EXHIBIT 10.22
AGREEMENT TO PURCHASE AND MARKET BRAND NAME AND RECIPES
THIS AGREEMENT, dated June 30, 1998 by and between Xxxxxx Creek Food
Corporation, a Colorado corporation (the "Seller"), and Perry's Majestic
Beer, Inc., a Delaware corporation (the "Buyer")
WITNESSETH:
WHEREAS, Seller is engaged in the business among other things, of
manufacturing, marketing and distributing applesauce, apple sauce blends and
apple butter made from associated proprietary recipes; and
WHEREAS, the Seller wishes to sell, and the Buyer wishes to purchase the
brand name, Xxxxxx Creek Foods, and the related products and associated recipes
of Seller as well as the exclusive right to market, distribute and sell the
Products produced under the "Xxxxxx Creek" label, including all applesauce,
applesauce blends, and apple butter.
NOW THEREFORE, in consideration of the mutual terms, conditions and other
agreements set forth herein, the Seller and the Buyer hereby agree as follows:
ARTICLE I.
PURCHASE AND SALE OF THE ASSETS
1.1 Purchase of Selected Assets. Subject to the terms and conditions set
forth in this Agreement, the Seller agrees that, on the Closing Date, the Seller
shall complete and execute the documents and escrow instructions required to
sell, transfer, assign, convey and deliver to the Buyer, Seller's right, title
and interest in and to the brand name "Xxxxxx Creek Foods", and the related
products including all apple sauce, apple sauce blends presently marketed, and
the recipes for said related products as of the date of this Agreement (the
"Products") of Seller as well as the exclusive right to market, distribute and
sell the Products produced under the "Xxxxxx Creek" label, and intellectual
property directly relating to the marketing, sale and distribution of the
Products, free and clear of all liens, mortgages, security interests, claims, or
other encumbrances of any nature whatsoever, which shall include, but not be
limited to the following:
(a) Physical Assets: All of Seller's customer lists, distribution
brokerage agreements, advertising plans and the like, directly used in
connection with the marketing, sale and distribution of the Products.
(b) Intangible Assets: All rights, title, and interest in and to the
Products, including, without limitation, (i) the exclusive right to market,
sell, and distribute the Products and to sell to Seller's past and present
customers and to utilize Seller's brokers; (ii) the good will associated with
the Products and the Assets; (iii) a non-exclusive license to use the
certification xxxx "Grown Without Pesticides" (application pending) as set forth
below in section 1.7; (iv) the right to the packaging designs and art graphics
for the Products; and (v) all information concerning past and present marketing
campaigns for the Products; (vi) all trade secrets and associated files which
are limited to the recipes for the products.
(c) Leases, Licenses, etc.: All right, title, interest in and to the
leases, licenses, permits, authorizations, contract rights, agreements, whether
written or oral, orders and other documents used in connection with the
marketing, distribution and sale of the Products;
(d) Intellectual Property Rights: All trademarks, trade names, and
other intellectual property rights utilized in connection with the marketing,
sale and distribution of the Products, (excepting the rights to use or apply the
Certification Xxxx "Grown Without Pesticides" or its variants [the Certification
Xxxx], such rights non-exclusively licensed as set forth below in section 1.7)
including written records thereof, including, without limitation, all rights to
the name "Xxxxxx Creek" and all variations thereof and the registered trademark
"Xxxxxx Creek" and the goodwill associated with such trademarks.
1.2 Allocation of Purchase Price. Purchase price of $650,000.00 shall be
allocated in full to the brand name Xxxxxx Creek Foods.
1.3 No Assumed Liabilities. The Buyer shall not assume nor be responsible
for any liabilities or obligations of the Seller or any of its affiliates (the
"Non-Assumed Liabilities").
1.4 Purchase of the Assets.
(a) In consideration for the Assets, Buyers shall pay the sum of six
hundred fifty thousand dollars ($650,000) (the "Purchase Price") as follows: at
Closing (as defined herein) Buyer shall (i) pay to Seller the non-refundable sum
of sixty-two thousand five hundred dollars ($62,500.00) in cash or certified
funds; (ii) deliver to Seller for conveyance to the Escrow Agent as hereinafter
defined a promissory note (the "Note") in the principal amount of five hundred
eight-seven thousand five hundred dollars ($587,500.00) bearing interest at the
rate of 9% per annum, principal payable on the six month anniversary of the
Closing and interest payable monthly beginning on the one-month anniversary of
the Closing, in the form annexed hereto as Exhibit A, which shall be delivered
by Seller to the Escrow Agent; and (iii) enter into a Consulting Agreement with
Xxxxxx Xxxx as set forth in Exhibit B attached hereto; (iv) enter into a
Production Agreement with Seller as set forth in Exhibit F attached hereto; (v)
provide Seller for delivery to the Escrow Agent with options to purchase two
hundred fifty thousand (250,000) shares of common stock, par value $.0001 per
share, of Buyer at fair market value at the date of the Closing. The option to
purchase said shares shall be in effect for five years from the date of Closing
Each exercise of an option granted hereunder shall be by means of a notice of
exercise (the "Notice of Exercise") delivered to Buyer specifying the number of
Option Shares to be purchased. Within five (5) days of receiving the Notice of
Exercise, Buyer shall schedule a closing for purchase of the stock (the "Stock
Closing") which shall be no more than five (5) days later. At the Stock Closing,
the Company shall deliver the Option Shares to Xxxxxx Xxxx with the appropriate
transfer documents and Xxxxxx Xxxx shall pay to Buyer the full purchase price of
such exercised Option Shares whether in cash or by certified check payable to
the order of "Perry's Majestic Beer, Inc." All Option Shares issued pursuant to
such option shall be fully paid and non-assessable and shall not be subject to
any liens. Neither Xxxxxx Xxxx nor any other person legally entitled to exercise
the Option shall be entitled to any of the rights or privileges of a stockholder
of the Company with respect to any common shares issuable upon any exercise of
the Option unless and until the Option is exercised; and (vi) appoint Xxxxxx
Xxxx or his designated agent as a member of the Board of Directors of Perry's
Majestic Beer, Inc.
(b) As further consideration for the Assets, for a period of five (5)
years from the date hereof (the "Royalty Period") Seller shall receive from
Buyer royalty payments equal to $.25 per case on each case of the Products sold
by Buyer during the Royalty Period. Such Royalty Payments shall be made to
Seller on a quarterly basis and within sixty (60) days of the end of each fiscal
quarter of Buyer. Upon written request from the Seller, the Buyer will make
available to Seller within thirty (30) days an accounting of Royalty Payments
for such quarter after the conclusion of each such fiscal quarter.
1.5 Exclusive Right to Market. Distribute and Sell. As of the date of
Closing, subject to timely payment of the Promissory Note referred to in
paragraph 1.3, Seller shall not sell any Products bearing the names, trade names
or trademarks referred to in this Agreement to any person or entity other than
Buyer and Buyer's designees. Seller shall sell and deliver such Products to
Buyer, upon placement of purchase orders by Buyer, in good and merchantable
condition. The manufacturing, shipping and quality of said Products shall
likewise be governed by the Production Agreement..
1.6 Limitation on Assignment. Further Assurance. To the extent that the
assignment of any contracts to be assigned to the Buyer, as provided herein,
shall require the consent of another party thereto, this Agreement shall not
constitute an agreement to assign the same if an attempted assignment would
constitute a breach thereof. To the extent required, the Seller agrees that it
will use all reasonable efforts to obtain the written consent of all necessary
parties to the assignment of the Buyer of all assigned contracts. If any such
consent is not obtained, the Seller shall use all reasonable efforts to obtain
the same and will cooperate with the Buyer, as appropriate, in any reasonable
arrangement designed by the Buyer to provide to the Buyer, as appropriate, the
benefits thereunder and the Buyer shall assume all correlative obligations to
effectuate such arrangement.
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1.7 Certification Xxxx. The Buyer understands that the Certification Xxxx
"Grown Without Pesticides" is now owned by the Seller. The Certification Xxxx is
owned by Xxxxxx Xxxx and another (collectively, the "Certification Xxxx Owner")
and is applied by the Seller under a nonexclusive license according to standards
which the Seller currently meets. The Buyer acknowledges Certification Xxxx
Owner's exclusive rights in the Certification Xxxx notwithstanding prior,
erroneous efforts by the Seller to register the Certification Xxxx under the
Seller's name. Further, the Buyer agrees to cooperate as reasonably requested by
the Certification Xxxx Owner to quitclaim any apparent rights, and to take such
other steps, including but not limited to adjusting the appearance of the
Certification Xxxx at Certification Xxxx Owner's expense, as the Certification
Xxxx Owner may reasonably request. Upon Seller's request and at Buyer's option,
Buyer may agree to execute a more formal, written license authorizing Buyer's
use and application of the Certification Xxxx, a more formal, written license
for the Certification Xxxx. It is understood and agreed that such license shall
include, among other terms, language providing: a) that the license is fully
paid-up, royalty free during its initial term; b I that its initial term shall
be for five years, for standards which are not beyond the existing standards
(which Seller currently meets), and c) that the license shall be renewable after
the initial term on the Certification Xxxx Owner's then-current standards and on
the Certification Xxxx Owner's then-current terms.
ARTICLE II
CLOSING
2.1 The Closing.
(a) The consummation of the transactions contemplated by this Agreement
(the "Closing") shall be held at a place chosen by the parties or the
transactions may take place in counterpart from separate locations.
