STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of the 23rd day of
September, 1999, by and among Real Goods Trading Corporation, a
California corporation (the "Company"), and Whole Foods Market,
Inc., a Texas corporation (the "Investor").
The parties hereby agree as follows:
1. Purchase and Sale of Stock.
1.1 SALE AND ISSUANCE OF COMMON STOCK. Subject to the
terms and conditions of this Agreement, the Investor agrees to
purchase at the Closing (as defined below), and the Company
agrees to sell and issue to the Investor, 800,000 shares (the
"Shares") of common stock, without par value, of the Company
("Common Stock") at a purchase price equal to $4.50 per Share.
1.2 CLOSING. The purchase and sale of the Shares shall
take place at the offices of the Investor in Austin, Texas, at
9:00 a.m., on the date hereof, or at such other time and place as
the Company and the Investor mutually agree upon orally or in
writing (which time and place are designated as the "Closing").
At the Closing, the Company shall deliver to the Investor a
certificate representing the Shares against delivery to the
Company by the Investor of a check in the amount of $3,600,000,
payable to the Company's order or by wire transfer of funds in
such amount to the Company's designated bank account.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to the Investor that, except as
set forth on a Schedule of Exceptions, attached hereto as Exhibit
A, furnished to the Investor, which exceptions shall be deemed to
be representations and warranties as if made hereunder:
2.1 ORGANIATION, GOOD STANDING AND QUALIFICATION. The
Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of California and has
all requisite corporate power and authority to carry on its
business as now conducted and as proposed to be conducted. The
Company is duly qualified to transact business and is in good
standing in each jurisdiction in which the failure so to qualify
would have a material adverse effect (a "Company Material Adverse
Effect") on (i) the business, operations, assets or financial
condition of the Company or (ii) the validity or enforceability
of, or the ability of the Company to perform its obligations
under, this Agreement.
2.2 AUTHORIZATION. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for
the authorization, execution and delivery of this Agreement, the
Registration Rights Agreement in the form of Exhibit B hereto
(the "Registration Rights Agreement") and the Director
Designation Agreement in the form of Exhibit C hereto (the
"Director Agreement") (the Registration Rights Agreement and
Director Agreement being referred to collectively as the
"Ancillary Agreements"), the performance of all obligations of
the Company hereunder and thereunder and the authorization,
issuance (or reservation for issuance) and delivery of the Shares
being sold hereunder has been taken or will be taken prior to the
Closing; and this Agreement and any Ancillary Agreements
constitute valid and legally binding obligations of the Company,
enforceable in accordance with their respective terms, except (i)
as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting
enforcement of creditors' rights generally and (ii) as limited by
laws relating to the availability of specific performance,
injunctive relief or other equitable remedies.
2.3 GOVERNMENTAL CONSENTS. No consent, approval, order or
authorization of, or registration, qualification, designation,
declaration or filing with, any federal, state, local or
provincial governmental authority on the part of the Company is
required in connection with the consummation of the transactions
contemplated by this Agreement or the Ancillary Agreements.
2.4 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not
in violation or default of any provisions of its Articles of
Incorporation or Bylaws (each as amended to date) or of any
instrument, judgment, order, writ, decree or contract to which it
is a party or by which it is bound or, to its knowledge, of any
provision of federal or state statute, rule or regulation
applicable to the Company, except where such violation or default
would not have a Company Material Adverse Effect. The execution,
delivery and performance of this Agreement or any Ancillary
Agreements and the consummation of the transactions contemplated
hereby and thereby will not result in any such violation or be in
conflict with or constitute, with or without the passage of time
and giving of notice, either a default under any such provision,
instrument, judgment, order, writ, decree or contract or an event
which results in the creation of any lien, charge or encumbrance
upon any assets of the Company or the suspension, revocation,
impairment, forfeiture, or nonrenewal of any material permit,
license, authorization, or approval applicable to the Company,
its business or operations or any of its assets or properties.
