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EXHIBIT (2(a))
MERGER AGREEMENT,
DATED AS OF NOVEMBER 18, 1996,
AMONG
THE FRESH JUICE COMPANY, INC.,
THE FRESH JUICE COMPANY OF CALIFORNIA, INC.,
▇▇▇▇▇▇'▇ JUICES, INC.
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ AND ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
FAMILY TRUST OF 1995
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
AND
▇▇▇▇▇▇▇ ▇▇▇▇
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MERGER AGREEMENT
AGREEMENT, dated as of November 18, 1996, among The Fresh Juice Company,
Inc., a Delaware corporation ("Fresh Juice"), The Fresh Juice Company of
California, Inc., a Delaware corporation and wholly-owned subsidiary of Fresh
Juice ("Merger Sub"), ▇▇▇▇ ▇▇▇▇▇▇ ("▇. ▇▇▇▇▇▇"); ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇ Family Trust of 1995 ("▇▇▇▇▇"); ▇▇▇▇ ▇▇▇▇ ("▇▇▇▇"); ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
("▇▇▇▇▇▇▇▇▇▇"); ▇▇▇▇▇ ▇▇▇▇▇▇ ("Burger") and ▇▇▇▇▇▇▇ ▇▇▇▇ ("▇. ▇▇▇▇" and together
with ▇. ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ and Burger each a "Selling Stockholder",
and collectively, the Selling Stockholders"), and ▇▇▇▇▇▇'▇ Juices, Inc. a
California corporation ("▇▇▇▇▇▇'▇").
The Boards of Directors of Fresh Juice, Merger Sub and ▇▇▇▇▇▇'▇ have each
determined that it is in the best interest of their respective stockholders to
effect a merger of ▇▇▇▇▇▇'▇ with and into Merger Sub (the "Merger") whereby all
of the issued and outstanding common stock, without par value, of ▇▇▇▇▇▇'▇ (the
"▇▇▇▇▇▇'▇ Stock") will be exchanged for Ninety Thousand and 00/100 Dollars
($90,000.00) and Five Hundred Ninety-Seven Thousand Four Hundred Forty-Three
(597,443) shares of common stock, $.01 par value, of Fresh Juice ("Fresh Juice
Common"); and
Each of the Board of Directors of Fresh Juice, Merger Sub and ▇▇▇▇▇▇'▇ have
approved the Merger in accordance with the General Corporation Law of the State
of Delaware (the "DGCL") and the California Corporation's Code (the "CCC") and
upon the terms and subject to the conditions set forth herein; and
The parties hereto desire to enter into the Merger in accordance with the
terms hereof.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
THE MERGER
1.1 The Merger. The Merger will occur upon the terms and subject to the
conditions hereof, and in accordance with the relevant provisions of the DGCL
and the CCC. Following the Merger, Merger Sub shall continue as the surviving
corporation (the "Surviving Corporation") under the name "The Fresh Juice
Company of California, Inc." and shall continue its existence under the laws of
the State of Delaware (authorized to do business in California as a foreign
corporation and with the registered fictitious name of "▇▇▇▇▇▇'▇ Juices"), and
the separate corporate existence of ▇▇▇▇▇▇'▇ shall cease.
1.2 Closing Date and Effective Time. The "Closing" for this transaction is
scheduled to occur on or before December 1, 1996 (the "Closing Date"). As
promptly as practicable after the Closing Date, but not later than ten (10) days
after the satisfaction or waiver of the conditions set forth in Article 6, the
parties hereto shall cause the Merger to be consummated by filing this Agreement
or a Certificate of Merger with the Secretary of State of the State of Delaware
and the Secretary of State of the State of California, each in the form annexed
hereto as Exhibit A and B, and executed in accordance with the relevant
provisions of, the DGCL and the CCC (the time of such filing being the
"Effective Time").
1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided for in the applicable provisions of the DGCL and the CCC.
Without limiting the generality of the foregoing, and subject thereto and to the
terms of this Agreement, at the Effective Time all the properties, rights,
privileges, powers and franchises of ▇▇▇▇▇▇'▇ and Merger Sub shall vest in the
Surviving Corporation, and all debts, liabilities and duties of ▇▇▇▇▇▇'▇ and
Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation. Such properties, rights, privileges, powers and franchises of
▇▇▇▇▇▇'▇ shall include, without limitation, ▇▇▇▇▇▇'▇ ownership interest in
▇▇▇▇▇▇'▇ Juice Creation L.L.C. in the amount of Thirty-Seven and One-Half
percent (37.5%). It is expressly acknowledged that ▇▇▇▇▇▇'▇ has or will, at or
prior to Closing, assign, convey and transfer to ▇. ▇▇▇▇▇▇, the Nine Hundred
Sixty Five Thousand and 00/100 Dollar ($965,000) insurance policy on the life of
▇▇▇▇▇▇ ▇▇▇▇▇▇, policy number 49 725 047, (presently owned by ▇▇▇▇▇▇'▇), and a
ten percent (10%) ownership interest in ▇▇▇▇▇▇'▇ Juice Creations, L.L.C.
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1.4 Subsequent Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of either ▇▇▇▇▇▇'▇ or Merger Sub acquired or to be acquired
by the Surviving Corporation as a result of, or in connection with, the Merger
or otherwise to carry out this Agreement, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of either ▇▇▇▇▇▇'▇ or Merger Sub, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of each
of such corporations or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title and
interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out this Agreement.
1.5 Certificate of Incorporation: By-laws: Directors and Officers.
(a) At the Effective Time, the Certificate of Incorporation of Merger Sub,
as in effect immediately prior to the Effective Time, shall be the Certificate
of Incorporation of the Surviving Corporation until thereafter amended as
provided by law and such certificate of incorporation.
(b) At the Effective Time, the By-laws of Merger Sub, as in effect
immediately prior to the Effective Time, shall be the By-laws of the Surviving
Corporation until thereafter amended as provided by law, the Certificate of
Incorporation of the Surviving Corporation and such by-laws.
(c) At the Effective Time, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇▇▇▇▇ will be the only initial directors of the Surviving Corporation,
and the officers listed on Schedule 1.5(c) hereto will be the initial officers
of the Surviving Corporation, in each case until their respective successors are
elected or appointed and qualified. If, at the Effective Time, a vacancy shall
exist on the Board of Directors or in any office of the Surviving Corporation,
such vacancy may thereafter be filled in the manner provided by law, the
Certificate of Incorporation of the Surviving Corporation and the By-laws of the
Surviving Corporation.
1.6 Conversion of Securities.
(a) At the Effective Time, by virtue of the Merger and without any action
on the part of any of Merger Sub, ▇▇▇▇▇▇'▇ or the holder of any of the
securities of ▇▇▇▇▇▇'▇ or Merger Sub:
(i) each share of ▇▇▇▇▇▇'▇ Stock issued and outstanding immediately
prior to the Effective Time shall be canceled and extinguished and be
converted into the right to receive the Merger Consideration (as defined
below) upon surrender of the certificate representing such share of
▇▇▇▇▇▇'▇ Stock; and
(ii) each share of Merger Sub common stock, par value $.01 per share,
issued and outstanding immediately prior to the Effective Time shall
hereafter represent one validly issued, fully paid and nonassessable share
of common stock, par value $.01 per share, of the Surviving Corporation.
(b) The "Merger Consideration" to be paid by Fresh Juice for the shares of
▇▇▇▇▇▇'▇ Stock in accordance with the Merger shall, subject solely to the
adjustments as hereinafter provided for, be paid as follows:
(i) delivery to the Selling Stockholders at Closing of certified funds in
the aggregate amount of $90,000.00 as set forth below:
▇. ▇▇▇▇▇▇............................................................... $ 30,000.00
▇▇▇▇.................................................................... $ 20,000.00
Burger.................................................................. $ 30,000.00
▇. ▇▇▇▇................................................................. $ 10,000.00
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(ii) delivery to the Selling Stockholders at Closing of an aggregate
of Five Hundred Ninety Seven Thousand Four Hundred Forty-Three (597,443)
validly issued, duly authorized and non-assessable shares of common stock,
par value $.01 per share, of Fresh Juice Stock, as set forth below:
▇. ▇▇▇▇▇▇....................................... 222,075 shares of Fresh Juice Common
▇▇▇▇▇........................................... 74,700 shares of Fresh Juice Common
▇▇▇▇............................................ 74,334 shares of Fresh Juice Common
▇▇▇▇▇▇▇▇▇▇...................................... 77,667 shares of Fresh Juice Common
Burger.......................................... 71,000 shares of Fresh Juice Common
▇. ▇▇▇▇......................................... 77,667 shares of Fresh Juice Common
(iii) delivery to the Selling Stockholders and their designee, ▇▇▇▇▇▇▇
▇▇▇▇ ("▇. ▇▇▇▇") of a warrant (in the form of Exhibit C annexed hereto) to
purchase an aggregate of 300,000 shares of Fresh Juice Common at a purchase
price of $3.00.
The above-described warrants shall be delivered to the Selling Stockholders
as set forth below:
SELLING STOCKHOLDER OR DESIGNEE WARRANTS
------------------------------------------------------------------------- --------
▇. ▇▇▇▇▇▇................................................................ 42,858
▇▇▇▇▇.................................................................... 42,857
▇▇▇▇..................................................................... 42,857
▇▇▇▇▇▇▇▇▇▇............................................................... 42,857
Burger................................................................... 42,857
▇. ▇▇▇▇.................................................................. 42,857
▇. ▇▇▇▇.................................................................. 42,857
provided, however, that the above-referenced proration may be adjusted among the
Selling Stockholders (and their designee) with the consent of the affected
Selling Stockholder(s) or designee, as the case may be, so long as it is done so
without affecting the rights of the parties not participating in such
adjustment; and
(v) each of the Selling Stockholders acknowledges that the shares of
Fresh Juice Common Stock being issued and delivered pursuant to the Merger
will not be registered pursuant to the Securities Act of 1933, as amended,
and must be held unless and until such shares are subsequently registered
under the 1933 Act or an exemption from registration is available;
accordingly a legend shall be placed on the stock certificates evidencing
such shares of common stock to reflect certain transfer restrictions.
(c) The Selling Stockholders shall have "piggy back" registration rights as
set forth in the Registration Rights Agreement among Fresh Juice and the Selling
Stockholders (attached hereto as Exhibit D, the "Registration Agreement").
1.7 Surrender of Shares: Stock Transfer Books.
(a) If delivery of the Merger Consideration in respect of canceled shares
of ▇▇▇▇▇▇'▇ Stock is to be made to a person other than the person in whose name
a surrendered certificate or instrument is registered, it shall be a condition
to such delivery that the certificate or instrument so surrendered shall be
properly endorsed or shall be otherwise in proper form for transfer and that the
person requesting such payment shall have paid any transfer and other taxes
required by reason of such payment in a name other than that of the registered
holder of the certificate or instrument surrendered or shall have established to
the satisfaction of Merger Sub that such tax either has been paid or is not
payable.
(b) If, after the Effective Time, certificates for ▇▇▇▇▇▇'▇ Stock are
presented to the Surviving Corporation, they shall be canceled and exchanged for
the Merger Consideration as provided in Section 1.6 hereof.
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ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS
Each of the Selling Stockholders hereby jointly and severally represents
and warrants to each of Fresh Juice and Merger Sub as follows:
2.1 Authorization: No Conflict. (a) Each Selling Stockholder has the legal
right and capacity to execute and deliver this Agreement and to perform the
transactions contemplated to be performed by him hereunder. This Agreement
constitutes the legal, valid and binding agreement of each Selling Stockholder
and is enforceable against him in accordance with its terms, except to the
extent that enforceability may be limited by bankruptcy, insolvency, moratorium
or other laws affecting the enforceability of creditors' rights generally and
that equitable remedies may be granted in the discretion of a court.
(b) Except as set forth on Schedule 2.1 hereto, the execution, delivery and
performance of this Agreement and the documents, transactions and instruments
contemplated hereby by each Selling Stockholder do not and will not violate,
conflict with, result in a breach of any provisions of, constitute a default (or
an event which, with or without due notice or lapse of time, or both, would
constitute a default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any liens, security
interest, charge or other encumbrance upon any of the properties or assets of
▇▇▇▇▇▇'▇ under any of the terms, conditions or provisions of, any contract,
note, bond, mortgage, indenture, deed of trust, license, lease, loan agreement,
judgment, order, decree, statute, rule, regulation or other agreement,
instrument or obligation to which ▇▇▇▇▇▇'▇ or any of the Selling Stockholders
are a party, or by which either or any of their respective properties or assets
may be bound or affected.
2.2 Approvals. All consents, approvals, permits, authorizations and
orders, if any, necessary for the due authorization, execution and delivery by
and on behalf of each Selling Stockholder of this Agreement and any other
transaction or obligation contemplated by this Agreement have been obtained.
2.3 Litigation. There are no actions, suits, proceedings or investigations
pending or, to the knowledge of each Selling Stockholder, threatened against any
Selling Stockholder, which question or challenge the validity of this Agreement,
the transactions contemplated thereto, or any action to be taken hereunder.
2.4 Certain Contracts. There are no outstanding contracts or agreements
between any Selling Stockholder, or any of his "affiliates," (as such term is
defined in the Securities and Exchange Act of 1934) on the one hand, and
▇▇▇▇▇▇'▇ or any of its subsidiaries, on the other hand, whether written or oral,
including without limitation, contracts or agreements for executive
compensation, severance, employment or retirement.