(b) At the Closing, the Seller shall execute and deliver to Western Escrow
Service (hereafter, "Escrow Agent"), to be treated pursuant to the escrow
instructions noted in Article 2. l(e) and Exhibit C, all documents and
instruments necessary to transfer to the Buyer all of the right, title and
interest of the Seller in and to the trade names and Products, including,
without limitation:
(i) The Assignment Agreement in the form annexed hereto as
Exhibit D;
(ii) Documents reflecting assignment of all names, patents,
licenses and trademarks included among the purchased Assets;
(iii) A Xxxx of Sale in the form annexed as Exhibit E;
(iv) Recipes;
(v) The executed Production Agreement in the form annexed
as Exhibit F;
(c) At the Closing, Buyer shall deliver to Seller for delivery to the
Escrow Agent to be treated pursuant to the instructions noted in Article 2.
l(e):
(i) The executed Consulting Agreement, Production Agreement, and
the Royalty Agreement and
(ii) The executed Promissory Note in the amount of $587,500.00.
(d) At the Closing, Buyer shall deliver directly to Seller:
(i) The non-refundable amount of $62,500.00 in cash or certified
funds.
(e) All documents noted in Article 2. l(b) and (c) shall be delivered to
Western Escrow Services, Inc., 000 Xxxxxx, Xxxxx, XX 00000 by Seller's counsel,
and counsel shall have a fiduciary obligation to deliver all documents noted
herein. The Escrow Agent shall be instructed to hold the Promissory Note and
documents of transfer, and shall be further instructed that the documents of
transfer as noted in Article 2.1(b) are to be released to Buyer or any agent
Buyer may designate upon receipt by the Escrow Agent of cash or certified funds
in the principal amount of $587,500.00 plus unpaid interest. Interest on the
Promissory Note shall accrue at the rate of 9% per annum from the date the
Promissory Note was signed and shall be paid monthly beginning on the one-month
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anniversary of the Closing. Upon payment, the cash or certified funds will be
delivered by the Escrow Agent to Seller or his designated agent. Said Escrow
Instructions are attached hereto as Exhibit C, and the parties agree that the
escrow agreement between the Escrow Agent and the Buyer and Seller shall control
the escrow portion of this contract.
2.2 Right to Carry on Business and Maintain Profits. Subject to Buyer's
timely compliance with the terms of this Agreement, it is agreed that the Buyer
may conduct all marketing, sales, and distribution of the products and utilize
the name Xxxxxx Creek and "Grown Without Pesticides" during the pendency of the
escrow agreement. All profits generated by the Buyer shall be the sole and
separate property of Buyer, it being the intention of this escrow provision to
suspend the delivery of the legal documents that transfer of rights and title
until the final payment is received so as to provide for an automatic reversion
of the transferred rights if Buyer fails to pay the Promissory Note when due.
Once escrow is closed, Buyer shall have all rights transferred by the documents
referred to in Article 2.1(b).
2.3 Xxxxxxx Money as Liquidated Damages. Regardless of whether the
Promissory Note is paid in full and the escrow closed, the $62,500.00 paid at
closing shall remain Seller's sole and separate property, and should this
contract fail due to the failure of Buyer to pay said Promissory Note in full,
Seller shall retain said $62,500.00 as liquidated damages for the breach of this
Agreement and this Agreement shall be considered null and void. Under these
circumstances, Buyer shall have no further obligation under the Promissory Note
or this contract and exhibits other than for the payment of manufacturing
charges pursuant to the Production Agreement.
2.4 Additional Actions to be Taken on the Closing Date.
(a) Liens/Consents. The Seller shall have satisfied and discharged all
liens on the Assets as well as providing all necessary consents to transfer or
assign the Assets to Buyer, in form and substance satisfactory to the Buyer.
(b) Consents. The Buyer shall have received consents to the transactions
contemplated by this Agreement signed by its Board of Directors.
(c) Bulk Sales Act. In the event that it is determined by a court of
competent jurisdiction that Article 6 of the Uniform Commercial Code is
applicable to this transaction, Seller agrees to indemnify Buyer from any losses
incurred by Buyer arising our of or resulting from the failure of the Seller to
comply with Article 6 of the Uniform Commercial Code. The agreement set forth in
this Section 2.2c shall expressly survive the Closing.
(d) Taxes. All taxes relating to or affecting the Assets and the Products
shall be paid in full, or reserved for, as of the Closing Date.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Buyer as follows:
3.1 Organization and Qualification. The Seller is a corporation validly
existing and in good standing under the laws of the State of Colorado and has
all requisite corporate power and authority to (a) own, lease and operate its
properties and assets as they are now owned, leased and operated, and (b) carry
on its business as now presently conducted an as proposed to be conducted. The
Seller is duly qualified to do business in each jurisdiction in which the nature
of its business or properties makes such qualification necessary.
3.2 Validity and Execution of Agreement. The Seller has the full legal
right, capacity and power and all requisite corporate authority and approval
required to enter into, execute and deliver this Agreement and any other
agreement or instrument contemplated hereby, and to perform fully its
obligations hereunder and thereunder. The shareholders of Seller have each
approved the transactions contemplated pursuant to this Agreement and each of
the other agreements required to be entered into pursuant hereto by Seller.
Seller has taken all actions, required by law, its certificate of incorporation
and bylaws to authorize its execution, delivery and performance of this
Agreement an
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the consummation of the transactions contemplated hereby. This Agreement and
such other agreements and instruments have been duly executed and delivered by
Seller and each constitutes the valid and binding obligation of Seller
enforceable against it in accordance with its terms.
3.3 No Conflict. Neither the execution and delivery of this Agreement nor
the performance by the Seller of the transactions contemplated hereby will (a)
violate or conflict with any of the provisions of its Certificate of
Incorporation of by-laws or other organizational documents of the Seller; (b)
result in the acceleration of, or entitle any party to accelerate the maturity
or the cancellation of the performance of any obligation under, or result in the
creation or imposition of any lien in or upon the Assets or constitute a default
(or an event which might, with the passage of time or giving of notice, or both,
constitute a default) under any contract; (c) violate or conflict with any
order, judgment, regulation or ruling of any governmental or regulatory body to
which the Seller is a party or by which any of its property or assets may be
bound or affected or with any provision of any law, rule, regulation, order,
judgment, or ruling of any governmental or regulatory body applicable to the
Seller.
3.4 Litigation. There are no outstanding orders, judgments, injunctions,
investigations, awards or decrees of any court, governmental or regulatory body
or arbitration tribunal by which the Seller, or any of its securities, assets,
properties, or business are bound, and which would adversely affect the Assets.
There are no actions, suits, claims, investigations, legal, administrative or
arbitral proceedings pending or, to the best knowledge of the Seller,
threatened, (whether or not the defense thereof or liabilities in respect
thereof are covered by insurance) against or affecting the Seller, or any of its
assets or properties, that, individually or in the aggregate, could, if
determined adversely to the Seller, reasonably be expected to have a material
adverse effect on the Assets, nor, to the best knowledge of the Seller, are
there any facts which could reasonably be expected to give rise to any such
action, suit, claim, investigation or legal, administrative or arbitral
proceeding.
3.5 The Assets. The Seller owns outright and has good and marketable title
to all of the Assets, (both tangible and intangible), free and clear of any
lien, pledge, hypothecation, mortgage, security interest, claim lease, charge,
option, right of first refusal, easement, servitude, or other encumbrance (the
"Liens"). The Assignment Agreement and such other conveyance documents as shall
have been executed and delivered to the Buyer will convey good and marketable
title to the Assets, free and clear of any liens.
3.6 Intangible Property. The documents set forth in Article 2. 1 (b)(ii)
set forth all patents, trademarks, service marks, trade names, copyrights, logos
and the like and franchises, all applications for any of the foregoing, and all
permits, grants and licenses or other rights held or owned by, or running to or
from the Seller, relating to the Assets (collectively, the "Intangible
Property"), true and complete copies of which have been delivered or made
available to the Buyer. All of the Intangible Property is included among the
Assets. It is understood that the Certification Xxxx is specifically not
included as part of the Assets or the Intangible Property. To the best of
Seller's knowledge, no patent, invention, trademark, service xxxx or trade name
of any other Person infringes upon, or is infringed upon by, any of the
Intangible Property and the Seller has not received any notice of any claim of
infringement, either within the last twelve months or which is material, of any
other Person with respect to any of the Intangible Property or any process or
confidential information relating thereto, and the Seller does not know of any
basis for any such charge or claim. All of the Intangible Property is valid and
in good standing. Seller has a right to sell all of the Intangible Property to
Buyer and the sale of the Intangible Property shall not operate in any way to
adversely affect any patent, license, trademark, trade name, invention or
service xxxx included among the Intangible Property. The Seller has not received
any notice or inquiry indicating, or claiming, that the manufacture, sale or use
of any of the assets conveyed herewith infringes upon the patent or other
intellectual property rights of any other Person. Seller represents that no
approval or consent of any person is needed so that the interest of the Seller
in the Intangible Property shall continue to be in full force and effect and
enforceable by the Buyer following the consummation of the transactions
contemplated hereby. Seller represents that there are no security interest
encumbering the intangible assets and in furtherance of this representation
Seller shall exercise due diligence to procure a letter from the SBA and
Colorado National Bank stating that they have no security interest in the
intangible property being transferred by this Agreement.
3.7 Undisclosed Liabilities. Seller represents that it has no direct or
indirect, indebtedness, liability, claim, loss, damage, deficiency, obligation
or responsibility, fixed or unfixed, xxxxxx or
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inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute,
contingent or otherwise which does or may affect the Assets (collectively, the
"Liabilities").
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3.9 Tax Matters.
(a) All Tax Returns required to be filed with respect to the Seller
relating to the Assets have been duly filed and were in all material respects
true, complete and correct and filed on a timely basis;
(b) the Seller has paid all Taxes that are due, or claimed or asserted by
the IRS or any other taxing authority ("Taxing Authority") to be due from the
Seller for the periods covered by such Tax Returns or Seller has duly and fully
provided reserves adequate to pay all Taxes in the Financials;
(c) The Seller has complied in all material respects with all applicable
laws relating to withholding of Taxes including withholding Taxes pursuant to
Sections 1441 and 1442 of the Internal Revenue Service ("IRS") Code of 1986, as
amended (the "Code") and similar provisions under any other applicable laws, and
the payment thereof over to the Taxing Authorities; and
(d) the Income Tax returns of the Seller have not been audited or examined
by any of the Taxing Authority (including the IRS) for any period for which the
applicable statute of limitation period has not yet expired and no statute of
limitations for any such period has been extended.
