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EXHIBIT 2.1
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ASSET PURCHASE AGREEMENT
BY AND BETWEEN
CONCORD BEVERAGE COMPANY
(THE "COMPANY")
AND
CONCORD BEVERAGE LP
("BUYER")
OCTOBER 18, 2000
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TABLE OF CONTENTS
ARTICLE I 1
1.1 Definitions 1
ARTICLE II 7
2.1 Purchase of Assets 7
2.2 Retained Assets 9
2.3 Liabilities 11
2.4 Liabilities 11
2.5 Purchase Price 13
2.6 Working Capital Adjustment 14
2.7 Allocation of Purchase Price 17
2.8 Time and Place of Closing 17
2.9 Deliveries by the Company at Closing 17
2.10 Deliveries by Buyer at Closing 18
ARTICLE III 20
3.1 Organization and Qualification 20
3.2 Authority; No Violation 20
3.3 Financial Statements 21
3.4 Absence of Undisclosed Liabilities 21
3.5 Absence of Certain Changes 21
3.6 Title, Sufficiency and Condition of the Purchased Assets 23
3.7 Real Estate 24
3.8 Accounts Receivable 24
3.9 Inventories 24
3.10 Intellectual Property 24
3.11 Trade Secrets and Customer Lists 25
3.12 Contracts 25
3.13 Customers 27
3.14 Compliance with Laws 27
3.15 Taxes 27
3.16 Employee Benefit Plans 28
3.17 Environmental Matters 30
3.18 Employees 30
3.19 Litigation 31
3.20 Brokers 31
3.21 Transactions with Interested Persons 31
3.22 Insurance 31
3.23 Disclosure of Material Information 31
ARTICLE IV 32
4.1 Organization and Qualification 32
4.2 Authority 32
4.3 Financing 32
4.4 No Brokers 32
ARTICLE V 32
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5.1 Covenants of the Company 33
5.2 Covenants of Buyer and the Company 33
ARTICLE VI 37
6.1 Survival of Representations and Warranties 37
6.2 Indemnification 38
6.3 Notice and Opportunity to Defend 39
6.4 Adjustment for Insurance and Taxes 40
6.5 Subrogation 41
6.6 No Right of Set Off. 41
ARTICLE VII 42
7.1 Fees and Expenses 42
7.2 Publicity and Disclosures 42
7.3 Notices 42
7.4 Successors and Assigns 43
7.5 Counterparts; Descriptive Headings; Variations in Pronouns 43
7.6 Severability; Entire Agreement 43
7.7 Attorneys' Fees 44
7.8 Course of Dealing 44
7.9 Tax Matters 44
7.10 GOVERNING LAW 44
7.11 WAIVER OF JURY TRIAL 44
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EXHIBITS
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Exhibit A - Promissory Note (Escrow) and Promissory Note (Balance)
Exhibit B - Escrow Agreement
Exhibit C - ▇▇▇▇ of Sale
Exhibit D - Non-Competition Agreements
Exhibit E - Co-Packing Agreement
Exhibit F - Real Estate Purchase Agreement
Exhibit G - Security Agreement
Exhibit H - Consulting Agreement
Exhibit I - Honickman Guaranty
Exhibit J - Trademark Assignment
Exhibit K - Inventory Letter Agreement
Exhibit L - Form of Opinion of Wolf, Block, ▇▇▇▇▇▇ and ▇▇▇▇▇-▇▇▇▇▇ LLP
Exhibit M - Co-Purchasing Agreement
Exhibit N - Administrative Services Agreement
Exhibit O - Intercreditor Agreement
Exhibit P - Trust Transfer and Assumption Agreement
Exhibit Q - Form of Mortgage
Exhibit R - Cott Guaranty
Exhibit S - Cott Parent Guaranty
Exhibit T - Form of Opinion of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
Exhibit U Consent to Concurrent Use of Vintage Trademark
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ASSET PURCHASE AGREEMENT
Asset Purchase Agreement (the "Agreement"), dated as of October 18, 2000,
by and between Concord Beverage LP, a Delaware limited partnership ("Buyer"),
having its principal place of business at c/o Cott Corporation, ▇▇▇ ▇▇▇▇▇'▇ ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇; and Concord Beverage Company, a
Pennsylvania corporation (the "Company"), having its principal place of business
at ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
This Agreement sets forth the terms and conditions upon which Buyer will
purchase from the Company, and the Company will sell to Buyer, substantially all
of the assets of the Business (as defined in Section 1.1 hereof), as a going
concern, for the consideration provided herein.
In consideration of the foregoing, the mutual representations, warranties
and covenants set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties to
this Agreement hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS. For the purposes of this Agreement, all capitalized words
or expressions used in this Agreement (including the Schedules and Exhibits
annexed hereto) shall have the meanings specified in this Article I, unless
otherwise defined herein or therein (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"ACCOUNTS RECEIVABLE" shall have the meaning set forth in Section 2.1(j)
hereof.
"ADMINISTRATIVE SERVICES AGREEMENT" shall have the meaning set forth in
Section 2.9(m).
"AFFILIATE" means, when used with respect to any Person, any Person that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Person specified. For
purposes of this definition, "control" (including the correlative terms
"controlling," "controlled by" and "under common control with"), with respect to
any Person, shall mean possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise.
"AGREEMENT" shall have the meaning set forth in the Recitals hereto.
"ASSUMED LIABILITIES" shall have the meaning set forth in Section 2.4
hereof.
"▇▇▇▇ OF SALE" shall have the meaning set forth in Section 2.9(b) hereof.
"BUSINESS" means the following:
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(i) the blending, processing, bottling, canning and distribution of
carbonated, non-alcoholic, non-malt beverages by the Company or
by Affiliates of the Company on behalf of the Company (excluding
blending, processing, bottling, canning or distribution performed
by the Company for or on behalf of Affiliates of the Company or
under the "Frank's" trademark); and
(ii) the "Vintage" brand beverage business of the Company and its
Affiliates (excluding the "Vintage" brand non-carbonated water
business).
"BUSINESS DAY" means any day, excluding Saturday, Sunday and any other day
on which commercial banks in New York, New York, are authorized or required by
law to close.
"BUYER" shall have the meaning set forth in the Recitals hereto.
"BUYER'S AUDITOR" means PricewaterhouseCoopers, LLP, or such other firm of
certified public accountants as shall be selected by Buyer.
"CERCLA" means the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended, and the regulations thereunder, and court
decisions in respect thereof, all as the same shall be in effect at the time.
"CLAIM" means an action, suit, proceeding, hearing, investigation,
litigation, charge, complaint, claim or demand.
"CLOSING" shall have the meaning set forth in Section 2.8 hereof.
"CLOSING DATE" shall have the meaning set forth in Section 2.8 hereof.
"CLOSING WORKING CAPITAL STATEMENT" shall have the meaning set forth in
Section 2.6(a) hereof.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" shall have the meaning set forth in the Recitals hereto.
"COMPANY POLICIES" shall have the meaning set forth in Section 2.6(a)
hereof.
"COMPANY'S AUDITOR" means ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇ LLP or such other firm of
certified public accountants as shall be selected by the Company.
"CONCORDVILLE BEVERAGE MANUFACTURING PLANT" means the real property located
in the vicinity of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇
and all improvements thereon, including, without limitation, the beverage
manufacturing plant located thereon.
"CONCORDVILLE WAREHOUSE" shall have the meaning set forth in Section 2.1(b)
hereof.
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"CONSULTING AGREEMENT" shall have the meaning set forth in Section 2.9(g)
hereof.
"CONTRACTS" shall have the meaning set forth in Section 2.1(c) hereof.
"CO-PACKING AGREEMENT" shall have the meaning set forth in Section 2.9(d)
hereof.
"CO-PURCHASING AGREEMENT" shall have the meaning set forth in Section
2.9(l) hereof.
"COTT GUARANTY" shall have the meaning set forth in Section 2.10(j) hereof.
"COTT PARENT GUARANTY" shall have the meaning set forth in Section 2.10(k)
hereof.
"ELIZABETH BEVERAGE MANUFACTURING PLANT" means the real properties located
at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ and ▇▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇▇, and all improvements thereon, including, without limitation, the
beverage manufacturing plant and warehouse located thereon.
"ENVIRONMENTAL ACTION" means any administrative, regulatory or judicial
action, suit, demand, demand letter, claim, notice of non-compliance or
violation, investigation, request for information, proceeding, consent order or
consent agreement relating in any way to any Environmental Law or any
Environmental Permit, including, without limitation, (a) any claim by any
governmental or regulatory authority for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any Environmental Law
and (b) any claim by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials, damage to the environment or alleged injury or threat of
injury to human health or safety from pollution or other environmental
degradation.
"ENVIRONMENTAL LAW" means any applicable federal, state or local law,
statute, rule, regulation, or ordinance relating to the environment, human
health or safety from pollution or other environmental degradation or Hazardous
Materials, including, without limitation, CERCLA, the Resource Conservation and
Recovery Act, the Hazardous Materials Transportation Act, the Clean Water Act,
the Toxic Substances Control Act, the Clean Air Act, the Safe Drinking Water Act
and the Federal Insecticide, Fungicide and Rodenticide Act, and any similar
state and local laws, the rules, regulations and interpretations thereunder, all
as the same shall be in effect from time to time.
"ENVIRONMENTAL PERMIT" means any permit, approval, identification number,
license or other authorization required under any Environmental Law.
"ERISA" means the Employee Retirement Income Security Act of 1974, and any
similar or successor federal statute, and the rules, regulations and
interpretations thereunder, all as the same shall be in effect at the time.
"ERISA AFFILIATE" means, for purposes of Title IV of ERISA, any trade or
business, whether or not incorporated, that together with the Company or any
Subsidiary of the Company, would be deemed to be a "single employer" within the
meaning of Section 4001 of ERISA, and, for purposes of the Code, any member of
any group that, together with the Company or any
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Subsidiary of the Company, is treated as a "single employer" for purposes of
Section 414 of the Code.
"ESCROW AGREEMENT" shall have the meaning set forth in Section 2.5 hereof.
"FINAL WORKING CAPITAL" shall have the meaning set forth in Section 2.6(a)
hereof.
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section 3.3
hereof.
"GAAP" means generally accepted accounting principles in the United States
set forth in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession, which are applicable to the circumstances as of the
date of determination.
