Exhibit 10.1
ASSET PURCHASE AGREEMENT
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ASSET PURCHASE AGREEMENT
Between
PENDLETON FLOUR MILLS, L.L.C.,
(as "Buyer"),
and
FISHER MILLS INC., FISHER MILLS - BLACKFOOT L.L.C.,
and
FISHER PROPERTIES INC.
(as "Sellers")
_______________________
March 16, 2001
_______________________
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TABLE OF CONTENTS
Page
SECTION 1 - SALE AND PURCHASE OF ASSETS; LIABILITIES..................... 2
1.1 Purchase and Sale............................................ 2
1.2 Excluded Assets.............................................. 4
1.3 Liabilities Assumed by Buyer................................. 4
1.4 Liabilities Not Assumed by the Buyer......................... 4
1.5 Purchase Price............................................... 5
1.6 Allocation of the Purchase Price............................. 6
1.7 Prorations and Other Costs................................... 7
1.8 Closing...................................................... 8
1.9 Guaranty..................................................... 8
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF SELLERS.................... 8
2.1 Organization and Qualification............................... 8
2.2 Authority to Execute and Perform Agreements.................. 8
2.3 Financial Statements......................................... 9
2.4 Title to Assets; Liens....................................... 9
2.5 Completeness of Assets....................................... 9
2.6 No Material Adverse Change................................... 10
2.7 Tax Matters.................................................. 12
2.8 Compliance with Laws; Permits................................ 13
2.9 Consents; No Breach.......................................... 13
2.10 Actions and Proceedings...................................... 13
2.11 Contracts and Other Agreements............................... 14
2.12 Real Property................................................ 14
2.13 Accounts Receivable.......................................... 15
2.14 Inventory.................................................... 15
2.15 Personal Property............................................ 16
2.16 Intellectual Property........................................ 16
2.17 Employee Benefit Plans....................................... 17
2.18 Labor Matters................................................ 19
2.19 Employees.................................................... 19
2.20 Insurance.................................................... 20
2.21 Brokerage.................................................... 20
2.22 Hazardous Materials.......................................... 20
2.23 Environmental Compliance..................................... 20
2.24 Product Recalls and Withdrawals.............................. 21
2.25 Customers and Suppliers...................................... 21
2.26 Restrictions on Business..................................... 21
2.27 Accuracy and Completeness of Representations and Warranties.. 22
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF BUYER...................... 22
3.1 Organization................................................. 22
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Page
3.2 Authority to Execute and Perform Agreements.................. 22
3.3 Brokerage.................................................... 22
3.4 Actions and Proceedings...................................... 22
3.5 Consents; No Breach.......................................... 22
3.6 No Financing................................................. 23
SECTION 4 - COVENANTS AND AGREEMENTS..................................... 23
4.1 Conduct of Milling Division Business......................... 23
4.2 Continued Effectiveness of Representations and Warranties.... 24
4.3 Taxes........................................................ 24
4.4 Access and Investigations.................................... 25
4.5 Expenses..................................................... 25
4.6 Assignability................................................ 25
4.7 Consummation of Agreement.................................... 26
4.8 Collection of Assets......................................... 26
4.9 License to Use "Fisher" Name................................. 26
4.10 No Solicitation.............................................. 27
4.11 Maintenance of Seller Records................................ 27
4.12 Employees.................................................... 27
4.13 Seattle Mill Warehouse and Equipment Lease................... 28
4.14 Portland Lease............................................... 28
4.15 Information Systems Service Contract......................... 28
4.16 HSR Filings.................................................. 29
4.17 Title Insurance.............................................. 29
4.18 Environmental Indemnity...................................... 30
4.19 Further Assurances........................................... 31
4.20 Financial Statements......................................... 31
4.21 Post-Closing Matters......................................... 31
4.22 Seattle Mill Earthquake Repairs.............................. 31
SECTION 5 - CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER............. 32
5.1 Representations, Warranties and Covenants.................... 32
5.2 Third Party Consents......................................... 32
5.3 Opinion of Counsel to Seller................................. 33
5.4 Litigation................................................... 33
5.5 Secretary's Certificate...................................... 33
5.6 Instruments of Transfer...................................... 33
5.7 Other Agreements............................................. 33
5.8 Real Estate Matters.......................................... 33
5.9 No Material Adverse Change................................... 33
5.10 HSR Act...................................................... 33
5.11 DNR Lease.................................................... 34
SECTION 6 - CONDITIONS PRECEDENT TO THE OBLIGATIONS OF SELLERS........... 34
6.1 Representations, Warranties and Covenants.................... 34
6.2 Secretary's Certificate of Buyer............................. 34
6.3 Litigation................................................... 34
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Page
6.4 Lease and Service Contract................................... 34
6.5 Assumption Agreement......................................... 34
6.6 HSR Act...................................................... 34
6.7 Approval by Fisher Board..................................... 34
SECTION 7 - SURVIVAL; INDEMNIFICATION.................................... 35
7.1 Indemnification by Seller.................................... 35
7.2 Indemnification by Buyer..................................... 35
7.3 Claims for Indemnification................................... 35
7.4 Defense by Indemnifying Party................................ 35
7.5 Expiration of Indemnification Obligations.................... 36
7.6 Thresholds................................................... 37
7.7 Limitation................................................... 37
7.8 Reduction of Indemnity Payments.............................. 37
SECTION 8 - TERMINATION OF AGREEMENT..................................... 37
8.1 Termination.................................................. 37
8.2 Effect of Termination........................................ 38
SECTION 9 - MISCELLANEOUS................................................ 38
9.1 Publicity.................................................... 38
9.2 Notices...................................................... 38
9.3 Entire Agreement............................................. 39
9.4 Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies..................................... 39
9.5 Governing Law; Attorneys' Fees; Jurisdiction/Venue........... 39
9.6 Binding Effect; No Assignment................................ 40
9.7 Variations in Pronouns....................................... 40
9.8 Counterparts................................................. 40
9.9 Exhibits and Schedules....................................... 40
9.10 Headings..................................................... 40
9.11 Definitions.................................................. 40
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EXHIBITS AND SCHEDULES
Exhibits
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Exhibit 1.9 Guaranty of Fisher
Exhibit 4.13 Seattle Warehouse Lease
Exhibit 4.14 Portland Lease
Exhibit 4.15 IS Services Contract
Exhibit 4.18 Legal Description of the Site
Exhibit 5.3 Form of Opinion of Graham & Dunn PC
Exhibit 5.6 Instruments of Conveyance
Exhibit 6.5 Assignment and Assumption Agreement
Schedules
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Schedule 1.1(a) Real Property
Schedule 1.1(b) Personal Property
Schedule 1.1(c) Permits
Schedule 1.1(d) Other Contracts and Rights
Schedule 1.1(e) Intellectual Property
Schedule 1.2 Excluded Assets
Schedule 1.3(b) Assumed Contracts
Schedule 1.5(b) Working Capital
Schedule 2.1(a) Foreign Qualification - FMI
Schedule 2.1(b) Foreign Qualification - LLC
Schedule 2.3(a) Exceptions to Annual Financial Statements
Schedule 2.3(b) Undisclosed Liabilities; Material Services Provided by
Fisher
Schedule 2.4 Liens
Schedule 2.5 Completeness of Assets
Schedule 2.6 Material Adverse Change
Schedule 2.7 Taxes
Schedule 2.8 Compliance with Laws
Schedule 2.9 Required Consents; No Breach
Schedule 2.12(c) Surveys
Schedule 2.13 Accounts Receivable
Schedule 2.15 Personal Property Exceptions
Schedule 2.17 Employee Benefit Plans
Schedule 2.17(a) Exceptions to Employee Benefit Plans
Schedule 2.17(f) Employee Benefit Plan Payments/Benefits Triggered by Sale
Schedule 2.17(h) Multiemployer Plan Contributions/Liabilities
Schedule 2.18(a) Pending/Threatened Labor Matters
Schedule 2.18(b) Collective Bargaining Agreements
Schedule 2.19 Employees
Schedule 2.25 Customers and Suppliers
Schedule 4.22 Earthquake and Manson Report Repairs
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into
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as of March 16, 2001, by and among Pendleton Flour Mills, L.L.C., an Oregon
limited liability company ("Buyer"), Fisher Mills Inc., a Washington corporation
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("FMI"), Fisher Mills --Blackfoot L.L.C., a Washington limited liability company
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(the "LLC") and Fisher Properties Inc., a Washington corporation ("FPI"), (FMI,
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the LLC and FPI each being a "Seller" and together, the "Sellers").
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RECITALS
A. FMI is engaged in the business of (i) milling flour and (ii)
distributing bakery products. FMI is a wholly owned subsidiary of Fisher
Communications, Inc. (formerly Fisher Companies Inc.) ("Fisher") and conducts
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flour milling operations in Seattle, Washington (the "Seattle Mill"). FMI also
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owns (i) a milling facility (the "Portland Mill") and the Portland Milling
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Equipment (defined in Section 9.11) located within FMI's distribution center in
Portland, Oregon (the "Portland Distribution Center"), and (ii) certain flour
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milling equipment (the "Modesto Milling Equipment") that is located within FMI's
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leased Modesto, California facility (the "Modesto Mill").
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B. The LLC is engaged in the business of milling flour and conducts its
operations at a milling facility located in Blackfoot, Idaho (the "Blackfoot
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Mill"). FMI owns a 99% membership interest in the LLC, and Fisher owns a 1%
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membership interest in the LLC. Each of the Seattle Mill, the Modesto Mill, the
Modesto Milling Equipment, the Portland Mill, the Portland Milling Equipment and
the Blackfoot Mill are referred to in this Agreement as a "Mill" and
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collectively as the "Mills."
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C. FMI's flour milling business division and the LLC are referred to in
this Agreement collectively as the "Milling Division." The Milling Division is
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a separate business division from the distribution operations that FMI conducts,
which are referred to in this Agreement as the "Distribution Division."
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D. FPI is engaged in the business of owning and managing commercial real
property and is a wholly owned subsidiary of Fisher. FPI owns certain real
property located adjacent to the Seattle Mill that is used as a parking lot for
employees of the Milling Division (the "Seattle Parking Lot"), and Lots 9 and 10
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(as defined in Section 9.11). Pursuant to terms of an agreement with the City
of Seattle regarding the vacation of Chelan Avenue Southwest, FPI will transfer
Lots 9 and 10 to the City of Seattle and the City of Seattle will, by ordinance
of the Seattle City Council, vacate a portion of Chelan Avenue Southwest (as
defined in Section 9.11) (the "Chelan Avenue Vacation Agreement"). FPI also
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owns an easement for the maintenance, modification, reconstruction and operation
of a railroad yard and connecting tracks over portions of Lots 14 and 15 in
Block 406 of Seattle Tidelands (the "Railroad Easement"). FPI is a party to
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this Agreement solely for the purpose of selling the Seattle Parking Lot,
transferring its rights under the Chelan Avenue Vacation Agreement and the
Railroad Easement pursuant to the terms hereof, and for purposes of this
Agreement, the Seattle Parking Lot, Lots 9 and 10, the Chelan Avenue Vacation
Agreement and the Railroad Easement constitute assets of the Milling Division.
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E. The Milling Division uses certain transload facilities located in the
Portland Distribution Center ("the Portland Transload") and in the Distribution
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Division's leased operating facility in Rancho Cucamonga, California (the
"Rancho Distribution Center"). The Portland Distribution Center and Rancho
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Distribution Center comprise Distribution Division assets, which are not being
sold pursuant to this Agreement; nonetheless, Buyer will acquire from FMI, as
part of the transactions contemplated by this Agreement, the Portland Milling
Equipment and the right to lease the Portland Transload and related space in the
Portland Distribution Center.
F. FMI and the LLC wish to sell to Buyer, and Buyer wishes to purchase
from FMI and the LLC, substantially all of the assets, properties and rights
held in connection with the business and operations of the Milling Division
other than the Excluded Assets (as hereinafter defined), and Buyer has agreed to
assume certain liabilities of the Seattle Mill and the Blackfoot Mill, all for
the purchase price and upon the terms and subject to the conditions set forth in
this Agreement. FPI wishes to sell to Buyer, and Buyer wishes to purchase from
FPI, the Seattle Parking Lot, Lots 9 and 10, FPI's rights under the Chelan
Avenue Vacation Agreement, and the Railroad Easement, for the Purchase Price and
upon the terms and conditions set forth in this Agreement. It is anticipated
that by separate agreements and to separate third party purchasers: (1) FMI will
sell the Distribution Division; and (2) FMI will sell the transload assets at
the Rancho Distribution Center.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants set forth below, the parties hereby agree as follows:
SECTION 1 - SALE AND PURCHASE OF ASSETS; LIABILITIES
1.1 Purchase and Sale. On the terms and subject to the conditions set
forth in this Agreement, at the Closing, Sellers shall sell, assign, transfer,
convey and deliver to Buyer, and Buyer shall acquire, accept and purchase from
Sellers, all of Sellers' right, title and interest in all assets, properties and
rights (except for Excluded Assets), whether tangible or intangible, whether
real, personal or mixed, and wherever located, used or usable in the operation
of the Milling Division (such assets, properties and rights described in this
Section 1.1 are referred to collectively as the "Purchased Assets"), including:
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(a) The rights, titles and interests in, to or under all real
property and leases of, and other interests in, the real property used in the
operation of the Milling Division and set forth on Schedule 1.1(a) (including
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without limitation the aquatic lands leased from the Washington State Department
of Natural Resources, the Seattle Parking Lot, Lots 9 and 10, and the property
covered by the Railroad Easement), in each case together with all buildings,
structures, fixtures and other improvements actually or constructively attached
thereto and all other rights, privileges and easements appurtenant thereto (the
"Real Property");
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(b) The machinery, rolling stock, equipment, computers, furniture,
furnishings, motor vehicles, all spare parts, and supplies, all raw materials,
work-in-progress, finished goods inventories, and all other personal property of
every kind and character, including
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replacements and additions occurring after the date of this Agreement through
the Closing, as set forth on Schedule 1.1(b) (the "Personal Property");
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(c) The licenses, authorizations, permits or approvals issued by any
Governmental Authority (defined in Section 9.11) and associated with the
operation of the Milling Division, or with the development or use of any real
property used in the operation of the Milling Division, and all pending
applications and subsequently issued licenses, authorizations, permits or
approvals with respect to the Milling Division, as set forth on Schedule 1.1(c)
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(the "Permits");
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(d) The Contracts or other rights of Sellers not listed elsewhere in
this Section 1.1 and which are used in the operation of the Milling Division
(other than such Contracts relating to the Excluded Assets), including, without
limitation, the Chelan Avenue Vacation Agreement, the Railroad Easement, all
leases of personal property, operating agreements, and all amendments,
extensions, renewals, substitutions and replacements of, and additions to, such
Contracts and other rights as may be entered into by any Seller from the date of
this Agreement through the Closing in accordance with the terms of this
Agreement, as set forth on Schedule 1.1(d);
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(e) The trademarks, service marks and trade names used in the
operation of the Milling Division, including brand names of the flour products
produced by the Milling Division (excluding the name "Sol Brillante," which is
an asset of the Distribution Division), as set forth on Schedule 1.1(e) and
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other intellectual property used in the operation of the Milling Division,
including without limitation (i) all software and all information technology
systems, including the information technology system shared by the Milling
Division and the Distribution Division that will be leased back by Buyer to FMI
pursuant to the IS Service Contract described in Section 4.15; (ii) except for
any Fisher Marks, all works subject to copyright, patents, trademarks, and
Internet domain names used or usable in the operation of the Milling Division,
(iii) the telephone numbers, customer lists, advertising and marketing programs
and plans, referral relationships, business information and software currently
used by Sellers in connection with the Milling Division and (iv) except for any
Fisher Marks, any pending applications, registrations, extensions and renewals
for any of the foregoing, and any and all additions to any of the foregoing
acquired from the date hereof through the Closing (collectively, including the
rights granted pursuant to Section 4.9, the "Intellectual Property");
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provided, that after Closing, no such marks, trade names or brand names may
include the term "Fisher" except as specifically provided in Section 4.9 (such
prohibited names, marks or other identifiers, including the Fisher "flag" logo
and "bug" logo, being "Fisher Marks");
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(f) The books, records and files of FMI and the LLC relating to the
Milling Division that are located on the premises of the Mills, exclusive of
corporate records, tax returns and supporting tax documents, and historical
archives of FMI or the LLC;
(g) The books, records and files of FPI relating solely to the
Seattle Parking Lot, Lots 9 and 10, the Chelan Avenue Vacation Agreement and the
Railroad Easement;
(h) The goodwill attributable to the Milling Division and the
Intellectual Property; and
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(i) All telephone numbers and unexpired advertisements (e.g., Yellow
Page advertisements) of the Milling Division.