3.10 Contracts and Other Agreements. Seller represents that there are no
written agreements (and, to the best knowledge of the Seller, any oral
agreements) and arrangements to which (i) the Seller is a party and which affect
the Assets, or (ii) by or to which any of the Assets are bound or subject
(collectively, the "Contracts").
3.11 Interest with Affiliates. No Affiliate of the Seller has any interest
in any of the Assets.
3.12 Employees. The Seller is not a party to, and there does not otherwise
exist, any agreements with any labor organization, collective bargaining, or
similar agreement with respect to employees of the Seller, which would affect
the Division or the Assets. The Seller is in compliance in all material respects
with its obligations under all Federal, state and local statues and ordinances,
executive orders, regulations, and common law governing its employment practices
with respect to the Seller.
3.13 Licenses. Permits. and Government Approvals. Seller has no knowledge
of any requirement to maintain any governmental permits, licenses, registrations
and other governmental consents (federal, state and local) with respect to the
Assets.
3.14 Compliance with Laws. Seller has no knowledge of any requirement that
Seller comply with any applicable federal, state, and local laws, regulations
and ordinances or any requirement of any governmental or regulatory body, court
or arbitrator affecting the Assets, the failure to comply with which could have
a material adverse effect on the Assets. Neither the Seller nor any of its
representatives, agents, employees, or affiliates has made or agreed to make any
payment to any person which would be unlawful. Seller has obtained all required
federal and state regulatory approvals to permit the manufacture and sale of the
Products. Seller has obtained all requisite approvals from all federal ends
state regulatory authorities fort the Products and has not been not) filed by
any such authority that is in violation of any rules, regulations, or other laws
relating to such approval.
3.15 Products. Seller represents that there are no statements, citations
or decisions by any governmental or regulatory body that any product ("Product")
manufactured, marketed, distributed, sold, leased or serviced that would
otherwise be included among the Assets is defective, has been sold without
government approval, or fails to meet in any material respect any standards
promulgated by any such governmental or regulatory body. There have been no
recalls ordered by any such governmental or regulatory body with respect to any
Product. To the best of Seller's knowledge, there is no fact relating to any
Product that may impose upon the Seller (or the Buyer upon consummation of the
transactions contemplated hereby) a duty to recall any Product or a duty to warn
customers of a defect in any Product.
3.16 Disclosures. To the best of Seller's knowledge, neither this
Agreement, nor any Exhibit to this Agreement contains an untrue statement of a
material fact or omits a material fact necessary
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to make the statements contained herein or therein not misleading. All
statements, documents, certificates or other items prepared or supplied by the
Seller with respect to the transactions contemplated hereby are true, correct
and complete and contain no untrue statement of a material fat or omit a
material fact necessary to make the statements contained therein not misleading.
3.17 Sales and Customer Information. Seller has delivered to Buyer
information concerning sales of the Products, manufacturing costs, marketing and
sales expenses and other information concerning the marketing, distribution and
sales of the Products (the "Sales Information"). The Sales Information is true
and correct and accurately reflects the information disclosed.
3.18 Opinion of Counsel. Seller's counsel shall issue an opinion letter
verifying that, based upon the information given him by Seller that the Seller
is a valid corporation in good standing in the state of Colorado; that Seller
has taken all corporate action necessary to authorize and approve this
transaction; that this transaction will not violate any provision of Seller's
corporate documents; that Seller is legally capable of transferring good and
marketable title to the assets being transferred and that counsel is not aware
of any liens, claims or encumbrances to which the assets are subject.
3.19 Survival. All of the representations and warranties of the Seller
contained herein shall survive the Closing Date until the date upon which the
liability to which any claim relating to any such representation or warranty is
barred by any applicable statutes of limitations.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
4.1 Organization and Qualification. The Buyer is a corporation validly
existing and in good standing under the laws of the State of Delaware, and has
all requisite corporate power and authority to (a) own, lease and operate its
properties and assets as they are now owned, leased and operated and (b) carry
on its business as now presently conducted and is duly qualified to do business
in each jurisdiction in which the nature of its business or properties makes
such qualification necessary.
4.2 Validity and Execution of Agreement. The Buyer has the full legal
right, capacity and power and all requisite corporate authority and approval
required to enter into, execute, and deliver this Agreement and any other
agreement or instrument contemplated hereby, and to perform fully its
obligations hereunder and thereunder. The board of directors of the Buyer has
approved the transaction contemplated by this Agreement and each of the other
agreements required to be entered into pursuant hereto by the Buyer. This
Agreement and such other agreement and instruments have been duly executed and
delivered by the Buyer and each constitutes the valid and binding obligation of
the Buyer enforceable against it in accordance with its terms.
4.3 No Conflict. Neither the execution and delivery of this Agreement nor
the performance by the Buyer of the transactions contemplated herein will (a)
violate or conflict with any of the provisions of its Certificate of
Incorporation or bylaws or other organizational documents; or (b) violate or
conflict with any provision of any law, rule, regulation, order, judgment,
decree or ruling of any court or federal, state or local Governmental or
Regulatory body applicable to Buyer.
4.4 Survival. All of the representations and warranties of the Buyer
contained herein shall survive the Closing Date until the date upon which the
liability to which any claim relating to any such representation or warranty is
barred by any applicable statutes of limitations.
ARTICLE V
CONDITIONS TO CLOSING
5.1 Obligations of Seller and Buyer. The respective obligations of Seller
and Buyer to consummate the transactions contemplated hereby shall be subject to
the fulfillment, prior to or at Closing, of each of the following conditions,
any one or a portion of which may be waived in writing:
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(a) Consents. Seller shall have obtained all necessary consents to
assignment of all parties to contracts relating to the Assets. Seller shall have
executed and delivered to Buyer a certificate, dated as of the Closing date and
signed by its President containing certified resolutions of Seller authorizing
Seller to enter into this Agreement and the transactions contemplated hereby.
Buyer shall have executed and delivered to Seller a certificate, dated as of the
date of the Closing and signed by its President containing certified resolutions
of Buyer authorizing Buyer to enter into this Agreement and the transactions
contemplated hereby.
(b) No Suits or Actions. At Closing no suit, action, proceeding shall have
been threatened, instituted, or commenced to restrain, enjoin or otherwise
prevent the consummation of this Agreement or the transactions contemplated
hereby.
(c) Consulting Agreement. Xxxxxx Xxxx and Buyer shall have entered into
the Consulting Agreement attached as Exhibit B.
(d) Instruments of Conveyance. Seller and Buyer shall have executed and
delivered to Escrow Agent all such documents and instruments as shall be
necessary to convey, transfer and assign to Buyer all of Buyer's right, title
and interest in and to the Assets, including, but not limited to, the Assignment
Agreement attached as Exhibit D and the Xxxx of Sale attached as Exhibit E.
(e) Production Agreement. Buyer and Seller shall have entered into and
delivered to Escrow Agent the Production Agreement attached as Exhibit F.
(f) Buyer shall have executed and delivered to Escrow Agent the Promissory
Note attached as Exhibit A.
(g) Buyer shall have executed and delivered to Seller the non-refundable
sum of $62,500.00 in cash or certified funds.
(f) Lack of Material Changes. At Closing, there shall not have been:
(i) any change in the condition, financial or otherwise, of the Assets of
Seller, other than changes in the ordinary course of business which have not
been either in any case or in the aggregate materially adverse;
(ii) any act outside the ordinary course of business which material
adversely affects the Assets;
(iii) any damage, destruction, or loss of any of the Assets, not
adequately compensated by insurance, materially adversely affecting the business
or prospects of Seller;
(iv) any waiver by Seller of any right of substantial value, material
default under the terms of any contract, agreement or other instrument to which
it is a party or by which it is bound;
(v) any sale, lease, transfer, or other disposition or mortgage or pledge
of any Asset, nor shall there be imposed or suffered to be imposed any lien,
claim, charge, security interest or other restriction of any kind or nature
whatsoever on any Asset.
5.2 Additional Conditions.
(a) There are no actions, suits, or proceedings pending, threatened
against or affecting Seller or Buyer which might result in any material adverse
change in the licenses, business, operations, properties or assets or the
condition, financial or otherwise, of Seller or Buyer, or in any way involving
this Agreement or the transactions contemplated hereby;
(b) Neither Buyer nor Seller know of, and has no reasonable grounds to
know of, any basis for any such action or proceeding;
(c) there is no order or decree of any court or agency directed to Seller
or Buyer arising out of any judicial, or quasi judicial, proceeding before any
such court or agency with respect to Seller or Buyer being in default;
8
(d) Seller and Buyer have complied in all material respects with all laws,
regulations, rules, ordinances, decrees, or orders of any court, government
(federal, state or local) department, commission, board, agency, official, or
other regulatory, administrative or governmental authority.
ARTICLE VI
INDEMNIFICATION
6.1 Indemnification.
(a) The Seller agrees to indemnify, defend and hold harmless the Buyer and
its respective directors, officers, employees, shareholders, and any Affiliates
of the foregoing, and their successors and assigns (collectively, the "Buyer
Group") from and against any and all losses, liabilities, (including punitive or
exemplary damages and fines or penalties and any interest thereon), expenses
(including reasonable fees and disbursements of counsel and expenses of
investigation and defense), claims, liens, or other obligations of any nature
whatsoever (hereinafter individually, a "Loss" and collectively, "Losses")
suffered or incurred by the Buyer Group, which arise out of, result from or
relate to (i) any breach of any representation or warranty of the Seller
contained in Article III and (ii) any breach of any covenant or agreement of the
Seller contained in this Agreement or in any other document contemplated herein.