"HAZARDOUS MATERIALS" means (a) petroleum or petroleum products, natural or
synthetic gas, asbestos, urea formaldehyde foam insulation and radon gas, and
(b) any substances defined as or included in the definition of "hazardous
substances," "hazardous wastes," "hazardous materials," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants,"
"contaminants" or "pollutants," or words of similar import, under any
Environmental Law.
"HONICKMAN GUARANTY" shall have the meaning set forth in Section 2.9(h)
hereof.
"INDEBTEDNESS" means all obligations, contingent or otherwise, whether
current or long-term, which in accordance with GAAP would be classified upon the
obligor's balance sheet as liabilities (other than deferred taxes) and shall
also include capitalized leases, guaranties, endorsements (other than for
collection in the ordinary course of business) or other arrangements whereby
responsibility is assumed for the obligations of others, including any agreement
to purchase or otherwise acquire the obligations of others or any agreement,
contingent or otherwise, to furnish funds for the purchase of goods, supplies or
services for the purpose of payment of the obligations of others.
"INDEMNIFICATION LOSSES" shall have the meaning set forth in Section 6.2(a)
hereof.
"INDEPENDENT FIRM" shall have the meaning set forth in Section 2.6(a)
hereof.
"INTERCREDITOR AGREEMENT" shall have the meaning set forth in Section
2.9(n) hereof.
"INTELLECTUAL PROPERTY" shall have the meaning set forth in Section 2.1(f)
hereof.
"INVENTORY" shall have the meaning set forth in Section 2.1(b) hereof.
"INVENTORY LETTER AGREEMENT" shall have the meaning set forth in Section
2.9(j) hereof.
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"IRS" means the Internal Revenue Service and any similar or successor
agency of the federal government administering the Code.
"KNOWLEDGE" or words of similar meaning shall mean the actual knowledge of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, after reasonable
investigation including reasonable inquiry of each of the individuals listed on
Schedule 1.1-1 attached hereto.
"LIEN" means, with respect to any asset, any mortgage, deed of trust,
pledge, hypothecation, assignment, security interest, lien, charge, restriction,
adverse claim by a third party, title defect or encumbrance of any kind
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any assignment or other conveyance of any right to receive
income and any assignment of receivables with recourse against assignor), any
filing of any financing statement as debtor under the Uniform Commercial Code or
comparable law of any jurisdiction and any agreement to give or make any of the
foregoing, except (i) liens for current Taxes or governmental charges or levies
on property not yet due or delinquent and (ii) so-called landlord's, carrier's,
and warehousemen's liens arising in the ordinary course of business, (iii) liens
incurred or deposits made in the ordinary course of business (A) in connection
with worker's compensation, unemployment insurance, social security and other
like laws or (B) to secure the performance of statutory obligations, not
incurred in connection with either the borrowing of money or the deferred
purchase price of goods or inventory and (iv) purchase money security interests
in equipment and/or capital equipment leases arising in the ordinary course of
business.
"LOSSES" shall have the meaning set forth in Section 2.4 hereof.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
operations, assets, or condition (financial or otherwise) of the Business,
except for any effect relating to past or existing general economic or
regulatory conditions affecting businesses substantially similar to the
Business.
"MINIMUM WORKING CAPITAL" means five million dollars ($5,000,000.00).
"MORTGAGE" shall have the meaning set forth in Section 2.10(h) hereof.
"NON-COMPETITION AGREEMENTS" shall have the meaning set forth in Section
2.9(c) hereof.
"PERSON" means any individual, firm, partnership, association, trust,
corporation, limited liability company, governmental body or other entity.
"PBGC" means the Pension Benefit Guaranty Corporation, and any successor
thereto.
"PROMISSORY NOTE (BALANCE)" shall have the meaning set forth in Section 2.5
hereof.
"PROMISSORY NOTE (ESCROW)" shall have the meaning set forth in Section 2.5
hereof.
"PURCHASE DOCUMENTS" means this Agreement, the Promissory Note (Escrow),
the Promissory Note (Balance), the Cott Guaranty, the Cott Parent Guaranty, the
Honickman
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Guaranty, the Real Estate Purchase Agreement, the Non-Competition Agreements,
the Consulting Agreement, the ▇▇▇▇ of Sale, the Co-Packing Agreement, the
Trademark Assignment, the Inventory Letter Agreement, the Mortgage, the Security
Agreement, the Administrative Services Agreement, the Escrow Agreement, the
Intercreditor Agreement, the Co-Purchasing Agreement, the Trust Transfer and
Assumption Agreement and any other certificate, affidavit, document, instrument,
stock power or agreement executed in connection therewith.
"PURCHASED ASSETS" shall mean those assets and properties used by the
Business and set forth in Section 2.1(a) through (n) hereof; provided, that the
term Purchased Assets does not include the Concordville Beverage Manufacturing
Plant and the other assets which are transferred to Buyer pursuant to the Real
Estate Purchase Agreement.
"PURCHASE PRICE" shall have the meaning set forth in Section 2.5 hereof.
"REAL ESTATE PURCHASE AGREEMENT" shall have the meaning set forth in
Section 2.9(e) hereof.
"REGULATORY AUTHORITY" means any federal, state, local or other government
authority or instrumentality, domestic or foreign.
"RELEASE" means any release, issuance, disposal, discharge, dispersal,
leaching or migration into the indoor or outdoor environment or into or out of
any property, including the movement of Hazardous Materials through or in the
air, soil, surface water, ground water, or property other than in compliance
with all Environmental Laws and Environmental Permits.
"RETAINED ASSETS" shall have the meaning set forth in Section 2.2 hereof.
"RETAINED CONTRACTS" shall have the meaning set forth in Section 2.2(d)
hereof.
"RETAINED LIABILITIES" shall have the meaning set forth in Section 2.4(b)
hereof.
"SECURITY AGREEMENT" shall have the meaning set forth in Section 2.9(f)
hereof.
"SUBSIDIARY" means, with respect to any Person (a) any corporation,
association or other entity of which at least a majority in interest of the
outstanding capital stock or other equity securities having by the terms thereof
voting power under ordinary circumstances to elect a majority of the directors,
managers or trustees thereof, irrespective of whether or not at the time capital
stock or other equity securities of any other class or classes of such
corporation, association or other entity shall have or might have voting power
by reason of the happening of any contingency, is at the time, directly or
indirectly, owned or controlled by such Person, or (b) any entity (other than a
corporation) in which such Person, one or more Subsidiaries of such Person, or
such Person and one or more Subsidiaries of such Person, directly or indirectly
at the date of determination thereof, has at least majority ownership interest.
For purposes of this Agreement, a Subsidiary of the Company shall include the
direct and indirect Subsidiaries of the Company.
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"TAX" means any federal, state, local or foreign income, bottle, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental, deposit, customs duty, capital stock,
franchise, profits, withholding, social security, unemployment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, or other tax or levy of any kind whatsoever,
including any interest, penalty, or addition thereto, whether disputed or not.
"TAX RETURN" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"TRADEMARK ASSIGNMENT" shall have the meaning set forth in Section 2.9(i)
hereof.
"TRUST TRANSFER AND ASSUMPTION AGREEMENT" shall have the meaning set forth
in Section 2.9(o) hereof.
"WORKING CAPITAL" means the sum of Inventory plus Accounts Receivable plus
the adjustment to Working Capital set forth on Schedule 1.1-2, minus current
liabilities which are Assumed Liabilities, as determined in accordance with
GAAP, applied on a consistent basis with Company Policies.
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 PURCHASE OF ASSETS. Upon the terms and subject to the conditions
contained in this Agreement, at the Closing, the Company is selling, assigning,
transferring and conveying to the Buyer, and the Buyer is purchasing, acquiring
and accepting from the Company the Business as a going concern and the following
assets and properties used by the Business:
(a) all equipment, machinery, furniture and fixtures, office
equipment, and fixed assets located at the Concordville Beverage
Manufacturing Plant and used, as of the Closing, by or in
connection with the Business as conducted at the Concordville
Beverage Manufacturing Plant, including, without limitation,
production, transportation, packing and delivery machinery or
equipment, drawings, manuals, maintenance records, accessories
and supplies relating to the foregoing, tooling, tools, motor
vehicles, computers and other tangible personal property;
(b) (i) all finished products used in the Business located at (A) the
Concordville Beverage Manufacturing Plant, (B) the ▇▇▇▇▇▇▇▇▇
Beverage Manufacturing Plant, (C) the warehouse located at Aldan
Avenue, Concord Industrial Park, Concordville, Pennsylvania (the
"Concordville Warehouse"), (D) the warehouse located at ▇▇▇-▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ and (E) any warehouse or
facility used by the Company to store finished products of the
Business other than such finished products which are the subject
of the Inventory Letter Agreement
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and (ii) other inventories, raw materials, work in process,
parts, spare parts, pallets, vending machines in stock, propane,
heating fuel and other supplies primarily or exclusively used in
the Business other than those assets which are subject to the
Inventory Letter Agreement (collectively, "Inventory");
(c) all bids, proposals, customer orders, contracts (other than
Retained Contracts), leases (other than leases relating to
Retained Assets), purchase orders, sale orders and commitments
primarily or exclusively relating to the Business ("Contracts");
(d) complete copies of all of the Company's books, records and other
data primarily or exclusively relating to the Business and in
existence on the Closing Date as requested by Buyer, except
minute and stock record books, journals, ledgers, Tax Returns and
books of original entry;
(e) all of the Company's right, title and interest in (X) goodwill,
dealer and customer lists, formulations (including, without
limitation, concentrate formulas and mixing and blending
instructions) and designs, each of which is used primarily or
exclusively in connection with the production of beverages for
the Business, and (Y) all other sales and marketing information
primarily or exclusively relating to the Business, and (Z) all
know-how, technology, drawings, engineering specifications, bills
of materials, software and other intangible assets, each of which
is primarily or exclusively used by the Business;
(f) all of the Company's right, title and interest in those patents,
patent applications, copyrights, trade names, trade dress,
servicemarks, assumed names, trademarks and trademark
applications listed in SCHEDULE 2.1(F) attached hereto
("Intellectual Property"), in each case together with the
goodwill appurtenant thereto, all federal, state, local and
foreign registrations thereof, if applicable, all common law
rights thereto, and all claims or causes of action for
infringement thereof;
(g) all permits, licenses, orders, ratings and approvals of all
federal, state, local or foreign governmental or regulatory
authorities or industrial bodies which are held by the Company
relating primarily or exclusively to the Business or necessary to
the operation of the Business, to the extent the same are
transferable;
(h) all insurance proceeds which are payable to the Company with
respect to damage to the Purchased Assets which occurred prior to
the Closing Date and subsequent to January 1, 2000 and was not
repaired prior to the Closing Date;
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(i) all claims and rights of the Company under the Contracts (other
than the Retained Contracts) and choses in action relating
primarily or exclusively to the Business, whether in law or in
equity, with respect to any acts or failures to act by any person
or entity after the Closing Date;
(j) the accounts receivable reflected in the Final Working Capital
(the "Accounts Receivable");
(k) all of the Company's right, title and interest in the vending
machines used in the Business;
(l) those assets relating to the Concord Beverage Company Plan for
Employees who are Members of Local 830 transferred to Buyer
pursuant to the Trust Transfer and Assumption Agreement;
(m) bottle deposits relating to sales in all bottle deposit states,
as reflected on the adjustment to Working Capital set forth on
Schedule 1.1-2;
(n) except for the Retained Assets described in Section 2.2 below,
the other excluded assets referred to as excluded assets in
clauses (a) through (m) above and the Concordville Beverage
Manufacturing Plant and the other assets transferred to Buyer
pursuant to the Real Estate Purchase Agreement, all of the
Company's right, title and interest in all other items of
property, real or personal, tangible or intangible, primarily or
exclusively used in the Business, including, without limitation,
any confidentiality, restrictive and negative covenant agreements
with employees of the Company and others to the extent
transferable to Buyer relating primarily or exclusively to the
Business.