2.5 CAPITALIZATION. The authorized capital of the Company
consists of 10 million shares of Common Stock, of which 4,079,942
shares are outstanding immediately prior to the issuance and
delivery of the Shares. An additional number of shares of Common
Stock are reserved for issuance upon the exercise of stock
options granted, or eligible for future grant, under the stock
option plans of the Company, as described in the "Company SEC
Reports" (defined hereinbelow). Except as stated above, there is
no outstanding subscription, contract, convertible or
exchangeable security, option, warrant, call or other right
obligating the Company to issue, sell, exchange, or otherwise
dispose of, or to purchase, redeem or otherwise acquire, shares
of, or securities convertible into or exchangeable for, capital
stock of the Company.
2.6 VALID ISSUANCE OF COMMON STOCK. The Shares which are
being purchased by the Investor hereunder, when issued, sold and
delivered in accordance with the terms hereof for the
consideration expressed herein, will be duly and validly issued,
fully paid and nonassessable and, based in part upon the
representations of the Investor in this Agreement, will be issued
in compliance with all applicable federal and state securities
laws.
2.7 COMPANY SEC REPORTS. The Company has made available to
the Investor (i) the Company's Annual Report on Form 10-KSB for
the year ended March 31, 1999 (ii) the Company's Quarterly Report
on Form 10-QSB for the quarter ended June 30, 1999, (iii) the
proxy statements relating to the Company's 1999 meeting of
stockholders and (iv) all other reports or registration
statements (as amended or supplemented prior to the date hereof),
filed by the Company with the Securities and Exchange Commission
(the "SEC") since April 1, 1999, including all exhibits thereto
and items incorporated therein by reference (items (i) through
(iv) being referred to as the "Company SEC Reports"). As of
their respective dates, the Company SEC Reports did not contain
any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which
they were made, not misleading. Since April 1, 1997, the Company
has filed all material forms (with necessary amendments), reports
and documents with the SEC required to be filed by it pursuant to
the federal securities laws and the SEC rules and regulations
thereunder, each of which complied as to form, at the time such
form, report or document was filed, in all material respects with
the applicable requirements of the federal securities laws and
the applicable rules and regulations thereunder.
2.8 FINANCIAL STATEMENTS. The Company has made available
to the Investor true, correct and complete copies of the
following financial statements (the "Company Financial
Statements"):
(a) the financial statements of the Company as of
March 31,1998 and 1999 and for the years then ended, including
the notes thereto, in each case examined by and accompanied by
the reportof Deloitte & Touche (collectively, the "Company
Year-End Statements"); and
(b) the unaudited balance sheet of the Company as of
June 30, 1999 (the "Company Balance Sheet"), with any notes
thereto, and the related unaudited statement of income for the
three months then ended (collectively, the "Company Quarterly
Statements").
The Company Year-End Statements and Company Quarterly Statements
have been prepared from, and are in accordance with, the books
and records of the Company and present fairly, in all material
respects, the financial position of the Company as of the dates
thereof and the results of operations and cash flows thereof for
the periods then ended, in each case in conformity with generally
accepted accounting principles, consistently applied, except for
normal year-end adjustments and as noted therein. Since March
31, 1999, there has been no change in accounting principles
applicable to, or methods of accounting utilized by, the Company,
except (i) as noted in the Company Financial Statements and (ii)
the Company is now recognizing gross shipping and handling
revenues and expenses, rather than netting such items.
2.9 ABSENCE OF CERTAIN CHANGES. Since June 30, 1999, the
Company has not, except as otherwise set forth or contemplated in
the Company SEC Reports:
(a) suffered any adverse change in the business,
operations, assets, or financial condition, except for such
changes that would not result in a Company Material Adverse
Effect;
(b) suffered any material damage or destruction to or
loss of the assets of the Company, whether or not covered by
insurance, which property or assets are material to the
operations or business of the Company;
(c) entered into or terminated any material agreement,
commitment or transaction, or agreed or made any changes in
material leases or agreements, other than renewals or extensions
thereof and leases, agreements, transactions and commitments
entered into or terminated in the ordinary course of business;
(d) declared, paid or set aside for payment any
dividend or distribution with respect to the Company's capital
stock; or
(e) entered into any agreement to do any of the
foregoing.
2.10 NO MATERIAL UNDISCLOSED LIABILITIES. To the
Company's knowledge, there are no liabilities or obligations of
the Company of any nature, whether absolute, accrued, contingent,
or otherwise, other than:
(a) the liabilities and obligations that are
reflected, accrued or reserved against on the Company Balance
Sheet, or referred to in the footnotes to the Company Balance
Sheet, or incurred in the ordinary course of business and
consistent with past practices since June 30, 1999; or
(b) liabilities and obligations which in the aggregate
would not result in a Company Material Adverse Effect.
