EXHIBIT 2.14
EXECUTION COPY
ASSET PURCHASE AGREEMENT
DATED SEPTEMBER 27, 1996
AMONG
ATLANTIC BEVERAGE COMPANY, INC.,
XXXXXX'X MERGER CORP.,
XXXXXX'X SAUSAGE, INC.,
XXXXX X. XXXXXX
AND
XXXXX XXXX XXXXXX
EXECUTION COPY
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT"), dated the 27th day of
September, 1996, by and among XXXXXX'X MERGER CORP., a Delaware corporation
("PURCHASER"), ATLANTIC BEVERAGE COMPANY, INC., a Delaware corporation and the
sole stockholder of Purchaser ("ABEV") and XXXXXX'X SAUSAGE, INC., a Kentucky
corporation ("SELLER") and XXXXX X. XXXXXX and XXXXX XXXX XXXXXX, husband and
wife and residents of Kentucky and the only stockholders of Seller ("OWNERS").
Owners and Seller are hereinafter referred to collectively as the "SELLING
PARTIES".
R E C I T A L S:
WHEREAS, Seller is engaged in the business (the "BUSINESS") of
marketing, distributing and selling prepared food products and related products
and services, and
WHEREAS, concurrently herewith, (i) Purchaser, ABEV and Xxxxxx'x Farms,
Inc., a Kentucky corporation ("GFI") and Owners, as the sole shareholders of
GFI, have executed that certain Agreement and Plan of Reorganization (the
"MERGER AGREEMENT") pursuant to which GFI will be merged with and into Purchaser
in a transaction intended to qualify as a "reorganization" within the meaning of
Section 368(a)(2)(D) of the Internal Revenue Code of 1986, as amended (the
"CODE") and (ii) Purchaser and Sellers entered into that certain Real Estate
Purchase Agreement (the "RPA") pursuant to which Sellers will sell the real
estate described in the RPA. Seller and GFI are hereinafter sometimes referred
to together as the "COMPANIES". Capitalized terms not otherwise defined herein
shall have the meanings ascribed to such terms in the Merger Agreement; and
WHEREAS, Purchaser desires to acquire, and Seller desires to sell, the
"ASSETS" (as described on SCHEDULE A, attached hereto), and which, for purposes
hereof, shall include the "INTANGIBLES" (as defined in Section 5H hereof) for a
purchase price which is established herein, all upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, and in consideration of the mutual premises and
representations, warranties and covenants and other good and valuable
consideration, the receipt and sufficiency of which being acknowledged, the
parties agree as follows:
l. SALE AND PURCHASE. On the Closing Date (as defined in Section 4
hereof), in reliance on the representations, warranties, covenants and
agreements of the parties, and on the terms and subject to the conditions set
forth herein, Seller shall sell, convey, transfer, assign and deliver to
Purchaser, the Assets, free and clear of all Encumbrances (as defined in Section
5B hereof). The Assets shall not include those assets identified on SCHEDULE B,
aftached hereto. Purchaser is not assuming any liability or obligation of Seller
of any nature whatsoever, except as expressly set forth in SCHEDULE C hereto.
Seller shall remain liable and responsible for all obligations and liabilities
not expressly assumed by Purchaser hereunder, and regardless of any agreement
relating to indemnification of the parties pursuant hereto. The transfer of the
Assets shall be effective as of October 1, 1996, at which time Purchaser shall
take control of the Business, and all decisions of any nature in respect thereof
2. PURCHASE PRICE. The purchase price (the "PURCHASE PRICE") for the
Assets shall be an amount equal to TWO HUNDRED THOUSAND AND NO/I00THS DOLLARS
($200,000.00), plus interest on such amount at the rate of seven per cent (7%)
per annum accrued from October 1, 1996 to the Closing Date, payable as set forth
below. The Purchase Price shall be allocated for Federal Income Tax purposes
among the Assets as agreed by the parties within sixty days after the Closing
Date, and each party agrees that, to the extent permitted by law, it or he shall
account for the sale of the Assets in a manner consistent with such allocation.
3. PAYMENT OF PURCHASE PRICE. On the terms and subject to the
conditions herein, Purchaser shall deliver to Seller on the Closing Date, the
Purchase Price, in immediately available funds.
4. CLOSING. The consummation of the transactions contemplated hereby
(the "CLOSING") shall take place no earlier ten (10) days after all conditions
precedent have been satisfied, including the consummation of the transactions
contemplated by Merger Agreement and the RPA, but no later than sixty (60) days
after the date hereof, at 9:00 A.M. (the "CLOSING DATE") at the law offices of
the Selling Parties' counsel in Paducah, Kentucky, or otherwise, on such other
date or place as the parties hereto may mutually agree.
5. THE SELLING PARTIES' REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. Each of the Selling Parties hereby jointly and severally, with the
other Selling Parties, represents and warrants to, covenants and agrees with,
ABEV and Purchaser, now and as of the Closing Date, as follows:
2
A. Organization Standing and Power. Seller is a corporation
duly organized, validly existing and in good standing under the laws of
Kentucky. Seller's federal employer identification number, state identification
number for sales and tax purposes and all similar identification numbers are set
forth on EXHIBIT 5A, attached hereto. Seller has all requisite corporate power
and authority to own, lease and operate the Assets owned, leased or operated by
it and to carry on the Business as now being conducted in the manner that, and
in the places in which, the Business is now being conducted. Neither the nature
of the Business nor the ownership, operation or leasing of real estate or
personal property by Seller requires it to qualify as a foreign corporation in
any jurisdiction other than jurisdictions in which the failure to so qualify
would not materially and adversely affect the Business or any of the Assets.
Seller is not qualified to transact business as a foreign corporation in any
state. Seller does not conduct any business or own or lease any asset or
property of any nature outside of the United States. Each of the Selling Parties
have the full power and authority and legal capacity to enter into and deliver
this Agreement and perform all other acts necessary or appropriate to consummate
all of the transactions contemplated hereby. Seller does not now and has never
had any subsidiaries.
B. Capital Structure, Ownership of Assets and Related Matters.
(i) The capital structure of Seller, including the
number of authorized, issued and outstanding shares of capital stock
are listed on PART A OF EXHIBIT 5B(I), attached hereto. Owners own,
both beneficially and of record, all of the issued and outstanding
shares of capital stock, equity or equity equivalents in and to Seller.
Seller has and will have, at Closing, good and marketable title to, or
a valid and transferable leasehold interest in, all of the Assets,
except for such Assets as may be sold or otherwise disposed of between
the date hereof and the Closing Date in the ordinary course of
business. No other "PERSON" (as defined in Section 15M hereof) has any
fee, leasehold or equitable interest in and to the Assets, except as
set forth on PART B OF EXHIBIT 5B(I). Except as set forth on PART B OF
EXHIBIT 5B(I), on the Closing Date, the Assets will be free and clear
of all of the following (hereinafter collectively referred to as
"ENCUMBRANCES"): security interests, liens, pledges, claims, charges,
escrows, encumbrances, options, rights of first refusal, mortgages,
indentures, security agreements or other agreements, arrangements,
contracts, commitments, understandings or obligations, whether written
or oral, encumbering title in any way, other than the Encumbrances
created hereby. None of the Selling Parties has any direct or indirect
financial stake in any Person which has an interest in any assets used
in
3
conducting the Business, except for Owners' fee interest in the real
property located at Xxxxx 0, Xxxxxxxxx, XX 00000.
(ii) Except for this Agreement, there are no
outstanding options, warrants or other rights, contracts, commitments,
agreements, understandings, arrangements or restrictions relating to
the purchase or acquisition of any shares of capital stock or other
equity securities or interests of any nature of Seller.
(iii) Seller neither owns nor has ever owned, shares
of any class of capital stock of any other corporation and does not
have any interest in any other entity and there are no contracts,
commitments, agreements, understandings or arrangements relating to
such.
(iv) Seller has never assumed or succeeded to the
liabilities of any Person (except each other), whether by operation of
law or otherwise, and it has never been known by any other name or
done business under any other name. THE BUSINESS CONSISTS ONLY OF THE
PURCHASE OF FINISHED GOODS FROM XXXXXX'X SAUSAGE, INC. AND THE SALE OF
PRODUCTS TO UNAFFILIATED THIRD PARTIES.
(v) Except for sales of inventory in the ordinary
course of business, and the rights of ABEV and Purchaser hereunder,
there are no outstanding options, warrants or rights to purchase or
acquire any interest whatsoever in any of the Assets, and there are no
contracts, commitments, agreements, understandings, arrangements or
restrictions relating to the ownership or operation of any of the
Assets.
(vi) The Assets constitute all of the property
necessary for the conduct of the Business in the manner in which and
to the extent to which it is currently being conducted. To Owners
knowledge, there is no fact, event or action which could result in an
adverse change in the Business, prospects, financial condition or
results of operations or the operation or ownership of the Assets by
Purchaser following the Closing.
(vii) The Assets owned or leased by Seller on the
date hereof constitute, and will constitute at Closing, all of the
properties and assets used in the conduct of the Business on the date
hereof, are in good working condition, have been maintained in
accordance with industry standards, and are sufficient to conduct the
Business in a manner consistent with past practices. The Selling
Parties know of no
4
condition which, either alone or with other conditions, interferes with
the economic value of any of the Assets or the use thereof in the
manner used by Seller in the Business.
(viii) The Assets do not include any interest of any
nature in any parcel of real property, except for the leases described
on EXHIBIT 5B(VIII) (collectively, the "REAL ESTATE").
C. Authorization. This Agreement and all writings relating
hereto to be executed and delivered by each of the Selling Parties have been
duly authorized by all necessary action and constitute the valid and binding
obligations of each the Selling Parties, enforceable in accordance with their
respective terms. The individuals executing this Agreement and the other
documents executed in connection herewith, individually and on behalf of Seller,
have been duly authorized and have the legal capacity to execute all of such
documents in such capacities. Neither the execution and delivery hereof nor any
writing relating hereto nor the consummation by any of the Selling Parties of
the transactions contemplated hereby or thereby, nor compliance with any of the
provisions hereof or thereof, will: (i) conflict with or result in a breach of
Seller's Articles or Certificate of Incorporation or By-Laws; (ii) violate any
statute, law, rule or regulation or any order, writ, injunction or decree of any
court or governmental authority; (iii) violate or conflict with or constitute a
default under (or give rise to any right of termination, modification,
cancellation or acceleration under), any agreement or writing of any nature to
which any of the Selling Parties is a party or by which the Assets may be bound
or affected, or result in the creation of any Encumbrance against or upon any of
the Assets under any agreement or writing to which any of the Selling Parties is
a party or by which any of them or their assets may be bound or affected, or
(iv) impair or in any way limit any governmental or official license, approval,
permit or authorization of Seller. Other than as set forth on EXHIBIT 5C,
attached hereto, no consent or approval of or notification to any Person is
necessary or required in connection with the execution and delivery by any of
the Selling Parties of this Agreement or any writing relating hereto or the
consummation of the transactions contemplated hereby or thereby.
D. Financial Statements.
(i) EXHIBIT 5D hereto consists of the balance sheets
and the related statements of income, changes in shareholders' equity
and changes in financial position of Seller, and the notes thereto and
the auditor's report thereon, if applicable, as at and for the fiscal
years ended July 31, 1994, 1995 and 1996, and all interim statements
prepared to date for the fiscal year to end September 30, 1996
(collectively and as updated, the "HISTORICAL FINANCIALS").
5
EXHIBIT 5D shall be updated as interim statements are prepared. The
Historical Financials are true, correct and complete and present fairly
the financial position of Seller and the results of its operations,
retained earnings and changes in financial positions as at the dates
thereof and for the periods covered thereby, do not include or omit to
state any material fact which renders them misleading, and have been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis, except as may be disclosed in the
reports relating thereto. At the Closing, the Selling Parties shall
deliver to ABEV and Purchaser a balance sheet dated as of the end of
the accounting period before the Closing Date (the "CLOSING BALANCE
SHEET") based on the best knowledge and good faith of the Owners, which
shall be prepared on a basis consistent with the Historical Financials
and in accordance with the provisions hereof. The Closing Balance Sheet
shall be certified by all of the Selling Parties as showing the
financial position of Seller as of that date. Seller has taken all
steps necessary to change its fiscal year end to September 30,
commencing with the 12 month period to end September 30, 1996.