2.2 RETAINED ASSETS. Notwithstanding the foregoing, the following assets
and properties shall not be sold, transferred, conveyed or assigned to Buyer in
connection with the sale of the Business (collectively, the "Retained Assets"),
and shall be deemed not to be included in the Business or the Purchased Assets:
(a) the Company's rights under this Agreement and the other Purchase
Documents;
(b) the ▇▇▇▇▇▇▇▇▇ Beverage Manufacturing Plant and all assets located
at the ▇▇▇▇▇▇▇▇▇ Beverage Manufacturing Plant and the facilities
of the Company's Affiliates, other than those identified in
Section 2.1(a) through (m);
(c) assets and properties of the Company and its Affiliates relating
to order entry and accounts receivable functions and other
accounting and administrative matters;
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(d) all insurance policies of the Company and any of its Affiliates
and any amounts payable thereunder except to the extent
identified in Section 2.1(h), all agreements, arrangements and
understandings between the Company and its Affiliates, and those
other contracts identified on SCHEDULE 2.2 (d) attached hereto
(collectively, "Retained Contracts");
(e) claims for refunds of Taxes to the extent such refunds relate to
periods ending prior to the effective time of the Closing;
(f) the Company's books, records and other data;
(g) the cash, cash equivalents and marketable equity securities of
the Company;
(h) all of the Company's right, title and interest to all items of
tangible personal property primarily or exclusively relating to
non-carbonated water products and non-carbonated derivatives
thereof, including, without limitation, finished products and
packaging materials used in connection with non-carbonated water
products;
(i) all "House Brands" other than those set forth on Schedule 2.2(i);
(j) except as specified in Section 2.1(l), all of the Company's
right, title and interest in all assets relating to any Employee
Pension Benefit Plan or Employee Welfare Benefit Plan, including,
without limitation, the Company's 401(k), pension and profit
sharing plans;
(k) except for the Accounts Receivable, all claims and rights of the
Company under the Contracts (whether or not Retained Contracts)
and choses in action relating primarily or exclusively to the
Business, whether in law or in equity, with respect to any acts
or failures to act by any person or entity prior to the Closing
Date; provided, however, that prior to filing a lawsuit with
respect to any such claims and rights under any Contracts which
are not Retained Contracts, the Company will consult with Buyer;
(l) those assets specified in Schedule 2.2(l);
(m) the Company's rights in and to the trademark application filed on
October 13, 2000 in International Class 32 with respect to the
trademark VINTAGE for use in connection with non-carbonated
waters, and such trademark and all registrations, renewals and
extensions issued in connection therewith; and
(n) all claims and rights of the Company or any of its Affiliates in
respect of any of the foregoing.
15
2.3 ASSUMPTION OF CONTRACTUAL LIABILITIES. At the Closing, Buyer shall
assume all liabilities, warranty obligations and any other obligations with
regard to performance under the Contracts from and after the Closing, and
obligations to be performed after the effective time of the Closing under all
performance bonds or other bonds or guarantees relating thereto entered into or
made in the ordinary course of the Business which performance bonds or other
bonds or guarantees are described on SCHEDULE 2.3, and copies of which have been
previously made available to Buyer. Notwithstanding the foregoing, no Contract
shall be assigned contrary to law or the terms of such Contract and, with
respect to Contracts that cannot be assigned or novated to Buyer at the Closing,
the performance obligations of the Company thereunder shall, unless not
permitted by such Contracts, be deemed to be subleased or subcontracted to Buyer
until such Contracts have been assigned or novated. At Buyer's request, the
Company shall utilize its commercially reasonable efforts, and Buyer shall
assist with respect thereto, to obtain any necessary consents or approvals
required to assign or novate such Contracts. Buyer shall utilize its
commercially reasonable efforts to perform and complete all Contracts in
accordance with their terms. The Company shall utilize its commercially
reasonable efforts to enforce the Contracts at the request, and at the sole
expense, of Buyer if neither assignment, novation, subleasing nor subcontracting
is permitted by the other party. The Company shall pay over to Buyer any amounts
received by the Company after the effective time of the Closing as a result of
performance by Buyer of such Contracts, which payment shall be made promptly,
but in no event more than ten (10) business days following receipt thereof by
the Company. Buyer shall not have any obligation to indemnify the Company
pursuant to the terms of this Agreement with respect to any Contract for which
Buyer has not received the necessary consents or approvals required to assign
such Contract and cannot pursuant to the terms of such contract receive, and has
not received, the financial benefit of such Contract despite Buyer's
commercially reasonable efforts to perform thereunder. If any of the Contracts
could expire in accordance with its terms after the six month anniversary of the
Closing Date, then at such time Buyer shall use its commercially reasonable
efforts to enter into new Contracts or otherwise amend or modify any Contracts
assigned to Buyer hereunder in order to remove the Company as a party thereto.
2.4 LIABILITIES
(a) On and after the Closing Date, Buyer shall assume and agree to
assume, pay, perform and discharge, any and all losses, debts,
liabilities, damages, obligations, claims, demands, judgments,
settlements, costs and expenses (including, without limitation,
reasonable attorneys' fees and expenses) of any nature or kind,
known or unknown, fixed, accrued, absolute or contingent,
liquidated or unliquidated (collectively, "Losses") resulting
from, arising out of or relating to (i) any activity undertaken
by, or any failure to act by, the Business after the effective
time of the Closing, (ii) the obligations assumed by Buyer
pursuant to Section 2.3, (iii) the accounts payable reflected in
the Final Working Capital, which amount shall not exceed the
Accounts Receivable reflected in the Final Working Capital, net
of allowance for doubtful accounts, (iv) the decision of Buyer or
any Affiliate of Buyer to employ or not to employ any individual
(which, by way of clarification, does not include those employees
of the
16
Company who are offered employment with Buyer consistent with the
terms of this Agreement and elect not to accept such employment
with Buyer), (v) any and all liabilities and obligations incurred
after the effective time of the Closing and arising out of,
resulting from or relating to the Purchased Assets or the
Concordville Beverage Manufacturing Plant (provided that the
foregoing shall not limit any liability of the Company to Buyer
for a breach of the Company's representations and warranties
hereunder); (vi) liabilities in respect of bottle deposits
relating to sales in bottle deposit states, as reflected on the
adjustment to Working Capital set forth on Schedule 1.1-2; (vii)
any and all liabilities incurred by Buyer in connection with the
negotiation, execution or performance of this Agreement or the
other Purchase Documents (including, without limitation, all
legal, accounting, brokers' finders and other professional fees
and expenses) and (viii) the obligations of Buyer set forth in
this Agreement and the other Purchase Documents (collectively,
the "Assumed Liabilities").
(b) Except for the Assumed Liabilities or as otherwise expressly set
forth in this Agreement or in any other Purchase Document, Buyer
shall not assume or agree to perform, pay or discharge, and the
Company shall remain unconditionally liable for all Losses of the
Company including, without limitation, (i) any and all
liabilities of the Company with respect to the Purchased Assets
or the Concordville Beverage Manufacturing Plant incurred prior
to the effective time of the Closing, the Retained Assets and the
▇▇▇▇▇▇▇▇▇ Beverage Manufacturing Plant, including, without
limitation, the accounts payable of the Company in excess of
Accounts Receivable as reflected in the Final Working Capital;
(ii) the Business (including, without limitation, liabilities for
all employee, ecological, health, safety, unemployment, workers
compensation, severance, or any other claims arising out of,
resulting from or relating to the conduct of the Business prior
to the effective time of the Closing); (iii) all environmental
claims and liabilities resulting from matters existing prior to
the Closing Date or arising out of, resulting from or relating to
the conduct of the Business prior to the effective time of the
Closing; (iv) any and all liabilities with respect to any
federal, state or local Taxes incurred by the Company with
respect to the Purchased Assets, the Concordville Beverage
Manufacturing Plant or the Business for any period ending prior
to the Closing Date; (v) any and all liabilities arising out of
the termination of the Company's insurance policies, leases,
contracts and employee benefit pension and profit sharing plans
and severance obligations; (vi) any and all liabilities of the
Company arising in connection with any claim, litigation or
proceeding with respect to the operation of the Business prior to
the effective time of the Closing (including, without limitation,
those matters set forth on SCHEDULE 3.19 attached hereto); (vii)
any and all liabilities incurred by the Company, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
or ▇▇▇▇▇▇▇
17
Honickman in connection with the negotiation, execution or
performance of this Agreement and the other Purchase Documents
(including, without limitation, all income Taxes and legal,
accounting, brokers' finders and other professional fees and
expenses); (viii) any and all liabilities relating to
indebtedness for borrowed money in connection with the Business
which are not reflected in the Final Working Capital, whether or
not such liabilities are reflected in the Financial Statements;
and (ix) any and all liabilities incurred by the Company
subsequent to the effective time of the Closing (collectively,
the "Retained Liabilities").