1.2 Excluded Assets. Notwithstanding anything contained in Section 1.1 to
the contrary, Sellers are not selling, and Buyer is not purchasing, any of the
following assets, properties or rights, all of which shall be retained by
Sellers (the "Excluded Assets"):
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(a) All assets, properties and rights owned or held by any of the
Sellers that are used or useable primarily in connection with the operation of
the Distribution Division;
(b) The transload facilities located in the Rancho Distribution
Center;
(c) All assets, properties and rights owned or held by FPI other than
the Seattle Parking Lot, Lots 9 and 10, the Chelan Street Vacation Agreement and
the Railroad Easement;
(d) The name "Sol Brillante" and the Fisher Marks and all licenses
held or granted by any Seller for use of the Fisher Marks, including the license
for the tradename "Fisher Scones," except as specifically authorized by Section
4.9 ;
(e) All books and records of each Seller that pertain to such
Seller's corporate existence or capitalization, and in the case of FPI, all
books and records other than those that specifically pertain to the Seattle
Parking Lot, Lots 9 and 10, the Chelan Street Vacation Agreement and the
Railroad Easement; and
(f) Those assets listed on Schedule 1.2.
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1.3 Liabilities Assumed by Buyer. On the Closing Date, Buyer shall assume
and agree to pay and perform, in accordance with their respective terms, only
the following obligations and liabilities of the Sellers (the "Assumed
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Liabilities"):
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(a) those current liabilities and accrued expenses of FMI or the LLC
as of the Closing Date, included in the calculation of Working Capital and
arising in the ordinary course of business or in connection with the
transactions contemplated by this Agreement; and
(b) those obligations of FMI or the LLC arising after the Closing
Date with respect to the Contracts set forth on Schedule 1.3(b) (the "Assumed
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Contracts").
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1.4 Liabilities Not Assumed by the Buyer. Notwithstanding any schedule or
exhibit to this Agreement and regardless of any disclosure to the Buyer, Buyer
shall not assume, nor shall Buyer be obligated to pay, perform or discharge, any
debt, liability, obligation or commitment of Sellers or relating to the
Purchased Assets (the "Excluded Liabilities"), other than the Assumed
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Liabilities. Without limiting the generality of the immediately foregoing
sentence, Buyer shall not be deemed by anything contained in this Agreement or
otherwise to have assumed any of the following (each of which is an Excluded
Liability):
(a) Bank debt of any Seller;
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(b) Inter-company obligations of any Seller;
(c) Any liability of Sellers for taxes with respect to any period or
partial period ending on or prior to the Closing Date;
(d) Liability or responsibility for Environmental conditions at the
Site (as defined in Section 4.18(a) as such conditions exist on the Closing
Date; and
(e) Except as otherwise specifically provided in Section 4.18, the
Milling Division's liabilities under the Consent Decree and the PRP Agreement
(each, as defined in Section 4.18(a)).
1.5 Purchase Price.
(a) Amount. In consideration of the sale of the Purchased Assets by
Sellers to Buyer and the assumption by Buyer of the Assumed Liabilities, and
subject to the satisfaction of all conditions set forth herein, Buyer shall pay,
deliver or cause to be delivered to Sellers:
(i) On the Closing Date, Thirty-One Million Dollars
($31,000,000) (the "Base Purchase Price"); plus
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(ii) The amount of Working Capital (Estimated Working Capital
payable on the Closing Date in accordance with Section 1.5(b)(i), subject to
adjustment as provided in Section 1.5(b)) (the Base Purchase Price plus the
Working Capital will equal the "Purchase Price");
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(iii) The Purchase Price shall be payable at Closing by wire
transfer of immediately available funds.
(b) Purchase Price Adjustment.
(i) The Base Purchase Price will be increased or decreased by a
Working Capital adjustment equal to the difference between the Milling
Division's Working Capital as shown on the Preliminary Settlement Statement and
on the Closing Settlement Statement. "Working Capital" shall mean the Milling
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Division's receivables, inventory and prepaid expenses applicable to Buyer
relating to the operating of the Milling Division, less the Assumed Liabilities
described in Section 1.3(a) and shall be prepared as shown on Schedule 1.5(b).
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The "Preliminary Settlement Statement" shall be the Estimated Working Capital of
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the Milling Division, as of April 30, 2001, prepared by FMI (after good faith
consultation with Buyer and Arthur Anderson LLP, accountants for Buyer) and
delivered to Buyer five (5) Business Days prior to Closing. The Base Purchase
Price shall be increased at Closing by the amount of the Estimated Working
Capital shown on the Preliminary Settlement Statement.
(ii) Within forty-five (45) days after the Closing Date, FMI
shall prepare and deliver to Buyer a settlement statement of the Milling
Division as of the Closing Date setting forth the Working Capital (the "Closing
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Settlement Statement"). The inventory reflected in the Closing Settlement
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Statement shall be based on a physical count as of 12:01 AM
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on May 1, 2001, in which both Buyer and Seller's representatives shall
participate. The items on the Preliminary Settlement Statement and on the
Closing Settlement Statement shall be prepared on a basis consistent with the
preparation of those items on the Base Balance Sheet. If, within twenty (20)
days after receipt of the Closing Settlement Statement, Buyer determines that
there are inaccuracies in the Closing Settlement Statement, Buyer shall so
notify Sellers and Buyer and Sellers, and their respective accountants, shall
use their best efforts to resolve any such inaccuracies and reach agreement on a
final Closing Settlement Statement. If, within thirty (30) days following such
notice, Buyer and Sellers have been unable to reach agreement, Buyer and Sellers
agree to submit such issues to an independent accounting firm of national
reputation (the "Neutral Accountant") mutually agreeable to the parties. In such
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event, (i) each party will furnish to the Neutral Accountant such workpapers and
other documents and information relating to the disputed issues as the Neutral
Accountant may request and are available to that party (or its independent
public accountants), and will be afforded the opportunity to present to the
Neutral Accountant any material relating to the determination and to discuss the
determination with the Neutral Accountant; (ii) the determination of the final
Closing Settlement Statement by the Neutral Accountant, as set forth in a notice
delivered to both parties by the Neutral Accountant, will be binding and
conclusive on the parties; and (iii) the parties agree to share equally the fees
and disbursements of the Neutral Accountant. The parties shall direct the
Neutral Accountant to use its best efforts to render a determination within
forty-five (45) days.
(iii) Sellers and Buyer shall fully cooperate in providing
access to their respective accountants and the Neutral Accountant, accounting
records and other information to the extent reasonably necessary for preparation
of the Closing Settlement Statement and the review thereof.
(iv) In the event the Working Capital as shown on the Closing
Settlement Statement, subject to any adjustment under this Section, is more than
the Estimated Working Capital as shown on the Preliminary Settlement Statement,
the Purchase Price shall be increased dollar for dollar by such difference and
the amount thereof shall be paid in cash or wire transfer of immediately
available funds by Buyer to Sellers within five (5) days after Buyer's receipt
of the Closing Settlement Statement or, if Buyer disputes the accuracy of the
Closing Settlement Statement, then within five (5) days after the determination
by the Neutral Accountant. In the event the Working Capital as shown on the
Closing Settlement Statement, subject to any adjustment under this Section, is
less than the Working Capital as shown on the Preliminary Settlement Statement,
the Purchase Price shall be reduced dollar for dollar by such difference and
Sellers shall pay to Buyer the amount thereof in cash or wire transfer of
immediately available funds within five (5) days after Buyer's receipt of the
Closing Settlement Statement or, if Buyer disputes the accuracy of the Closing
Settlement Statement, then within five (5) days after the determination by the
Neutral Accountant.
1.6 Allocation of the Purchase Price. Within twenty (20) days following
execution of this Agreement, Buyer shall provide FMI with a statement setting
forth the allocation of the Purchase Price among the Purchased Assets. FMI
shall have ten (10) days after receipt to accept the statement or to propose
changes. If FMI provides no notice of proposed changes within the ten-day
period, the allocations set forth in the statement shall be deemed conclusive
and the statement shall be the Certificate of Allocation. If Buyer accepts any
proposed changes, the modified statement shall be the Certificate of Allocation.
If the parties cannot agree on the
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allocation within twenty (20) days of Buyer's receipt of FMI's proposed changes,
either party can submit the issue to the Neutral Accountant, and such firm's
determination shall be final and binding on the parties. Each party agrees to
file all elections and returns required or desirable under applicable federal,
state and local Tax laws in accordance with the allocations reflected in the
Certificate of Allocation.
1.7 Prorations and Other Costs.
(a) Transfer and Conveyance Taxes. Sellers shall be responsible for
the payment and remittance of all state and local transfer and similar Taxes and
registration fees applicable to Buyer's purchase from Seller of Real Property.
Such payment shall be based upon an allocation agreed upon by Sellers and Buyer
prior to Closing. Sellers shall bear all state or local transfer Taxes arising
from the transactions contemplated by this Agreement, other than state or local
sales or use taxes levied on the transfer of any personal property Purchased
Assets, if any, which shall be borne by Buyer. The Tax Returns required by
reason of said transfer shall be timely prepared and filed by the party normally
obligated by law or regulation to make such filing. The parties agree to
cooperate with each other in connection with the preparation and filing of such
Tax Returns, in obtaining all available exemptions from such Taxes, and in
timely providing each other with resale certificates and any other documents
necessary to satisfy any such exemptions.
(b) Prorations. In addition to any other adjustments or prorations
provided for herein, there shall be adjustments and/or prorations as follows:
(i) Personal property Taxes and real property Taxes of Sellers
relating to the Purchased Assets which are due and payable in the tax year in
which the Closing occurs and installments of special assessments of Ad valorem
taxes on the Purchased Assets, including personal property taxes, and
assessments due and payable on or with respect to the Purchased Assets, shall be
prorated as of close of business on the Closing Date. If the tax rate for the
current year is not established by Closing, the proration of taxes shall be
based upon the tax rate for the preceding year applied to the latest assessed
evaluation; and any adjustments required by reason of a change of said assessed
evaluation or applicable tax rate shall be made in cash between Buyer and Seller
within ten (10) days after the tax rate for the current year is determined.
(ii) Charges and payments of Sellers due and payable with
respect to a period in which the Closing occurs under Assumed Contracts
(including leases) to which a Seller is a party or by which any of the Purchased
Assets are bound based on performance over a period of time that are included,
or the claims, rights and benefits of Sellers under which are included, in the
Purchased Assets shall be prorated between Sellers and Buyer at the Closing
(based on the number of days in the period occurring before, and on or after,
the Closing Date).
(iii) Sellers and Buyer will use their best efforts so that all
providers of utility services to the Real Property of Sellers will bill Sellers
for all costs incurred up to but not including the Closing Date and will bill
Buyer for all costs incurred on or after the Closing Date. To the extent
necessary, there will be such prorations between Sellers and Buyer at the
Closing respecting such utility costs as are equitable. In the event of any such
utility prorations, Buyer
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and Sellers shall read the applicable meters, if any, and make a written report
of each respective reading as of the Closing Date. Notwithstanding anything to
the contrary contained above in this paragraph, Sellers shall be responsible for
all costs of utility services to the Real Property incurred up to but not
including the Closing Date. Should the costs for such period be different from
the sum of the utility prorations made at the Closing, Sellers shall promptly
reimburse the Buyer for an overpayment made by Buyer, or Buyer shall promptly
reimburse Sellers for any overpayment made by Seller, as appropriate.
1.8 Closing. The closing of the sale and purchase of the transactions
contemplated hereby (the "Closing"), shall take place at the offices of Seller's
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counsel, Graham & Dunn PC, at 10:00 a.m., local time, on April 30, 2001, and
shall be deemed effective at 12:01 a.m. on May 1, 2001. The date on which the
Closing occurs shall hereinafter be referred to as the "Closing Date."
------------
1.9 Guaranty. All of the obligations of Sellers hereunder are subject to
the guaranty of Fisher executed and delivered as of the date hereof and in the
form of Exhibit 1.9 hereof (the "Fisher Guaranty"). The Fisher Guaranty shall
----------- ---------------
survive Closing.
SECTION 2 - REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers jointly and severally represent and warrant to Buyer as follows:
2.1 Organization and Qualification.
(a) FMI is a corporation duly organized, validly existing and in good
standing under the laws of the State of Washington, with full corporate power
and authority to carry on its business and to own, lease and operate, its
properties as and in the places where such business is being conducted and such
properties are owned, leased or operated. FMI is qualified to do business as a
foreign corporation in each jurisdiction set forth on Schedule 2.1(a) and except
---------------
as disclosed on Schedule 2.1(a), FMI is qualified to do business as a foreign
---------------
corporation in each of the jurisdictions in which FMI is required to be
qualified to do business, except where the failure to so qualify would not have
a Material Adverse Effect.
(b) The LLC is a limited liability company duly organized, validly
existing and in good standing under the laws of the State of Washington, with
full limited liability company power and authority to carry on its business and
to own, lease and operate, its properties as and in the places where such
business is being conducted and such properties are owned, leased or operated.
The LLC is qualified to do business as a foreign limited liability company in
each jurisdiction set forth on Schedule 2.1(b) and except as disclosed on
---------------
Schedule 2.1(b), the LLC is qualified to do business as a foreign corporation in
- ---------------
each of the jurisdictions in which the LLC is required to be qualified to do
business, except where the failure to so qualify would not have a Material
Adverse Effect. FPI is a corporation duly organized, validly existing and in
good standing under the laws of the State of Washington, with full corporate
power and authority to carry on its business, to own the Seattle Parking Lot and
Lots 9 and 10 and the Railroad Easement, and to enter into the Chelan Avenue
Vacation Agreement.
2.2 Authority to Execute and Perform Agreements. Each Seller has all
requisite corporate power and authority to enter into, execute and deliver this
Agreement and all of the
8
agreements to which Sellers will become a party pursuant to this Agreement and
to consummate the transactions contemplated hereby and thereby. This Agreement
has been duly executed and delivered by each Seller and constitutes a valid and
binding obligation of such Seller, enforceable against such Seller in accordance
with its terms, subject to bankruptcy, insolvency and other laws of general
applicability relating to or affecting creditors' rights.
2.3 Financial Statements.
(a) Sellers have delivered to Buyer the unaudited annual consolidated
balance sheets of FMI as at December 31, 2000, December 31, 1999, and December
31, 1998 and the related unaudited annual consolidated statements of income and
cash flow for the fiscal years then ended (the "Annual Financial Statements").
---------------------------
Except as set forth on Schedule 2.3(a), the Annual Financial Statements fairly
---------------
present in all material respects the financial condition, results of operations
and cash flow of FMI as at the dates of and for the periods referred to therein.
The Annual Financial Statements reflect the consistent application of accounting
principles throughout the periods involved. The foregoing financial statements
of FMI, as at December 31, 2000, are sometimes herein called the "Base Financial
Statements," the balance sheet included in the Base Financial Statements is
-------------------------
sometimes herein called the "Base Balance Sheet" and December 31, 2000 is
------------------
sometimes herein called the "Base Balance Sheet Date."