2.5 Outstanding Options, Warrants or Other Rights. None of the Selling
Stockholders has outstanding any option, warrant or other right permitting or
requiring him or others to purchase or convert any obligation into shares of
▇▇▇▇▇▇'▇ Stock. There are no voting trusts or other agreements or understandings
with respect to the voting of the shares of capital stock of ▇▇▇▇▇▇'▇ and the
shares of the capital stock of ▇▇▇▇▇▇'▇ are not subject to any preemptive
rights, rights of first refusal or similar rights.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇'▇ AND SELLING STOCKHOLDERS
Each of the Selling Stockholders (with respect to matters relating to
themselves and ▇▇▇▇▇▇'▇), and ▇▇▇▇▇▇'▇ (with respect to matters relating to
▇▇▇▇▇▇'▇) represents and warrants to Fresh Juice and Merger Sub as follows:
3.1 Organization Standing, etc. ▇▇▇▇▇▇'▇ is a duly organized and validly
existing corporation in good standing under the laws of the State of California,
and has all requisite corporate power and authority to own, lease and operate
its respective properties and assets and to carry on its respective business as
now conducted and as proposed to be conducted. ▇▇▇▇▇▇'▇ is duly qualified to do
business in good standing as a foreign corporation in each jurisdiction in which
the property owned, leased or operated by it or the nature of the
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business now conducted or proposed to be conducted by it makes such
qualification necessary. Except as set forth on Schedule 3.1 herewith, ▇▇▇▇▇▇'▇
has no subsidiaries or affiliates.
3.2 Capitalization. ▇▇▇▇▇▇'▇ has an authorized capitalization of 2500
shares of capital stock without par value of which 34.22 shares of common stock
are issued and outstanding. There are no treasury shares of ▇▇▇▇▇▇'▇ capital
stock.
3.3 Authorization. ▇▇▇▇▇▇'▇ has all requisite corporate power and
authority to execute and deliver this Agreement and to perform the transactions
contemplated hereby. ▇▇▇▇▇▇'▇ has taken all requisite corporate action to
authorize the execution, delivery and performance of this Agreement and the
transactions contemplated hereby. This Agreement is the legal, valid and binding
obligation of ▇▇▇▇▇▇'▇, enforceable against it in accordance with its terms,
except to the extent that enforceability may be limited by bankruptcy,
insolvency, moratorium or other laws affecting the enforceability of creditors'
rights generally and that equitable remedies may be granted in the discretion of
a court.
3.4 Status of Securities. Except as set forth on Schedule 3.4, the shares
of ▇▇▇▇▇▇'▇ Stock presently issued and outstanding are duly authorized, validly
issued, fully paid and nonassessable and free and clear of all liens, security
interests, pledges, charges, claims and encumbrances of any kind. The Selling
Stockholders set forth on Schedule 3.4, each of whom has not fully paid for the
shares of ▇▇▇▇▇▇'▇ Stock presently issued in such Selling Stockholder's name,
hereby agree that each Selling Stockholder set forth on Schedule 3.4 shall pay
to the Surviving Corporation the sum set forth next to their name on Schedule
3.4, with interest from December 1, 1996 on the unpaid principal, at the rate of
prime plus one percent (to be determined and adjusted on each yearly anniversary
on this note and fixed for the twelve (12) months period thereafter) based on
the published prime rate of the Bank of America, N.A., to fully satisfy such
Selling Stockholders' obligations to the Surviving Corporation in connection
with the ▇▇▇▇▇▇'▇ Stock presently owned by each such Selling Stockholder. The
sum set forth on Schedule 3.4, plus interest, shall be repaid over 50 years with
payments to be made annually on November 20, beginning with November 20, 1997.
Accrued and unpaid interest up through December 1, 1996, if any, shall be
forgiven. Until each Selling Stockholder has fully repaid the sum set forth on
Schedule 3.4, along with any interest accrued thereon, each such Selling
Stockholder listed on Schedule 3.4 shall continue to make the annual payments
required hereby, irrespective of whether such Selling Stockholder continues to
be employed by the Surviving Corporation. To evidence each such Selling
Stockholder's debt to the Surviving Corporation, each Selling Stockholder listed
on Schedule 3.4 shall execute and deliver to the Surviving Corporation a
promissory note in the form of Exhibit E annexed hereto (each a "Stockholder
Note" and together, the "Stockholder Notes"). To secure the repayment of the
Stockholder Notes, each Selling Stockholder listed on Schedule 3.4 shall (a)
pledge to the Surviving Corporation the Fresh Juice Common received by such
Selling Stockholder pursuant to the terms of this Agreement, (b) execute and
deliver to the Surviving Corporation a "Pledge and Security Agreement" in the
form of Exhibit F annexed hereto and (c) deliver to the Surviving Corporation
(i) the stock certificates, endorsed in blank, evidencing the Fresh Juice Common
owned by such Selling Stockholder and (ii) stock powers endorsed in blank in the
form of Exhibit G annexed hereto.
The terms of the Pledge and Security Agreement shall contain provisions
pursuant to which each such Selling Stockholder shall be permitted to obtain
from the Surviving Corporation a release, from the Surviving Corporation's
security interest, of one percent (1%) of the Fresh Juice Common originally
pledged to the Surviving Corporation pursuant to this Section 3.4 in exchange
for each one percent (1%) of the principal balance of the Stockholder Note
repaid by such Selling Stockholder to the Surviving Corporation.
3.5 Certificate of Incorporation and By-laws. ▇▇▇▇▇▇'▇ has delivered to
Fresh Juice and Merger Sub a true, correct and complete copy of its Certificate
of Incorporation and a true, correct and complete copy of its By-laws, each of
which contains all amendments thereto and have been certified by the Secretary
of ▇▇▇▇▇▇'▇.
3.6 Outstanding Options, Warrants and Other Rights. ▇▇▇▇▇▇'▇ does not have
outstanding any option, warrant or other right permitting or requiring it or
others to purchase or convert any obligation into shares of its capital stock
and has not agreed to issue or sell any shares of such capital stock, except to
Fresh Juice hereunder. There are no voting trusts or other agreements or
understandings with respect to the voting of the
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shares of capital stock of ▇▇▇▇▇▇'▇, and the shares of the capital stock of
▇▇▇▇▇▇'▇ are not subject to any preemptive rights, rights of first refusal or
similar rights.
3.7 Record Ownership. The Selling Stockholders are the sole record owners
of all of the shares of ▇▇▇▇▇▇'▇ Stock issued and outstanding. Except as set
forth in Section 3.4 above, the ▇▇▇▇▇▇'▇ Stock owned by the Selling Stockholders
is owned free and clear of all liens, claims, charges and encumbrances of every
kind. All of the stockholders and the shares of ▇▇▇▇▇▇'▇ Common Stock owned by
each of the Selling Shareholders are set forth on Schedule 3.7 hereto.
3.8 Financial Statements. ▇▇▇▇▇▇'▇ has delivered to Fresh Juice (i)
audited financial statements including the related notes thereto for its fiscal
year ended June 30, 1996 containing the balance sheet of ▇▇▇▇▇▇'▇ as of the end
of such fiscal year, and the related statement of operations and retained
earnings and statement of cash flows for such year, and (ii) (unaudited)
internal financial statements for the months of August and September, 1996
containing the corresponding balance sheets and related statements of operations
and retained earnings. At or after Closing, but not later than thirty (30) days
after Closing, ▇▇▇▇▇▇'▇ shall deliver to Fresh Juice (i) audited financial
statements, including the related notes thereto, for its fiscal year ended June
30, 1995, containing the balance sheet of ▇▇▇▇▇▇'▇ as of such fiscal year and
the related statement of operations and retained earnings and statement of cash
flows for such year, as well as an audited statement of operations for the
fiscal year ended June 30, 1994. The foregoing financial statements have been
(and those to be delivered at or after Closing will be) prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods indicated, are complete and correct, and fairly present the
financial position and stockholders' equity of ▇▇▇▇▇▇'▇ as of the date and for
the respective periods indicated. The balance sheets as of June 30, 1996, August
31, 1996 and September 30, 1996 each make full and adequate provision for all
fixed and contingent obligations and liabilities of ▇▇▇▇▇▇'▇ as of the date and
for the periods indicated, and as of September 30, 1996, ▇▇▇▇▇▇'▇ does not have
any fixed obligations or liabilities not reflected in or adequately reserved
against on such balance sheet as of September 30, 1996 or set forth in the
Schedules to this Agreement. To the knowledge of ▇▇▇▇▇▇'▇ and the Selling
Stockholders, there is no basis for the assertion against ▇▇▇▇▇▇'▇ of any
liability or obligation not adequately reflected or reserved against in such
financial statement or set forth in the Schedules to this Agreement; ▇▇▇▇▇▇'▇
has no liabilities, fixed or contingent, which would adversely affect the
conduct of the business of ▇▇▇▇▇▇'▇ other than as reflected or reserved against
in the balance sheet of ▇▇▇▇▇▇'▇ as of September 30, 1996 or set forth in the
Schedules to this Agreement.
3.9 Certain Changes or Events. Except as set forth on Schedule 3.9 hereto,
since September 30, 1996, ▇▇▇▇▇▇'▇ has not:
(i) experienced any change in its condition (financial or otherwise
including, without limitation, loss of customers or distributors),
properties, assets, liabilities, intellectual property rights, business,
operations or prospects other than changes in the ordinary course of
business which have not, individually or in the aggregate, had a material
adverse effect on its properties, assets, intellectual property rights,
business, operations or financial condition;
(ii) declared, set aside, made or paid any dividend or other
distribution in respect of its capital stock or purchased or redeemed,
directly or indirectly, any shares of its capital stock;
(iii) issued or sold any shares of its capital stock of any class, or
any options, warrants, conversion or other rights to purchase any such
shares or any securities convertible into or exchangeable for such shares;
(iv) incurred any indebtedness for borrowed money (except borrowings
in the ordinary course of business not exceeding $10,000 in the aggregate)
or issued or sold any debt securities;
(v) mortgaged, pledged, or subjected to any lien, lease, security
interest or other charge or encumbrance any of its properties or assets,
tangible or intangible, except (i) liens for current taxes not due and
payable or being contested in good faith by appropriate proceedings; (ii)
liens imposed by law and incurred in the ordinary course of business for
obligations not yet due to carriers, warehousemen,
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laborers, materialmen and the like; and (iii) encumbrances, easements and
security interests which do not detract from the value or interfere with
the use of the properties affected thereby;
(vi) acquired or disposed of any assets or properties of material
value except in the ordinary course of business;
(vii) forgiven or canceled any debts or claims, or waived any rights,
except in the ordinary course of business,
(viii) entered into any material transaction, contract or written
agreement other than in the ordinary course of business;
(ix) granted to any officer or salaried employee or any class of other
employees any increase in compensation in any form in excess of the amount
thereof in effect as of September 30, 1996 or any severance or termination
pay (other than in amounts consistent with past practices), or entered into
any written employment agreement or arrangement with any person;
(x) entered into, adopted or amended in any respect any collective
bargaining agreement or adopted or amended any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
insurance or other similar plan, agreement, trust, fund or arrangement for
the benefit of employees;
(xi) suffered any damage, destruction or loss (whether or not covered
by insurance) which materially adversely affects its condition (financial
or otherwise), properties, assets, business, operations or prospects;
(xii) suffered any strike or other labor trouble materially adversely
affecting its business, operations or prospects;
(xiii) suffered any loss of employees or customers that materially
adversely affects or could materially adversely affect its business,
operations or prospects; or
(xiv) incurred any liability or direct obligation except (A)
liabilities and obligations in the ordinary course of business and (B)
other liabilities and obligations not exceeding $10,000 in the aggregate.
(xv) amended, modified or licensed for use by others any of ▇▇▇▇▇▇'▇
intellectual property rights.
3.10 Title to Properties: Liens. Except as set forth on Schedule 3.10,
▇▇▇▇▇▇'▇ has good and marketable title to, or valid and subsisting leasehold
interests in, all of its properties and assets, real and personal, in each case
free and clear of any mortgage, pledge, lien, lease, charge, encumbrance,
conditional sale or other title retention agreement, except for the lien of
taxes not yet due and payable or being contested in good faith by appropriate
proceedings, and except for such imperfections of title and encumbrances, if
any, as do not detract from the value, or interfere with the present use, of its
properties or assets subject thereto or affected thereby, or otherwise impair
its business operations. There is not under any lease of real or personal
property to which ▇▇▇▇▇▇'▇ is a party any existing default or event of default
or event which with notice or lapse of time or both would constitute a default
or event of default.
3.11 Adequacy of Patents and Other Rights. ▇▇▇▇▇▇'▇ has all necessary
patents, licenses, trademark, trade names, copyrights and other rights that are
required to conduct its business substantially as now being conducted and as
proposed to be conducted, and no other right, license or authorization of any
kind whatsoever is required to so carry on its business. There is no
infringement or claim of any adverse nature with respect to any patent, patent
application, license, trademark, trade name, copyright or right in any thereof.
3.12 Litigation.
(a) Except as set forth on Schedule 3.12 hereof, there are no actions,
suits, proceedings or investigations pending or, to the knowledge of ▇▇▇▇▇▇'▇
and the Selling Stockholder's, threatened against or affecting ▇▇▇▇▇▇'▇, or the
Selling Stockholders, at law or in equity, before any court, commission, board,
bureau, agency, instrumentality or other governmental authority that may result
in any material adverse effect upon the business, assets, liabilities, prospects
or condition (financial or otherwise) of ▇▇▇▇▇▇'▇ or which seems to
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prevent the consummation of any of the transactions contemplated by this
Agreement. To the knowledge of ▇▇▇▇▇▇'▇ or the Selling Stockholders, there are
no claims that have not been asserted against ▇▇▇▇▇▇'▇ or the Selling
Stockholders that are probable of assertion.
(b) In connection with the proceedings set forth on Schedule 3.12, ▇▇▇▇▇▇'▇
and the Selling Stockholder hereby make the following specific representations
and warranties:
(i) Los Angeles United School District ▇. ▇▇▇▇▇▇ Investments ▇.
▇▇▇▇▇▇'▇ Juices, Inc. and all matters relating thereto have been dismissed
with prejudice as to ▇▇▇▇▇▇'▇.