(c) Notwithstanding anything to the contrary contained herein, Buyer
agrees that it shall adopt a defined benefit pension plan and an
associated trust providing for pension benefits that are
substantially identical to the benefits provided under the terms
of the Concord Beverage Company Defined Benefit Pension Plan for
Employees who are Members of Local 830 (the "Local 830 Plan") in
connection with the "spinoff" of the portion of the Local 830
Plan covering those members of the Teamsters Local Union Number
830 who are actively employed by the Company immediately prior to
the Closing and who become active employees of Buyer by reason of
the consummation of the transactions contemplated by this
Agreement. Buyer agrees to assume the liabilities attributable to
the portion of the Local 830 Plan that is the subject of the
spinoff and to accept a transfer of plan assets from the trust
forming part of the Local 830 Plan on the terms and conditions
set forth in the Trust Transfer and Assumption Agreement between
the Company and Buyer, which agreement shall provide for a
transfer of assets to Buyer sufficient to fund the liabilities
assumed on terms that are consistent with all applicable
requirements of Code Section 414(l).
2.5 PURCHASE PRICE. In consideration for the sale, transfer, conveyance
and assignment of the Purchased Assets, the Concordville Beverage Manufacturing
Plant and the other assets which are transferred to Buyer pursuant to the Real
Estate Purchase Agreement, subject to the Working Capital adjustment, as
provided in Section 2.6, Buyer shall pay to the Company a purchase price of
Seventy One Million Six Hundred Sixty Three Thousand Seven Hundred and Sixty
Three Dollars ($71,663,763.00) (such amount, as may be adjusted pursuant to
Section 2.6, the "Purchase Price"). Fifty Three Million Seven Hundred Forty
Seven Thousand Eight Hundred and Twenty Three Dollars ($53,747,823.00) of the
Purchase Price shall be paid at Closing by wire transfer of immediately
available federal funds and the remaining twenty five percent (25%) of the
Purchase Price shall be paid by delivery of two promissory notes in
substantially the forms attached hereto as EXHIBIT A; one of such promissory
notes shall be in the principal amount of Seven Million One Hundred Sixty Six
Thousand Three Hundred Seventy Six Dollars ($7,166,376.00) (the "Promissory Note
(Escrow)") and the other promissory note shall be in the principal amount of Ten
Million Seven Hundred Forty Nine Thousand Five Hundred Sixty Four Dollars
($10,749,564.00) (the "Promissory Note (Balance)"). At the
18
Closing, the Promissory Note (Escrow) shall be delivered to First Union National
Bank, as escrow agent, under the Escrow Agreement, by and among Buyer, the
Company and the escrow agent, in substantially the form of Exhibit B attached
hereto (the "Escrow Agreement") and payment thereof shall be subject to the
terms and conditions of the Escrow Agreement.
2.6 WORKING CAPITAL ADJUSTMENT.
(a) Subject to the provisions of this Section 2.6, the Purchase
Price will be adjusted on a dollar for dollar basis
following the Closing to the extent that the Working Capital
of the Business as of the Closing (the "Final Working
Capital") is greater or less than the Minimum Working
Capital.
As promptly as practicable, but in no event later than forty five
(45) days after the Closing, the Company shall prepare and
deliver to Buyer a statement of the Working Capital, reflecting
each of the components of Working Capital as if set forth on a
balance sheet, of the Business as of Closing Date which shall
have been examined and reported on by Company's Auditor (the
"Closing Working Capital Statement"). The report of Company's
Auditor shall be made to the Company and Buyer and shall state
that the Closing Working Capital Statement (i) has been prepared
in conformity with the terms of this Agreement, (ii) was prepared
in conformity with GAAP (except as otherwise provided herein),
and applied on a consistent basis with those policies used by the
Company ("Company Policies") in connection with the preparation
of the financial statements of the Company for the fiscal year
ended January 2, 2000, and (iii) presents fairly, in all material
respects, the Working Capital of the Business at the Closing
Date, and that the audit by Company's Auditor was conducted in
accordance with generally accepted auditing standards. The
Closing Working Capital Statement shall be prepared in accordance
with the books and records of the Company and in conformity with
GAAP, applied on a consistent basis with Company Policies, except
that (i) accounts receivable shall reflect only trade accounts
receivable of the Business, (ii) accounts payable shall reflect
only trade accounts payable of the Business and a payable to
Pepsi-Cola and National Brand Beverages, Ltd. of $2,000,000 and
shall exclude any accounts payable if including such accounts
payable would result in the aggregate accounts payable exceeding
the aggregate accounts receivable, (iii) the allowance for
doubtful accounts receivable shall be zero, (iv) the value of
Inventory shall be adjusted in accordance with the Company's year
end adjustment procedures and (v) Retained Assets and Retained
Liabilities shall be excluded.
Promptly after the Closing, but in no event later than October
22, 2000, Buyer and the Company shall cooperate to permit the
Company's Auditor
19
to perform a physical count and inspection of the Inventory for
purposes of preparing the Closing Working Capital Statement. The
timing of such physical count and inspection shall be coordinated
with Buyer and Buyer's Auditor so as to minimize disruption to
Buyer's business and to allow Buyer's Auditor to be present at
such physical count and inspection. For purposes of this
Agreement, the Inventory to be stated on the Closing Working
Capital Statement shall be the Inventory at the time of such
physical count and inspection as adjusted in accordance with the
books and records of the Company to the effective time of the
Closing.
The Company shall permit Buyer and Buyer's Auditor to review all
work papers and computations used by the Company and Company's
Auditor in preparing the Closing Working Capital Statement. After
the Closing Date, until agreement is reached as to the Closing
Working Capital Statement, for purposes of this Section 2.6,
Buyer shall permit the Company and Company's Auditor full and
free access, at all reasonable times, to the deeds, documents and
contracts and books of account, records, files, invoices and
other data associated with, necessary to or used in the Business
as conducted on or before the Closing Date; provided, however,
that the Company shall coordinate such access with Buyer in order
to minimize disruption to the conduct of Buyer's business. Buyer
shall within thirty (30) days after the receipt of the Closing
Working Capital Statement advise the Company in writing of the
amounts and descriptions of adjustments relating to Working
Capital, if any, which Buyer believes are necessary to be made to
the Closing Working Capital Statement.
In the event that Buyer and the Company are unable to resolve any
differences with respect to the Working Capital reflected on the
Closing Working Capital Statement within sixty (60) days after
receipt of the Closing Working Capital Statement by Buyer, then
the issues remaining unresolved shall be determined as follows:
Buyer and the Company shall jointly select and retain an
independent firm of certified public accountants of national
standing and reputation in the United States (the "Independent
Firm") for the purpose of resolving within the ranges proposed by
Buyer and the Company all remaining unresolved issues with
respect to the Working Capital. If Buyer and the Company are not
able to agree upon the Independent Firm within seventy-five (75)
days after receipt of the Closing Working Capital Statement by
Buyer, then the Independent Firm shall be selected by lot after
Buyer has eliminated two (2) of the three (3) independent firms
of public accountants of national standing and reputation in the
United States selected by the Company and the Company has
eliminated two (2) of the three (3) such firms selected by Buyer;
provided, however, that Buyer's Auditor shall not be one of the
three independent firms selected by Buyer and Company's Auditor
shall not be one of the three independent firms selected by the
Company.
20
(i) Within fifteen (15) days following retention of the
Independent Firm, Buyer and the Company shall present or cause to
be presented the issue or issues that must be resolved with
respect to the Working Capital as reflected on the Closing
Working Capital Statement.
(ii) Buyer and the Company shall use their commercially
reasonable efforts to cause the Independent Firm to render its
decision as soon as is reasonably practicable, including, without
limitation, prompt compliance with all reasonable requests by the
Independent Firm for information, papers, books, records and the
like; provided that Buyer and the Company agree that the scope of
the retention of the Independent Firm shall be limited to
resolving the issues presented to it and matters related thereto.
All decisions of the Independent Firm with respect to Working
Capital as reflected by the Closing Working Capital Statement
shall be final and binding upon all the parties to this
Agreement.
(iii) With respect to the performance of their respective
functions pursuant to this Section 2.6(a), (A) Buyer shall bear
the fees, costs, disbursements and other expenses of Buyer's
Auditor; (B) the Company shall bear the fees, costs,
disbursements and other expenses of Company's Auditor; and (C)
Buyer, on the one hand, and the Company, on the other hand, shall
bear equally all fees, costs, disbursements and other expenses of
the Independent Firm.
(b) If the Final Working Capital is less than the Minimum
Working Capital, the Company shall pay to Buyer, within
three (3) days after the date that agreement is reached as
to the Closing Working Capital Statement or finally
determined by the Independent Firm, an amount equal to the
amount by which the Minimum Working Capital exceeds the
Final Working Capital. Interest shall be assessed and due on
any amounts payable under this Section 2.6(b) at the rate of
seven percent (7%) per annum from the Closing Date to the
date of payment.
(c) If the Final Working Capital is greater than the Minimum
Working Capital, Buyer shall pay to the Company, within
three (3) days after the date that agreement is reached as
to the Closing Working Capital Statement or finally
determined by the Independent Firm, an amount equal to the
amount by which the Final Working Capital exceeds the
Minimum Working Capital. Interest shall be assessed and due
on any amounts payable under this Section 2.6(c) at the rate
of seven percent (7%) per annum from the Closing Date to the
date of payment.
21
2.7 ALLOCATION OF PURCHASE PRICE. The Purchase Price (adjusted for Assumed
Liabilities) shall be allocated among the Purchased Assets and the Concordville
Beverage Manufacturing Plant for purposes of Section 1060 of the Code, as agreed
by the parties hereto within thirty (30) days after the Closing Date. Upon
agreement by the parties, such Purchase Price allocation shall be set forth and
attached to this Agreement as SCHEDULE 2.7. The Company and Buyer agree to be
bound by such allocations and to complete and attach IRS Form 8594 to their
respective federal income tax returns to reflect such allocations. Such Form
shall also reflect the purchase of the Concordville Beverage Manufacturing Plant
pursuant to the terms set forth in the Real Estate Purchase Agreement at the
price allocated thereto in Schedule 2.7. Any adjustment to the Purchase Price
pursuant to Section 2.6 shall cause such adjustment to SCHEDULE 2.7 as the
parties shall mutually agree.
2.8 TIME AND PLACE OF CLOSING. The closing of the transactions described
herein (the "Closing") shall take place at the offices of Wolf, Block, ▇▇▇▇▇▇
and ▇▇▇▇▇-▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ at 2:00
p.m. on the date hereof, or at such other place or time as the parties hereto
may mutually agree. The date and time at which the Closing actually occurs is
hereinafter referred to as the "Closing Date." For purposes of this Agreement,
the effective time of the Closing means 12:01 a.m., Philadelphia time, on the
Closing Date.
