ASSET PURCHASE AGREEMENT
AGREEMENT, made as of the 15th day of September, 2005, by and between
Capital Beverage Corporation, a Delaware corporation with offices located at 000
Xxxxxxxx Xxxxxx, Xxxx Basin, Building # 302, Brooklyn, New York 11231 ("Seller")
and Oak Beverages Inc., a New York corporation with offices located at Xxx
Xxxxxx Xxxx, Xxxxxxxx, Xxx Xxxx 00000 ("Purchaser").
W I T N E S S E T H
WHEREAS, Seller is in the business of marketing, selling and distributing
at wholesale certain alcoholic beverage products (the "Distribution Business");
WHEREAS, Seller desires to sell, and cause to be transferred, assigned and
conveyed to Purchaser, and Purchaser desires to accept and purchase, certain
distribution rights and related assets of Seller relating to the Distribution
Business, subject to the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the foregoing premises, the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. For purposes of this Agreement, the following terms shall
have the following meanings and, as the context requires, the singular shall
include the plural:
(a) The term "Applicable Laws" shall have the meaning specified in
paragraph 5(g).
(b) The term "Assumption Notice" shall have the meaning specified in
paragraph 7(c)(i).
(c) The term "Authorizations" shall have the meaning specified in
paragraph 5(g).
(d) The term "Bankruptcy Code" shall have the meaning specified in
paragraph 5(r).
(e) The term "Bottle Xxxx" means New York Environmental Conservation
Law ss.ss.27-1001 et seq. and the regulations promulgated thereunder.
(f) The term "Breweries" shall have the meaning specified in paragraph
2(b).
(g) The term "Business Plan" shall have the meaning specified in
paragraph 8(a)(i).
(h) The term "Capital Acquired Assets" shall have the meaning
specified in paragraph 2.
(i) The term "Case Equivalents" means 288 fluid ounces (an amount
equivalent to a standard case of 24/12 ounce bottles) whether such Products were
in actual case goods or draught form.
(j) The term "Cash Portion" shall have the meaning specified in
paragraph 3(a)(iii).
(k) The term "Closing" shall have the meaning specified in paragraph
10(a).
(l) The term "Closing Date" means the date specified in paragraph
10(a).
(m) The term "Collective Bargaining Agreement" means the agreement
between Soft Drink and Brewery Workers Union Local 812 and Capital Beverage
Corp., dated February 1, 2000.
(n) The term "Competing Bid Notice" shall have the meaning specified
in paragraph 8(a)(vi)(B).
(o) The term "Controlling Shareholders" shall have the meaning
specified in paragraph 5(e)(ii).
(p) The term "Damages" shall have the meaning specified in paragraph
7(a).
(q) The term "Defense Conditions" shall have the meaning specified in
paragraph 7(c)(i).
(r) The term "Disclosure Schedule" shall have the meaning specified in
paragraph 5(a).
(s) The term "Distribution Business" shall have the meaning specified
in the Recitals.
(t) The term "Distribution Agreements" shall have the meaning
specified in paragraph 2(b).
(u) The term "Environmental Laws" shall have the meaning specified in
paragraph 5(k).
(v) The term "Employee Benefit Plan" shall have the meaning specified
in paragraph 5(j).
(w) The term "Escrow Agent" means Xxxxx & Silberstein, LLP, as escrow
agent.
(x) The term "Escrow Agreement" shall have the meaning specified in
paragraph 3(b).
(y) The term "Escrow Amount" shall have the meaning specified in
paragraph 3(a)(iii).
(z) The term "Escrow Property" shall mean the total amount held in
escrow by the Escrow Agent pursuant to the terms of the Escrow Agreement.
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(aa) The term "Exclusive Distribution Rights" shall have the meaning
specified in paragraph 2(b).
(bb) The term "Fiduciary Out" shall have the meaning specified in
paragraph 8(a)(vi)(C).
(cc) The term "Governmental Authority" shall have the meaning
specified in paragraph 5(g).
(dd) The term "Home D Customers" shall have the meaning specified in
paragraph 8(a)(iv)(B).
(ee) The term "Increased Escrow Amount" shall have the meaning
specified in paragraph 3(b).
(ff) The term "Indemnification Notice" shall have the meaning
specified in paragraph 7(c).
(gg) The term "Information Statement" shall have the meaning specified
in paragraph 8(a)(viii).
(hh) The term "Initial Period" shall have the meaning specified in
paragraph 8(a)(vi)(B).
(ii) The term "Insider Secondary Creditors" shall have the meaning
specified in paragraph 3(a).
(jj) The term "Liabilities" shall include, without limitation, any
direct or indirect indebtedness, guaranty, endorsement, claim, loss, damage,
deficiency, cost, expense, obligation or responsibility, fixed or contingent,
accrued or unaccrued, known or unknown, xxxxxx or inchoate, asserted or
unasserted, conditional or unconditional, matured or unmatured, liquidated on
unliquidated, secured or unsecured, secondary or other.
(kk) The term "Lien" means claims, restrictions, charges, set-offs,
security interests, interests, Liabilities, adverse claims, defects in title and
any other encumbrance, interest or lien.
(ll) The term "Other Benefit Obligations" shall have the meaning
specified in paragraph 5(j).
(mm) The term "Person" means any natural person, corporation, division
of a corporation, partnership, trust, joint venture, association, firm, company,
limited liability company, estate, unincorporated organization or Governmental
Authority.
(nn) The term "Primary Creditors" shall have the meaning specified in
paragraph 8(a)(xiv).
(oo) The term "Proceeding" shall have the meaning specified in
paragraph 3(c)(xv).
(pp) The term "Products" shall have the meaning specified in paragraph
2(b).
(qq) The term "Proprietary Rights" means all patents, copyrights,
trademarks, service marks, trade names, slogans, and all applications therefor
(together with all amendments, improvements and/or enhancements to the
foregoing), trade secrets, customer lists, data bases, ideas, know-how, customer
contacts and other proprietary rights and information (whether or not registered
with any Governmental Authority), based, in whole or in part, or included in or
covering or relating to Seller's Distribution Business and the Capital Acquired
Assets, or products or services relating thereto, some of the foregoing being
more specifically described in Schedule 1(v) of the Disclosure Schedule. Such
schedule shall also identify all applicable registration numbers and pending
registrations.
(rr) The term "Purchaser" means Oak Beverages, Inc. ("Oak") and/or its
successors and assigns, including, without limitation, any designee appointed by
Oak pursuant to paragraph 16(j).
(ss) The term "Purchase Price" shall have the meaning specified in
paragraph 3(a).
(tt) The term "Related Party Claims" shall have the meaning specified
in paragraph 9(c)(iii).
(uu) The term "Saleable Inventory" shall have the meaning specified in
paragraph 4(a).
(vv) The term "SEC" shall have the meaning specified in paragraph
5(e)(iii).
(ww) The term "SEC Sign-Off" shall have the meaning specified in
paragraph 8(a)(viii).
(xx) The term "Secondary Creditors" shall have the meaning specified
in paragraph 8(a)(xiv).
(yy) The term "Secondary Creditors Escrow Amount" shall have the
meaning specified in paragraph 3(a).
(zz) The term "Secondary Creditors Release Amount" shall have
the meaning specified in paragraph 3(a).
(aaa) The term "Securities Laws" shall have the meaning specified in
paragraph 5(e).
(bbb) The term "Seller" means Capital Beverage Corporation and its
successors and assigns.
(ccc) The term "Seller Documents" shall have the meaning specified in
paragraph 5(b).
(ddd) The term "Seller Retained Liabilities" shall have the meaning
specified in paragraph 3(c).
(eee) The term "Sub-Distribution Agreement" means that certain
sub-distribution agreement between Oak and Seller, in a form attached hereto as
Exhibit A.
(fff) The term "Superior Offer" shall have the meaning specified in
paragraph 8(a)(vi)(C).
(ggg) The term "Surrender Letter" shall have the meaning specified in
paragraph 8(a)(xii).
(hhh) The term "Termination Fee" shall have the meaning specified in
paragraph 12(c).
(iii) The term "Territory" shall have the meaning specified in
paragraph 2(b).
(jjj) The term "Undisclosed Liability" shall have the meaning
specified in paragraph 9(c)(iii).
(kkk) The term "Unresolved Pre-Closing Claims" shall have the meaning
specified in paragraph 3(b).
(lll) The term "WARN Act" shall have the meaning specified in
paragraph 3(b)(xiii).
2. Purchase and Sale. (a) Upon the terms and subject to the conditions
hereof, at the Closing, Seller shall sell, convey, assign, transfer and set over
to Purchaser and Purchaser, in reliance upon Seller's representations and
warranties made herein, shall purchase and acquire from Seller on the Closing
Date, for the consideration hereinafter set forth, the following assets
(collectively, the "Capital Acquired Assets"):
(i) Exclusive Distribution Rights;
(ii) Proprietary Rights;
(iii) Seller's on-premises and off-premises customer lists; and
(iv) All point-of sale (P.O.S.) materials.
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(b) For purposes of this Agreement, the term "Exclusive Distribution
Rights" means the exclusive right, title, interest and claims (i) to purchase
directly from the breweries specified on Schedule 2(b) of the Disclosure
Schedule (collectively, the "Breweries") certain products marketed, sold,
imported or supplied by the Breweries as set forth on Schedule 2(b) of the
Disclosure Schedule (collectively, the "Products"), and to market, sell and
distribute at wholesale on an exclusive basis, the Products in the territory
specified on Schedule 2(b) of the Disclosure Schedule (the "Territory") arising
from or related to one or more oral and/or written distribution agreements and
any related commercial relationships between Capital on the one hand and each of
the Breweries on the other hand (collectively, the "Distribution Agreements")
including, without limitation, any right or claim Capital may have against the
Breweries or their respective successors and assigns; and (ii) in and to
supplier and customer based, intangible assets and related distribution rights
derived from marketing, selling, distributing and merchandising the Products in
the Territory.
3. Purchase Price; Credits; Assumption of Liabilities; Payment.
(a) In consideration of the sale of the Capital Acquired Assets by
Seller to Purchaser pursuant hereto and upon the terms and subject to the
conditions hereof, Purchaser shall pay Nine Million Three Hundred Thousand U.S.
Dollars ($9,300,000.00) (the "Purchase Price").
At Closing, the Purchase Price will be reduced by, and Purchaser will
receive a credit in, an aggregate amount equal to the sum of: twenty-five cents
($0.25) for each case of Products purchased by Oak and sold by Oak to customers
in the Territory pursuant to the Sub-distribution Agreement, plus fifty cents
($0.50) for each case of Products purchased by Oak pursuant to the
Sub-distribution Agreement, but not sold to such customers, plus One Dollar
($1.00) for each barrel of Products purchased by Oak pursuant to the
Sub-distribution Agreement, and sold by Oak to customers in the Territory, plus
Two Dollars ($2.00) for each barrel of Products purchased by Oak pursuant to the
Sub-distribution Agreement, but not sold to such customers, all pursuant to the
Sub-Distribution Agreement, in accordance with its terms. In addition, at
Closing, the Purchase Price will be reduced by, and Oak will receive a credit at
Closing in, an amount equal to: (i) to all costs and expenses incurred by Oak on
account of Oak's redemption, collection and handling of all of the empty
beverage containers of Products under the Bottle Xxxx due to Capital's failure
to do so in accordance with the provisions of the Business Plan; and (ii) the
costs and expenses incurred by Oak on account of Oak's redemption, collection
and handling of empty beverage containers of Products under the Bottle Xxxx
during the first thirty (30) days after the effective date of the
Sub-Distribution Agreement, but only to the extent such costs and expenses
exceed Ten Thousand Dollars (US $10,000.00). The amounts of credits specified in
this paragraph 3(a) will be reasonably substantiated by Oak.
Subject to these credits, and the adjustment set forth in paragraph
3(b) below, the Purchase Price shall be paid as follows:
(i) by wire transfer to the account of the Escrow Agent as
specified by the Escrow Agent, as escrow agent, in the aggregate principal
amount necessary to pay and satisfy in full the claims of all the Primary
Creditors and Secondary Creditors (each as defined in paragraph 8(a)(xiv)), as
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determined pursuant to paragraph 8(a)(xiv), less the initial Secondary Creditor
Release Amount (as hereinafter defined) made by Purchaser pursuant to paragraph
3(a); and
(ii) by wire transfer to the account specified by Seller, or by
certified or bank check drawn on a New York clearing house bank, payable to the
order of Seller, in the aggregate principal amount of Seven Million Eight
Hundred Thousand Dollars ($7,800,000.00) minus the amount of credits specified
in paragraph 3(a), and the amount wired in the account of the Escrow Agent as
specified in paragraph 3(a)(i) (the aggregate amounts payable pursuant to
paragraphs 3(a)(i) and 3(a)(ii) are collectively referred to as the "Cash
Portion"); and
(iii) by wire transfer to the account specified on Schedule
3(a)(iii) of the Disclosure Schedule, or by certified or bank check drawn on a
New York clearinghouse bank, payable to the order of Escrow Agent, as escrow
agent, in the aggregate principal amount of One Million Five Hundred Thousand
Dollars ($1,500,000.00) (the "Escrow Amount").
