ASSET PURCHASE AGREEMENT
THIS IS AN ASSET PURCHASE AGREEMENT dated as of September 30, 1997 (the
"Agreement") between Bottles Packaging, Inc., a California corporation, with its
corporate headquarters at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ "▇," ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("Seller") and Hawaiian Natural Water Company, Inc., a Hawaii
corporation, with its corporate headquarters at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇ ("Buyer").
RECITALS
WHEREAS, Seller owns and operates as a division that certain water
bottling blow molding system manufactured by ▇▇▇▇▇▇ 3 S.R.L. Kegging, Bottling
and Packaging Systems ("▇▇▇▇▇▇ System") that is currently physically situated at
▇▇-▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ together with related tangible and
intangible assets (collectively, the "Division Assets").
WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase
from Seller the Division Assets.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other consideration, the value, receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows.
1. SALE AND PURCHASE OF ASSETS.
Subject to the terms and conditions of this Agreement, Seller
will sell, convey, transfer, assign and deliver to Buyer, and Buyer will
purchase from Seller, at the Closing (defined in Section 5) for the Purchase
Price (defined in Section 3) all right, title and interest of Seller in and to
the Division Assets, more particularly described as all machinery and equipment
owned by or leased to Seller which is used in connection with the operation of
▇▇▇▇▇▇ System and which is described in Exhibit "A" (the "Machinery").
2. NO ASSUMPTION OF LIABILITIES. Buyer is purchasing only the
Division Assets and will not and does not expressly or otherwise assume under
this Agreement or by reason of any transactions contemplated hereby, any debts,
liabilities (contingent or otherwise), or obligations of Seller whether related
to ▇▇▇▇▇▇ System or not.
3. PURCHASE PRICE.
The purchase price for the Division Assets ("Purchase Price")
shall be One Million Two Hundred Thousand and No/100 dollars ($1,200,000.00)
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4. TERMS OF PAYMENT.
(a) INITIAL GOOD FAITH DEPOSIT. Buyer has previously deposited
with Seller the sum of $50,000.00 as an initial good faith deposit, the receipt
of which is hereby acknowledged by Seller.
(b) DOWN PAYMENT. $325,000.00 payable at Closing.
(c) SELLER FINANCING. $825,000.00 payable over a five (5) year
period with no interest to accrue during the first two years and with a simple
interest to accrue at a rate of five percent (5%) per annum during the last
three years of this five-year period, with no prepayment penalty, as follows:
(i) during the first two years after the Closing, principal
will be paid in 24 equal monthly installments of $13,750 on the first day
of each month, with no interest, commencing with the first day of the first
calendar month after Closing;
(ii) during the subsequent three years, interest and
principal will be paid together on the first business day of October of
each calendar year, beginning with the first business day of October of the
year 2000, in the principal amount of $165,000, plus a payment of simple
interest accrued at a rate of .417% per month on the then outstanding
unpaid principal balance.
5. CLOSING.
Subject to the fulfillment of the conditions precedent
specified in Section 10 herein, the purchase and sale of the Division Assets
shall be consummated at a closing (the "Closing") to be held at 11:59 p.m.,
Hawaii Standard Time, at the offices of Tam, ▇'▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ on
September 30, 1997 or at such later date or at such other time as Seller and
Buyer shall mutually agree after the satisfaction or waiver of conditions
precedent specified in Section 10 of this Agreement (such date and time being
referred to as the "Closing Date").
6. DELIVERIES OF SELLER.
At the Closing, Seller shall deliver to Buyer in form reasonably
satisfactory to Buyer, the following:
(a) a ▇▇▇▇ of Sale substantially in the form of Exhibit "C"
attached hereto, covering the Division Assets, as necessary or desirable, to
transfer, assign, and convey to Buyer, as of the Closing Date, good and
marketable title to the Division Assets, free and clear of all liens, claims,
encumbrances, and other covenants and restrictions, except as provided in that
certain Security Agreement dated September 26, 1997 (the "Security Agreement"),
executed by Buyer and Seller and attached as Exhibit "D" hereto.
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(b) a written warranty ("Warranty"), covering the Division
Assets, executed by Seller and attached hereto.
(c) a credit memo to offset Seller's invoice F7-3 for
$331,681.86 issued under that certain Blow Molding Agreement dated November 28,
1995, by and between Seller and Buyer (the "Blow Molding Agreement").
