracts. Contemporaneously with the filing of
the Sale Motion, Seller shall provide appropriate notice of the
hearing on the Sale Motion as is required by the Bankruptcy Code
and Rules to all parties entitled to notice including, but not
limited to, all parties to the Acquired Contracts and all
applicable taxing and environmental authorities.
(c) On or before entry of the Bidding Procedures Order, Seller
shall file with the Bankruptcy Court a motion (which may be
included in the Sale Motion) for an order authorizing the
assumption and assignment, pursuant to Section 365 of the
Bankruptcy Code, of the Acquired Contracts (the "Assignment
Motion"). The Acquired Contracts shall be identified (by the
date of the Acquired Contract (if available), the non-debtor
party to the Acquired Contract and the address of such party) on
an exhibit to the Assignment Motion. Such exhibit shall set
forth the amounts necessary to cure any defaults under any
Acquired Contracts as determined by Seller based on Seller's
books and records. Seller shall, at the written direction of
Buyer delivered any time prior to the Sale Hearing, remove any
Acquired Contracts, other than the Leases, from the exhibit. In
cases in which Seller is unable to establish that a default
exists, the relevant cure amount shall be $0.00. Not later than
25 days prior to the hearing to consider the Assignment Motion,
Buyer and Parent shall provide such financial and other
information regarding Buyer and Parent as necessary to establish
Buyer's adequate assurances of future performance under the
Acquired Contracts (within the meaning of Section 365(f)(2) of
the Bankruptcy Code) in a form and content capable of being
included in the Assignment Motion, which shall include Parent's
agreement to guaranty Buyer's obligations under the Assumed
Liabilities, provided, if the information to establish Buyer's
adequate assurances of future performances requires Buyer or
Parent to provide any financial information that is not otherwise
publicly available, Buyer may seek a protective order from the
Bankruptcy Court to protect the confidentiality of the
information. The Assignment Motion also shall provide for an
objection deadline thereto whereby any non-debtor party to an
Acquired Contract or Lease, who fails to object to the cure
amount set forth in the Assignment Motion for its respective
Acquired Contract or Lease, prior to such objection deadline,
shall be forever bound by the cure amount provided in the
Assignment Motion.
(d) Seller will provide Buyer with a reasonable opportunity to
review and comment upon all motions, applications and supporting
papers prepared by Seller prior to the filing thereof in the
Chapter 11 Cases. All motions, applications and supporting
papers prepared by Seller and relating (directly or indirectly),
in Buyer's good faith determination, to the transactions
contemplated by this Agreement (including forms of orders and
notices to interested parties) must be acceptable in form and
substance to Buyer, in its reasonable discretion.
7.11 Exclusivity; No Solicitation of Transactions. Seller
represents that, other than the transactions contemplated by this
Agreement, Seller is not a party to or bound by any agreement
with respect to a possible merger, sale, restructuring, or other
disposition of all or any material part of the Acquired Assets.
Prior to the entry of the Bidding Procedures Order on the
Bankruptcy Court's docket, no Seller shall, directly or
indirectly, (i) solicit or negotiate any Acquisition Proposal,
regardless of whether such offer was unsolicited participate in
any effort or attempt by any Person (other than Buyer and its
Affiliates) to do or seek to do any of the foregoing, (ii)
execute an Acquisition Proposal, or (iii) except as provided in
this Agreement, seek or support Bankruptcy Court approval of a
motion or Order inconsistent in any way with the transactions
contemplated in this Agreement. Subsequent to the entry of the
Bidding Procedures Order on the Bankruptcy Court's docket, Seller
shall not, directly or indirectly, including through any officer,
director, employee, agent, professional or advisor, solicit any
Acquisition Proposal (other than as expressly permitted under the
Bidding Procedures Order) or participate in any negotiations with
respect to any Acquisition Proposal; provided, however, that
after entry of the Bidding Procedures Order on the Bankruptcy
Court's docket, nothing herein shall preclude Seller from taking
any action in the Chapter 11 Cases seeking to sell, pursuant to a
Qualifying Bid in connection with the Auction process established
in the Bidding Procedures Order, the Acquired Assets. From the
date of the issuance of the Sale Order and until the Closing Date
and provided that Buyer is proceeding in good faith to consummate
the transactions contemplated hereby in a timely manner, no
Seller or any of its Affiliates shall negotiate or consummate any
transaction involving an Acquisition Proposal.
7.12 Other Bids. Buyer acknowledges that pursuant to the Bidding
Procedures Order, and after (but in no case before) entry of the
Bidding Procedures Order, Seller may solicit bids ("Bids") from
other prospective purchasers (collectively, the "Bidders") for
the sale of all or substantially all of the Acquired Assets, on
terms and conditions substantially the same in all respects to
this Agreement and in accordance with the procedures set forth in
the Bidding Procedures Order.
ARTICLE 8
Covenants of Buyer and Parent
Except and to the extent Seller may otherwise permit in
writing, Buyer covenants and agrees as follows and Parent
covenants and agrees as follows and guarantees Buyer's
performance pursuant to this Article 8:
8.1 Adequate Assurances. Not later than 25 days prior to the
hearing to consider the Assignment Motion, Buyer and Parent shall
provide, in form and content capable of being included in the
Assignment Motion, such financial and other information regarding
Buyer and Parent as is reasonably necessary to provide adequate
assurance of future performance under Section 365(b) of the
Bankruptcy Code, which shall include Parent's agreement to
guaranty Buyer's obligation under the Assumed Liabilities,
provided, if the information to establish Buyer's adequate
assurances of future performances requires Buyer or Parent to
provide any financial information that is not otherwise publicly
available, Buyer may seek a protective order from the Bankruptcy
Court to protect the confidentiality of the information.
8.2 Xxxx-Xxxxx-Xxxxxx. At such time following execution of this
Agreement as Buyer and Seller shall reasonably determine in its
reasonable discretion, Buyer shall file or cause to be filed,
with filing fees split evenly between Seller and Buyer, with the
Federal Trade Commission and the United States Department of
Justice any notifications required to be filed under the HSR Act
and the rules and Regulations promulgated thereunder with respect
to the transactions contemplated hereby. Buyer shall consult
with Seller as to the appropriate time of filing such
notifications and shall use their commercially reasonable efforts
to make such filings at the agreed upon time, to respond promptly
to any requests for additional information made by such agencies,
and to cause the waiting periods under the HSR Act to terminate
or expire at the earliest possible date after the date of filing.
8.3 Discharge of Assumed Liabilities. From and after the
Closing Date, Buyer shall pay, perform and discharge the Assumed
Liabilities as they become due, including, without limitation,
the discharge and performance when due of each and every
obligation of Seller to be satisfied or performed after the
Closing Date under the Acquired Contracts.
8.4 Lenders' Consents. Promptly after the execution of this
Agreement, Parent will take all appropriate steps to obtain the
Lenders' Consents, and will use commercially reasonable efforts
to obtain the same as soon as practical.
8.5 Access. Seller shall, for a period of seven years from the
Closing Date, have access to, and the right to copy, at its
expense, for bona fide business purposes and during usual
business hours upon reasonable prior notice to Buyer, all books
and records relating to the operation of the Store Properties
prior to the Closing. Buyer shall retain and preserve all such
books and records for such seven-year period. Buyer may discard
or destroy any such books or records, provided that Buyer shall
so notify Seller and allow Seller, within 30 days of such
notification, to elect to take possession of such books and
records.
8.6 Commercially Reasonable Efforts; Further Assurances. Each
of Buyer and Parent shall execute such documents and use
commercially reasonable efforts to take or cause to be taken all
action and do or cause to be done all things necessary, proper or
advisable to consummate the transactions contemplated by this
Agreement, the Ancillary Agreements and the other documents and
instruments to be delivered pursuant hereto. Each of Buyer and
Parent shall use commercially reasonable efforts to fulfill or
obtain the fulfillment of the conditions set forth in Articles 10
and 11 of this Agreement.
8.7 Conditions. Buyer and Parent will notify Seller immediately
after obtaining actual knowledge of (i) any event or circumstance
which constitutes or may constitute a Material Adverse Effect, or
(ii) any event or circumstance that may, if not remedied, result
in an inability to satisfy any of the conditions specified in
Sections 11.10, 11.11 or 11.13 hereof. Such notice will specify
the nature of such event or circumstance and the actions proposed
by Buyer and Parent to remedy the same. Buyer and Parent shall
be deemed to have waived the conditions set forth in Sections
11.10, 11.11 and 11.13 on May 30, 2003 except with respect to
specific events or circumstances reflected on title commitments,
surveys or Environmental Reports, as the case may be, which Buyer
has received and of which Buyer has, on or prior to that date,
provided the notice contemplated hereby.
ARTICLE 9
Additional Agreements
9.1 Employees of Seller in the Store Properties.
(a) Store Employees. Buyer will make applications available to
the store-level Employees of the Store Properties within a
reasonable period of time after the date hereof but in no event
within later than twenty (20) days prior to the Closing Date.
Buyer shall (i) not later than seven (7) days prior to the
Closing Date, offer to employ each of the store-level Employees
of each Store Property for positions of employment at such Store
Property upon terms that are the substantial equivalent of the
terms under which such Store Employees were employed by Seller
(including participation of union Employees in the Union Pension
Plan and Union Welfare Plans), and (ii) offer to rehire any
former Employee of the Store Properties who has the right under
USERRA to return to the employment of Seller (or an Affiliate of
Seller) at the time required by USERRA. As to such former
employees, Buyer shall be obligated to retain them on a recall
list through the period they retain said recall rights and if a
vacancy occurs, recall these employees in accordance with their
recall rights as provided in any applicable collective bargaining
agreement. All Employees and former Employees to whom Buyer
offers employment pursuant to this Section 9.1(a) are referred to
collectively as the "Store Employees." Buyer agrees and Seller
acknowledges that such offers of employment shall be made in
compliance with Buyer's policies and procedures and all
applicable Laws. All obligations and liabilities pertaining to
the Store Employees arising or accruing or relating to any period
of time prior to the Closing Date, including wages, salaries,
earned vacations, employee benefits, self-insured retentions and
deductibles, severance payments, withholding and reporting
obligations, all Laws relating to the employment of labor and the
employer's share of payroll or other employment taxes and other
obligations (collectively, the "Employee Obligations"), but
excluding Seller's obligations under the Union Contracts relating
to (i) withdrawal liability as described in Sections 4203 or 4205
of ERISA ("Seller's Pension Plan Withdrawal Obligations") under
any Union Pension Plan which is a Multiemployer Pension Plan as
defined in Section 414(f) of the Code and which is subject to the
Multiemployer Pension Plan Amendments Act of 1980 as amended
("MEPPA"), (ii) any liability resulting from the termination of
participation by Store Employees in any Union Welfare Benefit
Plan, as defined in Section 3(1) of ERISA, established pursuant
to the Union Contracts (such obligations are referred to as the
"Welfare Plan Withdrawal Obligations") and (iii) obligations to
make contributions to the Union Pension Plans which arise after
the Closing Date but which may relate to service prior to the
Closing Date shall be the obligation of Seller. Seller will
indemnify Buyer and Parent and their Affiliates against any and
all Employee Obligations, including any liability or obligation
arising under the Worker Adjustment and Retraining Notification
Act, 29 U.S.C. Section 2101, et seq., or its Wisconsin or
Minnesota counterpart (collectively, the "WARN Act"), except to
the extent of any liability under the WARN Act that arises by
reason of Buyer's failure to fulfill its obligations under this
Section 9.1(a). Seller shall deliver to Buyer on the Closing
Date a list of any former Employee of the Store Properties who
may have the right under USERRA to return to the employment of
Seller or any Affiliate of Seller.