Notwithstanding paragraph 3(a)(i), Seller may elect to have a
portion of the Purchase Price paid by instructing Purchaser to remit payments
directly to any or all Primary Creditors or certain Secondary Creditors
(excluding only "Insider Secondary Creditors" (as defined below)), as and for
payment and satisfaction in full of the claims of such Primary Creditors and
Secondary Creditors. In such event, Seller shall give Purchaser at least three
(3) business days prior written notice setting forth that: (i) it requests
Purchaser remit, as part of the Purchase Price, payments toward satisfaction in
full of the claims of certain Primary Creditors and Secondary Creditors, (ii)
the name and address of such Primary Creditors and Secondary Creditors, (iii)
the amounts necessary to satisfy in full the claim of such Primary Creditors and
Secondary Creditors, and (iv) payoff letters, final invoices or statements
(including account numbers, if applicable) issued by such Primary Creditors and
Secondary Creditors, and verified by Seller as to the total outstanding balance
due to such Primary Creditors and Secondary Creditors. Purchaser will thereupon
bring to the Closing certified or bank checks payable to such Primary Creditors
and Secondary Creditors, in the amounts represented by Seller as required to
satisfy in full the claim of the Primary Creditors and Secondary Creditors, for
which such respective payments are to be made. Promptly after the Closing Date,
Seller will submit documentary evidence to Purchaser as proof of satisfaction of
the claims of such Primary Creditors and Secondary Creditors, to the reasonable
satisfaction of Purchaser. For purposes of this Agreement, an "Insider Secondary
Creditor" is a shareholder, officer, director, affiliate, agent or
representative of the Seller.
The Escrow Agent will disburse the amount of funds received pursuant to
paragraph 3(a)(i) as follows:
(A) at the Closing, Escrow Agent shall pay all amounts then due and
owing to each of the Primary Creditors as specified on the creditors list as set
forth on Schedule 8(a)(xiv) of the Disclosure Schedule (as updated pursuant to
paragraph 8(a)(xiv)) (other than the Primary Creditors that were paid at Closing
by checks remitted by Purchaser as specified above). Each of Purchaser and
Seller will provide Escrow Agent with a joint written instruction to that
effect, as more particularly specified in paragraph 10(b)(vii); and
(B) it is the intention of the parties that the amounts to be held in
escrow by the Escrow Agent for the payment and satisfaction of the claims of all
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of the Secondary Creditors, pursuant to paragraph 3(a)(i) (the "Secondary
Creditors Escrow Amount") be released in twenty-five percent (25%) increments
(the "Secondary Creditors Release Amount") to Seller, in trust, solely for the
purpose of providing Seller with the ease and flexibility of promptly settling
and satisfying in full the claims of all of the Secondary Creditors.
Accordingly, and notwithstanding paragraph 3(a)(i), Purchaser will pay at
Closing, as part of the Purchase Price, an initial Secondary Creditors Release
Amount, directly to Purchaser. After the Closing, and provided Seller presents
to Purchaser proof to the reasonable satisfaction of Purchaser of the
satisfaction of the claims of the Secondary Creditors for which it received the
initial Secondary Creditors Release Amount at Closing, and of the claims of the
Secondary Creditors which Purchaser directly paid at Closing, if any, pursuant
to Seller's instructions, Purchaser will authorize the Escrow Agent to release
the next Secondary Creditors Release Amount to the Seller, in trust, in
accordance with the terms of this Agreement. Seller will use such Secondary
Creditors Release Amount to pay at least twenty-five percent (25%) of the
aggregate claims of all the Secondary Creditors as specified on Schedule
8(a)(xiv) of the Disclosure Schedule (as updated pursuant to paragraph
8(a)(xiv)), all subject to and in accordance with the terms and provisions of
the Escrow Agreement.
Upon presentation by Seller to Purchaser of proof to the reasonable
satisfaction of Purchaser of: (i) the satisfaction of the claims of the
Secondary Creditors paid by Purchaser directly at Closing, if any, and (ii) that
not less than fifty percent (50%) of the aggregate claims of Secondary Creditors
have been paid and satisfied in full, Purchaser will authorize Escrow Agent to
release the next Secondary Creditors Release Amount to the Seller.
With respect to such next Secondary Creditors Release Amount, Seller shall
remit payments toward the satisfaction in full of the claims of such other
Secondary Creditors in accordance with the procedures set forth in this
paragraph 3(a)(iii)(B). This procedure shall be repeated until the aggregate of
all claims of Secondary Creditors have been paid and satisfied in full, as
established by proof to the reasonable satisfaction of Purchaser. In any event,
all claims of Secondary Creditors shall be paid and satisfied in full within
ninety (90) days after the Closing Date. To the extent there are any funds
remaining in escrow on account of claims of Secondary Creditors after ninety
(90) days, such funds will be released to Seller upon the earlier of: (i) the
presentation to Purchaser of proof to the reasonable satisfaction of Purchaser
that the aggregate of all claims of Secondary Creditors have been paid and
satisfied in full; or (ii) twelve (12) months after the Closing Date, provided
that no claim of any Secondary Creditors has been made, asserted, alleged or
instituted against Purchaser for which a portion of the Purchase Price is held
in escrow by the Escrow Agent as security for the payment of Secondary Creditors
pursuant to paragraph 3(a)(i).
In the event any Secondary Creditors Release Amount exceeds the amounts
expended by Seller to pay and satisfy in full twenty-five percent (25%) of the
aggregate claims of all Secondary Creditors for which it has been released,
Seller will be entitled to retain the difference thereof.
(b) In the event that third party claims are asserted, alleged or
instituted in writing against Purchaser during the period commencing on the date
hereof and ending on the Closing Date arising out of, relating to, or resulting
from, Purchaser entering into this Agreement or the Sub-Distribution Agreement
8
or the transactions contemplated thereunder or hereunder, and those claims
remain unsatisfied as of the Closing Date (the "Unresolved Pre-Closing Claims"),
then the Cash Portion shall be reduced, and the Escrow Amount shall be
increased, each by an amount equal to the amount of the Unresolved Pre-Closing
Claims (the "Increased Escrow Amount"), provided however, that the Escrow Amount
shall not be increased based upon claims asserted against Purchaser that are (i)
claims for personal injuries (except product liability claims) resulting from
Purchaser's negligence; (ii) labor or employment related claims by Purchaser's
employees against Purchaser due to Purchaser's acts or omissions but
specifically excluding (among other things) claims relating to acts or omissions
of Seller or Seller's employees; or (iii) claims resulting from Purchaser's
gross negligence. Seller shall use reasonable best efforts to resolve and
satisfy such Unresolved Pre-Closing Claims (which resolution may occur following
the Closing Date). Upon prior written notice by Seller to Purchaser and
Purchaser's counsel, and upon the prior written consent of Purchaser, Seller
shall be permitted to utilize the Increased Escrow Amount but only as follows:
Seller will be permitted to utilize only such portion of the Increased Escrow
Amount as is necessary to resolve and satisfy a particular Unresolved
Pre-Closing Claim, not to exceed the portion of the Increased Escrow Amount
attributable to that particular claim and only to the extent Seller provides
Purchaser with reasonable documentation evidencing that such claim is satisfied.
Purchaser will give such prior written consent provided that: (x) such amount
does not exceed the portion of the Increased Escrow Amount attributable to that
particular claim, and (y) the Escrow Agent shall have in its possession, prior
to the payment of such funds, a full general release signed by the Unresolved
Pre-Closing Claimant releasing all claims against Seller and Purchaser related
to the Unresolved Pre-Closing Claim in question, which Escrow Agent will
promptly provide to Purchaser. The Escrow Amount will be held and disbursed
pursuant to the terms of an escrow agreement between Purchaser, Seller and the
Escrow Agent (the "Escrow Agreement"), a form of which is attached hereto as
Exhibit B.
(c) Seller acknowledges and agrees that Purchaser is acquiring the
Capital Acquired Assets hereunder without any assumption of any obligations or
Liabilities of Seller or the Distribution Business (collectively, "Seller
Retained Liabilities") of any kind, whether such Liabilities or obligations
relate to payment, performance or otherwise, it being understood that all of the
Seller Retained Liabilities shall remain the sole responsibility of, and shall
be retained, paid, performed, and/or discharged solely by, the Seller.
Accordingly, Purchaser shall not be deemed to have assumed, nor shall
Purchaser be liable or responsible for, any of the Seller Retained Liabilities.
Notwithstanding anything to the contrary contained herein, and without limiting
the foregoing, the following shall include, without limitation, "Seller Retained
Liabilities" for the purposes of this Agreement:
(i) any Liability or obligation of the Seller arising under this Agreement;
(ii) any Liability or obligation arising from any product liability claim
in respect of the products sold by Seller prior to the Closing Date;
(iii) any Liability or obligation for any Taxes, including without
limitation (1) any Taxes arising as a result of Seller's operation of the
Distribution Business or ownership of the Capital Acquired Assets before the
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Closing Date, (2) any Taxes that will arise as a result of the sale of the
Capital Acquired Assets pursuant to this Agreement, and (3) any liability for
deferred Taxes of any nature;
(iv) all personal property sales and use taxes assessed by any Governmental
Authority with respect to Seller's operation of the Distribution Business or
ownership of the Capital Acquired Assets to the extent such assessment is
allocable to any period prior to and including the Closing Date;
(v) any cost, damage, expense, Liability, obligation, or other
responsibility arising from or under any federal, state, local or foreign law
(including common law), statute, code, ordinance, rule, regulation or other
requirement relating to the Environmental Laws;
(vi) all Liabilities and obligations of Seller under the Bottle Xxxx.
(vii) any Liability or obligation arising under any written or oral
agreement that is not expressly transferred to Purchaser under this Agreement;
(viii) any Liability or obligation relating to Employee Benefit Plan and
Other Benefit Obligations;
(ix) all Liabilities and obligations of Seller arising under the Collective
Bargaining Agreement;
(x) any Liability or obligation under any employment, severance, retention
or termination agreement with any employee of Seller;
(xi) any Liability or obligation arising out of or related to any employee
grievance commenced or relating to periods prior to the Closing Date whether or
not the affected employees become employees of Purchaser;
(xii) all Liabilities and obligations of Seller under the Distribution
Agreements;
(xiii) all Liabilities and obligations of Seller under the Workers
Adjustment and Retaining Notification Act, as amended ("WARN Act");
(xiv) any Liability or obligation to distribute to the shareholders of
Seller or otherwise apply all or any part of the consideration received
hereunder;
(xv) any Liability or obligation arising out of any existing action,
arbitration, audit, hearing, claim, investigation, litigation, or suit (whether
civil, criminal, administrative, investigative, or informal) commenced, brought,
conducted, or heard by or before, or otherwise involving, any Governmental
Authority or arbitrator ("Proceeding") whether or not set forth in any exhibit
or Schedule delivered to Purchaser, or any Proceeding arising out of, or
relating to, any occurrence or event happening before the Closing Date;
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(xvi) any Liability or obligation arising out of or resulting from Seller's
non-compliance with any Applicable Laws, including without limitation,
Securities Laws, or any order, injunction, judgment, decree, ruling, assessment
or arbitration award;
(xvii) any Liability or obligation based upon acts or omissions of Seller
occurring after the Closing Date;
(xviii) any withdrawal liability resulting from or arising out of the
Collective Bargaining Agreement;
(xix) any early termination costs, expenses, or other Liabilities resulting
from or arising out of the withdrawal from the Workers Compensation Group
Self-Insurance Plan; and
(xx) any other Liability or obligation of Seller, including any Liability
or obligation directly or indirectly arising out of or relating to the operation
of the Distribution Business or ownership of the Capital Acquired Assets prior
to the Closing Date, whether contingent or otherwise, fixed or absolute, known
or unknown, matured or unmatured, or present, future or otherwise.
(c) This Agreement does not constitute an assignment of the
Distribution Agreements to Purchaser nor a delegation of Seller's duties
thereunder. Accordingly, Seller hereby acknowledges and agrees that Purchaser
has not assumed, nor shall Purchaser be liable for, any obligations or
liabilities arising out of or relating to any of the Distribution Agreements.
(d) The Capital Acquired Assets shall be transferred, assigned,
conveyed and delivered to Purchaser free and clear of any and all Liens.