2.11 LITIGATION. There is no action, suit, proceeding or
investigation pending or, to the Company's knowledge, currently
threatened in writing against the Company which questions the
validity of this Agreement or any Ancillary Agreements, or the
right of the Company to enter into any of them, or to consummate
the transactions contemplated hereby or thereby, or which might
result, either individually or in the aggregate, in a Company
Material Adverse Effect.
2.12 TAX RETURNS; TAXES. The Company has duly filed all
U.S. federal and material state, county, local and foreign tax
returns and reports required to be filed by it, including those
with respect to income, payroll, property, withholding, social
security, unemployment, franchise, excise and sales taxes and all
such returns and reports are correct in all material respects;
has either paid in full all taxes that have become due as
reflected on any return or report and any interest and penalties
with respect thereto or have fully accrued on its books or have
established adequate reserves for all taxes payable but not yet
due; and has made cash deposits with appropriate governmental
authorities representing estimated payments of taxes, including
income taxes and employee withholding tax obligations. No
extension or waiver of any statute of limitations or time within
which to file any return has been granted to or requested by the
Company with respect to any tax. No unsatisfied deficiency,
delinquency or default for any tax, assessment or governmental
charge has been claimed, proposed or assessed against the
Company, nor has the Company received notice of any such
deficiency, delinquency or default.
2.13 MATERIAL CONTRACTS. The Company has furnished or
made available to the Investor accurate and complete copies of
the Material Contracts (as defined herein) applicable to the
Company. There is not under any of the Material Contracts any
existing breach, default or event of default by the Company nor
event that with notice or lapse of time or both would constitute
such a breach, default or event of default that would have a
Company Material Adverse Effect. As used herein, the term
"Material Contracts" shall mean all contracts and agreements
filed, or required to be filed, as exhibits to Company's Annual
Report on Form 10-KSB for the year ended March 31, 1999 and any
contracts and agreements entered into since March 31, 1999 which
would be required to be filed as an exhibit to Company's Annual
Report on Form 10-KSB for the year ending March 31, 2000.
2.14 PERMITS. To the Company's knowledge: (i) the Company
has all material franchises, permits, licenses and any similar
authority necessary for the conduct of its business as now being
conducted by it, the lack of which could have a Company Material
Adverse Effect; and (ii) the Company is not in default in any
material respect under any of such franchises, permits, licenses
or other similar authority.
2.15 INTELLECTUAL PROPERTY. The Company owns or has valid,
binding and enforceable rights to use all material patents,
trademarks, trade names, service marks, service names,
copyrights, applications therefor and licenses or other rights in
respect thereof ("Intellectual Property") used or held for use in
connection with the business of the Company, without any known
conflict with the rights of others, except for such conflicts as
do not have a Company Material Adverse Effect. The Company has
not received any written notice from any other person pertaining
to or challenging the right of the Company to use any
Intellectual Property or any trade secrets, proprietary
information, inventions, know-how, processes and procedures owned
or used or licensed to Company, except with respect to rights the
loss of which, individually or in the aggregate, would not have a
Company Material Adverse Effect.
2.16 LABOR AGREEMENTS AND ACTIONS. The Company is not
bound by or subject to (and none of its assets or properties is
bound by or subject to) any written or oral, express or implied,
contract, commitment or arrangement with any labor union, and no
labor union has requested or, to the knowledge of the Company,
has sought to represent any of the employees, representatives or
agents of the Company. There is no strike or other labor dispute
involving the Company pending, or to the knowledge of the Company
threatened in writing, which could have a material adverse effect
on the assets, properties, financial condition, operating results
or business of the Company, nor is the Company aware of any labor
organization activity involving its employees.
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. The
Investor hereby represents and warrants that:
3.1 AUTHORIZATION. This Agreement constitutes its valid
and legally binding obligation, enforceable in accordance with
its terms, except (i) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors' rights generally
and (ii) as limited by laws relating to the availability of
specific performance, injunctive relief or other equitable
remedies. The Investor represents that it has full power and
authority to enter into this Agreement.