Such indemnification shall be limited to the total proceeds received by the
Buyer under this Agreement.
(b) The Buyer agrees to indemnify, defend and hold harmless the Seller and
its directors, officers, employees, and shareholders, and any Affiliates of the
forgoing, and their successors and assigns from and against any and all Losses
suffered or incurred by them which, directly or indirectly, arise out of, result
from or relate to (i) any inaccuracy in or any breach of any representation or
warranty of the Buyer contained in Article IV and (ii) any breach of any
covenant or agreement of the Buyer contained in this Agreement or in any other
document contemplated by this Agreement.
6.2 Method of Asserting Claims. The party making a claim under this
Article VI is referred to as the "Indemnified Party" and the party against whom
such claims are asserted under this Article VI is referred to as the
"Indemnifying Party". All claims by any Indemnified Party under this Article VI
shall be asserted and resolved in accordance with the terms and provisions set
forth in Sections 6.2(a) - (c) below.
(a) In the event that any claim or demand for which an Indemnifying Party
would be liable to an Indemnified Party hereunder is asserted against or sought
to be collected from such Indemnified Party by a third party, said Indemnified
party shall, with reasonable promptness, notify in writing the Indemnifying
Party of such claim or demand, specifying the nature of the specific basis for
such claim or demand, and the amount or the estimated amount thereof to the
extent then feasible (which estimate shall not be conclusive of the final amount
of such claim and demand); any such notice, together wit any notice given
pursuant to Section 6.2(b) hereof, collectively being the "Claim Notice";
provided, however, that any failure to give such claim Notice will not be deemed
a waiver of any rights of the Indemnified party except to the extent the rights
of the Indemnifying Party are actually prejudiced. The Indemnifying Party, upon
request of the Indemnified Party, shall retain counsel (who shall be reasonably
acceptable to the Indemnified party) to represent the Indemnified Party, and
shall pay the fees and disbursements of such counsel with regard thereto,
provided, further, that any Indemnified party is hereby authorized prior to the
date on which it receives written notice from the Indemnifying Party designating
such counsel, to retain counsel, whose fees and expenses shall be at the expense
of the Indemnifying Party, to file any motion, answer or other pleading and take
such other action which it reasonably shall deem necessary to protect its
interest or those of the Indemnifying party until the date on which the
Indemnified party receives such notice from the Indemnifying Party. After the
Indemnifying Party shall retain such counsel, the Indemnified party shall have
the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless (i) the Indemnifying
Party and the Indemnified Party shall have mutually agreed to the retention of
such counsel or (ii) the named parties of any such proceeding (including any
impeded parties) include both the Indemnifying Party and the Indemnified Party
and representation of both parties by the same counsel would be inappropriate
due to accrual or potential differing interests between them. The Indemnifying
Party shall not, in connection with any proceedings or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one such
firm for the Indemnified Party (except to the extent the Indemnified Party
retained counsel to protect its (or the Indemnifying Party's) rights prior to
the selection of counsel
9
by the Indemnifying Party. The Indemnified party agrees to cooperate with the
Indemnifying Party and its counsel in contesting any claim or demand which the
Indemnifying Party defends. No claim or demand may be settled by an Indemnifying
Party or, where permitted pursuant to this Agreement, by an Indemnified Party
without the consent of the Indemnified Party in the first case or the consent of
the Indemnifying Party in the second case, which consent shall not be
unreasonably withheld, unless such settlement shall be accompanied by a complete
release of the Indemnified Party int eh first case or the Indemnifying Party in
the second case, or, where permitted pursuant to this Agreement, by an
Indemnified party without the consent of the Indemnified Party in the first case
or the consent of the Indemnifying Party in the second case.
(b) In the event any Indemnified Party shall have a claim against any
Indemnifying Party hereunder which does not involve a claim or demand being
asserted against or sought to be collected from it by a third party, the
Indemnified Party shall send a Claim Notice with respect to such claim to the
Indemnifying Party. If the Indemnifying Party~does not dispute such claim, the
amount of such claim shall be paid to the Indemnified Party within twenty (20)
days of receipt of the Claim Notice.
(c) So long as any right to indemnification exists pursuant to this
Article VI, the affected parties each agree to retain all books, records,
accounts, instruments and documents reasonably related to the Claim Notice. In
each instance, the Indemnified Party shall have the right to be kept informed by
the Indemnifying Party and its legal counsel with respect to all significant
matters relating to any legal proceedings. Any information or documents made
available to any party hereunder, which information is designated as
confidential by the party providing such information, and which is not otherwise
generally available to the public, or which information is not otherwise
lawfully obtained from third parties or not already within the knowledge of the
party to whom the information is provided (unless otherwise covered by the
confidentiality provisions of any other agreement among the parties hereto, or
any of them), and except as may be required by applicable law or requested by
third party lenders to such party, shall not be disclosed to any third Person
(except for the representatives of the party being provided with the
information, in which event the party being provided with the information shall
request its representatives not to disclose any such information).
ARTICLE VII
POST-CLOSING COVENANTS OF THE PARTIES
7.1 Tax Matters. With respect to the Assets, the Seller shall provide to
Buyer on demand such information as shall reasonably be requested by Buyer to
enable Buyer to prepare and file timely Buyer's federal, state and local income
Tax Returns and all forms, schedules and attachments related thereto.
7.2 Non-Competition. As a material inducement to cause the Buyer to enter
into this Agreement and to consummate the transactions contemplated hereby, and
in further consideration for the payments to be made by Buyer pursuant to
Section 1.2, Seller, on behalf of itself, its officers, directors, and
affiliates (the "Restricted Parties") shall not, for a period of twelve years
following the date of Closing (i) engage in the wholesale or retail sale,
marketing, or distribution of Grown Without Pesticide applesauce within the
United States; however, nothing contained herein shall in any way limit the
right of Seller to produce and manufacture apple sauce or related products of
others on a custom basis; (ii) take any action outside the ordinary course of
business which could have a material adverse effect on the Assets of the Buyer
following the Closing Date. If any court determines that this covenant, or any
part thereof, is unenforceable because of the duration of such provision or the
area covered thereby, such court shall have the power to reduce the duration or
area of such provision and, in its reduced form, such provision shall then be
enforceable and shall be enforced.
This section 7.2 is expressly contingent upon payment in full of all
obligations herein by the Buyer under the terms of the Agreement, which is to be
construed as payment in full of the principal and interest due under the
Promissory Note.
7.3 Confidentiality. From and after the Closing Date, the Seller and its
shareholders shall not disclose or furnish to any other Person, except to the
extent required by law or by order of any court or governmental agency, (a) any
information which is not generally known in the industry relating to any
license, patent, process, technique, or procedure transferred to Buyer pursuant
hereto or used in connection with the Assets; (b) any information which is not
generally known in the industry
10
relating to the operations or financial status of the Buyer which is not
specifically a matter of public record; or (c) any trade secrets in connection
with the Assets.
ARTICLE VIII
MISCELLANEOUS
8.1 Sales and Transfer Taxes. All required filings under any applicable
Federal, state, foreign or local sales tax, stamp tax or similar laws or
regulations shall be made by the Buyer and, at Closing, Buyer shall deliver to
Seller either (a) proof of the payment of any sales tax assessed pursuant to
such filings or (b) statements of no sales tax due, as the case may be. The
parties agree that any and all transfer, sales or stamp taxes and any similar
taxes or assessments imposed on the transfer of the Assets and the Assumed
Liabilities in accordance with the terms of this Agreement shall be borne
equally by the Buyer and Seller.
8.2 Post-Closing Further Assurances. At any time and from time to time
after the Closing Date at the request of either party, and without further
consideration, the other party will execute and deliver, or cause the execution
and delivery of, such other instruments of sale, transfer, conveyance,
assignment and confirmation and take or cause to be taken such other action as
the party requesting the same may reasonably deem necessary or desirable in
order to transfer, convey and assign more effectively to the requesting party
all of the property and rights intended to be conveyed to such party pursuant to
the provisions of this Agreement.
8.3 Notices. All notices, requests, demands, and other communications
required or permitted to be given hereunder shall be in writing and shall be
given personally, telegraphed, sent by facsimile transmission or sent by prepaid
air courier, same day or overnight messenger, or certified, registered or
express mail, postage prepaid. Any such notice shall be deemed to have been
given (a) when received, if delivered in person, telegraphed, sent by facsimile
transmission and confirmed in writing within three (3) business days thereafter
o sent by prepaid air courier, same day or overnight messenger, or (b) three (3)
business days following the mailing thereof, if mailed by certified first class
mail, postage prepaid, return receipt requested, in any such case as follows (or
to such other address or addresses as a party may have advised the other in the
manner provided in this Section 8.3):
If to the Seller, to:
Xxxxxx Creek Food Corporation
970-3100 Road
Hotchkiss, CO 81419
Attn: Xxxxxx Xxxx
Federal Tax ID: 00-0000000
Telephone Number: (000)000-0000
Telecopier Number: (000)000-0000
If to Buyer, to:
Perry's Majestic Beer, Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxx
Federal Tax ID:
Telephone Number: (000) 000-0000
Telecopier Number: (000) 000-0000
8.4 Entire Agreement. This Agreement (including the Exhibits) and the
agreements, certificates and other documents delivered pursuant to this
Agreement contain the entire agreement among the parties with respect to the
transactions described herein, and supersede all prior agreements, written or
oral, with respect thereto.
8.5 Waivers and Amendments. This Agreement may be amended, superseded,
canceled, renewed, or extended, and the terms hereof may be waived, only by a
written instrument signed by the parties hereto or, in the case of a waiver, by
the party waiving compliance. No delay on the part of any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof.
11
8.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado, without regard to principles
of conflicts of law. Venue shall be in Delta County, Colorado.