2.9 DELIVERIES BY THE COMPANY AT CLOSING. At the Closing, the Company
shall deliver or cause to be delivered to Buyer the following:
(a) the Escrow Agreement executed by the Company;
(b) a ▇▇▇▇ of sale, executed by the Company, in substantially the
form attached hereto as EXHIBIT C (the "▇▇▇▇ of Sale");
(c) Non-Competition Agreements executed by each of the Company,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ in substantially the form
attached hereto as EXHIBIT D (the "Non-Competition Agreements");
(d) a Co-Packing Agreement, executed by the Company, in substantially
the form attached hereto as EXHIBIT E (the "Co-Packing
Agreement");
(e) a Real Estate Purchase Agreement, executed by the Company, in
substantially the form attached hereto as EXHIBIT F (the "Real
Estate Purchase Agreement") and all documentation required to be
delivered by the Company pursuant to the Real Estate Purchase
Agreement;
(f) a Security Agreement, executed by the Company, in substantially
the form attached hereto as EXHIBIT G (the "Security Agreement");
(g) a Consulting Agreement, executed by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, in
substantially the form attached hereto as EXHIBIT H (the
"Consulting Agreement");
22
(h) a Guarantee, executed by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, with respect to
certain obligations of the Company, in substantially the form
attached hereto as EXHIBIT I (the "Honickman Guaranty");
(i) a Trademark Assignment and Assumption Agreement, executed by the
Company, in substantially the form attached hereto as EXHIBIT J
(the "Trademark Assignment");
(j) a Letter Agreement between Company and Buyer relating to the
runoff of inventory and raw materials by Affiliates of the
Company and certain other matters, executed by the Company, in
substantially the form attached hereto as EXHIBIT K (the
"Inventory Letter Agreement");
(k) a legal opinion of Wolf, Block, ▇▇▇▇▇▇ and ▇▇▇▇▇-▇▇▇▇▇ LLP,
special counsel to the Company, in substantially the form
attached hereto as EXHIBIT L;
(l) a Co-Purchasing Agreement, executed by the Company, in
substantially the form attached hereto as EXHIBIT M;
(m) an Administrative Services Agreement, executed by the Company, in
substantially the form attached hereto as EXHIBIT N;
(n) an Intercreditor Agreement, executed by the Company, in
substantially the form attached hereto as EXHIBIT O;
(o) a Trust Transfer and Assumption Agreement, executed by the
Company, in substantially the form attached hereto as EXHIBIT P;
(p) such other instruments or documents as Buyer reasonably
determines are necessary to carry out the transactions
contemplated hereby.
2.10 DELIVERIES BY BUYER AT CLOSING. At the Closing, Buyer shall deliver or
cause to be delivered to the Company the following:
(a) Payment of the Purchase Price in accordance with the terms of
this Agreement, including, wire transfer of the cash portion of
the Purchase Price to be paid at Closing;
(b) the Promissory Note (Escrow), executed by Buyer;
(c) the Promissory Note (Balance), executed by Buyer;
(d) the Non-Competition Agreements, executed by Buyer;
(e) the Co-Packing Agreement, executed by Buyer;
23
(f) the Real Estate Purchase Agreement, executed by Buyer;
(g) the Security Agreement, executed by Buyer;
(h) a Mortgage, executed by Buyer, in substantially the form attached
hereto as EXHIBIT Q (the "Mortgage");
(i) the Consulting Agreement, executed by Buyer;
(j) a guarantee, executed by BCB USA Corp., a Georgia corporation
("Cott"), with respect to all obligations of Buyer, in
substantially the form attached hereto as EXHIBIT R (the "Cott
Guaranty");
(k) a guarantee, executed by Cott Corporation, a Canadian
corporation, with respect to certain obligations of Buyer, in
substantially the form attached hereto as EXHIBIT S (the "Cott
Parent Guaranty");
(l) the Trademark Assignment, executed by Buyer;
(m) the Inventory Letter Agreement, executed by Buyer;
(n) a legal opinion of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, A Professional
Corporation, special counsel to Buyer, in substantially the form
attached hereto as EXHIBIT T;
(o) a Consent to Concurrent Use of the Vintage Trademark, executed by
Buyer, in substantially the form attached hereto as EXHIBIT U;
(p) the Escrow Agreement, executed by Buyer;
(q) the Administrative Services Agreement, executed by Buyer;
(r) the Intercreditor Agreement, executed by Buyer and First Union
Bank;
(s) the Co-Purchasing Agreement, executed by Buyer and Cott;
(t) the Trust Transfer and Assumption Agreement, executed by Buyer;
and
(u) such other instruments or documents as the Company reasonably
determines are necessary to carry out the transactions
contemplated hereby.
24
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Buyer, that, except as set
forth in the Disclosure Schedule delivered by the Company to Buyer prior to the
execution of this Agreement, with specific reference to the Section of this
Agreement to which the information stated in such disclosure relates (provided
that any section under Article III of the Disclosure Schedule or any subsections
thereof shall each be deemed to include all disclosures set forth in other
sections and subsections of the Disclosure Schedule as and to the extent the
context of such disclosures makes it reasonably clear, if read in the context of
such other section or subsection, that such disclosures are applicable to such
other sections or subsections) as follows:
3.1 ORGANIZATION AND QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the
Commonwealth of Pennsylvania. The Company has all requisite corporate power and
authority to own, use and lease its properties and to conduct its business as
such properties are owned, used or leased and as such business is currently
conducted. The Company is qualified to do business as a foreign corporation and
is in good standing in each jurisdiction in which the conduct of its business
would require such qualification, except for such failures to be so qualified
which will not have a Material Adverse Effect.
3.2 AUTHORITY; NO VIOLATION. The Company has all requisite corporate power
and authority to enter into this Agreement and the other Purchase Documents to
which it is a party and to carry out the transactions contemplated hereby and
thereby. The execution, delivery and performance of this Agreement and the other
Purchase Documents to which the Company is a party by the Company have been duly
and validly authorized and approved by all necessary corporate action. Each of
this Agreement and the other Purchase Documents to which the Company is a party
constitutes the legal and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except that the enforceability hereof
may be subject to bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and that the remedy of specific performance and injunctive and other forms of
equitable relief may be subject to equitable defenses and to the discretion of
the court before which any proceeding may be brought. The entering into of each
of this Agreement and the other Purchase Documents to which the Company is a
party by the Company does not, and the consummation by the Company of the
transactions contemplated hereby and thereby, including specifically the
transfer of the Purchased Assets and the Concordville Beverage Manufacturing
Plant to Buyer by the Company, will not violate the provisions of (a) any
applicable federal, state, local or foreign laws (except that no representation
is made to the extent that the status of Buyer or any of its Affiliates would
cause a breach hereof), (b) the Company's Articles of Incorporation or by-laws,
or (c) subject to obtaining consents to the assignment, novation, subleasing or
subcontracting of the Contracts, any provision of, or result in a default or
acceleration of, any obligation under, or result in any change in the rights or
obligations of the Company under, any Lien, contract, agreement, license, lease,
instrument, indenture, order, arbitration award, judgment, or decree included in
the
25
Purchased Assets to which the Company is a party or by which any of them is
bound, or to which any of the Purchased Assets is subject.
3.3 FINANCIAL STATEMENTS. Attached hereto as SCHEDULE 3.3(a) are the
audited balance sheet at January 1, 2000 and statements of income and cash flow
as of January 1, 2000, for the Company (the "Financial Statements"). The
Financial Statements have been prepared in accordance with the books and records
of the Business and in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby, present fairly in all material respects
the financial condition of the Business as of such date and the results of
operations of the Business for such period. Attached hereto as Schedule 3.3(b)
are (i) statements of income and cash flows of the Business for the 2000 fiscal
year based upon projected revenues and 1999 fiscal year expenses and (ii)
statements of income and cash flows of the Business for the 2000 fiscal year
based upon historical results for the nine (9) month period ended September 30,
2000 (collectively, the "Pro Forma Financial Statements"). The Pro Forma
Financial Statements were prepared by the Company in good faith based on
reasonable assumptions and represent the Company's good faith estimate of the
financial condition of the Business (exclusive of the Retained Assets and the
Retained Liabilities) as of the periods covered thereby.
3.4 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth in the
Financial Statements, there are no liabilities of the Business required to be
reported on a balance sheet prepared in accordance with GAAP applied on a
consistent basis which are Assumed Liabilities, whether accrued, absolute,
contingent or otherwise (including, without limitation, liabilities as guarantor
or otherwise with respect to obligations of any other Person, or liabilities for
Taxes due or then accrued or to become due), except for liabilities which have
arisen in the ordinary course of business of the Business since January 2, 2000.