(ii) Except as disclosed therein, the statements of
income included in the Historical Financials do not contain any items
of special or nonrecurring income, and the balance sheets included in
the Historical Financials do not, and the Closing Balance Sheet will
not, reflect any write-up or revaluation increasing the book value of
any asset, other than adjustments required by ABEV and Purchaser's
outside auditors in the determination of the Purchase Price, and as
disclosed thereon.
(iii) All pro forma adjustments made by any of the
Selling Parties or on any of the Selling Parties' behalf in any sales
brochure or other document or literature delivered to ABEV and
Purchaser as part of their review of the Business are reasonable,
appropriate and adequate.
E. Liabilities.
(i) The liabilities of Seller on the Historical
Financials consisted, and the liabilities on the Closing Balance Sheet
will consist, solely of obligations and liabilities incurred in the
ordinary and regular course of Business to Persons which are not
affiliated with any of the Selling Parties, except for lease payments
in respect of the Real Estate and payments to GFI for finished goods
inventory.
(ii) As of the Closing, Seller will have no material
and adverse liability or obligation of any nature whatsoever,
including,
6
without limitation, known or unknown, fixed or contingent, accrued,
absolute, matured or unmatured, or any "LOSS CONTINGENCIES" considered
"PROBABLE" or "REASONABLY POSSIBLE" within the meaning of the Financial
Accounting Standards Board's Statement of Financial Accounting
Standards No. 5, which were not or will not be recorded on the
Historical Financials, the Closing Balance Sheet or on EXHIBIT 5E(II)
hereof, it being the intent of the parties that every "material"
liability or obligation of every nature (including those liabilities or
obligations commonly referred to as "off-balance sheet" liabilities) be
properly disclosed to ABEV and Purchaser, and properly accrued on
either the Historical Financials or the Closing Balance Sheet or
disclosed herein, as the case may be. All contingent liabilities either
not disclosed or disclosed on EXHIBIT 5E(II) shall be for the account
of the Selling Parties for purposes of determining indemnification
hereunder, and, if any such liability is paid by ABEV and Purchaser,
then, such payment shall be deemed accrued on the books of the Business
as of September 30, 1996 for the purpose of retroactively adjusting the
Purchase Price. Furthermore, should such undisclosed liability be
deemed a recurring operating expense of the Business, then for
indemnification purposes and otherwise, the Purchase Price shall be
deemed to have been reduced Four Dollars ($4.00) for every dollar of
such operating expense, to be paid in cash from Sellers to Purchaser.
(iii) All reserves and allowances included or to be
included in the Historical Financials and the Closing Balance Sheet
are, and will be, adequate, appropriate and reasonable (in accordance
with generally accepted accounting principles), as may be required by
ABEV and Purchaser's outside auditors.
(iv) EXHIBIT 5E(IV) is a complete list (the
"PAYABLES' LIST"), as sworn to by the Selling Parties, of every
creditor of Seller, including taxing authorities (whether the liability
to such creditor is accrued, absolute, contingent or otherwise), listed
by name, address, amount of liability to such creditor, and whether
such liability is disputed. The Payables' List shall be updated as of
the Closing Date.
F. Absence of Changes. Except as otherwise listed on EXHIBIT
5F hereto or as expressly permitted to satisfy the conditions precedent herein,
the Business has been operated only in the ordinary and regular course and there
has not been, since June 30, 1996 and through the Closing Date there will not
be, with respect to Seller: (i) any material and adverse change in its
condition, financial or otherwise; (ii) any material and adverse damage,
destruction or loss, whether or not covered by insurance; (iii) other than for
purchases of inventory in the ordinary course of business, the incurring of any
obligation or liability of any nature (whether absolute,
7
accrued, contingent or otherwise and whether due or to become due) in excess of
$10,000.00; (iv) any transfer or application of any assets of Seller to the
payment of any amount payable to or for its benefit or any of the following
Persons ("SELLING PARTIES' AFFILIATES"): any member of the family of Owners or
any Person which is controlled, directly or indirectly, by either Owner or by
any member of the family of either Owner; (v) any declaration, setting aside or
payment of any dividend or other distribution in respect of any shares of
capital stock of Seller, or any direct or indirect redemption, purchase or other
acquisition of any such stock; (vi) any organized labor negotiations, strike or
work stoppage affecting the Business or any threat of the foregoing; (vii) any
sale, transfer or other disposition of any tangible or intangible asset of
Seller to any Person (except for (a) payments of third party obligations
incurred in the ordinary and regular course of business, in accordance with the
regular payment practice of Seller, and (b) sales of inventory in the ordinary
and regular course of business); (viii) any termination or waiver of any rights
of material value to the Business; (ix) the adoption of any statute, rule,
regulation or order which materially and adversely affects the Business; (x) any
increase in the compensation of, or benefits for, officers, employees,
independent contractors or other Persons performing services for Seller
(including, without limitation, any increase pursuant to any bonus, pension,
profit-sharing or other plan or commitment), having annual remuneration in
excess of $40,000, except for increases in accordance with Seller's normal
salary administration policies; (xi) any capital expenditure or commitment in
excess of $20,000.00 for property, plant or equipment; (xii) any forward
purchase commitments not completed by the Closing Date involving more than
$20,000.00; (xiii) any material change in the accounting methods or practices
followed by Seller or any change in depreciation or amortization policies or
rates theretofore adopted; (xiv) any payment of any liability or obligation of
Seller in excess of $5,000.00 sooner than in accordance with its usual or
customary practices; (xv) any sale of goods or services to any customer where
the payment for such goods or services allows for the payment therefor more than
fifteen (15) days after the goods or services have been provided to such
customer; or (xvi) any commitment, obligation or understanding to do any of the
foregoing.
G. Tax Matters. Seller has filed, and will timely file, all
tax returns and reports required to be filed and, in respect of any period
ending prior to or which includes the Closing Date, has paid, or has set up an
adequate reserve for the payment of, all taxes required to be paid or
anticipated to be payable, which reserve either is reflected in the Historical
Financials or will be reflected in the Closing Balance Sheet, as the case may
be. All tax returns of Seller for the last five (5) years have been delivered to
ABEV and Purchaser, and there have been no audits of such returns. Seller has no
liability for any taxes in excess of the amounts so paid or reserves so
established. Seller has properly withheld and paid, and will properly
8
withhold and pay, all payroll or similar taxes. Seller is not delinquent in the
payment of any tax, assessment, penalties or interest and it has not requested
any extension of time within which to file any tax returns in respect of any
fiscal year which have not since been filed. All tax returns filed or to be
filed are, or will be, true, complete and correct. There are no tax liens on any
of the Assets. No deficiencies for any tax, assessment, penalties or interest
have been proposed, asserted, assessed or, to the knowledge of Owners,
threatened against Seller which would not be covered by existing reserves and,
as of the date hereof, no requests for waiver of the time to assess any such tax
are pending. Seller is not currently involved in an audit and, to the knowledge
of Owners, none are threatened. None of the Selling Parties have given or been
requested to give waivers of any statute of limitations relating to the
assessment or payment of any taxes for any taxable period. As of the Closing
Date, all taxes collected under color of law will have been remitted to the
proper taxing jurisdiction. For purposes hereof, the term "TAX" shall include
all Federal, state, local and foreign taxes, assessments, and all franchise,
sales, use, occupation, property, excise or other taxes of any nature
whatsoever, and governmental charges, including penalties and interest relating
to the foregoing. Seller does not have, and will not have, any obligation of any
nature to indemnify either Owner for tax liabilities owing due to the
intentional acts of either Owner.
H. Property Owned, Leased or Licensed.
(i) PART A OF EXHIBIT 5H(I) contains a list of all
real estate leased by Seller (collectively, the "REAL ESTATE") and the
termination date or notice requirement with respect to termination,
annual rental and renewal or purchase options). Seller does not own any
fee interest in any real property and has no understandings, agreements
or commitments to purchase any.
(a) True and complete copies of all leases
relating to the Real Estate have been delivered to ABEV and Purchaser.
The Selling Parties know of no interior or exterior structural defects
or other defects in the buildings or improvements thereto or in the
plumbing, electrical, mechanical, heating, ventilating,
air-conditioning, sprinkler or other systems thereof. To the knowledge
of Owners, PART B OF EXHIBIT 5H(I), or the environmental assessment or
an update thereof to be delivered, at Owners' cost, to ABEV and
Purchaser (along with the update, the "ENVIRONMENTAL Report") with
respect to the Real Estate, sets forth the location of all underground
or below grade storage tanks, pumps, piping, dispensers, or any
retention pits located on any part of the Real Estate, and a list of
all documents, notices, test reports or other information relating
thereto including a description of substances stored therein. In
9
addition, at the Closing, each of the Selling Parties will deliver a
Certificate (the "ENVIRONMENTAL CERTIFICATE") which details all known
or suspected environmental concerns with respect to the Real Estate
and the operation of the Business not expressly detailed in the
Environmental Report or on PART B OF EXHIBIT 5H(I). The Environmental
Certificate shall also detail the sources of information utilized by
the Selling Parties therein.
(b) With respect to the Real Estate: the
lessor has good and indefeasible title in fee simple thereto and owns
all buildings and other structures (excluding equipment and other
fixtures which are owned by Seller) thereon; there are no unrecorded
leases, Encumbrances, restrictions or other matters materially
affecting title or the current use thereof and no Person (other than
the lessor) has the right to impose or claim any interest whatsoever
thereon, and, there are no covenants, conditions, restrictions or
other title exceptions applicable thereto which are presently violated
or which adversely affect the marketability thereof and there are no
defects therein or thereon.
(c) To Owners' knowledge, the Real Estate is
not subject to or threatened with any requests, applications or
proceedings to condemn, rezone or demolish all or any portion thereof.
Seller has have obtained all permits and certificates necessary for
the use and occupancy thereof and the improvements thereon and such
use and occupancy is and has been in full compliance with all federal,
state and local laws, rules and regulations. To the knowledge of
Owners: (i) all water, sewer, gas, electric, telephone, drainage and
other utility equipment, air conditioning, heating, ventilation and
all other facilities and services (collectively, the "SERVICES")
required by law or necessary for the operation of the Real Estate as
it is now being operated are installed and connected pursuant to valid
permits, are adequate to service such Real Estate, and are in good
operating condition and repair, and (ii) no material fact or condition
exists which would result in the termination or impairment in the
furnishing of any Service.
(d) None of the Selling Parties have
received notice of and have no awareness of any currently due, pending
or threatened general or special assessments, taxes, litigation or
governmental proceedings against or affecting or which may affect the
Real Estate. The most recent taxes and assessments with respect to the
Real Estate are set forth in PART C OF EXHIBIT 5H(I).
10
(e) To Owners' knowledge: each parcel of
Real Estate consists of one contiguous parcel, abuts on and has direct
vehicular access to a dedicated thoroughfare, and none of the Real
Estate is in an area designated as being subject to flood hazards or
risks.
(g) With respect to the leases covering the
Real Estate, such leases are in full force and effect, are valid and
binding obligations of the parties thereto, have not been amended and
are enforceable against the parties thereto in accordance with the
terms thereof. There are no defaults (alleged or actual) by either
party to such leases and no event has occurred which with due notice
or lapse of time or both would constitute a default. None of the
Selling Parties has any obligation to pay brokerage commissions or
other compensation in connection with such leases.
(ii) EXHIBIT 5H(II) contains a list of each item of
machinery, equipment, tooling, office furniture, automobiles, trucks
and other fixed assets owned or leased by Seller (collectively, the
"M&E") and all locations thereof EXHIBIT 5H(II) also contains a list
and brief description of each lease or other agreement under which
Seller pays in excess of $5,000.00 annually to lease, license, hold or
operate any of the M&E. Copies of all leases relating to any item of
M&E have been delivered to ABEV and Purchaser. The M&E will,
individually or in the aggregate, be fit for such assets' intended use
as of the Closing Date.
