EXHIBIT 10.42
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ASSET PURCHASE AGREEMENT
by and between
HAWAIIAN NATURAL WATER COMPANY, INC.,
a Delaware corporation
as Seller
and
HAWAIIAN SPRINGS, LLC
a Delaware limited liability company
as Purchaser
ASSET PURCHASE AGREEMENT
This asset purchase agreement ("Agreement") is dated November 20,
2006, and is between Hawaiian Natural Water Company, Inc., a Delaware
corporation ("Seller"), and Hawaiian Springs, LLC, a Delaware limited
liability company ("Purchaser"). Seller and Purchaser may be referred
to herein collectively as the "Parties," and each individually as a
"Party."
Seller is in the business of bottling, packing, and handling of water
in the State of Hawaii (the "Business"), and Seller owns or holds
certain assets and properties in connection therewith, necessary for,
or material to the business and operations thereof (the "Property" as
further defined in Section 1.29).
Purchaser wishes to purchase from Seller, and Seller wishes to sell,
assign, and transfer to Purchaser, substantially all of the Property.
Purchaser has agreed to assume certain liabilities of Seller relating
to the Business created after the Closing Date (defined below) and
Seller shall pay off or assume responsibility for all liabilities
related to the Business created prior to the Closing Date, all for the
Purchase Price and upon the terms and subject to the conditions
hereinafter set forth.
The Parties therefore agree as follows:
ARTICLE I.
DEFINITIONS
The definitions in Article I apply equally to both the singular and
plural forms of the terms defined. Whenever the context requires, any
pronoun includes the corresponding masculine, feminine, and neuter
forms. The words "include," "includes," and "including" are deemed to
be followed by the phrase "without limitation." All references to
Articles, Sections, Schedules, and Exhibits are references to
Articles, Schedules, and Sections of, and Exhibits to, this Agreement
unless the context otherwise requires. The word "or" is inclusive
(i.e., "A or X" xxxxx "X, X, or A and B"), thereby avoiding the
compound conjunction "and/or."
All accounting terms used herein are to be interpreted, and all
accounting determinations to be made under this Agreement, in all
material respects using general accepted accounting principles applied
on a basis consistent with the accounting practices of Seller
concerning the Property as of the Closing Date. Unless the context
otherwise specifies or requires, for this Agreement the following
terms has the meanings in this Section 1:
1.1 "Accounts Receivable" means all of the accounts receivable of
Seller as of the Closing Date to be sold to Purchaser as part of the
Property as set forth on Schedule 1.1.
1.2 "Xxxx of Sale" means a xxxx of sale duly executed by Seller
conveying to Purchaser all of Seller's right, title, and interest in
and to the Property on the Closing Date, in the form set forth in
Exhibit A.
1.3 "Book Value" means the value at which an asset is carried on
Seller's balance sheet; i.e., the cost of an asset minus any
accumulated depreciation.
1.4 "Books and Records" means all financial and other books and
records maintained by or for the benefit of Seller solely in
connection with the operation of the Property and other documents
prepared solely in connection with the Property within the possession
or control of Seller, including customer and distribution lists,
supply contracts, private label contracts, employment and tax records
along with any and all computer files, software, materials or
correspondence related thereto.
1.5 "Closing" means, concerning the purchase and sale of the Property,
consummation of its purchase by Purchaser as contemplated by this
Agreement.
1.6 "Closing Date" means the date on which the Closing occurs, set by
the Parties after necessary documents have been prepared and are ready
for execution. The Closing Date is November 20, 2006.
1.7 "Code" means the Internal Revenue Code of 1986, as amended, and
the relevant rules and regulations promulgated thereunder.
1.8 "Agreement Date" means the date specified above in the first
paragraph of this Agreement.
1.9 "Contracts" means all customer, distributor, or co-pack contracts
plus any other material contracts Seller holds in relation to its
bottling or administrative operations as specified in Schedule 1.9.
1.10 "Equipment Leases" means the equipment leases specified on
Schedule 1.10.
1.11 "Facilities" collectively means all of Seller's facilities,
including at the Kea'au Facility, the Kapolei Facility, and the Pearl
City Facility.
1.12 "FF&E" means any and all furniture, fixtures, equipment (or
equipage), tools, machinery, leasehold improvements, plant and other
tangible personal property related to or used in connection with
Seller's operations or located at the Facilities, including: (a)
bottling, packing, and handling equipment; (b) office equipment,
furniture, fixtures, furnishings, and computers (and related computer
equipment and software); (c) telecommunications equipment; and (d)
forklifts, if any, as specified in Schedule 1.12.
1.13 "General Assignment" means an assignment, duly executed and
acknowledged by Seller and Purchaser, assigning to Purchaser (to the
extent assignable) all of Seller's right, title, and interest in and
to intangible personal property of the Seller as of the Closing Date,
in the form set forth in Exhibit B.
1.14 "Governmental Authorities" means the federal government, the
applicable governmental authority of the State of Hawaii, and any
governmental agency connected with any of them that has jurisdiction
over the construction, reconstruction, operation, or use of the
Property.
1.15 "Ground Leases" means the ground leases specified on Schedule
1.15.
1.16 "Intellectual Property" means of the following only as it
pertains to Seller: (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements
thereto, and all patents, patent applications, and patent disclosures,
together with all reissuances, continuations, continuations-in-part,
revisions, extensions, and reexaminations thereof; (b) all trademarks,
service marks, trade dress, logos, trade names, and corporate names
(whether or not registered), together with all translations,
adaptations, derivations, and combinations thereof and including all
goodwill associated therewith, and all applications, registrations,
and renewals in connection therewith; (c) all copyrightable works, all
copyrights, and all applications, registrations, and renewals in
connections herewith; (d) all mask works and all applications,
registrations, and renewals in connection herewith; (e) all trade
secrets and confidential business information (including ideas,
research and development, know-how, formulas, compositions,
manufacturing and production processes and techniques, technical data,
designs, drawings, specifications, customer and supplier lists,
pricing and cost information, and business and marketing plans and
proposals); (f) all computer software (including data and related
documentation); (g) all other proprietary rights; and (h) all copies
and tangible embodiments thereof (in whatever form or medium), all as
specified in Schedule 1.16.