7. DELIVERIES OF BUYER.
At the Closing, Buyer shall deliver to Seller in form reasonably
satisfactory to Seller, the following:
(a) $325,000.00, in the form of a cashier's check or wire
transfer;
(b) a fully executed promissory note between Buyer and Seller
dated September 30, 1997 ("Promissory Note"), attached as Exhibit "B" hereto;
(c) a Security Agreement and related UCC-1 Financing Statement,
each fully executed by Buyer; and
(d) a cashier's check or wire transfer for the amount equal to
the amount paid by Seller to Seller's suppliers for Seller's then remaining
inventory of raw materials, such raw materials being usable preforms for the
manufacture of the PET bottles.
8. REPRESENTATIONS AND WARRANTIES OF SELLER.
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated herein, Seller hereby represents and
warrants as follows as of the Closing.
(a) AUTHORIZATION AND APPROVAL. Each document to which Seller is
a party herein constitutes the legal, valid, and binding obligation of Seller,
enforceable in accordance with its terms. Each document to which Seller is a
party herein has been duly and validly authorized by Seller. No further
approvals or consents of any third party is required in connection with the
execution and delivery by Seller of this Agreement, any other document to which
Seller is a party, or the consummation by Seller of the transactions
contemplated by any of the documents.
(b) NO VIOLATION. Neither the execution and delivery of any of
the documents to which Seller is a party herein, nor the consummation of the
transactions required of it under any of the documents required herein will (i)
violate any provision of the Articles of Incorporation or the Bylaws of Seller,
(ii) violate or give rise to any right of termination, cancellation, or
acceleration under any of the terms, conditions, or provisions of any lease,
license, contract, agreement, mortgage, deed of trust or other instrument or
document to which
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Seller is a party or by which the Division Assets may be bound, or (iii) violate
any order, writ, decree, law, statute, rule or regulation of any court or
governmental authority applicable to Seller or the Division Assets.
(c) TITLE TO DIVISION ASSETS. Seller has good, valid, and
marketable title to the Division Assets. The Division Assets are free and clear
of all defects of title or objections, restrictions, claims, liens, charges,
security interests, or other encumbrances of any kind or nature whatsoever. Upon
delivery of the ▇▇▇▇ of Sale, and acceptance thereof, Buyer will have good,
valid, and marketable title to the Division Assets, free and clear of any
restriction, claim, lien, charge, encumbrance, or equity whatsoever, except as
provided in the Security Agreement.
(d) OPERATING CONDITION OF DIVISION ASSETS. ▇▇▇▇▇▇ System is in
good operating condition and repair and is structurally sound. The Division
Assets are not in need of maintenance or repairs, except for ordinary, routine
maintenance and repairs which are not material in cost or expenditure of time.
(e) NO BROKER OR FINDER. Seller has not engaged any broker,
finder, or third party to act on behalf of Seller, directly or indirectly, as a
broker or finder in connection with this Agreement or the transactions
contemplated hereby, or has consented to or acquiesced in anyone so acting, and
Seller knows of no claim for compensation from any broker, finder, or third
party for so acting on behalf of Seller or of any basis for such a claim.
(f) ACCURACY OF REPRESENTATIONS. No representation or warranty
made in this Agreement or any other document delivered in connection herewith,
by or on behalf of Seller to Buyer, contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statement
so made, in light of the circumstances under which it was made, not misleading.
9. REPRESENTATIONS AND WARRANTIES OF BUYER.
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated herein, Buyer hereby represents and
warrants as follows as of the Closing.
(a) AUTHORIZATION AND APPROVAL. Each document to which Buyer is
a party herein, specifically including, but in no way limited to, the Promissory
Note and Security Agreement, constitutes the legal, valid, and binding
obligation of Buyer, enforceable in accordance with its terms. Each document to
which Buyer is a party herein, specifically including, but in no way limited to,
the Promissory Note and Security Agreement, has been duly and validly authorized
by Buyer. No further approvals or consents of any third party are required in
connection with the execution and delivery by Buyer of this Agreement, any other
document to which Buyer is a party, or the consummation by Buyer of the
transactions contemplated by any of the documents.