-----------------------
(b) Neither FMI nor the LLC has any liabilities or obligations of any
nature, whether known or unknown, absolute, accrued, contingent or otherwise and
whether due or to become due, arising out of or relating to the Business except
(i) as set forth in Schedule 2.3(b); (ii) as and to the extent disclosed or
--------------
reserved against in the Base Financial Statements and (iii) for liabilities and
obligations that: (x) were incurred after the date of the Base Financial
Statements in the ordinary course of business consistent with past practice (but
such liability shall not include liabilities arising from negligent or unlawful
actions of Sellers or any of their officers, directors or authorized agents);
and (y) individually and in the aggregate are not material to the Business.
Schedule 2.3(b) includes a description of all material services provided by
- ---------------
Fisher to FMI and the LLC for the periods in (a).
2.4 Title to Assets; Liens. Except as disclosed on Schedule 2.4, each
------------
Seller is the lawful owner of, or has lawful rights to use (with respect to
leases disclosed in writing to Buyer) and (subject to third party consents
identified in Section 2.9) transfer to Buyer, the Purchased Assets that such
Seller is transferring to Buyer. Except as disclosed on Schedule 2.4, each
------------
Seller has good and marketable title to the Purchased Assets that such Seller is
transferring to Buyer, free and clear of all Liens, except for Permitted Liens.
The delivery to Buyer of the instruments of transfer of ownership contemplated
by Section 5.6 will vest in Buyer good and marketable title to all of the
Purchased Assets, free and clear of all Liens except for Permitted Liens.
2.5 Completeness of Assets. The Purchased Assets constitute, and will
constitute at the Closing, all of the assets (other than the Excluded Assets)
used to operate the Milling Division as currently operated. Except for Excluded
Assets, there are no assets or properties used in the operation of the Business
and owned by any Person other than the Sellers that will not be leased or
licensed to Buyer under valid, current leases or license arrangements. Except as
set forth on Schedule 2.5, the Purchased Assets are in all material respects
------------
adequate for the purposes for which such assets are currently used or held for
use, and are in reasonably good
9
repair and operating condition (subject to normal wear and tear) for such use,
and to the knowledge of Sellers there are no facts or conditions which could,
individually or in the aggregate, interfere in any material respect with the
use, occupancy or operation thereof as currently used, occupied or operated.
2.6 No Material Adverse Change.
(a) Except as set forth on Schedule 2.6, since the Base Balance Sheet
------------
Date, there have been no changes in the assets, properties, business, operations
or condition (financial or otherwise) of the Milling Division which either
individually or in the aggregate constitute a Material Adverse Effect, nor does
any Seller know of any such change that is threatened, nor has there been any
damage, destruction or loss materially and adversely affecting the assets,
properties, business, operations or condition (financial or otherwise) of the
Milling Division not covered by insurance.
(b) Except as set forth on Schedule 2.6, since the Base Balance Sheet
------------
Date, none of the Sellers has, in connection with its operation of the Milling
Division:
(i) incurred any indebtedness for borrowed money;
(ii) made any loan or advance in excess of $30,000 to its
shareholder or members, as applicable, its officers, directors, employees,
consultants, agents or other representatives (other than travel advances made in
the ordinary course of business), or made any other loan or advance;
(iii) increased the salary, bonus, or other compensation payable
to any of its officers, directors, employees, consultants, agents or other
representatives, except for adjustments to the same in the ordinary course,
consistent with past practice;
(iv) assigned, mortgaged, pledged or otherwise subjected to
Lien (other than Permitted Lien) any of the Purchased Assets;
(v) sold, transferred, leased to others or otherwise disposed
of any of the Purchased Assets, except for inventory sold in the ordinary
course, or forgiven, canceled or compromised any debt or claim, or waived or
released any right of material value;
(vi) received any notice of termination of any Contract or
Contracts that individually or in the aggregate are material to the Business;
(vii) made any payment or commitment to pay any severance or
termination pay to any of its officers, directors, employees, consultants,
agents or other representatives, or made or otherwise agreed to make any change
in the rate of compensation, commission, bonus or other direct or indirect
remuneration ;
(viii) except in the ordinary course of business, entered into or
amended any Contract affecting the operation of the Milling Division;
10
(ix) failed to replenish inventories and supplies in a normal
and customary manner in the ordinary course and consistent with prior practice,
or made any purchase commitment in excess of normal, ordinary and usual
requirements of the business or made any change in its selling, pricing,
advertising or personnel practices inconsistent with its prior practice;
(x) made any capital expenditures or capital additions or
improvements in excess of an aggregate of $100,000;
(xi) made any prepayment of any accounts payable, delayed
payment of any trade payables or other obligations other than in the ordinary
course of business consistent with past practice;
(xii) instituted, settled or agreed to settle any litigation,
action or proceeding before any court or governmental body relating to the
Business other than such matters in the ordinary course consistent with past
practice and not in any case involving amounts in excess of $50,000;
(xiii) transferred or granted any rights or licenses under, or
entered into any settlement regarding the breach or infringement of, any
Intellectual Property, or modified any existing rights with respect thereto;
(xiv) incurred any contingent liability as a guarantor or
otherwise with respect to the obligations of others or cancelled any debt or
claim owing to, or waived any material right of, it;
(xv) incurred any damage, destruction or loss not covered by
insurance, affecting the properties, assets or Business;
(xvi) made any material change in accounting methods or
practices, or material change in credit practices or collection policies used by
it;
(xvii) to its knowledge, experienced any material adverse change
in its relationships with customers, distributors, suppliers or employees;
(xviii) failed to maintain the tangible Purchased Assets in
reasonable repair and operating condition, subject only to ordinary wear and
tear;
(xix) in all material respects, FMI and the LLC have each
conducted the Business only in the ordinary course and consistently with its
prior practices;
(xx) made a material change in: (a) the pricing of products;
(b) the formulation of branded products; (c) its supplier relationships; or (d)
its transportation contracts or arrangements (including rail and trucking); or
(xxi) taken or omitted to take any action that would result in
any of the foregoing.
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(c) Except as set forth on Schedule 2.6, as of the date hereof, no
------------
Seller knows of no existing or threatened damage, destruction or loss not
covered by insurance materially and adversely affecting the Seattle Parking Lot,
Lots 9 and 10 or the property covered by the Railroad Easement.
2.7 Tax Matters. Except as set forth on Schedule 2.7:
------------
(a) Each of FMI and the LLC has filed all Tax Returns required to be
filed by it by Law. All such Tax Returns are complete and accurate in all
respects. Neither FMI nor the LLC currently is the beneficiary of any extension
of time within which to file a Tax Return. With respect to all Taxes imposed
upon FMI or the LLC, or for which FMI or the LLC is or could be liable, and with
respect to all taxable periods or portions of periods ending on or before the
Closing Date, all applicable Tax Laws and agreements have been complied with in
all material respects, and all such amounts required to be paid by FMI or the
LLC to taxing authorities or others have been paid as due or accrued as of the
Closing Date and adequate reserves have been established by FMI and the LLC for
all Taxes which are not yet due.
(b) There is no action, suit, investigation, audit, claim or
assessment pending or proposed or threatened with respect to Taxes of FMI or the
LLC and to their knowledge, no basis exists therefor.
(c) Neither FMI nor the LLC has waived or been requested to waive any
statute of limitations in respect of Taxes.
(d) No claim has ever been made by an authority in any jurisdiction
where FMI or the LLC does not file Tax Returns that it is or may be subject to
taxation by that jurisdiction.
(e) No transaction contemplated by this Agreement is subject to
withholding under Section 1445 of the Code.
(f) None of the Assumed Liabilities is an obligation to make a
payment that will not be deductible under Code Section 280G;
(g) None of the Purchased Assets is "tax-exempt use property" under
Section 168(h) of the Code.
(h) Each of FMI and the LLC has withheld or collected, paid or
accrued and reserved against all material Taxes required to have been withheld
or collected and paid or remitted in connection with amounts paid or owing to
any employee, independent contractor, creditor, stockholder, or other third
party.
(i) There are no Liens for Taxes (other than for current Taxes not
yet due and payable and other Permitted Liens) upon any Purchased Assets.
(j) For the purposes of this Agreement, (i) "Tax" or "Taxes" means
--- -----
all federal, state, local and other taxes and governmental charges, fees and
assessments (including, without limitation, income, premium, business, excise,
sales, use, value added, gross receipts,
12
property, franchise, ad valorem, capital levy, transfer, stamp, withholding and
employment, social security, unemployment and payroll related taxes) and
includes interest, additions to tax and penalties with respect thereto; (ii)
"Tax Return" means any return, declaration, report, claim for refund, or
----------
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof; (iii) all references to
sections of the Code are to the Internal Revenue Code of 1986, as amended, and
shall include any predecessor provisions to such sections and any similar
provisions of federal, state, local or foreign Law.
2.8 Compliance with Laws; Permits. Except as disclosed on Schedule 2.8,
------------
each Seller is currently in compliance in all material respects with all Laws
pertaining to the Purchased Assets and the operation, development and use of the
Milling Division and has not received any notice asserting any violation or
noncompliance in connection with the business or operation of the Milling
Division or the development or use of any Purchased Asset with any Law or
Permits. The Permits, as listed on Schedule 1.1(c), are in full force and
---------------
effect. No Seller has received any notice from any Governmental Authority
revoking, canceling, rescinding, materially modifying or refusing to renew any
Permit, or threatening to do any of the foregoing. No Seller is in violation of
the requirements of any Permit, and, except as disclosed on Schedule 2.9 with
------------
respect to Permits, no consents are required to assign such Permits.
2.9 Consents; No Breach. Subject to the passage of any waiting period, if
applicable, under the HSR Act, the execution, delivery and performance of this
Agreement and related agreements to which any Seller is a party and the
consummation of the transactions contemplated hereby and thereby will not
violate or constitute a default under (i) any provision of the Articles of
Incorporation or Bylaws of such Seller; (ii) except as set forth in Schedule
--------
2.9, any of the terms or conditions of any instrument, Contract, Permit or other
- ---
agreement to which such Seller is a party or to which the Purchased Assets being
transferred by such Seller are bound or subject; or (iii) any Law with respect
to the Purchased Assets being transferred by such Seller or the Milling
Division. Except as set forth in Schedule 2.9, no Governmental Approval or
------------
other third party consent is required to be obtained by any Seller in connection
with the execution and delivery of this Agreement and the other agreements
contemplated hereby or the consummation of the transactions contemplated hereby
and thereby. Unless any such consent is designated on Schedule 2.9 as a
------------
required consent (the "Required Consents"), the receipt of consents shall not be
-----------------
a condition to Closing.
2.10 Actions and Proceedings. Other than the Consent Decree and as
otherwise disclosed on Schedule 2.18(a), there are no outstanding orders,
----------------
judgments, injunctions, awards or decrees of any court, governmental or
regulatory body or arbitration tribunal against any Seller. There are no
actions, suits, claims, grievances, complaints, charges or legal, administrative
or arbitral proceedings or investigations (whether or not the defense thereof or
liabilities in respect thereof are covered by insurance) pending or, to the
knowledge of such Seller, threatened, against it, including without limitation
any condemnation, environmental, local improvement district, planning, zoning,
land use application or other proceedings. To the knowledge of each Seller,
there is no fact, event or circumstance that would reasonably be expected to
give rise to any suit, action, claim, investigation or proceeding that
individually or in the aggregate would reasonably be expected to have a Material
Adverse Effect against Seller.
13
2.11 Contracts and Other Agreements.
(a) Schedules 1.1(a), 1.1(b), 1.1(d), and 1.1(e) set forth, as of
---------------- ------ ------ ------
the date hereof, lists and descriptions of each Contract pertaining to the
operation of the Milling Division, except those which involve the payment or
delivery of services of less than $50,000 in any twelve month period or which
will expire (and not be renewed) prior to the Closing Date or which do not
constitute Purchased Assets. Each Seller has previously provided Buyer with
access to and opportunity to photocopy all written material Contracts (and all
amendments and modifications thereto) relating to the Purchased Assets that such
Seller is transferring.
(b) Except as set forth in such Schedules, with respect to each
Contract to which a Seller is a party, (i) such Contract is in full force and
effect, and such Seller has no knowledge that such Contract is not a valid and
binding agreement of the other parties thereto, (ii) there exists no material
default under such Contract on the part of such Seller, (iii) such Seller does
not have any knowledge that any event has occurred which, with the giving of
notice or the lapse of time or both, would constitute any default under any
Contract, and (iv) there are no outstanding disputes under any such Contract.
(c) Except as set forth in such Schedules, all Contracts are
assignable (subject to passage of the waiting period under the HSR Act, if
applicable) to Buyer, and upon Closing will be validly assigned to Buyer and
enforceable by Buyer in accordance with their material terms, except to the
extent such enforceability (a) may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to creditors' rights
generally, and (b) is subject to general principles of equity.
2.12 Real Property
(a) Schedule 1.1(a) sets forth by each Mill (i) a description of
---------------
each parcel of real property used or usable in the operation of the Mill that
any Seller owns, which description includes the name of the owner of such
parcel, a street address and a legal description thereof, (ii) a description of
each parcel of real property used in the operation of the Mill under which any
Seller is either a lessee, lessor, sublessee or sublessor, which description
identifies the applicable leases or subleases, the names of the parties thereto,
the expiration dates thereof (including any renewal options) and the legal
descriptions thereof, and (iii) a description of the easements, rights of way,
special use permits, licenses, railroad spur agreements and other agreements
affecting use of the Mill premises, the names of the parties thereto, the
expiration dates thereof (including any renewal options) and the legal
descriptions thereof. The Real Property constitutes all of the fee, leasehold,
and other possessory interests in real property used or held for use by any
Seller in connection with the operation of the Milling Division.
(b) Except for Permitted Liens and as otherwise disclosed in Schedule
--------
1.1(a):
- ------
(i) Each Seller has good and marketable fee simple title to all
the owned real property listed in Schedule 1.1(a), free and clear of all Liens;
---------------
(ii) With respect to each lease, sublease, or other possessory
agreement identified in Schedule 1.1(a), (A) all are in full force and effect
---------------
and have not been modified, and are valid, binding, and enforceable in
accordance with their respective terms, (B) Sellers have
14
given complete copies of all such agreements to Buyer, (C) each Seller has good
and marketable leasehold title to such leases, subleases and other possessory
interests as are held by such Seller free and clear of all Liens, and (D) no
Seller is, and no Seller has any knowledge that any other party to any such
lease, sublease or possessory agreement is, in default with respect to any
material term or condition thereof, and no Seller has any knowledge that any
event has occurred which, through the passage of time or the giving of notice or
both, would constitute a material default thereunder or would cause the
acceleration of any obligation of any party thereto or the creation of any Lien
upon any asset of such Seller;
(iii) All of the buildings, structures, fixtures and other
improvements currently used by Sellers and being conveyed to Buyer are in
operating condition and repair for buildings, structures, fixtures, and
improvements of their age and usage, ordinary wear and tear excepted. To such
Seller's knowledge, all buildings, structures, fixtures and other improvements
are operated and used in conformance, in all material respects, with all setback
requirements, easements, covenants, restrictions, and all applicable building,
fire, zoning, health and safety codes and other similar laws or regulations; and
(iv) Subject to the receipt of each required consent to the
assignment of any real property lease, sublease, or possessory agreement (as set
forth on Schedule 2.9), Seller has the full power and authority to assign its
------------
interests under the leases, subleases and possessory agreements in accordance
with this Agreement.
(c) Schedule 2.12(c) lists all of the surveys of the Real Property
----------------
of the Milling Division that Sellers have in their possession, and Sellers have
delivered copies of all such surveys to Buyer.