1.17 "Inventory" means Seller's inventory located at the Facilities,
consisting of good and saleable inventory with a fair market value to
be determined by mutual agreement of the Parties on or about the
Closing Date, including: (a) raw materials that are not obsolete, and
(b) finished goods that are not obsolete.
1.18 "IRS" means the Internal Revenue Service.
1.19 "Kapolei Facility" means Seller's facility located at 00-000
Xxxxxxxx Xxxx., Xxxxxxx, XX 00000.
1.20 "Kea'au Facility" means Seller's facility located at 00-000 Xxx
Xxxxxxx Xx., Xxx'xx, XX 00000.
1.21 "Leases" collectively means the Equipment Leases, the Ground
Leases, and the Vehicle Leases.
1.22 "Liabilities" means and is limited strictly and solely to the
following liabilities of Seller: (a) the post-Closing obligations of
Seller under the Leases, and (b) liabilities of the Business created
after the Closing Date.
1.23 "Liens" means lien and/or other security interests against the
Property as specified in Schedule 1.23.
1.24 "Non-Foreign Status Certificate" means a certificate, to be
executed by Seller, in the form set forth in Exhibit C.
1.25 "Other Liabilities" means all other liabilities which relate
directly or indirectly to the Business and/or the Property, including
all liabilities in connection with the Settlement Agreement, dated
April 29, 2003, among Seller, AMCON Distributing Company (Seller's
parent company), and Hawaii Brewery Development Co., Inc.
1.26 "Pearl City Facility" means Seller's facility located at 00-000
Xxxxxx Xx., Xxxxx Xxxx, XX 00000.
1.27 "Permits" means all of the permits and licenses required by
Governmental Authorities required for Seller to conduct the Business
as specified in Schedule 1.27.
1.28 "Person" means any natural person, partnership, corporation,
limited liability company, association, trust or trustee, or any other
legal entity.
1.29 "Property" means substantially all of the tangible and intangible
assets currently used by Seller to conduct its current business and
operations at the Facilities, including: Accounts Receivable, Books
and Records, Contracts, FF&E, goodwill associated with Seller's
business, Inventory, Intellectual Property, Leases, Vehicles, and
Webpage. "Property" excludes the items specified in Section 2.4.
1.30 "Purchase Price" has the meaning set forth in Section 2.2.
1.31 "Purchaser's Documents" has the meaning set forth in Section 6.2.
1.32 "Seller's Documents" has the meaning set forth in Section 6.1.
1.33 "Separate Agreement" has the meaning set forth in Section 2.2.2.
1.34 "Transaction" collectively means the transactions contemplated in
this Agreement.
1.35 "Vehicles" means the vehicles described in Schedule 1.32.
1.36 "Vehicle Leases" means the leases specified in Schedule 1.33.
1.37 "Webpage" means the web pages located at the uniform recourse
locator address xxxx://xxx.xxxxxxxxxxxxxx.xxx/, and any e-mail address
used by Seller using the suffix "@xxxxxxxxxxxxxx.xxx."
ARTICLE II.
PURCHASE AND SALE OF PROPERTY
2.1 Purchase and Sale. On the terms and subject to the conditions of
this Agreement, Seller hereby agrees to sell, transfer, convey, and
deliver the Property to Purchaser; and Purchaser hereby agrees to
purchase the Property from Seller and to assume the Liabilities, as
hereinafter provided.
2.2 Consideration for Purchase.
2.2.1 Purchase Consideration. The total "Purchase Consideration" for
the Property includes (a) through (c):
(a) Fair Market Value, and not less than Book Value, for the
Inventory. "Fair Market Value" means the actual amount paid by Seller
for raw materials still in new and undamaged condition, and the
variable cost incurred by Seller in the production of all finished
goods found to be in new and shippable condition. Seller and
Purchaser will jointly survey and assess the Inventory before Closing,
to determine the quantities thereof and amounts paid therefor.
(b) Book Value for the Accounts Receivable set forth in Schedule
1.1, less any valid customer credits given by Seller before the
Closing Date.
(c) Two and one-half million dollars ($2,500,000.00).
(d) Assumption of the Liabilities in Section 2.3.
2.2.2 Wire Transfer. Purchase Consideration to be paid in cash shall
be in the form of a wire transfer to the parties and accounts
identified in Schedule 2.2.1. To the extent a recipient party is
other than Seller, such payment shall be for the benefit and account
of Seller.
2.3 Liabilities Assumed by Purchaser; Limitation on Liabilities
Assumed by Purchaser.
2.3.1 Purchaser must assume the Liabilities created after the Closing
Date.
2.3.2 Except for the Liabilities, Purchaser is assuming no Other
Liabilities. Seller instead remains solely responsible for all Other
Liabilities except the Liabilities, including as illustrative and not
exhaustive the following (a) through (f):
(a) Income Taxes. Any liability or obligation for federal,
state, local or foreign income taxes (and all other taxes) concerning
the operation of the Property before the Closing Date, including any
such taxes arising from the sale of the Property.
(b) Other Tax Obligations. Any other tax obligations incurred
by Seller up to the Closing Date, including the Hawaii State Bottle
Tax, General Excise Tax, corporate income tax, and any and all
employee taxes or obligations incurred up to that point (employee
withholding, workers compensation, etc.).
(c) Payables. Any and all payables up to the Closing Date.
Seller remains solely responsible to pay all obligations of whatever
nature related to Seller's operations up to the Closing Date.
(d) Transactional Expenses. Any liability or obligation
incurred by Seller to Purchaser or any third party in connection with
the negotiation, execution, or performance by Seller of this
Agreement, including any legal, accounting, and other professional
fees and expenses.
(e) Fines and Penalties. Any present, past or future costs,
assessments, fines, penalties, or related contingencies assessed or
assessable under any environmental law, labor, employee safety, wage
and hour, health and safety, or other statute, rule, or obligation
arising from or related to any act or omission before the Closing Date
by Seller or any officer, director, or employee thereof.
