ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into on this ____ day of
January, 1998, by and between VERMONT PURE SPRINGS, INC. (VPS) a Delaware
corporation with its principal place of business in Randolph, Vermont ("BUYER")
and SAGAMON SPRING WATER OF VERMONT, INC. (SSW), a Vermont corporation with its
principal place of business Rutland, Vermont ("SELLER").
RECITALS
WHEREAS, VPS is a company engaged in the bottling and sale of natural
spring water with its manufacturing facility and principal place of business in
Xxxxxxxx Center, VT and
WHEREAS, SSW is a company, engaged in the bottling and sale of water
with its principal place of business in Rutland, VT, and
WHEREAS, both Parties desire to enter into agreements by which VPS
shall (I) purchase the business of SSW related to bottled water, bottling
equipments and springwater development, springwater withdrawal rights and other
assets listed on Exhibit A.
NOW THEREFORE, in consideration of the mutual promises contained
herein, the parties agree as follows:
1. ASSETS
1.1. Asset Purchase and Sale. Seller and Buyer mutually agree for the
Seller to sell, convey, transfer, assign and deliver to Buyer and Buyer to
purchase substantially all of the property of Seller, wherever located, tangible
and intangible, consisting of the following assets: vehicles, bottling
equipment, spring properties, trademarks and other intellectual property,
purchase orders, customer lists, and goodwill. (The assets being purchased and
sold hereunder are sometimes referred collectively as "Assets" and are
identified in Exhibit "A"). Assets of Seller not on the list are being retained
by Seller.
1.2. Xxxx of Sale. Title to the Assets will be conveyed to Buyer by
Seller pursuant to a Xxxx of Sale, free and clear of all liens and encumbrances
except purchase money financing liens as described in Paragraph 2. The form of
the Xxxx of Sale shall be approved by Buyer's counsel prior to the closing Date
(as hereinafter defined).
2. PURCHASE PRICE
2.1 Purchase Price: $275,000, provided that:
(I) $170,000.00 of the Purchase Price to be paid in cash at
closing.
(ii) Buyer will pay Seller compensation for goodwill of the
Company of $8000.00 per year for five (5) years with the first payment due on
the signing of this agreement;
(iii) the issuance of a Note by Buyer to Seller in the amount
of $65,000.00 for a term of five (5) years at the prime rate of interest as
amended from time to time by Chase Manhattan, N.A. with equal payments of
principal and interest based on a 5 year amortization schedule. The Note will be
secured by a grant of a security interest in the assets acquired including
equipment, contract rights, inventory, accounts receivable, insurance proceeds,
and all tangible and intangible property and any replacement of said assets that
is the subject of this Agreement and a collateral assignment of the lease for
mineral rights currently granted by Xxxx X. Xxxxxxx and Xxxx X. Xxxxxxx to
Seller, which leasehold interest is being transferred to Buyer in accordance
with the terms and conditions of this agreement;
(iv) Xxxx Xxxxxxxxx and Xxx Xxxxx, officers and employees of
Seller, shall enter into with the Company (I) a non-compete agreement for five
(5) years.
3. EXCLUDED SECURITIES AND LIABILITIES
3.1 It is agreed and understood that this is a purchase and sale of
assets (with limited assumption of certain operating liabilities). The
securities of the Seller are expressly excluded from this transaction. All
liabilities not enumerated in Schedule B, including without limitation, Utility,
Taxing Authority and Employment Claims are expressly excluded.
4. CONDUCT OF BUSINESS AND CONDITION OF PREMISES
PENDING SETTLEMENT
4.1 Prior to the Settlement:
4.1.1. The business of Seller will be conducted only in the
ordinary course, in accordance with all laws and regulations of the township,
state, and federal governments, and Seller shall not violate the terms of any
existing leases or contracts.
4.1.2. Seller will continue to operate the business in the
manner heretofore operated by Seller. Until Settlement date, a representative of
the Buyer shall have the right, during normal business hours, to visit the
Seller's place of business to examine Seller's books and records and to observe
the operation of the business.
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4.1.3. Seller will keep all of the assets and the Premises
fully insured against any loss, either by fire, other casualty or theft until
the time of settlement.
4.1.4. SSW will use their best efforts to preserve SSW's
organization. to keep available the services of employees, and to preserve
friendly relations with its customers and trade creditor. Company shall make no
representation or promises with employees about future employment but Buyer will
consider existing employees for resumption of duties as appropriate.
4.1.5 In the event that prior to the date of Closing, the
Assets shall be totally or substantially lost or damages by fire or any other
casualty, the Buyer shall have the option to terminate this agreement or waive
the diminution in value and close under this Agreement buying the Assets "as
is", in which latter event it shall be entitled to treat the proceeds of any
insurance paid to Seller by reason of such loss or damage (excepting insurance
for lost profits, if any), as a payment on the purchase price or the Buyer shall
have the right to all insurance proceeds to apply the funds to repair and/or to
reconstruct the Assets.