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(b) NO VIOLATION. Neither the execution and delivery of any of
the documents to which Buyer is a party herein, nor the consummation of the
transactions required of it under any of the documents required herein will (i)
violate any provision of the Articles of Incorporation or the Bylaws of Buyer,
(ii) violate or give rise to any right of termination, cancellation, or
acceleration under any of the terms, conditions, or provisions of any lease,
license, contract, agreement, mortgage, deed of trust or other instrument or
document to which Buyer is a party may be bound, or (iii) violate any order,
writ, decree, law, statute, rule, or regulation of any court or governmental
authority applicable to Seller.
(c) NO BROKER OR FINDER. Buyer has not engaged any broker,
finder or third party to act on behalf of Buyer, directly or indirectly, as a
broker or finder in connection with this Agreement or the transactions
contemplated hereby, or has consented to or acquiesced in anyone so acting, and
Buyer knows of no claim for compensation from any broker, finder, or third party
for so acting on behalf of Buyer or of any basis for such a claim.
(d) ACCURACY OF REPRESENTATIONS. No representation or warranty
made in this Agreement or any other document delivered in connection herewith,
by or on behalf of Buyer to Seller, contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statement
so made, in light of the circumstances under which it was made, not misleading.
10. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER.
The obligations of Buyer to enter into or to complete the Closing
hereunder are subject, at the option of Buyer, to the fulfillment prior to or at
the Closing of each of the following conditions, any one or more of which may be
waived by Buyer.
(a) REPAIR OF DIVISION ASSETS. Prior to Closing and at its sole
expense, Seller has retained and employed an authorized representative of the
manufacturer or distributor of the ▇▇▇▇▇▇ System who conducted a detailed,
thorough and complete inspection of the ▇▇▇▇▇▇ System and corrected and repaired
the ▇▇▇▇▇▇ System in order that the ▇▇▇▇▇▇ System is properly operated and
maintained. Within 45 days from the Closing Date, Seller shall prepare a
detailed WRITTEN SUMMARY of the condition of the ▇▇▇▇▇▇ System.
(b) WARRANTY OF DIVISION ASSETS. At its sole expense, Seller
shall provide or will obtain from the manufacturer an unconditional written
warranty to Buyer in connection with the operation of ▇▇▇▇▇▇ System, identical
to the terms and conditions of the original manufacturer's warranty, in favor of
Buyer, and its successors and assigns, the term of which will commence upon the
Closing Date, for a period of one (1) year.
(c) RECOMMENDED SPARE PARTS. At its sole expense, Seller shall
prepare a written summary of recommended spare parts for the ▇▇▇▇▇▇ System it
deems necessary or prudent for Buyer to presently maintain and possess.
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11. SELLER'S INDEMNIFICATION.
Notwithstanding anything herein to the contrary, any claims for
indemnification which may be asserted against Seller arising out of or related
to this Agreement shall be enforceable only against the assets of the Seller,
and Buyer further agrees that any such indemnification claims shall not be
enforceable against any officer, director, shareholder, employee, or agent of
Seller.
Seller shall indemnify and hold harmless Buyer, and its officers,
directors, agents, and employees at all times from and after the date of this
Agreement, against and in respect of the following:
(a) any obligation, action or cause of action, loss, claim,
liability, expense, or other damage incurred, sustained or suffered by Buyer
caused by, resulting from or arising out of any failure of Seller to perform any
covenant in this Agreement or any breach of any representation or warranty made
by Seller in this Agreement or other instrument or certificate delivered
pursuant thereto, including without limitation the Security Agreement;
(b) all the liabilities of Seller or claims of any nature,
whether accrued, absolute, contingent or otherwise, against Seller or the
Division Assets, arising prior to the Closing;
(c) all reasonable costs and expenses (including reasonable
attorneys' fees) incidental to any of the foregoing, as well as reasonable costs
and expenses (including reasonable attorneys' fees) incurred by Buyer enforcing
its rights hereunder; and
(d) all reasonable costs and expenses incurred by Buyer directly
or indirectly resulting from Seller's failure to timely and diligently release
its security interests in the Division Assets after full satisfaction of the
payment obligations contained in the Promissory Note.
12. BUYER'S INDEMNIFICATION.
Notwithstanding anything herein to the contrary, any claims for
indemnification which may be asserted against Buyer arising out of or related to
this Agreement shall be enforceable only against the assets of the Buyer, and
Seller further agrees that any such indemnification claims shall not be
enforceable against any officer, director, shareholder, employee, or agent of
Buyer.