(e) The Purchase Price to be paid hereunder for the transfer of the
Capital Acquired Assets shall be allocated by Purchaser and Seller as set forth
on Schedule 3(e) of the Disclosure Schedule. Purchaser and Seller shall reflect
the Capital Acquired Assets upon their respective books and records for tax
reporting purposes in accordance with such schedule and shall file all tax
returns in accordance with and based upon such schedule. Purchaser and Seller
shall not take a position that is inconsistent with such schedule in any
proceeding or investigations before any court, arbitrator or Governmental
Agency.
4. Purchase of Inventory from Seller; Assumption of Open Orders.
(a) Within ten (10) days following the Closing Date, Purchaser shall
purchase from Seller and Seller shall sell to Purchaser all of Seller's Saleable
Inventory of Products. The purchase price for Saleable Inventory is Seller's
"laid in cost" for the respective Products. "Saleable Inventory" means undamaged
Products (including, without limitation, packaging) that are within 90 days of
the respective Brewers' currently published date code criteria and applicable
freshness policies. Saleable Inventory will be delivered f.o.b. Seller's
Brooklyn plant, loaded onto Purchaser's trucks, at which time Purchaser will pay
Seller for same as it is delivered. Saleable Inventory will be delivered to
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Purchaser free from any and all Liens. All payments for Saleable Inventory will
be made by company check. "Laid in cost" means the price paid by Seller for the
Products in question for delivery at the applicable f.o.b. shipping points plus
freight charges incurred by Seller in transporting the Products from such
delivery point to its warehouse plus all state or local taxes paid by Seller
with respect to the purchase of such Product. Saleable Inventory will be
reasonably determined by Purchaser pursuant to a physical inventory to be
performed by Purchaser and Seller after business hours on a date mutually agreed
upon by them.
(b) As of the Closing Date, Seller shall assign to Purchaser, at
Purchaser's option, all of Seller's outstanding purchase orders for Products not
yet delivered by the respective Xxxxxx; Purchaser will pay such assigned
invoices when due.
5. Representations and Warranties of Seller. Seller hereby represents and
warrants to Purchaser that:
(a) Corporate Existence and Rights. Seller is a corporation validly
organized, duly existing and in good standing under the laws of the jurisdiction
of its incorporation and as a foreign corporation in each jurisdiction where the
conduct of Seller's Distribution Business requires Seller to be so qualified,
all of which jurisdictions are listed on Schedule 5(a) of the disclosure
schedule (the "Disclosure Schedule"). Seller has the power and authority and the
legal right to own and operate its Distribution Business, to own the Capital
Acquired Assets and to lease the property it operates and to conduct the
business in which it is currently engaged. Seller does not currently have any
subsidiaries nor does it have any interest in any other Person not disclosed on
Schedule 5(a) of the Disclosure Schedule.
(b) Corporate Power, Authorization and Enforceable Obligations. Seller
has the power, authority and legal right to execute and deliver this Agreement
and to consummate the transactions contemplated hereby and has taken all
necessary corporate action duly authorizing the execution and delivery of this
Agreement and the transactions contemplated hereunder, assuming that the
Controlling Shareholders execute and deliver the consents specified in paragraph
8(a)(vii), and subject to the Seller's compliance with Regulation 14C of the
Securities Exchange Act of 1934, as amended. Assuming that the Controlling
Shareholders execute and deliver the consents specified in paragraph 8(a)(vii),
and subject to the Seller's compliance with Regulation 14C of the Securities
Exchange Act of 1934, as amended, all shareholder action will be taken to duly
authorize the execution and delivery of this Agreement and the transactions
contemplated hereunder. This Agreement, including the Disclosure Schedule have
been, and the other documents, instruments and certificates required to be
delivered by Seller pursuant to paragraph 10(b) hereof (collectively, the
"Seller Documents") will be, duly executed and delivered on behalf of Seller by
duly authorized officers of Seller, and this Agreement constitutes, and the
Seller Documents when executed and delivered will constitute, a legal, valid and
binding obligation of Seller, enforceable against it in accordance with their
respective terms.
(c) Validity of Contemplated Transactions, etc. Except as otherwise
expressly set forth on Schedule 5(c) of the Disclosure Schedule, the execution
and delivery and performance of this Agreement and the Seller Documents by
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Seller, and the consummation of the transactions contemplated hereby and
thereby, do not and will not violate, conflict with or result in the breach of
any term, condition or provision of, or require the consent of or filing with
any other Person under (i) any Applicable Laws to which Seller is subject, (ii)
any judgment, order, writ, injunction, decree or award of any court, arbitrator
or Governmental Authority which is applicable to Seller, (iii) the articles of
incorporation, charter documents or by-laws of Seller or any securities issued
by Seller, or (iv) any mortgage, indenture, agreement, contract, commitment,
lease or other instrument, document, agreement or understanding, oral or
written, to which Seller is a party, by which Seller may have rights or by which
any of the Capital Acquired Assets may be bound or affected, or give any party
with rights thereunder the right to terminate, modify, accelerate or otherwise
change the existing rights or obligations of Seller thereunder. Except as
otherwise expressly set forth on Schedule 5(c) of the Disclosure Schedule, no
authorization, approval or consent of, and no registration or filing with or
other act in respect of, any other Person is required in connection with the
execution, delivery or performance of this Agreement or the Seller Documents by
Seller or the consummation of the transactions contemplated hereby and thereby.
The execution, and delivery and performance of this Agreement or the Seller
Documents by Seller and the Controlling Shareholders do not and will not result
in or require the creation or imposition of any Lien on the Capital Acquired
Assets or any portion thereof.
(d) No Interest In Other Entities; No Third Party Options. Except for
interests in Persons described in Schedule 5(d) of the Disclosure Schedule, no
shares of any corporation or any ownership or other investment interest, either
of record, beneficially or equitably, in any association, partnership, joint
venture or other legal entity are included in the Capital Acquired Assets. As of
the date of this Agreement there are no, and as of the Closing Date, there will
be no existing agreements, contacts, options, commitments or rights with, of or
to any Person to acquire any of the Capital Acquired Assets or rights included
in such assets or any interest therein. Purchaser will not incur any liability,
cost or expense in connection with the consummation of the transactions
contemplated by this Agreement to any third party with whom Seller or its agents
or representatives have had discussions or negotiations regarding the sale,
transfer, assignment or disposition of all or a portion of the Capital Acquired
Assets or the Distribution Business.
(e) Capitalization. (i) The authorized capital stock of the Seller
(the "Capital Stock") consist of Twenty Million (20,000,000) shares of common
stock, with a par value of $0.001 per share, of which 3,792,045 shares are
issued and outstanding, and One Million (1,000,000) shares of preferred stock,
with a par value of $0.01 per share, of which none are issued and outstanding.
Except as set forth in Schedule 5(e) of the Disclosure Schedule, there are no
outstanding subscriptions, options, convertible security rights (pre-emptive or
otherwise), warrants, calls or agreements relating to any shares of Capital
Stock. Except as set forth in Schedule 5(e) of the Disclosure Schedule, and
other than the Capital Stock, no other equity or other security of the Seller is
issued and outstanding. No legend or other reference to any purported Lien or
transfer restrictions appear upon any certificate representing the stock or any
of the other capital stock of the Seller. The stock has been duly authorized and
validly issued, is fully paid and non-assessable, was not issued in violation of
the terms of any agreement binding on the Seller and was issued in compliance
with the Seller's certificate of incorporation and by-laws. Except as otherwise
set forth in Schedule 5(e) of the Disclosure Schedule, there are no agreements
relating to the issuance, sale or transfer of any capital stock or other
securities of the Seller including, without limitation, subscriptions, options,
13
warrants, calls, commitments, debentures or any other rights of any character to
purchase, convert into or otherwise acquire any shares of capital stock or other
securities of the Seller. None of the outstanding Capital Stock of the Seller
was issued in violation of the Securities Act of 1933, as amended, and any other
applicable federal or state securities laws and the rules and regulations
promulgated thereunder (collectively, the "Securities Laws"). The Seller does
not own, nor does it have any agreement to acquire, any capital stock or other
securities, or any direct or indirect equity or other interest in or to, any
other Person or business.
(ii) Xxxxxxx Xxxxxx, Xxxxxxx Xxxxxx, Xxxx Xxxxxxxxxxx, Xxxxxxx
Xxxxxxxxxxx, Xxxxxx Xxxxxxxxxxx and Xxxxx Xxxxxxxxxxx (collectively, the
"Controlling Shareholders") are the record and beneficial owners of 50.1% of all
of the issued and outstanding Capital Stock of the Seller, free and clear of all
Liens. Provided the Controlling Shareholders vote in favor of consummating the
transactions contemplated hereby, Seller is not and will not be required, under
any circumstances, to solicit proxies from its remaining shareholders in order
to execute and perform this Agreement and consummate the transactions
contemplated hereby. Instead, Seller will only be required to file an
Information Statement in order to obtain requisite shareholder approval of this
Agreement and the transactions contemplated hereunder.
(iii) The filing and distribution of the Information Statement,
without initiating a proxy solicitation process, is sufficient to obtain the
requisite stockholder approval to execute and deliver this Agreement and to
consummate the transactions contemplated hereunder, and is in accordance with
the Securities Laws, the regulations of the U.S. Securities and Exchange
Commission (the "SEC"), and the laws of the State of Delaware.
(iv) In connection with the filing and distribution of the
Information Statement, Seller acknowledges and agrees that Purchaser has no
obligation to furnish any (A) financial information concerning Purchaser or any
of its shareholders, or (B) any information which Purchaser, in good faith,
believes could put Purchaser at a competitive disadvantage. Purchaser will have
no liability for failing to provide such information, and Purchaser will have
the right to terminate this Agreement pursuant to paragraph 12(a)(x) in the
event the SEC requests or requires Purchaser to furnish such information.
(f) Title to Properties. Condition of Tangible Assets. Except as set
forth in Schedule 5(f) of the Disclosure Schedule, Seller is the sole and
exclusive legal and beneficial owner of the Capital Acquired Assets and has and
will transfer to Purchaser at the Closing, good, valid and marketable title in
and to such assets, free and clear of any and all Liens. The asset sale
contemplated hereby will, on the Closing Date, vest in Purchaser all right,
title, and interest in and to the Capital Acquired Assets, free and clear of any
and all Liens created by, or imposed upon, Seller or any of its assets.
(g) Compliance With Laws. Except as otherwise specified in Schedule
5(g) of the Disclosure Schedule: (i) as of the date of this Agreement, Seller
is, and as of the Closing Date will be, in full compliance with all federal,
state and local laws, rules, regulations and ordinances (collectively,
"Applicable Laws") that are or were applicable to it or to the conduct or
operation of the Distribution Business or the ownership or use of any of the
Capital Acquired Assets including, without limitation, the Securities Laws and
14
Environmental Laws; (ii) no event has occurred or circumstance exists that (with
or without notice or lapse of time) (A) may constitute or result in a violation
by the Seller of, or a failure on the part of the Seller to comply with, any
Applicable Law, or (B) may give rise to any obligation on the part of the Seller
to undertake, or to bear all or any portion of the cost of, any remedial action
of any nature; (iii) the Seller has not received any notice or other
communication (whether oral or written) from any applicable federal, state and
local governmental, public, or quasi public authorities, bodies, officials and
agencies (hereinafter collectively referred to as a "Governmental Authority") or
any other Person regarding (A) any actual, alleged, possible, or potential
violation of, or failure to comply with, any Applicable Laws, or (B) any actual,
alleged, possible, or potential obligation on the part of the Seller to
undertake, or to bear all or any portion of the cost of, any remedial action of
any nature; and (iv) Seller has obtained and holds all necessary licenses,
permits and other consents, authorizations and approvals (assuming the
Controlling Shareholders vote in favor of the transactions contemplated under
this Agreement as specified in paragraph 8(a)(vii)) (collectively,
"Authorizations") which are necessary to (A) execute this Agreement and
consummate the transactions contemplated hereby, and (B) conduct the
Distribution Business as now and previously conducted or to own the Capital
Acquired Assets. A list of Authorizations are specified on Schedule 5(g) of the
Disclosure Schedule. Seller is not in default nor has it received any notices of
any claim or default with respect to such Authorizations. All of such
Authorizations are renewable by their terms or in the ordinary course of
business.