8.7 Binding Effect; No Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors,
assigns, and legal representative. This
Agreement is not assignable except by written consent of the parties, and any
other purported assignment shall be null and void.
8.8 Variations in Pronouns. All pronouns and any variations thereof refer
to the masculine, feminine or neuter, singular or plural, as the context may
require.
8.9 Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
8.10 Exhibits. The Exhibits attached hereto are a part of this Agreements
as if fully set forth herein. All references herein to Exhibits shall be deemed
references to such parts of this Agreements, unless the context shall otherwise
require.
8.11 Effect of Disclosure on Exhibits. Any item disclosed on any Exhibit
shall only be deemed to be disclosed in connection with (a) the specific
representation and warranty to which such Exhibit is expressly referenced; (b)
any specific representation and warranty which expressly cross-references such
Exhibit and (c) any specific representation and warranty to which any other
Exhibit to this Agreement is expressly referenced if such other Exhibit
expressly cross-references such Exhibit.
8.12 Headings. The headings in this agreement are for reference only, and
shall not affect the interpretation of this Agreement.
8.13 Severability of Provisions. If any provision or any portion of any
provision of this Agreement or the application of such provision or any portion
of such provision to any Person or circumstance shall beheld invalid or
unenforceable, the remaining portion of such provision and the remaining
provisions of these Agreement, or the application of such provision or portion
or such provision as is held invalid or unenforceable to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby.
8.14 Brokers. Each party hereto represents and warrants that no broker or
finder is entitled to any brokerage or finder's fee or other commission from
such party, based on agreement, arrangements or undertakings made by such party,
in connection with the transactions contemplated hereby.
8.15 Expenses. Whether or not the transactions contemplated hereby shall
be consummated, each party shall (except as otherwise specifically provided
herein) pay its own expenses incident to the preparation and performance of this
Agreement.
8.16 Termination. It is specifically understood that this Agreement is
tied into the Buyer's timely payment of all interest and principal payments due
under the Promissory Note. Buyer's failure to make payments when due under the
Promissory Note, or termination of this Agreement for any reason prior to the
payment in full of the principal and interest due on the Promissory Note, will
cause the obligation of Seller under this Agreement to cease and Seller may then
resume producing and marketing Xxxxxx Creek products under their own name and
for their own profit.
12
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
XXXXXX CREEK FOOD CORPORATION
/s/ Xxxxxx Xxxx, President
--------------------------
Xxxxxx Xxxx, President
PERRY'S MAJESTIC BEER, INC.
/s/ Xxxxxx Xxxxxx, President
----------------------------
Xxxxxx Xxxxxx, President
13
EXHIBIT A
PROMISSORY NOTE
$587,500.00 Hotchkiss, Colorado June __, 1998
On January 2, 1999, for value received, Perry's Majestic Beer, Inc.
promises to pay to the order of Xxxxxx Creek Food Corporation the sum of Five
Hundred Eight-Seven Thousand, Five Hundred Dollars and no cents ($587,500.00) at
970-3100 Road, Xxxxxxxxx, Colorado 81419 with interest therefor at the rate of
nine (9) per centum per annum from date until due, payable with interest only
payments of $4,406.25 per month beginning July ____, 1998 and continuing on the
____ day of each successive month plus a final payment of interest plus the
principal amount of $591,900.25 due January 2, 1999.
In the event of prepayment, maker shall pay all taxes, expenses, fees and
costs reasonably incurred by Payee as a result of such pre-payment.
Failure to pay any principal or interest when due shall cause this entire note
to become due and collectible at once, in which case accrued interest and
principal shall, from and after the date of such default, bear interest at
fifteen (15) per centum per annum.
The makers, endorsers, sureties and guarantors of this note severally waive
presentment for payment, notice of nonpayment, protest, and notice of protest;
and in the event this note be collected by an attorney, by suit or otherwise,
agree to pay a reasonable attorney's fee.
PERRY MAJESTIC BEER, INC.
By: Xxxxxx Xxxxxx, President
Exhibit B
CONSULTING AGREEMENT
THIS AGREEMENT, dated June 30, 1998 by and between Perry's Majestic Beer,
Inc., a Delaware corporation ("Perry's") and Xxxxxx Xxxx (the "Consultant").
WITNESSETH:
Consultant agrees to render certain consulting services to Perry's upon
the terms and conditions set forth below:
1. Payment by Perry's. As full and total consideration for the services
provided by the Consultant to Perry's, Perry's hereby grants to Consultant the
right and option (the "Option") to purchase five hundred thousand (500,000)
shares of Perry's common stock, par value $.0001 per share, (the "Option
Shares") adjusted to reflect any stocks splits or reverse splits, at an exercise
price equal to the fair market value of the Option Shares as of the date of this
Agreement (the "Option Shares"). The Option shall be exercisable for a period of
five (5) years from the date of the execution of this Agreement. The Option
Shares granted to Consultant pursuant to this Paragraph 1 hereof shall vest as
follows: (i) two hundred thousand (200,000) upon execution of this Agreement;
(ii) one hundred thousand (100,000) on the one year anniversary of the execution
of this Agreement; (iii) one hundred thousand ( 100,000 on the two year
anniversary of the execution of this Agreement; and (iv) one hundred thousand
(100,000) on the three year anniversary of the execution of this Agreement.
2. Method of Exercise. Each exercise of an option granted hereunder shall
be by means of a notice of exercise (the "Notice of Exercise") delivered to
Perry's specifying the number of Option Shares to be purchased. Within five (5)
days of receiving the Notice of Exercise, Perry's shall schedule a closing which
shall be no more than five (5) days later. At the closing, Perry's shall deliver
the Option Shares to the Consultant with the appropriate transfer documents and
Consultant shall pay to Perry's the full purchase price of such exercised Option
Shares either in cash or by certified check payable to the order of "Perry's
Majestic Beer, Inc." All Option Shares issued pursuant to such option shall be
fully paid and nonassessable and shall not be subject to any liens.
3. Stockholder Rights. Neither the Consultant nor any other person legally
entitled to exercise the Option shall be entitled to any of the rights or
privileges of a stockholder of Perry's with respect to any common shares
issuable upon any exercise of the Option unless and until the Option is
exercised
4. Consultant's Obligations. From time to time the Consultant agrees to
provide Perry's with such consulting services as requested by Perry's in
connection with the sale, marketing, distribution and manufacturing of
applesauce and related products. Consultant shall not be obligated to provide
more than 40 hours of consulting time to Perry's per calendar year.
5. Term of Agreement. The term of this Agreement shall be for three years
from the date hereof.
6. Confidential Information. Consultant acknowledges that all information,
documents, customer lists, patents, trademarks, copyrights, materials,
specifications, business strategies or any other ideas which directly relate to
the business of Perry's (referred to herein as "Confidential Information")
whether prepared or generated by Consultant or Perry's pursuant to this
Agreement or otherwise in the possession or knowledge of Consultant prior to the
date hereof or coming into possession or knowledge of Consultant during the term
of this Agreement shall be the exclusive, confidential property of Perry's,
except to the extent expressly authorized in writing by Perry's for
dissemination. From the date of this Agreement through and including the twenty
fourth month following the termination of this Agreement or any extension
thereof (the "Restricted Period"), Consultant shall not disclose any of such
(confidential Information to any third party without the prior written consent
of Perry's and shall take all reasonable steps and actions necessary to maintain
the confidentiality of such Confidential Information.
7. Status as Independent Contractor. Consultant's engagement pursuant to
this Agreement shall be as independent contractor and not as an employee,
officer or other agent of Perry's. Neither party to this Agreement shall
represent or hold itself out to be the employer or the employee of the other.
Consultant further acknowledges that the compensation provided herein is a gross
amount of compensation and that Perry's will not withhold from such compensation
any amounts respective income taxes, social security payments or any other
payroll taxes. All such income taxes and payments shall be made or provided for
by Consultant and Perry's shall have no responsibility or duties regarding such
matters.
8. Miscellaneous. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Colorado, without regard to
principles of conflicts of law, and the parties irrevocably agree to submit any
controversy or claim arising out of or relating to this Agreement to binding
arbitration conducted in the state of New York. This Agreement may be executed
simultaneously in counterparts, each of which will be deemed to be an original
but all of which together will constitute one and the same instrument. The
invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of this Agreement,
which shall remain in full force and effect. This Agreement contains the entire
understanding of the parties hereto with respect to its subject matter. This
Agreement may be amended only by a written instrument duly executed by the
parties.
IN WITNESS WHEREOF, this Agreement is duly executed this 26th day of June
1998.
/s/ Xxxxxx Xxxx
---------------
By: Xxxxxx Xxxx
PERRY'S MAJESTIC BEER, INC.
/s/ Xxxxxx Xxxxxx
-----------------
By: Xxxxxx Xxxxxx, President
SCHEDULE A
DEPOSITS
This Schedule of Deposits is related to an Agreement to Purchase and
Market Brand Name and Recipes dated June 30 , 1998 (the "Purchase Agreement")
between Xxxxxx Creek Food Corporation, a Colorado corporation (the "Seller"),
and Perry's Majestic Beer, Inc., a Delaware corporation (the "Buyer"). A copy of
said Purchase Agreement is attached hereto for reference only.
1. At the Closing, the Seller shall execute and deliver to Western Escrow
Service (hereafter "Escrow Agent"), to be treated pursuant to the escrow
instruction noted in Article 2.1 (e) of the Purchase Agreement, all documents
and instruments necessary to transfer to the Buyer all of the right, title, and
interest of the Seller in and to the trade names and Products, including,
without limitation:
(i)The Assignment Agreement in the form annexed hereto as Exhibit D;
(ii)Documents reflecting assignment of all names, patents, licenses
and trademarks included among the purchased Assets;
(iii)A Xxxx of Sale in the form annexed as Exhibit E;
(iv)Recipes;
(v)The executed Production Agreement in theform annexed as Exhibit F;
2. At the Closing, Buyer shall deliver to Seller for delivery to the Escrow
Agent to be treated pursuant to the instructions noted in Article 2. l(e):
(i)The executed Consulting Agreement, Production Agreement, and the
Royalty Agreement and
(ii)The executed Promissory Note in the amount of $587,500.00.
