Exhibit 10.7
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made on February
28, 2005, between Independence Water Group, LLC, a Virginia Limited
Liability Company with offices at 0000 Xxx Xxxxx Xxxxxxx, Xxxxxxxxxxxx,
Xxxxxxxx 00000 ("Seller"), and Universal Food & Beverage Company of
Virginia, a Virginia Corporation ("Buyer").
BACKGROUND
A. On November 9, 2001 by Order in the United States Bankruptcy Court
for the Western District of Virginia, Roanoke Division (Abingdon), Seller
purchased certain assets of the Xxxxxxx Mountain Water Company, Inc.
(Debtor) from Xxxxxx X. Xxxx, Xx., Trustee by way of Deeds to Seller for
the Real Estate and Personal Property dated January 2, 2002.
B. As of September 1, 2004 Universal Food & Beverage Company, a
Delaware Corporation ("Universal"), of which Buyer is a wholly owned
subsidiary, entered into a Management Agreement with Seller (the
"Management Agreement") to manage the water bottling plant and equipment,
buildings, water aquifer rights and real estate (collectively the
"Business"). The Management Agreement provides for Buyer and Seller
entering into an Asset Purchase Agreement for the purchase of the Business
including approximately 000 xxxxx xx xxxxxx xxxx, xxxxx aquifer rights,
16,000 sq. ft. bottling facility and distribution space, including a
residence in Independence, Virginia, with all associated equipment,
materials, supplies, trademarks and goodwill (collectively the "Purchased
Assets").
C. On September 27, 2004 Cardinal Minerals, Inc., a Nevada corporation
("Cardinal"), entered into a Share Purchase Agreement and Plan of
Reorganization (the "Reorganization Agreement") with Universal, for the
exchange of all the outstanding shares of Universal for shares of common
stock of Cardinal (the "Share Exchange"). Upon consummation of the Share
Exchange, Universal will become a wholly owned subsidiary of Cardinal and
the shareholders of Universal will become shareholders of Cardinal which
will be renamed "Universal Food & Beverage Company".
AGREEMENTS
NOW, THEREFORE, in consideration of the Background and the terms and
conditions set forth in this Agreement, the Seller and Buyer agree as
follows:
1. Assets Purchased. At the Closing, Seller shall sell, assign, convey,
transfer, set over, and deliver to Buyer all of the assets, rights, and
interests of every conceivable kind or character whatsoever, whether tangible or
intangible, that on the Closing Date are owned by Seller or in which Seller has
an interest of any kind except for Excluded Assets listed under Section 2. These
include, without limitation, the following Purchased Assets:
a. All furniture, fixtures and equipment, fixed assets and all
other items of tangible personal property, in each case wherever
located and whether or not capitalized on Seller's books, including but
not limited to, the property set forth on Schedule 1A attached hereto
(the "Personal Property").
b. All good and saleable inventory of any kind, character,
nature or description, wherever located including all finished goods,
work-in-process, supplies, raw materials, parts, scraps, containers and
packaging materials and including any consigned inventory (the
"Inventory").
c. All accounts, chattel paper, documents, and instruments,
including all accrued interest receivable and also any security Seller
holds for the payment thereof generated by the Business (the
"Receivables") and all of Seller's general intangibles in connection
with the Business and, to the extent not otherwise constituting general
intangibles, any interest of Seller in any and all claims by Seller
against any other person in connection with the Business, whether now
accrued or later to accrue, contingent or otherwise, known or unknown,
including, but not limited to, all rights under express or implied
warranties from suppliers in connection with the Business (except as
they may pertain to Seller's liabilities other than Assumed
Liabilities), claims for collection or indemnity, claims in bankruptcy,
and chooses in action.
d. All Seller's right, title, benefit, and interest in and to
inventions, discoveries, improvements, designs, trade secrets, trade
names, trademarks, process sheets, specifications, bills of material,
formulae and secret and confidential processes, know-how and
technology, used in the Business (the "Intellectual Property") as
listed on Schedule 11.AA.
e. Four (4) tracts or parcels of improved land containing 621
acres more or less located at 0000 Xxx Xxxxx Xxxxxxx, Xxxxxxxxxxxx,
Xxxxxxxx, legally described on Schedule 1E attached hereto (the "Real
Estate");
f. The full benefit of:
i. Any and all purchase orders placed with and
accepted by Seller on or before the Closing Date in connection
with the Business that have not been completely performed or
filled before the Closing Date, covering the purchase from
Seller of products to be supplied by Seller in the Business,
or covering the rendition by Seller of service on products
supplied by Seller in the Business and including all deposits,
progress payments, and credits of the Business, as set forth
on Schedule 1.F.1;
ii. The purchase orders listed on Schedule 1.F.2
placed by Seller prior to the Closing Date in connection with
the Business that have not been completely performed before
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the Closing Date, covering Seller's purchase of inventory,
supplies, or materials in the ordinary course of business; and
iii. The leases of personal property and other
agreements listed in Schedule 1.F.3.
(All the items listed in this Section 1.F are the" Contracts and
Commitments").
g. All records and lists of the Business that pertain directly
or indirectly, in whole or in part, to any one or more of the
following: the Seller's Business customers, suppliers, advertising,
promotional material, sales, services, delivery, internal organization,
employees, and operations.
h. All security deposits, prepaid expenses, and similar items
reflected in the latest of the Financial Statements of Seller referred
to in Section 11.G, in connection with the Business, in the amount
accrued as of the Closing Date.
i. All transferable local, state, and federal franchises,
licenses, bonds, permits, and similar items pertaining to the Business
and/or the Purchased Assets, as listed on Schedule 1I attached hereto
(the "Permits").
j. The Business conducted by Seller as a going concern,
including any and all goodwill, telephone and FAX numbers, yellow-page
advertisements and P.O. Box if any.
k. To the extent not otherwise specifically included in this
Section or excluded under Section 2, all assets, rights, claims,
contracts, agreements, causes of action and properties as of the
Closing Date, of every kind, character, nature and description, whether
tangible or intangible, xxxxxx or inchoate, known or unknown,
contingent or fixed and wherever located.
Seller shall update all Schedules described in this Section 1, where
appropriate, as of the Closing Date.
2. Excluded Assets. Buyer is not purchasing any Excluded Assets from
Seller. "Excluded Assets" means:
a. All of Seller's books of account (although copies of such
books and records relating to the Business shall, on reasonable request
made by representatives of Buyer, be provided to Buyer);
b. Claims for refunds of federal and state income taxes, tax
credits of any kind;
c. Cash or cash equivalents.
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3A. Liabilities Assumed. Seller agrees that Buyer assumes no
liabilities of Seller, and Buyer shall not assume any such liability, whether
accrued, absolute, contingent, known, unknown, or otherwise, except for
a. Those liabilities specifically identified as of the Closing
Date on the Closing Date Balance Sheet consisting of all Trade Payables
(in an amount not to exceed $40,000 as set forth on the Financial
Statements included as Schedule 11.G), as may be adjusted, all as
pursuant to Section 4.C, consistent with the accounting done on the
Financial Statements including as Schedule 11.G, incurred in the normal
course of business;
b. Those liabilities related to executory obligations of
Seller's continued performance arising in the ordinary course of
business under any of the Contracts and Commitments of Seller that
become performable or payable on or after the Closing Date.