(ii) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇'▇ Juices, Inc. et. al. ▇▇▇▇▇▇'▇ has
been advised by ▇▇▇▇▇▇'▇ insurance company's counsel that this matter has
been settled by the insurance company for $85,000, and the action will be
dismissed with prejudice. The entire $85,000 will be paid by the insurance
company.
(iii) Franchise Dispute Cases II/LU v. The Southland Corp. et al. The
claims of the plaintiffs in the referenced class action suit (in which the
class has not yet been "certified", but will be "certified" in the near
future, are as set forth in the Complaint annexed to Schedule 3.12, and
except as set forth therein, ▇▇▇▇▇▇'▇ and the Selling Stockholders are not
aware of any other claims of the plaintiffs or other parties in the
referenced case or other 7-Elevens against ▇▇▇▇▇▇'▇.
▇▇▇▇▇▇'▇ and the Selling Stockholders hereby represent and warrant
that (a) prior to October 14, 1995, ▇▇▇▇▇▇'▇ did not sell products directly
to any 7-Eleven in the San Diego area, and (b) ▇▇▇▇▇▇'▇ has not engaged in
any price fixing or any other wrongful conduct alleged in the Complaint in
the referenced action.
(iv) ▇▇▇ ▇▇▇▇▇▇/▇▇▇▇▇▇ Distribution ▇. ▇▇▇▇▇▇'▇ Juices, Inc. et
al. The claims of ▇▇▇ ▇▇▇▇▇▇/▇▇▇▇▇▇ Distribution are as set forth in the
Complaint annexed to Schedule 3.12, and except as set forth therein,
▇▇▇▇▇▇'▇ and the Selling Stockholders are not aware of any other claims of
▇▇▇ ▇▇▇▇▇▇/▇▇▇▇▇▇ Distribution against ▇▇▇▇▇▇'▇.
(v) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇'▇ Juices, Inc. et al. The claims of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇/▇▇▇▇▇▇ Wholesale are as set forth in the Complaint annexed
to Schedule 3.12, and except as set forth therein, ▇▇▇▇▇▇'▇ and the Selling
Stockholders are not aware of any other claims of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇/▇▇▇▇▇▇
Wholesale against ▇▇▇▇▇▇'▇.
(vi) ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇'▇ Juices, Inc. et al. The claims of
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ are as set forth in the Complaint annexed to Schedule
3.12. The Complaint alleges a cause of action for personal injury and does
not seek punitive damages. ▇▇▇▇▇▇'▇ has notified its insurance carrier, ITT
Hartford, through its insurance agent, ▇▇▇▇ ▇▇▇▇▇, which has advised
▇▇▇▇▇▇'▇ that no action is necessary at this time and that damages for the
claims alleged in the complaint, if any, are fully covered by insurance.
The complaint filed by ▇▇. ▇▇▇▇▇▇ is believed by ▇▇▇▇▇▇'▇ (and its counsel)
to be barred by the statute of limitations. Except as set forth in the
Complaint filed by ▇▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇'▇ and the Selling Stockholders are
not aware of any other claims of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇.
(vii) ▇▇▇▇▇ ▇▇▇▇ -- Petition for Workers Compensation/Wrongful
Termination and Discrimination Suit. The claims of ▇▇▇▇▇ ▇▇▇▇ are as set
forth in the Petition for Benefits under Labor Code 132(a) and the related
documents annexed to Schedule 3.12, and except as set forth therein,
▇▇▇▇▇▇'▇ and the Selling Stockholders are not aware of any claims of ▇▇▇▇▇
▇▇▇▇. ▇▇▇▇▇▇'▇ and the Selling Stockholders hereby represent and warrant
that the Company has a valid basis for terminating ▇▇. ▇▇▇▇ and valid
defenses to ▇▇. ▇▇▇▇'▇ claims. In the event ▇▇. ▇▇▇▇ is successful in his
action, statutory damages available to ▇▇. ▇▇▇▇ provide for a payment of
$10,000, reinstatement of his position, and repayment of lost wages.
It is hereby understood among the parties hereto that the Surviving Corporation
(or ▇▇▇▇▇▇'▇ insurance company, where coverage exists) shall be responsible and
pay any and all settlement reached and/or judgments rendered in respect of the
proceedings described in Schedule 3.12 and that the Selling Stockholders shall
have no indemnification obligations to Fresh Juice or Merger Sub pursuant to
Section 7.1 hereof in
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respect of any of such proceedings except and to the extent that the specific
representations and warranties set forth in the Section 3.12(b) are materially
untrue or inaccurate as of the date of this Merger Agreement.
3.13 Accounts Receivable. Except as set forth on Schedule 3.13, the
accounts receivable of ▇▇▇▇▇▇'▇ as shown on its balance sheet at September 30,
1996, or thereafter acquired by it, are usual and normal receivables and,
through the continuation of existing collection procedures, are collectible in
the aggregate amounts thereof. To the knowledge of ▇▇▇▇▇▇'▇ or the Selling
Stockholders, such accounts receivable are subject to no valid defenses or
offsets except routine customer complaints or warranty demands of an immaterial
nature. To the extent deemed appropriate and necessary by ▇▇▇▇▇▇'▇, an adequate
reserve for doubtful accounts in the ordinary course of business has been
established.
3.14 Inventories. The inventories of ▇▇▇▇▇▇'▇, shown on its balance sheet
at September 30, 1996, or thereafter acquired by it, consist of items of a
quality and quantity usable or salable in the normal course of its business; the
value of all items of obsolete materials and of materials of below standard
quality have been written down to realizable market value or adequate reserves
have been provided therefor; and the values at which such inventories are
carried reflect the normal inventory valuation policies of ▇▇▇▇▇▇'▇.
3.15 Consents, etc. ▇▇▇▇▇▇'▇ is not required to obtain any consent,
approval, permit or authorization of any person, including, without limitation,
any governmental agency or regulatory authority, in connection with execution,
delivery, lawful consummation and performance of this Agreement and the
transactions contemplated thereby.
3.16 Compliance with Other Instruments, etc. The execution and delivery of
this Agreement and the performance of the transactions contemplated hereby by
▇▇▇▇▇▇'▇ or any of the Selling Stockholders does not and will not violate,
conflict with, result in a breach of any provisions of, constitute a default (or
an event which, with or without due notice or lapse of time, or both, would
constitute a default) under, result in the termination of, accelerate the
performance required by, or result in the creation of any lien, security
interest, charge or other encumbrance upon any of the properties or assets of
▇▇▇▇▇▇'▇, under any provision of its Certificate of Incorporation or By-laws, or
any contract, mortgage, indenture, lien, license, permit, lease or other
agreement or instrument, judgment, decree, ordinance, regulation or order or any
other restriction of any other kind or character to which ▇▇▇▇▇▇'▇ is a party or
by which ▇▇▇▇▇▇'▇, or any of its properties, is bound or affected.
3.17 Existing Contracts. Except as set forth on Schedule 3.17(a), all
material contracts, agreements, leases, licenses and understandings to which
▇▇▇▇▇▇'▇ is a party are in full force and effect and no default, or event which
with notice or lapse of time or both would constitute a default, exists in
respect thereof on the part of ▇▇▇▇▇▇'▇, or the other parties thereto. Except as
set forth on Schedule 3.17(b) hereto, ▇▇▇▇▇▇'▇ is not a party to and does not
have any obligation, contingent or otherwise, under any (i) written or oral
contract not made in the ordinary course of business in excess of $25,000, (ii)
employment contract or contract with or for the benefit, directly or indirectly,
of any officer, director, shareholder or partner (iii) collective bargaining
agreement with employees, (iv) bonus, pension, profit-sharing, retirement, stock
purchase, hospitalization, insurance or other plan providing employee benefits,
(v) lease with respect to any property, real or personal, whether as lessor or
lessee other than its current corporate headquarters/production facility and
warehouse, (vi) contract for the purchase of materials, supplies or equipment,
or the provision by ▇▇▇▇▇▇'▇ of goods or services, for an aggregate price in
excess of $25,000, (vii) contract or commitment for capital expenditures in
excess of $25,000 in the aggregate, (viii) contract continuing over a period of
more than one year from its date in excess of $25,000, (ix) mortgage, loan or
credit agreement, (x) contract affecting any of ▇▇▇▇▇▇'▇ intellectual property
rights, (xi) contract requiring consent to the transactions contemplated by this
Agreement or (xii) any other material contract, agreement or understanding.
3.18 Undocumented Liabilities. Except as set forth in the financial
statements referred to in Section 3.8 hereof and except for property owned by
customers and stored upon the premises of ▇▇▇▇▇▇'▇ for use in future orders of
such customers, of which ▇▇▇▇▇▇'▇ or the Selling Stockholders are aware,
▇▇▇▇▇▇'▇ does not have any material liabilities, contingent or otherwise, that
are not disclosed in such financial statements or set forth in the Schedules to
this Agreement, including, without limitation, tax liabilities due or to become
due, whether disputed or not, except such liabilities as have been incurred in
the ordinary course of business.
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3.19 Taxes. ▇▇▇▇▇▇'▇ has filed all tax returns which are required to be
filed, and has paid all taxes which have become due, pursuant to such returns or
pursuant to any assessment received by ▇▇▇▇▇▇'▇. ▇▇▇▇▇▇'▇ has made adequate
provision for all taxes due with respect to all periods as to which a return has
not yet been filed. To the knowledge of ▇▇▇▇▇▇'▇ or the Selling Stockholders
there is no tax deficiency proposed or threatened against ▇▇▇▇▇▇'▇ and no tax
returns of ▇▇▇▇▇▇'▇ are under examination or audit.
3.20 Employee Matters. ▇▇▇▇▇▇'▇ has withheld all amounts required by law
or contract to be withheld from the wages or salaries of its employees and is
not liable for any arrears or wages or any taxes or penalties for failure to
comply with any of the foregoing or for payment to any trust or other fund
compensation, social security or other benefits for employees. Except as set
forth on Schedule 3.12 hereto, to its knowledge, ▇▇▇▇▇▇'▇ has not engaged in any
unfair labor practice or discriminated on the basis of race, age, sex or
otherwise in its employment conditions or practices with respect to its
employees. There are no unfair labor practice or race, age, sex or other
discrimination complaints pending, or, to the knowledge of ▇▇▇▇▇▇'▇ or the
Selling Stockholders, threatened against ▇▇▇▇▇▇'▇ by any employee, former or
current, before any domestic (federal, state or local) or foreign board,
department, commission or agency nor, to the knowledge of ▇▇▇▇▇▇'▇ or the
Selling Stockholders, does any basis therefore exists. There are no existing or,
to the knowledge of ▇▇▇▇▇▇'▇ or the Selling Stockholders, threatened, labor
strike, disputes, grievances, controversies or other labor troubles affecting
the business of ▇▇▇▇▇▇'▇. There are not pending or, to the knowledge of ▇▇▇▇▇▇'▇
or the Selling Stockholders, threatened representation questions respecting any
employees.
3.21 Financial Statements. ▇▇▇▇▇▇'▇ shall provide to Fresh Juice, when
requested by Fresh Juice, such financial statements and information pertaining
to ▇▇▇▇▇▇'▇ as shall be necessary for Fresh Juice to satisfy any and all United
State Securities and Exchange Commission disclosure requirements, such as filing
of a Form 8-K, as may arise in connection with this Agreement and transactions
contemplated thereby.
3.22 Miscellaneous. Except as otherwise set forth on Schedule 3.22 or on
the other Schedules to this Agreement, ▇▇▇▇▇▇'▇:
(i) is in substantial compliance with all applicable federal, state
and local statutes, codes, ordinances, rules or regulations; has not
received any notice of a material violation of any law, order, regulation
or requirement relating to the operation of its business or the ownership
of its property;
(ii) does not have, as of September 30, 1996, any unfunded costs or
obligations in respect of employee benefit plans and does not have
delinquent premiums on health, accident, disability or any other insured
employee benefits;
(iii) has not, since September 30, 1996, permitted any option to renew
any lease or any option to purchase any property to expire unexercised, in
whole or in part;
(iv) does not have any safe deposit boxes, vault boxes or similar
arrangements for the safekeeping of property or outstanding powers of
attorney (other than appointments of statutory agents to receive service of
process); and
(v) except as provided for above, has made no express warranty to any
person or entity with respect to any product it manufactures or sells or
has manufactured or sold and has not made or agreed to make any
indemnification payment, or replacement with respect to any product
warranty claim, except for the warranties and/or agreement(s) to indemnify
or replace product of which true and correct copies have been delivered to
Fresh Juice, the warranties applicable under the Uniform Commercial Code as
in effect from time to time in the State of California or in any other
state in which its products are sold and any other warranties under other
state or federal laws.
3.23 Collective Bargaining Agreement. ▇▇▇▇▇▇'▇ is not now nor ever has
been a party to or bound by any collective bargaining agreement or union contact
which covers or covered its employees.
3.24 No Right of Setoff. Except as set forth on Schedule 3.24, as of the
date hereof, none of the Selling Stockholders is indebted to ▇▇▇▇▇▇'▇ for any
monies and ▇▇▇▇▇▇'▇ has no right of setoff with respect to any amounts due to
the Selling Stockholders from ▇▇▇▇▇▇'▇.
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3.25 Insurance. ▇▇▇▇▇▇'▇ maintains such policies of insurance in such
coverage amounts and for such risks as are generally maintained by companies in
the same industry with similar sales volumes. As of the date hereof, neither
▇▇▇▇▇▇'▇ nor any of its subsidiaries has received any notice of cancellation or
notice of a material amendment of any such insurance policy or bond or is in
default under such policy or bond, no coverage thereunder is being disputed and
all material claims thereunder have been filed in a timely fashion. All pending
material claims under such policies or bonds are disclosed on Schedule 3.25 to
this Agreement.