SCHEDULE B
SPECIAL INSTRUCTIONS
These instructions relate to an Agreement to Purchase and Market Brand
Name and Recipes dated June 30 , 1998 (the "Purchase Agreement") between Xxxxxx
Creek Food Corporation, a Colorado corporation (the "Seller"), and Perry's
Majestic Beer, Inc., a Delaware corporation (the "Buyer"). A copy of said
Purchase Agreement is attached hereto for reference only. The Escrow Agent has
no obligation to interpret or enforce any provision of said Agreement, but shall
hold the deposits listed on Schedule A according to these instructions. The
Escrow Agent is hereby authorized and directed to hold all of the deposits
listed on Schedule A and to dispose of same upon the following conditions:
1. At such time as the Escrow Agent receives cash or certified funds in
the principal amount of $587,500.00 plus any unpaid interest in the amount of 9%
per annum calculated on the principal amount of the Promissory Note from the
date said Promissory Note was executed, the Escrow Agent is to deliver to
Perry's Majestic Beer, Inc., 00 X. 00xx Xxxxxx, Xxx Xxxx, XX 00000 by certified
mail, the documents noted in Schedule A including a copy of the Promissory Note
marked "Paid in Full".
2. Simultaneous with the transaction noted in paragraph 1 above, the
Escrow Agent is to contact Xxxxxx Xxxx of Xxxxxx Creek Foods, Inc., 000 - 0000
Xxxx, Xxxxxxxxx, XX 00000, (000) 000-0000, and deliver to him the cash or
certified funds in the amount of $587,500.00 plus any interest as noted in
paragraph 1 above.
3. This escrow shall terminate on the due date of the Promissory Note, and
unless said Escrow Agreement is extended by written agreement of all parties
hereto, the Escrow Agent is instructed to send the Promissory Note to Perry's
Majestic Beer, 00 X. 00xx Xxxxxx, Xxx Xxxx, XX 00000, and to forward the balance
of the documents to Xxxxxx Xxxx at 000 - 0000 Xxxx, Xxxxxxxxx, XX 00000. The
Escrow Agent is instructed that the escrow will terminate automatically at the
due date of the Promissory Note unless it is extended in writing. The Escrow
Agent shall be under no obligation to contact either party in the event the
Promissory Note is not paid in full and the date has not been extended by
written mutual agreement of the parties, and may treat same as completed once
the Escrow Agent complies with the instructions in this paragraph 3.
EXHIBIT C
ESCROW AGREEMENT between WESTERN ESCROW SERVICES, INC. (hereinafter
Escrow Agent).
Xxxxxx Creek Food Corporation, Inc. (hereafter Seller)
and Perry's Majestic Beer, Inc., a Delaware corporation (hereafter Buyer).
1. The instruction may be supplemented, altered, amended, modified or revoked by
writing only, signed by all of the parties hereto, and approved by the Escrow
Agent, upon payment of all fees, costs and expenses incident thereto.
2. No assignment, transfer, conveyance or Hypothecation of any right, title or
interest in and to the subject matter of this Escrow shall be binding upon the
Escrow Agent and all fees, costs and expenses incident thereto shall have been
paid and then only upon the Escrow Agents assent thereto in writing.
3. Any notice required or desired to be given by the Escrow Agent to any party
to this Escrow may be given by mailing the same addressed to such party at the
address given below the signature of such party or the most recent address of
such party shown on the records of the Escrow Agent, and notice so mailed shall
for all purposes hereof be as effectual as though served upon such party in
person at the time of depositing such notice in the mail.
4. The Escrow agent may receive any payment called for hereunder after the due
date thereof unless subsequent to the date of such payment and prior to the
receipt thereof the Escrow Agent shall have been instructed in writing to refuse
any such payment.
5. The Escrow Agent shall not be personally liable for any act it may do or omit
to do hereunder as such agent, while acting in good faith and in the exercise of
its own best judgment, and any act done or omitted by it pursuant to the advice
of its own attorneys shall be conclusive evidence of such good faith.
6. The Escrow Agent is hereby expressly authorized to disregard any and all
notices or warnings given by any of the parties hereto, or by any other person,
firm or corporation, excepting only orders or process of court and is hereby
expressly authorized to comply with and obey and all process, orders, judgments
or decrees of any court, and in case the Escrow Agent obeys or compiles with any
such process, order, judgment or decree of any court it shall not be liable to
any of the parties hereto or to any other person, firm or corporation by reason
of such compliance, notwithstanding any such process, order, judgment or decree
by subsequently reversed modified, annulled, set aside or vacated, or found to
have been issued or entered without jurisdiction.
7. In consideration of the acceptance of this escrow by the Escrow Agent, the
undersigned agree, jointly and severally, for themselves, their heirs, legal
representatives, successors and assigns, to pay the Escrow Agent its charges
hereunder and to indemnify and hold it harmless as to any liability by it
incurred to any other person, firm or corporation by reason of its having
accepted the same, or its carrying out any of the terms thereof, and to
reimburse it for all its expenses, including, among other things, counsel fees
and court costs incurred in connection herewith; and that the Escrow Agent shall
have a first and prior lien upon all deposits made hereunder to secure the
performance of said agreement of indemnity and payment of its charges and
expenses, hereby expressly authorizing the Escrow Agent, in the event payment is
not received promptly from the undersigned, to deduct such charges and expenses,
without previous notice, from any funds deposited hereunder. Escrow fees
or charges, as distinguished from other expenses hereunder, shall be as written
above the Escrow Agents signatures at the time of acceptance hereof.
8. The Escrow Agent shall be under no duty or obligation to ascertain the
identity, authority or rights of the parties executing or delivering or
purporting to execute or deliver these instructions or any documents or papers
or payments deposited or called for hereunder, and assumes no responsibility or
liability for the validity or sufficiency of these instructions or any documents
or papers or payments deposited or call for hereunder.
9. The Escrow Agent shall not be liable for the outlawing of any rights under
any statute of Limitations or by reason of laches in respect to the instructions
or any documents or papers deposited.
10. In the event of any dispute between the parties hereto as to the facts of
default, the validity or meaning of these instructions or any other fact of
matter relating to the transaction between the parties. The Escrow Agent is
instructed as follows:
(a) That it shall be under no obligation to act, except under process of order
of court, or until it has been adequately indemnified to its full satisfaction,
and shall sustain no liability for its failure to act pending such process or
court order or indemnification;
(b) That it may in its sole and absolute discretion, deposit the property
described herein or so much thereof as remains in its hands with the then clerk,
or acting Clerk of the District Court, State of Colorado in whose jurisdiction
the subject property lies, and interplead the parties hereto, and upon so
depositing such property and filing its complaint in interpleader it shall be
relieved of all liability under the terms hereof as to the property so
deposited, and furthermore, the parties hereto for themselves, their heirs,
legal representatives, successors and assigns do hereby submit themselves to the
jurisdiction of said court and do hereby appoint the then clerk, or acting
clerk, of said court as their Agent for the service of all process in connection
with such proceedings. The institution of any such interpleader action shall not
impair the rights of the Escrow Agent under paragraph #7 above.
11. If the subject matter of this escrow consists in whole or in part of funds,
the same shall not be commingled by the Escrow Agent with its own funds;
provided, however, that anything contained in the Escrow Agreement of which
these General Provisions are made a part, to the contrary notwithstanding, the
Escrow Agent shall NOT BE REQUIRED TO DEPOSIT THE SAME IN ANY INTEREST BEARING
OR INCOME PRODUCING ACCOUNT AND SHALL NOT IN ANY WAY BE LIABLE TO ANY OF THE
OTHER PARTIES TO THE ESCROW AGREEMENT FOR THE PAYMENT OF INTEREST UPON SAID
FUNDS FOR THE PERIOD DURING WHICH THEY ARE HELD BY THE ESCROW AGENT. It is
intended that the provisions hereof shall supersede any other terms, conditions,
covenants or provisions contained in the Escrow Agreement which expressly or by
implication are in conflict herewith.
12. Payments made by checks returned to the Escrow Agent because of insufficient
funds or that are for any reason unpaid will be sent one time only for
collection and the drawer notified of such action. If returned a second time,
the check will be charged back to the drawer of the party for whom the payment
was made and the payment added back to the contract or escrow balance. In the
event that more than one unpaid check is tendered, the Escrow Agent may require
at its sole option that future payments be made by cash, money order or
Cashier's check. The Escrow Agent reserves the right to delay delivery of
documents or receipts to the appropriate party if payoffs or payments are made
by uncertified checks.
13. A Seller is responsible for delivering to the Escrow Agent, Tax Receipts
(notices are not acceptable) and evidence of payments of insurance premiums for
all taxes and insurance to be added
to a contract balance. It is the responsibility of the parties to the escrow,
not including the Escrow Agent, to assure themselves that taxes are paid and
insurance coverage is maintained, the Escrow Agent shall have no responsibility
for insuring that taxes or insurance premiums are paid. If a fund for payment of
taxes and insurance premiums is maintained with the escrow, such payments will
be made only when tax or insurance premium notices are submitted to the Escrow
Agent and only to the extent that money is available in the escrow account. It
is the responsibility of the parties to the escrow, excluding the Escrow Agent,
to assure themselves that sufficient funds are available to the Escrow Agent to
pay taxes and maintain insurance coverage, and the Escrow Agent assumes no
responsibility therefor.