(All of the items listed in this Section 3.A are "Assumed Liabilities.")
3B. Excluded Liabilities. Notwithstanding the provisions of Section 3A
the Buyer will not assume or become responsible for, and will not be deemed to
have assumed or have become responsible for, any other obligation or liability
of the Seller, whatsoever other than as specifically set forth in Section 3A
(with all such unassumed liabilities and obligations referred to herein
collectively as "Excluded Liabilities"). Without limiting the generality of the
foregoing, the Buyer will not assume or become responsible for and will not be
deemed to have assumed or to have become responsible for:
a. any liability or obligation arising prior to, on or after
the Closing Date in connection with any Excluded Asset;
b. any debt to any bank including but not limited to the
Xxxxxxx National Bank;
c. any liability or obligation of the Seller, any of its
Affiliates or any of their respective predecessors under any
Environmental Laws arising out of or in any way related to any event,
transaction, condition, practice, release or occurrence on or prior to
the Closing Date, including but not limited to any liability or
obligation resulting from any violation of Environmental Laws;
d. any liability or obligation (whether assessed or
unassessed) of the Seller or any of its affiliates with respect to any
Taxes, including any Taxes arising by reason of the transaction
contemplated by this Agreement or the Related Agreement, as of or for
any period prior to, on or after the Closing Date, except for property
taxes specifically included on the Financial Statement included as
Exhibit 11.G;
e. any liability or obligation of the Seller to any current or
former employee with respect to worker's compensation claims made after
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the Closing Date by current or former employees of Seller with respect
to conditions or occurrences commencing on or prior to the Closing
Date; or
f. any liability or obligation of the Seller with respect to
any civil or criminal litigation, proceeding, investigation or claim
relating to or involving allegations of criminal conduct, civil fraud
or intentional misconduct.
g. product warranty liabilities, including product defects,
for products produced by Seller on or prior to the execution of the
Management Agreement.
4. Purchase Price for Purchased Assets.
a. Purchase Price. The purchase price to be paid by Buyer to
Seller for the Purchased Assets at the Closing (the "Purchase Price")
shall be equal to:
(i) $200,000; and
(ii) 2,000,000 Units consisting of one share of
Common Stock ($0.001) per value per share of Universal (the
"Common Stock") and one Warrant to purchase one share of
common stock of Universal (the "Warrants"). The Warrants will
allow Seller to purchase one (1) share of the Common Stock at
an exercise price of $1.00 per share for three (3) years
following its issuance. The Units shall consist of the Common
Stock and the Warrants (the "Units").
The Purchase Price shall be paid by Buyer in full at
the Closing. Buyer shall deliver to Seller the amount
determined under this Section by cashier's check or wire
transfer at Closing. Buyer shall cause to be delivered at
Closing a share certificate for 2,000,000 shares of Common
Stock of Universal in the name of Seller which share
certificate will contain restrictions on transferability.
Buyer shall also cause to be delivered at Closing the Warrants
for the purchase of 2,000,000 shares of Common Stock of
Universal.
If the Closing occurs after the Share Exchange, Buyer
shall have the right to deliver and Seller shall accept the
same number of Cardinal shares of common stock and warrants as
Seller would have received as consideration of Common Stock
and Warrants pursuant to the terms of this Agreement. In the
event Seller receives such Cardinal shares of common stock and
warrants, they shall be subject to the same restrictions on
transferability as applied to the Common Stock and Warrants.
b. Allocation of Purchase Price. The Purchase Price shall be
allocated among the Purchased Assets in accordance with attached
Schedule 4.b. Buyer and Seller agree to file all tax returns and
reports in a manner consistent with the allocations in this Section.
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5. Related Agreement; Real Estate Purchase Agreement. The real estate
parcels located at Elk Creek Parkway, Independence, Virginia shall be purchased
by Buyer pursuant to an agreement in the form attached hereto as Exhibit A (the
"Related Agreement").
6. Delivery Free of Encumbrances. Seller shall deliver good title to
the Purchased Assets free and clear of all mortgages, liens, claims, demands,
charges, options, equity interests, leases, tenancies, easements, pledges,
security interests, and other encumbrances ("Encumbrances"), except for any
Assumed Liabilities that results in any Encumbrance.
7. Preclosing Actions. Before the Closing:
a. Conduct of Business. Buyer (under the ongoing Management
Agreement) shall carry on and conduct the Business only in the ordinary
course consistent with past practices, without any change in the
policies, practices, and methods that Buyer pursued before the date of
this Agreement. Buyer and Seller will use their best efforts to
preserve the Business organization intact; to preserve the
relationships with customers, suppliers, and others having business
dealings with it; and to preserve the services of the workers, agents,
and representatives. Without limitation of the foregoing, Seller shall
not undertake any action with respect to the Purchased Assets without
the prior written consent of Buyer.
b. Buyer's Access, Due Diligence Review. From the date of this
Agreement through the Closing, Seller shall permit Buyer and its
representatives to make a full business, financial, accounting, and
legal audit of Seller, the Business, the Purchased Assets and the
Assumed Liabilities. Seller shall take all reasonable steps necessary
to cooperate with Buyer in undertaking this audit.
c. Accuracy of Representations and Warranties and Satisfaction
of Conditions. Seller will immediately advise Buyer in writing if (i)
any of Seller's representations or warranties are untrue or incorrect
in any material respect or (ii) if Seller becomes aware of the
occurrence of any event or of any state of facts that results in any of
the representations and warranties of Seller being untrue or incorrect
as if Seller were then making them. Seller will not take any action, or
omit to take any action, that would cause any of Seller's
representations and warranties set forth in this Agreement to be untrue
or incorrect as of the Closing Date. Seller will use its best efforts
to cause all conditions within their control that are set forth in
Section 8 to be satisfied as promptly as practicable under the
circumstances.
8. Conditions Precedent to Buyer's Obligations. Buyer's obligation to
consummate the transactions contemplated by this Agreement is subject to the
fulfillment (or waiver by Buyer) before or at the Closing of each of the
following conditions:
a. Accuracy of Representations and Warranties. The
representations and warranties of Seller contained in this Agreement
and the Related Agreement shall be true and correct at and as of the
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Closing Date as though such representations and warranties were made on
that date.
b. Performance of Covenants. The Seller shall have in all
respects performed and complied with all covenants, agreements, and
conditions that this Agreement and all related documents require to be
performed or complied with before or on the Closing Date, specifically
including the Related Agreement referred to in Section 5.
c. Results of Due Diligence Review. Buyer shall be satisfied,
in its sole and absolute discretion, with the results of its due
diligence review of the Seller, the Business, the Purchased Assets and
the Assumed liabilities conducted as contemplated in Section 7b, above.
d. Permits. Buyer shall have received all permits that in
Buyer's opinion are necessary to operate the Business after the
Closing.
e. No Casualty. Prior to the Closing Date, Seller shall not
have incurred, or be threatened with, a material liability or casualty
that would materially impair the value of the Purchased Assets.
f. Opinion of Counsel. Buyer shall have received the favorable
opinion of Seller's counsel dated the Closing Date and in form and
substance satisfactory to Buyer's counsel. The opinion shall be in
substantially the form attached as Schedule 8. F.
g. Instruments of Transfer, etc. Seller and Buyer shall
prepare and deliver to Buyer, in form and substance satisfactory to
Buyer, all bills of sale, general instruments of transfer, conveyances,
assurances, transfers, assignments, approvals, consents, and any other
instruments and documents containing the usual and customary covenants
and warranties of title and that shall be convenient, necessary, or
required to effectively transfer the Purchased Assets to Buyer with
good title, free and clear of all Encumbrances.
h. Certificates Regarding Conditions Precedent. Seller Parties
shall have delivered to Buyer certificates of the Seller, in form and
substance satisfactory to Buyer, certifying that as of the Closing Date
all of the conditions set forth in this Section, except those totally
within the Buyer's control, have been satisfied.
i. No Litigation. No action, suit, proceeding, or
investigation shall have been instituted before any court or
governmental body, or instituted by any governmental agency, (i) to
restrain or prevent the carrying out of the transactions contemplated
by this Agreement, or (ii) that might affect Buyer's right to own,
operate, and control the Purchased Assets after the Closing Date.