(f) Dragnet Clause. Any other debts, liabilities, and taxes
incurred by Seller up to the Closing Date; and any employee salaries,
employee benefits, and employee-related taxes incurred by Seller up to
the Closing Date.
Seller promptly must pay, discharge, and perform all Other
Liabilities, when and as they become due; provided, however, that
Seller may refuse to pay or perform any Other Liabilities that Seller
contests in good faith and by proper proceedings diligently pursued to
completion; provided Purchaser is indemnified pursuant to Section
5.3.3 below.
2.4 Assets Retained by Seller.
Seller will retain all the items in Sections 2.4.1 through 2.4.2:
2.4.1 Any cash (or cash equivalents) on hand, and any and all
"internal debt" owed to AMCON Distributing Company.
2.4.2 Any tax credits including net operating loss tax benefits.
2.5 Allocation of the Purchase Consideration. Purchaser and Seller
agree to allocate the Purchase Consideration as specified in Schedule
2.5. After the Closing Date, the Parties will make consistent use of
the allocation for all tax purposes and in all filings, declarations,
and reports with the IRS in respect thereof, including the reports
required to be filed under Section 1060 of the Code. Purchaser will
prepare and deliver IRS Form 8594 to Seller within forty-five (45)
days after the Closing Date to be filed with the IRS. In any
litigation related to the determination of any tax, Purchaser and
Seller must not contend to represent that such allocation is not a
correct allocation.
ARTICLE III.
CLOSING DATE
3.1 Closing Procedures. This Agreement constitutes the agreement for
the transfer of substantially all of the Property from Seller to
Purchaser.
3.2 Closing Date.
3.2.1. The Transaction will close on the Closing Date, or such later
date as the parties mutually agree.
3.2.2. Provided that neither Party has received written notice of the
failure of any condition precedent specified in Article VII to the
obligations of such Party, then, when Purchaser and Seller are each
prepared to execute the documents and instruments and transfer the
funds required thereof by this Agreement, they must:
(a) insert the Closing Date as the date of any document to be
delivered but not theretofore dated;
(b) deliver to Purchaser: the Xxxx of Sale, General Assignment,
Non-Foreign Status Certificate, and any other document required to be
delivered to Purchaser; and
(c) deliver to Seller: all sums to be received by Seller from
Purchaser; the General Assignment executed, in counterpart, by
Purchaser; and any other document required to be delivered to Seller
at the Closing Date.
3.3 Costs. Each Party must pay all of its own legal, accounting, and
consulting fees and all other costs and expenses incurred in
connection with the Transaction.
ARTICLE IV.
ASSIGNMENT AND ASSUMPTION OF LEASES AND OTHER CONTRACTS
4.1 Assumption of Ground Leases. Seller is to assign to Purchaser,
and Purchaser is to accept assignment of and assume the obligations
under, the Ground Leases. Seller and Purchaser will, on the Closing
Date, execute agreements assigning and assuming the Ground Leases from
Seller to Purchaser. Those Lease Agreements must be substantially in
the form of Exhibit D, unless otherwise agreed or waived by the
Parties. Seller and Purchaser will cooperate and jointly be
responsible, before or on the Closing Date, to obtain the lessor's
consent (and estoppel certificate) concerning that assignment for the
Ground Leases. Purchaser assumes liability for all rents and other
charges owing under the Ground Leases after the Closing Date, and
Purchaser must indemnify Seller for all such amounts owing under the
Ground Leases after the Closing Date. Purchaser must pay Seller for
any lease deposits associated with any Ground Lease. Seller
indemnifies Purchaser for all rents and other charges owing under the
Ground Leases prior to and on the Closing Date.
4.2 Assumption of Equipment Leases. Seller is to assign to
Purchaser, and Purchaser is to accept assignment of and assume the
obligations under, the Equipment Leases. Seller and Purchaser must,
on the Closing Date, execute agreements assigning and assuming the
Equipment Leases from Seller to Purchaser. Those agreements must be
substantially in the form of Exhibit E, unless otherwise agreed or
waived by the Parties. Seller and Purchaser will cooperate and
jointly be responsible, before or on the Closing Date, to obtain the
lessor's consent (or estoppel certificate) concerning that assignment
of the Equipment Leases. Purchaser assumes liability for all rents
and other charges owing under the Equipment Leases after the Closing
Date, and Purchaser must indemnify Seller for all such amounts owing
under the Equipment Leases after the Closing Date. Seller indemnifies
Purchaser for all amounts owed or owing under the Equipment Leases
prior to or on the Closing Date. If Purchaser assumes the Equipment
Leases instead of paying them off at Closing and Seller has continuing
liability after the Closing Date under the Equipment Leases, then
Purchaser must arrange an irrevocable letter of credit (or similar
irrevocable financial device reasonably acceptable to Seller) to
insure all lease payments to the lessor under the Equipment Leases.
Purchaser must pay Seller for any lease deposits associated with any
Equipment Lease.
4.3 Assumption of Vehicle Leases. Seller is to assign to Purchaser,
and Purchaser is to accept assignment of and assume the obligations
under, the Vehicle Leases. Seller and Purchaser will, on the Closing
Date, execute an assignment and assumption of lease assigning the
Vehicle Leases from Seller to Purchaser. The Vehicle Lease Agreements
must be substantially in the form of Exhibit F, unless otherwise
agreed or waived by the Parties. Seller and Purchaser will cooperate
and jointly be responsible, before or on the Closing Date, to obtain
the lessor's consent (or estoppel certificate) concerning that
assignment for the Vehicle Leases. Purchaser assumes liability for
all rents and other charges owing under the Vehicle Leases after the
Closing Date, and Purchaser must indemnify Seller for all such amounts
owing under the Vehicle Leases after the Closing Date. Purchaser must
pay Seller for any lease deposits associated with any Vehicle Lease.