14. The Escrow Agent shall be entitled to a reasonable compensation for its
serves rendered from time to time. The fees and charges shall be as follows
unless and until modified as provided herein:
SET UP FEE $250. PERIODIC FEE $________
(Specify)
OTHER FEES $___________ $____________ $____________
All of the fees above set forth may be amended by the Escrow Agent at any time,
by advance written notification to the parties to this Escrow Agreement. The
amended fees shall be effective on or after twenty (20) days following the date
of such notice. Collection fees chargeable to the Buyer in accordance with the
terms of the documents in Escrow will be paid by the Buyer with and addition to
payment set forth in the contract or note.
15. Escrow Agent may resign by giving notice in writing to buyer and seller of
its intention to resign. The resignation shall become effective no sooner than
sixty (60) days from the date of mailing the notice. The notice shall be sent
certified mail, return receipt requested, to the addresses set forth below,
unless those addresses have been changed. Buyer and Seller shall advise Escrow
Agent in writing of the name of the new escrow agent selected. If Buyer and
Seller cannot agree as to a new escrow agent, or fail to advise Escrow Agent
within sixth (60) days, Escrow Agent may treat this as a dispute and proceed
under paragraph 10. If a new escrow agent is designated, then upon delivery of
the items described in Schedule A and B, or os much thereof as remains in Escrow
Agents hands to the new escrow agent, Escrow Agent is relieve of all liability
Witness Whereof, the undersigned have hereunto affixed their signatures
and hereby adopt as a part of this Escrow Agreement Schedules A and B.
/s/ Xxxxxx Xxxx /s/ Xxxxxx Xxxxxx
--------------- ---------------------
Xxxxxx Xxxx, President Xxxxxx Xxxxxx, President
Xxxxxx Creek Food Corporation Perry's Majestic Beer, Inc.
June 26, 1998 June 30, 1998
EXHIBIT D
ASSIGNMENT AGREEMENT
ASSIGNMENT AGREEMENT, dated June 26, 1998 by and between Xxxxxx Creek Food
Corporation, a Colorado corporation (the "Seller"), and Perry's Majestic Beer,
Inc., a Delaware corporation (the "Buyer").
WITNESSETH:
WHEREAS, pursuant to that certain Agreement to Purchase and Market Brand
Name and Recipes (the "Purchase Agreement") dated even date herewith by and
between the Seller and the Buyer, the Seller has agreed to sell the following
Assets to Buyer, subject to the payment of the Purchase Price:
(a) Physical Assets: All of Seller's customer lists, distribution
brokerage agreements, advertising plans and the like, directly used in
connection with the marketing, sale and distribution of the Products.
(b) Intangible Assets: All rights, title, and interest in and to the
Products, including, without limitation, (i) the exclusive right to market,
sell, and distribute the Products and to sell to Seller's past and present
customers and to utilize Seller's brokers; (ii) the good will associated with
the Products and the Assets; (iii) a non-exclusive license to use the
certification xxxx "Grown Without Pesticides" (application pending) as set forth
below in section 1.7; (iv) the right to the packaging designs and art graphics
for the Products; and (v) all information concerning past and present marketing
campaigns for the Products.
(c) Leases. Licenses, etc.: All right, title, interest in and to the
leases, licenses, permits, authorizations, contract rights, agreements, whether
written or oral, orders and other documents used in connection with the
marketing, distribution and sale of the Products;
(d) Intellectual Property Rights: All trademarks, trade names, and other
intellectual property rights utilized in connection with the marketing, sale and
distribution of the Products, (excepting the rights to use or apply the
Certification Xxxx "Grown Without Pesticides" or its variants [the Certification
Xxxx], such rights non-exclusively licensed as set forth below in section 1.7)
including written records thereof, including, without limitation, all rights to
the name "Xxxxxx Creek" and all variations thereof and the registered trademark
"Xxxxxx Creek" and the goodwill associated with such trademarks.
AND WHEREAS, the parties hereto desire to execute this Agreement to
further evidence the assignment by the Seller of the Assets.
NOW THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:
1. Definitions. Terms used herein and not otherwise defined herein shall
have the meanings provided for in the Purchase Agreement.
2. Assignment of Assets. The Seller hereby sells, transfers, conveys,
assigns and sets over to the Buyer, its successors and assigns, the Assets.
3. Attorney-in-Fact. The Seller hereby appoints the Buyer, with full power
of substitution, its true and lawful Attorney-in-Fact in its name, place and
stead to take any and all action on behalf of and in the name of Seller to
affirm the rights and interests of the Buyer in, under and to the Assets.
4. Further Assurances. At any time and from time to time after the date
hereof, at the request of the other party, and without further consideration,
each party shall execute and deliver such other instruments of sale, transfer,
conveyance, assignment and confirmation and take such other action as the other
party reasonably requests as necessary or desirable in order more effectively
transfer, convey and assign to the Buyer the Assets.
5. Governing Law. This agreement shall be governed by and construed in
accordance with the laws of the State of Colorado, without regard to principles
of conflicts of law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
XXXXXX CREEK FOOD CORPORATION
By:/s/ Xxxxxx Xxxx
------------------
Xxxxxx Xxxx, President
PERRY'S MAJESTIC BEER, INC.
By:/s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, President
EXHIBIT E
XXXX OF SALE
KNOW ALL MEN BY THESE PRESENTS, that Xxxxxx Creek Food Company, Inc. a
Colorado corporation ("Seller"), for and in consideration of the sum of Ten
Dollars ($10.00) and other good and valuable consideration, the receipt of which
is hereby acknowledged by these presents, and pursuant to an Agreement to
Purchase and Market Brand Name and Recipes dated June 30, 1998 ("Purchase
Agreement") between Seller and Perry's Majestic Beer, Inc. a Delaware
corporation ("Buyer"), hereby sells transfers, conveys, assigns and delivers
unto Buyer all of the right, title and interest of Seller in and to the
following Assets:
(a) Physical Assets: All of Seller's customer lists, distribution
brokerage agreements, advertising plans and the like, directly used in
connection with the marketing, sale and distribution of the Products.
(b) Intangible Assets: All rights, title, and interest in and to the
Products, including, without limitation, (i) the exclusive right to
market, sell, and distribute the Products and to sell to Seller's past and
present customers and to utilize Seller's brokers; (ii) the good will
associated with the Products and the Assets; (iii) a non-exclusive license
to use the certification xxxx "Grown Without Pesticides" (application
pending) as set forth below in section 1.7; (iv) the right to the
packaging designs and art graphics for the Products; and (v) all
information concerning past and present marketing campaigns for the
Products.
(c) Leases. Licenses. etc.: All right, title, interest in and to the
leases, licenses, permits, authorizations, contract rights, agreements,
whether written or oral, orders and other documents used in connection
with the marketing, distribution and sale of the Products;
(d) Intellectual Property Rights: All trademarks, trade names, and
other intellectual property rights utilized in connection with the
marketing, sale and distribution of the Products, (excepting the rights to
use or apply the Certification Xxxx "Grown Without Pesticides" or its
variants [the Certification Xxxx], such rights non-exclusively licensed as
set forth below in section 1.7) including written records thereof,
including, without limitation, all rights to the name "Xxxxxx Creek" and
all variations thereof and the registered trademark "Xxxxxx Creek" and the
goodwill associated with such trademarks.
Except as otherwise provided herein, all capitalized terms contained and
not defined herein shall have the respective meanings ascribed to them in the
Purchase Agreement.
Seller agrees to cooperate with Buyer in obtaining any consents or waivers
of third parties necessary to transfer to Buyer all property and rights provided
to be transferred to Buyer under the Purchase Agreement.
TO HAVE AND TO HOLD the Assets unto Buyer, its successors and assigns, for
its use forever.
At any time and from time to time after the date hereof at the request of
Buyer, and without further consideration, Seller shall execute and deliver such
other instruments of sale, transfer, conveyance, assignment and confirmation and
take such other action as Buyer may reasonably request as necessary or desirable
in order to more effectively transfer, convey and assign to Buyer, and to
confirm Buyer's title to or rights in, all of the Assets, and to put Buyer in
actual possession and operating control thereof.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
XXXXXX CREEK FOOD CORPORATION
By:/s/ Xxxxxx Xxxx
------------------
Xxxxxx Xxxx, President
STATE OF COLORADO,
COUNTY OF DELTA, ss.
Subscribed and affirmed before me this 26th day of June , 1998 by Xxxxxx
Xxxx, known personally to me to be the President of Xxxxxx Creek Food Company.
Witness my hand and official seal.
My commission expires: October 26, 1998 /s/ Xxxx Xxxxxx
---------------
Notary Public
ACCEPTED THIS 30th DAY OF JUNE, 1998
PERRY'S MAJESTIC BEER, INC.
By: /s/ Xxxxxx Xxxxxx
---------------------
Xxxxxx Xxxxxx, President
EXHIBIT F
PRODUCTION AGREEMENT
THIS AGREEMENT, dated June 30,1998 by and between Xxxxxx Creek Food
Corporation, a Colorado corporation (the "Seller"), and Perry's Majestic Beer,
Inc., a Delaware corporation (the "Buyer").
WITNESSETH:
WHEREAS, Seller is engaged in the business among other things, of
manufacturing, marketing and distributing applesauce, apple sauce blends and
apple butter made from associated proprietary recipes utilizing "Grown without
Pesticides" apples; and
WHEREAS, the parties have entered into an Agreement to Purchase and Market
Brand Name and Recipes dated June __, 1998 (the "Purchase Agreement"); and
WHEREAS, the Buyer wishes to continue to use the Seller's production
facility in Hotchkiss, Colorado to produce the Products from the associated
recipes and ingredients of the Seller, said Products to include all Products
currently produced under the Xxxxxx Creek label, including all applesauce,
applesauce blends, and apple butter; and
WHEREAS the Seller is desirous of continuing to produce same;
NOW THEREFORE, in consideration of the mutual terms, conditions and other
agreements set forth herein, the Seller and the Buyer hereby agree as follows:
1. Term. Seller agrees to manufacture and the Buyer agrees to use the Seller as
the sole and exclusive manufacturer of the Products produced under the "Xxxxxx
Creek" label, including all applesauce, applesauce blends, and apple butter for
a period of twelve (12) years from the date of closing of the "Purchase
Agreement." Seller shall have the sole and exclusive right to process and
package the Products of Buyer contemplated by this Agreement during that
twelve-year time period and encompassed in the Purchase Agreement. Buyer
reserves the right to make this a non-exclusive agreement if the Seller is
unable to meet the production needs of the Buyer. This right shall be for the
excess production needs above Seller's production capability only.