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x. Xxxx Search. Buyer shall have received UCC lien searches on
the Purchased Assets in form and content satisfactory to Buyer, and all
matters arising from such searches shall have been resolved or
addressed in a manner satisfactory to Buyer.
k. Consents. Seller shall have obtained, in writing, all
consents necessary or desirable to consummate or to facilitate
consummation of this Agreement and any related transactions. The
consents shall be delivered to Buyer before Closing and shall be
reasonably acceptable to Buyer in form and substance.
l. Environmental Investigation. Buyer shall have received, at
its cost and expense, Phase I Environmental Site Assessment prepared by
an independent, competent, and qualified environmental consultant, that
in its scope, form, and substance is satisfactory to Buyer on all real
estate being either purchased or leased under the terms of this
Agreement or any Related Agreements. Buyer shall also receive, at its
cost and expense, any updates it deems necessary or appropriate. Buyer
shall be satisfied, in its sole and absolute discretion, that there
will not be at and after the Closing any basis for the imposition on
Buyer of any liability under any Environmental Laws (as defined in
Section 11.T.1).
m. Conditional Tax Clearance. Seller shall have provided to
Buyer a certificate of conditional tax clearance from the Revenue
Commissioner of the Commonwealth of Virginia showing that Seller has
filed all tax returns and reports required to be filed before Closing
and that it has paid all taxes due.
n. Real Estate Appraisal and Well Survey. Buyer shall have
received, at its cost and expense, a study relating to the continued
suitability of the water resources and real estate value. Buyer shall
be satisfied, in its sole and absolute discretion, that there are no
issues relating to the continued use and availability of water
resources on the real estate and the value of the real estate as an
asset of the Business.
o. Board Approval. The Board of Directors of the Buyer shall
have taken the necessary Board action approving this transaction. The
Members of Seller have taken all necessary action approving this
transaction.
p. Other Documents and Instruments. Buyer shall have received
such other documents and instruments as it has reasonably requested, in
form and substance satisfactory to Buyer.
q. Approvals by Buyer's Counsel. Buyer's counsel shall
reasonably approve all legal matters and the form and substance of all
documents that Buyer or Seller are to deliver at the Closing.
r. Buyer's Financing. Buyer shall have obtained satisfactory
financing, as determined in Buyer's sole and absolute discretion.
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9. Conditions Precedent to Seller's Obligations. Seller's obligations
to consummate the transactions contemplated by this Agreement are subject to the
fulfillment of each of the following conditions before or at the Closing Date:
a. Accuracy of Representations and Warranties. Buyer's
representations and warranties contained in this Agreement and the
related Agreement shall be true and correct at and as of the Closing
Date as though such representations and warranties were made at the
Closing.
b. Performance of Covenants. Prior to and at the Closing Date,
Buyer shall have in all respects performed and complied with its
obligations under all the covenants, agreements, and conditions that
this Agreement and the Related Agreement require.
c. Board Approval. The Board of Directors of the Buyer shall
have taken the necessary action approving this transaction. The Members
of Seller have taken all necessary action approving this transaction.
d. Consents. Seller shall have obtained, in writing, all
consents necessary or desirable to consummate or to facilitate
consummation of the Agreement and any related transactions.
e. Opinion of Counsel. Seller shall have received the
favorable opinion of Buyer's counsel dated the Closing Date and in form
and substance satisfactory to Seller's counsel. The opinion shall be in
substantially the form attached as Schedule 9.F.
f. Approvals by Seller's Counsel. Seller's counsel shall
reasonably approve all legal matters and the form and substance of all
documents that Buyer or Seller are to deliver at the Closing.
10. Closing Matters.
a. Closing. The closing of the transactions contemplated in
this Agreement (the "Closing") shall take place at the offices of
Chicago Title Insurance Company, Washington, D.C., at 10:00 a.m. on
March 1, 2005 or at such other place and/or on such other date as the
parties may agree upon (the "Closing Date").
b. Updated Schedules. At the Closing, certain Schedules will
need to be up-dated to the day of Closing.
c. Certain Closing Expenses; Prorations. Buyer shall be liable
for and shall pay all federal, state, and local sales, use, excise, and
documentary stamp taxes and all other taxes, duties, or other like
charges properly payable on and in connection with Seller's conveyance
and transfer of the Purchased Assets to Buyer.
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d. Deliveries at the Closing. At the Closing, (i) Seller shall
deliver the various bills of sale, all other assignments and
instruments of transfer and Certificates, documents or items referred
to in this Agreement, including Section 8, and (ii) Buyer shall deliver
the various Certificates, documents or items, and the payments referred
to in this Agreement, including Section 4.a. and Section 9.
e. Further Assurances. Seller shall cooperate with and assist
Buyer with the transfer of the Purchased Assets under this Agreement
and take all other reasonable actions to assure that the Business is
smoothly transferred to Buyer. From time to time after the Closing
Date, Seller shall, at the request of Buyer, execute and deliver such
additional conveyances, transfers, documents, instruments, assignments,
applications, certifications, papers, and other assurances that Buyer
requests as necessary, appropriate, convenient, useful or desirable to
effectively carry out the intent of this Agreement and to transfer the
Purchased Assets to Buyer.
11. Seller Representations and Warranties. As of the date of this
Agreement and as of the Closing, the Seller represents and warrants to Buyer,
and acknowledges and confirms, that Buyer is relying on these representations
and warranties in entering into this Agreement.
a. Organization and Standing. Seller is a limited liability
company duly organized, validly existing, and in good standing under
the laws of the Commonwealth of Virginia, and Seller has all requisite
power and authority (corporate and otherwise) to own its properties and
conduct its business as it is now being conducted. The nature of the
business and the character of the properties Seller owns or leases do
not make the licensing or qualification of Seller as a foreign
corporation necessary under the laws of any other jurisdiction except
as may be listed on Schedule 11.A. Seller has not used or assumed any
other name in connection with the conduct of the Business during the
last two years, except as provided in Schedule 11.A.
b. Authorization. Seller has all requisite power and otherwise
requisite legal capacity (i) to execute, deliver, and perform this
Agreement and the Related Agreement to which each is a party and (ii)
to consummate the transactions contemplated under this Agreement and
the Related Agreement. Seller has taken, or will have taken at the time
of the Closing, all necessary corporate action (including the approval
of its board of directors and members) to approve the execution,
delivery, and performance of this Agreement and the Related Agreement
to be executed and delivered by it and the consummation of the
transactions contemplated in this Agreement. This Agreement is, and the
Related Agreement when executed and delivered by the parties to them,
will be legal, valid, and binding obligations the Seller, enforceable
against it in accordance with the Agreement and Related Agreement
respective terms, except as such enforcement may be limited by
bankruptcy, insolvency, moratorium, or similar laws relating to the
enforcement of creditors' rights and by general principles of equity
(regardless of whether such enforceability is considered in a
proceeding at law or in equity).