(iii) None of the Selling Parties has any right,
title or interest in and to any (a) nongovernmental licenses,
franchises, distribution or other similar rights, or (b) trademarks,
trade names (except for Seller's corporate name and trade name and
recipes), service marks, copyrights, know-how, software, written,
magnetic and storage media, inventions, designs, models, processes,
patents or any other proprietary rights and applications for any of the
foregoing. With respect to Seller's trade name and recipes, none of the
Selling Parties pays any royalty with respect to any of them, has the
exclusive right to bring actions for the infringement thereof and has
not granted any rights of any nature in any of them to any Person. No
product made or sold by Seller or for its benefit violates any license,
franchise or distribution agreement or infringes any trademark, trade
name, service xxxx, copyright, know-how, trade secret or patent of
another Person.
I. Insurance. Seller has maintained and presently maintains in
effect insurance covering the Assets and the Business from
11
reasonably foreseeable losses and any liabilities or risks relating thereto and
such insurance coverage shall be maintained by Seller through the Closing Date.
EXHIBIT 5I hereto sets forth a complete and accurate schedule (including the
type of policy, the policy number, the limits of coverage, the carrier, the
insurance agent or broker and the expiration date) of all insurance policies,
letters of credit or performance bonds held or issued by or on behalf of Seller
and now in force and those contemplated (including, without limitation,
comprehensive general liability, personal liability, comprehensive general
casualty and extended coverage, automobile, machinery, fire and lightning,
title, endowment, life, workers' compensation and fidelity bond coverage)
(collectively, the "INSURANCE POLICIES") and insurance agents and/or brokers
providing such insurance coverage. Except as disclosed on EXHIBIT 5I, such
coverage frilly complies with all contractual requirements of the Business and
Seller has not forfeited or waived any claim under any Insurance Policies and
each has fully complied with the terms and conditions thereof. The products
liability, personal injury and property damage insurance maintained has been on
an "OCCURRENCE" basis during the five-year period prior to the Closing Date.
EXHIBIT 5K (sets forth all property damage or personal injury claims asserted
against Seller during the past three years, or otherwise still pending. Except
as otherwise set forth on EXHIBIT 5K, all of such claims have been and are being
defended by insurance carriers or indemnitors without reservation and are or
will be completely covered by the Insurance Policies. None of the Selling
Parties has received notification, either directly or indirectly, from any
insurance carrier, denying or disputing any claim made by Seller, denying or
disputing any coverage for any such claim, denying or disputing the amount of
any claim, or regarding the possible termination, cancellation or amendment of
or premium increase with respect to any Insurance Policies. Seller has no
pending or anticipated claim against any of the insurance carriers under any of
such policies and there has been no, to the knowledge of Owners, actual or
alleged, occurrence of any kind which may give rise to any such claim.
J. Agreements, Etc. EXHIBIT 5J contains a list of all written,
and brief description of all oral, contracts, agreements, leases,
understandings, commitments, licenses, letters of credit, instruments and
obligations, the open purchase and sales orders journals, if any, as of the
beginning of business on the date hereof (which journals shall be updated as of
the Closing Date), and other instruments and obligations not listed on another
Exhibit or schedule hereto (unless excluded therefrom due to the dollar amount
involved) affecting the Business in any manner whatsoever (collectively, the
"CONTRACTS"). With respect to the Contracts, except as otherwise set forth on
such EXHIBIT 5J: (i) all are in full force and effect, have not been modified or
amended, and constitute legal, valid and binding obligations of the respective
parties thereto, (ii) Seller has, in all material respects, performed all of the
obligations required to be performed by it to
12
date and is not in default or, to the Owners' knowledge, alleged, to be in
default in any respect thereunder, no party has been released from any
obligation thereto and there exists no event, condition or occurrence which,
with or without notice, lapse of time or the occurrence of any other event,
would constitute a default thereunder by Seller or, to Owners' knowledge, would
constitute a default on the part of any other party thereto, (iii) the
continuation, validity and effectiveness under the current terms thereof
(including the current rentals under any leases or licenses) will in no way be
affected by the transactions contemplated hereby, or, if any would be affected
without a consent or waiver, the Selling Parties shall cause an appropriate
consent or waiver respecting such transfer to be delivered to ABEV and Purchaser
prior to the Closing Date at no cost or other adverse consequences to Seller,
ABEV or Purchaser; and (iv) none require the payment or performance of material
considerations by Seller on or after the Closing Date without the receipt of
consideration of commensurate value, within the meaning of applicable fraudulent
conveyance laws or decisions. The Selling Parties have furnished to ABEV and
Purchaser complete copies of all written Contracts and complete written
summaries of all oral Contracts described on any Exhibit hereto. Seller is not
restricted by any agreement to which it is a party from carrying on the Business
anywhere in the world. The Contracts confer on Seller all rights necessary to
enable it to conduct the Business as now being conducted (as well as any
expansion thereof now contemplated) and none imposes upon it any unduly or
extraordinary burdensome obligation.
K. Litigation and Claims, Etc. Except as set forth on EXHIBIT
5K, there are no personal injury, product liability or other actions, suits,
claims, investigations or legal or administrative or arbitration proceedings of
any nature pending or, to the knowledge of Owners, threatened, against or
involving any of the Selling Parties, the Assets, the Business or products,
whether at law or in equity, or before or by any foreign, federal, state,
municipal or other governmental or quasi-governmental instrumentality. Attached
to EXHIBIT 5K are (i) all service bulletins or similar notices to customers,
vendors or the public at-large and other Persons which discusses or notifies
such Persons about problems with Seller's products, and (ii) all notes from all
technical or engineering meetings (or the like) which relate in any way to
problems or potential problems of any nature with respect to such products. To
the knowledge of Owners, there is no basis for any other such action, suit,
claim, investigation or proceeding, and except as set forth on EXHIBIT 5K, none
of the foregoing has been pending during the last three years. There are no
outstanding orders, decrees or stipulations issued by any foreign, local, state
or federal judicial or governmental or quasi- governmental authority to which
any of the Selling Parties is or was a party or by which any is or was bound.
The insurance coverages in the Insurance Policies are adequate in character and
amount to pay all liabilities
13
relating to the matters described in EXHIBIT 5K. EXHIBIT 5K also details all
"recalls" or similar measures or public notices which occurred on or after
January 1, 1995, and details Seller's system for handling claims, whether under
warranties or otherwise, and also lists all such claims made in the last three
years.
L. Compliance; Governmental Authorizations; OSHA.
(i) Seller is in compliance, in all material
respects, with all federal, state and local laws, ordinances,
regulations, permits, licenses, decrees, judgments and orders
applicable to the Business, and has all foreign and United States,
federal, state and local governmental licenses and permits necessary
for the conduct of the Business as presently conducted or contemplated;
such licenses and permits are legally valid and in full force and
effect; no violations are or have been recorded in respect of any
thereof; and no proceeding is pending or, to the knowledge of Owners,
threatened, to revoke or limit any thereof. EXHIBIT 5L contains a list
and description (including subject matter and termination information)
of: (a) all such governmental licenses and permits (none of which will
be affected by the transactions contemplated hereby, unless otherwise
indicated on said Exhibit); and, (b) all consents, orders, decrees and
other compliance agreements under which Seller is operating or bound,
copies of all of which have been furnished to ABEV and Purchaser.
(ii) The Selling Parties have furnished to ABEV and
Purchaser copies of all written reports in their control or possession
of inspections relating to the Business and properties from January 1,
1994 through the date hereof under the Occupational Safety and Health
Administration Act, as amended, or comparable state legislation and all
other applicable foreign and United States federal, state and local
health and safety laws and regulations or any other law, rule or
regulation that either Seller or the Business is subject. To the
knowledge of Owners, there have been no other similar inspections. The
deficiencies, if any, noted on such reports or any deficiencies noted
by inspection through the Closing Date have been corrected, or will be
corrected by the Closing. To the knowledge of Owners, there is no other
safety, health, environmental or other material problem or concern
relating to the Business.
M. Inventories. The inventories of Seller included on the
Historical Financials and to be included on the Closing Balance Sheet consist
only of finished goods and are and will be valued at the lower of cost or market
value, net of reserves. Such inventories are all usable in the ordinary and
regular course of the Business, and are fit and sufficient for the purpose
14
for which they were purchased. All excess and obsolete items have been written
down to net realizable value, or written off, and all obsolete, damaged or
spoiled items have been destroyed. The inventories which were in transit on the
date hereof, and the inventories which are in transit on the Closing Date do not
and will not include any items which are damaged, spoiled or below standard
quality (except items for which Seller will receive credit or replacement from
the manufacturer or shipper thereof). Seller has exercised, and through the
Closing Date will exercise, its best efforts to have, the proper amount of
inventories to conduct the Business consistent with past practices. All
inventories are located at either the Real Estate or are on trucks being
delivered to the Companies' customers. Seller's inventories do not have any
allocation of overhead except as specifically disclosed on EXHIBIT 5M. Except as
specifically disclosed on EXHIBIT 5M, the inventory consists of items of quality
and quantity usable in the normal course of the Business. The Selling Parties
will provide to ABEV and Purchaser a list of all inventory (the "INVENTORY
LIST") on hand as of the end of the monthly accounting period ending closest to
the Closing Date, which list will comply with all of the requirements contained
in Sections 5D and 5M hereof.
N. Employee Matters. Seller has generally enjoyed a good
employer-employee relationship with their respective employees. Seller has
accrued on the Historical Financials, and will accrue, adequate reserves on the
Closing Balance Sheet, for all wages, salaries, contractual bonuses, vacation
pay and other direct and indirect compensation earned by, or accrued for the
benefit of, all employees (whether or not vested or payable by such date). The
Closing Balance Sheet will also include accruals for year end contractual
bonuses, pension and profit sharing contributions, and any other adjustments
which might normally be made only at year end. Upon termination of the
employment of any employee of Seller, none of it, ABEV or Purchaser will incur
any liability for any severance or termination pay, pension or profit-sharing
benefit or other similar payment under Seller's practices or policies in effect
on or prior to the Closing Date. Except as set forth on EXHIBIT 5K, there are no
controversies pending or, to the knowledge of Owners, threatened by any of
Seller's employees, former employees, job applicants or any association, group
or other Person or Persons regarding any of the Selling Parties' employment
practices or policies.
Seller is not a party to or bound by any employment or consulting
agreement, any collective bargaining agreement or any other agreement with a
labor union. There is not pending or, to the knowledge of Owners, threatened any
labor dispute, strike or work stoppage (whether by their own employees or
another Person's employees) which may affect the Business or which may interfere
with its continued operation. Seller has complied with all laws, rules and
regulations in connection with all employment matters, including without
limitation, hiring and firing of employees, wage matters,
15
collective bargaining matters, and matters relating to the National Labor
Relations Act and the Workers Adjustment and Retraining Notification Act, and to
Owners' knowledge, there are no activities or proceedings of any labor union to
organize any employees thereof. During the twelve-month period preceding the
date hereof, there have not been any significant labor troubles involving
employees of Seller and there are no significant threats of work stoppages by
such employees.
EXHIBIT 5N contains a list of all directors, officers, managers,
employees, consultants, independent contractors and other Persons rendering any
service to Seller who, during the 1996 fiscal year, are expected to receive
remuneration in excess of $25,000, together with the current job title and
aggregate remuneration rate (bonus and salary) for each such person, as well as
the total remuneration paid to date and expected amount of remuneration in 1996.
Other than Owners, there are no Persons who receive an aggregate of $25,000 or
more from both Seller and GFI.
O. EMPLOYEE BENEFIT PLANS.
(i) Except as is described in EXHIBIT 5O(I), neither
any of the Selling Parties nor any current or former Plan Affiliate of
any of the Selling Parties has at any time had any liability with
respect to any of the following (whether written, unwritten or
terminated): (a) any "employee welfare benefit plan," as defined in
Section 3(1) of ERISA, (b) any "employee pension benefit plan," as
defined in Section 3(2) of ERISA, or (c) any other plan, policy,
program, arrangement or agreement providing employee benefits (or other
similar benefits) to former employees, dependents, beneficiaries,
directors or independent contractors, including, but not limited to,
any bonus or incentive plan, stock option, restricted stock, stock
bonus plan, salary reduction agreement, change-of-control agreement,
severance agreement, material fringe benefit program, short-term
disability plan or sick leave, personnel policy, vacation time, holiday
pay, moving expense reimbursement program, employment agreement or
consulting agreement which could result in ABEV or Purchaser having any
liability, whether direct or indirect.