2. Production Standards/Recipes. Seller agrees to manufacture the Xxxxxx Creek
brand of applesauce, applesauce blends, and apple butter using the same quality
of production standards as previously used by them in the production of the
Products. The Seller further agrees to manufacture all Products using the same
ingredient qualities and quantities that the Seller has previously used in the
production of the Products. The Seller agrees to continue to use "good
manufacturing practices" to produce the Xxxxxx Creek brand of applesauce,
applesauce blends, and apple butter for the Buyer. Seller agrees to provide
production reports for each production run on a form provided by Buyer. Seller
shall notify Buyer in writing of any substantial deviations from the established
production standards and/or differences or variations in basic ingredients which
may affect the consistency of the finished product. Buyer shall then have the
option to elect to proceed with production according to the varied standards or
to withdraw the specific order.
3. Ordering and Shipping. Buyer shall place orders with the Seller by fax or by
mail. Seller agrees to manufacture and ship orders of 20 pallets or less within
15 days of the receipt of the order by the Seller. Any individual orders
exceeding 20 pallets shall automatically add an additional 10 days to
manufacture and shipping schedule as recited herein. In order to facilitate
Seller's shipping schedule, the parties agree that any orders that are shipped
in an easterly direction from the manufacturing plant in Hotchkiss, Colorado
(with the exception of the Denver area) shall be shipped on the 10th or 25th
of each month following the completion of the manufacturing cycle. Whenever
possible, the Buyers shall place orders in increments of 5,000 pounds or more.
Orders of less than 5,000 pounds will be subject to a shipping surcharge at the
discretion of the Seller. Buyer agrees that upon payment of the Promissory Note
the freight minimum shall increase to 8,000 pounds.
Buyer also agrees that if any new accounts are procured outside of the
existing marketing territory, the Seller shall have the right to add freight
surcharges for freight costs above $110 per pallet.
4. Special Orders. Any orders which require extraordinary production time,
overtime labor costs, increased costs of delivery of component parts, etc.,
necessary to fill the special order, will create additional costs that will be
added to the cost of manufacture as noted herein, and shall be in addition to
the payments agreed upon in this Agreement. Seller agrees to notify Buyer in
writing prior to incurring such additional costs.
5. Extraordinary Tasks. In the event that the Buyer requests the Seller to
perform any extraordinary or special tasks outside of the realm of the normal
production of applesauce and related products, the Buyer shall be billed at the
rate of $20.00 per hour for such extraordinary or special tasks, plus the costs
of materials. This paragraph is to include all special shipments except
shipments of samples, special packaging, or other tasks that are outside of the
normal production and shipment of the Products. Shipments of samples shall be
billed at cost of production, labor, shipping and added shipping materials.
6. Payment. Until the principal and interest due on the Promissory Note is paid
in full, Buyer agrees to pay Seller for products shipped contemporaneous with or
before the shipment is actually made. After payment in full of the principal and
interest on the Promissory Note in the sum of $587,500.00 as referred to in the
"Purchase Agreement", payment terms shall change to allow the Buyer 20 days to
pay in full following receipt of any invoice of product shipped from the Seller.
7. Fee for Manufacturing and Shipping. As payment for the services performed in
the manufacturing and shipping of the finished Products, the Seller and Buyer
agree to the following fee schedule: Seller will produce twelve (12) 24-ounce
glass jars (one flavor per case) for a price of $11.87 per case. Seller will
produce cases of forty-eight (48) 4-ounce cups wrapped 4 cups per sleeve and
placed in a master carton for a price of $11.18 per case. Price decreases will
be negotiated upon an increase in the production requests of Buyer. Price
increases will only occur as ingredient costs or other costs associated with
manufacturing rise and/or as wholesale price of the product is raised and said
increases shall be at a rate proportional to the increase in costs or the
increase in wholesale price. It shall be the obligation of Seller to provide
Buyer with documentation of all cost increases.
8. Grown Without Pesticides Apple Purchases. The Buyer recognizes that the Grown
Without Pesticides apples are raised specifically for the Buyer based on
contracts made at the beginning of the year, and that these apples typically
have to paid for in full at harvest. Because of the high expense for the
purchase of apples, the Buyer agrees to notify the Seller six months in advance
of harvest (i.e., by May 1 each year) of the estimated production quotas that
will be required for the upcoming harvest year from November 1 to September 30.
The Buyer further agrees to aid the Seller in the procurement of said apples in
accordance with the projections provided by the Buyer. In order to accomplish
this, the Buyer will pay to the Seller, prior to harvest in each year, a payment
equal to 50% of the cost of the apples which are to be purchased at harvest. Any
apples that are purchased on consignment or which will be purchased after
harvest based on a separate contractual relationship will not be affected by
this Agreement. In repayment for the advance referred to in this paragraph 8,
the Seller agrees to credit the Buyer the sum of $1.20 per case beginning in the
month of January following the harvest from which the apples were produced, and
will continue giving credits until all funds advanced are repaid.
Prior to the payment of the Promissory Note, the Buyer is to advance only
$25,000 to the Seller on or about October 1, 1998 for the procurement of Grown
Without Pesticides Apples. Repayment of the $25,000 shall commence immediately
for all orders placed after October 1, 1998 at the rate of $1.20 per case
credit.
9. Promissory Note. It is recognized that the Seller will continue to have
certain costs associated with debt being serviced by them and that the servicing
of this debt will result in the Seller operating at a loss during the period
until the Promissory Note is paid in full. Therefore, the interest on the
Promissory Note will be paid to Seller on a monthly basis.
10. Denver Advertising. Buyer agrees to honor the existing advertising plan for
the Denver-area market that has been previously agreed upon by Seller. The Buyer
agrees to allocate at least $20,000.00 for said marketing campaign, and said
expenditures will be expended prior to February 1, 1999. Seller agrees to
cooperate with Buyer and provide direction as to how the funds are to be spent
prior to disbursement. Buyer reserves the right to purchase and hold "Key Man"
life insurance on Xxxxxx Xxxx.
12. Insurance. The Seller agrees to keep in force a $1,000,000.00 of product
liability insurance for the duration of this Production Agreement, and to name
the Buyer as an additional insured on the policy. Any extra costs associated
with adding Buyer as a covered entity shall be borne by the Seller. By so
allowing this to occur the Seller is in no way accepting liability for any
damages that may be incurred by Buyer as a result of the marketing, selling or
in any way transferring said Products to a third party.
13. Independent Contractor Status. It is agreed between the parties that this
Agreement is not intended to create, and in fact does not create a
Principal/Agent, Partnership, or Joint Venture relationship. Seller is acting in
the nature of an independent contractor for the purpose of processing,
packaging, and shipping products for Buyer. Neither party to this Agreement
shall be liable for any obligations incurred by the other in the furtherance of
this Agreement unless specifically agreed to in writing and signed by both
parties. Nothing herein shall prohibit Seller from manufacturing food products
for other customers as long as the recipes for same are provided by the customer
and they are not Xxxxxx Creek recipes.
14. Force Majeure. Should the performance of this Agreement be prevented or
delayed by acts of God, war, civil insurrection, fire flood, storm, strikes,
lockouts, total or partial failure of transportation or delivery facilities,
interruption of power, or by any law, regulation or order of Court or by any
other cause beyond the control of such party, such party's performance to the
extent it is so prevented or delayed shall be excused.
15. Waiver. The failure of either party to this Agreement to insist on the full
performance of any of its provisions by the other party shall not constitute a
waiver of such performance, not shall it be constituted a waiver of any other
provisions of this Agreement.
16. Sole Agreement: This Agreement, in conjunction with the "Purchase Agreement"
and attachments constitutes the sole agreement between the parties on this
subject matter. All terms not otherwise defined in this document shall have the
meaning ascribed to them in said "Purchase Agreement"; Any prior agreements,
promises, negotiations or representations not expressly set forth in this
Agreement are of no force and effect. This Agreement may not be amended,
modified, or added to unless the change is in writing and signed by both of the
parties hereto. This Agreement shall be binding on the heirs, executors, assigns
and transferees of the parties. In this regard, it is expressly agreed that this
Agreement, and the rights and obligations thereunder, may be assigned by Seller
to Xxxxxx Xxxx at Seller's sole discretion.
17. Relationship to Purchase Agreement and Promissory Note: It is specifically
understood that this Production Agreement is tied into the Buyer's performance
under the Purchase Agreement and Buyer's timely payment of all interest and
principal payments due under the Promissory Note. Buyer's failure to comply with
the terms of the Purchase Agreement or to make payments when due under the
Promissory Note will cause the obligation of Seller under this Agreement to
cease and Seller may then resume producing and marketing Xxxxxx Creek products
under their own name and for their own profit.
18. Choice of Laws and Venue: this Agreement shall be interpreted according to
the laws of the State of Colorado, and Delta County shall have sole and
exclusive court jurisdiction of any disputes arising as a result of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be executed
as of June 26, 1998.
XXXXXX CREEK FOOD CORPORATION
By:/s/ Xxxxxx Xxxx
------------------
Xxxxxx Xxxx, President
PERRY'S MAJESTIC BEER, INC.
By:/s/ Xxxxxx Xxxxxx
Xxxxxx Xxxxxx, President