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c. Existing Agreements and Governmental Approvals.
i. Except as provided in Schedule 11.C, the
execution, delivery, and performance of this Agreement and the
Related Agreement and the consummation of the transactions
contemplated by them:
1. Do not and will not violate any
provisions of law applicable to any of Seller, the
Business, or the Purchased Assets;
2. As of the Closing, does not and will not
conflict with, result in the breach or termination of
any provision of, or constitute a default under (in
each case whether with or without the giving of
notice or the lapse of time or both) Seller's
Articles of Association or Operating Agreement, or
any indenture, mortgage, lease, deed of trust, or
other instrument, contract, or agreement or any
order, judgment, arbitration award, or decree to
which Seller is a party or by which it is bound
(including, without limitation, the Purchased
Assets); and
3. Do not and will not result in the
creation of any Encumbrance on any of Seller's
properties, assets, or Business (including, without
limitation, the Purchased Assets).
ii. No approval, authority, or consent of, or filing
by Seller with, or notification to, any federal, state, or
local court, authority, or governmental or regulatory body or
agency or any other corporation, partnership, individual, or
other entity is necessary:
1. To authorize the execution and delivery
of this Agreement or the Related Agreement by Seller,
2. To authorize the consummation of the
transactions contemplated by this Agreement or the
Related Agreement by Seller, or
3. To continue Buyer's use and operation of
the Purchased Assets after the Closing Date.
d. No Subsidiaries. Seller does not have any subsidiaries or
directly or indirectly own any interest or have any investment in any
other corporation, partnership, or other entity in connection with the
Business.
e. No Insolvency. No insolvency proceeding of any character,
including, without limitation, bankruptcy, receivership,
reorganization, composition, or arrangement with creditors, voluntary
or involuntary, affecting Seller or any of its assets or properties is
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pending or, to the Best Knowledge of Seller, threatened. Seller has not
taken any action in contemplation of, or that would constitute the
basis for, the institution of any such insolvency proceedings. For the
purposes of this Agreement, the phrase "Best Knowledge of Seller
"Parties," or words of similar import, mean such knowledge of the
Seller would have after due inquiry into the matter in question.
f. Permits and Licenses. Seller has all necessary permits,
certificates, licenses, approvals, consents, and other authorizations
required to carry on and conduct the Business and to own, lease, use,
and operate the Purchased Assets at the places and in the manner in
which the Business is conducted, all of which to the extent
transferable shall be transferred or assigned to Buyer at the Closing,
without expense to Buyer. A complete list of such permits,
certificates, licenses, approvals, consents, and other authorizations
is included in Schedule 11.F.
g. Financial Statements. Seller has delivered to Buyer the
audited financial statements on the Business dated for the calendar
years ended 12/31/03 and 12/31/04, as listed in Schedule 11.G,
(together, the "Financial Statements"). The Financial Statements do and
will fairly and accurately present Seller's financial position as of
the dates indicated, and are and will be true and correct in all
material respects, in accordance with generally accepted accounting
principles consistently applied. Except as otherwise disclosed on
Schedule 11.G, Seller's books, records, and work papers are complete
and correct; have been maintained on an accrual basis; and accurately
reflect, and will accurately reflect, the basis for the financial
condition of Seller's operations that are set forth in the Financial
Statements.
h. No Undisclosed Liabilities. Except as otherwise disclosed
in the Financial Statements, Seller does not have any liabilities or
obligations, whether accrued, absolute, contingent, or otherwise, and
there exists no fact or circumstance that could give rise to any such
liabilities or obligations in the future.
i. Intentionally Omitted.
j. No Adverse Changes. Since the date of the last of the
Financial Statements attached as Schedule 11.G, there has not been, to
the Best Knowledge of any of the Seller Parties, any occurrence,
condition, or development that has adversely affected, or is likely to
adversely affect, the Business, or the Purchased Assets.
k. Employees. Seller does not have any employees except as
otherwise disclosed on attached schedule 11.K.
l. Employee Benefit Plans.
1. Attached as Schedule 11L is a true and complete
list of all plans, contracts, programs, and arrangements
(including, but not limited to, collective bargaining
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agreements, pensions, bonuses, deferred compensation,
retirement, severance, hospitalization, insurance, salary
continuation, and other employee benefit plans, programs, or
arrangements) maintained currently or under which Seller has
had any obligations with respect to a former or current
employee of Seller (the "Plans").
2. Seller has performed all obligations required to
be performed by it under the Plans (including, but not limited
to, the making or accruing of all contributions) and is not in
default under and has no knowledge of any default by any other
party to the Plans.
m. Contracts. Except for the contracts, commitments or leases
listed on Schedules 1.F.2, 1.F.3, and 11.M or any other Schedule of
this Agreement, Seller is not a party to nor bound by any agreement or
commitment that affects the Business, the Purchased Assets, or the
Assumed Liabilities, (all these contracts and commitments referred to
as "Significant Contracts"). All Significant Contracts are valid and
binding obligations of the parties thereto in accordance with their
respective terms. No default or alleged default exists on the part of
Seller, nor, to the Best Knowledge of Seller, on the part of any other
party, under any of the Significant Contracts. True and complete copies
of all Significant Contracts have been delivered to Buyer.
n. Title to Purchased Assets. Seller is the sole and absolute
owner of the Purchased Assets and has good title to all of the
Purchased Assets, which are, or will be at the time of the Closing,
free and clear of any and all Encumbrances except for any Assumed
Liabilities that results in any encumbrance. Schedule 11.N lists or
describes all property used in the conduct of the Business that is
owned by or an interest in which is claimed by any other person
(whether a customer, supplier, or other person), together with copies
of all related agreements. All such assets are situated on the Premises
or other of Seller's facilities and is in such condition that upon
return to its owner, Buyer will not be liable in any amount to the
owner.
o. Condition of Purchased Assets. To the best of Seller's
knowledge, except as disclosed in Schedule 11.O, all equipment and
buildings Seller owns or leases are, to the best of Seller's knowledge,
structurally sound, in good operating condition and repair, and
adequate for their current uses. Each item is situated at the Seller's
facilities unless specifically disclosed to the Buyer on Schedule 11.O
attached to this Agreement.
p. Taxes.
1. For the purposes of this Agreement, "Tax" or
"Taxes" shall mean all foreign, federal, state, county, local,
and other taxes (including, without limitation, income taxes;
premium taxes; single-business taxes; excise taxes; sales
taxes; use taxes; value-added taxes; gross receipts taxes;
franchise taxes; ad valorem taxes; real estate taxes;
severance taxes; capital levy taxes; transfer taxes; stamp
13
taxes; employment, unemployment, and payroll-related taxes;
withholding taxes; and governmental charges and assessments),
and include interest, additions to tax, and penalties.