3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Shares to be
purchased by the Investor will be acquired for investment for the
Investor's own account, not as a nominee or agent, and not with a
view to the resale or distribution of any part thereof, and the
Investor has no present intention of selling, granting any
participation in, or otherwise distributing the same. By
executing this Agreement, the Investor further represents that it
does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participation to such
person or to any third person, with respect to any of the Shares.
3.3 DISCLOSURE OF INFORMATION. It believes it has received
all the information it considers necessary or appropriate for
deciding whether to purchase the Shares. The Investor further
represents that it has had an opportunity to ask questions and
receive answers from the Company regarding the terms and
conditions of the offering of the Shares. The foregoing,
however, does not limit or modify the representations and
warranties of the Company in Section 2 of this Agreement or the
right of the Investor to rely thereon.
3.4 INVESTMENT EXPERIENCE. The Investor acknowledges that
it is able to fend for itself, can bear the economic risk of its
investment and has such knowledge and experience in financial or
business matters that it is capable of evaluating the merits and
risks of the investment in the Shares.
3.5 ACCREDITED. The Investor is an "accredited investor"
within the meaning of SEC Rule 501 of Regulation D, as presently
in effect.
3.6 RESTRICTED SECURITIES. It understands that the Shares
are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the
Company in a transaction not involving a public offering and that
under such laws and applicable regulations such securities may be
resold without registration under the Securities Act of 1933, as
amended (the "Act"), only in certain limited circumstances. In
this connection, the Investor represents that it is familiar with
SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act.
3.7 LEGENDS. It is understood that the certificates
evidencing the Shares may bear one or all of the following
legends:
(a) "These securities have not been registered under
the Securities Act of 1933. They may not be sold, offered for
sale, pledged or hypothecated in the absence of a registration
statement in effect with respect to the securities under such Act
or an opinion of counsel satisfactory to the Company that such
registration is not required or unless sold pursuant to Rule 144
of such Act."
(b) Any legend required by the laws of any state.
4. Conditions of Investor's Obligations at Closing. The
obligations of the Investor at the Closing to the Company under
of this Agreement are subject to the fulfillment on or before the
Closing of each of the following conditions:
4.1 REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Company contained in Section 2 shall be
true on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the
date of such Closing.
4.2 PERFORMANCE. The Company shall have performed and
complied with all agreements, obligations and conditions
contained in this Agreement that are required to be performed or
complied with by it on or before the Closing.
4.3 COMPLIANCE CERTIFICATE. The chief executive officer of
the Company shall deliver to the Investor at the Closing a
certificate certifying that the conditions specified in Sections
4.1 and 4.2 have been fulfilled.
4.4 PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at
the Closing and all documents incident thereto shall be
reasonably satisfactory in form and substance to the Investor,
and they shall have received all such counterpart original and
certified or other copies of such documents as they may
reasonably request.
4.5 OPIONION OF COMPANY COUNSEL. The Investor shall have
received from corporate counsel for the Company, an opinion,
dated as of the Closing, in form and substance satisfactory to
the counsel to the Investor, with respect to the matters set
forth in Sections 2.1 through 2.6 above.
5. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLSOING. The
obligations of the Company at the Closing to the Investor under
this Agreement are subject to the fulfillment on or before the
Closing of each of the following conditions by the Investor:
5.1 REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Investor contained in Section 3 shall be
true on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the
Closing.
5.2 COMPLIANCE CERTIFICATE. An executive officer of the
Investor shall deliver to the Company at the Closing a
certificate certifying that the conditions specified in Section
5.1 has been fulfilled.
5.3 PAYMENT OF PURCHASE PRICE. The Investor shall have
delivered the purchase price specified in Section 1.1.
6. MISCELLANEOUS.
6.1 SURVIVAL OF WARRANTIES. The warranties,
representations and covenants of the Company and the Investor
contained in or made pursuant to this Agreement shall survive the
execution and delivery of this Agreement and the Closing and
shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investor or the
Company.
6.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to
the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the
parties hereto or their respective successors and assigns any
rights, remedies, obligations or liabilities under or by reason
of this Agreement, except as expressly provided in this
Agreement.