3.26 Environmental Matters. Neither ▇▇▇▇▇▇'▇ nor any of its subsidiaries
has received any written notice, citation, claim, assessment, proposed
assessment or demand for abatement alleging that ▇▇▇▇▇▇'▇ or any of its
subsidiaries (either directly or as a successor-in-interest in connection with
the enforcement of remedies to realize the value of properties serving as
collateral for outstanding loans) is responsible for the correction or clean-up
of any condition material to the business, operations, assets or financial
condition of ▇▇▇▇▇▇'▇ or its subsidiaries. Except as disclosed on Schedule 3.26,
▇▇▇▇▇▇'▇ has no knowledge that any toxic or hazardous substances or materials
have been emitted, generated, disposed of or stored on any property, that is or
has been owned or leased by ▇▇▇▇▇▇'▇ or any of its subsidiaries, in any manner
that violates or, after the lapse of time may violate, any presently existing
federal, state or local law or regulation governing or pertaining to such
substances and materials. ▇▇▇▇▇▇'▇ commissioned a phase one environmental study
of the premises in which its production facility/warehouse/corporate
headquarters is located, and a copy of the report relating thereto is annexed
hereto as part of Schedule 3.26.
3.27 Increase in Compensation Since June 30, 1996. Except as set forth on
schedule 3.27 hereto, since June 30, 1996, ▇▇▇▇▇▇'▇ has not granted to any
officer or salaried employee or class of other employees any increase in
compensation in any form in excess of the amount thereof in effect as of June
30, 1996, or any severance or termination pay, or entered into any written
employment agreement or arrangement with any person.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF MERGER SUB
Merger Sub hereby represents and warrants to ▇▇▇▇▇▇'▇ as follows;
4.1 Organization Standing, etc. Merger Sub is a duly organized and validly
existing corporation in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own, lease and operate
its properties and assets and to carry on its business as now conducted and as
proposed to be conducted. Merger Sub is duly qualified to do business in good
standing as a foreign corporation in each jurisdiction in which the property is
owned, leased or operated by it or the nature of the business now conducted or
proposed to be conducted by it makes such qualification necessary. Merger Sub
has no subsidiaries.
4.2 Capitalization. Merger Sub has an authorized capitalization of 100
shares of common stock, par value $.01 per share, of which 10 shares are issued
and outstanding ("Merger Sub Stock"). There are no treasury shares of Merger Sub
capital stock.
4.3 Authorization: No Conflict.
(a) Merger Sub has all requisite corporate power and authority to execute
and deliver this Agreement and to perform the transactions contemplated hereby.
Merger Sub has taken all requisite corporate action to authorize the execution,
delivery and performance of this Agreement and the transactions contemplated
hereby. This Agreement is the legal, valid and binding obligations of Merger
Sub, enforceable against it in accordance with its terms, except to the extent
that enforceability may be limited by bankruptcy, insolvency, moratorium or
other laws affecting the enforceability of creditors' rights generally and that
equitable remedies may be granted in the discretion of a court.
(b) Except as set forth on Schedule 4.3(b), the execution, delivery and
performance of this Agreement and the documents, transactions and instruments
contemplated hereby by Merger Sub do not and will not violate, conflict with,
result in a breach of any provisions of, constitute a default (or an event
which, with or
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without due notice or lapse of time or both, would constitute a default) under,
result in the termination of, accelerate the performance required by, or result
in the creation of any lien, security interest, charge or other encumbrance upon
any of the properties or assets of Merger Sub under any provision of its
charter, By-laws or other corporate documents, or under any of the terms,
conditions or provisions of any contract, note, bond, mortgage, indenture, deed
of trust, license, lease, loan agreement, judgment, order, decree, statute,
rule, regulation or other agreement, instrument or obligation to which Merger
Sub is a party, or by which it or any of its properties or assets is bound or
affected.
4.4 Status of Securities. The shares of Merger Sub Stock outstanding are
duly authorized, validly issued, fully paid and nonassessable and free and clear
of all liens, security interests, pledges, charges, claims and encumbrances of
any kind.
4.5 Articles of Incorporation and By-laws. Merger Sub has delivered to
▇▇▇▇▇▇'▇ a true, correct and complete copy of its Certificate of Incorporation
and a true, correct and complete copy of its By-laws, each of which contains all
amendments thereto and has been certified by the Secretary of Merger Sub.
4.6 Outstanding Options, Warrants or Other Rights. Merger Sub does not
have outstanding any option, warrant or other right permitting or requiring it
or others to purchase or convert any obligation into shares of capital stock of
Merger Sub and has not agreed to issue or sell any shares of capital stock of
Merger Sub. There are no voting trusts or other agreements or understandings
with respect to the voting of the shares of capital stock of Merger Sub, and the
shares of the capital stock of Merger Sub are not subject to any preemptive
rights, rights of first refusal or similar rights.
4.7 Record Ownership. Fresh Juice is the sole record owner of all of the
shares of Merger Sub Stock issued and outstanding. The Merger Sub Stock owned by
Fresh Juice is owned free and clear of all liens, claims, charges and
encumbrances of every kind.
4.8 Formation and Liabilities. Merger Sub was incorporated on October 28,
1996 and presently has no assets and no liabilities, other than cash reflecting
the subscription price paid for Fresh Juice's purchase of the Merger Sub capital
stock.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF FRESH JUICE
Fresh Juice represents and warrants to each of the Selling Stockholders and
▇▇▇▇▇▇'▇ as follows:
5.1 Organization Standing, etc. Fresh Juice is a duly organized and
validly existing corporation in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate its properties and assets and to carry on its business as now conducted
and as proposed to be conducted and to execute and deliver this Agreement and to
perform the transactions contemplated hereby and its obligations hereunder.
Fresh Juice is duly qualified to do business in good standing as a foreign
corporation in each jurisdiction in which the property owned, leased or operated
by it or the nature of the business now conducted or proposed to be conducted by
it makes such qualification necessary. Except as set forth on Schedule 5.1
hereto, Fresh Juice has no subsidiaries or affiliates.
5.2 Capitalization. Fresh Juice has an authorized capitalization of
37,000,000 shares of capital stock, consisting of 30,000,000 shares of Fresh
Juice Common and 7,000,000 shares of series preferred stock, par value $10.00
per share; there are 5,850,062 shares of Fresh Juice Common issued and
outstanding and there are no shares of such preferred stock issued and
outstanding. All such shares of issued and outstanding Fresh Juice Common have
been duly authorized, validly issued and are fully paid and non-assessable.
There are 200,000 treasury shares of Fresh Juice Common.
5.3 Authorization.
(a) Fresh Juice has all requisite corporate power and authority to execute
and deliver this Agreement and to perform the transactions contemplated hereby.
Fresh Juice has taken all requisite corporate action to authorize the execution,
delivery and performance of this Agreement and the transactions contemplated
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hereby. This Agreement is the legal, valid and binding obligations of Fresh
Juice, enforceable against it in accordance with its terms, except to the extent
that enforceability may be limited by bankruptcy, insolvency, moratorium or
other laws affecting the enforceability of creditors' rights generally and that
equitable remedies may be granted in the discretion of a court.
(b) Except as set forth on Schedule 5.3(b), the execution, delivery and
performance of this Agreement and the documents, transactions and instruments
contemplated hereby by Fresh Juice do not and will not violate, conflict with,
result in a breach of any provisions of, constitute a default (or an event
which, with or without due notice or lapse of time or both, would constitute a
default) under, result in the termination of, accelerate the performance
required by, or result in the creation of any lien, security interest, charge or
other encumbrance upon any of the properties or assets of Fresh Juice under any
provision of its charter, By-laws or other corporate documents, or under any of
the terms, conditions or provisions of any contract, note, bond, mortgage,
indenture, deed of trust, license, lease, loan agreement, judgment, order,
decree, statute, rule, regulation or other agreement, instrument or obligation
to which Fresh Juice is a party, or by which it or any of its properties or
assets is bound or affected.
5.4 Status of Securities. The shares of Fresh Juice Common to be issued
and delivered to the Selling Stockholders pursuant to this Agreement shall be,
as of the Effective Time, duly authorized, validly issued, fully paid and
nonassessable and free and clear of all liens, security interests, pledges,
charges, claims and encumbrances of any kind.
5.5 Articles of Incorporation and By-laws. Fresh Juice has delivered to
▇▇▇▇▇▇'▇ a true, correct and complete copy of its Certificate of Incorporation
and a true, correct and complete copy of its By-laws, each of which contains all
amendments thereto and have been certified by the Secretary of Fresh Juice.
5.6 Outstanding Options, Warrants or Other Rights. Except as set forth in
Schedule 5.6 hereto, Fresh Juice does not have outstanding any option, warrant
of other right permitting or requiring it or others to purchase or convert any
obligation into shares of its capital stock and has not agreed to issue or sell
any shares of such capital stock, except as provided for herein. Other than the
Stockholders Agreement between ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ dated as of
March 31, 1996, there are no voting trusts or other agreements or understandings
with respect to the voting of the shares of capital stock of Fresh Juice, and
the shares of the capital stock of Fresh Juice are not subject to any preemptive
rights, rights of first refusal or similar rights.
5.7 Fresh Juice Financial Statements. Fresh Juice has delivered to
▇▇▇▇▇▇'▇ and the Selling Shareholders (i) its Annual Report on Form 10-KSB for
the fiscal year ended November 30, 1995, as filed with the Securities Exchange
Commission (the "Fresh Juice 1995 Form 10-KSB") and (ii) its quarterly financial
statements as filed on 10-QSB for the quarters ended February 29, 1996, May 31,
1996 and August 31, 1996 (collectively, the "Fresh Juice Financial Statements").
The foregoing financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods indicated, are complete and correct, and fairly present the financial
position and stockholder's equity of Fresh Juice as of the date and for the
respective periods indicated. Except as set forth on Schedule 5.7 hereto, the
balance sheet as of August 31, 1996 makes full and adequate provision for all
fixed and contingent obligations and liabilities of Fresh Juice as of the date
and for the periods indicated, and as of August 31, 1996, Fresh Juice does not
have any fixed obligations or liabilities not reflected in or adequately
reserved against on such balance sheet as of August 31, 1996 or set forth in the
Schedules to this Agreement. To the knowledge of Fresh Juice, there is no basis
for the assertion against Fresh Juice of any liability or obligation not
adequately reflected or reserved against in such financial statements or set
forth in the Schedules to this Agreement; Fresh Juice has no liabilities, fixed
or contingent, which would adversely affect the conduct of the business of Fresh
Juice other than as reflected or reserved against in the balance sheet of Fresh
Juice as of August 31, 1996 or set forth in the Schedules to this Agreement.
5.8 Certain Changes or Events. Except as set forth in Schedule 5.8 or in
the Fresh Juice Financial Statements, since August 31, 1996, Fresh Juice has
not:
(i) experienced any change in its condition (financial or otherwise),
properties, assets, liabilities, business, operations or prospects other
than changes in the ordinary course of business which have not,
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individually or in the aggregate, had a material adverse effect on its
properties, assets, business, operations or financial condition;
(ii) declared, set aside made or paid any dividend or other
distribution in respect of its capital stock or purchased or redeemed,
directly or indirectly, any shares of its capital stock; or
(iii) issued or sold any shares of its capital stock of any class, or
any options, warrants conversion or other rights to purchase any such
shares or any securities convertible into or exchangeable for such shares.
(iv) incurred any indebtedness for borrowed money (except borrowings
in the ordinary course of business not exceeding $30,000 in the aggregate)
or issued or sold any debt securities;
(v) mortgaged, pledged, or subjected to any lien, lease, security
interest or other charge or encumbrance any of its properties or assets,
tangible or intangible, except (i) liens for current taxes not due and
payable or being contested in good faith by appropriate proceedings; (ii)
liens imposed by law and incurred in the ordinary course of business for
obligations not yet due to carriers, warehousemen, laborers, materialmen
and the like; and (iii) encumbrances, easements and security interests
which do not detract from the value or interfere with the use of the
properties affected thereby;
(vi) acquired or disposed of any assets or properties of material
value except in the ordinary course of business;
(vii) forgiven or canceled any debts or claims, or waived any rights,
except in the ordinary course of business,
(viii) entered into any material transaction other than in the
ordinary course of business;
(ix) granted to any officer or salaried employee or any class of other
employees any increase in compensation in any form in excess of the amount
thereof in effect as of August 31, 1996 or any severance or termination pay
(other than in amounts consistent with past practices), or entered into any
written employment agreement or arrangement with any person;
(x) entered into, adopted or amended in any respect any collective
bargaining agreement or adopted or amended any bonus, profit sharing,
compensation, stock option, pension, retirement, deferred compensation,
insurance or other similar plan, agreement, trust, fund or arrangement for
the benefit of employees (whether or not legally binding);
(xi) suffered any damage, destruction or loss (whether or not covered
by insurance) which materially adversely affects its condition (financial
or otherwise), properties, assets, business, operations or prospects;
(xii) suffered any strike or other labor trouble materially adversely
affecting its business, operations or prospects;
(xiii) suffered any loss of employees or customers that materially
adversely affects or could materially adversely affect its business,
operations or prospects; or
(xiv) incurred any liability or obligation (fixed or contingent)
except (A) liabilities and obligations in the ordinary course of business
and (B) other liabilities and obligations not exceeding $30,000 in the
aggregate.
5.9 Title to Properties; Liens. Except as set forth in Schedule 5.9
hereto, Fresh Juice and its subsidiaries each have good and marketable title to,
or valid and subsisting leasehold interests in, all of their respective
properties and assets, real and personal, in each case free and clear of any
mortgage, pledge, lien, lease, charge, encumbrance, conditional sale or other
title retention agreement, except for the lien of taxes not yet due and payable
or being contested in good faith by appropriate proceedings, and except for such
imperfections of title and encumbrances, if any, as do not detract from the
value, or interfere with the present use, of their respective properties or
assets subject thereto or affected thereby, or otherwise impair their respective
business operations. There is not under any lease of real or personal property,
to which Fresh Juice
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or any of its subsidiaries is a party, any existing default or event of default
or event which with notice or lapse of time or both would constitute a default
or event of default.