2. Seller has filed on a timely basis all Tax returns
it is required to file under foreign, federal, state, or local
law and has paid or established an adequate reserve with
respect to all Taxes for the periods covered by such returns.
No agreements have been made by or on behalf of Seller for any
waiver or for the extension of any statute of limitations
governing the time of assessment or collection of any Taxes.
Seller and its officers have received no notice of any pending
or threatened audit by the IRS or any foreign, state or local
agency related to Seller's Tax returns or Tax liability for
any period, and no claim for assessment or collection of Taxes
has been asserted against Seller. To the Best of Seller's
Knowledge, no such claim is being considered and there is no
basis for any such claim. There are no federal, state, or
local tax liens outstanding against any of Seller's assets
(including, without limitation, the Purchased Assets) or the
Business.
3. The sale by Seller of the Purchased Assets and the
Buyer's acquisition of such assets will not result in the
imposition of or liability for any sales or use taxes except
in connection with the transfer of any motor vehicles that are
part of the Purchased Assets which taxes will be paid for by
Seller.
q. Litigation, Claims. Except as set forth on Section 11.Q,
(i) there are no actions, suits proceedings, hearings, investigations,
charges, complaints, claims or demands of any kind pending or, to the
Best Knowledge of Seller, threatened against or affecting Seller, any
of the Purchased Assets or any aspect of the Business; (ii) there are
no injunctions, judgments, orders or decrees of any kind which are
outstanding against or unsatisfied by Seller or relating to any of the
Purchased Assets or any aspect of the Business; and (iii) Seller is not
charged, or threatened with, or under investigation with respect to,
any alleged violation of any provision of any law, constitution, code,
statute or ordinance, or any regulation, rule, injunction, judgment,
order, decree, ruling, charge or other restriction of any governmental
authority relating to any of the Purchased Assets or any aspect of the
Business.
r. Products. Except as set forth on Schedule 11.R: (i) there
are no liabilities of Seller whether based on strict liability,
negligence, breach of contract or otherwise, with respect to any
product, produced or sold by Seller to others; (ii) there are no
liabilities of Seller with respect to any claim for the breach of any
express or implied warranty or any other similar claim with respect to
any products produced or sold by Seller to others, other than standard
warranty obligations (to replace, repair or refund) made by Seller in
the ordinary course of business consistent with past practice to
purchasers of its products, and which are appropriately and adequately
reserved for in the Financial Statements; or (iii) Seller has not
entered into, or offered to enter into, any agreement, contract,
14
commitment or other arrangement (whether written or oral) pursuant to
which Seller is or will be obligated to make any rebates, discounts,
promotional allowances or similar payments or arrangements to or with
any customer ("Rebate Obligations"). Schedule 11.R sets forth a true
and correct listing of all warranty claims with respect to the products
of Seller made in connection with the Business during the last 12
months and a true and correct list of all contracts pursuant to which
any purchaser may return any products.
s. Environmental Matters.
i. Seller has not transported, stored, treated or
disposed, nor has it allowed or arranged for any third parties
to transport, store, handle, treat or dispose of Hazardous
Materials (as hereinafter defined) to or at any location other
than a site lawfully permitted to receive such Hazardous
Materials for such purposes, nor has Seller performed,
arranged for or allowed by any method or procedure such
transportation, storage, treatment or disposal in violation of
any Environmental Laws (as hereinafter defined). Seller has
not stored, handled, treated or disposed of, or allowed or
arranged for any third parties to transport, store, handle,
treat, dispose of, Hazardous Materials upon the Real Estate or
the Leasehold Premises, except as permitted by Law.
ii. During Seller's ownership or occupancy of the
Real Estate, there has not occurred, nor is there presently
occurring, a Release of any Hazardous Material on, in or at
the Real Estate.
iii. Seller has not shipped or transported for
treatment or disposed, nor has it allowed or arranged, by
contract, agreement or otherwise, for any third parties to
ship or transport from treatment or dispose any Hazardous
Materials to or at a site which, pursuant to CERCLA or any
similar state law has been placed on or has been proposed to
be placed on the National Priorities List or its state
equivalent. Seller has not received notice, nor does it have
knowledge of any facts which could give rise to any notice,
that the Seller is a liable party for any environmental
remediation or corrective action under CERCLA or any other
Environmental Laws. Seller has not submitted nor was required
to submit any notice pursuant to Section 103(c) of CERCLA with
respect to the Real Estate or Purchased Leasehold Premises.
The Seller has not received any written or oral request for
information in connection with any environmental remediation
or corrective action. Seller has not been required to or has
not undertaken any response or remedial actions or clean-up
actions of any kind at the request of any federal, state or
local governmental entity, or at the request of any other
person or entity.
iv. Seller does not use, or has not used, any
Underground Storage Tanks, and there are not now nor, to the
best of Seller's knowledge, have there ever been any
Underground Storage Tanks on the Real Estate. For purposes of
this Section 4.19, the term "Underground Storage Tanks" shall
15
have the meaning given it in the Resource Conservation and
Recovery Act (42 U.S.C. Sections 6901 et seq.) or similar
state statute.
v. There are no laws, regulations, ordinances,
licenses, permits or orders relating to environmental
remediation, corrective action or worker safety matters
requiring any work, repairs, construction or capital
expenditures with respect to the assets or properties of the
Seller.
vi. Schedule 11.S identifies (i) all environmental
audits, site assessments or occupational health studies
undertaken by the Seller or its agents or known to be taken by
governmental agencies; (ii) the results of any groundwater,
soil, air or asbestos sampling or monitoring undertaken with
respect to the Real Estate; (iii) all written communications
between the Seller and any environmental agencies; and (iv)
all citations issued under the Occupational Safety and Health
Act (29 U.S.C. Sections 651 et seq.) or similar state statute.
vii. As used herein, the term "Environmental Law"
shall mean any applicable federal, state, or local statutory
or common law, ordinance, rule, or regulation relating to: (i)
pollution or protection of the environment; (ii) nuisance or
trespass; (iii) emissions, discharges, releases, or threatened
releases of any Hazardous Material into the environment
(including, without limitation, ambient air, surface water,
groundwater, land surface, or subsurface strata); or (iv) the
manufacture, processing, distribution, use, treatment,
storage, disposal, transportation, or handling of Hazardous
Materials. The term "Environmental Laws" shall include, but
shall not be limited to: the Clean Air Act; the Clean Water
Act; the Occupational Safety and Health Act; the Comprehensive
Environmental Response, Compensation, and Liability Act of
1980; the Resource Conservation and Recovery Act; the Toxic
Substances Control Act, and any amendments thereto and any
similar state or local law or ordinance. For purposes of this
Agreement, the term "Environmental Laws" also shall mean, to
the extent any of the following have the force and effect of
law, any regulation, code, plan, order, decree, judgment,
injunction, notice, or demand letter issued, entered, or
approved under any law, ordinance, rule, or regulation
referred to in the preceding sentence.