(b) Seller's Benefit Plans. Effective as of the Closing Date,
the Store Employees shall cease to participate in Seller's
Benefit Plans unless such participation is otherwise required to
continue by Law. In this regard, the Store Employees shall cease
to accrue any future benefits under the Xxxxxxx Pension Plan (the
"Seller's Pension Plan") and the Xxxxxxx 401(k) Plan ("Seller's
401(k) Plan") as of the Closing, except to the extent required by
USERRA or other applicable law. Subject to the limitations of
the Bankruptcy Code, benefits will be paid to the Store Employees
in accordance with the terms of Seller's Pension Plan, and Buyer
and Parent shall have no liability or obligation whatsoever for
any such benefits or otherwise in connection with Seller's
Pension Plan. With regard to the Seller's 401(k) Plan, Seller
and Buyer shall take any and all actions as may be necessary to
permit Transferred Employees to elect to receive distributions
from the Seller's 401(k) Plan (other than participant loans) that
may be rolled over into Buyer's 401(k) Plan ("Buyer's 401(k)
Plan") at the election of the participant. Pending the transfer
of the accounts of the Store Employees from Seller's 401(k) Plan
to Buyer's 401(k) Plan, Buyer agrees that it will do any and all
things reasonably required to cause payroll deductions to be made
from the wages of Transferred Employees who have participant
loans from the Seller's 401(k) Plan and to transfer such withheld
amounts to the Seller's 401(k) Plan to prevent an event of
default with respect to such loans. Further, Buyer agrees that,
for store-level Employees, it will recognize all employment
service with Seller for purposes of Buyer's Employee Benefit
Plans, as such term is defined in Section 3(3) of ERISA ("Buyer's
Benefit Plans"); provided, however, that recognition of
employment service by Buyer shall only be for purposes of
determining eligibility and vesting under Buyer's Benefit Plans,
and shall not require recognition for amount of benefits under
any defined benefit plan maintained by Buyer (including, without
limitation, vacation pay accrual). Effective as of the Closing
Date, Buyer shall provide group health and medical benefits under
the terms of the group health and medical plans maintained by
Buyer for its other similarly-situated employees (the "Buyer's
Medical Plans") with respect to those Store Employees who become
Transferred Employees (other than union Employees, who shall be
entitled to continue their participation in the Union Welfare
Plans). Effective as of the Closing, claims incurred for covered
medical services rendered or otherwise arising prior to the
Closing for the Store Employees under Seller's Medical Plan (the
"Seller's Medical Plan") will be the sole responsibility of
Seller, and any covered claims incurred for medical services
rendered or otherwise arising on or after the Closing under
Buyer's Medical Plan on behalf of any Transferred Employees will
be the sole responsibility of Buyer.
(c) MEPPA Liability. Due to the transactions contemplated by
this Agreement, it is possible that either a complete or partial
withdrawal by the Seller from a Union Pension Plan could occur as
provided under MEPPA. However, the parties hereto intend that
pursuant to Section 4204 of ERISA that there shall not occur
either a complete or partial withdrawal of Seller due solely to
the transactions contemplated by this Agreement. Accordingly, it
is the intent of the parties hereto to prevent such withdrawal
from occurring, and Buyer and Seller agree as follows:
(i) Buyer agrees to assume the Union Contracts and to perform
all obligations which would otherwise have been required to be
performed by Seller under such Union Contracts, including by
example and not by limitation, Seller's Pension Plan Withdrawal
Obligations and Welfare Plan Withdrawal Obligations (in each case
to the extent the same are apportioned, in the manner provided by
applicable ERISA rules and regulations, or by the labor unions
which sponsor such Union Pension Plans and Union Welfare Plans,
to the business operations represented by Store Properties), only
to the extent applicable to Store Employees who are employed by
Buyer; provided, however, that Buyer shall not assume any
liability for any violation by Seller of any Union Contract prior
to the Closing Date;
(ii) Buyer will have the obligation to contribute to any Union
Pension Plan established or maintained under the Union Contracts
with respect to the operations of the Store Properties for
substantially the same number of contribution base units for
which the Seller had an obligation to contribute to any such
Union Pension Plan;
(iii) Buyer agrees to provide to the Union Pension Plan for a
period of five Plan years commencing with the first plan year
beginning after the consummation of the sale of assets
contemplated by this Agreement, a bond issued by a corporate
surety company that is an acceptable surety for purposes of
Section 412 of ERISA, or an amount held in escrow by a bank or
similar financial institution satisfactory to the Union Pension
Plan in an amount equal to the greater of (a) the average annual
contributions required to be made by the Seller with respect to
the operations under the Union Pension Plan for the three plan
years preceding the plan year in which the sale of assets
contemplated under this Agreement occurred, or (b) the annual
contribution that the Seller was required to make with respect to
the operations under the Union Pension Plan for the last plan
year before the plan year in which the sale of the assets
occurred; which bond or escrow shall be paid to the Union Pension
Plan if the Buyer withdraws from the Union Pension Plan or fails
to make a contribution to the Union Pension Plan when due at any
time during the first five plan years beginning after the sale of
the assets contemplated under this Agreement. Provided, however,
that without reducing Buyer's obligations under this Agreement,
if the Buyer withdraws in a complete withdrawal or a partial
withdrawal with respect to operations under the Union Pension
Plan during such first five plan years, the Seller is secondarily
liable for any withdrawal liability it would have had to the
Union Pension Plan with respect to the operations (but for the
application of Section 4204 of ERISA) if the liability of the
Purchaser with respect to the Union Pension Plan is not paid.
Notwithstanding the foregoing, Buyer shall be entitled to the
benefit of any provisions of ERISA or the rules and regulations
promulgated thereunder (specifically sections 4204.11 et seq. of
the regulations of the Pension Benefit Guaranty Corporation)
which provide relief from the foregoing bond and escrow
requirements upon the satisfaction of any net worth, net income
or other similar requirements, and Seller will cooperate with
Buyer in providing notice to the Union Pension Plan, as required
for that purpose.
(d) COBRA Indemnification and Information. Subject to the
limitations of the Bankruptcy Code, Seller shall be responsible
for providing continuation coverage in compliance with the
requirements of COBRA with respect to any and all M&A Qualified
Beneficiaries as defined in Treas. Reg. Section 54.4980B-9 Q&A
4(a) with respect to Seller's Medical Plans as a result of the
transactions contemplated by this Agreement. Subject to the
limitations of the Bankruptcy Code, Seller shall pay and shall
assume, indemnify, defend, and hold harmless Buyer from and
against and in respect of any and all losses, damages,
liabilities, taxes, and sanctions that arise under COBRA and the
Code, interest and penalties, costs, and expenses (including,
without limitation, disbursements and reasonable legal fees
incurred in connection therewith, and in seeking indemnification
therefor, in any amounts or expenses required to be paid or
incurred in connection with any action, suit, proceeding, claim,
appeal, demand, assessment, or judgment) imposed upon, incurred
by, or assessed against Buyer or Parent or their Affiliates
arising by reason of or relating to any failure of Seller to
comply with the continuation of health care coverage requirements
imposed by COBRA, to all Persons who qualify as "M&A qualified
beneficiaries" with respect to the transactions contemplated by
this Agreement under 26 C.F.R. 54.4980B-9. As between Seller,
on the one hand, and Buyer and Parent on the other hand, Buyer
and Parent shall have no liability under COBRA or related
provisions of the Code other than for Store Employees who are
employed by Buyer and whose employment with Buyer is terminated
after the Closing Date but shall have such liability with respect
to any Store Employee whose employment terminates after the
Closing Date.
(e) No Third Party Beneficiaries. The obligations of Seller and
Buyer hereunder relating to the Store Employees are for the sole
benefit of either Seller or Buyer, and no inference should be
drawn that any Store Employee is a beneficiary of any of the
terms, provisions and obligations hereunder; and the ability to
enforce the obligations of Seller and/or Buyer hereunder with
respect to such Store Employees shall be the right of either
Seller or Buyer, as applicable, but not any Store Employee.
(f) Vacation and Paid Time Off. On or before the Closing Date,
Seller shall pay to each Store Employee the dollar value of any
unused vacation for employment service.
9.2 Non-Competition.
(a) As a condition to entering into this Agreement, Seller
hereby agrees, and shall cause its Affiliates to agree, not to
(and to cause its Affiliates not to) own, operate, or control,
directly or indirectly, any retail supermarkets or pharmacies (a
"Retail Food Store"), other than Retail Food Stores currently
owned by Seller or any Affiliate of Seller which Retail Food
Stores are not part of the Acquired Assets, within a radius of
three (3) miles of any of the Store Properties (the "Prohibited
Area") for five (5) years following the Closing Date (the "Non-
Competition Period"); provided, however, Seller or its Affiliates
may acquire and operate a Retail Food Store in the Prohibited
Area (i) through judicial or administrative process from a retail
grocery store owner/operator indebted to Seller or an Affiliate
of Seller, (ii) through assignment in lieu of judicial or
administrative process from a retail grocery store owner/operator
indebted to Seller or an Affiliate of Seller, or (iii) by the
exercise of a right of first refusal or similar right of
acquisition of a retail grocery store from a retail grocery store
owner/operator; provided, further, that this Section 9.2 shall
not prohibit Seller or its Affiliates from owning and operating
limited assortment retail stores, including without limitation
the stores currently owned and operated by Seller under the name
yes!LESSr, nor shall it prohibit the operation of any stores
owned by third parties and operated by them under franchise or
license agreements with Seller or any of its Affiliates.
(b) Seller agrees that the Non-Competition Period, and the
territorial restrictions of the Prohibited Area and other
provisions and restrictions set forth above, are necessary to
protect Buyer in the use and employment of the goodwill
associated with the Store Properties and the Acquired Assets.