5.10 Adequacy of Patents and Other Rights. Fresh Juice has all necessary
patents, licenses, trademarks, trade names, copyrights and other rights that are
required to conduct business substantially as now being conducted and as
proposed to be conducted, and no other right, license or authorization of any
kind whatsoever is required to so carry on its business. There is no
infringement or claim of any adverse nature with respect to any patent, patent
application, license trademark, trade name, copyright or right in any thereof.
5.11 Accounts Receivable. Except as set forth on Schedule 5.11 hereto or
in the Fresh Juice Financial Statements, the accounts receivable of Fresh Juice
as shown on its balance sheet at August 31, 1996, or thereafter acquired by it,
are usual and normal receivables and, through the continuation of existing
collection procedures, are collectible in the aggregate amounts thereof, after
allowance for doubtful accounts in the amount of the reserve established
therefor. To the knowledge of Fresh Juice, such accounts receivable are subject
to no valid defenses or offsets except routine customer complaints or warranty
demands of an immaterial nature. To the extent deemed appropriate and necessary
by Fresh Juice, an adequate reserve for doubtful accounts in the ordinary course
of business has been established.
5.12 Inventories. Except as set forth on Schedule 5.12 hereto, the
inventories of Fresh Juice, shown on its balance sheet at August 31, 1996, or
thereafter acquired by it, consist of items of a quality and quantity usable or
salable in the normal course of its business; the value of all items of obsolete
materials and of materials of below standard quality has not been written down
to realizable market value and adequate reserves have not been provided
therefor, however, the aggregate value of all obsolete materials is of
immaterial value; and the values at which such inventories are carried reflect
the normal inventory valuation policies of Fresh Juice.
5.13 Litigation, etc. Except as set forth in Schedule 5.13, or as
disclosed in the Fresh Juice Financial Statements, there are no actions, suits,
proceedings or investigations pending or, to the knowledge of Fresh Juice,
threatened against or affecting Fresh Juice, at law or in equity before any
court, commission, board, bureau, agency, instrumentality or other governmental
authority that may result in any material adverse effect upon the business,
assets, liabilities, prospects or condition (financial or otherwise) of Fresh
Juice or which seems to prevent the consummation of any of the transactions
contemplated by this Agreement. To the knowledge of Fresh Juice, there are no
claims that have not been asserted against it that are probable of assertion.
5.14 Consents, etc. Except as set forth in Schedule 5.14 hereto, Fresh
Juice is not required to obtain any consent, approval, permit or authorization
of any person, including, without limitation, any governmental agency or
regulatory authority, in connection with the execution, delivery, lawful
consummation and performance of this Agreement and the transactions contemplated
thereby, or the consummation of the transactions contemplated hereby or thereby.
5.15 Compliance with Other Instruments, etc. Except as set forth in
Schedule 5.15 hereto, the execution, delivery and performance of this Agreement
by Fresh Juice does not and will not violate, conflict with, result in a breach
of any provisions of, constitute a default (or an event which, with or without
due notice or lapse of time, or both, would constitute a default) under, result
in the termination of, accelerate the performance required by, or result in the
creation of any lien, security interest, charge or other encumbrance upon any of
the properties or assets of Fresh Juice, under any provision of its charter or
by-laws, or any contract, mortgage, indenture, lien, license, permit, lease or
other agreement or instrument, judgment, decree, ordinance, regulation or order
or any other restriction of any other kind or character to which Fresh Juice is
a party or by which Fresh Juice or any of its properties, is bound or affected.
5.16 Existing Contracts. Except as set forth in the Fresh Juice Form
10-KSB and on Schedule 5.16(a), all material contracts, agreements, leases,
licenses and understandings to which Fresh Juice or its subsidiaries are a party
are in full force and effect and no default, or event which with notice or lapse
of time or both would constitute a default, exists in respect thereof on the
part of Fresh Juice, or the other parties thereto. Except as set forth in the
Fresh Juice 10-KSB or on Schedule 5.16(b) hereto, Fresh Juice is not a party to
and does not
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have any obligation, contingent or otherwise, under any (i) written or oral
contract not made in the ordinary course of business in excess of $75,000, (ii)
employment contract or contract with or for the benefit, directly or indirectly,
of any officer, director, shareholder or partner other than ▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇,▇▇, and ▇▇▇▇▇▇ ▇▇▇▇▇ (iii) collective
bargaining agreement with employees, (iv) bonus, pension, profit-sharing,
retirement, stock purchase, hospitalization, insurance or other plan providing
employee benefits, (v) lease with respect to any property, real or personal,
whether as lessor or lessee other than its current corporate headquarters,
warehouses and production facilities, (vi) contract for the purchase of
materials, supplies or equipment, or the provision by Fresh Juice of goods or
services, for an aggregate price in excess of $75,000, (vii) contract or
commitment for capital expenditures in excess of $75,000 in the aggregate,
(viii) contract continuing over a period of more than one year from its date in
excess of $75,000, (ix) mortgage, loan or credit agreement, (x) contract
requiring consent to the transactions contemplated by this Agreement, (xi)
guaranty of the obligations of any other person, or (xii) any other material
contact, agreement or understanding.
5.17 Undocumented Liabilities. Except as set forth in the financial
statements referred to in Section 5.7 hereof and except for property owned by
customers and stored upon the premises of Fresh Juice for use in future orders
of such customers, of which Fresh Juice is aware, Fresh Juice does not have any
liabilities, contingent or otherwise, that are not disclosed in the Fresh Juice
Financial Statements, including, without limitation, tax liabilities due or to
become due, whether disputed or not, except such liabilities as have been
incurred in the ordinary course of business.
5.18 Taxes. Fresh Juice has filed all tax returns which are required to be
filed, and has paid all taxes which have become due, pursuant to such returns or
pursuant to any assessment received by Fresh Juice. Fresh Juice has made
adequate provision for all taxes due with respect to all periods as to which a
return has not yet been filed. There is no tax deficiency proposed or threatened
against Fresh Juice and no tax returns of Fresh Juice are under examination or
audit.
5.19 Employee Matters. Fresh Juice has withheld all amounts required by
law or contract to be withheld from the wages or salaries of its employees and
is not liable for any arrears or wages or any taxes or penalties for failure to
comply with any of the foregoing or for payment to any trust or other fund
compensation, social security or other benefits for employees. To its knowledge,
Fresh Juice has not engaged in any unfair labor practice or discriminated on the
basis of race, age, sex or otherwise in its employment conditions or practices
with respect to its employees. There are no unfair labor practice or race, age,
sex or other discrimination complaints pending, or, to the knowledge of Fresh
Juice, threatened against Fresh Juice by any employee, former or current, before
any domestic (federal, state or local) or foreign board, department, commission
or agency nor, to the knowledge of Fresh Juice, does any basis therefore exist.
There are no existing or, to the knowledge of Fresh Juice threatened, labor
strikes, disputes, grievances, controversies or other labor troubles affecting
the business of Fresh Juice. There are not pending or, to the knowledge of Fresh
Juice, threatened representation questions respecting any employees.
5.20 Miscellaneous. Fresh Juice:
(i) is in substantial compliance with all applicable federal, state
and local statutes, codes, ordinances, rules or regulations; Fresh Juice
has not received any notice of violation of any law, order, regulation or
requirements relating to the operation of its business or the ownership of
its property;
(ii) does not have, as of August 31, 1996 any unfunded costs or
obligations in respect of employee benefit plans and does not have unpaid
premiums on health, accident, disability or any other insured employee
benefits;
(iii) has not, since August 31, 1996, permitted any option to renew
any lease or any option to purchase any property to expire unexercised, in
whole or in part;
(iv) has made no express warranty to any person or entity with respect
to any product it manufactures or sells or has manufactured or sold and has
not made or agreed to make any indemnification payment, or replacement with
respect to any product warranty claim, except for the warranties of which
true and correct copies have been delivered to ▇▇▇▇▇▇'▇ and the warranties
applicable
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under the Uniform Commercial Code as in effect from time to time in the
State of New York, New Jersey, Connecticut, Florida, or any other state in
which it does business.
5.21 Collective Bargaining Agreement. Fresh Juice is not now nor ever has
been a party to or bound by any collective bargaining agreement or union contact
which covers or covered its employees.
5.22 No Right of Setoff. As of the date hereof, none of the Selling
Stockholders is indebted to Fresh Juice for any monies and Fresh Juice has no
right of setoff with respect to any amounts due to the Selling Stockholders from
Fresh Juice.
5.23 SEC Documents. Fresh Juice has made available to ▇▇▇▇▇▇'▇ and the
Selling Stockholders (or, with respect to documents filed subsequent to the date
of this Agreement, will make available to ▇▇▇▇▇▇'▇) a true and complete copy of
each report, schedule, registration statement and definitive proxy statement
filed by Fresh Juice with the SEC since January 1, 1996 (such documents, as
amended since the time of their filing, being referred to herein as the "Fresh
Juice SEC Documents"), which are all the documents (other than preliminary
material) that Fresh Juice was required to file with the SEC since such date. As
of their respective dates, the Fresh Juice SEC Documents complied or will comply
in all material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as the case may be, and the rules and regulations
of the SEC thereunder applicable to such Fresh Juice SEC Documents, and none of
the Fresh Juice SEC Documents contained or will contain any untrue statement of
a material fact or omitted or will omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided that
disclosures as of a later date shall be deemed to modify disclosures of an
earlier date. The financial statements of Fresh Juice included in the Fresh
Juice SEC Documents filed and to be filed subsequent to January 1, 1996 comply
and will comply in all material respects with applicable accounting requirements
and with the published rules and regulations of the SEC and with respect
thereto, have been and will be prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-QSB of the SEC) and fairly present and will
fairly present (subject, in the case of the unaudited statements, to recurring
audit adjustments normal in nature and amount) the consolidated financial
position of Fresh Juice as at the dates thereof and the consolidated results of
its operations and cash flows or changes in financial position for the periods
then ended. ▇▇▇▇▇▇'▇ and the Selling Stockholders have had an opportunity to
review these documents and ask questions about such documents.
5.24 Insurance. Fresh Juice maintains such policies of insurance in such
coverage amounts and for such risks as are generally maintained by companies in
the same industry with similar sales volumes. As of the date hereof, neither
Fresh Juice nor any of its subsidiaries has received any notice of cancellation
or notice of a material amendment of any such insurance policy or bond or is in
default under such policy or bond, no coverage thereunder is being disputed and
all material claims thereunder have been filed in a timely fashion. All pending
material claims under such policies or bonds are disclosed in this Agreement or
the Schedules hereto.
5.25 Environmental Matters. Except as disclosed on Schedule 5.25 hereto
neither Fresh Juice nor any of its subsidiaries has received any written notice,
citation, claim, assessment, proposed assessment or demand for abatement
alleging that Fresh Juice or any of its subsidiaries (either directly or as a
successor-in-interest in connection with the enforcement of remedies to realize
the value of properties serving as collateral for outstanding loans) is
responsible for the correction or clean-up of any condition material to the
business, operations, assets or financial condition of Fresh Juice or its
subsidiaries. Except as disclosed on Schedule 5.27, Fresh Juice and its
subsidiaries each have no knowledge that any toxic or hazardous substances or
materials have been emitted, generated, disposed of or stored on any property
owned or leased by Fresh Juice or any of its subsidiaries in any manner that
violates or, after the lapse of time may violate, any presently existing
federal, state or local law or regulation governing or pertaining to such
substances and materials.
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ARTICLE 6
CONDITIONS TO BE SATISFIED AT OR PRIOR TO CLOSING
6.1 Unless otherwise waived by Fresh Juice and Merger Sub, the following
conditions shall be fulfilled by ▇▇▇▇▇▇'▇ and/or the Selling Stockholders on or
before the date of this Agreement:
(a) Resignation of Directors or Officers of ▇▇▇▇▇▇'▇. Fresh Juice shall
have received, in writing, the resignations, effective as of the Effective Time,
of the following directors and officers of ▇▇▇▇▇▇'▇ (which individuals,
constitute all of ▇▇▇▇▇▇'▇ directors and executive officers):
BOARD OF DIRECTORS
------------------
▇. ▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
OFFICERS OFFICE
----------- ----------------------------------------------------
▇. ▇▇▇▇▇▇ President
Heavirland Secretary, Vice President
▇. ▇▇▇▇ Assistant Secretary, Director of Purchasing,
Director of Marketing
Burger Assistant Treasurer, Vice President-Operations
▇▇▇▇ Treasurer, Vice President-Production
(b) Appointment of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ as Co-Chairmen of the
Board of Directors of ▇▇▇▇▇▇'▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ shall have been
appointed and elected to serve, effective as of the Effective Time, as
Co-Chairmen of the Board of Directors of ▇▇▇▇▇▇'▇.
(c) Permits, Approvals, Litigation, etc. ▇▇▇▇▇▇'▇ and the Selling
Stockholders shall have obtained, in form and substance reasonably satisfactory
to Fresh Juice and its counsel, all consents, permits, releases and waivers from
third parties that may be required in connection with the performance of their
respective obligations under this Agreement and the consummation of the
transactions contemplated hereby.
(d) Merger. All requirements of law necessary to effect the Merger shall
have been completed, other than the filing of the appropriate Certificates of
Merger with the Secretary of State's office for each of the State of Delaware
and California.
(e) No Violation of Law, etc. There shall be no law and no order shall
have been entered and not vacated by a court of competent jurisdiction which
enjoins, restrains, makes illegal or otherwise prohibits consummation of the
transactions contemplated by this Agreement.