(ii) As used herein, the following terms shall have
the following respective meanings: (a) the term "EMPLOYEE PLAN" shall
mean any plan, policy, program, arrangement or agreement described in
Section 5O(i), whether or not scheduled; and (b) the term "ERISA" shall
mean the Employee Retirement Income Security Act of 1974, as amended.
16
(iii) With respect to any person or entity ("FIRST
PERSON"), the term "PLAN AFFILIATE" shall mean any other person or
entity with whom the First Person constitutes all or part of a
controlled group, or which would be treated with the First Person as
under common control or whose employees would be treated as employed by
the First Person, under Section 414 of the Code and any regulations,
administrative rulings and case law interpreting the foregoing.
(iv) No Employee Plan (a) is subject to Title IV of
ERISA, (b) is a "multiemployer plan" as defined in Section 4001 of
ERISA, a "multiemployer plan" within the meaning of Section 3(37) of
ERISA, a "multiple employer plan" within the meaning of Code Section
413(c) or a "multiple employer welfare arrangement" within the meaning
of Section 3(40) of ERISA, or (c) provides any welfare-type benefits
for retirees or former employees, or their spouses or dependents
(except for limited continued medical benefit coverage for former
employees, their spouses and other dependents as required to be
provided under Section 4980B of the Code.
(v) A complete copy of each written Employee Plan as
amended to the Closing, together with Form 5500 Annual Reports for the
three (3) most recent plan years, if any; a copy of any funding vehicle
with respect to each such plan; a copy of the most recent determination
letter with respect to such plan (if any); have been delivered to ABEV
and Purchaser. A description of the material terms of any unwritten
Employee Plan is set forth in EXHIBIT 5O(v). No person has made any
statement, whether oral or in writing, regarding any Employee Plan
which will result in any liability to ABEV or Purchaser in excess of
any liability previously disclosed pursuant to this paragraph.
(vi) Each Employee Plan (a) has been and currently
complies in form and in operation in all respects with all applicable
requirements of ERISA and the Code and any other applicable Federal and
state laws, (b) has been and is operated and administered in compliance
with its terms (except as otherwise required by law); (c) has been and
is operated in compliance with the applicable requirements of the Code
and ERISA in such a manner as to qualify, where appropriate, for both
Federal and state purposes, for income tax exclusions to its
participants, tax-exempt income for its funding vehicle, and the
allowance of deductions and credits with respect to contributions
thereto; and (d) where applicable, has received a favorable
determination letter from the Internal Revenue Service.
17
(vii) With respect to each Employee Plan, no person
has: (a) has entered into any nonexempt "prohibited transaction," as
such terms is defined in ERISA or the Code; or (b) has breached a
fiduciary obligation; which could subject ABEV or Purchaser to any
liability.
(viii) With respect to each Employee Plan all
required or recommended contributions, payments, premiums,
contributions, reimbursements, expenses, accruals or other liabilities
for all periods ending prior to or as of June 30, 1996 (including
periods from the first day of the then current plan year to such date)
(a) have been frilly satisfied, (b) will be accrued as of such date, or
(c) are subject to a funding arrangement separate from the assets of
Seller or any of its Plan Affiliates.
P. Transactions with Related Parties. EXHIBIT 5P lists all
amounts directly or indirectly paid (or deemed for accounting purposes to have
been paid) or to be paid by any of the Selling Parties, to, or received by any
of the Selling Parties from any Person which is controlled by, controls, or
under common control with, directly or indirectly, any of the Selling Parties
during the current and the last fiscal year for products or services (including
any charge for management, interest, capital employed, administrative,
purchasing, financial or other services) related in any way to the Business. For
purposes of this Section, the term "SELLING PARTIES" shall include any and all
of the "SELLING PARTIES' AFFILIATES."
Q. Accounts and Notes Receivable. EXHIBIT 5Q contains an aged
list of unpaid accounts and notes receivable (the "RECEIVABLES") owing to Seller
as of a date not more than four (4) business days prior to the date hereof, with
the address of the Business' trade debtors. ABEV and Purchaser shall be
furnished with an updated schedule of Receivables and any other information
relating thereto as ABEV and Purchaser shall reasonably request on reasonable
advance notice. All of the Receivables reflected on the Historical Financials
and to be reflected on updated Receivables Schedules and the Closing Balance
Sheet constituted and will constitute only valid claims against third parties
not affiliated with any of the Selling Parties. The schedule of Receivables also
highlights trade debtors of Seller with principal places of business outside of
the continental United States. The Receivables arose or will arise from bona
fide transactions in the ordinary and regular course of Business and all
(subject to the reserve for bad debt) are collectible within thirty (30) days
after they arose or will arise (except with respect to the Receivables due and
owing from Wal-Mart and Kroger, which Receivables are collectible within sixty
(60) days after they arose or will arise), and are not subject to any defenses,
set-offs or counterclaims. The Historical Financials do, and the Closing Balance
Sheet will, include reserves for bad debt reasonably based on past customer
performance. Except as
18
listed on EXHIBIT 5Q, Seller does not sell, and does not
contemplate selling, products directly to the United States of America or any
branch, agency or subdivision thereof. EXHIBIT 5Q also highlights those
customers of the Business whose accounts have been more than thirty (30) days
past due repeatedly over the past six (6) months.
R. Customers and Suppliers. EXHIBIT 5R is a list of the ten
(10) largest customers (measured by U.S. dollar volume in each case) of the
Business during the 1995 and 1996 (to date) fiscal years and the last twelve
(12) months showing, with respect to each, the name, address and dollar volume
involved. Seller is not required to provide any bonding, guaranty or other
financial security arrangements in connection with any transactions with any of
their customers, except as described on EXHIBIT SR. Owners have no knowledge or
reason to believe that as a result of the transactions contemplated hereby or
otherwise, any customer listed on EXHIBIT SR intends to cease or substantially
reduce, the purchase of goods or services from ABEV and Purchaser on terms and
conditions similar to those imposed on purchases from Seller prior to the date
hereof. The Selling Parties do not know of any claims or disputes pending,
contemplated or threatened with respect to any of the parties referred to in
EXHIBIT 5R and none are concerned about the financial viability of any of such
parties. Seller's sole and exclusive supplier of inventory is GFI.
S. Miscellaneous Assets. The Assets do not and will not
include (i) any contracts for future services or prepaid items or deferred
charges, the substantial value or benefit of which will not be usable by ABEV
and Purchaser after the Closing Date, and (ii) any goodwill, organization
expense or other intangible asset.
T. Bank Accounts; Officers; Directors; Credit Cards. EXHIBIT
5T is a list of all bank accounts, safe deposit and post office boxes and the
like in the name of or controlled by any of the Selling Parties with respect to
the Business and details about the Persons having access thereto. EXHIBIT 5T
also lists all officers, directors and managers of Seller and all credit or
debit cards under which it has or may have current or future liability and the
names of the Persons holding such cards.
U. Business Generally. Other than for events effecting the
economy or Seller's industry in general, since January 1, 1996, to the knowledge
of Owners, there have been no events, transactions or information affecting or
relating to Seller or the Business which could be reasonably expected to have a
material and adverse effect on the Business.
V. Reports and Studies. EXHIBIT 5V lists all reports and
studies relating to the Business or the sale thereof in the possession or
19
control of any of the Selling Parties prepared for the officers, directors,
management, stockholders and agents of the Selling Parties since January 1, 1995
by investment bankers, investment advisors, accountants, engineers,
environmental consultants, management consultants or any other Persons.
W. Environmental Matters.
(i) None of the Selling Parties has transported,
stored, treated or disposed, and none has allowed or arranged for any
other Person to transport, store, treat or dispose waste to or at: (a)
any location other than a site lawfully permitted to receive such waste
for such purposes or (b) any location designated for remedial action
pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), the Resource Conservation
and Recovery Act, as amended ("RCRA"), or any similar federal, state or
local statute; and none has performed, arranged for or allowed by any
method or procedure such transportation or disposal in contravention of
any laws or regulations or in any other manner which may result in
liability for contamination of the environment. None of the Selling
Parties has disposed, and none has allowed or arranged for any other
Person to dispose, of waste upon property owned or leased by any of
them.
(ii) (a) No generation, use, handling, storage,
treatment, Release (as defined below), discharge, spillage or disposal
of any Hazardous Waste, Hazardous Substance or Hazardous Chemical (as
defined below) has occurred or is occurring at any site or Facility (as
defined below) at any time owned, leased or operated, directly or
indirectly, by any of the Selling Parties, (b) no Hazardous Waste or
waste containing any Hazardous Substance or Hazardous Chemical
generated, used, handled, stored or treated by Seller has been stored,
Released, discharged, spilled or disposed of at any site or Facility at
any time owned, leased or operated, directly or indirectly, by any of
the Selling Parties, and (c) no site or Facility, at any time, owned,
leased or operated, directly or indirectly, by any of the Selling
Parties is or has been the site of any industrial facility, dump or
landfill.
(iii) No soil or water in, upon, under or adjacent to
any site or Facility at any time owned, leased, or operated, directly
or indirectly, by any of the Selling Parties has been contaminated by
any Hazardous Waste, Hazardous Substance or Hazardous Chemical and no
such site constitutes a nuisance of any kind or nature.
(iv) None of the Selling Parties has received
notification of any past or present failure by Seller to comply with
any
20
laws, regulations, permits, franchises, licenses or orders applicable
to it or the Business, which have not been remedied, cured or complied
with. Without limiting the generality of the foregoing, none of the
Selling Parties has received any notification (including requests for
information directed to any) from any governmental or
quasi-governmental agency or Person asserting that Seller is or may be
a "potentially responsible party" for a remedial action at any
Facility, pursuant to the provisions of CERCLA, or any similar federal,
state or local statute assigning responsibility for the costs of
investigating or remediation of Releases of contaminants into the
environment.
(v) For purposes of this Agreement, the terms
"Hazardous Waste", "Hazardous Substance", "Hazardous Chemical",
"pollutant", "contaminant", "Release" and "Facility" include any
"hazardous waste", "hazardous substance", "pollutant", "contaminant"
and "facility", respectively, within the meaning of RCRA, CERCLA, the
Emergency Planning and Community Rights to Know Act of 1986, as
amended, or any other federal, state or local law, rule or regulation
adopted pursuant thereto or otherwise relating to the disposal of
Hazardous Wastes or the cleanup of sites at which Hazardous Substances
have been released or the environment in general.
(vi) EXHIBIT 5W(VI) is a list of (a) locations
(identified by address, owner/operator, type of facility, type of
waste, and period of time the Facility was used) to which Seller has,
during the past three (3) years, transported, or caused to be
transported, or allowed or arranged for any other Person to transport,
any type of waste material, generated by either or its customers, for
storage, treatment, burning, recycling or disposal and (b) storage,
treatment, burning, recycling or disposal activities which either has
undertaken, during the past three (3) years, at locations then or
presently owned or occupied by either together with such other relevant
information concerning such locations as would enable ABEV and
Purchaser to determine whether either has any liability for such
locations and the activities thereon, including, but not limited to,
property address, nature of either's interest in the property, current
owner of the property, nature of the activity conducted at such
location, type and form of waste, estimated volume of waste disposal on
or in ground, and period of time the activity was conducted.
X Brokers and Finders. Except for The March Group, LLC, whose
commission shall be borne entirely by Owners, none of the Selling Parties nor
any officer, director or employee thereof, has employed any broker or finder or
incurred any liability for any financial advisory fees, brokerage fees,
commissions or finders' fees, and, except as stated above, no broker or
21
finder has acted directly or indirectly for any of the Selling Parties in
connection with this Agreement and the transactions contemplated hereby.