2.13 Accounts Receivable. All accounts receivable of any Seller (including
the accounts receivable to be reflected on the Closing Settlement Statement)
after taking into account customary reserves, have arisen in the ordinary course
of the Milling Division's business and, to the extent not already collected,
have not been and are not subject to, any set-off or counter-claim. Schedule
--------
2.13 accurately lists, for each account receivable as of February 28, 2001,
- ----
respectively, the amount owing (including interest, if applicable) and the aging
of each such receivable, the name of the party from who such receivable is
owing, and any security in favor of any Seller for the repayment of such
receivable which such Seller purports to have. Except as disclosed on Schedule
--------
2.13, such accounts receivable can reasonably be anticipated to be paid in full
- ----
without outside collection efforts within such Seller's standard payment terms.
At Closing, Buyer will take possession of complete and correct copies of all
instruments, documents and agreements evidencing such receivables and of all
instruments, documents or agreements creating security therefor.
2.14 Inventory.
(a) The inventory of FMI and the LLC on December 31, 2000 and as
reflected on the Closing Settlement Statement, after taking into account
customary reserves, is (i) of good, usable and merchantable quality in all
respects, (ii) is of such quality as to meet the quality control standards of
the particular Seller and any applicable quality control standards of
Governmental Authorities; (iii) has been produced in accordance with all
applicable Laws and
15
does not constitute "adulterated or misbranded goods" within the meaning of any
applicable Laws. All packaging inventory complies with all labeling requirements
of applicable Laws.
(b) The values of the inventories stated in the Closing Settlement
Statement reflect the normal inventory valuation policies of FMI. Since the Base
Balance Sheet Date, no material amount of inventory has been sold or disposed of
except through sales or other dispositions in the ordinary course of business.
The inventory levels of each Seller have been maintained at such amounts as are
required for the operation of the Business as conducted in the ordinary course
of business, and such inventory levels are adequate therefor.
(c) During the three years preceding the date of this Agreement,
there have been no personal injury claims relating to products produced and sold
by or through Sellers and to Seller's Knowledge, there are no basis for any such
claims.
2.15 Personal Property. Schedule 1.1(b) sets forth as of the Base Balance
---------------
Sheet Date and for each Mill, (a) a list of each material item of Personal
Property owned or held for use by FMI and the LLC, and used in the operation of
the Mill, including a reasonable description of such items, (b) identification
of the owner of, and any agreement relating to the use of, each such item of
Personal Property (other than motor vehicles), the rights to which are to be
transferred to Buyer pursuant hereto under leases or similar agreements or
arrangements which provide for rental payments at a rate in excess of $1,000 per
month, and (c) identification of the owner of, and any agreement relating to,
the use of each motor vehicle used in the operation of the Mills, the rights to
which are to be transferred to the Buyer pursuant hereto. Except as set forth
on Schedule 2.15, all of such Personal Property is in all material respects
-------------
adequate for the purposes for which it is currently used, subject to normal wear
and tear.
2.16 Intellectual Property
(a) Schedule 1.1(e) sets forth as of the date hereof a list of the
---------------
(i) trademarks, trademark registrations, trade names, service marks, Internet
domain registrations, patents, patent applications, invention disclosures, and
applications for any of the foregoing, used in the operation of the Milling
Division, (ii) proprietary software used in the operation of the Milling
Division, (iii) license agreements or similar arrangements to which any Seller
is a party, either as licensee or a licensor, for each such item of Intellectual
Property, and (iv) other items of Intellectual Property used in the operation of
the Milling Division as presently operated.
(b) Except as indicated in Schedule 1.1(e), as of the date hereof:
---------------
(i) There have not been any actions or other judicial or
adversary proceedings involving any Seller concerning any items of Intellectual
Property, nor, to the knowledge of any Seller, is any such action or proceeding
threatened;
(ii) Each of FMI and the LLC has the right and authority to use
all items of Intellectual Property in the operation of the Milling Division in
the manner presently operated and to convey such right and authority to Buyer,
and neither FMI nor the LLC has received any notice that such use conflicts
with, infringes upon or violates any right of any other Person; and
16
(iii) There are no outstanding nor, to the knowledge of any
Seller, any threatened disputes or disagreements with respect to any license
agreements or similar agreements with respect to any Intellectual Property.
(c) Immediately following the Closing, Buyer will own, or will have
all lawful rights to use, all Intellectual Property set forth on Schedule 1.1(e)
---------------
(other than the Fisher Marks), free of any Liens other than Permitted Liens.
2.17 Employee Benefit Plans. Schedule 2.17 sets forth a list of every
-------------
Employee Program (as defined below) that FMI or the LLC maintains (as such term
is further defined below).
(a) Each such Employee Program (and each related trust, insurance
contract, or fund) complies in form and in operation in all respects with the
applicable requirements of ERISA and the Code. Except as disclosed in Schedule
--------
2.17(a), neither FMI nor the LLC has engaged in any transaction with respect to
- -------
any Employee Benefit Plan which would subject them to any Tax, penalty or
liability for Prohibited Transactions (as defined in ERISA Section 406 and Code
Section 4975). There have been no acts or omissions by which have given rise to
or may give rise to fines, penalties, taxes or related charges under Sections
502(c), 502(i) or 4071 of ERISA or Section 4975 through 4980D of the Code. No
director, officer or employee of either FMI or the LLC, to the extent he or she
is a fiduciary with respect to any Employee Program, has breached any of his
responsibilities or obligations imposed upon fiduciaries or which could result
in any claim being made under, by or on behalf of any Employee Program. There
are no IRS or DOL audits and no actions, suits or claims (other than routine
claims for benefits) pending or threatened involving such plans or the assets of
such plans, and no facts exist which could give rise to any such actions, suits
or claims (other than routine claims for benefits).
(b) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid to each
such Employee Program which is an Employee Pension Benefit Plan within the time
required by law and all contributions for any period ending on or before the
Closing Date which are not yet due have been paid to each such Employee Pension
Benefit Plan or accrued in accordance with the past custom and practice of FMI
and the LLC. All premiums or other payments for all periods ending on or before
the Closing Date have been paid with respect to each such Employee Program which
is an Employee Welfare Benefit Plan on or before the Closing Date. None of the
assets of any employee benefit plan are invested in employer securities or
employer real property.
(c) Each such Employee Program which is an Employee Pension Benefit
Plan has received a determination letter from the Internal Revenue Service to
the effect that it meets the requirements of Code Section 401(a). As to any
Employee Pension Benefit Plan which is subject to Title IV of ERISA, there have
been no "reportable events" (as described in Section 4043 of ERISA), and no
steps have been taken to terminate any such plan.
(d) As of the last day of the most recent prior plan year, the market
value of assets under each such Employee Program which is an Employee Pension
Benefit Plan equaled or exceeded the present value of liabilities thereunder
(determined in accordance with then current funding assumptions).
17
(e) All group health plans have been operated in substantial
compliance with the group health plan continuation coverage requirements of
Section 4980B of the Code and Section 601 of ERISA to the extent such
requirements are applicable.
(f) Except as disclosed in Schedule 2.17(f), the consummation of the
----------------
transactions contemplated by this agreement will not constitute an event under
any plan that will result in any payment of severance, increase in benefits,
acceleration of vesting, or the incurring of any withdrawal liability.
(g) FMI and the LLC have delivered to Buyer copies of the most recent
plan documents and summary plan descriptions, the most recent determination
letter received from the Internal Revenue Service, the most recent Form 5500
Annual Report, and all related trust agreements, insurance contracts, and other
funding agreements which implement each such Employee Benefit Plan.
(h) Except as provided in Schedule 2.17(h), neither FMI, the LLC nor
----------------
other members of any Controlled Group of Corporations (as defined in Code
Section 1563) that may include either FMI or the LLC, contributes to, ever has
contributed to, or ever has been required to contribute to any Multiemployer
Plan or has any liability (including withdrawal liability) under any
Multiemployer Plan.
(i) Definitions. For the purposes of this Section:
(i) "Employee Program" means (A) all employee benefit plans
----------------
within the meaning of ERISA Section 3(3), including, but not limited to,
multiple employer welfare arrangements (within the meaning of ERISA Section
3(4)), plans to which more than one unaffiliated employer contributes and
employee benefit plans (such as foreign or excess benefit plans) which are not
subject to ERISA; and (B) all stock or cash option plans, restricted stock
plans, stock purchase plans, bonus or incentive award plans, severance pay
policies or agreements, deferred compensation agreements, supplemental income
arrangements, vacation plans, health, disability, life insurance and all other
employee benefit plans, agreements, and arrangements not described in (A) above.
In the case of an Employee Program funded through an organization described in
Code Section 501(c)(9), each reference to such Employee Program shall include a
reference to such organization.
(ii) An entity "maintains" an Employee Program if such entity
---------
sponsors, contributes to, or provides (or has promised to provide) benefits
under such Employee Program, or has any obligation (by agreement or under
applicable law) to contribute to or provide benefits under such Employee
Program, or if such Employee Program provides benefits to or otherwise covers
employees of such entity (or their spouses, dependents or beneficiaries).
(iii) An entity is an "ERISA Affiliate" of FMI if it would have
---------------
ever been considered a single employer with either Seller under ERISA Section
4001(b) or part of the same "controlled group" as FMI for purposes of ERISA
Section 302(d)(8)(C).
(iv) "Multiemployer Plan" means a (pension or non-pension)
------------------
employee benefit plan to which more than one employer contributes and which is
maintained pursuant to one or more collective bargaining agreements.
18
2.18 Labor Matters.
(a) Each of FMI and the LLC has complied, and is currently in
compliance, in all material respects with all Laws, publicly available policies,
standards, and publicly available guidelines regarding employment and employment
practices, and has not and is not engaged in any unfair labor practice or
unlawful discriminatory act or other unlawful act with respect to employment or
employment practices. Except as disclosed on Schedule 2.18(a), as of the date
----------------
hereof, there is no pending or, to the knowledge of FMI or the LLC, threatened
charge, grievance, arbitration proceeding, or complaint by or against FMI or the
LLC before the National Labor Relations Board or the Equal Employment
Opportunity Commission, or any other Governmental Authority relating to labor or
employment practices or omissions, decisions or practices, and no labor strike
or other labor trouble is pending or, to the knowledge of FMI or the LLC,
threatened by, against or affecting it.
(b) Except as disclosed in Schedule 2.18(b), as of the date hereof,
----------------
neither FMI nor the LLC is a party to or bound by any collective bargaining
agreement, letter of understanding or other labor agreement, and there is no
labor union or other organization representing, purporting to represent or
attempting to organize or represent any employee, and the Milling Division has
not experienced, within the past 24 months, and no Mill is now experiencing, any
work stoppage, noticeable slowdown or other labor difficulty, and neither FMI
nor the LLC has any reason to believe that any organizational effort by any of
its employees or any union is imminent.
(c) All current employees of FMI and the LLC are lawfully authorized
to work in the United States according to applicable immigration Laws. Neither
FMI or the LLC is subject to any unsatisfied or pending settlement agreement,
conciliation agreement, letter of commitment, deficiency letter or consent
decree with any employee or applicant for employment, labor union or other
representative, or any Governmental Authority or arbitrator relating to claims
of unfair labor practices, employment discrimination, or other claims with
respect to employment and labor practices and policies, and no Governmental
Authority, administrative tribunal or arbitrator has issued a judgment, order,
decree, injunction, decision, award or finding with respect to the employment
and labor practices or policies of FMI or the LLC which has resulted in, or
would reasonably be expected to have a Material Adverse Effect.
2.19 Employees. Schedule 2.19 sets forth, as of the date hereof (except
-------------
as otherwise noted), a list by Mill and/or corporate office of each employee
employed by FMI or the LLC in the Milling Division, whether part time or full
time, along with the following information for each: name, job title, rate of
pay, date of hire, accrued vacation time as of the most recent pay period,
whether such individual is bound by an employment agreement, or covered by a
collective bargaining agreement listed on Schedule 2.18(b), and if so, which
----------------
one. There are no Contracts between FMI or the LLC and any of their respective
current or former employees or independent contractors, except as disclosed in
Schedule 2.19. No former employee or contractor of FMI or the LLC is a party to
- -------------
any Contract with FMI or the LLC or any of its Affiliates requiring such FMI,
the LLC or such Affiliate to make any payments to such employee or contractor.
Except as set forth on Schedule 2.19, the Milling Division does not employ or
-------------
use any independent contractors, temporary employees, leased employees or any
other servants or agents compensated other than through reportable wages paid by
FMI or the LLC (collectively,
19
"Contingent Workers"). To the extent that FMI or the LLC employs or uses
------------------
Contingent Workers, it has properly classified and treated them in accordance
with applicable laws and for purposes of all benefit plans and perquisites. Each
of FMI and the LLC (i) is in compliance with all applicable Laws respecting
employment, employment practices, terms and conditions of employment and wages
and hours, and occupational safety and health (ii) has withheld and reported all
amounts required by Law or Contract to be withheld and reported with respect to
wages, salaries and other payments to employees, (iii) has no liability for any
arrears of wages or any taxes or any penalty for failure to comply with any of
the foregoing, and (iv) has no liability for any payment to any trust or other
fund governed by or maintained by or on behalf of any Government Agency, with
respect to unemployment compensation benefits, social security or other benefits
or obligations for employees (other than routine payments to be made in the
normal course of business and consistent with past practice). There are no
pending or, to the best knowledge of each of FMI and the LLC, threatened, or
reasonably anticipated claims or actions against either FMI or the LLC under any
worker's compensation policy or long-term disability policy except as set forth
on Schedule 2.19.
-------------
2.20 Insurance. Each of FMI and the LLC has provided Buyer with access to
and delivered to Buyer copies of all policies of property, fire, casualty,
workers compensation, and liability insurance, together with all riders and
amendments thereto, relating to the operation of the Milling Division or the
Purchased Assets that Buyer has requested. Such policies are in full force and
effect, and all premiums due thereon have been paid or accrued on the Balance
Sheet. Each of FMI and the LLC has complied in all material respects with the
terms and provisions of such policies. There is no claim by FMI, the LLC or any
Affiliate of either of them pending under any of such policies or bonds as to
which coverage has been questioned, denied or disputed by the underwriters of
such policies or bonds. Neither FMI nor the LLC has any knowledge of financial
difficulty experienced by any underwriter.
2.21 Brokerage. Other than U.S. Bancorp Piper Jaffray Inc., whose fees in
connection herewith shall be paid by FMI, no broker, finder, agent or similar
intermediary has acted on behalf of any Seller in connection with this Agreement
or the transactions contemplated hereby, and there are no brokerage commissions,
finders fees or similar fees or commissions payable in connection therewith
based on any agreement, arrangement or understanding with any Seller, or any
action taken by such Seller.
2.22 Hazardous Materials. Other than for matters contained in the Consent
Decree, including but not limited to all remediation performed pursuant to the
Consent Decree: (a) no Seller has unlawfully generated, used or handled any
Hazardous Materials, nor has any Seller unlawfully treated, stored or disposed
of any Hazardous Materials at any premises such Seller owns or leases; (b) to
the knowledge of each Seller, no person has ever unlawfully generated, used,
handled, stored or disposed of any Hazardous Materials at any premises leased by
such Seller during the period of such Seller's lease; and (c) to the knowledge
of Sellers, there has been no release or threatened release of any Hazardous
Materials on, under or at any premises owned by Sellers, nor any release or
threat of release of Hazardous Materials on, under or at any premises leased by
Sellers during the period of such lease.