(f) Opinion of Counsel for ▇▇▇▇▇▇'▇. Fresh Juice and Merger Sub shall have
received a favorable written opinion, of Rosky, Landau, ▇▇▇▇▇ & ▇▇▇▇▇▇, counsel
for ▇▇▇▇▇▇'▇, dated the date hereof, in the form annexed hereto as Exhibit
6.1(f).
(g) Appointment of Additional Directors of Surviving Corporation. ▇▇▇▇▇▇
▇. ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall each have been
nominated and elected to serve, effective as of the Effective Time, as directors
of ▇▇▇▇▇▇'▇.
(h) Delivery of ▇▇▇▇▇▇'▇ Stock for Cancellation. The Selling Stockholders
shall deliver to Fresh Juice the certificates representing the shares of
▇▇▇▇▇▇'▇ Stock set forth on Schedule 3.7 marked for cancellation.
(i) Agreement Relating to Retiring Obligations to ▇. ▇▇▇▇ and Amended
Promissory Note. ▇▇▇▇▇▇'▇ and the Selling Stockholders shall cause ▇. ▇▇▇▇ to
execute and deliver to ▇▇▇▇▇▇'▇ an agreement in the form of Exhibit H annexed
hereto, pursuant to which ▇▇▇▇▇▇'▇ obligations to ▇. ▇▇▇▇ shall be retired for
One Million One Hundred Sixty Thousand and 00/100 Dollars ($1,160,000.00) and
20,226 shares of Fresh Juice Common. The agreement shall be delivered to Fresh
Juice at or before Closing and shall provide for the One
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Million One Hundred Sixty Thousand and 00/100 Dollars ($1,160,000.00) to be paid
by the Surviving Corporation as follows:
(i) Delivery to ▇▇▇▇▇▇▇ ▇▇▇▇ by the Surviving Corporation or Fresh
Juice at Closing of certified funds in the amount of Sixty Thousand and
00/100 Dollars ($60,000.00).
(ii) Delivery by the Surviving Corporation to ▇▇▇▇▇▇▇ ▇▇▇▇ at Closing
of a promissory note in the amount of Five Hundred Thousand and 00/100
($500,000.00) bearing simple interest at the rate of nine percent (9%) per
annum (the "500,000 ▇▇▇▇ Note"). The 500,000 ▇▇▇▇ Note shall be in the form
of Exhibit I annexed hereto and shall be repaid in accordance with the
schedule annexed thereto (i.e., $100,000.00 August 1, 1997; $400,000.00
January 5, 1998).
(iii) Delivery by the Surviving Corporation to ▇. ▇▇▇▇ at Closing of a
promissory note in the amount of Six Hundred Thousand and 00/100 Dollars
($600,000.00) bearing simple interest at the rate of nine percent 9% per
annum (the "$600,000 ▇▇▇▇ Note"). The $600,000 ▇▇▇▇ Note shall be in the
form of Exhibit J annexed hereto and shall be repaid in accordance with
schedule annexed thereto (i.e., interest only with a balloon payment due at
the 12/31/01 maturity date.)
As additional consideration for ▇. ▇▇▇▇ permitting ▇▇▇▇▇▇'▇ (or the
Surviving Corporation) to retire its obligations to him at a discount, the
Surviving Corporation shall deliver to ▇. ▇▇▇▇ at Closing 20,226 shares of
Fresh Juice Common. ▇. ▇▇▇▇ acknowledges that the shares of Fresh Juice
Common Stock being issued and delivered as part of the consideration to
satisfy the debt owed to ▇. ▇▇▇▇ by ▇▇▇▇▇▇'▇ will not be registered
pursuant to the Securities Act of 1933, as amended, and must be held unless
and until such shares are subsequently registered under the 1933 Act or an
exemption from registration is available; accordingly a legend shall be
placed on the stock certificates evidencing such shares of common stock to
reflect certain transfer restrictions. As further consideration for ▇. ▇▇▇▇
permitting ▇▇▇▇▇▇'▇ to retire its obligations to him at a discount,
▇▇▇▇▇▇'▇ shall ▇▇▇▇ "paid in full" and deliver to ▇. ▇▇▇▇ that certain
promissory note dated January 3, 1994 in the amount of $80,000 executed and
delivered by ▇. ▇▇▇▇ to ▇▇▇▇▇▇'▇.
(j) Agreement Relating to Retiring Obligations to ▇▇▇▇▇▇ (▇▇▇▇▇)
▇▇▇▇▇▇. ▇▇▇▇▇▇'▇ and the Selling Stockholders shall cause ▇▇▇▇▇ ▇▇▇▇▇▇, on
behalf of ▇▇▇▇▇▇ ▇▇▇▇▇▇, to execute and deliver to ▇▇▇▇▇▇'▇ (a) Second Amended
Promissory Note in the form of Exhibit K annexed hereto to replace and supersede
the $888,827.80 Amended Promissory Note dated December 1, 1995 executed and
delivered by ▇▇▇▇▇▇'▇ to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and (b) an agreement in the form of
Exhibit L annexed hereto, pursuant to which the Surviving Corporation shall have
the option, at any time during the two year period following the Effective Time,
to retire the Surviving Corporation's obligations to ▇▇▇▇▇▇ (▇▇▇▇▇) ▇▇▇▇▇▇ for
an amount equal to seventy-five percent (75%) of the principal amount of such
obligation. The agreement shall be delivered to Fresh Juice at or before
Closing.
(k) Appointment of ▇▇▇▇▇▇ ▇▇▇▇▇ as Trustee of ▇▇▇▇▇▇'▇ Trust. ▇. ▇▇▇▇▇▇
shall resign as Trustee of ▇▇▇▇▇▇'▇ Trust and ▇▇▇▇▇▇'▇ shall designate ▇▇▇▇▇▇
▇▇▇▇▇ as its designee under the Agreement of Trust of the ▇▇▇▇▇▇'▇ Trust dated
July 27, 1992, as amended by Amendment No. 1 to Agreement of Trust of the
▇▇▇▇▇▇'▇ Trust dated July 8, 1996, to replace ▇. ▇▇▇▇▇▇ as Trustee. ▇▇▇▇▇▇'▇
shall cause all documents or notices necessary to be executed or delivered, as
the case may be, to be so executed or delivered to properly effect such change
and copies of same shall be delivered to Fresh Juice, Merger Sub and their
counsel at or before Closing.
(l) The Selling Stockholders listed on Schedule 3.4 shall each execute and
deliver to the Surviving Corporation the Stockholder Notes, Pledge and Security
Agreements, stock certificates endorsed in blank and irrevocable stock powers
each described more fully in Section 3.4.
(m) Formal written approval of the transactions contemplated herein by
Fleet Bank, N.A., including a written commitment letter committing to loan funds
sufficient to satisfy ▇▇▇▇▇▇'▇ obligations to Community Bank.
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(n) Execution by ▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ (▇▇▇▇▇) ▇▇▇▇▇▇ of Subordination
Agreements, each in the form of Exhibit M and N annexed hereto, respectively.
(o) Merger sub shall have obtained the authority of the Secretary of the
state of California to do business in California as a foreign corporation.
(p) ▇▇▇▇▇▇'▇ shall cause ▇▇▇▇ ▇▇▇▇▇▇ (alternate -- ▇▇▇▇▇▇▇ ▇▇▇▇) to resign
as the ▇▇▇▇▇▇'▇ appointed director for ▇▇▇▇▇▇'▇ Juice Creations L.L.C. and shall
appoint ▇▇▇▇▇▇ ▇. ▇▇▇▇▇/▇▇▇▇▇ ▇▇▇▇▇ to serve as ▇▇▇▇▇▇'▇ appointed director of
▇▇▇▇▇▇'▇ Juice Creations, L.L.C. and shall provide ▇▇▇▇▇▇'▇ Juice Creations,
L.L.C. and its other directors with appropriate notice thereof.
6.2 Unless otherwise waived by ▇▇▇▇▇▇'▇ and the Selling Stockholders, the
following conditions shall be fulfilled by Fresh Juice and/or Merger Sub on or
before the date hereof.
(a) Permits, Approvals, Litigation, etc. Fresh Juice and Merger Sub shall
have obtained, in form and substance reasonably satisfactory to ▇▇▇▇▇▇'▇ and its
counsel, all consents, permits, releases and waivers from third parties that may
be required in connection with the performance of their respective obligations
under this Agreement.
(b) Opinion of Counsel for Fresh Juice and Merger Sub. ▇▇▇▇▇▇'▇ shall have
received a favorable written opinion from Bourne, ▇▇▇▇ & ▇▇▇▇▇▇, attorneys for
Fresh Juice and Merger Sub, dated the date hereof, in the form annexed hereto as
Exhibit 6.2(b).
(c) Employment Agreements. The Surviving Corporation shall have entered
into employment agreements with ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ and Burger in the form of
Exhibits O, P and Q, respectively, annexed hereto. The Surviving Corporation
shall have entered into an Agreement with ▇▇▇▇▇▇'▇ Juice Creations, L.L.C. in
the form of Exhibit R hereto, pursuant to which the Surviving Corporation has
undertaken to fund one-half ( 1/2) of ▇. ▇▇▇▇'▇ salary at ▇▇▇▇▇▇'▇ Juice
Creations, L.L.C. for two years up to a maximum contribution of $35,000 per
year.
(d) Consulting Agreement. Fresh Juice shall have entered into a consulting
agreement with ▇. ▇▇▇▇▇▇, in the form annexed hereto as Exhibit S.
(f) Delivery of Fresh Juice Common Certificates. Fresh Juice shall have
delivered to the Selling Stockholders, the certified check and the stock
certificates evidencing the Fresh Juice Common described in Section 1.6(b)(ii).
(g) Delivery to ▇. ▇▇▇▇ of the promissory note described in Section 6.1(i)
marked "paid in full".
ARTICLE 7
INDEMNIFICATION
7.1 Indemnification by the Selling Stockholders.
(a) Each of the Selling Stockholders agrees subsequent to the Closing to
indemnify and hold each of Fresh Juice and Merger Sub and their respective
shareholders, subsidiaries, representatives and affiliates and persons serving
as officers, directors, partners, employees or agents thereof harmless from and
against any damages (including punitive damages), liabilities, losses, taxes,
fines, penalties, costs, and expenses (including, without limitation, reasonable
fees of counsel) of any kind or nature whatsoever (whether or not arising out of
third-party claims and including all amounts paid in investigation, defense or
settlement of the foregoing pursuant to this Section 7.1) (hereinafter,
collectively referred to as "Loss") which may be sustained or suffered by any of
them arising out of or based upon any of the following matters:
(i) fraud, intentional misrepresentation or a deliberate or willful
breach by any of the Selling Stockholders or ▇▇▇▇▇▇'▇ of any of their
respective representations, warranties or covenants under this Agreement;
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(ii) any other material breach of any representation, warranty or
covenant of the Selling Stockholders or ▇▇▇▇▇▇'▇ under this Agreement or in
any certificate delivered by any of the Selling Stockholders or ▇▇▇▇▇▇'▇
hereunder, or by reason of any material claim, action or proceeding
asserted or instituted growing out of any matter or thing constituting a
material breach of such representations, warranties or covenants;
(iii) Assessments, fines or penalties resulting from or arising in
connection with any tax audit, review or assessment relating to any income,
sales, use, property or other tax return filed, or which should have been
filed, by ▇▇▇▇▇▇'▇ prior to the Effective Time.
(iv) product liability claims resulting from product manufactured by
▇▇▇▇▇▇'▇ on or prior to the Effective Time, irrespective of when such
claims are asserted.
(b) The Selling Stockholders' indemnification obligations under this
Section 7 shall be joint and several. However, any claims against each Selling
Stockholder for indemnification of a Loss pursuant to this Section 7 (the
"Claims") shall be limited to the sum of the aggregate dollar value of the
Merger Consideration received by each such Selling Stockholder (calculated as of
the Effective Time); provided, however, that there shall be no limitation on
Claims related to Section 3.4, 3.6, 3.7, 3.12, 3.19, 3.26 and 7.1(a)(iii)
hereof.
(c) Notwithstanding anything herein to the contrary, unless any such Loss
to be indemnified hereunder exceeds One Hundred Thousand and 00/100 Dollars
($100,000) (either individually or in the aggregate with other Losses to be
indemnified under this Section 7), the Selling Stockholders shall have no
obligation to indemnify Fresh Juice in connection therewith; provided, however,
that this subsection 7.1(c) shall not apply to the representations and
warranties and/or covenants contained in Sections 3.9(i), 3.27, 9.7(c), or
9.7(d) hereof.
(d) Other than as provided by law, this Section 7 contains the sole
remedies of the parties hereto with respect to claims arising from the subject
matter of this Section 7.
7.2 Indemnification by Fresh Juice and Merger Sub. (a) Fresh Juice and
Merger Sub agree to indemnify and hold ▇▇▇▇▇▇'▇ and each of the Selling
Stockholders and their respective shareholders, subsidiaries, representatives
and affiliates and persons serving as officers, directors, partners, employees
or agents thereof harmless from and against any damages(including punitive
damages), liabilities, losses, taxes, fines, penalties, costs, and expenses
(including, without limitation, reasonable fees of counsel) of any kind or
nature whatsoever (whether or not arising out of third-party claims and
including all amounts paid in investigation, defense or settlement of the
foregoing pursuant to this Section 7.2) which may be sustained or suffered by
any of them arising out of or based upon any of the following matters:
(i) fraud, intentional misrepresentation or a deliberate or willful
breach by Fresh Juice or Merger Sub of any of their representations,
warranties or covenants under this Agreement; or
(ii) any other breach of any representation, warrant or covenant of
Fresh Juice or Merger Sub under this Agreement or in any certificate
delivered by Fresh Juice or Merger Sub hereunder, or by reason of any
claim, action or proceeding asserted or instituted growing out of any
matter or thing constituting a breach of such representations, warranties
or covenants; provided, however, that any claims for indemnification
pursuant to this subsection (b) shall be limited to the sum of the dollar
value of the Merger Consideration as of the Effective Time and further
provided that there shall be no limitation in claims for indemnification
related to Section 5.4, 5.6, 5.18 and 5.25 hereof.