Y. Material Disclosures. No representation, warranty, covenant
or agreement by the Selling Parties contained herein, and no statement contained
in any certificate, Schedule, Exhibit, list or other writing furnished to ABEV
and Purchaser in connection with the transactions contemplated hereby, contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. All Schedules and Exhibits hereto and all writings furnished to ABEV
and Purchaser hereunder or in connection with the transactions contemplated
hereby are accurate, true and complete. All representations, warranties,
covenants and agreements made by the Selling Parties herein and all other
agreements and instruments delivered in connection herewith or pursuant hereto
and facts and information contained in the Exhibits and Schedules shall be true
and correct as of the Closing Date with the same effect as if they had been made
at and as of the Closing Date. There are no facts, conditions, or aspects
relating to the past or present operations of Seller and the Business which are
not set forth herein which would have a material adverse affect upon the
operation of the Business after the Closing Date or ABEV and Purchaser's
investment decision in consummating the transactions contemplated hereby, and
none of the Selling Parties know of any fact, event or action which could result
in a material adverse change in the Business, prospects, financial condition or
results of operations of Seller and the Business or the operation or ownership
of the Assets by ABEV and Purchaser following the Closing. The records of Seller
relating to the Business are accurate and complete in all material respects and
there are no matters as to which appropriate entries have not been made in such
records.
6. ABEV AND PURCHASER'S REPRESENTATIONS, WARRANTIES, AGREEMENTS AND
COVENANTS. Each of ABEV and Purchaser hereby jointly and severally, represents
and warrants to, covenants and agrees with, the Selling Parties, now and as of
the Closing Date, as follows:
A. Organization, Standing and Power. Each of ABEV and
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each has all requisite power and
authority to own, lease and operate the Assets and to carry on the Business
after the transactions contemplated hereby. Each of ABEV and Purchaser has the
full power and authority to enter into this Agreement and perform all acts
necessary or appropriate to consummate all of the transactions contemplated
hereby.
22
B. Authorization. This Agreement and all writings relating
hereto to be executed and delivered by ABEV and Purchaser have been duly
authorized by all necessary action and constitute the valid and binding
obligations of ABEV and Purchaser, enforceable in accordance with their
respective terms. The individuals executing this Agreement and the other
documents executed in connection herewith on behalf of ABEV and Purchaser have
been duly authorized to execute all of such documents on behalf thereof. Neither
the execution and delivery hereof nor any writing relating hereto nor the
consummation by ABEV and Purchaser of the transactions contemplated hereby or
thereby, nor compliance with any of the provisions hereof or thereof, will: (i)
conflict with or result in a material breach of the Certificates of
Incorporation or By-Laws of ABEV and Purchaser; (ii) violate any statute, law,
rule or regulation or any order, writ, injunction or decree of any court or
governmental authority; (iii) violate or conflict with or constitute a default
under (or give rise to any right of termination, modification, cancellation or
acceleration under), any agreement or writing of any nature to which either ABEV
and Purchaser is a party or by which its assets may be bound or affected, or,
except as consented to by ABEV and Purchaser, result in the creation of any
Encumbrance against or upon any of their assets under any agreement or writing
to which either is a party or by which either or their assets may be bound or
affected; or (iv) impair or in any way limit any governmental or official
license, approval, permit or authorization of either ABEV and Purchaser. Other
than LaSalle National Bank, no consent or approval of or notification to any
Person is necessary or required in connection with the execution and delivery by
ABEV and Purchaser hereof or any writing relating hereto or the consummation of
the transactions-contemplated hereby or thereby.
C. Brokers and Finders. Neither ABEV and Purchaser nor any
officer, director or employee thereof, has employed any broker or finder or
incurred any liability for any financial advisory fees, brokerage fees,
commissions or finders' fees, and except as stated above, no broker or finder
has acted directly or indirectly for ABEV and Purchaser, in connection with this
Agreement and the transactions contemplated hereby.
D. Material Disclosures. No representation, warranty, covenant
or agreement by ABEV and Purchaser contained herein, and no statement contained
in any certificate, Schedule, Exhibit, list or other writing furnished to any of
the Selling Parties in connection with the transactions contemplated hereby,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading. All Schedules and Exhibits hereto and all copies of all writings
furnished to the Selling Parties hereunder or in connection with the
transactions contemplated hereby are accurate, true and complete. All
representations, warranties, covenants and
23
agreements made by ABEV and Purchaser herein and facts and information contained
in the Exhibits and Schedules shall be true and correct as of the Closing Date
with the same effect as if they had been made at and as of the Closing Date.
There are no facts, conditions, or aspects relating to the past or present
operations of ABEV and Purchaser which are not set forth herein which would have
a material adverse affect upon the operation of the Business.
7. CLOSING TRANSACTIONS. On the Closing Date (or on a date otherwise
indicated herein):
A. The Selling Parties shall deliver or cause to be delivered
to ABEV and Purchaser:
(i) Such bills of sale, endorsements, assignments,
receipts and other instruments, in such form as are reasonably
satisfactory to ABEV and Purchaser, to evidence that the Assets are
transferred to Purchaser free and clear of all Encumbrances.
(ii) Such keys, lock and safe combinations, and new
bank signature cards and other similar items as ABEV and Purchaser
shall require to obtain full occupation and control of the Assets and
Business.
(iii) The Certificates required by Sections 9A and 9B
hereof.
(iv) The legal opinion of counsel to the Selling
Parties, in substantially the form as Schedule D attached hereto.
(v) Certificate(s) of good standing of Seller
certified by the Secretary of State of Kentucky and all other states in
which Seller is qualified to transact business as a foreign
corporation, dated within thirty (30) days of the Closing Date.
(vi) A copy of the Articles (or Certificate) of
Incorporation of Seller, certified by the Secretary of State of
Kentucky within thirty (30) days of the Closing Date.
(vii) Possession of the Real Estate.
(viii) Such estoppel letters as are reasonably
requested by ABEV and Purchaser, including those to be executed and
delivered by the landlords of the Real Estate, in form and substance
acceptable to ABEV and Purchaser's counsel.
24
(ix) All consents, waivers and releases necessary,
required or appropriate to consummate the transactions contemplated
hereby.
(x) Uniform Commercial Code Tax, Lien and Judgement
Search results showing to the reasonable satisfaction of ABEV and
Purchaser that all Encumbrances, if any, on the Assets have been
released.
(xi) An Authorization of Inspection, in form and
substance acceptable to ABEV and Purchaser.
(xii) Certificates of Title, as appropriate,
evidencing Seller's ownership of the Assets, endorsed for transfer.
(xiii) The Closing Balance Sheet, and, as updated to
the end of the accounting period ended closest to the Closing, the
Inventory List, an updated Payables' List and an updated schedule of
Receivables.
(xiv) Certified copies of resolutions duly and
unanimously adopted by Seller's Board of Directors and Shareholders
unanimously approving the transactions contemplated by, and authorizing
the execution, delivery and performance by Seller of, this Agreement,
and a certificate as to the incumbency of officers of Seller executing
any instrument or other document delivered in connection with such
transactions.
(xv) Such documents and instruments as are necessary
to grant Purchaser, and no other Person, the right to use all trade
names currently used by Seller.
(xvi) Results of environmental assessments evidencing
and indicating no environmental risk with respect to the Real Estate.
(xvii) Such other documents as the ABEV and Purchaser
may reasonably request.
B. ABEV and Purchaser shall deliver or cause to be delivered
to the Selling Parties:
(i) The Purchase Price.
(ii) The Certificates required by Sections 10A and
10B hereof.
25
(iii) Certified copies of resolutions duly adopted by
ABEV and Purchaser's Board of Directors approving the transactions
contemplated by, and authorizing the execution, delivery and
performance by ABEV and Purchaser of, this Agreement, and a certificate
as to the incumbency of officers of ABEV and Purchaser executing any
instrument or other document delivered in connection with such
transactions.
(iv) Certificates of good standing of ABEV and
Purchaser certified by the Secretary of State of the State of Delaware,
dated within thirty (30) days of the Closing Date.
(v) A copy of the Certificate(s) of Incorporation of
ABEV and Purchaser, certified by the Secretary of State of the State of
Delaware, dated within thirty (30) days of the Closing Date.
(vi) The legal opinion of Xxx X. Xxxxxxx, P.C.,
counsel to ABEV and Purchaser, in the form of Schedule E, attached
hereto.
(vii) Such other documents as the Selling Parties may
reasonably request.
8. CONDUCT AND TRANSACTIONS PRIOR TO CLOSING.
A. Access to Records and Properties of Seller. From and after
the date hereof until the Closing Date, the Selling Parties shall afford (i) to
all representatives of ABEV and Purchaser, free and full access at all
reasonable times to the assets, properties, books and records of Seller in order
that ABEV and Purchaser may have full opportunity to make investigations of the
assets and affairs of Seller, and to such additional data and other information
about the Business and properties of Seller as ABEV and Purchaser shall
reasonably request or that the Selling Parties believe in good faith ABEV and
Purchaser would want to see in making its investment decision hereunder, and
(ii) to the accountants of ABEV and Purchaser, free and full access at all times
to work papers and other records of Seller's accountants relating to the
Business. Any such investigation made pursuant to clause (i) or (ii) shall not
affect or otherwise diminish any of the representations, warranties, covenants
or agreements of the Selling Parties hereunder or ABEV and Purchaser's rights to
indemnification or otherwise. All information to which ABEV and Purchaser is
given access shall be kept strictly confidential except as required by law,
statute, rule or regulation and, should the transactions contemplated hereby
fail to be consummated, all such information shall be returned to the Selling
Parties.
26
B. Operation of Business of Seller. From the date hereof to
the Closing Date, Seller shall operate only in the ordinary and regular course
of business, consistent with past practices, and shall:
(i) consult with ABEV and Purchaser on a regular
basis with respect to all decisions outside of the ordinary and
regular course of business involving or otherwise which may have a
material affect on the Business;
(ii) maintain the Assets in good repair, order and
condition, reasonable wear and use excepted;
(iii) maintain and keep in full force and effect all
Insurance Policies;
(iv) not, except as permitted under Section 5F: (a)
enter into any contract or agreement binding upon either which is to be
assumed by ABEV and Purchaser hereunder and which is not immediately
terminable upon thirty (30) days notice without cost; (b) extend credit
in the sale of the products or services other than in accordance with
prior credit practices; (c) lease, buy or otherwise acquire any real
estate or any interest therein; (d) increase any type of compensation
payable or to become payable to any of employees, directors, agents or
representatives; (e) make any change in its capital structure; (f) do
any other thing or act described in Section 5F hereof; or (g) enter
into any agreement, commitment or understanding to do any of the
foregoing;
(v) not do anything outside of the ordinary course of
business which has the intent or effect of changing the Purchase
Price;
(vi) use its best efforts to preserve intact its
business organizations, and to keep available to ABEV and Purchaser the
services of all present officers, employees and agents and use its best
efforts to preserve for ABEV and Purchaser the goodwill of suppliers,
customers and others having business relations with Seller; and
(vii) maintain its books, accounts and records in a
proper manner and in the usual, regular and ordinary manner on a basis
consistent with prior years.
C. Supplements. From time to time prior to the Closing Date,
the Selling Parties shall furnish to ABEV and Purchaser supplemental information
with respect to any matters or events arising or discovered subsequent to the
date hereof which, if existing or known on the date hereof, would have rendered
any statement, representation or warranty made by the
27
Selling Parties or any information contained in any Exhibit or Schedule hereto
then inaccurate or incomplete; the furnishing of such supplemental information
shall not, however, affect or otherwise diminish any of the representations,
warranties, covenants or agreements of the Selling Parties hereunder. The
furnishing of any supplemental information which is materially different than
previously submitted information shall provide ABEV and Purchaser with the
unilateral right to terminate this Agreement and any duties and obligations
hereunder, without cost or liability.
Notwithstanding the foregoing, ABEV and Purchaser acknowledges that the
open purchase orders journals and open sales orders journals change in the
ordinary and regular course of business; therefore, the Selling Parties shall
only be obligated to provide ABEV and Purchaser with an updated list of such
journals as of the beginning of business on the Closing Date.