viii. As used herein, the term "Hazardous Material"
shall mean any pollutant, contaminant, chemical, toxic, or
hazardous substance or material, or industrial waste that is
included within the definitions of the terms "solid waste",
"pollutant or contaminant", "hazardous substance," "hazardous
chemical," or "hazardous waste," including petroleum and any
fraction thereof, asbestos, mold or radionuclide, under any
Environmental Law. The term "Hazardous Materials" shall mean
all or some of the foregoing.
t. Compliance with Laws. At all times prior to the Closing
Date, Seller has, complied with all laws, orders, regulations, rules,
16
decrees, and ordinances affecting to any extent or in any manner any
aspects of the Business or the Purchased Assets.
u. No Brokers. Seller has not engaged, and is not responsible
for any payment to, any finder, broker, or consultant in connection
with the transactions contemplated by this Agreement.
v. Transactions with Certain Persons. Except as set forth on
Schedule 11.V attached hereto, no shareholder, officer, director or
employee of Seller, nor any member of any such person's family, nor any
corporation, partnership, trust or other entity in which any such
person has a substantial interest as a shareholder, officer, director,
trustee or partner (each, an "Affiliate"), owns any assets used in or
relating to the Business or is presently a party to any material
transaction with Seller relating to the Purchased Assets or the
Business (including, but not limited to, any contract, agreement or
other arrangement (a) providing for the furnishing of material services
or supplies by, (b) providing for the rental of material real or
personal property from, or (c) otherwise requiring material payments to
(other than for services as officers or directors of Seller) such
Affiliate.
w. Intellectual Property. Schedule 11.W lists all Intellectual
Property of the Seller that Seller directly or indirectly owns,
licenses, uses, requires for use, or controls in whole or in part and
all licenses and other agreements allowing Seller to use the
intellectual property of third parties in connection with the Business,
except for commercially available computer software such as word
processing, spreadsheet and similar applications. Seller does not own,
directly or indirectly, or use any patents, copyrights, trademarks, or
service marks in the Business except as listed. Except as set forth in
Schedule 11.W, Seller is the sole and exclusive owner of the
Intellectual Property, free and clear of all Encumbrances. Except as
set forth in Schedule 11.W, none of the Seller's Intellectual Property
infringes on any other person's intellectual property and no activity
of any other person infringes on any of the Intellectual Property.
Seller's manufacturing and production, process sheets, specifications,
bills of material, trade secrets, "know-how," and like data are in such
form and of such quality that they can, following the Closing Date, be
used in the process of designing, producing, and selling the products
and providing the services previously provided by Seller so that such
products and services meet applicable specifications and conform with
all applicable quality standards that Buyer will be required to meet at
the date of the Closing.
x. Insurance. All insurance policies covering Seller's real
and personal property or providing for business interruption, personal
and product liability coverage, and other insurance are described in
Schedule 11.X (which specifies the insurer, policy number, type of
insurance, and any pending claims). Such insurance is in amounts Seller
deems sufficient with respect to its assets, properties, business,
operations, products, and services as the same are presently owned or
conducted, and all such policies are in full force and effect and the
premiums have been paid. There are no claims, actions, suits, or
17
proceedings arising out of or based on any of these insurance policies,
and no basis for any such claim, action, suit, or proceeding exists.
Seller is not in default with respect to any provisions contained in
any such insurance policies and has not failed to give any notice or
present any claim under any such insurance policy in due and timely
fashion.
y. Sales Representatives, Dealers and Distributors. Except as
set forth on Section 11.Y, Seller is not a party to any contract or
agreement with any person or entity under which such other person or
entity is a sales agent, representative, dealer or distributor of any
of Seller's products or services, and which by its terms cannot be
terminated at will or on not more than 30 days' prior notice and there
has been no change in the rate of compensation paid or payable to any
such person or entity since the date of the most recent Financial
Statements.
z. Product Warranties. Except as disclosed on Section 11.Z,
the Seller has not extended to its customers any product warranties,
indemnifications or guarantees.
aa. Computer Programs. Seller owns all right and title to and
interest in, or has valid licenses for the use of, all computer
programs used in the Business, and all such computer programs are
assignable to Buyer, except as set forth in Schedule 11.aa.
bb. Accuracy of Information Furnished to Buyer. No
representation, statement or information made or furnished by the
Seller or the Seller Shareholder to the Buyer, including but not
limited to those contained in this Agreement and the various schedules
and exhibits attached hereto and the other information and statements
referred to herein and previously furnished by the Seller or the Seller
Shareholder to the Buyer, contains or shall contain any untrue
statement of a material fact or omits or shall omit any material fact
necessary to make the information contained therein not false or
misleading.
12. Buyer Parties' Representations and Warranties. Buyer represents and
warrants to Seller that:
a. Organization and Standing. Buyer is a corporation duly
organized and validly existing under the laws of the State of Virginia,
and Buyer has all the requisite power and authority (corporate and
otherwise) to own its properties and to conduct its business as it is
now being conducted.
b. Authorization. Buyer has taken all necessary corporate
action, as the case may be (i) to duly approve the execution, delivery,
and performance of this Agreement and the Related Agreement and (ii) to
consummate any related transactions. Buyer has duly executed and
delivered this Agreement. This Agreement is, and the Related Agreement
when executed and delivered by the parties to them will be, legal,
valid, and binding obligations of Buyer, enforceable against Buyer in
accordance with their respective terms, except as such enforcement may
18
be limited by bankruptcy, insolvency, moratorium, or similar laws
relating to the enforcement of creditor's rights and by general
principles of equity (regardless of whether such enforceability is
considered in a proceeding at law or in equity).
c. Existing Agreements and Governmental Approvals. The
execution, delivery, and performance of this Agreement and the Related
Agreement and the consummation of the transactions contemplated by
them:
i. Do not and will not violate any provisions of the
law applicable to Buyer;
ii. Do not and will not conflict with, result in the
breach or termination of any provision of, or constitute a
default under (in each case whether with or without the giving
of notice or the lapse of time, or both) Buyer's Articles of
Incorporation, Bylaws or any indenture, mortgage, lease, deed
of trust, or other instrument, contract, or agreement or any
order, judgment, arbitration award, or decree to which Buyer
is a party or by which it or any of its assets and properties
are bound; and
iii. No approval, authority, or consent of, or filing
by Buyer with, or notification to, any federal, state, or
local court, authority, or governmental or regulatory body or
agency or any other corporation, partnership, individual, or
other entity is necessary
iv. to authorize Buyer's execution and delivery of
this Agreement and Related Agreement; or
v. to authorize Buyer's consummation of the
transactions contemplated by this Agreement and the Related
Agreement.
13. Employees. Buyer shall have no obligation to hire Seller's
employees if any, in the Business.
14. Indemnification. Seller. Seller shall defend, indemnify, and hold
harmless Buyer and its directors, officers, shareholders, successors, and
assigns from and against any and all costs, losses, claims, suits, actions,
assessments, diminution in value, liabilities, fines, penalties, damages
(compensatory, consequential, and other), and expenses (including reasonable
legal fees) in connection with or resulting from:
i. Except as otherwise expressly assumed by Buyer in
the Agreement, all debts, liabilities, and obligations of
Seller, whether accrued, absolute, contingent, known, unknown,
or otherwise, but excluding any Assumed Liabilities;
ii. Any inaccuracy in any representation or breach of
any warranty of Seller contained in this Agreement or the
Related Agreement;
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iii. Any failure by Seller to perform or observe in
full, or to have performed or observed in full, any covenant,
agreement, or condition to be performed or observed by the
Seller under this Agreement or the Related Agreement.