5. SETTLEMENT
5.1 ("Settlement") shall take place on or before June 30, 1997 and on
the date and time set forth by written notice from the Buyer to the Seller at
least ten (10) days in advance thereto.
5.2 Settlement shall be held in Rutland, VT or such other local place
as Seller and Buyer shall agree.
5.3 Time shall be of the essence of this Agreement.
5.4 Any closing adjustments shall be apportioned pro rata as of
the date of Settlement.
6. BULK SALES ACT.
6.1 Buyer and Seller waive compliance with the applicable Bulk Sales
Act. Seller and its majority shareholder shall indemnify and hold Buyer harmless
for any loss to Buyer arising out of such non-compliance . Seller will execute
and deliver, at closing, an indemnification agreement in accordance with this
Paragraph.
7. SELLER'S WARRANTIES.
7.1 The Seller represents and warrants to Buyer that as of the date of
this Agreement and as of the date of the Settlement, that:
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7.1.1 The Seller is a corporation duly organized and existing
in good standing under the laws of the State of Vermont with the corporate power
to own its assets and carry on its business as is now being conducted.
7.1.2 Seller has good and marketable title and the right of
sole possession and control of all the assets being sold pursuant to this
Agreement, and that such assets at the time of Settlement will not be subject to
any mortgages, pledges, liens, encumbrances, security interest, or charges,
except as described in Paragraph II (iv).
7.2 The Seller represents that to the best of the Seller's
knowledge, information and belief:
7.2.1 The Seller is in compliance with all applicable laws,
ordinances, rules, regulations, and requirements of all governmental authorities
having jurisdiction thereof, and that Seller has complied with all laws,
municipal ordinances, and regulations of all governmental authorities having
jurisdiction thereof, and that Seller has complied with all laws, municipal
ordinances, and regulations applicable to Seller and in the ownership of the
assets and the business hereunder.
7.2.2 There are no actions, suits, or proceedings pending or
threatened against Sellers, either at law or in equity, brought by any federal,
state, or municipal or other governmental agency, department, board, bureau, or
other instrumentality.
7.2.3 All federal, state, and local tax returns required to be
filed have been filed, all deficiencies proposed have either been paid or
settled or are included in an account for accrued taxes; all withholding,
unemployment, social security, excise interest have been paid or will be paid by
Seller after Settlement from funds set aside at Settlement.
7.2.4 All financial information provided to the Buyer is
accurate and in accordance with the books and records of the Company, and fairly
represents the financial condition, assets and liabilities of the Company.
7.2.5 Neither Seller nor any direct or indirect shareholder
thereof has made any agreement or taken any action which might cause anyone to
become entitled to a broker's fee or commission.
7.3 If Seller obtains any knowledge or information between the date
hereof and Settlement, making or indicating that any of the aforesaid warranties
or representations are no longer true, or indication that any of the
representations and conditions set forth in this Section VII hereof are not true
and cannot be made true by the Seller by the time of Settlement, or will no
longer be true as of the date of Settlement, Seller will promptly notify Buyer
of such change in circumstances.
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8. CONDITIONS PRECEDENT
All obligations of the Buyer under this Agreement are subject to
fulfillment, prior to or at Settlement, of each of the following conditions:
8.1 Due Diligence. Buyer has been afforded the opportunity to conduct
due diligence on the business and operations of the Seller and is satisfied, in
its reasonable discretion, that the business is as represented to VPS prior to
entering into this Asset Purchase Agreement.
8.2 Representation and Warranties. The representations and warranties
of Seller contained in this Agreement being true at the time of Settlement as
though such representations and warranties were made at such time.
8.3 Compliance with Agreement. Seller shall have performed and complied
with all agreements and conditions required by this Agreement to be performed or
complied with by prior to or at closing.
8.4 Opinion of counsel. Seller shall have delivered to Buyer, in form
and content satisfactory to Buyer's counsel, an opinion of its counsel issued to
Buyer to the effect that:
8.4.1 Seller has been duly incorporated and is existing as a
corporation in good standing under the laws of the State of Vermont.
8.4.2 This transaction and its terms do not violate any
provisions of Seller's Articles of Incorporation or Bylaws;
8.4.3 Seller has taken all shareholder, director and other
actions necessary to authorize the transactions contemplated by the parties
hereto;
8.4.4 Seller has the authority to carry on the business
presently being conducted by Company;
8.4.5 Seller has full power and authority to sell, assign and
transfer the Assets sold pursuant to this Agreement.
8.5 Documentation. Negotiation and preparation of definitive documents,
including all collateral documents, governing the transactions contemplated
herein under terms and conditions acceptable to Buyer's and Seller's counsel.
8.6 Financing. Buyer obtains financing for the purchase of assets
herein described on terms acceptable to the Buyer.