(c) During the Non-Competition Period, Seller shall not (i)
induce or attempt to induce any employee of Buyer or any of its
Affiliates employed at any Store Property to leave the employ of
Buyer or any of its Affiliates, or in any way interfere with the
relationship between Buyer or any of its Affiliates and any
employee thereof, (ii) hire directly or through another entity
any individual employed at any Store Property by Buyer or any of
its Affiliates at any time within the then preceding six (6)
months (provided, this restriction will not apply to any employee
that was terminated by Buyer), or (iii) induce or attempt to
induce any supplier, licensee or other business relation of Buyer
or any of its Affiliates to cease doing business with Buyer or
any of its Affiliates, or in any way interfere with the
relationship between any such supplier, licensee or business
relation and Buyer or any of its Affiliates (including, without
limitation, making any negative statements or communications
concerning Buyer or any of its Affiliates).
(d) Seller agrees that damages cannot compensate Buyer in the
event of a violation of the above restrictive covenants, and that
in such event injunctive relief shall be essential for the
protection of Buyer. Accordingly, Seller agrees and consents
that, in the event any of said restrictive covenants shall be
violated or breached, Buyer shall be entitled to obtain
injunctive relief upon proper showing against the party or
parties violating such covenants, upon due notice, in addition to
such further or other relief as may appertain at equity or law
and without the posting of any security or bond. Procurement of
such an injunction by Buyer shall not be considered an election
of remedies or a waiver of any right to assert any other remedies
which Buyer has at law or in equity. No waiver of any breach of
violation hereof shall be implied from forbearance or failure by
Buyer to take action thereon. Seller agrees that, if any
provision hereof shall be adjudicated to be invalid or
unenforceable, such provision shall be deleted from this
Agreement with all other provisions remaining in full force and
effect, but such deletion is to apply only with respect to the
operation of such provision in the particular jurisdiction in
which such adjudication is made; provided, further, that to the
extent any provision hereof is deemed unenforceable by virtue of
its scope in terms of area or length of time, but may be made
enforceable by limitations thereon, Seller agrees that the same
shall be enforceable to the fullest extent permissible under the
laws and public policies applied in such jurisdiction in which
the enforcement is sought.
(e) Buyer acknowledges and agrees that Seller and its Affiliates
conduct wholesale distribution operations and that the provisions
of this Section 9.2 do not apply to Seller's or its Affiliates'
ownership and operation of such wholesale distribution business.
9.3 Estoppel Certificate and Permits.
(a) Seller shall prepare (with input from Buyer) and use
commercially reasonable efforts to obtain an Estoppel Certificate
from each respective landlord of the Store Properties.
(b) At the request of Buyer from time to time, Seller hereby
agrees to use all commercially reasonable efforts at Buyer's cost
and expense to assist Buyer in obtaining the Permits that are
required for Buyer's ownership and operation (including
maintenance and repairs) of the Store Properties following the
date of this Agreement. If requested by Buyer, Seller agrees to
cooperate with Buyer at Buyer's cost and expense in connection
with Buyer's attempt to obtain liquor licenses for the Store
Properties.
9.4 Parent's Guaranty. Parent hereby guarantees the full,
prompt and complete performance by Buyer of each and every
obligation of Buyer under this Agreement and the Buyer Ancillary
Agreements.
9.5 Transition Services Agreement. If Buyer so requests,
Seller will negotiate in good faith with Buyer regarding the
terms upon which Seller will provide certain logistics services
to Buyer in connection with the distribution of products to the
Store Properties on a transitional basis after the Closing Date,
at Buyer's expense.
ARTICLE 10
Conditions to Seller's Obligations
The obligation of Seller to consummate the transactions
contemplated by this Agreement shall be subject to the
fulfillment, prior to or at the Closing, of each of the following
conditions unless waived by Seller in writing:
10.1 Buyer's and Parent's Representations and Warranties. Each
representation and warranty made by each of Buyer and Parent in
Article 6 hereto shall be true and correct in all material
respects on and as of the Closing Date with the same effect as
though each such representation or warranty had been made or
given on and as of the Closing Date, other than representations
and warranties made as of a specific date, which shall be true
and correct as of such specific date.
10.2 Buyer's and Parent's Covenants. Each of Buyer and Parent
shall have performed and complied, in all material respects, with
all of the covenants set forth herein which are to be performed
or complied with by it before or as of the Closing Date.
10.3 Buyer's and Parent's Deliveries. Each of Buyer and Parent,
as applicable, shall have executed and delivered to Seller the
Buyer Ancillary Agreements and other documents and items referred
to in Article 14 hereof.
10.4 No Proceedings. No action, suit or proceeding which has a
reasonable likelihood of success is pending or threatened by or
before any Governmental Entity to enjoin, restrain, prohibit or
obtain substantial damages in respect of the transfer of the
Acquired Assets as contemplated by this Agreement or the
Ancillary Agreements, or which would be reasonably likely to
prevent or make illegal the consummation of any transactions
contemplated by this Agreement.
10.5 HSR Act. The waiting period under the HSR Act shall have
expired with no objection from the Federal Trade Commission or
the Anti-Trust Division of the United Sates Department of
Justice.
10.6 Bankruptcy Court Approval. The Sale Order shall have been
entered by the Bankruptcy Court.
10.7 Seller's Board Approval. Seller's Boards of Directors
shall have approved the transactions contemplated by this
Agreement no later than May 6, 2003.
ARTICLE 11
Conditions to Buyer's and Parent's Obligations
The obligation of each of Buyer and Parent to consummate the
transactions contemplated by this Agreement shall be subject to
the fulfillment, prior to or at the Closing, of each of the
following conditions unless waived by Buyer in writing:
11.1 Seller's Representations and Warranties. Each
representation and warranty made by Seller in Article 5 hereof
shall be true and correct in all respects on and as of the
Closing Date with the same effect as though each such
representation and warranty had been made or given on and as of
the Closing Date other than (i) representations and warranties
made as of a specific date, which shall be true and correct as of
such specific date and (ii) any breach of a representation or
warranty that has not resulted in a Material Adverse Effect.
11.2 Seller's Covenants. Seller shall have performed and
complied in all material respects with all of the covenants set
forth herein which are to be performed by or complied with by it
before or as of the Closing Date.
11.3 Schedules. No change or update to the Schedules pursuant to
Section 7.6(c) shall reflect a Material Adverse Effect.
11.4 Seller's Deliveries. Seller shall have executed and
delivered to Buyer the Seller Ancillary Agreements and other
documents referred to in Article 13 hereof.
11.5 Lender's Consents. By May 16, 2003 Parent shall have
obtained consent from its lender(s) to the consummation by Buyer
of the transactions contemplated herein ("Lenders' Consents").
11.6 Excess Delayed Stores. The provisions of Section 4.5 shall
not be in effect to delay the Closing for any more than twelve
(12) of the Store Properties.
11.7 No Proceedings. No action, suit or proceeding which has a
reasonable likelihood of success is pending or threatened by or
before any Governmental Entity to enjoin, restrain, prohibit or
obtain substantial damages in respect of the transfer of the
Acquired Assets as contemplated by this Agreement or the
Ancillary Agreements, or which would be reasonably likely to
prevent or make illegal the consummation of any transactions
contemplated by this Agreement or the Ancillary Agreements.
11.8 HSR Act. The waiting period under the HSR Act shall have
expired with no objection from the Federal Trade Commission in
the Anti-Trust Division of the United States Department of
Justice.
11.9 Permits. Buyer shall be reasonably satisfied that, as of
the Closing Date, it shall have obtained with respect to each of
the Store Properties the "Requisite Licenses" (as defined below)
required to operate such Store Property substantially in the
manner in which it has heretofore been operated, in compliance
with applicable Laws; provided, that this condition will be
deemed fulfilled if Buyer has the Requisite Licenses for no fewer
than 24 Store Properties in the aggregate. "Requisite Licenses"
for any Store Property means (i) the pharmacy permits and
licenses required to operate the pharmacy in such Store Property
(where applicable) and (ii) at least two of the (x) liquor, (y)
food stamp and (z) "WIC" licenses or permits required to operate
such Store Property.
11.10 Title Insurance. Buyer shall have obtained a
commitment for an ALTA Owner's Title Insurance Policy 1992 Form
(or other form of policy acceptable to Buyer) for the Owned Real
Property and, at its election, each Leased Real Property, issued
by a title insurance company satisfactory to Buyer (the "Title
Company"), together with a copy of all documents referenced
therein (the "Title Commitments"). At Closing, Buyer shall have
obtained title insurance policies from the Title Company (which
may be in the form of a xxxx-up of the Title Commitments or a pro
forma of the Title Policies) in accordance with the Title
Commitments, insuring Buyer's fee simple title to the Owned Real
Property and, at Buyer's election, its leasehold interest in each
leased Store Property as of the Closing Date (including all
recorded appurtenant easements insured as separate legal parcels)
with gap coverage from the Seller through the date of recording,
subject to no Title Defect, in such amount as Buyer reasonably
determines to be the value of the Store Property insured
thereunder (the "Title Policies"). Each of the Title Policies
shall have the creditor's rights exception deleted, and shall
include an extended coverage endorsement (insuring over the
general or standard exceptions), and, with respect to the Owned
Property, ATLA Form 3.1 zoning ( with parking and loading docks)
and all other endorsements reasonably requested by Buyer, in form
and substance reasonably satisfactory to Buyer. Buyer shall pay
all fees, costs and expenses with respect to the Title
Commitments and Title Policies. Any failure to satisfy the
condition herein with respect to one or more, but not all, of the
Store Properties shall not result in a termination of this
Agreement or the Parties' obligations, but shall result in the
application of Section 4.5 hereof with respect to the affected
Store Property.
11.11 Surveys. Buyer shall have obtained a survey for the
Owned Real Property and, at its election, each leased Store
Property, dated no earlier than the date of this Agreement,
prepared by a licensed surveyor satisfactory to Buyer, and
conforming to 1999 ALTA/ACSM Minimum Detail Requirements,
including Table A Items Nos. 1, 2, 3, 4, 6, 7(a), 7(b)(1), 7(c),
8, 9, 10, 11(b), 13, 14 15 and 16, and such other standards as
the Title Company and Buyer require as a condition to the removal
of any survey exceptions from the Title Policies, and certified
to Buyer, Buyer's lender and the Title Company, in a form
satisfactory to each of such parties (the "Surveys"). The
Surveys shall not disclose any Title Defect unless the Title
Company will issue a further assurance endorsement with respect
to such defect, insured over to Buyer's reasonable satisfaction
prior to the Closing. Buyer shall pay all fees, costs and
expenses with respect to the Surveys. Any failure to satisfy the
condition herein with respect to one or more, but not all of the
Store Properties shall not result in a termination of this
Agreement or the Parties' obligations, but shall result in the
application of Section 4.5 hereof with respect to the affected
Store Property.