6.3 GOVERNING LAW; ARBITRATION. This Agreement shall be
governed by and construed under the laws of the State of
Colorado. Any controversy or dispute among the parties arising
in connection with this Agreement shall be submitted to a panel
of three arbitrators and finally settled by arbitration in
accordance with the commercial arbitration rules of the American
Arbitration Association. Each of the disputing parties shall
appoint one arbitrator, and these two arbitrators shall
independently select a third arbitrator. Arbitration shall take
place in Denver, Colorado, or such other location as the
arbitrators may select. Any award for monetary damages resulting
from nonpayment of sums due hereunder shall bear interest from
the date on which such sums were originally due and payable.
Judgment upon the award rendered may be entered in any court
having jurisdiction or application may be made to such court for
judicial acceptance of the award and an order of enforcement, as
the case may be.
6.4 COUNTERPARTS. 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.
6.5 TITLES AND SUBTITLES. The titles and subtitles used in
this Agreement are used for convenience only and are not
considered in construing or interpreting this Agreement.
6.6 NOTICES. Any notices given under this Agreement shall
be in writing and shall be delivered to the addresses set forth
below the signatures of the parties or at such other address as
the party shall specify in writing. Notices shall be deemed
effectively given: (i) upon the next business day after being
sent overnight by U.S. Express Mail or by a major U.S. express
document courier; or (ii) upon receipt of confirmation following
transmission by a facsimile machine.
6.7 FINDER'S FEE. Each party represents that it neither is
nor will be obligated for any finders' fee or commission in
connection with this transaction. The Investor agrees to
indemnify and to hold harmless the Company from any liability for
any commission or compensation in the nature of a finders' fee
(and the costs and expenses of defending against such liability
or asserted liability) for which the Investor or any of its
officers, employees or representatives is responsible. The
Company agrees to indemnify and hold harmless the Investor from
any liability for any commission or compensation in the nature of
a finders' fee and the costs and expenses of defending against
such liability or asserted liability) for which the Company or
any of its officers, employees or representatives is responsible.
6.8 EXPENSES. Each party shall pay all costs and expenses
that it incurs with respect to the negotiation, execution,
delivery and performance of this Agreement. If any action at law
or in equity is necessary to enforce or interpret the terms of
this Agreement or the other documents entered into in connection
herewith, the prevailing party shall be entitled to reasonable
attorney's fees, costs and necessary disbursements in addition to
any other relief to which such party may be entitled.
6.9 AMENDMENTS AND WAIVERS. Any term of this Agreement may
be amended and the observance of any term of this Agreement may
be waived only with the written consent of the Company and the
Investor. Any amendment or waiver effected in accordance with
this paragraph shall be binding upon each holder of any
securities purchased under this Agreement at the time outstanding
(including securities into which such securities are
convertible), each future holder of all such securities, and the
Company.
6.10 SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such
provision shall be excluded from this Agreement and the balance
of the Agreement shall be interpreted as if such provision were
so excluded and shall be enforceable in accordance with its
terms.
6.11 ENTIRE AGREEMENT. This Agreement and the documents
referred to herein constitute the entire agreement among the
parties and no party shall be liable or bound to any other party
in any manner by any warranties, representations, or covenants
except as specifically set forth herein or therein.
6.12 PUBLIC DISCLOSURE. Neither the Company nor the
Investor shall make any public announcement regarding the terms
hereof of or the transactions contemplated herein without the
prior written consent of the other, except as required by law.
6.13 COVENANT OF GOOD FAITH AND FAIR DEALING. Each of the
parties hereby covenants to use its good faith and to deal fairly
in connection with the matters described herein.
In Witness Whereof, each of the parties hereto have executed
this Agreement as of the date first written above.
WHOLE FOODS MARKET, INC
By: [S]GLENDA FLANAGAN
Glenda Flanagan
Address: 601 North Lamar Blvd., Suite 300
Austin, Texas 78703
Attn: Chief Financial Officer
Fax: 512-477-1069
REAL GOODS TRADING COPORATIONn
By: [S]JOHN SCHAEFFER
John Schaeffer
Chief Financial Officer
Address: 3140 Airway Drive
Santa Rosa, California 95403
Attention: President
Fax: 707-744-2104
152446.2