D. Risk of Loss. With respect to any material loss, damage,
condemnation or destruction of any of the Assets, upon any such loss, damage,
condemnation or destruction, ABEV and Purchaser may at its option, cancel and
terminate this Agreement or proceed as follows: if, in the event of any such
material loss, damage or destruction prior to the Closing, ABEV and Purchaser
elect not to terminate, the parties shall promptly attempt to agree on a
mutually satisfactory reduction in the total price to be paid for the Assets,
and the transaction shall be closed on the basis of such reduced price. If the
parties are unable to agree on such reduced value within seven (7) days after
notice to ABEV and Purchaser of such loss, damage, destruction or taking and
ABEV and Purchaser are not willing to conclude the transaction by payment of the
full price, then any party hereto may terminate this Agreement. In the event the
parties agree to a mutually satisfactory reduction of the price and the
transaction is closed on that basis, any insurance or condemnation proceeds
shall be paid to and retained by Seller. In the event the parties do not agree
to a mutually satisfactory reduction of the price, and ABEV and Purchaser elect
to conclude the transaction by payment of the full price, any insurance or
condemnation proceeds shall be paid to and retained by ABEV and Purchaser.
E. Consents, Waivers and Releases. The Selling Parties shall,
at their own cost and expense:
(i) Provide all necessary or appropriate consents and
comply with all provisions arguably relating to the transactions
contemplated hereby, including all federal, state or local laws, rules
and regulations;
(ii) Procure consents to the transactions
contemplated hereby, waivers of rights from, or releases from:
28
(a) all parties holding security interests
on any of the Assets;
(b) the stockholders and directors of
Seller, which consent shall be deemed to have been granted as of the
date hereof by Owners' execution hereof,
(c) all other parties deemed necessary or
appropriate by ABEV and Purchaser.
All of such approvals, waivers, consents and releases shall be in form
and substance satisfactory to ABEV and Purchaser and their counsel, in their
sole discretion.
F. [THIS SECTION INTENTIONALLY LEFT BLANK]
G. Distributions to Owners from Seller. Between the date
hereof and September 30, 1996, there will not be, directly or indirectly,
distributions or dividends of any kind or nature from Seller to either Owner or
any Selling Parties' Affiliates except as permitted by ABEV. After September 30,
1996 and until the Closing, there will not be, directly or indirectly,
distributions or dividends of any kind or nature from Seller to either Owner or
any Selling Parties' Affiliates.
9. CONDITIONS OF OBLIGATIONS OF ABEV AND PURCHASER. The obligations of
ABEV and Purchaser to perform this Agreement are subject to the satisfaction of
the following conditions on or prior to the Closing Date:
A. Representations, Warranties, Covenants and Agreements. The
representations, warranties, covenants and agreements of the Selling Parties in
this Agreement or in any Schedule, Exhibit, certificate or document delivered in
connection herewith shall be true and correct in all material respects on the
Closing Date, and ABEV and Purchaser shall have received a Certificate signed by
the Selling Parties to that effect.
B. Performance of Obligations of the Selling Parties. The
Selling Parties shall have performed all agreements and obligations required to
be performed by them on or prior to the Closing Date, and ABEV and Purchaser
shall have received a Certificate signed by the Selling Parties to that effect.
C. Consents, Waivers and Releases. The Selling Parties shall
have obtained, or to the reasonable satisfaction of ABEV and Purchaser obviated
the need to obtain, all consents, waivers and releases (including those
described in Section 8E) from third parties necessary to execute and
29
deliver this Agreement and consummate the transactions contemplated hereby.
Also, ABEV and Purchaser shall have obtained the consent of ABEV and Purchaser's
Board of Directors to execute and deliver this Agreement and consummate the
transactions contemplated hereby.
D. No Litigation. No action, suit or other proceeding shall be
pending before any court, tribunal or governmental authority seeking or
threatening to restrain or prohibit the consummation of the transactions
contemplated hereby, or seeking to obtain damages in respect thereof, or
involving a claim that consummation thereof would result in the violation of any
law, decree or regulation of any governmental authority having appropriate
jurisdiction.
E. Absence of Changes. Except as otherwise listed on Exhibit
5F hereto, since January 1, 1996, the Business has been operated only in the
ordinary and regular course and there has not been, and through the Closing Date
there will not be, with respect to Seller, any thing or act described in Section
5F hereof, and there shall not have been, with respect to the Business, any
adverse changes.
F. Completion of Review by ABEV and Purchaser. ABEV and
Purchaser shall have completed their business, accounting, financial,
environmental and legal review of the Business and Assets, and ABEV and
Purchaser shall, in their sole and absolute discretion, be satisfied with the
results of such investigation or otherwise waive this condition.
G. Financing and Additional Financial Matters. ABEV and
Purchaser shall have procured financing in an amount and on terms and conditions
that are satisfactory to ABEV and Purchaser, in their sole discretion. Also, as
of the Closing Date, ABEV and Purchaser shall be satisfied that (i) Seller shall
have paid all liabilities in the ordinary course of business, and (ii) for the
period September 30, 1996 to the Closing Date, there shall have been no
distributions of any nature whatsoever from Seller to Owners or any Selling
Parties' Affiliates, except as permitted hereby. Finally, ABEV and Purchaser
shall have received satisfactory evidence that as of September 30, 1996, all
expenses which are or should have been accrued by Seller, as provided by ABEV's
accountants, shall have been accrued (or paid), and, as of such date and the
Closing Date, there shall be sufficient cash on hand to discharge such
liabilities and accruals. Finally, ABEV and its accountants shall be satisfied
that the only audit which is required of Seller under appropriate SEC guidelines
is for the twelve-month period ended September 30, 1996.
30
H. Closing Documents. The Selling Parties shall have
delivered, or shall have caused the delivery of, all appropriate documents and
instruments described in Section 7 hereof.
10. CONDITIONS OF OBLIGATIONS OF THE SELLING PARTIES. The obligations
of the Selling Parties to perform this Agreement are subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
A. Representations Warranties Covenants and Agreements . The
representations, warranties, covenants and agreements of ABEV and Purchaser
herein or in any Schedule, Exhibit, certificate or document delivered in
connection herewith shall be true and correct in all material respects on the
Closing Date, and the Selling Parties shall have received a Certificate signed
by ABEV and Purchaser to that effect.
B. Performance of Obligations of ABEV and Purchaser. ABEV and
Purchaser shall have performed all agreements and obligations required to be
performed by it on or prior to the Closing Date, and the Selling Parties shall
have received a Certificate signed by ABEV and Purchaser to that effect.
C. Consents Waivers and Releases. ABEV and Purchaser shall
have obtained, or to the reasonable satisfaction of the Selling Parties obviated
the need to obtain, all consents, waivers and releases from third parties
necessary to execute and deliver this Agreement, buy the Assets and consummate
the transactions contemplated hereby.
D. No Litigation. No action, suit or other proceeding shall be
pending before any court, tribunal or governmental authority seeking or
threatening to restrain or prohibit the consummation of the transactions
contemplated hereby, or seeking to obtain damages in respect thereof, or
involving a claim that consummation thereof would result in the violation of any
law, decree or regulation of any governmental authority having appropriate
jurisdiction.
E. Closing Documents. ABEV and Purchaser shall have delivered,
or shall have caused the delivery of, all appropriate documents and instruments
described in Section 7 hereof
11. CLOSING NOT A WAIVER. The fact that the parties have chosen to
consummate the transactions contemplated hereby shall not act or be deemed or
construed as a waiver of either party or estop either party from pursuing their
respective rights to indemnification hereunder or other remedies for any reason
whatsoever.
31
12. POST-CLOSING COVENANTS.
A. Restrictive Covenants.
(i) Nondisclosure. Each Owner acknowledges that
he/she has been and will be entrusted with trade secrets, marketing,
operating and strategic plans, customer and supplier lists, proprietary
information recipes and other confidential or specialized data and/or
information relative to the Business, whether now existing or to be
developed or created after the Closing Date (collectively, "TRADE
SECRETS"). Each Owner covenants and agrees that he/she shall at all
times after the date hereof hold in strictest confidence any and all
Trade Secrets that may have come or may come into his/her possession or
within his/her knowledge concerning or related to the products,
services, processes, recipes, businesses, suppliers, customers and
clients of Seller and the Business and also that the Trade Secrets
constitute Assets of Seller and not of any individual. Each Owner
covenants and agrees that neither he/she nor any Person controlled by
him/her will for any reason, directly or indirectly, for
himself/herself or for the benefit of any other Person, use, copy,
divulge or otherwise disseminate or disclose any of the Trade Secrets
owned or used by, or licensed to, Seller or any of its affiliates or
otherwise relating to Seller or the Business, provided that either
Owner may disclose Trade Secrets pursuant to an order by a court of
competent jurisdiction, provided, further, that such Owner shall give
ABEV and Purchaser notice of such order and any court pleading
requesting such disclosure, in order to provide ABEV and Purchaser with
an opportunity to prevent such disclosure or procure an appropriate
protective order.
(ii) Customers and Trade Secrets. Each Owner
acknowledges that customers and customer accounts and the Trade Secrets
of Seller will, after the Closing, at all times be the sole and
separate property of Purchaser, in which neither Owner has any rights
whatsoever, and all activities of or work performed by either Owner for
or on behalf of Purchaser after the Closing will be performed solely
for the benefit of Purchaser and the goodwill resulting from such
efforts by Owners is and at all times will be the sole and separate
property of Purchaser, which goodwill is intended to be protected, in
part, by this Section.
(iii) Non-Solicitation Non-Hire. Each Owner agrees
that from the Closing Date and continuing for a period (the
"NON-COMPETE PERIOD") of four (4) years from the Closing Date, neither
he/she nor any person or enterprise controlled by him/her will solicit
or hire or contract with, for employment, consulting or any other
reason,
32
any person (except family members) who was employed by ABEV, Purchaser or Seller
or any of such parties' affiliates as a manager, sales person, officer, office
head, buyer, driver, accountant/controller or other key employee at any time
within one (1) year prior to the time of the act of solicitation, or hire.
(iv) Non-Competition by Owners. During the
Non-Compete Period, each Owner agrees that neither he/she nor any
person or enterprise controlled by him/her will become a stockholder,
director, officer, agent, employee or representative of or consultant
to a corporation or member of a partnership or limited liability
company, engage as a sole proprietor in any business, act as a
consultant to any of the foregoing or otherwise engage, directly or
indirectly, in any enterprise which competes with the Business in any
geographic area in which Seller currently, and the Purchaser
subsequently, carries on such Business or contemplates or has the
capability of doing business on the date of the acts described above,
including the geographic areas set forth in Exhibit 12A(iv); provided,
however, that the foregoing shall not prohibit the ownership of less
than two percent (2%) of the outstanding shares of the stock of any
corporation engaged in any business, which shares are regularly traded
on a national securities exchange or in any over-the-counter market.
The Non-Compete Period shall be extended for that period of time during
which either Owner is in violation of the covenants contained in this
Section 12A.
(v) Relief, Reformation, Severability. Each Owner
agrees that the covenants contained in this Section 12 are separate and
are reasonable in their scope and duration and may be enforced by
specific performance or otherwise. Neither Owner shall raise any issue
of reasonableness as a defense in any proceeding to enforce any of the
covenants herein. Notwithstanding the foregoing, in the event that a
covenant included in this Section 12 shall be deemed by any court to be
unreasonably broad in any respect, then, to the extent permitted, the
court which makes such finding shall modify such covenant for the
purpose of making such covenant reasonable in scope and duration. The
validity, legality or enforceability of the remaining provisions of
this Agreement shall not be affected by any such modification.