2.23 Environmental Compliance. Without limiting the generality of the
foregoing provisions and except as disclosed in the Phase I Reports (as defined
in Section 9.11), (a) the
20
Real Property does not include, and to Sellers' knowledge has never included,
any aboveground or underground storage tank; (b) other than in connection with
the Consent Decree discussed in Section 4.18 hereof, no Seller has been
identified as, alleged to be, nor to Seller's knowledge is any such
identification or allegation pending or threatened, a potentially responsible
party ("PRP") or potentially liable party ("PLP") in connection with the Milling
--- ---
Division, the Real Property or any operations thereon; (c) there are no, and to
Seller's knowledge there have been no, violations of or noncompliance with any
applicable Laws relating to human health or the environment in connection with
the Milling Division, the Real Property or the operations thereon; and (d) the
Real Property contains no asbestos, asbestos-containing materials, urea
formaldehyde or lead-based paint; (e) no Seller, with respect to the Milling
Division, the Real Property or the operations thereon, is subject to any fine,
penalty, judgment (including those for exemplary, special or punitive damages),
settlement payment, or other liability or obligation (including those with
respect to personal injury, clean-up, removal or remediation, under CERCLA that
both (i) relate to, are based upon or arise from or in connection with any
applicable Law (whether made or asserted by a governmental authority or by a
private person) and (ii) also result from Sellers' acts or omissions; and (f)
Sellers, with respect to the Milling Division, the Real Property or the
operations thereon, have maintained all material records and have made all
material filings required by applicable Law with respect to treatment, storage,
presence, contamination, generation, transport, emission, discharge or release
into the environment of any substance (including solids, liquids and gases) and
with respect to the proper disposal of such materials (including solid waste
materials and petroleum or any fractions or by-products of them) required for
operations.
2.24 Product Recalls and Withdrawals. During the three years preceding the
date of this Agreement, there have been no recalls or withdrawals of products
sold by or inventory of the Milling Division or other similar actions by or
before any Government Authority (or by reasons of quality or product integrity);
no voluntary recalls of inventory; and, to the Sellers' knowledge, no such
recall is threatened; provided, that disclosure shall only be required under
this Section 2.24 with respect to matters involving inventory valued in excess
of $50,000.
2.25 Customers and Suppliers. Schedule 2.25 sets forth a list of (a) the
-------------
ten largest customers and the ten largest suppliers of each of the Seattle Mill
and the Blackfoot Mill based on sales during the calendar year 1999 and (b) the
ten largest customers and ten largest suppliers of each of the Seattle Mill and
the Blackfoot Mill during the period ended September 30, 2000, showing the
approximate total sales to each such customer, the approximate total amounts
paid to each such supplier and a list of the products purchased from each such
supplier during such periods. Except as set forth on Schedule 2.25, since the
-------------
Base Balance Sheet Date, there has not been any adverse change in the business
relationship of any Seller with any customer or supplier named in Schedule 2.25.
-------------
2.26 Restrictions on Business. There are no agreements (non-compete or
otherwise), or order to which a Seller is a party or otherwise binding upon the
Sellers which has had or could be reasonably expected to have the effect of
prohibiting or impairing any business practice of the Sellers, any acquisition
of property (tangible or intangible) by any Seller or the conduct of Business by
the Sellers. Without limiting the foregoing, no Seller has entered into any
Contract under which such Seller is restricted from selling, licensing or
otherwise
21
distributing any of its respective products or services to any class of
customers, in any geographic area, during any period of time or in any segment
of the market.
2.27 Accuracy and Completeness of Representations and Warranties. No
representation, warranty or statement made by any Seller in this Agreement
contains any untrue statement of fact or omits a fact necessary to make the
representation, warranty or statement made not misleading.
SECTION 3 - REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to each Seller as follows:
3.1 Organization. Buyer is a limited liability company, duly organized,
validly existing and in good standing under the laws of Oregon, and has the
power and lawful authority to own, lease and operate its assets, properties and
business and to carry on its business as now being and as heretofore conducted.
Buyer is qualified to do business as a foreign limited liability company in each
of the jurisdictions in which Buyer is required to be qualified to do business,
except where the failure to so qualify would not have a material adverse effect
on Buyer.
3.2 Authority to Execute and Perform Agreements. Buyer has all requisite
power and authority to enter into, execute and deliver this Agreement and all of
the agreements to which Buyer will become a party pursuant to this Agreement and
to consummate the transactions contemplated hereby and thereby. This Agreement
has been duly executed and delivered by Buyer and constitutes a valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms, subject to bankruptcy, insolvency and other laws of general applicability
relating to or affecting creditors' rights.
3.3 Brokerage. No broker, finder, agent or similar intermediary has acted
on behalf of Buyer in connection with this Agreement or the transactions
contemplated hereby, and there are no brokerage commissions, finders' fees or
similar fees or commissions payable in connection therewith based on any
agreement, arrangement or understanding with Buyer or any action taken by Buyer.
3.4 Actions and Proceedings. There are no orders outstanding and no
actions or proceedings pending or, to the knowledge of Buyer, threatened
against, relating to or affecting Buyer or any of its assets which could
reasonably be expected to result in the issuance of an order restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of
the transactions contemplated by this Agreement.
3.5 Consents; No Breach. Subject to receipt of third party consents and
the passage of any waiting period, if applicable, under the HSR Act, the
execution, delivery and performance of this Agreement and related agreements to
which Buyer is a party and the consummation of the transactions contemplated
hereby and thereby will not violate or constitute a material default under (i)
any provision of the Certificate of Formation or operating agreement of Buyer;
(ii) any of the material terms or conditions of any material instrument or
Contract to which Buyer is a party; or (iii) any statute, law or regulation with
respect to Buyer.
22
3.6 No Financing. Buyer has or will have prior to Closing all necessary
financing with respect to the transactions contemplated by this Agreement.
SECTION 4 - COVENANTS AND AGREEMENTS
The parties covenant and agree as follows:
4.1 Conduct of Milling Division Business. During the period from the date
hereof to the Closing Date, Sellers shall observe the following covenants with
respect to their respective operations of the Milling Division:
(a) Affirmative Covenants Pending Closing.
-------------------------------------
(i) Preservation of Personnel. Each of FMI and the LLC will
use commercially reasonable efforts to preserve intact and keep available the
services of its present employees;
(ii) Insurance. Each of the Sellers will keep in effect
casualty, public liability, worker's compensation and other insurance policies
described in Section 2.20 in coverage amounts not less than those in effect on
the date of this Agreement with respect to the Purchased Assets and give all
notices and present all claims thereunder in a due and timely fashion;
(iii) Preservation and Advancement of the Business; Maintenance
of Properties, Contracts. FPI will perform and comply in all material respects
with the terms of the Chelan Avenue Vacation Agreement and the Railroad
Easement, and each of FMI and the LLC will: (a) use commercially reasonable
efforts to preserve and advance its business, advertise, promote and market its
products in accordance with past practices over the last twelve months, keep its
properties intact, maintain its books and records, preserve its goodwill and its
business; (b) maintain all physical properties in reasonable repair and
operating condition subject only to ordinary wear and tear, in each case in
accordance with commercially reasonable standards; and (c) perform and comply in
all material respects with the terms of the Contracts set forth in Schedule
--------
1.1(d) and the leases set forth on Schedule 1.1(a) hereto;
- ------ ---------------
(iv) Maintenance of Seattle Parking Lot and Lots 9 and 10. FPI
will maintain the Seattle Parking Lot and Lots 9 and 10 in reasonable repair and
operating condition subject only to ordinary wear and tear, in accordance with
reasonable commercial standards and as required by the Chelan Avenue Vacation
Agreement as to Lots 9 and 10;
(v) Intellectual Property Rights. Each Seller will use
commercially reasonable efforts to preserve and protect its Intellectual
Property; and
(vi) Ordinary Course of Business. Each of FMI and the LLC will
operate its business in the ordinary course and the normal, usual and customary
manner, or as otherwise consented to in writing by Buyer, such consent not to be
unreasonably withheld.
(b) Negative Covenants Pending Closing. Absent the written approval
----------------------------------
of Buyer:
23
(i) Disposition of Assets. No Seller will sell or transfer, or
mortgage, pledge or create or permit to be created any security interest or Lien
(other than Permitted Liens) on, any of the Purchased Assets, other than sales
of inventory in the ordinary course of business consistent with past practices,
and no Seller will dissolve or merge or consolidate with any other person or
entity;
(ii) Liabilities. Neither FMI nor the LLC will voluntarily incur
any obligation or liability other than in the ordinary course of business or,
incur any indebtedness for borrowed money;
(iii) Compensation and Severance. Neither FMI nor the LLC will
increase the rates of direct or bonus compensation payable or to become payable
to any officer or management-level employee, other than in accordance with
existing plans or policies, or resolutions previously adopted by its Board of
Directors; enter into any employment, severance, consulting or similar agreement
with any employee of the Milling Division; except in the ordinary course of
business, contribute or make any commitment to, or representation that it will,
contribute any amounts to any bonus, severance, pension, profit sharing,
deferred compensation, group insurance, retirement or other employee benefit
plan, fund or similar arrangement or collective bargaining agreement for Milling
Division employees;
(iv) Acquisitions. Neither FMI nor the LLC will make any
acquisition of property;
(v) Accounting Methods. Neither FMI nor the LLC will make any
change in the accounting methods or practices of the Milling Division or make
any changes in the depreciation or amortization policies or rates adopted by FMI
or the LLC as are related to the Milling Division, other than changes required
by law or under GAAP; or
(vi) Other Actions. Without the prior written consent of Buyer,
neither FMI nor the LLC will take any action or omit to take any action that
would make any of the representations or warranties set forth in Section 2.6
untrue in any material respect.
(vii) Certain Payments. Neither FMI nor the LLC will make any
prepayment of any accounts payable or delay payment of any trade payables or
other obligations other than in the ordinary course of business consistent with
past practice.
4.2 Continued Effectiveness of Representations and Warranties. From the
date hereof through the Closing Date, Sellers and Buyer shall promptly be given
notice of any event, condition or circumstance occurring from the date hereof
through the Closing Date that would constitute a violation or breach of the
representations and warranties or any other provision of this Agreement by any
other party or constitute a Material Adverse Effect. In the event such violation
or breach of this Agreement shall occur on or prior to the Closing Date, Sellers
and Buyer, as the case may be, shall promptly use their reasonable best efforts
to remedy the same.
4.3 Taxes. Each Seller shall prepare and file, in a timely manner
consistent with prior years, all Tax Returns and returns required to be filed
after the date hereof and on or before the Closing Date, and shall pay or accrue
for any Taxes and estimated Taxes, required to be paid
24
by it in a timely manner (including without limitation pursuant to Section 6655
of the Code) with respect to periods after the date hereof and on or before the
Closing Date.
4.4 Access and Investigations.
(a) Access. Sellers will, upon reasonable prior notice and during
normal business hours, (i) provide Buyer with access to the Mills and the
Seattle Parking Lot for the purpose of inspection (including, without
limitation, environmental investigations); (ii) allow Buyer access to Sellers'
employees, officers, agents and accountants; (iii) grant Buyer access to
Sellers' records pertaining to the Milling Division and Purchased Assets; and
(iv) furnish to Buyer such additional information and data concerning the
Milling Division and Purchased Assets as Buyer reasonably may request. Any such
inspection shall be conducted at reasonable times and under reasonable
circumstances so as to minimize any disruption to or impairment of each Seller's
business. To the extent the books and records described in Section 1.1(f) are
not readily available on the Mill premises, Sellers will cooperate in providing
Buyer with access to any material documents, books and records not located at
the Mills.
(b) Confidentiality. Except for public announcements as are agreed
to by the parties, or as otherwise required by law, at all times prior to and
following the Closing Date and, in the event of the termination of this
Agreement, at all times subsequent to such termination, Buyer and Sellers shall,
and shall cause their respective officers, directors, employees, consultants,
legal, accounting and financial advisors and the financial institutions and
investors engaged to assist in connection with the transactions contemplated
hereby (collectively, its "Representatives") to, keep confidential and not use
---------------
in any manner, or declare or reveal to any other person or entity, any
information or documents relating to the transactions contemplated hereby or any
information or documents obtained from any Seller concerning its assets,
properties, business and operations, unless, and then only to the extent, (i) it
is readily ascertainable (other than by virtue of fault or omission on the part
of Buyer or their Representatives) from public information or trade sources, or
(ii) already known (other than by virtue of receipt from a third party under an
obligation to any Seller to keep such information confidential) or (iii)
subsequently developed by Buyer independently of any investigation of any
Seller, or (iv) received from a third party not under an obligation to any
Seller to keep such information confidential, or (v) it is required to be
disclosed by Law, and reasonable advance notice of such disclosure is given to
Sellers. If this Agreement terminates, any documents obtained from any Seller
will be returned or destroyed, at such Seller's option.
4.5 Expenses. Each of Buyer and the Sellers shall bear their respective
expenses incurred in connection with the preparation, execution and performance
of this Agreement and the transactions contemplated hereby, including, without
limitation, all fees and expenses of agents, representatives, counsel and
accountants; and Buyer on one hand and Sellers on the other shall share the
filing fees, if any, required under the HSR Act.
4.6 Assignability. To the extent that any lease, Contract, license, sales
or purchase order, or right included in the Purchased Assets (each an
"Interest") is not capable of being sold, assigned, transferred or conveyed
--------
without the approval, consent or waiver of the issuer thereof or the other party
or parties thereto, or any other person or entity (including a governmental
authority)(or would be breached in the event of an assignment, transfer, etc.
without such
25
approval, consent or waiver) (a) this Agreement shall not, in the event such
issuer or other person or entities shall object to such assignment, constitute
an assignment or conveyance thereof absent such approval consent or waiver and
(b) each Seller shall use its reasonable best efforts, both prior and subsequent
to the Closing Date, to obtain all necessary approvals, consents or waivers
necessary to convey to Buyer each such Interest. Subject to Buyer's rights
under Section 5.2, to the extent any of the approvals, consents or waivers
referred to in this Section 4.6 have not been obtained as of the Closing,
Sellers shall, during the remaining term of such Interest, exercise commercially
reasonable efforts to cooperate with Buyer, at its request, in any reasonable
and lawful arrangements designed to provide the benefits of such Interest to
Buyer.
4.7 Consummation of Agreement. Sellers and Buyer shall each exercise
commercially reasonable efforts to perform and fulfill all obligations to be
performed and fulfilled by it under this Agreement and facilitate the
satisfaction of all conditions precedent referred to in Sections 5 or 6, as the
case may be.
4.8 Collection of Assets. Subsequent to the Closing, Buyer shall have the
right and authority to collect all receivables and other items transferred and
assigned to it by Sellers hereunder and to endorse with the name of the
applicable Seller any checks received on account of such receivables or other
items, and each Seller agrees that it will promptly transfer or deliver to Buyer
from time to time, any cash or other property that such Seller may receive with
respect to any claims, Contracts, licenses, leases, commitments, sales orders,
purchase orders, receivables of any character or any other items which are among
the Purchased Assets being transferred by such Seller. Buyer agrees to remit to
Sellers any rebates, refunds, amounts received for accounts receivable that were
previously written off, overpayments or other like payments received by Buyer
for the period prior to Closing which are not Purchased Assets.
4.9 License to Use "Fisher" Name.
(a) To the extent any of the Fisher Marks are used by the Business on
stationery, signage, invoices, receipts, forms, packaging, advertising and
promotional material, product, training and service literature and material,
computer programs or like material ("Marked Materials") or appear on inventory
----------------
at closing, Buyer may use such Marked Materials or sell such inventory after
Closing for a period of 6 months without altering or modifying such Marked
Material or inventory.
(b) Effective on the Closing Date, FMI and the LLC will each grant,
and do hereby grant, Buyer a 90-day non-exclusive nontransferable, royalty-free
license to use the Fisher Marks that are in use as of the Closing Date, for the
sole and exclusive purpose of transitioning operation of the Milling Division
from FMI and the LLC to Buyer. All goodwill arising out of Buyer's use of the
Fisher Marks will inure solely to the benefit of FMI and the LLC, or, if
applicable, Fisher Companies Inc. During the 90-day license period, Buyer will
take all steps necessary to cause the removal of all Fisher Marks from all
components of the Milling Division's business, including, without limitation,
motor vehicles, signage, letterhead, advertising and promotional materials, and
product names. Upon expiration of the 90-day license period, any use of the
Fisher Marks in connection with the operation of the Milling Division shall
constitute a material breach of this Agreement.