11.12 FIRPTA Affidavit. Seller shall deliver to Buyer a non-
foreign affidavit dated as of the Closing Date and in form and
substance required under the Treasury Regulations issued pursuant
to Section 1445(b) of the Internal Revenue Code so that Buyer is
exempt from withholding any portion of the Cash Purchase Price
thereunder (the "FIRPTA Affidavit").
11.13 Environmental Reports. Buyer shall have received
reports of a Phase I environmental assessment and compliance
review (and, if requested by Buyer or its lenders, a Phase II or
other more extensive environmental assessment and compliance
review) with respect to each of the Store Properties (each, an
"Environmental Report" and collectively, the "Environmental
Reports") which Environmental Reports do not indicate the
presence or probable presence of any conditions or circumstances
at such Store Property (i) that constitute material violations of
any Environmental Law, (ii) that would interfere with the use or
expansion (as currently contemplated by Buyer) of the Store
Property for its current or similar use, (iii) that would impair
the value of the property for its current or any similar use, or
(iv) that impose any liability or obligation for any remediation,
repair, upgrade or alteration of the property ("Remediation
Costs") having a reasonably anticipated cost in excess of Two
Hundred Thousand Dollars ($200,000.00); provided, however, that
if all anticipated Remediation Costs relating to the Store
Properties in the aggregate exceed One Million Two Hundred Fifty
Thousand Dollars ($1,250,000.00), then this clause (iv) shall
thereafter be applied without regard to the $200,000 threshold
amount. The Environmental Reports shall be obtained at the
Buyer's sole cost and expense. Any failure to satisfy the
condition herein with respect to one or more, but not all of the
Store Properties shall not result in a termination of this
Agreement or the Parties' obligations, but shall result in the
application of Section 4.5 hereof with respect to the affected
Store Property.
11.14 Bankruptcy Condition.
(a) The Bidding Procedures Order shall have been entered by the
Bankruptcy Court as soon as practicable and no later than May 21,
2003. The Sale Order shall have been entered by the Bankruptcy
Court as soon as practicable and no later than August 6, 2003 .
(b) The Sale Order, in substantially the form attached hereto as
Annex III, shall approve and authorize the sale of the Acquired
Assets, the results of the Auction, and the assumption and
assignment of the Acquired Contracts and the Acquired Contracts
shall have been actually assumed and assigned to Buyer such that,
subject only to payment by Buyer of the Cure Costs, the Acquired
Contracts will be in full force and effect from and after the
Closing with non-debtor parties being barred and enjoined from
asserting against Buyer, among other things, any defaults,
breaches or claims of pecuniary losses existing as of the Closing
or by reason of the Closing.
(c) The Bidding Procedures Order shall provide:
(i) Upon the date Seller consummates an Acquisition Proposal,
Seller shall immediately pay to Buyer (in immediately available
cash via wire transfer to an account designated by Buyer), a
breakup fee equal to $3,000,000 (the "Breakup Fee"); Seller shall
pay the Break-Up Fee from any proceeds of the Acquisition
Proposal prior to the attachment thereto of any lien, claim,
encumbrance or interest whatsoever;
(ii) If the transactions contemplated hereby are not consummated
for any reason other than the material breach by Buyer of this
Agreement or the failure of Parent to obtain the Lender's
Consent, Seller shall immediately pay to Buyer (in immediately
available cash via wire transfer to an account designated by
Buyer) an amount equal to the reasonable costs and out-of-pocket
expenses incurred by Buyer in connection with its legal,
environmental, accounting and business due diligence, the
securing of any necessary Lenders' Consents, and the preparation
and negotiation of this Agreement (including, without limitation,
the reasonable costs and expenses associated with Section 8.2) up
to a maximum of $1,500,000 (the "Expense Reimbursement");
pursuant to section 364(c)(1) of the Bankruptcy Code, the Buyer
shall have a superpriority administrative expense claim (which
claim shall be senior to any and all claims of any creditors of
or holders of equity in the Debtors, including, without
limitation, the Debtors' prepetition and postpetition senior
secured lenders, trade lien claims, and reclamation claimants)
for the Expense Reimbursement;
(iii) That Seller is authorized without further Bankruptcy
Court action to pay any amounts that become due and payable to
Buyer pursuant to this Agreement (including, without limitation,
the Breakup Fee and Expense Reimbursement) and that such amounts
shall be payable from the proceeds of the Acquisition Proposal;
(iv) No party submitting any other offer to purchase the Acquired
Assets or a Qualifying Bid shall be entitled to any expense
reimbursement, breakup fee, bid protection, or termination or
similar fee or payment;
(v) Prior to receipt by a prospective Bidder of any information
(including, but not limited to, business and financial
information and access to representatives of Seller) from Seller,
each such Bidder will be required to execute an appropriate
confidentiality agreement and deliver evidence reasonably
satisfactory to Seller establishing such potential Bidders'
financial capability to timely consummate a purchase of the all
the Acquired Assets;
(vi) Each Bidder shall submit an executed asset purchase
agreement, substantially similar to this Agreement, along with
any other bid package requirements to Seller, and place into
escrow a cash deposit of no less than $4,000,000. The foregoing
must be completed at least two (2) Business Days prior to the
Auction;
(vii) A Bid will not be considered by Seller as qualified for
the Auction (a "Qualifying Bid") unless such Bid is greater than
the sum of the Estimated Cash Purchase Price plus the amount of
the Breakup Fee and the Expense Reimbursement, plus Five Million
Dollars ($5,000,000), and such Bid satisfies the requirements set
forth in immediately preceding subparagraphs (v) and (vi). The
bidder of any such Qualifying Bid is a "Qualified Bidder";
(viii) Seller shall conduct the Auction on the date
immediately prior to the date of the Sale Hearing, regardless of
whether it receives any Qualifying Bids;
(ix) Only Qualified Bidders and Buyer may participate in the
Auction;
(x) The Estimated Cash Purchase Price offered by Buyer herein
shall be deemed to be the opening Bid at the Auction. The Bid
subsequent thereto must be a Qualifying Bid (the "Second Bid").
All Bids after the Second Bid must be submitted by a Qualified
Bidder and must be for an amount not less than $250,000 higher
than any previous Bid;
(xi) Buyer shall have the right to submit additional Bids;
(xii) At the Auction, Seller shall have the right to select
the highest and best Bid from Buyer and any Qualified Bidder (the
"Highest and Best Bid"), which will be determined by considering,
among other things: (i) the number, type and nature of any
changes to this asset purchase agreement requested by each
Bidder; (ii) the extent to which such modifications are likely to
delay closing of the sale of the Acquired Assets and the cost to
Seller of such modifications or delay; (iii) the total and net
consideration to be received by Seller; (iv) the likelihood of
the Bidder's ability to close a transaction and the timing
thereof; and (v) the net benefit to Seller's estate, taking into
account Buyer's rights to the Breakup Fee and Expense
Reimbursement;
(xiii) During the Auction, all Bids must be solicited and
submitted in the presence of all other Qualified Bidders (who
have not affirmatively left the Auction); and
(xiv) Buyer shall have standing to contest the Highest and
Best Bid selected by Seller.
11.15 Service of Notice. The Parties intend to consummate
the transactions contemplated herein as soon as practicable after
the entry of the Sale Order, whether or not it has become a Final
Order. No notice of this provision or waiver of any other
condition to Closing need be given, it being the intention of the
parties hereto that Buyer shall be entitled to, and is not
waiving, the protection of Section 363(m) of the Bankruptcy Code,
the mootness doctrine and any similar statute or body of law if
the Closing occurs in the absence of Final Orders.
11.16 Cure Costs. If a cure obligation (pursuant to Section
365 of the Bankruptcy Code) is not set forth on Schedule 5.19, or
if any Acquired Contract is subject to a cure in excess of the
amount set forth next to such Acquired Contract on Schedule 5.19,
Seller shall have paid the amount of such cure or the excess of
such cure over the amount set forth on Schedule 5.19 or shall
have agreed in form and substance satisfactory to Buyer that such
additional cure obligations shall reduce the Asset Purchase
Price.
ARTICLE 12
Closing and Termination
12.1 Closing.
(a) A closing (the "Closing") shall be held on the later of (i)
the third business day following full satisfaction or due waiver
of the last to occur of the closing conditions set forth in
Articles 10 and 11 hereof (other than those to be satisfied at
the Closing) and (ii) the first business day following the entry
of the Sale Order, or on such other date as is mutually
acceptable to Buyer and Seller. The Closing will take place at
the offices of McAfee & Xxxx A Professional Corporation located
at Tenth Floor, Two Leadership Square, 000 Xxxxx Xxxxxxxx,
Xxxxxxxx Xxxx, Xxxxxxxx 00000, at 10:00 a.m. Oklahoma City,
Oklahoma time on such date. The date on which the Closing occurs
is referred to herein as the "Closing Date."
(b) Seller and Buyer shall meet on the date preceding the
Closing Date at the offices of McAfee & Xxxx A Professional
Corporation to conduct a pre-Closing at which all deliveries to
be made at Closing will be reviewed by the Parties and placed in
escrow. At 11:59 p.m. in the jurisdiction in which the
corresponding Store Property operates on the date preceding the
Closing Date, Seller shall terminate its operation of such Store
Property. At 12:01 a.m. in the jurisdiction in which such Store
Property operates on the Closing Date, Buyer shall take
possession of the Store Property and the transfer of the Acquired
Assets and Store Properties shall be effective as of such time.
At 10:00 a.m. on the Closing Date Oklahoma City, Oklahoma time,
all instruments and payments held in escrow shall be distributed
and disbursed to Seller and Buyer, and the Closing shall be
consummated.
(c) At Closing the Parties will prorate all items of income and
expense with respect to the Acquired Assets as of the date of
Closing. Such items will include, without limitation, rent,
deposits, taxes and common area maintenance and similar charges
under the Leases, amounts payable under other Acquired Contracts
and property taxes. To the extent the amounts of such items
cannot be ascertained as of Closing the parties will reasonably
estimate the same, based on historical experience and in
anticipated current year adjustments. The result of such
prorations shall be reflected in a net credit or debit to the
parties at Closing as appropriate.