4.4 Insurance Polices. Seller will assign to Purchaser, and
Purchaser will accept that assignment of and assume the obligations
under, all of Seller's business insurance policies that are reasonably
assumable by Purchaser. All such insurance policies (or replacements
thereof) or any applicable portion thereof will be kept in full force
and effect and Purchaser will assume the obligation to pay all
premiums under those insurance policies as of the Closing Date. The
Seller will notify all insurance companies of this Agreement and the
sale of the Property to the Purchaser. Seller also actively will
assist Purchaser, before or on the Closing Date, to obtain the
insurer's consent concerning that assignment and assumption of those
insurance policies of Seller.
4.5 Sale Contracts. Seller is to assign to Purchaser, and Purchaser
is to accept assignment of and assume the future obligations under,
the Contracts. (Seller must not enter into any new Contract after
accepting the Parties' letter of intent dated September 22, 2006.)
ARTICLE V.
REPRESENTATIONS, WARRANTIES, AND COVENANTS
5.1 Purchaser's Representations and Warranties. Purchaser hereby
represents and warrants to Seller as follows:
5.1.1 Power and Authority. Purchaser is a limited liability company,
duly incorporated, validly existing, and in good standing under the
laws of the State of Delaware. Purchaser has the power and authority
to enter into this Agreement and the "other documents" required to be
executed by Purchaser under Section 7.2, to perform its obligations
hereunder and to consummate the Transaction; neither the execution and
delivery hereof by Purchaser nor the performance by Purchaser of
Purchaser's obligations hereunder will violate or constitute an event
of default under any material terms or material provisions of any
material agreement, document, instrument judgment, order, or decree to
which Purchaser is a party or by which Purchaser is bound.
5.1.2 Authorization; Valid Obligation. All actions required to be
taken by or on behalf of Purchaser to authorize Purchaser to make,
deliver, and carry out the terms of this Agreement have been or will
be duly taken before the Closing Date. No consent to the execution,
delivery, and performance of this Agreement by Purchaser is required
from any partner, member, manager, board of directors, shareholder,
creditor, investor, judicial or administrative body, Governmental
Authority, or other Person, other than any such consent that already
has been unconditionally given.
5.1.3 As Is Purchase.
(a) Before the execution of this Agreement and within forty-five
(45) days of the Closing Date, Purchaser has been afforded access to
books and records of Seller relating to the operation of the Property,
and to other information available to Seller with respect thereto.
Seller has made no representations or warranties to Purchaser as to
the accuracy or completeness of that information.
(b) To the extent deemed necessary or desirable by Purchaser,
Purchaser (i) has conducted its own investigation of the Property; and
(ii) has made its own inspections, tests, audits, studies, and
investigations conducted in connection with, and on Purchaser's own
judgment concerning, its purchase of the Property.
5.2 Purchaser's Covenants. Purchaser covenants with Seller that
Purchaser must indemnify, defend, and hold harmless Seller from and
against any and all loss, damage, claim, cost, and expense and any
other liability whatsoever (including reasonable attorney's fees,
charges and costs) incurred by Seller by reason of any claim, demand,
or litigation relating to the Property and arising from acts,
omissions, occurrences, or matters that take place after the Closing
Date, except to the extent arising from any act, negligence, willful
misconduct, or omission of Seller.
5.3 Seller's Representations and Warranties. Seller represents and
warrants to Purchaser as follows:
5.3.1 Power and Authority. Seller is a corporation, duly
incorporated, validly existing, and in good standing under the laws of
the State of Delaware. Seller has the power and authority to enter
into this Agreement, and other documents required to be executed by
Seller at Closing under Section 6.3, to perform its obligations under
this Agreement, and to consummate the Transaction.
5.3.2 Title to Assets. Seller has good and marketable title to, or a
valid leasehold interest in, the Property free and clear of any
security interests therein or restrictions on transfer except for: (a)
each respective lessor's interests in each of the Leases; (b) required
consents to assignment of the Leases; and (c) the Liens. Seller makes
no warranties or representations to Purchaser, express or implied, as
to the condition of any of the Property transferred to Purchaser as
part of the Transaction or the suitability of any of the Property for
any particular purpose, except as expressly provided in this Section
5.3.2 as to Seller's good and marketable title thereto and except as
expressly provided herein. All Property is sold to Purchaser "as is"
and in its condition and at its location as of the Closing Date.
5.3.3 Seller's Covenants. Seller hereby covenants with Purchaser
that Seller (and its successors and assigns) must indemnify, defend,
and hold harmless Purchaser from and against any and all loss, damage,
claim, cost, and expense and any other liability whatsoever (including
reasonable attorney's fees, charges and costs) incurred by Purchaser
by reason of any claim, demand, or litigation relating to the Other
Liabilities, Property and/or the Business and arising from acts,
omissions, occurrences, or matters that take place on or before the
Closing Date, except to the extent arising from any act, negligence,
willful misconduct, or omission of Purchaser.
(a) Modifications of Contracts and Leases. Seller must not
amend the Contracts and the Leases (and any agreements set forth in
the exhibits attached hereto), and Seller must not enter into any
other leases of or concerning the Property or other agreements
affecting the Property, without the prior written consent of
Purchaser.
(b) Insurance Policies. All existing insurance policies (or
replacements thereof) affecting the Property or any portion thereof
will be kept in full force and effect, subject to Section 4.4.
5.4 Survival. Purchaser and Seller each hereby covenants and agrees
with the other that the representations, warranties, covenants, and
indemnities of Purchaser and Seller (as the case may be) set forth,
respectively, in Articles V, X, and XIV survive the Closing without
limitation as to duration; provided, however, the representations and
warranties made by Purchaser and Seller (Section 5.1, as to Purchaser
and Sections 5.3.1 and 5.3.2 only as to Seller) survive the Closing
for a twelve (12) month period commencing upon the Closing Date.
5.5 No Warranty Concerning Future Business Prospects. Seller makes
no warranties, express or implied, concerning the future business
prospects of Purchaser, as a result of or following the Transaction.
Seller has supplied Purchaser with certain financial information
concerning Seller and its operations; provided, however, Seller
supplied that financial information to Purchaser without any warranty,
express or implied, that might reflect Purchaser's business prospects.