(b) Other than as provided by law, this Section 7 contains the sole
remedies of the parties hereto with respect to claims arising from the subject
matter of this Section 7.
(c) Notwithstanding anything herein to the contrary, unless any such Loss
to be indemnified hereunder exceeds One Hundred Thousand and 00/100 Dollars
($100,000) (either individually or in the aggregate with other Losses to be
indemnified under this Section 7), Fresh Juice shall have no obligation to
indemnify ▇▇▇▇▇▇'▇ or the Selling Stockholders in connection therewith.
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7.3 Notice; Defense of Claims. Promptly after receipt by an indemnified
party of notice of any claim, liability or expense to which the indemnification
obligations hereunder would apply, the indemnified party shall give notice
thereof in writing to the indemnifying party, but the omission to so notify the
indemnifying party promptly will not relieve the indemnifying party from any
liability except to the extent that the indemnifying party shall have been
prejudiced as a result of the failure or delay in giving such notice. Such
notice shall state the information then available regarding the amount and
nature of such claim, liability or expense and shall specify the provision or
provisions of this Agreement under which the Liability or obligation is
asserted. If within 20 days after receiving such notice the indemnifying party
gives written notice to the indemnified party stating that it disputes and
intends to defend against such claim, liability or expense at its own cost and
expense, then counsel for the defense shall be selected by the indemnifying
party (subject to the consent of the indemnified party which consent shall not
be unreasonably withheld) and the indemnified party, shall make no payment on
such claim, liability or expense as long as the indemnifying party is conducting
a good faith and diligent defense. Notwithstanding anything herein stated, the
indemnified party shall at all times have the right to fully participate in such
defense at its own expense directly or through counsel; provided, however, if
the named parties to the action or proceeding include both the indemnifying
party, and the indemnified party and representation of both parties by the same
counsel would be inappropriate under applicable standards of professional
conduct, the expense of separate counsel for the indemnified party shall be paid
by the indemnifying party. If no such notice of intent to dispute and defend is
given by the indemnifying party, or if such diligent good faith defense is not
being or ceases to be conducted, the indemnified party, shall, at the expense of
the indemnifying party, undertake the defense of such claim, liability or
expense (with counsel selected by the indemnified party), and shall have the
right to compromise or settle the same (exercising reasonable business
judgment). If such claim, liability or expense is one that by its nature cannot
be defended solely by the indemnifying party, then the indemnified party shall
make available all information and assistance that the indemnifying party may
reasonably request and shall cooperate with the indemnifying party in such
defense, provided that the indemnifying party reimburses the indemnified party
for its reasonable cost and expenses incurred in connection therewith.
ARTICLE 8
PROTECTION OF CONFIDENTIAL INFORMATION
AND COVENANTS AGAINST COMPETITION
8.1. Confidentiality. In view of the fact that the Selling Stockholders'
are fully familiar with many confidential affairs of ▇▇▇▇▇▇'▇ and its
affiliates, including the names of ▇▇▇▇▇▇'▇ and its affiliates' customers and
suppliers, matters of a business nature such as information about costs,
profits, markets, sales, other information not readily available to the public,
and plans for future developments (hereinafter collectively "Confidential
Matters"), the Selling Stockholders each hereby agree to keep secret all
Confidential Matters of ▇▇▇▇▇▇'▇ and its affiliates, and not to disclose such
Confidential Matters to anyone outside of ▇▇▇▇▇▇'▇ for a period of five (5)
years from the Effective Date.
8.2. Agreement Not To Compete. For a period of five (5) years from the
Effective Time, each of the Selling Stockholders shall not (i) purchase or
otherwise acquire or own an ownership interest of greater than 5% of a company
or other entity which is at such time engaged in the juice beverage industry and
active in the same geographic area as ▇▇▇▇▇▇'▇, Fresh Juice or any of their
respective affiliates, is otherwise competitive with ▇▇▇▇▇▇'▇, Fresh Juice or
any of their respective affiliates, or is attempting to enter such industry in
such geographic area or to become otherwise competitive; (ii) act as a
consultant, officer, director, employee or in any other capacity, whose
responsibilities are related to the juice beverage industry in the same
geographic area as ▇▇▇▇▇▇'▇, Fresh Juice or any of their respective affiliates
operates; or (iii) solicit in any way (for juice or other products) or entice
away from ▇▇▇▇▇▇'▇, Fresh Juice or any of their respective affiliates (a) any
clients or accounts of ▇▇▇▇▇▇'▇, Fresh Juice or any of their respective
affiliates which were active clients or accounts of ▇▇▇▇▇▇'▇, Fresh Juice or any
of their respective affiliates during the two (2) year period immediately prior
to the Effective Time or which became customers during the above-referenced
three (3) year term of this covenant, (b) any prospective client or account of
▇▇▇▇▇▇'▇, Fresh Juice or any of their respective affiliates which ▇▇▇▇▇▇'▇,
Fresh Juice or any of their respective affiliates was actively engaged in
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soliciting during the two (2) year period immediately prior to the Effective
Time or during the three (3) year term of this covenant, (c) any employee of
▇▇▇▇▇▇'▇, Fresh Juice or any of their respective affiliates (unless such
employee shall have either been discharged by such entity or shall have
otherwise ceased to be employed by such entity for a period of 365 days) or (d)
any manufacturers or suppliers of ▇▇▇▇▇▇'▇, Fresh Juice or any of their
respective affiliates, which were manufacturers or suppliers of ▇▇▇▇▇▇'▇, Fresh
Juice or any of their respective affiliates during the two (2) year period
immediately prior to the Effective Time or during the three (3) year term of
this covenant.
8.3. Remedies. (a) The Selling Stockholders each recognize that any branch
of the covenants contained in Sections 8.1 or 8.2 hereof would irreparably
injure the ▇▇▇▇▇▇'▇ and Fresh Juice. Accordingly, the Selling Stockholders each
agree that in the event of any breach of the covenants contained in Sections 8.1
or 8.2 hereof ▇▇▇▇▇▇'▇ and Fresh Juice shall each be entitled, in addition to
pursuing its other remedies, to obtain an injunction, against the Selling
Stockholders breaching said covenants, from any court having jurisdiction over
the matter, restraining any further violation of this Agreement by the Selling
Stockholder and no bond or other security shall be required in connection with
such injunction.
8.4. Reformation. If any of the covenants contained in Sections 8.1 or 8.2
hereof, or any part thereof, are held to be unenforceable because of the scope
or duration of any such provision, the parties agree that the body making such
determination shall have the power to reduce the scope or duration of such
provision and, in its reduced form, said provision shall be enforceable. If any
of the covenants in Sections 8.1 or 8.2 hereof, or any part thereof, is
hereafter construed to be invalid or unenforceable, the same shall not affect
the remainder of the covenants, which shall be given full force and effect
without regard to the invalid provisions.
ARTICLE 9
COVENANTS
9.1 Interim Period Covenants of ▇▇▇▇▇▇'▇. Except as expressly contemplated
by this Agreement or except as set forth on Schedule 9.1 or except with the
express prior written approval of Fresh Juice and Merger Sub, which shall not be
unreasonably withheld, during the period between the execution of this Agreement
and the Effective Time, ▇▇▇▇▇▇'▇ shall not:
(i) amend its charter or by-laws;
(ii) issue or agree to issue (by the issuance or granting of options,
warrants or rights to purchase stock or otherwise) any shares of capital
stock, any securities exchangeable for or convertible into its capital
stock, or any other securities;
(iii) split, combine or reclassify any shares of its capital stock or
declare, set aside or pay any dividends or make any other distributions
(whether in cash, stock or other property) in respect of its capital stock
or purchase or redeem any of its capital stock;
(iv) enter into any contract, agreement, undertaking or commitment, or
take any other action which would have been required to be set forth in
Schedule 9.1 if taken or in effect on the date hereof;
(v) delay payment of any account payable or other liability in excess
of $30,000 individually, or $80,000 in the aggregate, beyond its due date
or the date when such liability would have been paid in the ordinary course
of business consistent with past practice;
(vi) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof, or make any investment, either by purchase of stock or
securities or contribution of capital in an other entity or person;
(vii) except for prior obligations disclosed on any Schedule hereto,
increase the compensation or benefits, payable or to become payable to any
directors, officers or employees after the date hereof or take any action
with respect to the grant or increase of severance or termination pay
payable after the date hereof;
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(viii) except as required by law or the terms thereof, institute any
increase in or otherwise amend any profit sharing, incentive, deferred
compensation, insurance, retirement, medical, disability, welfare or other
employee benefit plan, agreement, trust or fund;
(ix) enter into any contract for the purchase or sale of real estate;
(x) enter into any lease.
(xi) enter into any negotiation or transaction relating to the merger
or consolidation of, the sale of any shares of capital stock of, ▇▇▇▇▇▇'▇,
or the sale, lease or other disposition of any substantial portion of the
properties or business of ▇▇▇▇▇▇'▇;
(xii) make any material changes in the commissions or other incentives
payable to its sales staff;
(xiii) execute any document in connection with or relating to ▇▇▇▇▇▇'▇
Juice Creations, L.L.C.
(xiv) agree or commit to do or authorize any of the foregoing.
9.2 Interim Period Covenants of Fresh Juice and Merger Sub. Except as
expressly contemplated by this Agreement or except as set forth on Schedule 9.2
or except with the express prior written approval of ▇▇▇▇▇▇'▇, which shall not
be unreasonably withheld, during the period between the execution of this
Agreement and the Effective Time, Fresh Juice and Merger Sub each shall not:
(i) amend its charter or by-laws;
(ii) issue or agree to issue (by the issuance or granting of options,
warrants or rights to purchase stock or otherwise) any shares of capital
stock, any securities exchangeable for or convertible into its capital
stock, or any other securities;
(iii) split, combine or reclassify any shares of its capital stock or
declare, set aside or pay any dividends or make any other distributions
(whether in cash, stock or other property) in respect of its capital stock
or purchase or redeem any of its capital stock;
(iv) enter into any contract, agreement, undertaking or commitment, or
take any other action which would have been required to be set forth in
Schedule 9.2 if taken or in effect on the date hereof;
(v) delay payment of any account payable or other liability in excess
of $30,000 individually, or $80,000 in the aggregate, beyond its due date
or the date when such liability would have been paid in the ordinary course
of business consistent with past practice;
(vi) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof, or make any investment, either by purchase of stock or
securities or contribution of capital in an other entity or person;
(vii) except for prior obligations disclosed on any Schedule hereto,
increase the compensation or benefits, payable or to become payable to any
directors, officers or employees after the date hereof or take any action
with respect to the grant or increase of severance or termination pay
payable after the date hereof;
(viii) except as required by law or the terms thereof, institute any
increase in or otherwise amend any profit sharing, incentive, deferred
compensation, insurance, retirement, medical, disability, welfare or other
employee benefit plan, agreement, trust or fund;
(ix) enter into any contract for the purchase or sale of real estate;
(x) enter into any negotiation or transaction relating to the merger
or consolidation of, the sale of any shares of capital stock of, Fresh
Juice or Merger Sub, or the sale, lease or other disposition of any
substantial portion of the properties or business of Fresh Juice or Merger
Sub;
(xi) make any material changes in the commissions or other incentives
payable to its sales staff;
(xii) agree or commit to do or authorize any of the foregoing.
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9.3 Mutual Covenants.
(a) Prior to the Closing Date, except as otherwise provided for herein,
each of ▇▇▇▇▇▇'▇, Fresh Juice and Merger Sub covenants to the other parties that
it will (A) operate its business only in the usual, regular and ordinary manner
and, to the extent consistent with such operation, will use its best efforts to
(i) preserve its present business organization intact, (ii) keep available the
services of its officers and employees, and (iii)preserve its present
relationships with persons having business dealings with it, and (B) maintain
its properties in customary repair, order and condition, reasonable wear and use
and damage by fire or unavoidable casualty except and to maintain adequate
insurance upon all of its properties, at least in such amounts and of such kinds
comparable to that in effect as of the date hereof.
9.4 Covenants of Selling Stockholders. Each of the Selling Stockholders
hereby covenants in their capacity as Stockholder or director of ▇▇▇▇▇▇'▇ to
support, approve and to the extent required, vote in favor of the Merger
transactions contemplated herein.
9.5 Post Closing Covenants of Fresh Juice.
(a) Fresh Juice acknowledges that ▇▇▇▇▇▇'▇ loan documents with Community
Bank may provide for acceleration of the maturity date under such loan documents
as a result of the consummation of the transactions contemplated herein. After
the Effective Time, if requested by Community Bank, Fresh Juice shall cause
▇▇▇▇▇▇'▇ to satisfy ▇▇▇▇▇▇'▇ obligations to Community Bank under the loan
documents executed and delivered to Community Bank by ▇▇▇▇▇▇'▇ on May 20, 1996.
▇▇▇▇▇▇'▇ and the Selling Stockholders each hereby represent and warrant that
true and complete copies of the Community Bank loan documents are annexed hereto
as Exhibit T. Fresh Juice shall cause the Surviving Corporation to take such
action as is necessary to cause Community Bank to release ▇. ▇▇▇▇▇▇ from his
personal guaranty of the obligations of ▇▇▇▇▇▇'▇ under the Community Bank loan
documents.