In addition, except as set forth in the Financial Statements, there are no
liabilities of the Business, whether accrued, absolute, contingent or otherwise
(including, without limitation, liabilities as guarantor or otherwise with
respect to obligations of any other Person, or liabilities for Taxes due or then
accrued or to become due), except for liabilities which, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
3.5 ABSENCE OF CERTAIN CHANGES. Since January 1, 2000, except in
connection with the transactions contemplated by this Agreement, there has not
been:
(a) any change in the operations, assets, liabilities or condition
(financial or otherwise) of the Business that, by itself or in
conjunction with all other such changes, whether or not arising
in the ordinary course of business, has had or is reasonably
likely to have a Material Adverse Effect;
(b) any obligation or liability incurred by the Company relating to
the Business, other than obligations and liabilities (i) which
are not Assumed Liabilities or (ii) which were incurred in the
ordinary course of business and either relate to a Contract which
has been made available to Buyer or are for amounts not
substantially more than reflected on the Financial Statements;
26
(c) any Lien placed on any of the Purchased Assets which remains in
existence immediately after the Closing other than Liens relating
to acts, or failures to act, of Buyer and its Affiliates;
(d) any contingent liabilities which are Assumed Liabilities incurred
by the Company with respect to the obligations of any other
Person with respect to the Business or the Purchased Assets;
(e) any purchase, sale, lease, assignment, transfer or other
disposition, or any agreement or other arrangement for the
purchase, sale, lease, assignment, transfer or other disposition,
of any part of the properties or assets located at the
Concordville Beverage Manufacturing Plant and used by the
Business as conducted at the Concordville Beverage Manufacturing
Plant, other than pursuant to this Agreement and purchases,
sales, leases, assignments, transfers or other dispositions in
the ordinary course of business which, in the case of fixed
assets, involve either the replacement of assets with assets of
at least comparable value or assets purchased or other capital
expenditures made in amounts not exceeding $50,000 for any single
item or $250,000 in the aggregate;
(f) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the Purchased
Assets or the Concordville Beverage Manufacturing Plant;
(g) any material labor trouble or claim of unfair labor practices
involving the Business;
(h) any change in the employment contracts of or compensation payable
or to become payable by the Company to any of the officers,
directors, employees, consultants or agents of the Business, or
any bonus payment or arrangement made to or with any of such
officers, directors, employees, consultants or agents; or any
material change in coverage or benefits available under any Plan
described in Section 3.16, to the extent related to the
Concordville Beverage Manufacturing Plant, except in each such
case, in the ordinary course of business;
(i) any change with respect to the Business' management personnel;
(j) any payment or discharge of a material Lien or liability of the
Business not disclosed on the Financial Statements or incurred in
the ordinary course of business;
(k) any obligation or liability incurred by the Company with respect
to any loan, advance or commitment to lend by any bank, financial
institution or institutional lender to any of the officers,
directors, employees, consultants, agents, or shareholders of the
Business or to any other Person, which obligation or liability in
any such case is an Assumed Liability; or
27
any loans or advances made by the Company to any officers,
directors, employees, consultants, agents or shareholders of the
Business, except for such loans or advances which are not
included in the Purchased Assets or are for normal compensation,
professional fees and expense allowances payable to such
officers, directors, employees, consultants, agents, shareholders
or other Persons;
(l) any contracts, licenses, leases or agreements entered into by the
Company on behalf of the Business which are included in the
Purchased Assets and are outside the ordinary course of business;
(m) any postponement or delay in payment of any trade accounts
payable, other than those being disputed in good faith, or other
liability of the Business which is an Assumed Liability except in
the ordinary course of business;
(n) any disputes with trade creditors outside of the ordinary course
of business;
(o) any cancellation, waiver, compromise or release of any right or
claim of the Business either involving more than $50,000 or
outside the ordinary course of business consistent with prior
practices; or
(p) any cancellation, termination, modification, or acceleration by
any party to any contract, license, lease or agreement of the
Business which cancellation, termination, modification or
acceleration has had or is reasonably likely to have a Material
Adverse Effect.
3.6 TITLE, SUFFICIENCY AND CONDITION OF THE PURCHASED ASSETS. The Company
has good and valid title to, or a valid leasehold interest in, all of the
Purchased Assets, including all real property leased by the Company included in
the Purchased Assets (collectively, the "Leased Facilities"), free and clear of
all Liens, except, with respect to the Leased Facilities, Liens with respect to
the underlying property. To the Knowledge of the Company, the Company is in
material compliance with zoning and building laws (other than Environmental Laws
which are addressed in Section 3.17) (collectively, "Defects") with respect to
the Concordville Beverage Manufacturing Plant and the Leased Facilities. The
sale and delivery of the Purchased Assets to the Buyer pursuant hereto shall
vest in the Buyer good and valid title thereto, free and clear of all Liens,
except as may be created by Buyer and except, with respect to the Leased
Facilities, Liens with respect to the underlying property. Except for the
Retained Assets, the Purchased Assets and the real property interests conveyed
to Buyer pursuant to the Real Estate Purchase Agreement (including the
Concordville Beverage Manufacturing Plant) include all real, personal, tangible
and intangible property and assets primarily or exclusively used in the Business
or necessary for the conduct of the Business as reflected in the Pro-Forma
Financial statements and as the Business is presently being conducted. All
tangible properties and assets owned or leased by the Company and contained in
the Purchased Assets and currently used in the operations of the Business are in
working order and, to the Knowledge of the Company, have been maintained
28
in accordance with industry standards. Schedule 3.6-2 contains a list of vending
machines used in the Business which are not included in Inventory.
3.7 REAL ESTATE. Schedule 3.7-1 attached hereto lists all real property
owned by the Company and used in the conduct of the Business. Schedule 3.7-2
lists all real property leased or subleased to the Company and used in the
conduct of the Business.
3.8 ACCOUNTS RECEIVABLE. None of the Accounts Receivable set forth in the
Closing Working Capital Statement shall be more than ninety (90) days past due
as of September 30, 2000.
3.9 INVENTORIES. All of the Inventory, net of reserves therefor to be set
forth on the Closing Working Capital Statement, consist of items of a quality
and quantity usable and salable in the ordinary course of business consistent
with past practice of the Business. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN
THIS AGREEMENT, THE WARRANTIES SET FORTH ABOVE IN THIS SECTION 3.9 ARE IN LIEU
OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, AND OF ALL OTHER OBLIGATIONS OR
LIABILITIES ON THE PART OF SELLER, AND SELLER NEITHER ASSUMES NOR AUTHORIZES ANY
PERSON TO ASSUME FOR IT ANY OTHER OBLIGATION OR LIABILITY IN CONNECTION WITH THE
WARRANTED INVENTORY OR ANY PART THEREOF. SELLER DOES NOT WARRANT THE FITNESS OF
SUCH INVENTORY OR ANY PART THEREOF FOR ANY SPECIFIC PURPOSE OR THE
MERCHANTABILITY THEREOF.
3.10 INTELLECTUAL PROPERTY. Except for shrink wrap software, the
intellectual property included in the Retained Assets and other software which
is generally commercially available, the Company does not own or license any
patents, patent applications, proprietary designs, copyrights, trade names,
servicemarks, trademarks and trademark applications which are primarily or
exclusively used in the Business and are not included in the Intellectual
Property. Except as set forth in Section 2.2(m), the trade names, servicemarks,
assumed names, trademarks and trademark applications set forth on Schedule
2.1(f) are the only trade names, servicemarks, assumed names, trademarks and
trademark applications currently used primarily or exclusively in the Business.
The use of the Intellectual Property by the Company does not require the consent
of any other Person. The Intellectual Property is either owned by the Company or
the Company has a legal right to use it, and the Intellectual Property may be
transferred by the Company to Buyer, free and clear of any Liens and without the
consent of any other Person. (a) No other Person has an interest in or a right
or license to use, or the right to license any other Person to use, any of the
Intellectual Property owned by the Company, (b) there are no claims or demands
of any other Person pertaining thereto which have been received by the Company
and no proceedings have been instituted, or are pending or, to the Knowledge of
the Company, threatened, which challenge the Company's rights in respect
thereof, (c) to the Knowledge of the Company, none of the Intellectual Property
owned by the Company is being infringed by another Person or is subject to any
outstanding order, decree, ruling, charge, injunction, judgment or stipulation,
and (d) no Claim is pending or, to the Knowledge of the Company, is threatened
charging either the Company or the Business with infringement of any adversely
held proprietary or intellectual property right.
29
3.11 TRADE SECRETS AND CUSTOMER LISTS. To the Knowledge of the Company, the
Company has the right to use, free and clear of any Claims or rights of any
other Person, all trade secrets and customer lists required for the development
or marketing of all services and products being sold by it, and all of such
trade secrets and customer lists which are owned by the Company and are
primarily or exclusively used by the Business shall be transferred to the Buyer
as part of the Purchased Assets. Except for payment in respect of the Contracts,
there are no payments required to be made by the Company for the use of the
trade secrets or customer lists included in the Purchased Assets. To the
Knowledge of the Company, the Company is not in any way making an unlawful or
wrongful use of any confidential information or trade secrets of any other
Person. Except as set forth in the Contracts, Buyer shall not be subject to any
non-competition or confidentiality agreement with any Person as a result of the
purchase of the Purchased Assets hereunder. Schedule 3.11 includes a list of the
top ten customers by revenue of the Business for the fiscal year ending January
1, 2000.
3.12 CONTRACTS. Except as set forth on SCHEDULES 3.12 OR 3.16, the Company
is not a party to or subject to any of the following agreements in connection
with the Business where any one would constitute either a Purchased Asset or an
Assumed Liability:
(a) bottling contracts, co-packing contracts, barter contracts,
manufacturing contracts, production contracts, franchise
contracts;
(b) except as required by law, any plan or contract regarding or
providing for bonuses, pensions, options, stock purchases,
deferred compensation, severance benefits, retirement payments,
profit sharing, stock appreciation, collective bargaining or the
like, or any contract or agreement with any labor union;
(c) any employment or consulting contract or contract for personal
services not terminable upon no more than thirty (30) days notice
by the Company without penalty to the Company;
(d) any contract or agreement for the purchase of any commodity,
product, material, supplies, equipment or other personal
property, or for the receipt of any service, other than purchase
orders entered into in the ordinary course of business for less
than $50,000 each and which in the aggregate do not exceed
$250,000;
(e) any contract or agreement for the purchase or lease of any fixed
asset, whether or not such purchase or lease is in the ordinary
course of business, for a price in excess of $50,000;
(f) any contract or agreement with any sales agent or distributor of
products of the Business not terminable upon no more than thirty
(30) days notice by the Company without penalty to the Company;
(g) any contract or agreement concerning a partnership or joint
venture with one or more Persons;
30
(h) any confidentiality agreement, non-competition agreement or other
contract or agreement containing covenants limiting the Company's
freedom to compete in any line of business or in any location or
with any Person;
(i) any license agreement (as licensor or licensee) involving
payments in excess of $50,000 per annum;
(j) any contract or agreement with any present or former officer,
director, consultant, agent or shareholder of the Company or with
any Affiliate of the Company;
(k) any loan agreement, indenture, note, bond, debenture or any other
document or agreement evidencing a capitalized lease obligation
or Indebtedness to any Person;
(l) any agreement of guaranty, indemnification or other similar
commitment with respect to the obligations or liabilities of any
other Person;
(m) any agreement not otherwise set forth in this Section 3.12 under
which the consequences of a default or termination would be
reasonably likely to have a Material Adverse Effect; or
(n) any other agreement or contract (or group of related agreements
or contracts) the performance of which involves consideration
paid or received by the Company in a consecutive twelve month
period in excess of $50,000 individually or $250,000 in the
aggregate.
True and complete copies of all contracts, commitments, plans, leases,
licenses and agreements listed on Schedule 3.12 or 3.16, as in effect on the
date hereof, have been provided or otherwise made available to Buyer prior to
the execution of this Agreement. Neither the Company, nor, to the Knowledge of
the Company, any other Person, is in material default under any such contract,
commitment, plan, lease, license or agreement described in Schedule 3.12 (a
"Default" being defined for purposes hereof as an actual default or event of
default or the existence of any fact or circumstance which would, upon receipt
of notice or passage of time, constitute a default).