Purchaser acknowledges such information supplied by Seller was not, is
not, and must not be deemed to be any commitment or guarantee by
Seller concerning what Purchaser's future business prospects might be
upon consummation of the Transaction.
ARTICLE VI.
PRE-CLOSING COVENANTS
The Parties agree as follows with respect to the period between the
execution of this Agreement and the Closing:
6.1 General. Each of the Parties will use commercially reasonable
efforts to take all action and to do all things necessary, proper or
advisable in order to consummate and make effective the transactions
contemplated by this Agreement. Without limiting the generality of
the foregoing, both Parties will cooperate in all reasonable respects
to obtain all required consents to the assignment and transfer of the
Property and the assumption of the Liabilities; provided, however,
that Purchaser shall not be required to agree to any commercially
significant amendment of any agreement as a condition of obtaining
such consent; however, Purchaser acknowledges that a personal guaranty
or letter of credit may be required in order to assume and have
assigned the Equipment Lease with General Electric.
6.2 Notices and Consents. Seller will give any required notices to
third parties and will use commercially reasonable efforts to obtain
any third party consents that Purchaser reasonably may request.
6.3 Operation of Business Negative Covenants. Except as expressly
contemplated in this Agreement, Seller will not, without the consent
of Purchaser, engage in any practice, take any action, or enter into
any transaction outside the ordinary course of the Business. Without
limiting the generality of the foregoing, Seller will not take any
action that may, directly or indirectly, impair or materially
adversely affect the Property or result in any adverse change in the
Liabilities.
6.4 Operation of the Business Affirmative Covenants. Unless
Purchaser otherwise agrees:
6.4.1 Seller will (A) conduct the Business diligently and in the
ordinary course of the Business of Seller in substantially the same
manner as heretofore conducted and in material conformity with all
applicable laws, rules and regulations, and (B) exercise all
commercially reasonable efforts to preserve the Business intact, to
preserve present commercially significant relationships with suppliers
and customers and others having business relations with it and to keep
in full force and effect its corporate existence and all material
rights and intellectual property relating to the Business.
6.4.2 Seller will in all material respects maintain the Property in
its present or better condition, ordinary wear and tear excepted.
6.4.3 Seller will conduct the Business in accordance, in all
commercially significant respects, with all applicable governmental
rules and regulations and any licenses, permits and other
authorizations issued to it by any governmental or regulatory
authority, federal, state or local.
6.4.4 Seller will comply in all commercially significant respects
with all applicable laws, rules and regulations to which it is
subject. Upon receipt of notice of violation of any of such laws,
rules and regulations, Seller will use its best efforts to contest in
good faith or to cure such violation prior to the Closing.
6.4.5 Seller will maintain or cause to be maintained in force the
existing hazard and liability insurance policies, or comparable
coverage, relating to the Property and the Business.
6.5 Notice of Developments. Seller will give prompt written notice
to Purchaser of any material adverse change in the Business or
financial condition of Seller.
6.6 Exclusivity. Seller will not, and will not cause or permit
Seller's representatives, employees or agents to, solicit, initiate,
or encourage the submission of any proposal or offer from any person
relating to the acquisition of all or substantially all of the capital
stock or assets of Seller (including any acquisition structured as a
merger, consolidation, or share exchange).
6.7 Employee Matters. Seller shall take all action necessary to
terminate substantially all of its employees prior to or on the date
of the Closing. Seller acknowledges that Purchaser is under no
obligation to offer employment to any such terminated employee or to
extend any benefit or to assume any liability in respect of any such
employee although subject to a review of all personnel files and to
certain personal interviews, Purchaser intends to offer employment to
substantially all existing employees on existing terms. Seller does
not believe it is subject to the provisions of the Worker Adjustment
and Retraining Notification Act (the "WARN Act"), if any, or under any
other applicable Law with respect to such termination but that Seller
shall give all required notices and other information required to be
given to the employees of Seller, any collective bargaining unit
representing any group of employees of Seller (if any) and any
applicable government authority under the WARN Act (if any) and under
any other applicable Law in connection with the transactions
contemplated by this Agreement. Seller agrees to hold Purchaser
harmless from all obligations with regard to the WARN Act and any
other applicable Law in respect of Seller's employees whenever
arising.
ARTICLE VII.
DELIVERY OF DOCUMENTS
7.1 Closing Documents to be Delivered by Seller to Purchaser. Seller
must deliver the following original documents to Purchaser on the
Closing Date, each of which must be executed, and, where appropriate,
acknowledged by Seller, and dated as of the Closing Date:
7.1.1 Two counterparts of the Assignment and Assumption of Interest
in each Lease (Exhibits D, E, F);
7.1.2 Consents to the assignment of each Lease along with landlord
estoppel certificates reasonably required by Purchaser;
7.1.3 Two counterparts of the General Assignment (Exhibit B);
7.1.4 Two counterparts of the Xxxx of Sale (Exhibit A);
7.1.5 All documents necessary to transfer title to Purchaser of the
Vehicles;
7.1.6 Bulk Sales Report, to be filed under Haw. Rev. Stat. 237-45;
7.1.7 Assignment of Intellectual Property (Exhibit G);
7.1.8 Executed Non-Foreign Status Certificate (Exhibit C);
7.1.9 Executed Intellectual Property conveyancing documents
(including but not limited to the Webpage) reasonably required by
Purchaser;
7.1.10 Evidence as reasonably required by Purchaser that all Liens
have been released and Other Liabilities satisfied; and,
7.1.11 Any other documents, reasonably required by Purchaser to
consummate the purchase and sale of the Property.
7.2 Closing Documents and Funds to be Delivered by Purchaser to
Seller. Purchaser must deliver to Seller on the Closing Date the
following funds and original documents, each of which must be
executed, and, where appropriate, acknowledged by Seller, and dated as
of the Closing Date:
7.2.1 The Purchase Price, in cash or other immediately available
federal funds, in the form and amount required by Section 2.2;
7.2.2 Two counterparts of the Assignment and Assumption of Interest
in each of the Leases (Exhibits D, E, F);
7.2.3 Two counterparts of the General Assignment (Exhibit B);
7.2.4 Any other documents, reasonably required by Seller to
consummate the purchase and sale of the Property.