(vi) Remedies. Each Owner acknowledges that any
breach of the restrictive covenants herein will cause irreparable harm
to ABEV and Purchaser, and that such harm will be difficult if not
impossible to ascertain. Therefore, if any action or proceeding is
commenced by or on behalf of ABEV or Purchaser to enforce the
provisions hereof, they shall be entitled to equitable relief,
including injunction, against any actual or threatened breach hereof,
and any
33
damages arising therefrom including, without limitation, reasonable
fees of its attorneys and their support staff and all other costs and
expenses incurred by either ABEV or Purchaser in good faith in
connection therewith without bond and without liability should such
relief be denied, modified or vacated. Neither the right to obtain such
relief nor the obtaining of such relief shall be exclusive of or
preclude ABEV or Purchaser from any other remedy. Each Owner hereby
waives the claim or defense to an action for equitable relief by the
other that ABEV or Purchaser has an adequate remedy at law or has not
been or is not being irreparably injured by such breach. FURTHERMORE,
EACH OWNER HEREBY IRREVOCABLY WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE OF ANY NATURE ARISING OUT OF,
CONNECTED WITH, RELATED OR INCIDENTAL TO THE RESTRICTIVE COVENANTS
CONTAINED IN THIS SECTION 12 HEREOF. INSTEAD, ANY DISPUTES RESOLVED IN
COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
B. Inventions. Owners shall and hereby do assign to ABEV and
Purchaser their entire right, title and interest in all discoveries, computer
programs, processes and improvements, patentable or otherwise, trade secrets and
ideas, writings and copyrightable material, which have been or may be conceived
by either of them or developed or acquired by either of them during the
Non-Compete Period, which may pertain directly or indirectly to the Business.
Each Owner agrees to promptly and fully disclose in writing all such
developments. Each Owner acknowledges that all Trade Secrets and other ideas
relating to the Business which were or will be conceived by him/her before the
date hereof or during the Non-Compete Period have been, or shall be, assigned by
them to Purchaser. Each Owner will, upon ABEV and Purchaser's request, execute,
acknowledge and deliver to ABEV and Purchaser all instruments and do all other
acts which are necessary or desirable to enable ABEV and Purchaser to file and
prosecute applications for, and to acquire, maintain and enforce all letters,
patents, trademark registrations, or copyrights or enforce all rights in any
intangible or intellectual property in all countries.
C. Collection of Receivables. From and after the Closing,
Purchaser shall have the sole right and authority to collect, for its own
account, all of the Receivables, and to endorse in Seller's name, any checks or
drafts received on account of any such Receivables or such other items. Each
Owner agrees that he/she will transfer or deliver to Purchaser, promptly after
the receipt thereof, any cash or other property which he may receive after the
Closing in respect of any claims, contracts, licenses, leases,
34
commitments, sales orders, purchase orders, receivables of any character or any
other items related directly or indirectly to the Business.
D. Power of Attorney. Effective as of the Closing, each Owner
hereby constitutes and appoints Merrick M. Elfinan, Xxxx X. Xxxxxx or their
successors and assigns, with the full power and right of substitution, as
Owners' true and lawful attorney: (i) to institute and prosecute all proceedings
which Purchaser may deem proper in order to collect, assert or enforce any
claim, right or title of any kind in or to the Assets; (ii) to defend or
compromise any and all actions, suits or proceedings in respect of any of the
Assets, and to do all such acts and things in relation thereto as ABEV and
Purchaser shall deem necessary or advisable; and (iii) to take all action which
ABEV and Purchaser may reasonably deem proper in order to provide ABEV and
Purchaser with all of the benefits relating to the Assets. Each Owner
acknowledges that the foregoing powers are coupled with an interest and shall be
irrevocable. Purchaser shall be entitled to retain for its own account any
amounts collected pursuant to the foregoing powers, including any amounts
payable as interest in respect thereof.
E. Subrogation of ABEV and Purchaser. In the event that ABEV
or Purchaser shall become liable for or suffer any damage with respect to any
matter which was covered by insurance maintained by Seller on or prior to the
Closing, ABEV and Purchaser shall be and hereby are each subrogated to any
rights of Seller under such insurance coverage, and, in addition, each Owner
agrees to promptly remit to ABEV and Purchaser any insurance proceeds which
he/she may receive on account of any such liability or damage.
F. No Adverse Action. Neither Owners nor any of their agents
or representatives shall take any action, directly or indirectly, that would in
any way adversely affect ABEV and Purchaser's efforts to obtain all proper
permits and authorizations necessary or appropriate to operate the Business in
any manner deemed reasonable by ABEV and Purchaser.
G. Indemnification Matters. From and after the Closing, to the
extent that either Owner has a right, either legal or equitable, to
indemnification, subrogation or other similar right or remedy from Seller for
any matter whatsoever, such Owner shall waive such right or remedy and shall not
attempt, whether directly or indirectly, to enforce or collect such right or
remedy at any time.
13. INDEMNIFICATION. EACH OF THE TERMS AND CONDITIONS CONTAINED IN
SECTION 13 OF THE MERGER AGREEMENT IS HEREBY INCORPORATED HEREIN AS THOUGH FULLY
SET FORTH HEREIN, AND ALL OF THE INDEMNIFICATION
35
DUTIES AND OBLIGATIONS OF THE SELLING PARTIES THEREIN ARE HEREBY DEEMED TO BE
THE JOINT AND SEVERAL DUTIES AND OBLIGATIONS OF EACH SELLER HEREIN. FURTHERMORE,
SELLERS AGREE AND ACKNOWLEDGE THAT THE INDEMNIFICATION PROCESS AND PROCEDURES
SET FORTH IN SECTIONS 13C-F, INCLUSIVE (INCLUDING RIGHTS OF SET- OFF), SHALL BE
THE INDEMNIFICATION PROCESS AND PROCEDURES WHICH GOVERN SELLERS' JOINT AND
SEVERAL INDEMNIFICATION OBLIGATIONS HEREIN.
EACH OF THE SELLING PARTIES AGREES AND ACKNOWLEDGES THAT ANY MATTER
GIVING RISE TO INDEMNIFICATION HEREUNDER SHALL GIVE RISE TO INDEMNIFICATION
UNDER THE MERGER AGREEMENT, IT BEING THE PARTIES' INTENT TO "CROSS-DEFAULT"
BREACHES AND DEFAULTS HEREUNDER WITH THE MERGER AGREEMENT.
NONE OF THE FOREGOING REMEDIES SHALL BE MUTUALLY EXCLUSIVE.
14. SURVIVAL OF REPRESENTATIONS WARRANTIES AGREEMENTS AND COVENANTS.
A. All representations, warranties, agreements and covenants
made by any party hereto in this Agreement shall survive the Closing of the
transactions hereunder.
B. The representations and warranties hereunder shall not be
affected or diminished by any investigation at any time by or on behalf of the
party for whose benefit such representations, warranties, covenants and
agreements were made, or the fact that such representations, warranties,
agreements and covenants were made to such party's knowledge.
15. MISCELLANEOUS.
A. Manner of Closing. At the Closing, all transactions shall
be conducted substantially concurrently and no transaction shall be deemed to be
completed until all are completed.
B. Access to Records. ABEV and Purchaser shall afford to
Owners and their agents, the opportunity, upon reasonable advance notice, to
examine and make copies of the books and records of Seller having an effect on
all periods prior to the Closing Date, in connection with tax and financial
reporting matters and other bona fide business purposes, and ABEV and Purchaser
shall use reasonable efforts to retain such books and records for a period of
four (4) years from the date of such books and records.
36
C. Parties in Interest. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by the parties and their respective
executors, successors and assigns. Furthermore, should either Owner already
have, or in the future create, a trust for his benefit or the benefit of any
family member, then Owners' signatures below will constitute and, if necessary,
such trust will execute such instruments as are necessary to evidence, such
trust being jointly and severally liable for Owners' obligations hereunder. By
Owners' execution hereof, each hereby acknowledges that any trust to which
either has transferred, or in the future transfers, assets with the intent,
purpose or effect of estate planning purposes or to avoid liability hereunder or
of which either is the trustee or is a beneficiary, shall be jointly and
severally liable for all of Owners' obligations hereunder, without the necessity
for further action on any party's behalf Notwithstanding the foregoing, each
Owner is prohibited from assigning his/her interests hereunder, by operation of
law or otherwise. Each Owner hereby consents to a collateral assignment of
ABEV's and Purchaser's rights hereunder to a lender, understanding that such
lender shall have the ability to enforce the rights of ABEV and Purchaser
granted herein.
D. Entire Agreement Amendments. This Agreement, the Exhibits
and Schedules attached hereto, and the other writings referred to herein or
delivered in connection herewith contain the entire understanding of the parties
with respect to its subject matter, and supersedes all prior understandings and
agreements. This Agreement may be amended only by a written instrument duly
executed by the parties. Any reference herein to this Agreement shall be deemed
to include the Exhibits and Schedules attached hereto. If any provision of this
Agreement is determined to be illegal or unenforceable, such provision will be
deemed amended to the extent necessary to conform to applicable law or, if it
cannot be so amended without materially altering the intention of the parties,
it will be deemed stricken and the remainder of the Agreement will remain in
full force and effect.
E. Headings. The section and subsection headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
F. Notices. All notices, claims, certificates, requests,
demands and other communications ("communications") hereunder shall be in
writing and shall be deemed to have been duly given when personally delivered,
mailed (by registered or certified mail, postage prepaid) or sent by overnight
courier service or facsimile addressed as follows:
If to any of the Selling Parties,
in care of Xx. Xxxxxx, at: Xxxxx X. Xxxxxx
Xxxxx #0
00
Xxxxxxxxx, XX 00000
With a copy to: Xxxx X. Xxxxxxx, Esq.
XXXXXXX XXXXXXX HOUSTON & XXXXXX
Old National Bank Building
000 Xxxxxxxx
Xxxxxxx, XX 00000-0000
Facsimile: (000)000-0000
If to ABEV and Purchaser: c/o Sterling Capital, Ltd.
000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Facsimile: (000)000-0000
With a copy to: Xxx X. Xxxxxxx, P.C.
000 Xxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile: (000)000-0000
or to such other address as the person to whom a communication is to be given
may have furnished to the others in writing in accordance herewith. A
communication given by any other means shall be deemed duly given on the earlier
of when actually received by the addressee or three (3) days after sending such
communication. Notice hereunder to either Owner shall be deemed to be notice to
each of the Selling Parties.
G. Public Announcements. All public announcements relating to
this Agreement or the transactions contemplated hereby, including announcements
to employees, will be made only as may be agreed upon jointly by the parties
hereto, or as ABEV and Purchaser considers required or appropriate to comply
with applicable law. Any governmental, public or private inquiries or requests
for information shall be promptly referred to ABEV and Purchaser.
H. Further Assurances. After the Closing Date, without further
consideration, the parties shall execute and deliver such further instruments
and documents as either party shall reasonably request to consummate the
transactions contemplated hereby.
I. Waivers. Any party to this Agreement may, by written notice
to the other party hereto, waive any provision of this Agreement. The waiver by
any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent, same or different breach.
38
J. Materialitv and Knowledge. The terms "MATERIAL" or
"MATERIALLY" or "MATERIALITY" shall mean either (i) the existence of a fact or
condition or facts or conditions which, if a dollar amount is readily
ascertainable with respect to such, has a value, either individually or in the
aggregate, of more than $10,000.00, except if such fact or condition relates to
taxes, claims and/or litigation in which case such matter shall be material
irrespective of the dollar amount, or (ii) the determination by a lender, in
such lender's sole and absolute discretion, that such fact or condition is, or,
if known to such lender would be, material for purposes of its making a loan to
ABEV and Purchaser in order to consummate the transactions hereunder or to avoid
any acceleration of such loan, or (iii) any fact or condition which gives rise
to any right of termination, cancellation, acceleration or modification of any
agreement or understanding to which Seller is a party and such right has been
exercised. The term "KNOWLEDGE" shall mean (i) actual knowledge or notice, (ii)
that knowledge which a party should know after having made all reasonable
inquiries and (iii) that an individual or individuals making a statement as to
its, his or her "KNOWLEDGE" has made all reasonable inquiries regarding the
facts and circumstances relating to such statement. For purposes of this
Agreement, the knowledge of any of the Selling Parties shall be deemed to be the
knowledge of all of the Selling Parties (i.e., the knowledge of one of the
Selling Parties shall be imputed to all other Selling Parties, including both
Owners), and the receipt of a notice by any shall be deemed to be receipt by
all. The knowledge of any employee of Seller shall be deemed to be the knowledge
of Seller.