Buyer shall indemnify and hold harmless Seller, and its officers,
directors, agents, and employees at all times from and after the date of this
Agreement, against and in respect of the following:
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(a) any obligation, action or cause of action, loss, claim,
liability, expense, or other damage incurred, sustained or suffered by Seller
caused by, resulting from or arising out of any failure of Buyer to perform any
covenant in this Agreement or any breach of any representation or warranty made
by Buyer in this Agreement or other instrument or certificate delivered pursuant
thereto, including without limitation the Promissory Note and Security
Agreement;
(b) all the liabilities of Buyer or claims of any nature,
whether accrued, absolute, contingent or otherwise, against Buyer or the
Division Assets, arising after the Closing; and
(c) all reasonable costs and expenses (including reasonable
attorneys' fees) incidental to any of the foregoing, as well as reasonable costs
and expenses (including reasonable attorneys' fees) incurred by Seller enforcing
its rights hereunder.
13. TERMINATION.
The obligations of the parties hereto to consummate the purchase
and sale contemplated hereby may be terminated and abandoned at any time before
the Closing Date, without cost, expense, or liability to either party, by
(a) the mutual agreement of Seller and Buyer;
(b) Buyer, if there has been a material breach by Seller of any
of its representations, warranties, or covenants set forth in this Agreement;
(c) Seller, if there has been a material breach by Buyer of any
of its representations, warranties, or covenants set forth in this Agreement;
and
(d) any party, who has not intentionally delayed the Closing, if
Closing has not taken place by November 1, 1997.
14. NOTICES.
Any notice, request or other communication hereunder shall be
given in writing and shall be served either personally delivered, transmitted by
facsimile or delivered by certified or registered mail, postage prepaid and
addressed to the following addresses:
If to Buyer: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇, President
Hawaiian Natural Water Company, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
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If to Seller: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇, CFO
Bottles Packaging Inc.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ "▇,"
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Notices shall be deemed received upon actual receipt if sent as described above.
15. SURVIVAL OF REPRESENTATION AND WARRANTIES.
The representations and warranties of Seller and Buyer in this
Agreement and in any statement, certificate, warranty, instrument, schedule or
other similar document delivered pursuant to this Agreement shall survive the
Closing until the fifth (5th) anniversary of the Closing Date, except as
otherwise expressly provided herein.
16. ENTIRE AGREEMENT.
This Agreement, including any exhibits or schedules attached
hereto and other documents referred to herein, contains the entire understanding
of the parties hereto in respect of its subject matter. There are no
restrictions, promises, warranties, covenants, or undertakings, other than those
expressly set forth herein and therein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to the subject
matter contained and described herein this Agreement.
17. AMENDMENTS; WAIVER.
This Agreement may not be amended, supplemented, cancelled or
discharged, except by written instrument executed by the parties hereto. No
failure to exercise and no delay in exercising any right, power, or privilege,
or partial exercise of any right, power, or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power,
or privilege hereunder preclude the exercise of any other right, power, or
privilege hereunder or otherwise. No waiver of any breach of any agreement
hereunder or any other agreement shall be deemed to be a waiver of any preceding
or succeeding breach of the same or any other agreement. No extension of time of
performance of any obligations or other acts hereunder or under any other
agreement shall be deemed to be an extension of the time for performance of any
other obligations or any other acts. The rights and remedies of the parties
under this Agreement, and the exhibits attached hereto, are in addition to all
other rights and remedies, at law or in equity, that the parties may have
against each other.
18. TIME.
Time is of the essence in the performance of the parties'
respective obligations contained herein.
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19. SEVERABILITY.
Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
20. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of
Seller and Buyer, and their respective successors and assigns.
21. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance
with the internal laws of the State of Hawaii in all respects, including matters
of construction, enforcement, and performance, without giving effect to the
principles of choice-of-laws thereof.
22. COUNTERPARTS: INTEGRATION. EFFECTIVENESS. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof. This
Agreement shall become effective when executed by each of the parties hereto and
delivered to Seller.