7.3 Seller's Deliveries to Purchaser at Closing. Seller must deliver
to Purchaser contemporaneously with the Closing original counterparts
of the following documents together with, to the extent obtainable by
Seller through its reasonable efforts, appropriate consents:
7.3.1 Leases;
7.3.2 Contracts, FF&E, and Inventory.
7.3.3 Books and Records;
7.3.4 Permits, if any; and
7.3.5 Keys to all entrance doors, offices, storerooms, FF&E, and
Vehicles.
The documents and keys described in this Section 7.3 are deemed to be
delivered properly, if left in the property in possession of an
authorized representative of Purchaser.
ARTICLE VIII.
CONDITIONS PRECEDENT TO CLOSING
8.1 Conditions Precedent to Purchaser's Obligations. The obligation
of Purchaser to purchase the Property is subject to the satisfaction,
not later than the Closing Date, of the following conditions:
8.1.1 Representations and Warranties of Seller. There has been no
material breach of any of Seller's representations, warranties, and
covenants in this Agreement set forth in Section 5.3 and Section 5.4
as of the Closing Date.
8.1.2 No Material Changes. There has been no casualty or
condemnation of which Purchaser has elected to terminate this
Agreement under Article XII (Casualty).
8.1.3 Seller's Deliveries. Seller has delivered the items described
in Section 7.1, and Purchaser has acknowledged that Seller is prepared
to deliver the items described in Section 7.3. The foregoing
notwithstanding, if the consents for any Lease is not delivered to
Purchaser before the Closing Date, it may be delivered as soon as
Seller is able after the Closing Date. If the consent to a Lease is
not delivered before the Closing Date, then Seller must indemnify,
defend, and hold harmless Purchaser from and against any and all loss,
damage, claim, cost, and expense and any other liability whatsoever
(including reasonable attorney's fees, charges, and costs) incurred by
Purchaser by reason of any claim, demand, or litigation relating to
the consent to the Lease not being delivered before the Closing Date
except to the extent arising from any act, negligence, willful
misconduct, or omission of Purchaser.
8.2 Conditions Precedent to Seller's Obligations. The Closing and
Seller's obligations concerning the Transaction are subject to the
satisfaction, not later than the Closing Date of the following
conditions:
8.2.1 Funds. Purchaser has delivered to Seller on the Closing Date,
all cash or other immediately available funds due from Purchaser in
accordance with Section 2.2 of this Agreement.
8.2.2 Representations, Warranties, and Covenants of Purchaser. There
is no material breach of any of Purchaser's representations,
warranties, and covenants in this Agreement including, but not limited
to, those set forth in Sections 5.1 and 5.2 as of the Closing Date.
8.2.3 Purchaser's Deliveries. Purchaser has delivered to Seller the
items described in Section 7.2.
The conditions set forth in this Section 8.2 are solely for the
benefit of Seller and may be waived only by Seller. Seller at all
times has the right to waive any condition. Any such waiver or
waivers must be in writing and delivered to Purchaser. Purchaser and
Seller each must not act or fail to act for the purpose of permitting
or causing any condition of this Agreement to fail.
8.3 Failure of Condition. Except as otherwise provided in this
Agreement, if the Transaction fails to close on or before the Closing
Date for any reason whatsoever (other than a reason for which
Purchaser or Seller has the express right to postpone Closing),
including a failure of a condition precedent set forth in this Article
VIII, either Purchaser or Seller, if not then in default hereunder,
may terminate this Agreement in accordance with the provisions of
Section 9.1 or 9.2, as the case may be; and, thereupon:
8.3.1. each Party must pay its own costs and expenses; and
8.3.2. each Party is released from all obligations under this
Agreement, except for the provisions that expressly survive
termination of this Agreement.
ARTICLE IX.
PRE-CLOSING/CLOSING DEFAULTS AND REMEDIES
9.1 Seller's Defaults. Seller is considered to be in default
hereunder if Seller fails to meet, comply with, or perform any
material covenant agreement, representation, warranty or obligation on
its part required within the time limits and in the manner required in
this Agreement, and such failure was not caused by Purchaser's
default.
9.2 Purchaser's Remedies. If Seller is in default hereunder,
Purchaser may exercise either one of the following as its sole and
exclusive remedies:
9.2.1 Terminate this Agreement by written notice delivered to Seller
on or before the Closing Date; or
9.2.2 Enforce specific performance of this Agreement against Seller,
in which event Purchaser is deemed to have accepted Seller's title to
the Property and waived any breach by Seller of any of its
representations and warranties made hereunder, except for any matters
or breaches caused by an act or omission of Seller in violation of
this Agreement or curable by Seller.
Purchaser hereby waives any right to any damages (whether actual,
incidental, consequential, punitive or otherwise and whether or not
the remedy of specific performance is available) or any other legal or
equitable remedies (other than those specified in Section 9.2.1 and
Section 9.2.2), which it may otherwise have for Seller's default prior
to the Closing.
9.3 Purchaser's Defaults. Purchaser is considered to be in default
hereunder if Purchaser fails to meet, comply with, or perform any
material covenant, agreement, representation, warranty, or obligation
on its part required within the time limits and in the manner required
in this Agreement, and such failure was not caused by Seller's
default.
9.4 Seller's Remedy. If Purchaser is in default hereunder, Seller
may exercise the following as its sole and exclusive remedy: Enforce
specific performance of this Agreement against Purchaser, in which
event Seller is deemed to have delivered Seller's title to the
Property and waived any breach by Purchaser of any of its
representations and warranties made hereunder, except for any matters
or breaches caused by an act or omission of Purchaser in violation of
this Agreement or curable by Purchaser. Seller hereby waives any
right to any damages (whether actual, incidental, consequential,
punitive, or otherwise and whether or not the remedy of specific
performance is available) or any other legal or equitable remedies
(other than that specified in the preceding sentence), which it may
otherwise have for Purchaser's default.