(h) INTENTIONALLY OMITTED
(i) Labor Matters. Except for the Collective Bargaining Agreement,
Seller is not a party to any other collective bargaining agreement, no such
agreement determines the terms and conditions of employment of any employee of
Seller, no collective bargaining agent has been certified as a representative of
any of the employees of Seller, and no representation campaign or election is
now in progress with respect to any of the employees of Seller. Seller has
complied in all respects to Applicable Laws relating to employment, equal
employment opportunity, non-discrimination, immigration, wages, hours, benefits,
collective bargaining, payment of Social Security and similar taxes,
occupational safety and health and plant closings. Except as set forth in
Schedule 5(i) of the Disclosure Schedule, Seller is not liable for the payment
of any compensatory damages, taxes, fines, penalties, or other amounts, however,
designated, for failure to comply with any of the foregoing Applicable Laws.
Except as set forth in Schedule 5(i) of the Disclosure Schedule, there has not
been, there is not presently pending or existing, and there is not threatened,
(a) any strike, slowdown, picketing, work stoppage, or employee grievance
process, (b) any Proceeding against or affecting Seller relating to the alleged
violation of any Applicable Laws pertaining to labor relations or employment
matters, including any charge or complaint filed by an employee or union with
the National Labor Relations Board, the Equal Employment Opportunity Commission,
or any comparable Governmental Authority, organizational activity, or other
labor or employment dispute against or affecting Seller or its premises, or (c)
any application for certification of a collective bargaining agent. Except as
set forth in Schedule 5(i) of the Disclosure Schedule, no event has occurred or
circumstances exist that could provide the basis for any work stoppage or other
labor dispute. There is no lock-out of any employees by Seller, and no such
action is contemplated by Seller.
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Except as set forth in Schedule 5(i) of the Disclosure Schedule, the
Collective Bargaining Agreement: (i) is in full force and effect and is valid,
binding and enforceable against the parties thereto in accordance with its
terms; (ii) Seller is, and to the best of Seller's knowledge after due inquiry
all other parties thereto are, in compliance with the provisions thereof; (iii)
Seller is, and to the best of Seller's knowledge, each of the other parties to
such agreements are in compliance with their respective obligations thereunder
and Seller is not, and to the best of Seller's knowledge no other party thereto
is, in default in the performance, observance or fulfillment of any material
obligation, covenant or condition contained therein and no event has occurred
which with or without the giving of notice or lapse of time, or both, would
constitute a default thereunder. Furthermore, to the best of Seller's knowledge,
and except as set forth in Schedule 5(i) of the Disclosure Schedule, the
Collective Bargaining Agreement does not contain any contractual requirement
with which there is a reasonable likelihood that Seller will be unable to
comply. Seller has delivered a true and correct copy of the Collective
Bargaining Agreement and the Collective Bargaining Agreement has not been
assigned, modified, supplemented or amended except as expressly specified on
Schedule 5(i) of the Disclosure Schedule.
(j) Employee Benefit Plans and Arrangements. Except as set forth on
Schedule 5(j) of the Disclosure Schedule, there are no Employee Benefit Plans
(as defined below) or Other Benefit Obligations (as defined below) of which
Seller is or was a Plan Sponsor, or to which Seller contributes or has
contributed, or in which Seller otherwise participates or maintains or has
participated or maintained or under which Seller has any Liability or
obligation.
For purposes hereof, the term "Employee Benefit Plan" has the meaning
specified in Section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), and shall include, without limitation, all qualified
and non-qualified plans under Section 401(a) of the IRC and all pension plans
within the meaning of ERISA ss. 3(3), together with pension plans that are
subject to Title IV of ERISA, 29 U.S.C. ss.1301 et seq. The term "Employee
Benefit Plan" shall also be deemed to include multi-employer plans within the
meaning specified in ERISA ss. 3(37)A and voluntary employees' beneficiary
associations under IRC ss. 501(c)(9). The term "Plan Sponsor" has the meaning
specified in ERISA ss. 3(16)(B). The term "Other Benefit Obligations" means all
obligations, arrangements, employee stock-option or profit sharing plans, health
care plans or benefits, policies or customary practices, whether or not in
writing or legally enforceable, to provide benefits, other than salary, as
compensation for services rendered, to present or former directors, employees,
or agents, or any beneficiary, dependent or assignee of any of them, other than
obligations, arrangements and practices that are Employee Benefit Plans. "Other
Benefit Obligations" include, without limitation, consulting agreements under
which the compensation paid does not depend upon the amount of service rendered,
sabbatical policies, severance payment policies, incentive, bonus and deferred
compensation policies, vacation and holiday policies and fringe benefits within
the meaning of IRC ss. 132.
(k) Certain Contingencies. No Governmental Authority has notified
Seller with respect to Seller's Distribution Business or the Capital Acquired
Assets, nor, to the best of Seller's knowledge after due inquiry, has any
Governmental Authority during the preceding five (5) years taken any steps to
16
investigate or inquire about Seller, the Distribution Business or the Capital
Acquired Assets, other than on account of routine inspections which did nor
result in any notice of violations.
Except as specified in Schedule 5(k) of the Disclosure Schedule,
Seller does not, nor has it ever, generated, transported, stored, disposed of or
treated hazardous wastes or substances within the meaning of Environmental Laws.
There has been no release or, to the knowledge of the Seller, any threat of
release, of any such hazardous materials, waste or substances at or from any
facilities of Seller or from or by any other properties and assets (whether
real, personal, or mixed) in which the Seller has or had an interest, or to the
knowledge of Seller, any geologically or hydrologically adjoining property.
Seller does not know of, and has never received any notice of, any potential
liability of Seller or the Distribution Business under the Applicable Laws
concerning environmental related issues and Liabilities, including without
limitation, Comprehensive Environmental Response, Compensations and Liability
Act of 1980, as amended, or any comparable law, rule, ordinance or regulation,
or any other Applicable Laws concerning hazardous wastes or substances
(collectively, "Environmental Laws").
(l) Litigation. Except for matters specified in Schedule 5(l) of the
Disclosure Schedule, there are no legal actions, suits, governmental proceedings
or investigations pending or, to the best of Seller's knowledge, threatened
against or affecting Seller, Seller's Distribution Business or the Capital
Acquired Assets, and neither Seller nor the Capital Acquired Assets are subject
to any order, writ, injunction, judgment, decree or award of any court,
arbitrator or Governmental Authority. Seller is not a party to or subject to the
provisions of any judgment, order, writ, injunction, decree, permit or award of
any court, arbitrator or Governmental Authority which may adversely affect the
transactions contemplated hereby.
(m) Taxes. As of the date hereof and on the Closing Date, all federal,
state, local and foreign tax returns, reports, statements and other similar
filings required to be filed by Seller (the "Tax Returns") with respect to any
federal, state, local or foreign taxes, assessments, interest, penalties,
deficiencies, fees and other governmental charges or impositions (including
without limitation all income tax, capital gains tax, value-added tax, estate
tax, unemployment compensation, social security, payroll, sales and use, excise,
privilege, property, ad valorem, franchise, license, school and any other tax or
similar governmental charge or imposition under laws of the United States or any
state or municipal or political subdivision thereof or any foreign country or
political subdivision thereof) (the "Taxes") have been filed with the
appropriate governmental agencies in all jurisdictions in which such Tax Returns
are required to be filed, and all such Tax Returns properly reflect the
Liabilities of Seller for Taxes for the periods, property or events covered
thereby. Except as set forth in Schedule 5(m) of the Disclosure Schedule, all
Taxes, including without limitation those which are called for by the Tax
Returns, or heretofore or hereafter claimed to be due by any taxing authority
from Seller, have been properly accrued or paid. The accruals for Taxes are
adequate to cover the tax Liabilities of Seller with respect to the Distribution
Business as of the date hereof. Except as set forth in Schedule 5(m) of the
Disclosure Schedule, Seller has not received any notice of assessment or
proposed assessment in connection with any Tax Returns and there are not pending
tax examinations of or tax claims asserted against Seller or any of its assets
or properties. Seller has not extended, or waived the application of, any
statute of limitations of any jurisdiction regarding the assessment or
collection of any Taxes. Except as set forth in Schedule 5(m) of the Disclosure
Schedule, there are no tax liens (other than any lien for current taxes not yet
due and payable) on any of the assets or properties of Seller. Except as set
forth in Schedule 5(m) of the Disclosure Schedule, Seller has no knowledge of
any basis for any additional assessment of any Taxes. Except as set forth in
17
Schedule 5(m) of the Disclosure Schedule, Seller has made all deposits required
by law to be made with respect to employees' withholding and other employment
taxes, including without limitation the portion of such deposits relating to
taxes imposed upon Seller. Seller will also pay before the Closing Date all
sales and use taxes and all other Taxes then due and owing arising out of the
operation of the Distribution Business for all periods prior to the Closing
Date.
(n) Brokers and Finders. No Person has been authorized by Seller, or by
anyone acting on behalf of Seller, to act as broker, finder or in any other
similar capacity in connection with the transactions contemplated by this
Agreement in such a manner as to give rise to any valid claim against Purchaser
or Seller for any broker's or finder's fee or commission or similar type of
compensation.
(o) Distribution Rights. Except as set forth in the Sub-Distribution
Agreement, Seller has not sold, transferred, conveyed, assigned or set over any
of its right, title and interest in and to the Exclusive Distribution Rights, or
any portion thereof, to any Person. Except as set forth in the Sub-Distribution
Agreement, to Seller's knowledge, no Person other than Seller has any right,
title, interest, encumbrance or claim in or to the Exclusive Distribution
Rights. Except as set forth in the Sub-Distribution Agreement, and in Schedule
5(o) of the Disclosure Schedule, Seller holds the Exclusive Distribution Rights
and the Saleable Inventory free and clear of any Liens. Except as set forth in
the Sub-Distribution Agreement, Seller is not an agent of any of the Brewers,
has not appointed any sub-distributors and has not delegated any of its duties
in connection with the performance of its obligations under any of the
Distribution Agreements or in connection with the Exclusive Distribution Rights.
Seller is not a party to nor, to the best of its knowledge, threatened with, any
Proceeding related to the Exclusive Distribution Rights.
(p) Products. During the consecutive 12 calendar month period ending April
30, 2005, Seller distributed and sold at least 1,500,000 Case Equivalents of
Products in the Territory and, to the best of Seller's knowledge, those cases
were consumed within the Territory and not transshipped outside of the Territory
in any material respect. To the best of Seller's knowledge, all Products located
on the premises of Seller's customers comply with each respective Xxxxxx'x
currently published date code criteria and applicable freshness policies;
(q) Customer Reports. The information to be contained in the customer
reports it is providing to Purchaser pursuant to paragraph 10(b) of this
Agreement is true, complete and accurate in all material respects.
(r) Bankruptcy. Based upon the present financial condition of the Seller
and the reasonably foreseeable financial condition of the Seller between the
date hereof and the Closing Date, Seller presently does not intend to, and, in
the absence of a material change in Seller's financial condition will not take
any action to, commence an action or proceeding or take advantage of or file
under any federal or state insolvency statutes including, without limitation,
the United States Bankruptcy Code, seeking to have an order of relief entered
with respect to it, or seeking adjudication as a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, liquidation, dissolution or
other relief with respect to its debts, or make a general assignment for the
benefit of creditors, or consent to the appointment of a receiver, liquidator,
or similar official of all or substantially all of its assets. In the event of a
material change in Seller's financial condition which results in the filing of a
voluntary petition under Title 11 of the United States Code (the "Bankruptcy
18
Code"), Seller agrees that within twenty (20) days of such filing, it will
either file a motion under ss.363 of the Bankruptcy Code seeking bankruptcy
court approval of this Agreement and the ancillary agreements related hereto, to
sell the Capital Acquired Assets as contemplated hereby, or it will file a Plan
of Reorganization under ss.1121 of the Bankruptcy Code which provides for the
sale of the Capital Acquired Assets pursuant to the terms of this Agreement.
(s) Accuracy of Information. No information contained in the Disclosure
Schedule or Seller Documents contains any untrue statement of material fact or
omits any material fact necessary to make the statements therein not false or
misleading.
6. Representations and Warranties of Purchaser. Purchaser hereby makes the
following representations and warranties to Seller:
(a) Corporate Existence and Rights. Purchaser is a corporation validly
organized, duly existing and in good standing under the laws of the jurisdiction
of its incorporation and as a foreign corporation in each jurisdiction where the
conduct of its business requires Purchaser to be so qualified. Purchaser has the
power and authority and the legal right to own and operate its business, to
lease the property it operates and to conduct the business in which it is
currently engaged.
(b) Corporate Power, Authorization and Enforceable Obligations. Purchaser
has the power, authority and legal right to execute, deliver and perform this
Agreement and consummate the transactions contemplated hereby and has taken all
necessary corporate and shareholder action to duly authorize the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby. This Agreement has been, and the other documents, instruments and
certificates required to be delivered by Purchaser pursuant to paragraph 10(c)
(collectively, the "Purchaser Documents") will be, duly executed and delivered
on behalf of Purchaser by duly authorized officers of Purchaser, and this
Agreement constitutes, and the Purchaser Documents when executed and delivered
will constitute, a legal, valid and binding obligation of Purchaser, enforceable
against it in accordance with their respective terms.