12.2 Termination. This Agreement (and the transactions
contemplated hereby) may not be terminated except as follows:
(a) Upon the mutual written consent of Seller and Buyer;
(b) By Seller, if (i) Buyer is in material breach of this
Agreement, and (ii) such breach has not been cured within 10 days
following the delivery of written notice thereof to Buyer;
(c) By Buyer, if (i) Seller is in material breach of this
Agreement, and (ii) such breach has not been cured within 10 days
following the delivery of written notice thereof to Seller;
(d) By Buyer if the Lenders' Consents have not been obtained
prior to May 16, 2003;
(e) By Buyer or Seller, if the Bankruptcy Court has entered the
Sale Order but the Closing has not occurred on or before August
6, 2003, provided the terminating party is not in material breach
of its obligations hereunder;
(f) By Seller or Buyer, if the Bankruptcy Court denies either
the Sale Motion or the Bidding Procedures Motion.
12.3 Breakup Fee and Expense Reimbursement.
(a) After the Bankruptcy Court enters the Bidding Procedures
Order and upon the date Seller consummates an Acquisition
Proposal, Seller shall immediately pay (in cash) to Buyer the
Breakup Fee and the Expense Reimbursement; provided, however,
Buyer shall not be entitled to the Breakup Fee or Expense
Reimbursement if this Agreement is terminated under Sections
12.2(b) or 12.2(d) of this Agreement.
(b) If the transactions contemplated hereby are not consummated
for any reason, other than the termination of this Agreement
under Sections 12.2(b) or 12.2(d), Seller shall immediately upon
termination of this Agreement pay (in cash) to Buyer the Expense
Reimbursement.
(c) Seller's obligation to pay the Breakup Fee and the Expense
Reimbursement pursuant to this Section 12.3 shall survive
termination of this Agreement and shall be paid from the proceeds
received by Seller from the Sale of the Acquired Assets pursuant
to the Acquisition Proposal prior to the attachment thereto of
any lien, claim, encumbrance or interest whatsoever, and with
respect to the Expense Reimbursement, pursuant to section
364(c)(1) of the Bankruptcy Code, the Buyer shall have a
superpriority administrative expense claim (which claim shall be
senior to any and all claims of any creditors of or holders of
equity in the Debtors, including, without limitation, the
Debtors' prepetition and postpetition senior secured lenders,
trade lien claims, and reclamation claimants).
12.4 Effect of Termination.
(a) Upon the termination of this Agreement in accordance with
Section 12.2 hereof, and except as set forth in Section 12.3 and
Section 12.4(b) below, the Parties shall be relieved of any
further obligations or liability under this Agreement other than
in the case of termination of this Agreement prior to the Closing
(i) confidentiality obligations contained in Section 17.12, (ii)
the expense allocation provisions under Section 17.1, (iii) the
arbitration provisions of Section 17.3, and (iv) obligations for
breaches of this Agreement occurring prior to such termination.
(b) Notwithstanding anything to the contrary contained herein,
the provisions of this Section 12.3, Article 15 and Article 16
shall survive any termination of this Agreement.
ARTICLE 13
Seller's Deliveries at Closing
At Closing, Seller shall deliver the following to Buyer:
13.1 Bring-Down Certificate. A bring-down certificate executed
by an executive officer of Seller certifying that the conditions
specified in Sections 11.1 and 11.2 have been satisfied.
13.2 Secretary's Certificate. A certificate executed on behalf
of Seller by Seller's Secretary or Assistant Secretary certifying
as to the incumbency, and authenticating the signatures of,
officers executing this Agreement and certificates delivered
hereunder on behalf of Seller, and certifying as to the adoption
and continuing effect of appropriate resolutions authorizing
Seller's execution, delivery and performance of this Agreement,
accompanied by appropriate certificates of Governmental Entities
evidencing the organization of such party and its due
qualification in each state in which the Store Properties are
located.
13.3 Seller Ancillary Agreements. The Seller Ancillary
Agreements duly executed by Seller.
13.4 License Agreement. A License Agreement, in a form mutually
acceptable to the Parties and their counsel, , pursuant to which
Buyer will license the name "Rainbow" and variations thereof back
to Seller on a non-exclusive, non-transferable, non-licensable
and royalty-free basis for the limited purpose of operating
retail grocery stores outside of the States of Minnesota and
Wisconsin, and for a limited period of time following the
Closing, within such states (the "License Agreement").
13.5 Indemnity Escrow Agreement and Purchase Price Adjustment
Escrow Agreement. An indemnity Escrow Agreement and a Purchase
Price Adjustment Escrow Agreement, each on terms mutually
acceptable to the Parties and their counsel.
13.6 Real Estate.
(a) the Estoppel Certificates (to the extent same are obtained
on or prior to the Closing Date; and
(b) the FIRPTA Affidavit.
ARTICLE 14
Buyer's and Parent's Deliveries at Closing
At Closing, Buyer and Parent shall deliver the following to
Seller and Escrow Agent:
14.1 Cash Payment. Buyer shall deliver to Seller the Estimated
Cash Purchase Price minus the Purchase Price Adjustment Escrow
Amount and the Indemnity Escrow Amount.
14.2 Escrow Amount. Buyer shall deliver to Escrow Agent the
Purchase Price Adjustment Escrow Amount and the Indemnity Escrow
Amount.
14.3 Bring-Down Certificate. Each of Buyer and Parent shall
deliver a bring-down certificate executed by an executive officer
of Buyer and Parent, respectively, certifying that the conditions
specified in Sections 10.1 and 10.2 have been satisfied.
14.4 Secretary's Certificate. Each of Buyer and Parent shall
deliver a certificate executed on behalf of such entity by
Buyer's Secretary or Assistant Secretary or Parent's Secretary or
Assistant Secretary, respectively, certifying as to the
incumbency, and authenticating the signatures of, officers
executing this Agreement and certificates delivered hereunder on
behalf of Buyer and Parent, respectively, and certifying as to
the adoption and continuing effect of appropriate resolutions
authorizing such entity's execution, delivery and performance of
this Agreement, accompanied by appropriate certificates of
Governmental Entities evidencing the organization of such party
and its due qualification in each state in which the Store
Properties are located.
14.5 Buyer Ancillary Agreements. The Buyer Ancillary Agreements
duly executed by Buyer and Parent, as applicable.
14.6 License Agreement. The License Agreement.
ARTICLE 15
Tax Matters
15.1 Filing of Returns. In connection with the preparation and
filing of Tax Returns as of and after the Closing Date, Buyer and
Seller shall cooperate and exchange information as reasonably
required to accomplish the matters contemplated by this Article
15.
15.2 Access to Books and Records. After the Closing, upon
reasonable notice, and subject to Section 8.3 hereof, each Party
will give to the representatives, employees, counsel and
accountants of the other Party, access, during normal business
hours, to records pertaining to the Store Properties or the
Acquired Assets and relating to periods prior to or including the
Closing Date, and will permit such persons to examine and copy
such records, in each case to the extent reasonably requested by
the other Party in connection with Tax and financial reporting
matters, audits, legal proceedings, governmental investigations
and other business purposes (including such financial information
and any receipts evidencing payment of Taxes as may be requested
by Seller to substantiate any claim for Tax credits or refunds);
provided, however, that nothing herein will obligate any Party to
take actions that would unreasonably disrupt the normal course of
its business or violate the terms of any Contract to which it is
a party or to which any of its assets is subject. Seller and
Buyer will cooperate with each other in the conduct of any Tax
audit or similar proceedings involving or otherwise relating to
the Acquired Assets or the Store Properties (or the income
therefrom or assets thereof) with respect to any Tax and each
will execute and deliver such powers of attorney and other
documents as are necessary to carry out the intent of this
Section 15.2 and Section 15.3.
15.3 Indemnification for Taxes.
(a) In accordance with the provisions of Article 3, and subject
to Section 15.5, Seller agrees to indemnify and hold harmless
Buyer, Parent, their Affiliates, successors and permitted assigns
from and against any and all Indemnifiable Losses incurred or
suffered by Buyer arising from (i) any Taxes of Seller or its
Affiliates or Taxes attributable to the operations of the Store
Properties or ownership of the Acquired Assets for all Tax
periods (or portions thereof) prior to the Closing Date, (ii) any
material breach of the representations contained in Section 5.10
or (iii) the failure of Seller to perform any of the agreements
or undertakings made by Seller in this Article 15.
(b) In accordance with the provisions of Article 3, and subject
to Section 15.5, each of Buyer and Parent agrees to indemnify and
hold harmless Seller, its Affiliates, successors and permitted
assigns from and against any and all Indemnifiable Losses
incurred or suffered by Seller arising from (i) any Taxes of
Buyer or its Affiliates or Taxes attributable to the operations
of the Store Properties or ownership of the Acquired Assets for
all Tax periods (or portions thereof) ending on or after the
Closing Date, or (ii) the failure of Buyer to perform any of the
agreements or undertakings made by Buyer in this Article 15.
(c) Any Party seeking indemnification under this Article 15 (the
"Tax Indemnitee") shall give the other Party (the "Tax
Indemnitor") written notice of any audit, proposed adjustment or
assessment, or proceeding by a Tax authority involving Taxes for
which the Tax Indemnitee will seek indemnification no later than
20 Business Days after receipt of notice of such proceeding by
the Tax Indemnitee; provided, however, that the failure of the
Tax Indemnitee to so notify the Tax Indemnitor shall not preclude
any indemnity hereunder unless and to the extent that such
failure has materially and adversely affected the Tax
Indemnitor's ability to effectively conduct and contest the
asserted Tax claim. At its cost, the Tax Indemnitor shall have
the right to control and settle such proceeding; provided,
however, that to the extent the Tax Indemnitor is not liable
under this Article 15 for the entire amount of the Tax relating
to such proceeding, at the Tax Indemnitee's option, (i) the Tax
Indemnitor shall have the right to control the proceeding at its
cost and to settle such proceeding with the written approval of
the Tax Indemnitee (which approval shall not be unreasonably
withheld), (ii) the Tax Indemnitee shall have the right to
control the proceeding at its cost and to settle such proceeding
with the written approval of the Tax Indemnitor (which approval
shall not be unreasonably withheld), or (iii) the Tax Indemnitor
and Tax Indemnitee shall jointly control and share the cost and
mutually agree on a settlement of such proceeding.
(d) No Party shall be entitled to indemnification relating to
Taxes unless the claim for indemnification is asserted in writing
within one year following the final determination of (including
the expiration of the time to appeal) any audit examination,
investigation or other proceeding relating to the Taxes for which
indemnification is sought.
(e) Notwithstanding anything to the contrary in this Agreement,
the obligations imposed by this Article 15 shall survive until
the expiration of 60 days following the expiration of the
applicable statute of limitations for assessment and collection
of each Tax; provided, however, that in the event that a notice
of claim for indemnity pursuant to this Article 15 is made during
such period, indemnity with respect to such claim shall survive
until such time as the claim is finally resolved.
