- 22 -
and allocated the stated $1.5 million price to be paid at the
closing, $300,000 to “Records” and $1,200,000 to “Sellers’
Rights”. There is no evidence in the record of any negotiation
over this allocation or of any of the considerations that led
H�agen-Dazs to allocate the purchase price in this fashion.
Unlike prior drafts of the purchase agreement in the record,
the agreement as executed on July 8, 1988, between H�agen-Dazs
and SIC and Arnold contains an Article 2.4 that makes the closing
contingent on an audit by a “`Big-8’ auditing firm” of the
documentation of the sales to supermarket chains, independent
supermarkets, and food service accounts for the 12-month period
ending May 31, 1988. The audit was required to ascertain the
actual sales figures in order to set the purchase price under
Article 2.4 in accordance with a purchase price reduction clause
that applied to both the payment to be made at the closing and
the contingent annual payments to be made over the following 3
years.10 Article 2.4 also provided that H�agen-Dazs would have
9(...continued)
operates from one to ten stores”.
10 The Agreement provided that if the audited supermarket
sales were greater than $4 million but less than $4,700,000, then
there would be a downward adjustment to the purchase price equal
to:
[1 - (audited sales figures/$4,700,000)] x $2,350,000.
The Agreement allocated 81 percent of the downward adjustment to
the purchase price to be paid at closing and 19 percent to the
(continued...)
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