9.5 Applicability. The provisions of this Article IX only apply if a
default occurs and the Closing does not occur. The provisions do not
apply in the case of a claim under Section 5.3.3.
ARTICLE X.
BROKER
Seller and Purchaser mutually represent and warrant to each other that
neither Seller nor Purchaser knows of any broker or other Person who
has claimed or may have the right to claim a commission, finder's fee,
brokerage fee, or other fee or payment in connection with the
Transaction.
ARTICLE XI.
POST-CLOSING
11.1 Books and Records. For the period of six (6) months after the
Closing Date, Seller or its authorized representative shall, at its
sole cost and expense, and during normal business hours shall have
access to all Books and Records relating to the conduct of Business by
Seller, provided that it gives Purchaser two (2) business days prior
notice and such access does not interfere with Purchaser's conduct of
the Business. Additionally, during the period from 60 calendar days
after Closing Date to six (6) months after Closing Date, Purchaser
will use good faith efforts to protect, gather and arrange shipping to
Seller or Seller designated storage facility, at Seller's expense, any
accounting or financial records relating to the conduct of Business by
Seller requested in writing by Seller.
11.2 Covenant Not To Compete. For a period of three (3) years
following the Closing Date, Seller shall not compete with Purchaser in
the Business in the State of Hawaii.
11.3 President. Purchaser has advised that it currently intends to
retain Seller's current president as an employee post-Closing and
Seller consents to such retention without objection.
11.4 Confidentiality. No information concerning one party that has
been furnished to or obtained by the other party in connection with
this Agreement may be disclosed to any person other than in confidence
to employees, legal counsel, financial advisers or independent public
accountants who reasonably need to know such information in connection
with the transactions contemplated by this Agreement and who agree to
be bound by this Section 11.4. Notwithstanding the foregoing, this
obligation shall not apply to information that (a) is, or becomes,
publicly available from a source other than the other party; (b) was
known and can be shown to have been known by the other party at the
time of its receipt; (c) is received by the other party from a third
party without breach of this Agreement; (d) is required by law or
court order to be disclosed; or (e) is disclosed in accordance with
the written consent of the other party.
ARTICLE XII.
CASUALTY
If any substantial damage to the Property occurs before the Closing
Date by reason of fire, earthquake, lava flow, or other casualty,
Seller must give Purchaser immediate notice of such event. If the
cost to repair and restore the Property exceeds the sum of (i) the
insurance proceeds available for restoration plus (ii) the deductible
amount on the applicable insurance policy, then Purchaser has the
right to terminate this Agreement by giving written notice to Seller
to such effect by the earlier to occur of (a) the Closing Date, or (b)
five (5) days after Seller has notified Purchaser of the casualty. If
Purchaser does not elect to terminate this Agreement, then the closing
of the Transaction will take place as herein provided with abatement
of the Purchase Price in an amount equal to the cost to repair or
restore the Property that exceeds the amount of proceeds from casualty
insurance paid or payable concerning the casualty, and at the Closing,
Seller must pay or assign to Purchaser (by written instrument in the
case of any assignment, but without recourse) any proceeds from all
fire and other casualty insurance paid or payable concerning the
casualty (less sums theretofore expended, if any, by Seller for
temporary repairs or barricades), and Seller has no liability or
obligation concerning the condition of the Property as the result of
such casualty. Despite any foregoing language to the contrary, Seller
will pay any deductible amount on the applicable insurance policy up
to and including the Closing Date; Purchaser will pay any such
deductible amount after the Closing Date.
ARTICLE XIII.
NOTICES
13.1 Notices in Writing. Whenever any notice, demand, or request is
required or permitted hereunder, such notice, demand, or request must
be made in writing and must be personally delivered to the individuals
listed below, sent via prepaid courier or overnight courier or
telecopier, or deposited in the United States mail, registered or
certified, return receipt requested, postage prepaid, addressed to the
addresses (and individuals) set forth below:
To Seller:
Hawaiian Natural Water Co., Inc.
C/O AMCON Distributing Co.
Xxxx Xxxxxxx
0000 Xxxxxxxxx Xxxx
Xxxxx, XX 00000
Telephone Number: 000.000.0000
Telecopier Number: 402.331.4834
Email: xxxxxxxx@xxxxx.xxx
To Purchaser:
Xxxxxxx X. Xxxxxx
Managing Member
Hawaiian Springs, LLC
0000-X Xxxxxxx Xxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000-0000
Telephone Number: 000.000.0000
Telecopier Number: 714.545.5668
Email: xxxxxxxx@xxxxxxxxx.xxx
13.2 Receipt. Any notice, demand, or request to be served upon any
Party is deemed sufficiently given to and received by that Party for
all purposes hereunder: (a) if sent via courier, at the time such
notice, demand, or request is delivered, to the address specified by
the Party to receive such notice; (b) if sent via telecopier, at the
time of receipt by such Party; or (c) if sent via registered or
certified mail, three (3) days after it is deposited in the United
States mail.
13.3 Deemed Delivery. The inability to deliver any notice, demand or
request because the individual to whom it is properly addressed in
accordance with this Article XIII refused delivery thereof or no
longer can be located at that address constitutes delivery thereof to
such individual.
13.4 Change of Address. Each Party has the right from time to time
to designate by written notice to the other Party such other person or
persons and such other place or places as the Party may desire written
notices to be delivered or sent in accordance herewith.
ARTICLE XIV.
SUCCESSORS AND ASSIGNS
14.1 Transfers by Seller. [Intentionally omitted.]
14.2 Transfers by Purchaser. Purchaser has the right to assign or
partially assign all of its right, title, and interest in this
Agreement to a subsidiary to be formed without the prior written
consent of Seller. Any other transfer or assignment requires the
written consent of Seller which consent may be withheld in Seller's
sold and absolute discretion. No assignment or transfer made by
Purchaser has any force or effect whatsoever unless and until
Purchaser delivers to Seller a counterpart of that assignment, duly
executed by Purchaser and the assignee, and an assumption agreement
with the respect thereto in favor of Seller, duly executed by
Purchaser and the assignee, both of which documents must be in form
and substance satisfactory to Seller. Notwithstanding anything to the
contrary contained herein, such assignment does not relieve the
assigning Party from its liability under this Agreement. Any
assignment made in violation hereof or that does not comply with the
provisions hereof is null and void.