15.4 Transaction Taxes. Buyer and Seller shall bear in equal
amounts and be responsible for paying in equal amounts any
recording charges, sales, use, stamp, transfer, deed,
documentary, registration, business and occupation and other
similar taxes (including related penalties (civil or criminal),
additions to tax and interest) imposed by any Governmental Entity
with respect to the transfer of the operations of the Store
Properties and any Acquired Assets to Buyer ("Transaction
Taxes"), regardless of whether the Tax authority seeks to collect
such taxes from Seller or Buyer; provided, that Seller shall take
all steps and make all filings or submissions under applicable
Minnesota and Wisconsin sales and use tax laws and regulations
reasonably requested by Buyer in order to cause such transfer to
qualify as an "occasional sale." Buyer shall also be responsible
for (i) defending or pursuing any proceedings related to such
Transaction Taxes and (ii) paying any expenses related thereto.
Seller shall give prompt written notice to Buyer of any proposed
adjustment or assessment of any Transaction Taxes with respect to
the transactions contemplated hereby and in the Ancillary
Agreements. In any proceedings, whether formal or informal,
Seller shall permit Buyer to participate in the defense of such
proceeding with respect to such Transaction Taxes, and shall take
all actions and execute all documents required to allow such
participation. Buyer shall not be responsible for income or
franchise taxes of Seller, if any, arising from the transactions
contemplated hereby. The fee for filings under the HSR Act will
be divided evenly between Seller and Buyer. Notwithstanding the
foregoing, Seller shall seek the Bankruptcy Court's approval,
pursuant to section 1146(c) of the Bankruptcy Code, to be
relieved (and to relieve Buyer) of and from payment or
satisfaction of Transaction Taxes to the extent permitted by
section 1146(c) of the Bankruptcy Code.
15.5 Tax Prorations for Periodic Taxes. As to any Acquired Asset
acquired by Buyer, Seller and Buyer shall apportion the liability
for real and personal property taxes, ad valorem taxes, and
similar taxes ("Periodic Taxes") for all Tax periods including
but not beginning or ending on the Closing Date (all such periods
of time being hereinafter called "Proration Periods"). The
Periodic Taxes described in this Section 15.5 shall be
apportioned between Seller and Buyer as of the Closing Date, with
Buyer liable for that portion of the Periodic Taxes equal to the
Periodic Tax for the Proration Period multiplied by a fraction,
the numerator of which is the number of days remaining in the
applicable Proration Period including and after the Closing Date,
and the denominator of which is the total number of days covered
by such Proration Period. Seller shall be liable for that portion
of the Periodic Taxes for a Proration Period for which Buyer is
not liable under the preceding sentence. Buyer and Seller shall
pay or be reimbursed for real and personal property taxes
(including instances in which such property taxes have been paid
before the Closing Date) on this prorated basis. If a payment on
a tax xxxx is due after the Closing, the Party that is legally
required to make such payment shall make such payment and
promptly forward an invoice to the other party for its pro rata
share, if any. If the other Party does not pay the invoice
within 30 calendar days of receipt, the amount of such payment
shall bear interest at the rate of 6% per annum. The Party
responsible under applicable Law for paying a Tax described in
this Section 15.5 shall be responsible for administering the
payment of (and any reimbursement for) such Tax. For purposes of
this Section 15.5, the Proration Period for ad valorem taxes and
real and personal property taxes shall be the fiscal period for
which such taxes were assessed by the Tax jurisdiction.
15.6 Tax Returns; Payment of Taxes other than Transaction Taxes
and Periodic Taxes. Seller will (i) prepare and timely file with
each applicable Tax authority all Tax Returns which include all
income, gains, losses, deductions and credits attributable to the
Store Properties, the Acquired Assets, and the operations
relating thereto for any period or portion of a period ending
before the Closing Date and (ii) make timely payments of all
Taxes required to be reflected on such Tax Returns and all other
Taxes relating to the Store Properties, the Acquired Assets, and
the operations relating thereto for any taxable period or portion
of a Proration Period ending the day before the Closing Date.
Buyer will (a) prepare and timely file with each applicable Tax
authority all Tax Returns which include all income, gains,
losses, deductions and credits attributable to the Store
Properties, the Acquired Assets and the operations relating
thereto for any period or portion of a period beginning on or
after the Closing Date and (b) make timely payments of, and
indemnify and hold Seller harmless against, all Taxes required to
be reflected on such Tax Returns and all other Taxes relating to
the Store Properties, the Acquired Assets, and the operations
relating thereto for any taxable period or portion of a Proration
Period beginning on the Closing Date. The determination of the
portion of any Taxes imposed on or connected with the Store
Properties, the Acquired Assets, or the operations relating
thereto which is allocable to the portion of a Proration Period
ending the day before the Closing Date and to the portion of a
Proration Period beginning on the Closing Date, shall be made, in
the case of all Taxes other than Transaction Taxes and Periodic
Taxes, by assuming that the portion of a Proration Period ending
the day before the Closing Date and the portion of a Proration
Period beginning on the Closing Date constitute separate taxable
periods and by taking into account the actual taxable events
occurring during such separate periods.
15.7 Tax Refunds. Any Tax refunds (including any interest
related thereto) received by Buyer, its affiliates or successors
relating to Tax periods (or portions thereof) ending before the
Closing Date shall be for the account of Seller, and Buyer shall
pay over to Seller any such amount within 5 Business Days of
receipt thereof. Buyer shall, if Seller so requests and at
Seller's direction and expense, file or cause its Affiliates to
file for and obtain any Tax refunds with respect to Tax periods
or portions thereof ending before the Closing Date.
ARTICLE 16
Indemnification
16.1 Survival of Representations, Warranties, Covenants and
Agreements.
Subject to Section 16.3(e), each of the representations and
warranties contained in Article 5 and Article 6 shall terminate,
without further action, on the date which is eighteen (18) months
following the Closing Date (the time through which any
representation or warranty survives as provided above is referred
to herein as the "Expiration Date").
16.2 Indemnification.
(a) Following the Closing and subject to the other sections of
this Article 16, Seller will indemnify, defend and hold harmless
Buyer, Parent and their Affiliates and their respective
directors, officers and agents from and against all Indemnifiable
Losses relating to, resulting from or arising out of:
(i) any inaccuracy in any of the representations and warranties
made by Seller in this Agreement,
(ii) a breach by Seller of any covenant or agreement of Seller
contained in this Agreement or any Ancillary Agreement, which
covenant or agreement requires performance by Seller at or after
the Closing, and
(iii) any of the Excluded Liabilities.
(b) Following the Closing and subject to the other sections of
this Article 16, Buyer and Parent will jointly and severally
indemnify, defend and hold harmless Seller and its Affiliates and
their respective directors, officers and agents from and against
all Indemnifiable Losses relating to, resulting from or arising
out of:
(i) any inaccuracy in any of the representations or warranties
made by Buyer or Parent in this Agreement,
(ii) a breach by Buyer or Parent of any covenant or agreement of
such entity contained in this Agreement or any Ancillary
Agreement, which covenant or agreement requires performance by
such entity at or after the Closing, and
(iii) any of the Assumed Liabilities.
(c) Payments made under Article 15 or this Section 16.2 shall be
treated by Buyer and Seller as purchase price adjustments and
Buyer and Seller shall file all Tax Returns consistent with such
treatment.
16.3 Limitations on Liability.
(a) For purposes of this Agreement:
(i) "Indemnification Payment" means any amount of Indemnifiable
Losses required to be paid pursuant to this Agreement,
(ii) "Indemnitee" means any Person or entity entitled to
indemnification under this Agreement,
(iii) "Indemnifying Party" means any Person or entity
required to provide indemnification under this Agreement, and
(iv) "Indemnifiable Losses" means any losses, liabilities,
damages, costs and/or expenses (including reasonable out-of-
pocket attorneys' fees and expenses) actually incurred in
connection with any actions, suits, demands, assessments,
judgments and settlements, in any such case (x) reduced by the
amount of insurance proceeds recovered from any Person or entity
with respect thereto and (y) excluding any such losses,
liabilities, damages, costs and expenses to the extent that the
underlying liability or obligation is the result of any action
taken or omitted to be taken by any Indemnitee.
(b) As between Seller and any Affiliate of Seller, on the one
hand, and Buyer and Parent and any Affiliate of Buyer or Parent,
on the other hand, the remedies, rights and obligations set forth
in this Article 16, Section 15.3 (Indemnification for Taxes),
Sections 12.2 (Termination) and 12.3 (Effect of Termination),
Section 9.1 (Employees) and the Ancillary Agreements will be the
exclusive remedies, rights and obligations with respect to the
liabilities and obligations referred to in Section 16.2 and any
breach of the representations, warranties or covenants set forth
in this Agreement or the Ancillary Agreements. Without limiting
the foregoing, as a material inducement to entering into this
Agreement and the Ancillary Agreements, to the fullest extent
permitted by Law, each of the Parties waives any claim or cause
of action that it otherwise might assert, and any breach of the
representations, warranties or covenants set forth in this
Agreement, except for claims or causes of action brought under
and subject to the terms and conditions of this Article 16,
Section 15.3 (Indemnification for Taxes), Sections 12.2
(Termination) and 12.3 (Effect of Termination), Section 9.1
(Employees) and the Ancillary Agreements.
(c) Except as provided by Section 16.5, notwithstanding any
other provision of this Agreement or of any applicable Law, no
Indemnitee will be entitled to make a claim against an
Indemnifying Party for Indemnifiable Losses arising out of or
relating to any inaccuracy of representations or warranties under
Sections 16.2(a)(i) or 16.2(b)(i) until the aggregate amount of
Indemnifiable Losses exceeds an amount equal to $500,000 (the
"Indemnification Threshold"). In the event and to the extent the
aggregate amount of Indemnifiable Losses against an Indemnifying
Party exceeds the Indemnification Threshold, such party shall be
responsible for all Indemnifiable Losses only to the extent the
same exceed the Indemnification Threshold, but subject to the
Indemnification Cap.
(d) Notwithstanding any other provision of this Agreement, the
indemnification obligations of Seller under Section 16.2(a)(i) or
the indemnification obligation of Buyer or Parent under Section
16.2(b)(i) will not exceed an amount equal to the Indemnity
Escrow Amount (the "Indemnification Cap"), respectively. The
Parties shall be obligated to provide indemnification for all
Indemnifiable Losses that may be asserted pursuant to Sections
16.2(a)(ii), 16.2(a)(iii), 16.2(b)(ii) and 16.2(b)(iii), as
applicable.
(e) The obligation of Seller to indemnify under Section 16.2(a)
and the obligation of Buyer or Parent to indemnify under Section
16.2(b) shall expire, with respect to any representation or
warranty of the respective party, on the date on which the
survival of such representation or warranty shall expire in
accordance with Section 16.1. In the event an Indemnitee makes a
claim for indemnification pursuant to this Article 16, any such
notice must specifically identify a particular breach and the
underlying facts relating thereto.