(c) Validity of Contemplated Transactions, etc. The execution, delivery and
performance of this Agreement, and the Purchaser Documents by Purchaser, and the
consummation of the transactions contemplated hereby and thereby, do not and
will not violate, conflict with or result in the breach of any term, condition
or provision of, or require the consent of any other Person under (i) any
Applicable Laws to which Purchaser is subject, (ii) any judgment, order, writ,
injunction, decree or award of any court, arbitrator or Governmental Authority
which is applicable to Purchaser, (iii) the certificate of incorporation,
charter documents or by-laws of Purchaser or any securities issued by Purchaser,
or (iv) any mortgage, indenture, agreement, contract, commitment, lease or other
instrument, document, agreement or understanding, oral or written, to which
19
Purchaser is a party, by which Purchaser may have rights or by which any of its
assets may be bound or affected, or give any party with rights thereunder the
right to terminate, modify, accelerate or otherwise change the existing rights
or obligations of Purchaser thereunder. No authorization, approval or consent
of, and no registration or Bankruptcy Case with or other act in respect of, any
other Person is required in connection with the execution, delivery or
performance of this Agreement and the Purchaser Documents by Purchaser or the
consummation of the transactions contemplated hereby and thereby.
(d) Brokers and Finders. No Person has been authorized by Purchaser, or by
anyone acting on behalf of Purchaser, to act as broker, finder or in any other
similar capacity in connection with the transactions contemplated by this
Agreement in such a manner as to give rise to any valid claim against Seller or
Purchaser for any broker's or finder's fee or commission or similar type of
compensation.
(e) Financial Ability. The Purchaser currently has, and will have,
sufficient liquid assets to fund the Purchase Price at Closing.
7. Indemnifications. (a) From and after the Closing Date, Purchaser hereby
agrees to indemnify, protect, reimburse and hold harmless Seller and Seller's
shareholders, officers, directors, successors and assigns, and each of them
(hereinafter collectively referred to as the "Seller Group"), from and against
any and all Liabilities, damages, losses, obligations, penalties, claims,
actions, litigations, Proceedings, demands, defenses, judgments, suits, costs,
disbursements and expenses, including, but not limited to, reasonable attorneys'
fees and expenses, or diminution of value, whether or not involving a third
party claim (hereinafter collectively referred to as the "Damages") of
whatsoever kind and nature, imposed upon, incurred by or asserted or awarded
against any of the Seller Group directly or indirectly arising out of, relating
to or resulting from (i) Purchaser's breach of any agreement, covenant, term,
condition or provisions contained herein or Purchaser's failure to perform any
agreements, covenant, term, condition or provision on its part to be performed,
or (ii) Purchaser's misrepresentation or breach of any representation or
warranty made by Purchaser hereunder as if such representation or warranty were
made both on the date hereof and as of the Closing Date, or any material
misstatement or omission in any certificate or schedule delivered or caused to
be delivered by Purchaser pursuant to or in furtherance of the transactions
contemplated hereby.
(b) From and after the Closing Date, subject to the threshold set forth in
paragraph 7(f) below, Seller hereby agrees to indemnify, protect, reimburse and
hold harmless Purchaser and Purchaser's shareholders, officers, directors,
successors and assigns, and each of them (hereinafter collectively referred to
as the "Purchaser Group") from and against any and all Damages of whatsoever
kind and nature, imposed upon, incurred by or asserted or awarded against any of
the Purchaser Group directly or indirectly arising out of, relating to or
resulting from (i) any Liabilities or obligations of Seller including, without
limitation, the Seller Retained Liabilities; (ii) Seller's breach of any
agreement, covenant, term, condition or provision contained herein or Seller's
failure to perform any agreement, covenant, term, condition or provision on its
part to be performed hereunder; (iii) Seller's misrepresentation or breach of
20
any representation or warranty made by Seller hereunder as if such
representation or warranty were made both on the date hereof and as of the
Closing Date, or any misstatement or omission in any certificate, schedule,
application, exhibit, the Disclosure Schedule or any other document delivered or
caused to be delivered by Seller pursuant to or in furtherance of the
transactions contemplated hereby; (iv) Seller's breach of paragraph 8(a)(vii);
or (v) Damages to Purchaser caused by Seller's stockholders.
(c) A party making a claim for indemnification hereunder (hereinafter
referred to as the "Indemnified Party"), shall give the other party (hereinafter
referred to as the "Indemnifying Party") written notice of such claim within a
reasonable time from the actual discovery of same (the "Indemnification
Notice"); provided, however, that the failure to give such notice will not
relieve the Indemnifying Party from any liability that it may have to the
Indemnified Party except to the extent that the Indemnifying Party demonstrates
actual prejudice as a result thereof. Any such Indemnification Notice shall be
accompanied by a copy of documents which have been served upon the Indemnified
Party, if any.
(i) With respect to claims for indemnification relating to an action,
claim, demand or Proceeding of a third party, the Indemnifying Party shall,
subject to the rights of or duties to any insurer, reinsurer or other Person
having liability therefor, have the option to assume, at the Indemnifying
Party's sole cost and expense, the control of the defense of any legal
proceedings, including employment of counsel reasonably satisfactory to the
Indemnified Party, provided each of the following conditions are satisfied
(collectively, the "Defense Conditions"): (A) the Indemnifying Party gives
written notice thereof to the Indemnified Party no later than twenty (20) days
from the date of receipt of the Indemnification Notice (the "Assumption
Notice"); (B) the Indemnifying Party is not also a party to such Proceeding and
the Indemnified Party determines in good faith that joint representation would
be inappropriate; (C) the Indemnified Party determines in good faith that joint
representation would not be inappropriate due to a conflict of interest; (D) the
Indemnifying Party provides the Indemnified Party with evidence reasonably
acceptable to the Indemnified Party that the Indemnifying Party will have
sufficient financial resources to defend against the claims raised in the
Proceeding and fulfill its indemnification obligations hereunder; (E) the claim
involves only money damages and does not seek an injunction or other equitable
relief (however, if the claim seeks equitable relief, the Indemnified Party will
control, at its option, the defense of the Proceeding at the Indemnified Party's
cost), and (F) the Indemnifying Party conducts the defense of such claim
actively and diligently. If the Indemnifying Party shall have exercised its
right to assume control and established its right to do so, the Indemnified
Party may, in its sole discretion and at its sole cost and expense, employ
counsel to represent it in addition to counsel employed by the Indemnifying
Party. If the Indemnifying Party exercises its right to assume control, it will
be conclusively established for purposes of this Agreement that the claims made
in that proceeding are within the scope and subject to indemnification. The
Indemnified Party shall cooperate with the Indemnifying Party assuming control
of legal proceedings and shall make available all pertinent information under
the control of the Indemnified Party as to such legal proceedings and shall make
appropriate personnel reasonably available for discovery and trial. In addition,
in no event will Purchaser be entitled to indemnification of any Damages
incurred by it in excess of the Purchase Price.
In the event that the Indemnifying Party shall exercise its right to
undertake control of the defense of any such legal proceedings, such
Indemnifying Party may only compromise or settle such legal proceeding on behalf
21
of and for the account of the Indemnified Party after it obtains the prior
written consent of the Indemnified Party; provided, however, that if the
Indemnifying Party shall receive an offer of a settlement or compromise from the
other parties in the applicable legal proceedings at a particular monetary
amount excluding Seller Creditors (as defined below), or obtain a commitment
from such parties that they would accept a compromise or settlement at such
monetary amount if offered, and such settlement or compromise requires only the
payment of such amount, the granting of an appropriate release or similar
accommodation, and no other relief, and there is (i) no finding or admission of
any violation of any Applicable Laws or any violation of the rights of any
Person and no effect on any other claims that may be made against the
Indemnified Party; (ii) the offer of settlement or compromise would not violate
the restrictions and qualifications set forth in paragraph 3(b) concerning use
of the Increased Escrow Amount; and that (iii) settlement of such claim is not,
in the good faith judgment of the Indemnified Party, likely to establish a
precedential custom or practice adverse to the continuing business interests of
the Indemnified Party and the Indemnified Party refuses to consent thereto and
elects to continue the legal proceedings, then the Damages of the Indemnified
Party which are the subject of the applicable legal proceedings to which the
settlement or compromise relates shall be deemed to be limited to that amount of
Damages which the Indemnified Party would have had if such compromise or
settlement had been effected. For purposes hereof, the term "Seller Creditors"
means any third party asserting a claim against Purchaser relating to Seller
Retained Liabilities. In the event that the Indemnifying Party does not exercise
its option to assume control of any such action or proceeding, then the
Indemnifying Party shall nevertheless be obliged to indemnify the Indemnified
Party pursuant to the provisions hereof, and shall promptly pay all Damages as
incurred by the Indemnified Party.
In the event any of the Defense Conditions is or becomes unsatisfied, then
(i) the Indemnified Party may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to such claim in any manner
it may deem appropriate (and the Indemnified Party need not consult with, or
obtain any consent from, the Indemnifying Party in connection therewith), (ii)
the Indemnifying Party will reimburse the Indemnified Party promptly and
periodically for the costs of defending against such claim (including reasonable
attorneys' fees and expenses) in accordance with paragraph 7(d), and (iii) the
Indemnifying Party will remain responsible for any Damages the Indemnified Party
may suffer resulting from, arising out of, relating to, or caused by such claim;
and
(ii) Any claim for indemnification with respect to any matter not related
to a third party claim may be asserted by Indemnification Notice. The claim
specified in such notice shall be deemed valid and the Indemnified Party shall
be entitled to indemnification hereunder on account of such claim unless within
twenty (20) days of the Indemnifying Party's receipt of the Indemnification
Notice, the Indemnifying Party gives notice to the Indemnified Party that it
disputes the validity of such claim. In such event the dispute will be settled
in accordance with the provisions of paragraph 16(g) hereof.
(d) Any and all amounts due for indemnity hereunder shall be promptly paid,
in lawful money of the United States of America, as Damages are incurred, and in
any event within thirty (30) days after written demand therefor. Payments shall
be made in accordance with the reasonable instructions of the Indemnified Party.
22
(e) The Indemnifying Party hereby consents to the non-exclusive
jurisdiction of any court in which a Proceeding is brought against the
Indemnified Party for purposes of any claim that an Indemnified Party may have
under this Agreement with respect to such Proceeding or the matters alleged
therein, and agrees that, in addition to any other method of service of process
available under applicable law, process may also be served on the Indemnifying
Party for any such Proceeding in accordance with paragraph 16(a).
(f) Notwithstanding the foregoing, Purchaser may not assert any claim for
indemnification by Seller until the aggregate of all claims exceeds $20,000.00,
and thereupon, Seller's obligations for indemnification of Purchaser will be in
full force and effect for all Damages. In addition, in no event will Purchaser
be entitled to indemnification of any Damages incurred by it in excess of the
Purchase Price.
(g) The representations, warranties and covenants made by each of the
Purchaser and the Seller shall survive the Closing Date until the eighteen month
anniversary thereof, except for claims for indemnity made by either Seller or
Purchaser due to a breach of any of the representations, warranties and
covenants occurring during such eighteen (18) month period, which will survive.
The remedies available under this Section 7 are the exclusive remedies available
to a party as a result of a breach of this Agreement.
(h) The right to indemnification, payment of Damages or other remedy based
on any representations, warranties, covenants, or obligations made under this
Agreement will not be affected by any investigation conducted with respect to,
or any knowledge acquired (or capable of being acquired) at any time, whether
before or after the execution and delivery of this Agreement or the Closing
Date, with respect to the accuracy or inaccuracy of or compliance with, any such
representation, warranty, covenant, or obligation. The waiver of any condition
based on the accuracy of any representation or warranty, or on the performance
of or compliance with any covenant or obligation, will not affect the right to
indemnification, payment of Damages, or other remedy based on such
representations, warranties, covenants, and obligations.
(i) The Escrow Amount shall first be used to satisfy claims by Purchaser
for indemnification under this Section, before the other assets of Seller are
used for such purpose, subject to the following: (i) the provisions of paragraph
7 of this Agreement, (ii) to the extent the Escrow Amount is available, (iii)
provided the assets of Seller or its Distribution Business are not dissipated,
and (iv) Purchaser does not deem itself to be insecure. The Indemnifying Party
shall not reduce the Escrow Amount, the Increased Escrow Amount, or any other
amounts held in escrow pursuant to this Agreement, as payment for legal fees and
expenses incurred by it in assuming the defense of the Indemnified Party under
this paragraph 7.