3.13 CUSTOMERS; SUPPLIERS. To the Knowledge of the Company, the
relationships of the Company with the customers and suppliers of the Business
are normal commercial working relationships. To the Knowledge of the Company,
none of the customers or suppliers intends to cancel or otherwise adversely
modify its relationship with the Company or to decrease materially or limit its
usage or purchase of the services or products of the Company where any such
action would reasonably be likely to have a Material Adverse Effect; provided,
however, the parties acknowledge and agree that no inquiry has been made
regarding the intent of any customer with respect to such customer's business
plans whether with respect to doing business with Buyer or otherwise. To the
Knowledge of the Company, no customer of the Company has notified the Company
that it intends to stop or materially decrease its purchases of products of the
Business
31
from Buyer or any of its Affiliates subsequent to the Closing; provided,
however, that no inquiry has been made of any customer of the Company regarding
any of the matters referred to in this sentence.
3.14 COMPLIANCE WITH LAWS.
(a) The Company has all licenses, permits, franchises, orders,
approvals, accreditations, written waivers and other authorizations as are
necessary in order to enable it to own and conduct the Business as currently
conducted, except where the failure to have such licenses, permits, franchises,
orders, approvals, accreditations, written waivers and other authorizations
would not reasonably be likely to have a Material Adverse Effect.
(b) The Company has conducted and is conducting the Business in
material compliance with applicable federal, state, local and foreign laws,
statutes, ordinances, regulations, rules or orders or other requirements of any
governmental, regulatory or administrative agency or authority or court or other
tribunal relating to it (including, but not limited to, any law, statute,
ordinance, regulation, rule, order or requirement relating to securities,
properties, business, products, advertising, sales or employment practices,
immigration, terms and conditions of employment, wages and hours, safety,
occupational safety, health or welfare conditions relating to premises occupied,
product safety and liability or civil rights, but excluding those laws which are
the subject of the representations and warranties set forth in Sections 3.15,
3.16 and 3.17 hereof). The Company is not now charged with, and, to the
Knowledge of the Company, is not now under investigation with respect to, any
material violation of any applicable law, statute, ordinance, regulation, rule,
order or requirement relating to any of the foregoing in connection with the
Business, the Purchased Assets or the Concordville Beverage Manufacturing Plant,
and the Company has filed all reports required to be filed with any
governmental, regulatory or administrative agency or authority in connection
with the Business, the Purchased Assets or the Concordville Beverage
Manufacturing Plant.
3.15 TAXES. The Company has filed all material Tax Returns that it was
required to file relating to the Business. All material Taxes owed by the
Company with respect to the Business, the Purchased Assets and the Concordville
Beverage Manufacturing Plant have been paid (whether or not shown on any Tax
Return). No Claim has been received in writing from a taxing authority in a
jurisdiction where the Company does not file Tax Returns with respect to the
Business, the Purchased Assets or the Concordville Beverage Manufacturing Plant
that it is or may be subject to the imposition of any Tax by that jurisdiction.
The Company has not received written notice of any dispute or Claim concerning
any liability for Taxes of the Company with respect to the Business, the
Purchased Assets or the Concordville Beverage Manufacturing Plant. The Company
is not a party to any pending action or proceeding, nor, to the Knowledge of the
Company, is any action or proceeding threatened by any governmental authority
for the assessment or collection of any Taxes relating to the Business, the
Purchased Assets or the Concordville Beverage Manufacturing Plant.
3.16 EMPLOYEE BENEFIT PLANS. SCHEDULE 3.16 attached hereto lists and
identifies each "Employee Pension Benefit Plan" (as such term is defined in
Section 3(2) of ERISA) which is not a Multiemployer Plan, "Multiemployer Plan"
(as such term is defined in Section 3(37) of
32
4001(a)(3) of ERISA), "Employee Welfare Benefit Plan" (as such term is defined
in Section 3(3) of ERISA) and stock purchase, option, or bonus plan, deferred
compensation, severance pay, incentive, merit or performance bonus, vacation,
sick pay or leave, fringe benefit plan, policy, or arrangement, or payroll
practice, which is maintained or contributed to by the Company or any ERISA
Affiliate, or under which the Company or any ERISA Affiliate has any liability
or contingent liability and in which employees who are employed in the operation
of the Business at the Concordville Beverage Manufacturing Plant participate
(individually a "Plan" and collectively, the "Plans").
Each Plan which is intended to be "qualified" under Section 401(a) of the
Code and which Buyer has expressly agreed herein to assume, in whole or in part
(including a spinoff and subsequent merger of a portion of a Plan), (i) has
received a favorable determination letter from the Internal Revenue Service and
no event has occurred and no condition exists which could reasonably be expected
to result in the revocation of any such determination, and (ii) is and has been
at all times operated and maintained in material compliance with applicable
provisions of the Code and ERISA. No Plan has incurred any "accumulated funding
deficiency" (as described in Section 302 of ERISA or Section 412 of the Code),
whether or not waived, nor has there been any failure to make by its due date a
required installment under Section 302(e) of ERISA or Section 412(m) of the Code
with respect to any Plan. All contributions required to be made to any Plan as
of the Closing Date has been, or will be, timely made.
Each Plan complies and has been administered in form and operation with all
material requirements of law and regulation applicable thereto. To the Knowledge
of the Company, there are no actions, suits, or claims (other than routine
claims for benefits made in the ordinary course of plan administration for which
plan administrative review procedures have not been exhausted) pending or
threatened that would have a material impact on the ability of the Plans to
provide the benefits provided for thereunder, and no facts exist which could
give rise to any such action, suit, or claim.
None of the Potential Transferred Employees (as hereinafter defined) is
entitled to any benefits beyond their retirement or other termination of
employment other than (i) coverage mandated by applicable law, (ii) death or
retirement benefits under a Plan, or (iii) benefits, the full cost of which is
required to be borne by the Potential Transferred Employee seeking such
benefits. For purposes of this Agreement, the term "Potential Transferred
Employee" means each employee whose employment with the Company is anticipated,
as a result of the consummation of this Agreement, as being terminated and who
is anticipated to become, as of the Closing Date, an employee of Buyer, and the
term "Transferred Employee" means each Potential Transferred Employee who in
fact becomes an employee of Buyer.
(a) With respect to each Plan, no liability under Title IV or ERISA
has been incurred since the effective date of ERISA that has not
been satisfied in full, and no condition exists that presents a
risk of incurring a liability under Title IV, other than
liability for PBGC premiums which have been paid when due.
33
(b) No steps have been taken to terminate any Plan subject to Title
IV of ERISA.
(c) No Plan has been the subject of a "reportable event" (as
described in Section 4043 of ERISA) as to which a notice would be
required to be filed with the PBGC.
(d) With respect to each Plan which is subject to Title IV of ERISA,
neither (i) the present value of accrued benefits under such Plan
(based upon the actuarial assumptions used for funding purposes
in the most recent actuarial report prepared by the Plan's
actuary with respect to such Plan), nor (ii) the "benefit
liabilities" (as described in Section 4001(a)(16) of ERISA) of
such Plan exceeded, as of its last valuation date, the then
current value of the assets of such Plan. All costs of any Plan
subject to Title IV of ERISA have been provided for on the basis
of consistent methods in accordance with sound actuarial
assumptions and practices. Since the last valuation date for each
such Plan, there have been no amendments or changes to such Plans
that would increase the amount of benefits thereunder.
(e) For each Plan which is being assumed by Buyer pursuant to this
Agreement, either in whole or in part (including a spinoff and
subsequent merger of a portion of a Plan), a true and complete
copy of each of the following documents have been delivered to
Buyer: (i) Plan document and all amendments thereto; (ii) most
recent Summary Plan Description (together with each Summary of
Material Modifications required under ERISA); (iii) IRS Form 5500
Annual Report, if required under ERISA, for the two most recent
plan years, together with all schedules, financial statements,
and opinions of independent accountants; (iv) the actuarial
report, if required under ERISA, for the two most recent plan
years; (v) Form PBGC-1, if required under ERISA, for the two most
recent plan years; (vi) if the Plan is funded through a trust or
any third party funding vehicle (including a voluntary employee
benefit association under Section 501(c)(9) of the Code, or a
"multiple employer welfare arrangement" described in Section
3(40) of ERISA), the trust or other funding agreement, all
amendments thereto, and the latest financial statements thereof
for the two most recent plan years; and (vii) the most recent
determination letter received from the Internal Revenue Service
with respect to each Plan that is intended to be qualified under
Section 401 of the Code.
3.17 ENVIRONMENTAL MATTERS. The use and operation by the Company and, to
the Knowledge of the Company, by all past owners and operators, of all
facilities and properties of the Business, including, without limitation, the
Concordville Beverage Manufacturing Plant and the Concordville Warehouse, have
been, and will be on the Closing Date, in compliance in all material respects
with all Environmental Laws, and no Environmental Action has been filed,
34
commenced, or, to the Knowledge of the Company, threatened with or against any
of them alleging any failure so to comply. The Company has received all material
Environmental Permits required to allow it to conduct the Business, such
Environmental Permits are valid and in effect, and the Company is in material
compliance with such Environmental Permits. The Company has not received written
notice from any Person, (i) that in connection with the use and operation of the
Business it has been identified by the United States Environmental Protection
Agency ("EPA") or similar state authority as a potentially responsible party
under CERCLA with respect to a site listed on the "National Priorities List," as
in effect as of the Closing Date, of hazardous waste sites or any similar state
list; (ii) that any Hazardous Materials which the Company has generated,
transported, or disposed of in connection with the Business has been found at
any site at which a Person has conducted, or has ordered that the Company
conduct, a remedial investigation, removal, or other response action pursuant to
any Environmental Law; or (iii) that the Company is or shall be a named party to
any Environmental Action arising out of any Person's incurrence of costs,
expenses, losses, or damages of any kind whatsoever in connection with the
release of Hazardous Materials in connection with the use and operation of the
Business. To the Knowledge of the Company, there are no underground fuel or
other storage tanks located at any of the facilities of the Business. To the
Knowledge of the Company, there have been no Releases in connection with the
Business on, upon, into the vicinity of, or from the real estate or other assets
of the Business, which releases were in violation of Environmental Laws. Without
in any way limiting the generality of the foregoing, there is, to the Knowledge
of the Company, no friable asbestos contained in or forming part of any
building, building component, structure, or office space owned or leased by the
Company and used by the Business; and, to the Knowledge of the Company, no
polychlorinated biphenyls ("PCBs") are used or stored at any property owned or
leased by the Company in connection with the use and operation of the Business.