ARTICLE XV.
MISCELLANEOUS
15.1 Approvals. Whenever the approval or consent of either Purchaser
or Seller is called for under the terms of this Agreement, such
approval or consent must not be unreasonably withheld and must be
given or denied within three (3) business days of receipt of a request
by Purchaser or Seller, as the case may be, for such approval or
consent (unless a different period for such approval or consent is
expressly provided for in this Agreement). The failure by Purchaser
or Seller to notify the other Party of its denial of approval or
consent before 5:00 p.m. (Hawaii time) on the third business day (or
such different period for such approval or consent as is expressly
provided for in this Agreement) after the day on which that request is
received by the Party from whom approval or consent is sought is
deemed to be approval or consent, as of the end of said third business
day, by the Party from whom approval or consent is sought.
15.2 Amendment. No provision of this Agreement or of any documents
or instrument entered into, given or made under this Agreement may be
amended, changed, waived, discharged, or terminated except by an
instrument in writing signed by the Party against whom enforcement of
the amendment, change, waiver, discharge, or termination is sought.
15.3 Entire Contract. This Agreement together with the Schedules and
Exhibits attached hereto embodies the entire agreement between the
Parties concerning the Transaction. There have been and are no
covenants, agreements, representations, warranties, or restrictions
between the Parties hereto with regard thereto other than those set
forth herein. This Agreement and supersedes all prior and
contemporaneous agreements, representations, and undertakings by or
between the Parties.
15.4 Time is of the Essence. Time is strictly of the essence
concerning each and every term, condition, obligation, and provision
of this Agreement.
15.5 Succession and Assignment. This Agreement is binding upon and
inures to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this
Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of the other Party.
15.6 Number and Gender of Words. Words of any gender used in this
Agreement are to be held and construed to include any other gender,
and words of a singular number are to be held to include the plural
and vice versa, unless the context requires otherwise.
15.7 Third Parties. Nothing in this Agreement, express or implied,
is intended to confer upon any person, other than the Parties and
their respective successors and assigns, any rights or remedies under
or by reason of this Agreement. Nor is anything in this Agreement
intended to relieve or discharge the obligation or liability of any
third person to any Party, nor is any provision herein to be construed
to give any third person any right of subrogation or action over
against any Party.
15.8 Further Assurances. Each of Seller and Purchaser will, at any
time and from time to time after the Closing Date, upon the request of
the other, execute, acknowledge and deliver, or will cause to be done,
executed, acknowledged and delivered all such further acts, deeds,
assignments, transfers, conveyances, powers of attorney, and
assurances as may reasonably be required to consummate the
Transaction.
15.9 Governing Law. This Agreement is to be construed under and be
governed by the internal laws of the State of Hawaii (without regard
to otherwise applicable conflict of law principles), and all
obligations of the Parties created under this Agreement are to be
deemed performed in Hawaii County, Hawaii.
15.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which is an original, but such counterparts
together constitute one and the same instrument, binding on the
Parties.
15.11 Exhibits and Schedules. All exhibits and schedules described
in this Agreement and attached hereto are by this reference
incorporated fully herein. The term "this Agreement" includes all
such exhibits and schedules.
15.12 Invalid Provisions. If any provision of this Agreement is held
to be illegal, invalid, or unenforceable under present or future laws,
then those provisions are fully severable; the Agreement is to be
construed and enforced as if that illegal, invalid, or unenforceable
provision had never comprised a part of this Agreement; and the
remaining provisions of this Agreement remain in full force and effect
and are not be affected by the illegal, invalid, or unenforceable
provision or by its severance from this Agreement. Furthermore, in
lieu of that illegal, invalid, or unenforceable provision, there is to
be added automatically as a part of this Agreement, a provision as
similar in terms to such illegal, invalid, or unenforceable provision
as may be possible and be legal, valid, or enforceable.
15.13 Attorney's Fees. If any dispute between Seller and Purchaser,
relating to the Transaction, should result in litigation, the
prevailing party (or more prevailing party) is to be reimbursed for
all reasonable costs incurred in connection therewith, including
reasonable attorney's fees and court costs (and expert witness fees
and costs, if any). The prevailing party (or most prevailing party)
is to be determined by the court based upon an assessment of which
party's major arguments or positions taken in the proceedings could
fairly be said to have prevailed over the other party's major
arguments or positions on major disputed issues.
15.14 Interpretation. The Parties agree that each Party and its
counsel have reviewed and revised this Agreement and that the normal
rule of construction to the effect that any ambiguities are to be
resolved against the drafting party is not to be employed in the
interpretation of this Agreement or any amendments or exhibits
thereto.
15.15 No Waiver. No failure of any Party to exercise any power given
such Party hereunder or to insist upon strict compliance by the other
Party with its obligations hereunder does constitute a waiver of any
Party's right to demand strict compliance with the terms of this
Agreement.
15.16 Representation by Counsel. Each Party acknowledges to the
other that it has been represented at all times by competent legal
counsel in connection with this Agreement and the Transaction.
15.17 Termination. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated before the
Closing Date: (a) by mutual written consent of Seller and Purchaser;
or (b) by either Purchaser or Seller (by written notice to the other)
if the Closing does not have occur on or before November 20, 2006, or
on whatever later date as the parties may agree to in writing.
Signature page follows; remainder page intentionally left blank.
The Parties are signing this Agreement on the date in the introductory
paragraph.
PURCHASER:
HAWAIIAN SPRINGS, LLC
By: /s/ Xxxxxxx X. Xxxxxx
Title: Managing Member
Date Executed: November 20, 2006
SELLER:
HAWAIIAN NATURAL WATER COMPANY, INC.
By: /s/ Xxxxxx X. Xxx Xxxxxxx
Title: President
Date Executed: November 20, 2006