(f) No Indemnifying Party shall be liable to or obligated to
indemnify any Indemnitee hereunder for any punitive or exemplary
damages, except to the extent such damages have been recovered by
a third person (including a Governmental Entity) and are the
subject of a Third Party Claim for which indemnification is
available under the express terms of this Article 16.
(g) The Parties shall cooperate with each other with respect to
resolving any claim or liability with respect to which one Party
is obligated to indemnify the other Party hereunder, including by
making commercially reasonable efforts to mitigate or resolve any
such claim or liability.
(h) Notwithstanding anything to the contrary herein, except for
willful breaches by Seller, the Buyer's right to indemnification
with respect to Indemnifiable Losses shall initially be satisfied
from the Indemnity Escrow Amount. To the extent that on the
Expiration Date claims for indemnification then pending against
Seller ("Pending Claims") do not exceed the Indemnity Escrow
Amount (reduced by any Indemnifiable Losses theretofore satisfied
from the Indemnity Escrow Amount, referred to herein as the
"Remaining Escrow Amount"), Buyer shall direct the Escrow Agent
to pay to Seller the amount, if any, by which the Remaining
Escrow Amount exceeds the Pending Claims, by wire transfer of
immediately available funds to an account designated by Seller.
The Escrow Agent shall retain a portion of the Indemnity Escrow
Amount equal to the amount of all Pending Claims. At such time
after the Expiration Date as all Pending Claims have been finally
determined, Buyer shall direct the Escrow Agent to pay to Seller
the excess, if any, of the retained Remaining Escrow Amount over
the amount of Indemnifiable Losses determined to be due Buyer in
respect of such Pending Claims.
16.4 Defense of Claims.
(a) If any Indemnitee receives notice of the assertion of any
claim or of the commencement of any action or proceeding by any
Person or Governmental Entity that is not a party to this
Agreement (a "Third Party Claim") against such Indemnitee, with
respect to which an Indemnifying Party is obligated to provide
indemnification under this Agreement, the Indemnitee will give
such Indemnifying Party reasonably prompt written notice thereof,
but in any event not later than 20 calendar days after receipt of
notice of such Third Party Claim; provided, however, that the
failure of the Indemnitee to notify the Indemnifying Party shall
only relieve the Indemnifying Party from its obligation to
indemnify the Indemnitee pursuant to this Article 16 to the
extent that the Indemnifying Party is materially prejudiced by
such failure (whether as a result of the forfeiture of
substantive rights or defenses or otherwise). Upon receipt of
notification of a Third Party Claim, the Indemnifying Party shall
be entitled, upon written notice to the Indemnitee, to assume the
investigation and defense thereof if such Indemnifying Party
delivers a written agreement in form and substance satisfactory
to the Indemnitee agreeing to indemnify the Indemnifying Party
with respect to such Third Party Claim; provided that
notwithstanding anything herein to the contrary, the Indemnifying
Party shall have no right to assume or continue the defense of
any Third Party Claim (and the Indemnitee shall have the
exclusive right to defend it) if (i) the Indemnitee reasonably
determines that the Indemnifying Party does not have sufficient
financial resources to defend or discharge such Third Party
Claim, (ii) if a conflict of interest is presented for the
Indemnifying Party from defense of the Third Party Claim, (iii)
the Indemnitee reasonably determines that an adverse
determination would adversely affect the business operations of
the Indemnitee in any material respect, or (iv) the Indemnifying
Party is not vigorously defending such Third Party Claim, as
reasonably determined by the Indemnitee. Whether or not the
Indemnifying Party elects to assume the investigation and defense
of any Third Party Claim, the Indemnitee shall have the right to
employ separate counsel and to participate in the investigation
and defense thereof; provided, however, that the Indemnitee shall
pay the fees and disbursements of such separate counsel unless
(i) the employment of such separate counsel has been specifically
authorized in writing by the Indemnifying Party, (ii) the
Indemnifying Party has failed to assume the defense of such Third
Party Claim within a reasonable time after receipt of notice
thereof, or (iii) the named parties to the proceeding in which
such claim, demand, action or cause of action has been asserted
include both the Indemnifying Party and such Indemnitee and, in
the reasonable judgment of counsel to such Indemnitee, there
exists one or more defenses that may be available to the
Indemnitee that are in conflict with those available to the
Indemnifying Party. Notwithstanding the foregoing, the
Indemnifying Party shall not be liable for the fees and
disbursements of more than one counsel for all Indemnified
Parties in connection with any one proceeding or any similar or
related proceedings arising from the same general allegations or
circumstances. Without the prior written consent of the
Indemnitee, the Indemnifying Party will not enter into any
settlement of any Third Party Claim that would lead to liability
or create any financial or other obligation on the part of the
Indemnitee unless such settlement includes as an unconditional
term thereof the release of the Indemnitee from all liability in
respect of such Third Party Claim. If a settlement offer solely
for money damages is made by the applicable third party claimant,
and the Indemnifying Party notifies the Indemnitee in writing of
the Indemnifying Party's willingness to accept the settlement
offer and pay the amount called for by such offer without
reservation of any rights or defenses against the Indemnitee, the
Indemnitee may continue to contest such claim, free of any
participation by the Indemnifying Party, and the amount of any
ultimate liability with respect to such Third Party Claim that
the Indemnifying Party has an obligation to pay hereunder shall
be limited to the lesser of (A) the amount of the settlement
offer that the Indemnitee declined to accept or (B) the aggregate
Indemnifiable Losses of the Indemnitee with respect to such
claim.
(b) Any claim by an Indemnitee on account of an Indemnifiable
Loss that does not result from a Third Party Claim will be
asserted by giving the Indemnifying Party reasonably prompt
written notice thereof and the Indemnifying Party will have a
period of 30 calendar days within which to respond in writing to
such claim. If the Indemnifying Party does not so respond within
such 30 calendar day period, the Indemnifying Party will be
deemed to have rejected such claim, in which event the Indemnitee
will be free to pursue such remedies as may be available to the
Indemnitee on the terms and subject to the provisions of this
Article 16.
(c) If, after the making of any Indemnification Payment, the
amount of the Indemnifiable Loss to which such payment relates is
reduced by recovery, settlement or otherwise under any insurance
coverage, or pursuant to any claim, recovery, settlement or
payment by or against any other entity, the amount of such
reduction (less any costs, expenses, premiums or Taxes incurred
in connection therewith) will promptly be repaid by the
Indemnitee to the Indemnifying Party. Upon making any
Indemnification Payment, the Indemnifying Party will, to the
extent of such Indemnification Payment, be subrogated to all
rights of the Indemnitee against any third party that is not an
Affiliate of the Indemnitee in respect of the Indemnifiable Loss
to which the Indemnification Payment relates; provided that (i)
the Indemnifying Party shall then be in compliance with its
obligations under this Agreement in respect of such Indemnifiable
Loss, and (ii) until the Indemnitee recovers full payment of its
Indemnifiable Loss, all claims of the Indemnifying Party against
any such third party on account of said Indemnification Payment
will be subrogated and subordinated in right of payment to the
Indemnitee's rights against such third party. Without limiting
the generality or effect of any other provision of this Article
16, each such Indemnitee and Indemnifying Party will duly execute
upon request all instruments reasonably necessary to evidence and
perfect the above-described subrogation and subordination rights.
16.5 Inapplicability to Taxes. Except as expressly provided in
this Article 16, this Article 16 shall not apply with respect to
indemnification of the Parties for Taxes, which liability shall
be governed by Article 15 hereof.
ARTICLE 17
Miscellaneous
17.1 Expenses. Except as otherwise expressly provided for
elsewhere in this Agreement, each Party hereto shall pay its own
expenses and costs relating to the negotiation, execution and
performance of this Agreement. Seller and Buyer shall each bear
all of its cost and expense incurred in securing the appropriate
governmental approvals to the assignment of the Acquired
Contracts.
17.2 Governing Law. This Agreement shall be governed by the laws
of the State of Minnesota regardless of the laws that might
otherwise govern under applicable conflicts of law principles.
17.3 Disputes; Bankruptcy Court Jurisdiction; Arbitration.
(a) Prior to the Closing Date, any dispute between the Parties
relating to this Agreement shall be subject to the retained
jurisdiction of the Bankruptcy Court. In addition, after the
Closing Date, any dispute relating to claims arising under
Section 365(b) or 365(f) of the Bankruptcy Code shall be subject
to the retained jurisdiction of the Bankruptcy Court.
(b) After the Closing Date, subject to Sections 17.3(a) and
Section 17.13, any dispute between the Parties, including any
matter relating to this Agreement or any of the Ancillary
Agreements, shall be resolved by final binding arbitration in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association ("AAA"), to be conducted in Hennepin
County, Minnesota. To the extent they are available, arbitrators
shall be selected from the AAA with food industry experience. In
any dispute involving a claim in excess of $1,000,000, three
arbitrators shall be employed. Absent a showing of good cause,
the hearing shall be conducted within 90 days from the service of
the statement of claim. All proceedings shall be governed by the
Federal Arbitration Act.
Each Party shall bear the expense of their own attorneys,
experts and out of pocket costs as well as fifty percent of the
expense of administration and arbitrator fees.
The Parties agree that the arbitrators SHALL NOT HAVE THE
POWER TO AWARD PUNITIVE OR EXEMPLARY DAMAGES UNLESS THE
ARBITRATOR(S) or a court of competent jurisdiction determines
that this limitation, under the circumstances, violates public
policy except to the extent such damages have been recovered by a
third person (including a Governmental Entity) and are the
subject of a Third Party Claim for which indemnification is
available under the express terms of Article 16.
Depositions, other than those taken in lieu of live
testimony, shall not be taken except upon the arbitrator(s)
finding of special need. Parties shall be entitled to conduct
document discovery in accordance with a procedure where responses
to information requests shall be made within twenty days from
their receipt.
Each Party shall be entitled to pursue remedies for
emergency judicial relief in any court of competent jurisdiction,
except that immediately following the preliminary adjudication of
such request for emergency relief, the Parties hereby consent to
a stay of the judicial proceedings pending a determination of the
dispute on the merits by arbitration as herein provided.
(c) Anything to the contrary contained herein notwithstanding,
if for any reason the provisions of this Section 17.3 regarding
arbitration of disputes should be determined to be unenforceable
by a court of competent jurisdiction, the Parties irrevocably
submit to the exclusive jurisdiction of the Bankruptcy Court so
long as the Chapter 11 Cases are proceeding.