23. SETTLEMENT AND RELEASE OF CLAIMS UNDER BLOW MOLDING AGREEMENT. By
their execution of this Agreement, Seller and Buyer hereby release and discharge
(and agree not to ▇▇▇ or claim against) one another (and such party's respective
successors and assigns), from all liability and responsibility whatsoever,
whether previously incurred, now existing, or hereafter arising, whether known
or unknown, with respect to the terms, requirements, and conditions contained in
the Blow Molding Agreement, PROVIDED, HOWEVER, that nothing contained herein
shall serve as a release or discharge of any claims being herein expressly
reserved that Seller or Buyer may possess against one another under: (a) that
certain Seller's Invoice to Buyer, dated June 17, 1997, in the amount of
$71,186.70, and (b) any and all other of Seller's outstanding invoices to Buyer
in connection with Seller's manufacture and production of bottles pursuant to
the Blow Molding Agreement, which invoices have been provided to Buyer and
remain unpaid by Buyer in whole or part prior to Closing, and which will
continue to be governed by the Blow Molding Agreement after the Closing.
Notwithstanding anything to the contrary contained herein, the release and
discharge contained in this Section 23 are explicitly subject to the Buyer's
continuing compliance with all of Buyer's obligations under the Promissory Note,
subject to Buyer's offset rights under the Warranty.
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24. WAIVER OF THE STATUTE OF LIMITATIONS UNDER BLOW MOLDING
AGREEMENT. Seller and Buyer hereby waive any and all defenses under Hawaii Rules
of Civil Procedure Rule 12, that Seller's or Buyer's cause(s) of action under
the Blow Molding Agreement may be barred by the statute of limitations, and
Seller and Buyer hereby consent to the bringing of a cause of action against it
arising out of or in connection with the Blow Molding Agreement, regardless of
the effects of the Hawaii Rules of Civil Procedure limiting the time period
within which such actions must be commenced. This Section and the waivers
provided herein shall be void and of no legal effect upon the satisfaction of
Buyer's obligations under the Promissory Note.
IN WITNESS WHEREOF, the parties have caused this instrument to be
executed the day and year first above written.
BOTTLES PACKAGING, INC., a California corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------
Its: President
------------------------------------
"Seller"
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On this 26th day of September, 1997, before me personally appeared
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ and ____________________, to me personally known, who being
by me duly sworn, did say that he is the President of BOTTLES PACKAGING INC.,
a California corporation, and that the instrument was signed and sealed in
behalf of the corporation by authority of its Board of Directors, and the
said ____________________ acknowledged the instrument to be the free act and
deed of the corporation.
Illegible
-------------------------------------------
Notary Public, State of California
My commission expires: October 20, 2000
10
HAWAIIAN NATURAL WATER COMPANY, INC., a
Hawaii corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Its: President
------------------------------------
"Buyer"
STATE OF HAWAII )
) ss.
CITY AND COUNTY OF HONOLULU )
On this 30th day of September, 1997, before me personally appeared
▇▇▇▇▇▇ ▇▇▇▇▇▇, to me personally known, who being by me duly sworn, did say that
he is the President of HAWAIIAN NATURAL WATER COMPANY, INC., a Hawaii
corporation, and the said ▇▇▇▇▇▇ ▇▇▇▇▇▇ acknowledged the instrument to be the
free act and deed of the corporation.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------------
Notary Public, State of Hawaii
My commission expires: June 29, 1999
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EXHIBIT "A"
MACHINERY
QUANTITY DESCRIPTION
1 3 cavity blow-molding machine complete with 3 molds for l.5, 1.0
and 0.5 liter bottles
1 Mechanical preform container overturner
1 Bottle ejection device
1 Refrigerator type EGF 18/AE
1 Sterilizing filter PA11-V3A10399 complete with cartridge
1 Coalescent filter PMT11-VV3A14185 complete with cartridge
1 Deodorizing filter ▇▇▇▇▇ - ▇▇▇▇▇▇▇▇ complete with cartridge
1 Drier DFR-43 - 268 m/h @ 40 bar
1 1,000 liter vertical tank - 42 bar
1 Cooling tower PMS 6-65
1 1,500 liter vertical tank - 12 bar
1 High pressure reduce R123 L1 1" PI 50 bar PU 5/50 bar
1 Hydraulic, pneumatic and electric installation
1 Electrical distribution switchboard, main lug only, N1 enclosure,
120/208 V, 3 PH
1 Hydraulic pallet ▇▇▇▇
1 Electric pallet ▇▇▇▇
1 Electrical wiring for equipment, lights, switches and receptacles
1 Simpli-flex modular conveyor system to convey PET water bottles