26
4.10 No Solicitation. No Seller will, directly or indirectly, on or prior
to the earlier of (a) the Closing or (b) termination of this Agreement, (i)
solicit, initiate or encourage discussions with any person, other than Buyer and
its Representatives, relating to the possible acquisition of such Seller or all
or a material portion of the assets or capital stock of such Seller or any
merger or other business combination with Seller (an "Acquisition Transaction")
-----------------------
or (ii) participate in any negotiations regarding, or furnish to any other
person information with respect to, any effort or attempt by any other person to
do or to seek any Acquisition Transaction; provided, however, that Sellers may
solicit, initiate or encourage discussions with any party relating exclusively
to the sale of the Distribution Division.
4.11 Maintenance of Seller Records. For a period of six (6) years after
the Closing Date, Sellers and their respective Representatives shall have access
to, and the right to make copies of, all of the books and records transferred to
Buyer hereunder to the extent that such access may be required by a Seller in
connection with matters relating to or affected by the operations of the
Business prior to the Closing Date. Such access shall be afforded by Buyer upon
receipt of reasonable advance notice and during normal business hours. If Buyer
wishes to dispose of any of such books and records prior to the expiration of
such six-year period, Buyer shall, prior to such disposition, give each Seller a
reasonable opportunity to segregate and remove such books and records as such
Seller may select.
4.12 Employees.
(a) Buyer shall be under no obligation to hire any employees of
Sellers. Sellers shall terminate the employment of all of their Milling Division
employees no later than 11:59 p.m. on the day prior to Closing, and will perform
all obligations in connection therewith or contemplated by this Agreement,
including without limitation giving any notices required by law, including,
without limitation, the Workers Adjustment and Retraining Notification Act, 29
U.S.C. (S)2101 et. seq., whether such notice is legally required to be given by
Buyer or by Sellers, and Sellers hereby assume any responsibility and/or
liability Buyer may otherwise have for providing any such notice to Sellers'
employees for any actions Buyer may take as a result of the transactions
contemplated by this Agreement; paying all compensation due through the day
prior to Closing, including compensation for accrued vacation and benefits;
satisfying all Sellers' obligations to employees or former employees on account
of their employment or former employment by Sellers, including obligations for
providing COBRA health plan continuation coverage to former employees and their
dependents if they are on COBRA health plan continuation coverage on the day
before the Closing Date and to employees who terminate employment on the Closing
Date; and performing any obligations required by the Fair Labor Standards Act of
1938, the Equal Pay Act, applicable wage and hour laws, or any other applicable
laws. Buyer shall have no liability for accrued wages (including salaries and
commissions), severance benefits, vacation pay, pension and profit sharing
contributions, seniority rights; other forms of benefits of any type or nature
on account of said employees' employment by Sellers, any COBRA health plan
continuation coverage to former employees of Seller and their dependents who are
on COBRA health plan continuation coverage on the day prior to Closing or to
employees of Sellers who are not employed by Buyer on the Closing Date and their
dependents.
27
(b) Buyer may extend offers of employment to some or all of such
terminated employees in their discretion upon the Closing, at terms and
conditions of employment set by Buyer in its discretion. FMI shall cooperate
with Buyer in all reasonable respects in connection with the hiring by Buyer of
former Milling Division employees. To the extent Buyer assumes or becomes bound
by any collective bargaining agreements, it will provide the benefits required
during the term of such agreement. If Buyer hires any former employee(s), it
shall recognize the years of prior service of each former employee of FMI and
the LLC for purposes of determining such employee's eligibility to participate
in, eligibility for benefit commencement under, and vesting purposes of each
employee benefit program (including vacation and sick pay policies) maintained
by Buyer and generally made available to employees of Buyer except for purposes
of any accrual under a defined benefit plan or entitlement to a particular level
of contribution under any defined contribution plan. FMI shall also allow
terminated Milling Division employees to take distributions of their accounts in
its 401(k) plan. Buyer will accept rollovers of distributions from the FMI
pension plan and/or 401(k) plan into the qualified plan, if any, which Buyer may
maintain or establish, by employees who are hired by Buyer and are eligible for
its qualified plan, if any. Buyer will cooperate with FMI with respect to the
welfare benefit plans it offers to former Milling Division employees to
eliminate waiting periods or pre-existing exclusions to the extent practical.
(c) Nothing in this Section 4.12 or elsewhere in this Agreement shall
confer upon any employee of Sellers any rights or remedies of any nature or kind
whatsoever, including, without limitation, any right to employment with Buyer
for any specified period or under any specified terms and conditions of
employment.
(d) It is expressly understood that neither Buyer nor Sellers have
the right to control, direct or influence the labor relations policies or
activities of the other; that neither shall be considered to be the labor
relations agent or representative of the other and that neither shall be
responsible for the acts of the other's agents, employees, or representatives
which affect either party's respective employees, specifically including
Sellers' employees who shall be terminated prior to Closing.
4.13 Seattle Mill Warehouse and Equipment Lease. Buyer(s), as lessor, and
FMI, as lessee (and for assignment to any purchaser of the Distribution
Division), will enter into a lease in substantially the form set forth on
Exhibit 4.13. Such lease will grant the lessee access to and use of office and
- ------------
storage space in the Seattle Mill warehouse, and access to and use of the
cooler, freezer and storage racks located therein, so as to enable the lessee to
continue operating the Distribution Division consistent with past practice (the
"Seattle Warehouse Lease").
-----------------------
4.14 Portland Lease. FMI, as lessor (and for assignment to any purchaser
of such real property), and Buyer, as lessee, will enter into a lease in
substantially the form set forth on Exhibit 4.14. Such lease will grant Buyer
------------
access to and use of the Portland Transload and space within the Portland
Distribution Center, so as to enable Buyer to continue operating the Portland
Mill and the Portland Transload consistent with past practice (the "Portland
--------
Lease").
- -----
4.15 Information Systems Service Contract. Buyer will enter into a
service agreement with FMI (for assignment to any purchaser of the Distribution
Division), in substantially the form set forth on Exhibit 4.15, pursuant to
------------
which Buyer will maintain,
28
administer and service the information technology system shared by the Milling
Division and the Distribution Division (the "IS Service Contract").
-------------------
4.16 HSR Filings. Each party, as necessary, will (a) take promptly all
actions necessary to make the filings required of it under the Hart-Scott-Rodino
Anti-Trust Improvements Act of 1976 (the "HSR Act"), (b) comply at the earliest
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practicable date with any request for additional information received from the
Federal Trade Commission or the Antitrust Division of the Department of Justice
pursuant to the HSR Act, and (c) cooperate in connection with Buyer's filing
under the HSR Act and in connection with resolving any investigation or other
inquiry concerning the transactions contemplated by this Agreement commenced by
either the Federal Trade Commission or the Antitrust Division of the Department
of Justice or state attorneys general.
4.17 Title Insurance. Sellers shall provide Buyer with (i) a commitment
issued by a recognized title insurance company for all of the Real Property,
committing to issue to Buyer on the Closing Date a fee (or leasehold as to any
leased property) owner's standard ALTA (1970 Form B with 1984 Amendments) policy
of title insurance with respect to the Real Property, and (ii) copies of any
existing surveys of the Real Property. The cost of the owner's standard
coverage title insurance and one-half of any escrow fee shall be paid by Seller.
The cost of any title endorsements requested by Buyer, the additional premium
for any extended coverage, any surveys or survey updates required for issuance
of an extended coverage title policy and one-half of any escrow fee shall be
borne by Buyer. Seller shall provide to the title company such affidavits as
may reasonably be required by the title company for the issuance of an extended
coverage title policy. Buyer shall have five (5) days from the date on which
Buyer receives the preliminary title reports to provide Seller with written
notice of those exceptions disclosed by the title commitments to which it
objects and for which it cannot obtain satisfactory endorsements from the title
company to cover such exceptions, and five (5) days after receipt of any
supplemental commitment thereto in which to examine the same and to object to
any new exceptions set forth therein for which it cannot obtain satisfactory
endorsements from the title company. Seller shall, within five (5) days from
the date on which it receives notice of Buyer's objections, notify Buyer as to
whether it will remove the exceptions to which Buyer has objected on or before
the Closing Date. Buyer shall thereafter have five (5) days within which to
give Seller written notice that it either (A) waives Seller's removal of the
exceptions that Seller has notified Buyer it is unable to remove, and thereafter
agrees to accept title in such condition, or (B) has elected to terminate this
Agreement. Buyer may not, however, terminate this Agreement if the exception to
title that Seller is unable to remove would not preclude Buyer from operating
the business on the Real Property in the manner in which it is currently
conducted. If Buyer does not give such notice within the time period permitted
for doing so, this contingency shall be deemed waived. Notwithstanding the
foregoing, Seller shall remove all monetary exceptions to title prior to the
Closing Date (except any monetary exceptions arising or resulting from acts of
Buyer with respect to the Real Property).
29
4.18 Environmental Indemnity.
(a) For purposes of this Agreement, the following terms have the
following meanings:
(i) "Claims" means (a) any expenses (including reasonable
------
attorneys and consultants fees), costs, losses, penalties, fines, judgments,
settlements, awards or liabilities to the extent that such Claims are based on
(1) the release or threatened release of Hazardous Materials on, in, under or
about the Site or (2) the generation, treatment, storage, disposal, or use
(collectively "generation") of Hazardous Materials on or about the Site,
----------
provided that the release, threatened release or generation referred to in (1)
or (2) occurred prior to Closing; and (b) demands or claims based on any alleged
violation of the Consent Decree or breach of the PRP Agreement, whether the
alleged violation or breach occurred prior or subsequent to Closing, provided
that and only to the extent that, the alleged violation or breach is not caused
in whole or in material part by any act or omission by Buyer.
(ii) "Consent Decree" means the Decree entered by the United
--------------
States District Court for the Western District of Washington in United States v.
Port of Seattle, et al., (Civil Action No. 95-04195-Z) relating to the soil and
groundwater operable unit of the Harbor Island Superfund Site in Seattle,
Washington.
(iii) "Hazardous Materials" has the same definition as
-------------------
"hazardous substance" set forth in (a) Chapter 70.105D of the Revised Code of
Washington, and (b) the Comprehensive Environmental, Response Compensation and
Liability Act, 42 U.S.C. (S)9601 et seq., as amended, and includes without
limitation any substance referred to or regulated in any federal, state or local
environmental statute, law, rule or regulation applicable to the Site.
(iv) "PRP Agreement" refers to the Amended and Restated Harbor
-------------
Island Remediation PRP Participation Agreement (effective September 30, 1994),
as now or hereafter amended.
(v) "Site" means the real property situated on Harbor Island
within the State of Washington that is being conveyed pursuant to this
Agreement. A legal description of the Site is set forth in Exhibit 4.18.
------------
(b) FMI and FPI each hereby indemnifies and agrees to defend and to
hold Buyer harmless from and against any Claims relating to the Site by third
parties, including but not limited to the Environmental Protection Agency,
Washington Department of Ecology, or other governmental agency. Each Seller
further indemnifies and agrees to hold harmless Buyer against any claim, loss or
damage resulting from Seller's acts or omissions on the Site after the Closing.
Upon receipt of notice of any Claim, Buyer shall immediately provide each Seller
with all information known to Buyer regarding such Claim. This indemnity shall
continue in full force and effect, without limit, termination or expiration, and
the obligations of FMI and FPI under this Section 4.18 are joint and several.
(c) Buyer shall not commit any act or fail to perform under Section
4.18(d) hereof, which if committed by any Seller, would constitute a violation
of the Consent Decree or a breach of the PRP Agreement (collectively
"Violations"), and Buyer shall indemnify and hold
----------
30
each Seller and Fisher harmless from any demands (including reasonable
attorneys' fees), losses, penalties, fines, judgments, settlements, awards or
liabilities resulting from Violations.
(d) After Closing, each Seller shall perform all duties assigned to
such Seller under the Consent Decree and the PRP Agreement in such manner as
such Seller deems appropriate, except that Buyer, after Closing, shall be
responsible for and shall perform all appropriate or required maintenance on
those portions of the Site which were remediated (capped) pursuant to the
Consent Decree. After Closing, Buyer shall reasonably cooperate with each Seller
to allow such Seller to perform its duties under both the Consent Decree and the
PRP Agreement.
(e) Each Seller does hereby, on behalf of itself and its affiliates,
unconditionally, absolutely and irrevocably release Buyer and each of its
affiliates from and waives as to Buyer and each of its affiliates, any claim,
demand, cause of action, liability, obligation or right for contribution,
indemnity or otherwise, whether known or unknown, contingent or accrued and
whether under common law principles, any statute (including CERCLA) or any other
applicable law, or under any agreement, instrument or document with respect to
Hazardous Materials relating to the Site; provided, however, that the foregoing
--------
does not limit Buyer's obligations under subsections (c) and (d) of Section
4.18.
4.19 Further Assurances. Each of the parties shall execute such
documents, further instruments of transfer and assignment and other papers and
take such further actions as may be reasonably required or desirable to carry
out the provisions hereof and the transactions contemplated hereby.
4.20 Financial Statements. From the execution of this Agreement until the
Closing, on or before the 21/st/ day of each month, the Sellers shall deliver to
Buyer unaudited consolidated financial statements of the Business as at and for
the monthly period ending the last day of the preceding month (including the
month of January, 2001) (the "Subsequent Monthly Financial Statements") which
---------------------------------------
shall include a balance sheet and statement of income. At the time that the
Subsequent Monthly Financial Statements are delivered to Buyer, the Sellers
shall by such delivery be deemed to have made the representations and warranties
to Buyer with respect to such Subsequent Monthly Financial Statements set forth
in Section 2.3.
4.21 Post-Closing Matters. After Closing, Buyer will cooperate with and
assist Sellers in closing Sellers' accounting and other books of record for the
period ending as of the Closing Date. Such cooperation and assistance will
include the use by Sellers of their former employees who are hired by Buyer
after Closing, and access by such employees and other Seller personnel to
appropriate systems, books and records for the foregoing purposes.
4.22 Seattle Mill Earthquake Repairs.
(a) Following an inspection of the Seattle Mill to determine damages
caused by the Seattle earthquake on February 28, 2001, Seller and Buyer have
agreed on the necessary repairs to the Seattle Mill. Schedule 4.22 sets forth
-------------
the agreed repairs and any additional repairs contained in the Manson
Construction report. Seller agrees to make such repairs to Buyer's reasonable
satisfaction as promptly as practicable and to attempt to complete all repair
work
31
prior to Closing. If at any time the estimate to make such repairs exceeds, in
the aggregate, $2.5 million dollars, Seller may elect by written notice to Buyer
not to make such repairs. Upon receipt of such notice, Buyer may elect either to
accept the Seattle Mill in its then condition or to terminate this Agreement.
(b) Seller will periodically notify Buyer prior to Closing of repair
work that has been completed and provide Buyer with an opportunity to inspect
the repairs. Not later than three (3) days prior to Closing, Seller and Buyer
shall meet to determine any repairs that have not been completed or repair work
that Buyer has not accepted and with respect to which Buyer has notified Seller
in writing of its reasons for not accepting the work. Seller and Buyer will
determine the cost to complete such items. If Seller and Buyer are unable to
agree on the cost to complete the repairs, each party shall submit its costs and
a reasonable explanation of its position to Engineers Northwest or such other
independent third-party mutually acceptable to Seller and Buyer (the
"Consultant"). The Consultant shall then make a final determination of the costs
to complete the repairs and notify Seller and Buyer in writing of its decision.