Notwithstanding the foregoing, there shall be no limitation on
the indemnification by Seller for claims based on a breach of
Seller's warranties and representations set forth under
Sections 11.a (Organization and Standing), 11.b
(Authorization), 11.n (Title to Purchased Assets), 11.p
(Taxes), or 11.s (Environmental Matters).
Provided, however, such indemnification shall be limited to the total of the
Purchase Price plus all monies paid by Buyer under the Related Agreement.
b. Buyer. Buyer shall defend, indemnify, and hold harmless
Seller and its directors, officers, shareholders, successors, and
assigns from and against any and all costs, losses, claims, suits,
actions, assessments, diminution in value, liabilities, fines,
penalties, damages (compensatory, consequential, and other), and
expenses (including reasonable legal fees) in connection with or
resulting from:
i. All debts, liabilities, and obligations of Buyer,
whether accrued, absolute, contingent, known, unknown, or
otherwise;
ii. Any inaccuracy in any representation or breach of
any warranty of Buyer contained in this Agreement or the
Related Agreement;
iii. Any failure by Buyer to perform or observe in
full, or to have performed or observed in full, any covenant,
agreement, or condition to be performed or observed by the
Buyer under this Agreement or any Related Agreement.
c. Notice of Claim. Each person entitled to indemnification
under this Section 15 (the "Indemnified Party") shall give notice to
the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of
any claim as to which indemnity may be available or sought, and shall
permit the Indemnifying Party to participate in the defense of any such
claim or any resulting litigation, and the Indemnifying Party may
participate in such defense at such party's expense. The failure of any
Indemnified Party to give the notice required by this Agreement shall
not relieve the Indemnifying Party of its obligations unless such
failure results in actual detriment to the Indemnifying Party. In the
event that a claim or litigation is partially, but not wholly covered
by an indemnity set forth in this Section 15 the Indemnified and the
Indemnifying Parties shall share in the resulting losses in proportion
to their respective liabilities. Except with the consent of each
Indemnified Party, which consent shall not be unreasonably withheld, no
Indemnifying Party shall consent to the entry of any judgment or enter
into any settlement which does not include a release of such
Indemnified Party from all liability in respect to such claim or
litigation to the extent it is covered by the indemnity in this Section
15.
20
d. Limit of Liability. Neither party shall have any liability
(for indemnification or otherwise) under this Section 15 except to the
extent that the total of all Damages exceeds One Hundred Thousand and
No/100 Dollars ($100,000.00).
15. Expenses. Each of the parties shall pay all of the costs that it
incurs incident to the preparation, execution, and delivery of this Agreement
and the performance of any related obligations, whether or not the transactions
contemplated by this Agreement shall be consummated, except that all such costs
and all liabilities of Seller other than the Assumed Liabilities, including,
without limitation, Tax liabilities, shall be paid out of the proceeds of the
Purchase Price (which shall in no case increase the Purchase Price) and shall
not be charged to the Business as an expense.
16. Risk of Loss. The risk of loss of or damage to the Purchased Assets
from fire or other casualty or cause shall be on Seller at all times up to the
Closing, and it shall be the responsibility of Seller to repair, or cause to be
repaired, and to restore the property to the condition it was before the loss or
damage.
17. Seller's Name. Seller agrees that from and after the Closing Date,
Buyer shall have all of the right's of Seller to use in or in connection with
the conduct of any business (whether carried on by it directly or through any
related corporation) the name "Independence Water Group" or "Xxxxxxx Mountain
Water Company" ("Name"); any part or portion of the Name, either alone or in
combination with one or more other words; or any variation of the Name. It is
contemplated that on or as soon as practicable after the Closing Date, Seller
will change its name to some name which is different from Independence Water
Group, LLC and will not be confused with that Name. After the Closing Date,
Seller agrees that it will not use either directly or indirectly the Name or any
name that may be confused with the Name.
18. Termination.
a. This Agreement may be terminated at any time before the
Closing Date as follows:
i. By Buyer and Seller Parties in a written
instrument;
ii. By either Buyer or Seller if the Closing does not
occur on the Closing Date;
iii. By Buyer or Seller if there has been a material
breach of any of the representations or warranties set forth
in this Agreement on the part of the other, and this breach by
its nature cannot be cured before the Closing; or
iv. By Buyer or Seller if there has been a breach of
any of the covenants or agreements set forth in this Agreement
on the part of the other, and this breach is not cured within
21
ten (10) business days after the breaching party or parties
receives written notice of the breach from the other party.
b. If terminated as provided in Section 19, this Agreement
shall forthwith become void and have no effect, except for Sections
19.C and except that no party shall be relieved or released from any
liabilities or damages arising out of the party's breach of any
provision of this Agreement.
c. Buyer warrants and agrees, on the one hand, and the Seller,
on the other hand, warrants and agrees that if this Agreement is
terminated pursuant to Section 19, each party will not, during the six
(6) month period following the termination, directly or indirectly
solicit any employee of the other party to leave the other party's
employment.
19. Miscellaneous Provisions.
a. Representations and Warranties. All representations,
warranties, and agreements made by the parties pursuant to this
Agreement shall survive the consummation of the transactions
contemplated by this Agreement for two (2) years after the Closing
Date. Notwithstanding the foregoing, the representations and warranties
made by Seller under Section 11.a (Organization and Standing), Section
11.b (Authorization) and Section 11.n (Title to Purchased Assets) shall
survive forever. Also, the representations and warranties made by
Seller under Section 11.p (Taxes) shall survive for any and all
applicable statute of limitation periods and the representations and
warranties made by Buyer under Section 12.a (Organization and Standing)
and Section 12.b (Authorization) shall survive forever and the
representations and warranties made by Seller under Section 11.s
(Environmental Matters) shall survive for the shorter of any applicable
statute of limitations periods or five (5) years after the Closing
Date.
b. Notices. All notices, demands, and requests required or
permitted to be given under the provisions of this Agreement shall be
in writing and shall be deemed given (i) when personally delivered or
sent by facsimile transmission to the party to be given the notice or
other communication or (ii) on the business day following the day such
notice or other communication is sent by overnight courier to the
following:
if to Seller: Xxxx Xxxxxxx
Manager and Member
Independence Water Group, LLC
0000 Xxxxxxxx Xxxx.
Xxxxxxxxx, Xxxx 00000
Phone: _____________________
Facsimile: _________________
22
with a Copy to: ____________________________
____________________________
____________________________
Phone: _____________________
Facsimile: _________________
if to Buyer: Xxxxx X. Xxxxxx
Universal Food & Beverage Company of Virginia
0000 Xxxxxxxx Xxxxx
Xx. Xxxxxxx, XX 00000
Phone: 000-000-0000
Facsimile: 000-000-0000
with a copy to: Xxxx X. Xxxxxxx
Holland & Knight LLC
Xxx XxxXxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxx Xxxxxxx, XX 00000
(000) 000-0000 Phone Number
(000) 000-0000 Fax Number
or to such other address or facsimile number that the parties may
designate in writing.
c. Assignment. Neither Seller nor Buyer shall assign this
Agreement, or any interest in it, without the prior written consent of
the other.
d. Parties in Interest. This Agreement shall inure to the
benefit of, and be binding on, the named parties and their respective
successors and permitted assigns, but not any other person.
e. Choice of Law. This Agreement shall be governed, construed,
and enforced in accordance with the laws of the Commonwealth of
Virginia.
f. Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signature on each
counterpart were on the same instrument.
g. Entire Agreement. This Agreement, the Related Agreement and
all related documents, schedules, exhibits, or certificates represent
the entire understanding and agreement between the parties with respect
to the subject matter and supersede all prior agreements or
negotiations between the parties. This Agreement may be amended,
supplemented, or changed only by an agreement in writing that makes
specific reference to this Agreement and that is signed by the party
against whom enforcement of any such amendment, supplement, or
modification is sought.