17.4 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed
to have been duly given when personally delivered, delivered by
overnight courier or transmitted by facsimile, or five days after
mailed, certified or registered mail, with postage prepaid
addressed as follows (or to such other person or address as the
Party to receive such notice may have designated from time to
time by notice in writing pursuant hereto):
If to Seller:
Xxxxxxx Companies, Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxx 00000
Attn: General Counsel
Fax Number: (000) 000-0000
With a copy to:
McAfee & Xxxx
Tenth Floor, Two Leadership Square
000 Xxxxx Xxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxx, Esq.
Xxxxxxx X. Xxxxx, Esq.
Fax Number: (000) 000-0000
If to Buyer or Parent:
Xxxxxx'x, Inc.
00000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxx,
Vice President, Secretary and Treasurer
Fax Number: (000) 000-0000
With a copy to:
Xxxxx Xxxxxxxxxxx Xxxxx S.C.
000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Attn: Xxxx X. Xxxxxxx
Fax Number: (000) 000-0000
17.5 Definition of Agreement. Unless the context clearly
otherwise requires, as used herein, the term "Agreement" means
this Agreement and the Schedules, Annexes and Exhibits hereto.
The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Article, Section, Paragraph or other subdivision.
17.6 Headings, Gender. The headings to Articles and Sections of
this Agreement are for reference only and shall not be used in
construing or interpreting the provisions hereof or otherwise
affect the meaning hereof. The use of the neuter pronoun "it"
shall also refer to, as appropriate, the masculine and/or
feminine gender. The use of the singular herein shall, where
appropriate, be deemed to include the plural and vice versa.
17.7 Counterparts; Third Party Beneficiaries. This Agreement may
be executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one
and the same instrument. No provision of this Agreement, other
than as expressly provided in the indemnification provisions of
Articles 15 and 16, is intended to (i) confer upon any Person
other than the Parties hereto and their successors and permitted
assigns, any rights or remedies hereunder, (ii) relieve or
discharge the obligation or liability of any third party or (iii)
give any third party any right of subrogation or action against
Seller, Buyer or Parent.
17.8 Entire Agreement. This Agreement and the Ancillary
Agreements embody the entire agreement and understanding between
Seller, Buyer and Parent with respect to the subject matter
hereof and supersede all prior agreements and understandings
related to the subject matter hereof. There are no
representations, warranties, covenants, promises or agreements on
the part of a Party to the other hereto which are not explicitly
set forth herein.
17.9 Modifications. Any modification, amendment or waiver of or
with respect to any provision of this Agreement or any agreement,
instrument or document delivered pursuant hereto shall not be
effective unless it shall be in writing and signed by an
authorized representative of each of Seller, Buyer and Parent and
shall designate specifically the terms and provisions so
modified.
17.10 Assignment and Binding Effect. This Agreement shall be
binding upon and inure to the benefit of the Parties hereto and
their respective successors and permitted assigns, but (except as
provided for in this Section 17.10) neither this Agreement nor
any of the rights, interests or obligations hereunder shall be
assigned by Buyer, Parent or Seller without the prior written
consent of the other; provided, however, that Buyer may assign
any of its rights, interests or obligations hereunder to any
Affiliate of Buyer, provided that, such assignment shall not
relieve Buyer or Parent from its obligations hereunder.
17.11 Schedules. Any matter disclosed on any one Schedule
hereto shall be deemed to be disclosed on all other Schedules
hereto.
17.12 Public Announcements; Confidentiality. Prior to
Closing, the Parties will consult with each other before issuing
or prior to the issuance by any Affiliate of, and will provide
each other the opportunity to review and comment upon, any press
release or other public statements (or relevant portions thereof)
relating to the transactions contemplated by this Agreement and
shall not issue, and shall ensure that their respective
Affiliates shall not issue, any such press release or make any
such public statement prior to such consultation, except as may
be required by applicable Law, court process or by obligations
pursuant to any listing agreement with any national securities
exchange or contractual obligation to make public filings with
the Securities and Exchange Commission. Each Party also agrees
that it will not, directly or indirectly, except to the extent
required by Law or Order (provided prior timely notice has been
provided to the other Party to permit such Party to limit such
disclosure or to seek appropriate protective orders), make use of
or divulge, or permit any of its agents, employees or Affiliates
to make use of or divulge, any terms or conditions of this
Agreement or the Ancillary Agreements. Notwithstanding the
foregoing, Parent shall be entitled to disclose this Agreement to
its lenders and principal investors, provided that any such
individual or entity either executes a confidentiality agreement
prior to such disclosure or is otherwise subject to a
confidentiality agreement with Seller with respect to such
information; provided, however, Parent shall be entitled to
disclose the Cash Purchase Price and specific information
regarding the Store Properties to its lenders and principal
investors. The obligations contained in this Section 17.12 are
in addition to and independent of the obligations contained in
the Non-Disclosure Agreement.
17.13 Right to Specific Performance. The Parties acknowledge
that the unique nature of the transactions contemplated by this
Agreement may render money damages an inadequate remedy for the
breach by either Party of its obligations under this Agreement.
Each Party agrees that in the event of such breach, (i) the non-
breaching Party may, upon proper action instituted by it, be
entitled to seek a decree of specific performance of this
Agreement, and (ii) such rights are cumulative and in addition to
any other remedy to which the Parties may be entitled at law or
equity.
17.14 Severability. Any term or provision of this Agreement
that is invalid or unenforceable in any situation in any
jurisdiction shall not affect the validity or enforceability of
the remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
[Remainder of page intentionally left blank. Signature
page follows.]
IN WITNESS WHEREOF, the Parties, acting through their duly
authorized representatives, have executed this Agreement as of
the date first above written.
XXXXXXX COMPANIES, INC.
By: /s/ Xxxxxxx X. Roof
Name: Xxxxxxx X. Roof
Title: CFO
RAINBOW FOOD GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: President
XXXXXX'X, INC.
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Executive Vice
President
RBF CORP.
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: President
INDEX OF SCHEDULES
Schedule 1.1(a) Acquired Contracts
Schedule 1.1(b) Seller's Knowledge
Schedule 2.1(g) Material permits and licenses
Schedule 2.1(i) Retail Leases and Subleases
Schedule 2.1(j) Intellectual Property and Trademarks
Schedule 4.2(b) Inventory Procedure and Certain Excluded
Inventory
Schedule 4.4 Allocation
Schedule 4.5 Specific Store Property Value Schedule
Schedule 5.3 No Breach or Conflict
Schedule 5.4 Owned Real Property
Schedule 5.5(a) Leased Store Properties
Schedule 5.5(b) Eminent Domain Proceedings
Schedule 5.8 Claims, Litigation and Disputes
Schedule 5.9 Acquired Contracts
Schedule 5.10 Compliance with Laws
Schedule 5.11 Taxes
Schedule 5.13(a) Employee Benefit Plans
Schedule 5.13(b) Union Pension Plan Liability
Schedule 5.13(c) Employees
Schedule 5.13(d) Employee Matters
Schedule 5.14 Environmental Matters
Schedule 5.17 Recent Events
Schedule 5.19 Cure Costs
Schedule 5.20 Intellectual Property
Schedule 7.2 Conduct of Business Pending Closing
Schedule 7.2(h) Raises; Bonuses
INDEX OF EXHIBITS
Exhibit A Xxxx of Sale
Exhibit B Assignment and Assumption Agreement
INDEX OF ANNEXES
Annex I Store Properties
Annex II Bidding Procedures Order
Annex III Sale Order
THE ABOVE-DESCRIBED EXHIBITS, SCHEDULES AND ANNEXES ARE OMITTED
FROM THIS FILING PURSUANT TO ITEM 601(B)(2) OF REGULATION S-K.
THE REGISTRANT, XXXXXX'X, INC. HEREBY AGREES TO FURNISH A COPY OF
SUCH EXHIBITS, SCHEDULES AND ANNEXES TO THE COMMISSION UPON
REQUEST.
EXHIBIT A
TO ASSET PURCHASE AGREEMENT
XXXX OF SALE
KNOW ALL MEN BY THESE PRESENTS:
Rainbow Food Group, Inc., a Nevada corporation
("Assignor"), for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, does hereby sell,
transfer, assign, and convey to _____________________, a
____________________, ("Assignee"), the Inventory (excluding
Excluded Inventory), Leasehold Improvements, Equipment, Files and
Records and Supplies, as defined in Section 2.1 of that certain
Asset Purchase Agreement dated as of __________, 2003, by and
between Assignor and Assignee (the "Asset Purchase Agreement"),
to have and to hold the same, unto the Assignee, its successors
and assigns, forever, and does hereby warrant and defend the
title to said Purchased Assets against the lawful claims and
demands of all persons whomsoever. This Xxxx of Sale is made
pursuant and subject to the Asset Purchase Agreement and
incorporates all of the terms and conditions therein.
EXECUTED AND DELIVERED as of this _______ day of _______,
2003.
RAINBOW FOOD GROUP, INC.,
a Nevada corporation
By
______________________________
Vice
President
EXHIBIT B
TO ASSET PURCHASE AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT (the
"Agreement") is entered into as of this ____ day of ____________,
2003, by and between __________________, a ________________
("Assignor"), and _______________________, a ____________________
("Assignee").
W I T N E S S E T H:
WHEREAS, pursuant to that certain Asset Purchase
Agreement dated as of _________________, 2003, by and between
Assignor and Assignee (the "Asset Purchase Agreement"), Assignor
agreed to assign to Assignee all of Assignor's right, title, and
interest in, to, and under the Acquired Contracts, Permits, as
such terms are defined in the Asset Purchase Agreement;
NOW, THEREFORE, for good and valuable consideration,
the receipt and adequacy of which are hereby acknowledged,
Assignor does hereby sell, assign, transfer, and convey to
Assignee all of Assignor's right, title, and interest in, to, and
under and all obligations under the Acquired Contracts, Permits.
Assignee hereby assumes and agrees to perform all of
the obligations of Assignor under the Acquired Contracts and
Permits accruing from and after the date hereof and to indemnify
and hold harmless Assignor from and against liabilities or
obligations under the Acquired Contracts, Permits with respect to
events occurring or liabilities accruing from and after the date
hereof.
Assignor agrees to indemnify and hold Assignee harmless
from and against any liabilities or obligations under Acquired
Contracts, Permits with respect to events occurring or
liabilities accruing prior to the date hereof.
This Agreement is made pursuant and subject to the
Asset Purchase Agreement and incorporates all of the terms and
conditions therein including, without limitation, the
representations and warranties of Assignor.
This Agreement shall bind and inure to the benefit of
Assignor and Assignee and their respective successors and
assigns.
This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
EXECUTED AND DELIVERED the day and year first above
written.
_______________________, a
________________
By
____________________________________
Vice
President
_____________________, a
__________________
By Vice
President