8. Agreements Pending Closing.
(a) Agreements of Seller Pending the Closing. Seller covenants and agrees
that, pending the Closing and except as otherwise agreed to in writing by
Purchaser:
23
(i) Maintenance of Physical Assets. Seller shall continue and maintain and
service the tangible assets used in the conduct of the Distribution Business in
the manner set forth in the business plan mutually agreed to in writing by
Seller and Purchaser and as set forth on Schedule 8(a)(i) of the Disclosure
Schedule (the "Business Plan").
(ii) Compliance with Laws, etc. Seller shall comply with all Applicable
Laws applicable to the Distribution Business, the noncompliance of which would
reasonably be expected to materially and adversely effect the Distribution
Business or the Capital Acquired Assets.
(iii) Update Schedules. Seller shall periodically disclose to Purchaser in
writing any information contained in its representations and warranties or the
Disclosure Schedule which, because of an event occurring after the date hereof
is incomplete or is no longer correct as all times after the date hereof until
the Closing Date; provided, however, that none of such disclosures shall be
deemed to modify, amend or supplement the representations and warranties of
Seller or the schedules hereto, unless Purchaser shall have consented thereto in
writing.
(iv) Proprietary Rights. Seller shall not transfer, license, dispose of or
permit to lapse any Proprietary Rights or any rights thereto or to disclose the
Proprietary Rights to any Person.
(v) Conduct of Business. (A) Seller will operate its business in accordance
with, and subject to, the Business Plan concerning the distribution of Products
including, without limitation, the following:
(i) use reasonable best efforts to preserve existing shelf space and
location for Products on the premises of Seller's customers; and
(ii) use reasonable best efforts to preserve existing draught lines on the
premises of Seller's customers.
(B) Seller will use its reasonable best efforts to promote and
distribute Products to customers within the Territory in accordance with
the Business Plan. Seller will not sell Products to Home D Customers in
excess of volumes customarily purchased by such customers for like time
intervals, except as contemplated by the Business Plan. The term "Home D
Customers" means the holder of a class C or CO license under New York
Alcoholic Beverage Control Law permitting the holder to sell beer both at
wholesale and retail.
(C) Except as contemplated by the Business Plan, Seller shall use its
best efforts to preserve the goodwill of Seller's respective customers,
suppliers, employees and others having relations with Seller.
(D) Seller shall conduct its business in such a manner that on the
Closing Date the representations and warranties of Seller contained in this
Agreement shall be true and correct, as though such representations and
warranties were made on and as of such date. Furthermore, Seller shall
cause all of the conditions to the obligations of Seller under this
Agreement to be timely satisfied.
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(vi) Sale of Distribution Business or Assets; Negotiations. Subject to the
fiduciary duties of the Board of Directors of Seller set forth in paragraph
8(a)(vi)(B) and (C) below, (A) Neither Seller nor its directors, officers,
Controlling Shareholders, shareholders, employees, representatives or agents
shall: (a) directly or indirectly solicit or encourage inquiries or offers from,
or initiate negotiations or discussions with, any Person other than Purchaser
with respect to any acquisition of all or a portion of Seller, the Distribution
Business or the Capital Acquired Assets (other than the sale of inventory in the
ordinary course of business); (b) enter into any agreement with any Person other
than Purchaser with respect to any acquisition of all or a portion of Seller,
the Distribution Business or the Capital Acquired Assets (other than the sale of
inventory in the ordinary course of business); or (c) afford access to the
books, records or properties of Seller to any other Person that may be
considering acquiring all or a portion of seller, the Distribution Business or
the Capital Acquired Assets (other than the sale of inventory in the ordinary
course of business).
(B) If at any time during the time period beginning on the date of the
execution of this Agreement and ending on the initial filing of the
Information Statement with the SEC (the "Initial Period"), a third party
makes an unsolicited offer to the Seller to purchase all or a portion of
the Seller, the Distribution Business or the Capital Acquired Assets at a
price greater than the Purchase Price, then Seller may engage in
discussions or negotiations with such third party during such time period
only, provided it gives Purchaser written notice of Seller's intention to
have such discussions or negotiations prior to doing so (the "Competing Bid
Notice").
(C) However, if at any time following the Initial Period, the board of
directors of Seller determines that Seller's compliance with the
restrictions set forth in paragraph 8(a)(vi)(A) would cause a breach of the
fiduciary duties owed by such directors in their capacity as directors due
to the receipt of a Superior Offer, and such determination is based on a
written opinion of Seller's counsel to the effect that the board must, as a
matter of fiduciary duty, consider the Superior Offer, then Seller will be
permitted to receive, consider and negotiate offers received from third
parties after the Initial Period for the sale of the Distribution Business
or the Capital Acquired Assets and to provide such third parties with
access to relevant books and records of Seller (the "Fiduciary Out"). For
purposes hereof, the term "Superior Offer" means a bona fide offer of a
third party to purchase all or a portion of the Seller, the Distribution
Business or the Capital Acquired Assets from Seller at a price higher than
the Purchase Price and upon the same or more favorable as the terms
contained in this Agreement.
(vii) Controlling Shareholders' Vote. Contemporaneously with the execution
and delivery of this Agreement, Seller shall deliver a written consent signed by
each of the Controlling Shareholders representing, and which will consist of, a
majority vote of all of the then issued and outstanding shares of capital stock
of the Seller, in favor of the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereunder. Such consents shall be
sufficient to authorize the execution and delivery of this Agreement and to
consummate the transactions contemplated hereby without the need to initiate a
proxy solicitation process.
25
(viii) Information Statement. With respect to the execution and performance
of this Agreement and the consummation of the transactions contemplated hereby,
Seller will (A) comply with all Applicable Laws including, without limitation,
Securities Laws and the regulations of the SEC (except where such inability is
due to Purchaser's refusal to provide requested information in connection with
the Information Statement); (B) file an Information Statement on Schedule 14C
with the SEC (the "Information Statement") as promptly as practicable after the
execution and delivery of this Agreement; (C) comply with any and all requests,
directives, comments and inquiries made by the SEC in order to facilitate the
expiration of all applicable waiting periods thereto, including using all
reasonable efforts to follow-up with the SEC in order to obtain the SEC Sign-Off
(as defined below); (D) promptly distribute to its stockholders the Information
Statement pursuant to Regulation 14C of the Securities Exchange Act of 1934, as
amended following notification to Seller, that the SEC no longer has any
comments or concerns regarding the Information Statement (the "SEC Sign-Off");
(E) not initiate a proxy solicitation process to obtain the consent of
shareholders (other than the Controlling Shareholders); and (F) not require
Purchaser to provide any (x) financial information concerning Purchaser or any
of its shareholders, or (y) any information which Purchaser, in good faith,
believes could put Purchaser at a competitive disadvantage, in support or in
furtherance of the filing of the Information Statement, other than the terms of
this Agreement. Seller further agrees that prior to filing the Information
Statement with the SEC pursuant to paragraph 8(a)(viii)(B) above, it will first
provide Purchaser with a copy thereof, for its review and comments, if any.
(ix) Price List. On the Closing Date, Seller agrees to deliver to Purchaser
Seller's current 2005 price list for the Products, which shall contain the
current and complete Product price structure for each of its customers,
including all rebates, discounts and promotions for the consecutive twelve (12)
month period ending April 30, 2005.
(x) Customer List. On the Closing Date, Seller shall deliver to Purchaser a
list(s) of its currently active on-premise and off-premise customers for
Products in the Territory (for resale at retail or at wholesale and including
customers which Seller reasonably believes resell the Products to locations
outside the Territory); the list(s) will be in a form reasonably acceptable to
Purchaser and will reflect the purchase history (by customer and package) of
these customers for the consecutive twelve (12) month period ending April 30,
2005, as well as identifying the business name, address, New York license
number, the owner and/or manager or buyer (if known), the date and amounts of
Seller's last Products' sale to each customer and appropriate billing and
redemption history information under New York Environmental Conservation Law
xx.xx. 27-1001 et. seq.
(xi) Payment for Products. Concurrent with the Closing, Seller agrees it
shall forthwith reconcile and pay any outstanding amounts owed to each Xxxxxx
for Products sold and delivered to it, including deposits for cooperage and
kegs, net of verifiable amounts due to it from each respective Xxxxxx for
promotional, incentive and merchandising programs and for container, keg and
other deposits.
26
(xii) Xxxxxx Approvals. Seller will use its best efforts to assist
Purchaser in obtaining the written approval from the Brewers of Purchaser as a
distributor of Xxxxxx'x Products in the Territory. In this regard, Seller will,
on or before Closing: (A) pay all amounts which are due and outstanding to
Pabst, (B) provide Pabst with a fully executed copy of this Agreement, and (C)
will execute and deliver a letter of voluntary surrender of all of the Products
and the Exclusive Distribution Rights (as to the Products) in the Territory in
the form attached hereto as Exhibit C (the "Surrender Letter").
(xiii) Pension Expense Calculation. Immediately following the execution and
delivery of this Agreement, Seller shall engage a qualified consultant to
calculate the expenses and any related liabilities associated with Seller's
pension plan, collective bargaining agreement and any other withdrawal
liabilities which may arise or accrue as a result of the execution of this
Agreement and the transactions contemplated hereunder.
(xiv) Creditors List. A list of Seller's creditors prepared by Seller is
set forth in Schedule 8(a)(xiv) of the Disclosure Schedule . Seller hereby
represents and warrants that this list identifies all creditors of Seller and
the Distribution Business and the amounts indicated as being owed for each
creditor is the total amount of Liability owed by Seller to such creditors.
Within five (5) days prior to Closing, Seller shall deliver (i) payoff letters
issued by the Primary Creditors and the Secondary Creditors which Seller will
instruct Purchaser to pay directly at Closing, pursuant to paragraph 3(a). Such
payoff letters will indicate the total Liabilities owed by Seller to such
creditors as of the Closing Date; and (ii) an updated list of creditors so that
the list accurately reflects all creditors of Seller and the total amount of
Liabilities owed by Seller to each of the creditors. This updated creditors list
will be accompanied by a sworn verification executed by the president of Seller
verifying the foregoing. The updated creditors list will be subject to the
review of Purchaser's auditors and, if the Liabilities to a particular creditor
cannot be readily ascertained, Seller's auditors shall set a reasonable estimate
to the Liabilities owed by Seller to such creditor, which will be reflected on
the updated Schedule 8(a)(xiv) of the Disclosure Schedule. At or prior to
Closing, Seller will pay and satisfy in full all of the creditors identified as
"Primary Creditors" on Schedule 8(a)(xiv) of the Disclosure Schedule (the
"Primary Creditors"), to the reasonable satisfaction of Purchaser in accordance
with paragraph 3(a). Any Primary Creditors whose claims have not been paid and
satisfied in full by the Closing Date, will be paid and satisfied in full on the
Closing Date by Escrow Agent in accordance with paragraph 3(a). Seller will pay
and satisfy in full all of its remaining creditors specified in Schedule
8(a)(xiv) of the Disclosure Schedule (the "Secondary Creditors") within ninety
(90) days after the Closing Date in accordance with the procedures specified in
paragraph 3(a)(iii)(B) and the provisions of the Escrow Agreement.
(xv) Landlord Acknowledgement. Seller will obtain a release issued by the
Landlord in favor of Seller of any Liabilities arising under, resulting from or
in connection with, the lease between Erie Basin Marine Associates, as Landlord,
and Prospect Beverages Inc., as tenant, for the lease of the property known as
000 Xxxxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxxxxxx #000 and 302, Brooklyn, New York (the
"Lease"), and will deliver a copy of such release to Purchaser at the Closing.
27
(xvi) Third Party Claims. In the event that third party claims are
asserted, alleged or instituted against Purchaser after the date hereof arising
out of, relating to, or resulting from, Purchaser entering into this Agreement
or the Sub-Distribution Agreement or the transactions contemplated hereunder or
thereunder (excluding claims asserted against Purchaser that are (i) claims for
personal injuries (excluding product liability claims) resulting from
Purchaser's negligence; (ii) labor or employment related claims by Purchaser's
employees against Purchaser due to Purchaser's acts or omissions and
specifically excluding claims relating to acts or omissions of Seller or
Seller's employees; or (iii) claims resulting from Purchaser's gross
negligence), Seller will pay and satisfy in full all such claims, and will
submit documentary evidence to Purchaser as proof thereof, to the reasonable
satisfaction of the Purchaser, within sixty (60) days after the Closing Date.
(xvii) Business Plan. Commencing on the date hereof and continuing
thereafter until the termination of the Sub-Distribution Agreement, Seller will
comply with all of its obligations under the Business Plan.
(xviii) Indemnification. In the event Purchaser indemnifies Escrow Agent in
an amount in excess of fifty percent (50%) of the aggregate of Purchaser's and
Seller's indemnification obligations to the Escrow Agent pursuant to paragraph 8
of the Escrow Agreement, Seller will reimburse and pay to Purchaser such excess
amount promptly after such excess amount is incurred by Purchaser.