(b) Fresh Juice acknowledges that the Purchase Agreement entered into
between ▇▇▇▇▇▇'▇ and DiGraphics, pursuant to which ▇▇▇▇▇▇'▇ purchased a juice
route/territory from DiGraphics (the "Purchase Agreement"), may provide for
acceleration of the payments due under the Purchase Agreement as a result of the
consummation of the transactions contemplated herein. After the Effective Time,
if requested by DiGraphics, Fresh Juice shall cause ▇▇▇▇▇▇'▇ to pay the balloon
payment falling due under the Purchase Agreement. ▇▇▇▇▇▇'▇ and the Selling
Stockholders each hereby represent and warrant that a true and complete copy of
the Purchase Agreement is annexed hereto as Exhibit U.
9.6 Post Closing Covenants and Obligations of ▇. ▇▇▇▇▇▇.
On or before January 1, 1997, ▇. ▇▇▇▇▇▇ shall (a) assume, and cause the
leasing/financing company or bank leasing to ▇▇▇▇▇▇'▇ the Mercedes Benz
automobile being used by ▇. ▇▇▇▇▇▇ (the "Mercedes") to assign to him, all
obligations under said lease, (b) be responsible for and obtain in his own name
insurance for the Mercedes, (c) be responsible for all maintenance, repair and
all other costs and expenses associated with or relating to the Mercedes. ▇.
▇▇▇▇▇▇ also agrees to indemnify and hold harmless each of Fresh Juice, Merger
Sub and ▇▇▇▇▇▇'▇ from and against any damages, liabilities, causes of action,
losses, penalties, costs and expenses (including, without limitation, reasonable
fees of counsel) of any kind or nature whatsoever relating to or arising in
connection with the Mercedes or the Lease for the Mercedes.
9.7 Post Closing Obligations of ▇▇▇▇▇▇'▇ and Selling Stockholders.
(a) ▇▇▇▇▇▇'▇ and each of the Selling Stockholders acknowledges and agrees
that Fresh Juice may have need of information, including financial statements
concerning ▇▇▇▇▇▇'▇ and the Stockholders in order to comply with applicable
securities laws and regulations in connection with securities law filings by
Fresh Juice ("Filings"). ▇▇▇▇▇▇'▇ and the Selling Stockholders jointly and
severally agree that they will cooperate with Fresh Juice in connection with any
Filings and that they will: (i) furnish Fresh Juice with such information
concerning ▇▇▇▇▇▇'▇ as Fresh Juice and its lawyers and accountants may
reasonably require to comply with applicable securities laws and regulations
(the "▇▇▇▇▇▇'▇ Information"); (ii) use diligent efforts to review, comment on,
and otherwise assist Fresh Juice as reasonably necessary for the preparation of
descriptions concerning ▇▇▇▇▇▇'▇ to be used in connection with the Filings; and
(iii) represent and warrant to Fresh Juice
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in connection with any Filings that the ▇▇▇▇▇▇'▇ information provided will not
contain any untrue statement of a material fact or omit any material fact
necessary to make the information contained therein not misleading.
(b) ▇▇▇▇▇▇'▇ and each of the Selling Stockholders covenants and agrees with
Fresh Juice that if Fresh Juice shall determine that audited financial
statements of ▇▇▇▇▇▇'▇ for the periods prior to the Closing are necessary or
advisable in connection with any securities law filings or otherwise, each shall
cooperate fully with Fresh Juice's accountants in the preparation of such
audited financial statements and each shall make such reasonable representations
and warranties to the applicable certified public accountants as are customary
in connection with the preparation of such audited financial statements.
(c) In the event that the audit of the financial statements for 1994 or
1995 result in any adjustments which negatively impact the audited financial
statements of ▇▇▇▇▇▇'▇ for the fiscal year ending June 30, 1996, the Selling
Stockholders shall be jointly and severally responsible to, and shall, deliver
to Fresh Juice a cash payment equal to such negative impact on a dollar for
dollar amount basis.
(d) In the event that (i) The Fresh Juice Company, Inc. determines, in its
sole discretion, that it must engage new auditors to complete the audited
financial statements described in Section 3.8 hereof, and (ii) such audited
financial statements disclose a total tangible net worth, as of June 30, 1996,
that is less than the tangible net worth disclosed on the audited financial
statement of ▇▇▇▇▇▇'▇, as of June 30, 1996, delivered to Fresh Juice prior to
execution of this Agreement, then in such event, the Selling Stockholders shall
be jointly and severally responsible to, and shall, deliver to Fresh Juice a
cash payment equal to such difference on a dollar for dollar amount basis.
ARTICLE 10
GENERAL
10.1 Expenses. Whether or not the Closing occurs, all costs and expenses
in connection with the negotiations and preparations with respect to this
Agreement and the transactions contemplated thereby will be borne by the party
incurring such cost or expense.
10.2 Publicity. So long as this Agreement is in effect, none of the
parties hereto shall, or permit any of their representatives or affiliates to,
issue or cause the publication or dissemination of any press release with
respect to this Agreement or any of the transactions contemplated hereby, except
with the agreement of the other parties hereto; provided that any party hereto
or any affiliate thereof may make such an announcement without the agreement of
the other parties if required by law or by the rules of any exchange on which
their securities are traded.
10.3 Execution in Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
10.4 Notices. All notices and other communications which are required or
may be given under this Agreement shall be in writing and shall be deemed to
have been duly given when (i) delivered in person, (ii) by facsimile
transmission, upon receipt, (iii) one business day after having been sent by
overnight courier, or (iv) five (5) days after being mailed by registered or
certified first class mail, postage prepaid, return receipt requested, to the
parties hereto at the following addresses:
If to Fresh Juice or Merger Sub, addressed to such party, care of:
The Fresh Juice Company, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Facsimile No. (908-388-2954)
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with a copy to:
Bourne, ▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
If to any Selling Stockholder or ▇▇▇▇▇▇'▇, addressed to such party, care
of:
▇▇▇▇▇▇'▇ Juices, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Rosky, Landau, ▇▇▇▇▇ & ▇▇▇▇▇▇
Wilshire -- San ▇▇▇▇▇▇▇ Plaza
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Fax No. (▇▇▇) ▇▇▇-▇▇▇▇
10.5 Waivers. No waiver of any term, covenant or condition of this
Agreement shall be effective unless made in a written instrument duly executed
by or on behalf of the party entitled to the benefits thereof.
10.6 Amendments. The parties may agree to the amendment or modification of
this Agreement solely by an agreement in writing executed by or on behalf of
each of the parties hereto.
10.7 Successors and Assigns. This Agreement binds, inures to the benefit
of, and is enforceable by the successors and assigns of the parties hereto, and
does not confer any right on any other persons or entities.
10.8 GOVERNING LAW. THE EXECUTION, VALIDITY, CONSTRUCTION AND PERFORMANCE
OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW JERSEY, WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES
THEREOF; PROVIDED, HOWEVER, THAT IF THE LAW OF THE STATE OF CALIFORNIA WOULD
PERMIT THE DURATION OR SCOPE OF THE COVENANTS CONTAINED IN SECTIONS 8.1 OR 8.2
TO BE LONGER OR BROADER, AS THE CASE MAY BE, THAN THAT WHICH THE LAW OF THE
STATE OF NEW JERSEY WOULD PERMIT, THEN IN SUCH EVENT, CALIFORNIA LAW SHALL APPLY
IN DETERMINING THE DURATION OR SCOPE, AS THE CASE MAY BE, OF SUCH COVENANTS.
10.9 Submission to Jurisdiction.
The parties hereto agree to submit themselves to the jurisdiction of the
courts of the State of New Jersey and the United States District Court for the
District of New Jersey for the resolution of any dispute in connection with or
arising out of this Agreement and the transactions contemplated hereunder.
10.10 No Broker. Each of the parties hereto represents and warrants to
each of the other parties that all negotiations with respect to this Agreement
and the transactions contemplated hereby have been conducted by the parties
directly with each other without the intervention or aid of any person in such
manner as to give rise to any valid claim against any of the parties hereto for
a brokerage commission or other like payment.
10.11 No Other Inducement. No representation, promise or inducement has
been made by either party that is not embodied in this Agreement, and neither
party shall be bound by or liable for any alleged representation, promise or
inducement not so set forth.
10.12 Captions. The captions of this Agreement are for convenience of
reference only and shall not affect in any manner any of the terms, covenants or
conditions hereof.
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10.13 Survival of Representations, Warranties and Agreements. The
representations, warranties, agreements, covenants and obligations set forth in
this Agreement or in any schedule, exhibit or certificate delivered by any party
hereto to any other party hereto in connection with this Agreement or the
transactions contemplated hereby shall survive for one (1) year from the date
hereof and any party aggrieved by such breach of any representation or warranty
shall institute suit not later than two (2) years from the Effective Time and
their claim shall be waived if suit is not instituted by such date; provided,
however, that claims under Sections 7.1(a)(i) or 7.2(a)(ii), as the case may be
(fraud, intentional misrepresentation, etc.), shall survive indefinitely and
shall be subject to such statute of limitations as is provided by law.
10.14 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force ant effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
10.15 Entire Agreement. This Agreement is complete and constitutes the
entire agreement and supersedes any and all other prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof and, except as otherwise expressly provided
herein, is not intended to confer upon any other person any rights or remedies
hereunder.
10.16 Assignment. This Agreement and the right and obligations hereunder
shall not be assigned or otherwise transferred, except that Merger Sub may
assign all or any of its rights and obligations hereunder to any wholly-owned
subsidiary of Fresh Juice.
10.17 No Third Party Beneficiary. Nothing in this Agreement shall confer
upon any person or entity not a party hereto, or the legal representatives of
such person or entity, any rights or remedies of any nature or kind whatsoever
under or by reason of this Agreement.
10.18 Alternative Dispute Resolution. The parties hereto agree to settle
any dispute arising hereunder pursuant to the provisions of The New Jersey
Alternative Procedure for Dispute Resolution Act (N.J.S.A. 2A:23A-1 et seq.) and
to use J.A.M.S./ENDISPUTE (Morristown, N.J.) and a retired judge associated
therewith as the referee under such procedure.
10.19 Attorneys' Fees to Prevailing Party. In the event that any party
hereunder institutes suit and/or pursues the Alternative Dispute Resolution
procedures set forth in Section 10.18 above, the party prevailing in such action
shall be entitled, in addition to any other relief granted in such party's
favor, to an award of reasonable attorneys' fees and all other reasonable costs
and expenses incurred in connection with the dispute litigated in such action.
10.20 Waiver and General Release. With the exception of any claims, causes
of action or rights which arise from the express terms of this Agreement and any
Exhibit or Schedule hereto, the Selling Stockholders each hereby absolutely and
forever discharge and release ▇▇▇▇▇▇'▇, Fresh Juice and Merger Sub, and their
respective officers, assigns, collectively, the "Released Parties"), from any
and all manners of obligation, debt, liabilities, covenants, actions, contracts,
agreements, torts, undertakings, damages, accounts, causes of action and clams
of every kind and nature whatsoever, whether known or unknown, to the fullest
extent permitted by law (collectively "Claims"), which any of the Selling
Stockholders have or may have or allege against any of the Released Parties by
reason of any matter, cause, or thing existing or arising on or before the date
hereof, other than Claims for which the Selling Stockholders are entitled to
indemnification as officers or directors of any of the Released Parties, if
applicable.
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This Release, notwithstanding Section 1542 of the California Civil Code,
which provides
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR
DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR
will be a full settlement of said Claims. It is understood and agreed that this
Release is a full and final release of all Claims and that this Release
extinguishes Claims that are known, unknown, foreseen or unforeseen other than
Claims for which the Selling Stockholders are entitled to indemnification as
officers or directors of any of the Released Parties, if applicable. The parties
hereto understand and acknowledge the significance and consequence of this
specific waiver of Section 1542 and hereby assume full responsibility for any
injuries, damages, losses or liability that each of them hereafter may incur.
10.21 Option To Pay Off Debt of Selling Stockholders To Surviving
Corporation at a Discount and ▇. ▇▇▇▇▇▇'▇ Share Therein. For a period of forty
five (45) days from Closing, each of the Selling Stockholders listed on Schedule
3.4 hereto shall have the option to pay off their Stockholder Notes for fifty
percent (50%) of the amount due, so long as such Stockholder Note is satisfied
in full. The Surviving Corporation shall pay to ▇. ▇▇▇▇▇▇ all sums received,
from the Selling Stockholders exercising the option set forth in this Section
10.21, up to a maximum of $50,000.
10.22 Satisfaction of ▇. ▇▇▇▇▇▇'▇ and ▇. ▇▇▇▇'▇ Debt to ▇▇▇▇▇▇'▇. ▇▇▇▇▇▇'▇
and the Surviving Corporation each hereby acknowledge and agree that ▇. ▇▇▇▇▇▇
and ▇. ▇▇▇▇ have each fully satisfied all of their respective obligations to
▇▇▇▇▇▇'▇ in connection with the purchase of their stock in ▇▇▇▇▇▇'▇.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed pursuant to due authorization on the date first above written.
THE FRESH JUICE COMPANY, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Executive Officer
THE FRESH JUICE COMPANY OF
CALIFORNIA, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇
Title: President
▇▇▇▇▇▇'▇ JUICES, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: President
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇ AND ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
FAMILY TRUST OF 1995
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Trustee
By: /s/ ▇▇▇▇ ▇▇▇▇
------------------------------------
▇▇▇▇ ▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇
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SCHEDULE 1.5(c)
OFFICER OFFICE
-------------------------------- -----------------------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇.............. President, Chief Executive Officer and Assistant Secretary
▇▇▇▇▇▇ ▇▇▇▇▇.................... Treasurer and Assistant Secretary
▇▇▇▇▇▇ ▇. ▇▇▇▇▇................. Secretary and Assistant Treasurer
▇▇▇▇ ▇▇▇▇▇▇▇.................... Assistant Secretary
▇▇▇▇ ▇▇▇▇....................... Vice President
▇▇▇▇▇ ▇▇▇▇▇▇.................... Vice President
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