The Consultant's determination of the costs to complete the repairs shall be
final and binding on the parties. Seller, at Seller's option, may elect either
to reduce the Purchase Price or deposit into an agreed escrow account the amount
so determined to complete the final repairs. If Seller elects to so reduce the
Purchase Price, Seller shall have no further obligation or liability with
respect to the earthquake repairs. If Seller elects to deposit the amount so
determined into escrow, then, upon completion of the final repairs, Seller shall
have no further obligation or liability with respect to the earthquake repairs.
SECTION 5 - CONDITIONS PRECEDENT TO
THE OBLIGATIONS OF BUYER
The obligations of Buyer to purchase the Purchased Assets are subject to
the fulfillment, at or before the Closing, of each of the following conditions,
any one or more of which may be waived by Buyer.
5.1 Representations, Warranties and Covenants. The representations and
warranties of Sellers contained in this Agreement shall be true and correct in
all material respects on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date. Sellers shall have
complied with and performed, in all material respects, all covenants and
agreements required by this Agreement to be complied with or performed by them
on or prior to the Closing Date. Sellers shall have delivered to Buyer a
certificate, dated the Closing Date and signed by an officer of each Seller to
the foregoing effect and stating that all material conditions to Buyer's
obligations hereunder have been satisfied. Notwithstanding the above, the
"materiality" reference herein shall be inapplicable to any representation,
warranty or covenant already containing a materiality covenant.
5.2 Third Party Consents. Buyer shall have received the Required Consents.
Sellers shall use commercially reasonable efforts to obtain the consents set
forth on Schedule 2.9, provided, that the failure to obtain such consents shall
------------
not be a condition to Closing.
32
5.3 Opinion of Counsel to Seller. Buyer shall have received a written
opinion, dated the Closing Date and addressed to Buyer, from Graham & Dunn PC,
general counsel to Seller, substantially in the form of Exhibit 5.3 hereto.
-----------
5.4 Litigation. No action, suit or proceeding shall have been instituted
before any court or governmental or regulatory body, or instituted or threatened
by any governmental or regulatory body, to restrain, modify or prevent the
carrying out of the transactions contemplated hereby, or to seek damages or a
discovery order in connection with such transactions, or that has an adverse
effect on the Purchased Assets or the Milling Division.
5.5 Secretary's Certificate. Sellers shall have delivered to Buyer a
certificate or certificates dated as of the Closing Date and signed on each
Seller's behalf by its Secretary to certify that the resolutions of such
Seller's board of directors and shareholder authorizing the actions taken in
connection with the sale of the Purchased Assets, including, without limitation,
the execution, delivery and performance of this Agreement, were duly adopted and
continue in force and effect.
5.6 Instruments of Transfer. Sellers shall have delivered to Buyer at the
Closing, dated as of the Closing Date, all bills of sale, real property bargain
and sale or equivalent deeds, assignments and other appropriate instruments of
conveyance, substantially in the forms set forth in Exhibit 5.6.
-----------
5.7 Other Agreements. Sellers or Fisher, as the case may be, shall have
executed and delivered to Buyer the Seattle Warehouse Lease, the Portland Lease,
the IS Service Contract and the Fisher Guaranty.
5.8 Real Estate Matters. Buyer shall receive:
(a) A policy of title insurance covering the Real Property meeting
the requirements of Section 4.17 hereof and with coverage of the amount of the
Purchase Price allocated to the Real Property.
(b) A certificate of FMI, dated the Closing Date and sworn to under
penalty of perjury, setting forth the name, address and federal tax
identification number of FMI and the LLC and stating that neither FMI nor the
LLC are a "foreign person" within the meaning of Section 1445 of the Code, such
certificate to be in the form set forth in Treasury Regulations Section 1.1445-
2.
5.9 No Material Adverse Change. No event, occurrence, fact, condition,
change, development or effect shall have occurred, exist, or come to exist since
the Base Balance Sheet that individually or in the aggregate, has constituted or
resulted in, or could reasonably be expected to constitute or result in, a
Material Adverse Effect.
5.10 HSR Act. The applicable waiting periods (and any extensions thereof)
under the HSR Act shall have expired or been terminated.
33
5.11 DNR Lease. Either an assignment of the lease with the Washington
Department of Natural Resources (the "DNR") with the DNR's consent or, if
---
required by the DNR, a new lease duly executed by the DNR and Buyer.
SECTION 6 - CONDITIONS PRECEDENT
TO THE OBLIGATIONS OF SELLERS
The obligations of each Seller to sell the Purchased Assets are subject to
the fulfillment, at or before the Closing, of each of the following conditions,
any one or more of which may be waived by such Seller:
6.1 Representations, Warranties and Covenants. The representations and
warranties of Buyer contained in this Agreement shall be true in all material
respects on and as of the Closing Date with the same force and effect as though
made on and as of the Closing Date. Buyer shall have complied with and
performed, in all material respects, all covenants and agreements required by
this Agreement to be complied with and performed by it on or prior to the
Closing Date. Buyer shall have delivered to Sellers a certificate, dated the
Closing Date and signed by Buyer's operating manager, to the foregoing effect
and stating that all material conditions to the obligations of Sellers hereunder
have been satisfied. Notwithstanding the above, the "materiality" reference
herein shall be inapplicable to any representation, warranty or covenant already
containing a materiality covenant.
6.2 Secretary's Certificate of Buyer. Buyer shall have delivered to
Sellers a certificate dated as of the Closing Date and signed on its behalf by
its operating manager to certify that Buyer's members have authorized the
actions taken in connection with the purchase of the Purchased Assets and
assumption of the Assumed Liabilities, including, without limitation, the
execution, delivery and performance of this Agreement, and that such
authorization continues in force and effect.
6.3 Litigation. No action, suit or proceeding shall have been instituted
before any court or governmental or regulatory body, or instituted or threatened
by any governmental or regulatory body, to restrain, modify or prevent the
carrying out of the transactions contemplated hereby, or to seek damages or a
discovery order in connection with such transactions or that has had or may have
a material adverse effect on the business of Buyer.
6.4 Lease and Service Contract. Buyer shall have executed and delivered to
FMI the Seattle Warehouse Lease, the Portland Lease, and the IS Service
Contract.
6.5 Assumption Agreement. Buyer shall have delivered to Sellers at the
Closing, dated as of the Closing Date, an assignment and assumption agreement
sufficient to assign to, and cause the assumption by, Buyer of the Assumed
Liabilities in accordance with this Agreement, in the form attached as Exhibit
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6.5.
- ---
6.6 HSR Act. The applicable waiting periods (and all extensions thereto)
under the HSR Act shall have expired or been terminated.
6.7 Approval by Fisher Board. The board of directors of Fisher shall have
approved this Agreement and the transactions hereby contemplated not later than
three weeks
34
after the parties' execution of this Agreement. If not so timely approved, this
condition shall be deemed satisfied and this Agreement shall remain in full
force and effect.
SECTION 7 - SURVIVAL; INDEMNIFICATION
7.1 Indemnification by Seller. Subject to the conditions and provisions of
this Section 7, each Seller shall indemnify, defend and hold harmless Buyer from
and against any and all Loss, asserted against, imposed upon or incurred by
Buyer or any of its officers, directors, shareholders, employees or agents
directly or indirectly, by reason of or resulting from any (i) breach by any
Seller of any of the representations or warranties in this Agreement or in any
agreement to which a Seller becomes a party pursuant to this Agreement, or in
any closing certificate delivered by a Seller in connection herewith, (ii) any
breach by any Seller of any covenant or other obligation to be performed by it
under the terms of this Agreement or any other agreement to which a Buyer
becomes a party pursuant to this Agreement, (iii) any breach of Section 2.13,
Accounts Receivable, or Section 2.14, Inventory, or (iv) Excluded Liabilities.
7.2 Indemnification by Buyer. Subject to the conditions and provisions of
this Section 7, Buyer shall indemnify, defend and hold harmless each Seller and
its officers, directors, shareholders, employees and agents from and against any
and all Loss, asserted against, imposed upon or incurred by such Seller,
directly or indirectly, by reason of or resulting from any (i) breach by Buyer
of any representation or warranty of Buyer in this Agreement or any other
agreement to which a Buyer becomes a party pursuant to this Agreement, or in any
closing certificate delivered by Buyer in connection herewith; (ii) any breach
by Buyer of any covenant or other obligation to be performed by it under the
terms of this Agreement any other agreement to which a Buyer becomes a party
pursuant to this Agreement, (iii) Assumed Liabilities; or (iv) of Buyer's
activities or operations of the Milling Division after the Closing Date to the
extent not the result of a breach of any representation or warranty of any
Seller or the non-performance by Sellers of any covenant to be performed by
Seller that is contained in this Agreement or any other agreement entered into
in connection therewith or constitutes an Excluded Liability.
7.3 Claims for Indemnification. Whenever any claim shall arise for
indemnification under this Section 7, the party entitled to indemnification (the
"indemnified party") shall promptly notify the other party (the "indemnifying
----------------- ------------
party") of the claim and, when known, the facts constituting the basis for such
- -----
claim. In the event of any claim for indemnification hereunder resulting from
or in connection with any claim or legal proceedings by a third party, the
notice to the indemnifying party shall specify, if known, the amount or an
estimate of the amount of the liability arising therefrom. The indemnified
party shall not settle or compromise any claim by a third party for which it is
entitled to indemnification hereunder, without the prior written consent of the
indemnifying party (which shall not be unreasonably withheld), unless suit shall
have been instituted against it and the indemnifying party shall not have taken
control of such suit within a reasonable time after notification thereof as
provided in Section 7.4 of this Agreement.
7.4 Defense by Indemnifying Party. In connection with any claim giving
rise to indemnity hereunder resulting from or arising out of any claim or legal
proceedings by a third party, the indemnifying party at its sole cost and
expense may, upon written notice to the
35
indemnified party, assume the defense of any such claim or legal proceeding if
it acknowledges to the indemnified party in writing its obligations to indemnify
the indemnified party with respect to all elements of such claim. The
indemnified party shall be entitled to participate in the defense, compromise or
settlement of any such action, with its counsel and at its own expense unless
the named parties to any action or proceeding include both the indemnifying
party and the indemnified party and a representation of both the indemnifying
party and the indemnified party by the same counsel would be inappropriate due
to the actual or potential differing interests between them (such as the
availability of different defenses) and in such event the costs of the
indemnified party's counsel shall be borne by the indemnifying party. Such
participation shall include, without limitation, the right to consult with the
indemnifying party and its counsel or other representatives concerning such
claim and the indemnifying party and the indemnified party and their respective
counsel or other representatives shall cooperate with respect to such claim. In
settling or compromising any claim or consenting to entry of a judgment, the
indemnifying party shall use its reasonable best efforts to include as a term
thereof the giving by the claimant or the plaintiff to the indemnified party, a
release from all liability in respect of such claim. In no event shall the
indemnifying party settle any claim if such settlement would bind or impair the
indemnified party, without the prior written consent of the indemnified party,
which consent shall not impair or otherwise alter the obligations of the
indemnifying party to the indemnified party hereunder. If the indemnifying party
shall elect not to undertake such defense, or within a reasonable time after
notice of such claim, does not assume the defense of any such claim or
litigation resulting therefrom, (a) the indemnified party, at the expense of the
indemnifying party, may defend against such claim or litigation, in such manner
as the indemnified party may deem appropriate, including, but not limited to
settling such claim or litigation, after giving notice of the same to the
indemnifying party, on such terms as the indemnified party may deem appropriate,
and (b) the indemnifying party shall be entitled to participate in (but not
control) the defense of such action, with its counsel and at its own expense. If
the indemnifying party thereafter seeks to question the manner in which the
indemnified party defended such third party claim or the amount or nature of any
such settlement, the indemnifying party shall have the burden to prove by a
preponderance of the evidence that the indemnified party did not defend or
settle such third party claim in a reasonably prudent manner.
7.5 Expiration of Indemnification Obligations. The representations and
warranties of Sellers contained in this Agreement shall survive the Closing and
continue (regardless of any investigation made by or on behalf of the parties to
this Agreement) until (i) with respect to Taxes and Tax Returns in Section 2.7
(Tax Matters), the expiration of all applicable statutes of limitation, (ii)
Section 2.4 "Title to Assets; Liens," Section 2.22 "Hazardous Materials," and
Section 2.23 "Environmental Compliance," the expiration of all applicable
statutes of limitation, and (iii) with respect to all other representations and
warranties in Section 2, at 11:59 p.m. (Seattle time) on the date that is 18
months after the Closing Date. Other than those representations and warranties
described in the preceding sentence, all obligations of the Sellers contained in
any other provision of this Agreement (excluding Section 4.18 and this Section
7, which shall survive the Closing until all matters have been completely
concluded), or in any certificate or other instrument delivered pursuant to this
Agreement, shall survive the Closing until 18 months after the Closing Date.
All representations and warranties of Buyer shall survive the Closing and
continue until 18 months after the Closing Date.
36
7.6 Thresholds. The indemnified party shall not be entitled to receive,
and the indemnifying party shall not be obligated to pay, any indemnity
obligations pursuant to Sections 7.1(i) or (ii) or 7.2(i) or (ii), as
applicable, until such amounts aggregate $250,000, whereupon the amounts of all
indemnity obligations thereafter shall be payable.
7.7 Limitation. The indemnifying party's aggregate indemnity obligations
under Sections 7.1(i) or (ii) or 7.2(i) or (ii), as the case may be, shall not
exceed $2,500,000. The limitations in Sections 7.6 and 7.7 shall not apply to
breaches of the representations and warranties contained in Section 2.4 "Title
to Assets; Liens," Section 2.7 "Tax Matters," Section 2.22 "Hazardous
Materials," Section 2.23 "Environmental Compliance," or Section 4.18
"Environmental Indemnity."
7.8 Reduction of Indemnity Payments. Notwithstanding anything in this
Section 7 to the contrary, an indemnity payment owed by one party to another
party pursuant to this Section 7 shall be reduced by any amounts actually
received by the indemnified party under insurance policies in connection with
the claim for which the indemnification pursuant to this Agreement relates (less
all deductibles, costs of collection and other expenses incurred in connection
therewith).
SECTION 8 - TERMINATION OF AGREEMENT
8.1 Termination. This Agreement may be terminated prior to the Closing as
follows, provided that in the case of subsections (a) through (d), the
terminating party is not then in any material breach of this Agreement:
(a) at the election of FMI upon written notice to Buyer from FMI, if
any one or more of the conditions to the obligation of any Seller to close has
not been fulfilled on or before May 1, 2001, and the failure of such condition
to be satisfied is not caused by a breach of this Agreement by any Seller;
(b) at the election of Buyer upon written notice to Sellers if any
one or more of the conditions to the obligation of Buyer to close has not been
fulfilled on or before May 1, 2001, and the failure of such condition to be
satisfied is not caused by a breach of this Agreement by Buyer;
(c) at the election of FMI upon written notice to Buyer from FMI, if
Buyer has breached any representation, warranty, covenant or agreement contained
in this Agreement and has not, within fifteen (15) Business Days of receipt by
Buyer of written notice from FMI, cured such breach;
(d) at the election of Buyer upon written notice to Sellers if any
Seller has breached any representation, warranty, covenant or agreement
contained in this Agreement and has not, within fifteen (15) Business Days of
receipt by such Seller of written notice from Buyer, cured such breach;
(e) by mutual written agreement of Sellers and Buyer.
37
8.2 Effect of Termination. If this Agreement is terminated and the
transactions contemplated hereby are not consummated as provided above, each and
every representation and warranty contained in this Agreement or any Schedule
hereto, or any certificate, document or other instrument delivered by the
parties in connection herewith, shall expire and neither party shall be under
any liability whatsoever with respect to any such representation or warranty;
provided, however, that notwithstanding the foregoing, (i) Buyer shall continue
to abide by the provisions of Section 4.4(b) and (ii) each party shall be and
remain liable to the other for any material breach by such party of its
representations, warranties or covenants contained herein.