(xix) Credits. In the event this Agreement is terminated by either party
for any reason, Seller shall promptly pay to Purchaser all of the credits
specified in paragraph 3(a).
(xx) Bankruptcy. Based upon the present financial condition of the Seller
and the reasonably foreseeable financial condition of the Seller between the
date hereof and the Closing Date, Seller presently does not intend to, and, in
the absence of a material change in Seller's financial condition will not take
any action to, commence an action or proceeding or take advantage of or file
under any federal or state insolvency statutes including, without limitation,
the United States Bankruptcy Code, seeking to have an order of relief entered
with respect to it, or seeking adjudication as a bankrupt or insolvent, or
seeking reorganization, arrangement, adjustment, liquidation, dissolution or
other relief with respect to its debts, or make a general assignment for the
benefit of creditors, or consent to the appointment of a receiver, liquidator,
or similar official of all or substantially all of its assets. In the event of a
material change in Seller's financial condition which results in the filing of a
voluntary petition under Title 11 of the United States Code (the "Bankruptcy
Code"), Seller agrees that within twenty (20) days of such filing, it will
either file a motion under ss.363 of the Bankruptcy Code seeking bankruptcy
court approval of this Agreement and the ancillary agreements related hereto, to
sell the Capital Acquired Assets as contemplated hereby, or it will file a Plan
of Reorganization under ss.1121 of the Bankruptcy Code which provides for the
sale of the Capital Acquired Assets pursuant to the terms of this Agreement.
(b) Sub-Distribution Agreement. On the date hereof, Purchaser and Seller
shall execute and deliver to each other the Sub-Distribution Agreement in the
form as set forth in Schedule A. Subject to the terms of this Agreement, the
Sub-Distribution Agreement will become effective upon the initial filing of the
Information Statement with the SEC pursuant to Regulation 14C of the Securities
Exchange Act of 1934, as amended. In this regard, Seller hereby acknowledges
that: (i) it has scaled back its business and operations, including the
marketing, selling and distribution of the Products of its own free will; (ii)
it has requested Oak to act as Seller's sub-distributor of the Products in the
Territory pursuant to the terms of the Sub-Distribution Agreement; (iii) Oak has
indicated that it does not want to act as Seller's sub-distributor; and (iv)
pursuant to the request of Seller, and despite the reluctance of Oak, Oak has
nevertheless agreed to be sub-distributor pursuant to the terms of the
Sub-Distribution Agreement as a financial accommodation to Seller in order to
assist Seller to maintain its relationships with its suppliers, pending the
consummation of the transactions contemplated hereunder.
28
9. Conditions Precedent to Closing.
(a) Conditions Precedent to Purchaser's Obligations. All obligations of
Purchaser under this Agreement are subject to the fulfillment or satisfaction,
prior to or at the Closing, of each of the following conditions precedent:
(i) Purchaser shall have received (A) the written approval of this
Agreement and the transactions contemplated hereby by each of the Brewers; and
(B) a letter issued by the Brewers and addressed to Purchaser which appoints
Purchaser as the distributor on an exclusive basis for all Products for the
Territory and the trade accounts located therein;
(ii) In the event the consent specified in paragraph 9(a)(i) is subject to
the execution of a distribution agreement between any of the Brewers and
Purchaser, then the negotiation, execution and delivery of such agreement by and
between each such respective Xxxxxx and Purchaser, all in form and substance
reasonably satisfactory to Purchaser and its counsel, and, in the case of Pabst,
on terms substantially similar to Oak's existing distribution agreement with
Pabst;
(iii) The representations and warranties of Seller contained in this
Agreement, the Disclosure Schedule and in any schedule, certificate or document
delivered by Seller to Purchaser pursuant to the provisions hereof shall have
been true and accurate on the date hereof, or when made, without regard to any
schedule updates furnished by Seller after the date hereof and shall be true and
accurate on the Closing Date with the same effect as though such representations
and warranties were made as of such date, except where such inaccuracy results
in Damages to Purchaser not to exceed Twenty Thousand Dollars ($20,000.00) in
the aggregate;
(iv) Seller shall have performed and complied with all agreements,
covenants and conditions required by this Agreement to be performed or complied
with by it on or prior to the date specified; if no date is specified, then
prior to or at the Closing;
(v) Purchaser shall have received a certificate from Seller dated the
Closing Date, certifying that the conditions specified in paragraphs (iii) and
(iv) hereof and the covenants set forth in paragraph 8(a) have been fulfilled;
29
(vi) Except as expressly set forth in the Business Plan, the Distribution
Business and Capital Acquired Assets shall not have been and shall not be
threatened to be materially adversely affected in any way including, without
limitation, Seller's liabilities exceeding the Purchase Price, as a result of
any event or occurrence;
(vii) Seller shall have complied with all applicable rules and regulations
of the SEC with respect to the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby; and
(viii) Seller shall have delivered to Purchaser all of the items set forth
in paragraph 10(b).
(b) Conditions Precedent to the Obligations of Seller. All obligations of
Seller under this Agreement are subject to the fulfillment or satisfaction,
prior to or at the Closing, of each of the following conditions precedent or
waiver thereof by Seller:
(i) The representations and warranties of Purchaser contained in this
Agreement, the Disclosure Schedule or in any list, certificate or document
delivered by Purchaser to Seller pursuant to the provisions hereof shall be true
and accurate in all material respects on the date hereof, or when made, without
regard to any schedule updates furnished by Purchaser after the date hereof and
shall be true and accurate in all material respects on the Closing Date with the
same effect as though such representations and warranties were made as of such
date;
(ii) Purchaser shall have performed and complied with all agreements and
conditions required by this Agreement to be performed or complied with by them
prior to or at the Closing; and
(iii) Seller shall have received a certificate from Purchaser dated the
Closing Date certifying that the conditions specified in Paragraphs (i) and (ii)
hereof have been fulfilled.
(c) Conditions Precedent to Each Party's Obligations. The respective
obligations of each of the Seller and the Purchaser under this Agreement are
subject to the fulfillment or satisfaction prior to or at the Closing of each of
the following conditions, any one or more of which may be waived by them, to the
extent permitted by law:
(i) Information Statement. All applicable waiting periods with respect to
the filing and the distribution of the Information Statement required to be
filed and distributed by Seller shall have passed.
(ii) Litigation. No action, suit or proceeding shall have been instituted
and be continuing or be threatened by any Governmental Entity to restrain,
modify or prevent the carrying out of the transactions contemplated hereby; no
preliminary or permanent injunction issued by any court of competent
jurisdiction preventing the consummation of the Closing.
30
(iii) The amount of Unresolved Pre-Closing Claims that constitute
Undisclosed Liabilities does not exceed One Million Five Hundred Thousand
Dollars ($1,500,000.00) and provided Purchaser does not insist on maintaining an
Increased Escrow Amount in excess of One Million Five Hundred Thousand Dollars
($1,500,000.00) for Undisclosed Liabilities. For purposes hereof, "Undisclosed
Liabilities" are those Liabilities of Seller (excluding Liabilities for Taxes,
labor matters (including, without limitation, withdrawal liability) and claims
by any of the shareholders, officers, directors, agents or employees of the
Seller (collectively, "Related Party Claims")) not disclosed on any of Seller's
financial statements, the Disclosure Schedule, publicly filed reports or the
lists of creditors set forth on Schedule 8(a)(xiv).
10. The Closing. (a) Subject to paragraph 12, the Closing of the assets
sale contemplated hereby shall take place at the offices of Ettelman &
Xxxxxxxxxx, P.C., 000 Xxxxxxx Xxxxxxxxx Xxxx., Xxxxx 000, Xxxxxx Xxxx, Xxx Xxxx
00000 on the date that is the later of five (5) business days following (i)
Purchaser's receipt of (x) the written approval of all Brewers to this Agreement
and the transactions contemplated hereunder, and the letters issued by all the
Brewers appointing Purchaser as the exclusive distributor of Products in the
Territory, pursuant to paragraph 9(a)(i) or (y) fully executed distribution
agreements pursuant to paragraph 9(a)(ii), if applicable, or (ii) the Effective
Date of the Information Statement; or (iii) at such other time and location as
the parties shall mutually agree. Such closing is hereinafter referred to as the
"Closing" and the date of the Closing is hereinafter referred to as the "Closing
Date". Subject to the provisions of paragraph 12, the failure to consummate the
purchase and sale provided for in this Agreement on the date and time and at the
place determined pursuant to this paragraph 10(a), will not result in the
termination of this Agreement and will not relieve any party of any obligation
under this Agreement.
(b) Seller agrees to deliver, or cause to be delivered, the following to
Purchaser on the Closing Date:
(i) such bills of sale with covenants of warranty, assignments,
endorsements, consents, permits, approvals, authorizations and other good and
sufficient instruments and documents of conveyance, transfer and consent in form
reasonably satisfactory to Purchaser and its counsel, as shall be necessary and
effective to transfer and assign to, and vest in, Purchaser all of Seller's
right, title and interest in and to the Capital Acquired Assets;
(ii) a certificate from the secretary of Seller certifying that attached to
such certificate are all requisite resolutions of Seller's board of directors
approving the execution and delivery of this Agreement and the consummation of
the transactions contemplated hereunder;
(iii) all of the agreements, contracts, commitments, manuals, training
materials and guidebooks, price books and price lists, on-premises and
off-premises customer lists and subscriber lists, supplier lists, sales records,
files, correspondence, legal opinions, rulings issued by Governmental
Authorities, and other documents, books, records, papers, files, office supplies
and data belonging to Seller which are part of the Capital Acquired Assets;
(iv) Seller's current 2005 price list for the Products, as specified in
paragraph 8(a)(x);
31
(v) a copy of the Escrow Agreement signed by Seller;
(vi) an updated list of all of the creditors of Seller and the Distribution
Business and the total amounts of Liabilities owed by Seller to each such
respective creditor; payoff letters issued by the Primary Creditors and the
Secondary Creditors which Seller will instruct Purchaser to pay directly at
Closing, pursuant to paragraph 3(a). Such payoff letters will indicate the total
Liabilities owed by Seller to such creditors as of the Closing Date; and the
sworn verification of Seller verifying the foregoing, all in accordance with
paragraph 8(a)(xiv); and
(vii) written instructions signed by Seller authorizing the Escrow Agent to
pay all amounts then due and owing to each of the Primary Creditors, pursuant to
paragraph 3(a)(iii)(A).
Simultaneously with Seller's delivery of the aforementioned, Seller shall
take all action as may be required to duly and effectively deliver and place
Purchaser in actual possession and operating control of the Capital Acquired
Assets; provided, however, that nothing contained herein shall be deemed to
require Seller to deliver possession of the Capital Acquired Assets at a
location other than Seller's current business premises.
(c) Purchaser agrees to deliver, or cause to be delivered, the following on
the Closing Date:
(i) the Cash Portion pursuant to paragraph 3(a)(i) hereof;
(ii) the Escrow Amount, pursuant to paragraph 3(a)(ii);
(iii) a certificate from the secretary of Purchaser certifying that
attached to such certificate are all requisite resolutions of Purchaser's board
of directors approving the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereunder;
(iv) a copy of the Escrow Agreement signed by Purchaser; and
(v) written instructions signed by Purchaser authorizing the Escrow Agent
to pay all amounts then due and owing to each of the Primary Creditors, pursuant
to paragraph 3(a)(iii)(A).
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11. Post Closing Matters. (a) Seller, from time to time after the Closing,
at Purchaser's request, and at Purchaser's expense, will execute, acknowledge
and deliver to Purchaser such other instruments of conveyance and transfer and
will take such other actions and execute and deliver such other agreements,
documents, certificates and further assurances as Purchaser may reasonably
request in order to vest more effectively in Purchaser, or to put Purchaser more
fully in possession of, any of the Capital Acquired Assets or to enable
Purchaser to fully obtain the practical realization of the benefits, utilization
and value of the Capital Acquired Assets. Each of the parties hereto will
cooperate with the other and execute and deliver to the other party hereto such
other instruments and documents and take such other actions as may be reasonably
requested from time to time by the other party to evidence and confirm the
intended purposes of this Agreement, including, without limitation, (i)
executing documentation needed in order to assist Purchaser in obtaining any
copyrights or patents relating to the Capital Acquired Assets to the extent
available, if at all; and (ii) filing all instruments of assignment with the
applicable Government Authority for the purpose of assigning the Proprietary
Rights to Purchaser of record.