K. Counterparts. The Agreement may be executed in one or more
counterparts, but all such counterparts shall constitute one and the same
instrument.
L. Certificate. A Certificate shall mean a certificate signed
by the individual stating that (i) such individual who is signing the
certificate has made or has caused to be made such investigations as are
necessary in order to permit him to verify the accuracy of the information set
forth in such certificate and (ii) to the individual's knowledge, after due
inquiry, such certificate does not misstate any material fact and does not omit
any fact necessary to make the certificate not misleading.
M. Use of Certain Terms. The term "Seller", and "Selling
Parties" shall also include all predecessors thereof and businesses acquired by
or merged therewith, or businesses whose liabilities (some or all) have been
assumed by Seller or the Selling Parties. The term "each of the Selling Parties"
shall mean any or all thereof, including Owners, whichever has the broadest
meaning given the particular context. The term "PERSON" shall mean an
individual, a partnership, a joint venture, a joint stock company, a
corporation, a trust, an unincorporated organization, a limited liability
39
company, any other legal entity and a government, governmental body or
quasi-governmental body, or any department, agency or political subdivision
thereof.
N. Applicable Law. The terms and conditions of this Agreement
shall be governed by and construed in accordance with the laws of the State of
Delaware applicable to agreements between Delaware residents entered into and to
be performed entirely within Delaware.
O. Consent to Jurisdiction. For those matters or disputes of
any nature arising out of, connected with, related or incidental to a party
seeking to compel action (other than payment) or cease a prohibited action, the
parties hereto hereby irrevocably submit themselves to the exclusive
jurisdiction of the courts of the State of Kentucky located in the City of
Paducah, Kentucky and to the jurisdiction of the United States District Court
for the Western District of Kentucky for the purpose of bringing any action that
may be brought in connection with the provisions hereof. The parties hereto
hereby individually agree that they shall not assert any claim that they are not
subject to the exclusive jurisdiction of such courts, that the venue is
improper, that the forum is inconvenient or any similar objection, claim or
argument. Service of process on any of the parties hereto with regard to any
such action may be made by mailing the process to such Persons by regular or
certified mail to the address of such Person set forth herein or to any
subsequent address to which notices shall be sent.
P. Agreement to Arbitrate. Except for those matters described
in Section 14O above, in the event of any other dispute arising out of,
connected with, related or incidental to this Agreement and the documents or
instruments delivered in connection herewith, such dispute shall be submitted to
arbitration in accordance with the terms of this Section. The party who is
alleging that a dispute exists shall send a notice of such dispute to all other
parties, which notice shall set forth in detail the dispute, the parties
involved and the position of such party with respect thereto. Within ten (10)
business days after the delivery of such a notice, counsel for the parties shall
deliver a joint request to the Managing Partner of the Cincinnati, Ohio Office
of Xxxxxxx & Xxxx, Esq., requesting such person to deliver a list of ten (l0)
prospective arbitrators, all of whom such partner believes to be experienced in
commercial arbitration, along with a brief resume of each such person. The
parties shall do all things necessary to reasonably cooperate in the selection
of the ten (10) persons, including holding Xxxxxxx & Xxxx harmless from any and
all claims arising out of such selection and arbitration. If such Managing
Partner declines, the list often (10) shall be selected by the party asking for
arbitration receiving a list from any private dispute resolution firm with
offices in Cincinnati. The arbitrator shall be selected as follows: within three
(3) days after the list is delivered to
40
each party, each party shall assign rank of preference to each available
arbitrator, with number one being the most preferable and ten being the least
preferable (i.e., a different rank must be assigned to each available
arbitrator) and deliver such rankings confidentially to the person or firm which
created the list; in the event of a tie, the person or firm which created the
list shall then select the arbitrator from the two potential arbitrators which
have tied. The single arbitrator with the lowest total score shall be the
arbitrator for the dispute. The arbitrator so selected shall schedule a hearing
in Paducah, Kentucky, on the disputed issues within forty-five (45) days after
his appointment, and the arbitrator shall render his decision after the hearing,
in writing, as expeditiously as is possible, and shall be delivered to the
parties. The arbitrator shall render his decision based on written materials
supplied by the parties to the arbitration in support of their respective oral
presentations at the hearing, and no party shall be entitled to discovery in
such matter. Each party shall supply a copy of any written materials to be
submitted to the arbitrator at least fifteen (15) days prior to the scheduled
hearing. The parties agree that the arbitrator shall not have any power or
authority to award punitive damages. A default judgment may be entered against
any party who fails to appear at the arbitration hearing. Such decision and
determination shall be final and unappealable and shall be filed as a judgment
of record in any jurisdiction designated by the successful party. The successful
parry shall be entitled to recover all fees, costs and expenses incurred in
connection with such arbitration. The parties hereto agree that this paragraph
has been included to rapidly and inexpensively resolve any disputes between them
with respect to the matters described above, and that this paragraph shall be
grounds for dismissal of any court action commenced by any party with respect to
a dispute arising out of such matters.
THE PARTIES AGREE THAT ANY ARBITRATION SHALL BE GOVERNED BY AND PURSUANT TO THE
FEDERAL ARBITRATION ACT, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER.
Q. Exceptions to Exclusive Jurisdiction and Mandatory
Arbitration. Notwithstanding the provisions of Sections 15O and 15P hereof, in
the event that there is a third party action which may give rise to rights of
indemnification or contribution from one party(ies) to another, the parties
hereto irrevocably submit themselves to the jurisdiction of the court in which
such third party action is brought, and the party to be indemnified may, but
shall not be obligated to, bring a third party action or other appropriate
proceeding to enforce such rights of indemnification or contribution. The
foregoing is not intended to confer any rights upon any other party other than
the parties hereto.
41
R. Pronouns. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, singular and plural as the identity
of that person referred to requires.
S. Joint and Several Obligations. The duties and obligations
of each of the Selling Parties are joint and several, and the Selling Parties
hereby acknowledge the same, and each of the Selling Parties hereby guarantees
performance of all duties and obligations of the other under and pursuant to
this Agreement. Furthermore, where there is imposed an obligation or duty upon
one Selling Party, each of the other Selling Parties shall be jointly and
severally liable for ensuring the prompt compliance of such obligation or duty
thereof Notwithstanding the foregoing, after the Closing, neither Owner shall be
entitled to contribution or other similar remedy or remedies from Seller for
Owners' obligations hereunder, it being the intent that only the Owners (or
their successors, assigns, trusts, etc.) shall be responsible for the indemnity
obligations hereunder.
T. Effect of Disputes. Notwithstanding the fact that there may
from time to time be disputes among the parties concerning the terms and
conditions hereof, the parties agree not to under any circumstances, disparage,
criticize or denigrate the talents, skills, prospects, abilities, integrity or
character of the other parties hereto, or such parties' management, directors,
employees, agents or representatives (including those of ABEV and Purchaser's
affiliates). Each of the Selling Parties further agrees that each will not, at
any time after the date hereof and without ABEV and Purchaser's written consent,
contact any past, present or prospective customer, supplier, employee or agent
or representative of Seller or ABEV and Purchaser with the intent, purpose or
effect of injuring the reputation, business or business relationships of ABEV
and Purchaser. The provisions of this Section shall survive the execution and
termination hereof irrespective of the reason for such termination.
U. Mutual Drafting. This Agreement is the joint product of
ABEV and Purchaser, Seller and Owners and their respective counsel, and each
provision hereof has been subject to the mutual consultation, negotiation and
agreement of such parties and counsel, and shall not be construed for or against
any party hereto.
(end of text)
************************************
42
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
ATLANTIC BEVERAGE COMPANY, INC.
By_____________________________
Xxxxxxx X. Xxxxxx, Chairman
XXXXXX'X MERGER CORP.
By______________________________
Xxxxxxx X. Xxxxxx, Chairman
XXXXXX'X SAUSAGE, INC.
By_____________________________
Xxxxx X. Xxxxxx, President
_______________________________
Xxxxx X. Xxxxxx
_______________________________
Xxxxx Xxxx Xxxxxx
43
SCHEDULE A
Assets
Seller agrees to and will sell, transfer, assign and deliver
to ABEV and Purchaser, free and clear of all liens, claims and Encumbrances,
except those which ABEV and Purchaser has expressly agreed to assume pursuant to
SCHEDULE C hereof, all of the assets used in the Business other than the
Excluded Assets (as described on SCHEDULE B hereof), as they exist at the
Closing, which Assets include, but are not limited to, the following:
the machinery, equipment, tools, supplies, leasehold improvements, construction
in progress, furniture and fixtures, trucks, automobiles, vehicles and other
fixed assets owned or leased (as indicated) by Seller, as identified on Schedule
A(i);
(i) the inventories of Seller including, without limitation,
inventories of raw materials, work in process and finished goods, as identified
on Schedule A(ii);
(ii) all of Seller's right, title and interest in their
customer accounts, customer account contracts, and other rights to provide
services to their customers, as identified on Schedule A(iii);
(iii) all permits, licenses, governmental approvals,
contracts, franchise rights, patents, trademarks, trade names, trade secrets,
corporate names, telephone numbers, good will and all other proprietary rights
and intangible assets used in the Business, as identified on Schedule A(iv);
(iv) all cash and cash equivalents and investments, whether
short-term or long-term, of Seller, including prepaid expenses, bank accounts,
certificates of deposit, treasury bills and securities;
(v) all Receivables of Seller, including, without limitation,
all trade and customer accounts receivable arising from service, sales of
inventory in the ordinary course of business, notes receivable and insurance
proceeds receivable;
(vi) all operating data, books, files, documents and records
of Seller, including without limitation, customer and supplier lists, insurance
policies, financial, accounting and credit records, marketing information,
advertising materials, correspondence, budgets and other similar documents and
records which pertain to the Assets;
44
(vii) all other known and unknown, liquidated or unliquidated,
contingent or fixed rights, choses in action or causes of action of every nature
and kind which Seller has or may have against any third party and all rights
which may pertain to the Assets;
(viii) office supplies and other consumable supplies; and
(ix) any and all goodwill related to the foregoing.
Notwithstanding the foregoing, the omission from the foregoing list of any asset
of Seller necessary for or used in connection with the operation of the Business
is hereby deemed an Asset, and shall be transferred to ABEV and Purchaser in the
manner described above.
45
SCHEDULE B
Excluded Assets
Anything to the contrary in SCHEDULE A notwithstanding, the
Assets shall exclude the following assets:
the Purchase Price and the Selling Parties' other rights under this Agreement;
(i) any shares of capital stock of Seller which are owned and
held as treasury shares;
(ii) the corporate minute books and stock records of Seller;
and
(iii) all interests of any of the Selling Parties, in and
rights of and relating to, any real property which any of the Selling Parties
own, lease or have any other interest.
46
SCHEDULE C
Assumed Liabilities
ABEV and Purchaser are not assuming or taking responsibility for any
obligation or liability of any of the Selling Parties of any nature whatsoever,
except (i) customer orders pending as of the Closing Date, which orders have
been taken in the ordinary and regular course of business on terms and
conditions (including pricing, delivery and payment) consistent with past
business practices, and (ii) those obligations and liabilities expressly set
forth on Schedule C1 hereto. By way of example, and not meant to exhaust those
obligations and liabilities of the Selling Parties, whether contingent, fixed,
liquidated or unliquidated, NOT being assumed by ABEV and Purchaser are the
following:
(a) any obligations or liabilities of any of the Selling
Parties arising under or disclosed in this Agreement;
(b) any obligations or liabilities of any of the Selling
Parties for federal, state or local income tax liability arising from the
operations of the Business, arising out of the sale of the Assets or any other
matter of any nature;
(c) any obligation for any transfer, sales or other taxes,
fees, levies, franchises or impositions of any nature (including interest and
penalties) arising from the operations of the Business, out of the sale of the
Assets or any other matter of any nature; or
(d) any obligation for expenses incurred in connection with
the operations of the Business and sale of the Assets prior to the date hereof.
Any liability of Seller which is omitted from this
Schedule shall be deemed to be a liability which is NOT being assumed
by ABEV and Purchaser.
47