SECTION 9 - MISCELLANEOUS
9.1 Publicity. No public release or announcement concerning this Agreement
or the transactions contemplated hereby shall be made without advance approval
thereof by Sellers and Buyer, except as otherwise required by law.
9.2 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally (including
couriers such as FedEx), sent by facsimile transmission or sent by certified,
registered or express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally, sent by facsimile transmission (with
electronic confirmation) or, if mailed, three days after the date of deposit in
the United States mails, as follows:
if to Buyer, to:
Pendleton Flour Mills, L.L.C.
811 SW Naito Parkway, Suite 620
Portland, OR 97214
Attention: R. Randolph Labbe
Telephone: (503) 221-1301
Facsimile: (503) 294-2058
with a copy to:
Andrew P. Kerr, Esq.
Brownstein, Rask, Arenz, Sweeney, Kerr & Grim, LLP
1200 SW Main Building
Portland, OR 97205-2040
Telephone: (503) 221-1722
Facsimile: (503) 221-1074
38
if to Sellers or Fisher, to:
Fisher Mills Inc., Fisher Mills Blackfoot L.L.C.,
Fisher Properties Inc.
c/o Fisher Communications, Inc.
600 University Street, Suite 1525
Seattle, WA 98101-3185
Attention: Warren J. Spector,
Executive Vice President & Chief Operating
Officer
Telephone: (206) 404-7000
Facsimile: (206) 404-6766
with a copy to:
Jack G. Strother, Esq.
Graham & Dunn, P.C.
U.S. Bank Centre Building
1420 Fifth Avenue, 33rd Floor
Seattle, WA 98101-23901
Telephone: (206) 624-8300
Facsimile: (206) 340-9599
Any party may by notice given in accordance with this Section to the other
parties designate another address, fax number or person for receipt of notices
hereunder.
9.3 Entire Agreement. This Agreement supersedes all prior discussions and
agreements between the parties with respect to the subject matter hereof and
contains the sole and entire agreement between the parties with respect to the
subject matter hereof.
9.4 Waivers and Amendments; Non-Contractual Remedies; Preservation of
Remedies. This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived, only by a written instrument
signed by the parties or, in the case of a waiver, by the party waiving
compliance. No delay on the part of any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any waiver on
the part of any party of any such right, power or privilege, nor any single or
partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
The rights and remedies herein provided are cumulative and are not exclusive of
any rights or remedies that any party may otherwise have at law or in equity.
9.5 Governing Law; Attorneys' Fees; Jurisdiction/Venue.
(a) This Agreement shall be governed and construed in accordance with
the laws of the State of Washington, excluding its conflict of law principles.
(b) In any dispute between Seller and Buyer, the substantially
prevailing party in any action or proceeding shall be entitled to recover from
the other party its costs and expenses (excluding attorneys' fees).
39
(c) Any litigation instituted to enforce the terms of this Agreement
shall be venued in the appropriate state or federal courts located in King
County, Washington, as to which jurisdiction Seller and Buyer hereby consent.
9.6 Binding Effect; No Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
legal representatives. This Agreement is not assignable or delegable except by
operation of law or with the consent of the parties.
9.7 Variations in Pronouns. All pronouns and any variations thereof refer
to the masculine, feminine or neuter, singular or plural, as the context may
require.
9.8 Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Delivery of signatures by facsimile shall bind the parties to the
terms of the Agreement provided that the original executed signatures are
delivered within seven (7) days thereafter.
9.9 Exhibits and Schedules. The Exhibits and Schedules are a part of this
Agreement as if fully set forth herein. All references herein to Sections,
subsections, clauses, Exhibits and Schedules shall be deemed references to such
parts of this Agreement, unless the context shall otherwise require.
9.10 Headings. The headings in this Agreement are for reference only, and
shall not affect the interpretation of this Agreement.
9.11 Definitions. As used in this Agreement:
"Affiliate" shall mean, with respect to any person or entity, any other
---------
person or entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
or with respect to which 5% or more of the voting equity is owned by such first
person or entity; or with respect to which such first person or entity serves as
an officer or director.
"Business" means the business of the Milling Division
--------
"Business Day" means any day other than (a) a Saturday or Sunday, or (b) a
------------
day on which commercial banks in the State of Washington are authorized or
required by law to close.
"Chelan Avenue Vacation Agreement" means an agreement with the City of
--------------------------------
Seattle with respect to the vacation of a portion of Chelan Avenue Southwest,
together with small portions of 16th Avenue Southwest and Klickitat Avenue
Southwest, all of which are adjacent to the Seattle Mill. There is no written
agreement between FPI and the City of Seattle that sets forth all of the terms
of the transaction regarding the street vacation and FPI's conveyance of Lots 9
and 10 to the City of Seattle. Attached to this Agreement as Exhibit 9.11 are
------------
copies of Resolution 29974 of the City Council of the City of Seattle that
describes the property to be vacated by the City of Seattle.
40
"Chelan Street Vacation" means the property that is to be vacated along
----------------------
Chelan Street in the Seattle Mill that is subject to the Chelan Street Vacation
Agreement.
"Control" means the ability to direct, or cause the direction of, the
-------
management and policies of entity, whether by vote, Contract or otherwise, and
shall be conclusively presumed in the case of ownership of 50% or more of the
equity interest in an entity.
"Contracts" means all oral and written contracts, agreements, instruments,
---------
commitments, understandings, binding arrangements, leases of real and personal
property, licenses, purchase orders, sales orders, distribution agreements,
partnership arrangements or agreements, joint venture arrangements or
agreements, mortgages, indentures, covenants, permits, concessions, franchises
and all other legally binding arrangements.
"GAAP" means generally accepted accounting principles as in effect in the
----
United States consistently applied.
"Governmental Authority" means (i) any nation or government, any state or
----------------------
other political subdivision thereof, (ii) any entity exercising executive,
legislative, judicial, regulatory or administrative functions of, or pertaining
to, government and (iii) any tribunal or arbitrator of competent jurisdiction.
"Knowledge" or "awareness" means the actual knowledge of such party;
--------- ---------
provided that with respect to the "knowledge" of Seller, such term shall refer
to the actual knowledge of the following officers of Seller, assuming that each
has performed the responsibilities of his job in a reasonably prudent manner:
Bryce Seidl, President and Chief Executive Officer
Kendall McFall, Senior VP Milling
John McDowell, VP Finance
Kevin Bardsley, VP Sales
Ron Osborne, VP Logistics & Grain
"Laws" means all applicable provisions of all (i) constitutions, treaties,
----
statutes, laws, rules, regulations and ordinances of any Governmental Authority,
(ii) authorizations, consents, approvals, permits or licenses issued by, or
registrations or filings with, any Governmental Authority and (iii) order,
decisions, judgments, awards and decrees of any Governmental Authority.
"Liens" means any liens, mortgages, pledges, hypothecations, rights of
-----
others, security interests, restrictions, assignments, leases, subleases,
easements, occupancy agreements, covenants, encroachments, burdens, title
defects, title retention agreements, rights of first refusal, adverse claims or
interests, encumbrances or other claims, restrictions or limitations of any kind
or nature whatsoever, including but not limited to such as may arise under
Contract.
"Loss" means any and all claims, demands, liabilities, obligations,
----
actions, suits, orders, statutory or regulatory compliance requirements, or
proceedings asserted by any Person
41
(including Government Agencies), and all losses, damages, costs, expenses,
assessments, judgments, recoveries and deficiencies, including interest,
penalties, diminution in value, investigatory expenses, consultants' fees, and
costs and expenses reasonable attorneys' fees and expenses of investigation and
defense (including costs incurred in enforcing the applicable indemnity), of
every kind and description, contingent or otherwise, incurred by or awarded
against an Indemnified Party.
"Lots 9 and 10" means the real property identified as Lot 9 and Lot 10 on
-------------
the survey of the Seattle Mill prepared by Bush, Roed & Hitchings, Inc. dated
May 5, 2000 under Job No. 200100.00, which lots are to be transferred to the
City of Seattle in connection with the Chelan Street Vacation Agreement.
"Material Adverse Effect" means an event, change or effect that
-----------------------
substantially and adversely affects the value, condition (financial or
otherwise) results of operations, business, prospects, rights, assets or
liabilities of the Milling Division as currently conducted.
"Permitted Lien" means (i) Liens reserved against in the Base Financial
--------------
Statements, to the extent so reserved, (ii) Liens for Taxes not yet due and
payable or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of Seller in accordance with GAAP, or (iii) Liens that, individually or in
the aggregate, do not and would not materially detract from the value of any of
the Purchased Assets or materially interfere with the use thereof as currently
used or contemplated to be used or otherwise; provided, however, that "Permitted
Liens" shall not include any of the Liens referenced in subsections (i) through
(iii) above that are overdue or delinquent.
"Person" means any individual, partnership, firm, corporation, limited
------
liability company, association, trust, unincorporated organization or other
entity.
"Phase I Reports" means the Phase 1 Environmental Site Assessments
---------------
performed by Shannon & Wilson, Inc., dated October 2000.
"Portland Milling Equipment" means the Kice short flow mill and milling
--------------------------
equipment related to its operation including wheat handling, wheat storage bins,
tempering and cleaning house equipment, and conveyancing equipment between the
Kice mill and the exterior storage facilities, but excluding (i) the transloader
and related equipment including bulk floor handling, scale and storage equipment
located at the Portland Distribution Center; and (ii) assets ordinarily and
customarily used in connection with the Distribution Division.
Terms not otherwise defined in this Section 9.11 are defined in the section
of the Agreement specified in the following index:
- ----------------------------------------------------------------------
TERMS SECTION
- ----------------------------------------------------------------------
Acquisition Transaction Section 4.10
- ----------------------------------------------------------------------
Agreement Introduction
- ----------------------------------------------------------------------
Annual Financial Statements Section 2.3(a)
- ----------------------------------------------------------------------
42
- ----------------------------------------------------------------------
Assumed Contracts Section 1.3(b)
- ----------------------------------------------------------------------
Assumed Liabilities Section 1.3
- ----------------------------------------------------------------------
Audited Financial Statements Section 2.3(a)
- ----------------------------------------------------------------------
Base Balance Sheet Section 2.3(a)
- ----------------------------------------------------------------------
Base Balance Sheet Date Section 2.3(a)
- ----------------------------------------------------------------------
Base Financial Statements Section 2.3
- ----------------------------------------------------------------------
Base Purchase Price Section 1.5(a)(i)
- ----------------------------------------------------------------------
Blackfoot Mill Recital B
- ----------------------------------------------------------------------
Buyer Introduction
- ----------------------------------------------------------------------
Claims Section 4.18(a)(i)
- ----------------------------------------------------------------------
Closing Section 1.8
- ----------------------------------------------------------------------
Closing Date Section 1.8
- ----------------------------------------------------------------------
Closing Settlement Statement Section 1.5(b)(ii)
- ----------------------------------------------------------------------
Code Section 2.7(j)
- ----------------------------------------------------------------------
Consent Decree Section 4.18(a)(ii)
- ----------------------------------------------------------------------
Contingent Workers Section 2.19
- ----------------------------------------------------------------------
Distribution Division Recital C
- ----------------------------------------------------------------------
DNR Section 5.11
- ----------------------------------------------------------------------
Employee Program Section 2.17(d)(i)
- ----------------------------------------------------------------------
ERISA Affiliate Section 2.17(d)(iii)
- ----------------------------------------------------------------------
Excluded Assets Section 1.2
- ----------------------------------------------------------------------
Excluded Liabilities Section 1.4
- ----------------------------------------------------------------------
Fisher Recital A
- ----------------------------------------------------------------------
Fisher Guaranty Section 1.9
- ----------------------------------------------------------------------
Fisher Marks Section 1.1(e)
- ----------------------------------------------------------------------
FMI Introduction
- ----------------------------------------------------------------------
FPI Introduction
- ----------------------------------------------------------------------
Guaranty Section 1.9
- ----------------------------------------------------------------------
43
- ----------------------------------------------------------------------
Hazardous Materials Section 4.18(a)(iii)
- ----------------------------------------------------------------------
HSR Act Section 4.15
- ----------------------------------------------------------------------
indemnified party Section 7.3
- ----------------------------------------------------------------------
indemnifying party Section 7.3
- ----------------------------------------------------------------------
Intellectual Property Section 1.1(e)
- ----------------------------------------------------------------------
Interest Section 4.6
- ----------------------------------------------------------------------
IS Service Contract Section 4.14
- ----------------------------------------------------------------------
LLC Introduction
- ----------------------------------------------------------------------
Marked Materials Section 4.9(a)
- ----------------------------------------------------------------------
Mill(s) Recital B
- ----------------------------------------------------------------------
Milling Division Recital C
- ----------------------------------------------------------------------
Modesto Mill Recital A
- ----------------------------------------------------------------------
Multiemployer Plan Section 2.17(i)(iv)
- ----------------------------------------------------------------------
Neutral Accountant Section 1.5(b)(ii)
- ----------------------------------------------------------------------
Permits Section 1.1(c)
- ----------------------------------------------------------------------
Personal Property Section 1.1(b)
- ----------------------------------------------------------------------
Portland Distribution Center Recital A
- ----------------------------------------------------------------------
Portland Lease Section 4.14
- ----------------------------------------------------------------------
Portland Mill Recital A
- ----------------------------------------------------------------------
PLP Section 2.23
- ----------------------------------------------------------------------
PRP Section 2.23
- ----------------------------------------------------------------------
PRP Agreement Section 4.18(a)(iv)
- ----------------------------------------------------------------------
Preliminary Settlement Statement Section 1.5(b)(i)
- ----------------------------------------------------------------------
Purchased Assets Section 1.1
- ----------------------------------------------------------------------
Purchase Price Section 1.5(a)(ii)
- ----------------------------------------------------------------------
Railroad Easement Recital D
- ----------------------------------------------------------------------
Rancho Distribution Center Recital D
- ----------------------------------------------------------------------
Real Property Section 1.1(a)
- ----------------------------------------------------------------------
44
- ----------------------------------------------------------------------
Representatives Section 4.4(b)
- ----------------------------------------------------------------------
Required Consents Section 2.9
- ----------------------------------------------------------------------
Seattle Mill Recital A
- ----------------------------------------------------------------------
Seattle Parking Lot Recital D
- ----------------------------------------------------------------------
Seattle Warehouse Lease Section 4.13
- ----------------------------------------------------------------------
Seller(s) Introduction
- ----------------------------------------------------------------------
Site Section 4.18(a)(v)
- ----------------------------------------------------------------------
Subsequent Monthly Financial Statements Section 4.20
- ----------------------------------------------------------------------
Tax/Taxes Section 2.7(j)
- ----------------------------------------------------------------------
Tax Returns Section 2.7(j)
- ----------------------------------------------------------------------
Violations Section 4.18(c)
- ----------------------------------------------------------------------
Working Capital Section 1.5(b)(i)
- ----------------------------------------------------------------------
- ----------------------------------------------------------------------
45
IN WITNESS WHEREOF, the parties have executed this Agreement
under seal as of the date first above written.
BUYER:
PENDLETON FLOUR MILLS, L.L.C.
By Kerr Pacific Corp., Its Manager
By: /s/ E. Randolph Labbe
---------------------
Name: E. Randolph Labbe
SELLERS:
FISHER MILLS INC.
By: /s/ R. Bryce Seidl
------------------
Name: R. Bryce Seidl
Title: President & Chief Executive Officer
FISHER MILLS - BLACKFOOT L.L.C.
By Fisher Mills Inc., Its Manager
By: /s/ R. Bryce Seidl
------------------
Name: R. Bryce Seidl
FISHER PROPERTIES INC.
By: /s/ Mark Weed
-------------
Name: Mark Weed
Title: President & Chief Executive Officer
46