(b) Each of the Controlling Shareholders and Seller, for themselves and
their respective heirs, executors, successors and assigns, or affiliates or
related entities (collectively the "Restricted Parties"), agrees that (i) after
the Closing Date, none of the Restricted Parties will act as, or represent
himself or itself as, an authorized distributor of the Products in the Territory
or any portion thereof; and (ii) after the Closing Date, none of the Restricted
Parties will directly or indirectly engage in wholesale transactions in the
Products which it knows, or has reason to know, are to be resold in the
Territory.
(c) Seller shall not disclose or use any confidential information
pertaining to the Distribution Business or the Capital Acquired Assets without
prior written consent of Purchaser except to the extent (i) the information is
then in the public domain by acts not attributable to Seller, (ii) the
information is hereafter received by Seller from a third party source on an
unrestricted basis or (iii) Seller is required to disclose such information
under Applicable Law or under court or governmental order; provided, however,
that Seller shall provide Purchaser with prior notice of such disclosure and a
reasonable opportunity to seek a protective order with respect thereto. In the
event that such protective order is not obtained or that Purchaser waives
compliance with the provisions hereof, Seller agrees to determine, together with
Purchaser, what disclosure of such information shall be the minimum required to
satisfy Seller's legal duties, and the furnish only the minimum portion legally
required.
12. Termination. (a) Subject to paragraph 12(c), this Agreement shall
terminate and neither party shall have any further obligations hereunder upon
the happening of any of the following events (each, a "Termination Event"):
(i) the mutual written consent of Purchaser and Seller;
(ii) by Purchaser, at its option, by written notice to Seller, if there has
been a material violation or breach of any of Seller's covenants,
representations, warranties or agreements made herein (without giving effect to
any supplement to the Disclosure Schedule); in order to be considered
"material", the violation or breach results in Damages to the Purchaser of
Twenty Thousand Dollars ($20,000.00) or greater;
(iii) by Seller, at its option, by written notice to Purchaser, if there
has been a material violation or breach of any of Purchaser's covenants, or
agreements made herein or if any material representation or warranty of
Purchaser made herein shall be breached in any material respect or shall prove
to be materially inaccurate or misleading;
33
(iv) by Seller, (1) if, during the Initial Period, Seller has discussions
or negotiations with a third party pursuant to paragraph 8(a)(vi)(B) and Seller
determines that it is necessary to terminate this Agreement and pursue such
discussions and negotiations in order to discharge their fiduciary duties, or
(2) if, after the Initial Period, its board of directors duly exercises its
Fiduciary Out, receives an opinion letter of counsel and accepts a Superior
Offer as stated in paragraph 8(a)(vi)(C);
(v) by Purchaser, at its option, if any of the conditions in paragraph 9(a)
have not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Purchaser
to comply with its obligations under this Agreement) and Purchaser has not
waived such condition on or before the Closing Date;
(vi) by Seller, at its option, if any of the conditions in paragraph 9(b)
have not been satisfied as of the Closing Date or if satisfaction of such a
condition is or becomes impossible (other than through the failure of Seller to
comply with its obligations under this Agreement) and Seller has not waived such
condition on or before the Closing Date;
(vii) by either Seller or Purchaser, if the Closing does not occur (other
than through the failure of any party seeking to terminate this Agreement to
comply fully with its obligations under this Agreement) on or before the date
that is 90 days after the date of execution of this Agreement, or such later
date as the parties may mutually agree upon in writing;
(viii) INTENTIONALLY OMITTED;
(ix) by Purchaser, (1) at any time following the receipt of a Competing Bid
Notice plus seven (7) days, so long as Seller has not ceased discussions with
the party that gave rise to such termination right within such seven (7) day
notice period (if Seller has ceased discussions, at any time during such seven
(7) day period, Seller will provide to Purchaser a written letter to that
effect, certified by the President or Chief Executive Officer of Seller), or (2)
if Seller or any of its officers, directors, shareholders, employees, agents or
representatives engages in any of the activities specified in paragraph 8(a)(vi)
as a result of its Fiduciary Out, irrespective of whether Seller accepts a
Superior Offer;
(x) by Purchaser, if, in connection with the Information Statement,
Purchaser is required to provide (A) any financial information regarding
Purchaser or any of its shareholders, or (B) any information in which Purchaser,
in good faith, believes could put Purchaser at a competitive disadvantage; and
(xi) by Seller, if Purchaser refuses to provide the information specified
in paragraph 12(a)(x) and the SEC is unwilling to provide the SEC Sign-Off
without such information.
34
(b) The parties agree that, except in the case of a termination by reason
of the material breach of a covenant, condition or representation, and except as
set forth in subparagraph (c) hereof, neither party can be held liable for
expenses incurred or opportunities foregone by the other in reliance on this
Agreement in the event of a termination pursuant to the terms hereof.
(c) If this Agreement is terminated by the Seller pursuant to the
provisions of paragraph 12(a)(iv) or by Purchaser pursuant to the provisions of
paragraph 12(a)(ix), the Seller shall immediately upon the termination of this
Agreement, pay to Purchaser by wire transfer of immediately available funds an
amount equal to One Million Dollars ($1,000,000.00)(the "Termination Fee"),
payable as follows: (i) Two Hundred Fifty Thousand Dollars ($250,000.00) payable
immediately; and (ii) Seven Hundred Fifty Thousand Dollars ($750,000.00) payable
upon the closing of the Superior Offer. Subject to Purchaser's receipt of the
payment in full of the fees set forth in this paragraph 12(c), Purchaser shall
execute and deliver to Seller a release, which specifically excludes and
preserves Purchaser's rights for indemnification by Seller under the
Sub-Distribution Agreement.
(d) Each party's right of termination under paragraph 12(a) is in addition
to any other rights it may have under this Agreement or otherwise, and the
exercise of a right of termination will not be an election of remedies. If this
Agreement is terminated pursuant to paragraph 12(a), all further obligations of
the parties under this Agreement will terminate, except that the obligations in
paragraphs 8(a)(xix) and 11(c) will survive; provided, however, that if this
Agreement is terminated by a party because of the breach of the Agreement by the
other party or because one or more of the conditions to the terminating party's
obligations under this Agreement is not satisfied as a result of the other
party's failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
13. Survival. Notwithstanding anything to the contrary contained herein,
all representations, warranties, covenants and obligations in this Agreement,
the Disclosure Schedule, the supplements to the Disclosure Schedule, the
Seller's Documents to be delivered pursuant to paragraph 10(b), and any other
certificate or document to be delivered pursuant to this Agreement shall survive
the Closing of this Agreement for a period of eighteen (18) months.
In the event a party gives notice to the other party of the assertion of a
claim arising out of a provision of this Agreement prior to the expiration of
the applicable survival period pertaining to such provision, such provision
shall survive with respect to that claim until the final settlement or judicial
resolution (after exhausting all appeals) of such claim.
14. Benefits of Parties. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective permitted successors,
heirs, legal representatives and assigns.
15. Further Assurances. Each of the parties hereto shall do such further
acts and things and execute and deliver such agreements, instruments and
documents as may reasonably be requested by the other party for the purpose of
consummating the transactions contemplated hereby.
35
16. Miscellaneous.
(a) Notices. All notices permitted, required or provided for by this
Agreement shall be made in writing, and shall be deemed adequately delivered if
delivered by hand or by a nationally recognized overnight courier service that
regularly maintains records of its pick ups and deliveries, to the parties at
their respective addresses set forth below or to any other address designated by
a party hereto by written notice of such address change:
To Seller:
Xxxxxxx X. Xxxxxx
700 Columbia Street
Erie Basin, Building #302
Brooklyn, New York 11231
With a copy to:
--------------
Xxxxxxx X. Xxxxx, Esq.
Xxxxx & Xxxxxxxxxxx, LLP
000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
To Purchaser:
Xxxxx Xxxxxxx, President
Oak Beverages Inc.
Xxx Xxxxxx Xxxx
Xxxxxxxx, Xxx Xxxx 00000
With a copy to:
--------------
Xxxxx X. Xxxxxxxxxx, Esq.
Ettelman & Xxxxxxxxxx, P.C.
000 Xxxxxxx Xxxxxxxxx Xxxx., Xxxxx 000
Xxxxxx Xxxx, Xxx Xxxx 00000
Notices shall be deemed given as of the date of delivery to the overnight
courier service or to the recipient if delivered by hand, and received one day
after delivery to the overnight courier service or when actually received if
delivered by hand.
(b) Modification or Amendment. This Agreement may not be modified or
amended except by an instrument in writing signed by the party or parties
against whom enforcement is sought.
(c) Third Party Beneficiaries. Except for their proper successors and
assigns, the parties hereto intend that no third party shall have any rights or
claims by reason of this Agreement, nor shall any party have any rights or
claims against any third party.
36
(d) Headings. The headings in this Agreement are intended solely for
convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.
(e) Invalidity of Provision. Any term or provision of this Agreement which
is invalid or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. Further, to the extent
that any term or provision hereof is deemed invalid, void or otherwise
unenforceable, but may be made enforceable by amendment thereto, the parties
agree that such amendment may be made so that the same shall, nevertheless, be
enforceable to the fullest extent permissible under the laws and public policies
applied in any such jurisdiction in which enforcement is sought.
(f) Event on Non-Business Days. Whenever any action is to be taken or any
event is to occur, other than the giving of notice for which separate provision
is made above, under or pursuant to this Agreement, on any Saturday, Sunday or a
public holiday under the laws of the place of performance of such action, such
action shall be taken and such event shall occur on the next succeeding business
day.
(g) Governing Law Disputes. All questions pertaining to the validity,
construction, execution and performance of this Agreement shall be construed and
governed in accordance with the laws of the State of New York, without giving
effect to the conflicts or choice of law provisions thereof. Any dispute arising
under this Agreement shall be settled in any court of competent jurisdiction
located in the state of New York, County of New York, and to the extent not
otherwise subject to the jurisdiction of such courts both parties agree to waive
any objection to such jurisdiction and agree to subject themselves to the
jurisdiction of such court. Each of the parties further agrees that service of
process for any such action may be made by certified mail, return receipt
requested in addition to any other method of service permitted by applicable
law.
(h) Waiver of Breach. Any waiver of any of the provisions of this
Agreement, or of any inaccuracy in or non-fulfillment of any of the
representations, warranties or obligations hereunder or contemplated hereby,
shall not be effective unless made in writing and signed by the party against
whom the enforcement of any such waiver is sought. A waiver given in any case
shall only apply with respect to that particular act, omission or breach, and
shall not be effective as to any further or subsequent act, omission or breach,
regardless of whether they be of the same or similar nature.
(i) Counterparts/Faxes. This Agreement may be executed by fax and in
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same instrument.
(j) Assignment. Neither party may assign any of its rights or delegate any
of its duties under this Agreement without the prior written consent of the
other party, except that Oak may assign its rights and delegate its duties under
this Agreement to its wholly-owned designee, and in such event, Oak shall remain
obligated under the terms and conditions of this Agreement.
37
(k) Entire Agreement. (i) This Agreement, the Disclosure Schedules,
schedules and exhibits hereto set forth the entire agreement and understanding
of the parties hereto in respect of the subject matter contained herein, and
supersedes all prior agreements, promises, understandings, letters of intent,
covenants, arrangements, communications, representations or warranties, whether
oral or written, by any party hereto or by any related or unrelated third party.
(ii) All exhibits, schedules and the Disclosure Schedules attached hereto,
and all certificates, documents and other instruments delivered or to be
delivered pursuant to the terms hereof are hereby expressly made a part of this
Agreement as fully as those set forth herein, and all references herein to the
terms "this Agreement", "hereunder", "herein", "hereby" or "hereto" shall be
deemed to refer to this Agreement and to all such writings. Disclosure of a
specific item in any Schedule shall be deemed to only apply to the specific
section of paragraph 5 to which such disclosure specifically relates except
where (i) there is an explicit cross-reference in the Disclosure Schedule to
another section of the Disclosure Schedule, and (ii) Purchaser could reasonably
be expected to ascertain the scope of the modification to a representation
intended by such cross-reference.
(l) Publicity. So long as this Agreement is in effect, prior to making a
press release or other public statement with respect to the transactions
contemplated by this Agreement, any party (a "Releasing Party") will consult
with the other party (the "Receiving Party") and provide such other party with a
draft of such press release, except as may otherwise be required by law or stock
exchange regulations.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by a duly authorized officer, all on the day and year
first above written.
CAPITAL BEVERAGE CORPORATION
By: /s/ Xxxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxxx Xxxxxx
Title: President and Chief Executive Officer
OAK BEVERAGES INC.
By: /s/ Xxxxx Xxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxx
Title: President
38
EXHIBIT A
Form of Sub-Distribution Agreement
39
EXHIBIT B
Form of Escrow Agreement
40
EXHIBIT C
Surrender Letter
41