23
h. Arbitration.
i. Any dispute, controversy, or claim arising out of
or relating to this Agreement or relating to the breach,
termination, or invalidity of this Agreement, whether arising
in contract, tort, or otherwise, shall at the request of any
party be resolved in binding arbitration. Any arbitration
shall proceed in accordance with the current Commercial
Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association ("AAA") to the extent that the
Arbitration Rules do not conflict with any provision of this
Section.
ii. No provision of or the exercise of any rights
under this Section shall limit the right of any party to seek
and obtain provisional or ancillary remedies (such as
injunctive relief, attachment, or the appointment of a
receiver) from any court having jurisdiction before, during,
or after the pendency of an arbitration proceeding under this
Section. The institution and maintenance of any such action or
proceeding shall not constitute a waiver of the right of any
party (including the party taking the action or instituting
the proceeding) to submit a dispute, controversy, or claim to
arbitration under this Section.
iii. Any award, order, or judgment made pursuant to
arbitration shall be deemed final and may be entered in any
court having jurisdiction over the enforcement of the award,
order, or judgment.
iv. The arbitration shall be held before one
arbitrator knowledgeable in the general subject matter of the
dispute, controversy, or claim and selected by AAA in
accordance with the Arbitration Rules.
v. The arbitration shall be held at the office of AAA
as chosen by the party requesting arbitration, or at another
place the parties agree on.
vi. In any arbitration proceeding under this Section,
subject to the award of the arbitrator(s), each party shall
pay all its own expenses and an equal share of the fees and
expenses of the arbitrator. The arbitrator shall have the
power to award recovery of costs and fees (including
reasonable attorney fees, administrative and AAA fees, and
arbitrator's fees) among the parties as the arbitrator
determine to be equitable under the circumstances.
20. Non-Competition and Confidentiality by Seller and Shareholder.
a. Non-Competition. From and after the Closing Date until the
fifth (5th) anniversary thereof, Seller shall not organize, invest in,
own, manage, operate, control or participate in, or be associated in
any manner whatsoever, directly or indirectly, with or have any
financial interest in, or aid or assist anyone in the conduct of, or
otherwise engage in, whether for compensation or otherwise, any
business (whether it be a sole proprietorship, joint venture, business
trust, partnership, corporation or other entity) located anywhere
24
within the United States (the "Territory"), that directly or indirectly
competes with the Business being acquired by Buyer pursuant hereto;
provided, however, that the foregoing shall not be deemed to prohibit
Seller or Seller Shareholder from owning shares of stock in any
publicly-owned corporation so long as such ownership, directly or
indirectly, does not exceed five percent (5%) of the total outstanding
stock of such publicly-owned corporation, measured by reference to
either market value or voting power.
b. Blue-Penciling. If any provision or part of this Section 21
is held to be unenforceable because of the duration of such provision
or the area covered thereby, the parties hereto agree to modify such
provision, or that the court making such determination shall have the
power to modify such provision, to reduce the duration or area of such
provision, or both, or to delete specific words or phrases herefrom
("blue-penciling"), and, in its reduced or blue-penciled form, such
provision shall then be enforceable and shall be enforced.
c. Confidentiality. Seller hereby covenants and agrees that,
at all times from and after the Closing Date, it shall keep secret and
maintain in strictest confidence, and shall not use for their benefit
or for the benefit of others, and shall not cause or allow any of
Seller's agents, officers, directors or employees to so disclose or
use, any Confidential Information (as hereinafter defined) relating to
Seller or the Business or otherwise pertaining to this Agreement or the
transactions contemplated hereby. As used in this Agreement,
"Confidential Information" shall mean any and all information, in
whatever form, relating to Seller, the Business or the Purchased
Assets, including, without limitation, any Intellectual Property, which
information is sufficiently secret to derive economic value, actual or
potential, from not being generally known to other persons who can
obtain economic value from its disclosure or use and is the subject of
efforts that are reasonable under the circumstances to maintain its
secrecy or confidentiality.
d. Equitable Remedies. Seller recognizes and agrees that Buyer
conducts its business throughout the Territory and elsewhere, and,
therefore, the geographical scope of the non-competition covenants
contained in the above Section is reasonable. It is further recognized
and agreed that Buyer would not have entered into or consummated the
transaction contemplated by this Agreement without the covenants
contained in this Section, and that irreparable injury will result to
Buyer and its businesses and properties in the event of a breach of any
covenant contained herein by Seller or Shareholder, that such injury
would be difficult if not impossible to ascertain and, therefore, that
any remedy at law for any such breach will be inadequate. As a result,
Buyer shall be entitled to temporary and permanent injunctive relief
without the necessity of proving actual damage to Buyer by reason of
any such breach. In the event that an enforcement action is brought by
Buyer pursuant hereto, Buyer shall be entitled to recover from Seller
and Seller Shareholder the reasonable costs and attorneys' fees
incurred in connection therewith. Nothing contained in this Section
shall prevent Buyer from electing to seek any monetary or other relief
in addition to or in lieu of any equitable relief for breach of any of
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the covenants contained herein. Whenever used in this Section, the term
"Buyer" shall be deemed to include any successor or any other person or
entity that may hereafter acquire all or any portion of the aforesaid
Business being acquired by Buyer hereunder during the period of this
covenant not to compete.
e. Schedules and Exhibits. This Agreement shall be valid and
enforceable upon execution, whether or not all or any of the Schedules
and Exhibits referred to herein are completed and attached hereto. Once
completed, the Schedules and Exhibits shall be attached hereto and
shall become a part hereof.
[signatures on next page]
26
The parties have executed this Agreement on the date set forth on the
first page of this Agreement.
SELLER:
Independence Water Group, LLC
By: /s/ Xxxx X. Xxxxxxx
-------------------------
Name: Xxxx X. Xxxxxxx
Its: Manager
/s/ Xxxx X. Xxxxxxx
-----------------------------
Member
/s/ Xxxxxx X. Xxxxx
-----------------------------
Member
/s/ Sterling Trust Co.
FBO Xxxxxxx X. Xxxx XXX
by: Xxxxxxx X. Xxxx
-------------------------
Member
/s/ Sterling Trust Co.
FBO Dolton L. Xxxx XXX
by: Dolton X. Xxxx
-------------------------
Member
BUYER:
Universal Food & Beverage Company of Virginia
By: /s/ Xxxxx X. Xxxxxx
-------------------------
Name: Xxxxx X. Xxxxxx
Its: Chairman of the Board & CEO
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