8.7 Seller's Shareholder Approval. Seller shall have obtained the
necessary Shareholder
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approval for this transaction.
8.8 Non-Compete Agreement. Xxxx Xxxxxxxxx and Xxx Xxxxx shall
execute and deliver at Closing the Non-Compete Agreements attached as Exhibits
"C"and "D".
8.9 Water Rights. Successful negotiation and preparation of definitive
documents, including all collateral documents, governing the transfer and
renegotiation of water withdrawal rights contained in an agreement by and
between Seller and Xxxxx X. Xxxxxxx under terms and conditions acceptable to
Buyer and Buyer's counsel.
9. NONDISCLOSURE OF CONFIDENTIAL INFORMATION
9.1 Seller and its directors, shall not, during the term of this
Agreement or at any time for a period of two years following closing, unless
authorized to do so in writing by the Buyer, directly or indirectly disclose or
permit to be known to, or used for the benefit of, any person, corporation or
other entity (outside of the employ of the Company), or itself, any confidential
information. For the purposes of this Section IX, the term confidential
information shall include, but not be limited to, confidential or proprietary
knowledge or information with respect to the conduct or details of the Seller's
business including, but not limited to, lists of customers of the Buyer's
business, pricing strategies, or marketing methods. Confidential information
does not include matters which are generally known outside of the Buyer, public
knowledge or in the public domain.
9.2 All confidential information described in Section IX (A) shall be
the exclusive property of the Buyer, and Seller shall use its best efforts to
prevent any publication or disclosure thereof.
9.3 The provisions of this Section IX shall survive the closing and
shall continue for a period of two years.
10. RESTRICTIVE COVENANT
In order to protect the Buyer in its full beneficial use and enjoyment
of the goodwill, assets, business relationships, marketing techniques and other
know-how acquired as a result of this Agreement, for a period of five (5) years
after the closing of this Agreement, Seller, including its officers and
directors will not, within the United States of America, directly or indirectly
compete with the Buyer in the bottling of home/office water, and will not either
(I) solicit any persons or entities known to be customers of the Buyer to
purchase any of the aforementioned products; or (ii) solicit or induce any
employee of the Buyer to leave such employment to take a position with Seller or
with any company for which any officer or director then works. During the
aforesaid period, Seller shall not make any statements or commit any acts
(including contacting any of the Buyer's customers that would in any way be
tortiously injurious or detrimental to the
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Company's image, business or customer relations. The provisions of this Section
X shall survive the termination, for any reason, of this Agreement and shall
continue for the two year period contemplated by this Section X.
11. GOVERNING LAW
This Agreement shall be construed, interpreted and enforced in
accordance with the laws of the State of Vermont.
12. TERMS SEVERABLE
In the event that any term or provision hereof or the application
thereof to persons or circumstances shall to any extent be invalid or
unenforceable, then the remainder of this Agreement shall not be affected
thereby and each term or provision hereof shall be valid and enforced to the
fullest extent permitted by law.
12. SURVIVAL OF TERMS
The terms of this Agreement, including but not limited to the
warranties, representations and covenants made by the parties hereto, shall
survive for a period of one (1) year from the Closing Date and the Seller shall
remain liable for any deficiency arising from any breach of the same.
13. FORCE MAJEURE
The failure of or delay in compliance with any of the terms
and conditions of this Agreement by either party shall be excused if said
failure or delay is due to an Act of God, fire, flood, strike, labor dispute,
accident, act of government or any similar cause beyond the reasonable control
of said party.
14. ENTIRE AGREEMENT
This Agreement, including the Preambles, and any other document or
exhibit incorporated herein by reference sets forth the entire understanding of
the parties. It shall not be changed or terminated orally. This Agreement may be
executed in one or more counterparts each of which shall be deemed an original
but all of which together shall constitute one and the same document.
15. NOTICE
Notices required under this Agreement shall be in writing sent by certified mail
and facsimile to the representatives of the parties as follows:
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Vermont Pure Springs, Inc.
Xxxxx 00
Xxxxxxxx Xxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Facsimile (000) 000-0000
With Copy to:
Xxxxx X. Xxxxx, Esquire
Ledgewood Law Firm
0000 Xxxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
To Seller:
Sagamon Spring Water of Vermont
X.X. Xxx 000
Xxxxxxx, XX 00000
Attention: Xxxx Xxxxxxxxx and Xxx Xxxxx
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the day, month and year first written above.
WITNESS: VERMONT PURE SPRINGS, INC.
______________________ By:_____________________________
Name:___________________________
Title:__________________________
SAGAMON SPRING WATER
OF VERMONT, INC
WITNESS:
_______________________ By:___________________________
Name:_________________________
Title:________________________
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Exhibit A
List of Assets
Exhibit B
Liabilities assumed
Exhibit C
Non-compete of Xxxx Xxxxxxxxx
Exhibit D
Non-compete of Xxx Xxxxx
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