None of the real property or other assets of the Business, including, without
limitation, the Concordville Beverage Manufacturing Plant and the Concordville
Warehouse, is subject to any applicable environmental clean-up responsibility
law or environmental restrictive transfer law or regulation, solely by virtue of
the transactions set forth herein and contemplated hereby. Notwithstanding the
foregoing, no representation is made under this Section 3.17 with respect to the
▇▇▇▇▇▇▇▇▇ Beverage Manufacturing Plant.
3.18 EMPLOYEES. SCHEDULE 3.18 attached hereto sets forth a list of all
employees of the Business with annual compensation in excess of $50,000,
including each such employee's job title, present salary and duration of
employment period. Schedule 3.18 lists each collective bargaining agreement or
other union contract to which the Company is a party. The Company is in material
compliance with the terms and conditions of the collective bargaining agreement
listed in Schedule 3.18. With respect to the Business, the Company is in
material compliance with applicable federal, state and local laws affecting
labor, employment and employment practices, including terms and conditions of
employment and wages and hours, and there are, and have been during the past
three (3) years, no complaints against the Company pending or, to the Knowledge
of the Company, threatened before the National Labor Relations Board or any
similar state or local agency. There is no pending or, to the Knowledge of the
Company, threatened labor trouble with the employees of the Business and there
has been no such labor trouble during the past three (3) years. Except for the
obligations assumed by Buyer pursuant to Section 5.2(b) and the Assumed
Liabilities, as a result of the transactions contemplated by this
35
Agreement, Buyer will not be liable for any payment by reason of anything done
with respect to the employees of the Business prior to the Closing.
3.19 LITIGATION. (a) There is no Claim pending or, to the Knowledge of the
Company, threatened (or, to the Knowledge of the Company, any facts which would
be reasonably likely to lead to such a Claim) by, against, affecting or
regarding the Business or the Company with respect to the Business, the
Purchased Assets or the Concordville Beverage Manufacturing Plant at law or in
equity, before any federal, state, local or foreign court or any other
governmental or administrative agency or tribunal or any arbitrator or
arbitration panel, and (b) there are no judgments, orders, rulings, charges,
decrees, injunctions, notices of violation or other mandates against the
Business, the Company, the Purchased Assets or the Concordville Beverage
Manufacturing Plant with respect to the Business. None of the matters listed on
Schedule 3.19, either individually or in the aggregate with other matters listed
on such schedule, would reasonably be expected to have a Material Adverse
Effect.
3.20 BROKERS. Neither the Company nor any Person acting on its behalf, has
engaged, retained, or incurred any liability to any broker, investment banker,
finder or agent or has agreed to pay any brokerage fees, commissions, finder's
fees or other fees with respect to the transactions contemplated hereby.
3.21 TRANSACTIONS WITH INTERESTED PERSONS. No officer, supervisory employee
or director of the Company owns directly or indirectly, either individually or
jointly, any material interest in, or serves as an officer or director of, any
customer, competitor or supplier of the Business, or any organization which has
a material contract or arrangement with the Business which is assumed by Buyer
in connection with the transactions contemplated by this Agreement.
3.22 INSURANCE. Each insurance policy to which the Company is a party or a
named insured as to which proceeds could reasonably be expected to be included
in the Purchased Assets pursuant to Section 2.1(h) is valid, binding,
enforceable, and in full force and effect and will continue to be valid,
binding, enforceable and in full force and effect on identical terms immediately
following the consummation of the transactions contemplated by this Agreement.
3.23 DISCLOSURE OF MATERIAL INFORMATION. Each of this Agreement and the
Purchase Documents (including the Schedules and Exhibits hereto and thereto)
does not contain, with respect to the Company or the Business, any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
Buyer hereby represents and warrants to the Company as follows:
4.1 ORGANIZATION AND QUALIFICATION. Buyer is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware, with full power and authority to own, use or lease its properties and
to conduct its business as such properties are owned, used or leased and as such
business is conducted.
36
4.2 AUTHORITY. Buyer has the requisite partnership power and authority to
enter into this Agreement and the other Purchase Documents to which Buyer is a
party and to carry out the transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement and the other Purchase
Documents by Buyer has been duly and validly authorized and approved by all
necessary partnership action on the part of Buyer and this Agreement and the
other Purchase Documents to which Buyer is a party constitute the legal and
binding obligation of Buyer, enforceable against Buyer in accordance with its
terms, except that the enforceability hereof may be subject to bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and that the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding may be brought. Assuming the accuracy of the representations and
warranties of the Company hereunder, the entering into of this Agreement and the
other Purchase Documents to which Buyer is a party by Buyer does not, and the
consummation by Buyer of the transactions contemplated hereby and thereby will
not, violate the provisions of (a) any applicable federal, state, local or
foreign laws, (b) the limited partnership agreement or certificate of limited
partnership of Buyer or (c) any provision of, or result in a default or
acceleration of any obligation under, or result in any change in the rights or
obligations of Buyer under, any mortgage, Lien, lease, agreement, contract,
instrument, order, arbitration award, judgment, or decree to which Buyer is a
party or by which Buyer is bound, or to which any property of Buyer is subject.
4.3 FINANCING. Buyer has the funds necessary to consummate the
transactions contemplated by this Agreement and the other Purchase Documents.
4.4 NO BROKERS. Neither Buyer nor any Person acting on its behalf, has
engaged, retained, or incurred any liability to any broker, investment banker,
finder or agent or has agreed to pay any brokerage fees, commissions, finder's
fees or other fees with respect to the transactions contemplated hereby.
ARTICLE V
COVENANTS
5.1 COVENANTS OF THE COMPANY. The Company shall keep, perform and fully
discharge the following covenants and agreements:
(a) BOOKS AND RECORDS. For a period of six (6) years commencing on
the Closing Date, the Company shall afford to Buyer and its employees, counsel
and other authorized representatives, at Buyer's expense, during normal business
hours and upon reasonable notice (which shall in no event be less than three (3)
business days), (i) complete access, at all reasonable times, to the books and
records of the Business and all information relating to such accounting,
business, financial or tax affairs relating to the Business retained by the
Company, concerning (X) any matter relating to this Agreement or (Y) business of
the Business prior to the Closing and (ii) the reasonable services of the
Company's employees to assist the Company with respect to such matters.
37
(b) CUSTOMER CONTACTS. For a period of thirty (30) days following the
Closing, the Company shall cause ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ to cooperate with Buyer to
introduce any employees, representatives and/or agents of Buyer or any Affiliate
thereof to any current customer or supplier of the Company, as may be reasonably
requested by Buyer, for customer relationship purposes.
(c) CORPORATE NAME. Within ten (10) business days following the
Closing Date, the Company shall change its corporate name to remove the word
"Concord" therefrom.
(d) INSURANCE PROCEEDS. The Company shall use its commercially
reasonable efforts to promptly collect and distribute to Buyer all insurance
proceeds, if any, included among the Purchased Assets and which are payable to
Buyer pursuant to Section 2.1(h) in accordance with the terms and provisions of
such insurance policies.
5.2 COVENANTS OF BUYER AND THE COMPANY. The parties hereto hereby agree to
keep, perform and fully discharge the following covenants and agreements:
(a) WAIVER OF COMPLIANCE WITH THE BULK SALES ACT. In connection with
the transactions contemplated hereby, the parties shall waive compliance with
the provisions of Article 6 of the Uniform Commercial Code - Bulk Transfers and
the Bulk Sales Act and any other applicable United States, state or provincial
bulk sales act or statute ("Bulk Sales Acts").
(b) EMPLOYEES. (i) Buyer agrees to offer employment to all current
employees of the Company on terms which, in the aggregate, are no less favorable
to such employees as the terms of their respective employment by the Company
immediately prior to the Closing Date. As of the Closing Date, or, if later, the
date an employee returns from disability leave, leave related to workers'
compensation or leave of absence, Buyer shall provide all former employees of
the Company who accept employment with Buyer (the "New Employees") with a base
salary which is no less than that provided by the Company to such employees and
the same benefits that are provided by Buyer to similarly situated employees of
Buyer. Buyer shall waive, or cause to be waived, all waiting periods for such
New Employees under all employee welfare and benefit plans, to the extent
permissible thereunder, in which the former employees of the Company are
eligible to participate. Buyer agrees that it will provide vacation and
severance benefits to all New Employees which are the same as those offered to
similarly situated employees of Buyer and in connection therewith give credit to
the total length of service each such New Employee had with the Company;
provided that the severance benefits available to such employees shall include
no less than two weeks of severance for each full year of service for any former
employee of the Company with an aggregate of less than ten years of service with
the Company and Buyer and no less than three weeks of severance for each full
year of service for any former employee of the Company with an aggregate of ten
years of more of service with the Company and Buyer; provided, further, however
that the foregoing shall not be applicable to (A) employees who enter into
written employment agreements with Buyer, (B) employees subject to any
collective bargaining agreement assumed by Buyer or (C) employees who would not
be eligible for severance under Buyer's standard employment policies because of
the reasons for the employee's termination. Subject to the first sentence of
this paragraph (b), Buyer makes
38
no commitment as to the continued employment of the former employees of the
Company subsequent to the Closing Date.
(ii) COBRA. The Company agrees to make continuation coverage
under the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA," and
such continuation coverage being referred to herein as "COBRA coverage")
available to New Employees through its self-insured medical and dental plan as
of the Closing Date on the same basis and terms applicable to terminated
employees of the Company. The Company agrees to accept, and Buyer agrees to
remit to the Company, payments of the premiums for such New Employees from Buyer
as a matter of administrative convenience; provided, however, that Buyer shall
stop making such remittances as of the date the New Employees are able to
participate in Buyer's medical and dental plans or March 1, 2001, whichever
occurs first.
(iii) 401(K) PLAN. Each New Employee's service with the Company
shall be counted both as eligibility service and as vesting service for purposes
of Buyer's 401(k) plan and shall be permitted to enter Buyer's 401(k) plan as
soon as administratively feasible following the Closing Date (or following such
later date as such New Employee's eligibility service satisfies the service
requirements of Buyer's 401(k) plan).
(c) BOOKS AND RECORDS. The Company agrees that it shall preserve and
keep all books and records of the Business which are retained by the Company in
accordance with the terms of this Agreement and all information relating to the
accounting, business, financial and tax affairs of the Business in existence on
the Closing Date or which come into existence after the Closing Date but relate
to the Business prior to the Closing Date for a period of six (6) years
thereafter, or for any longer period (i) as may be required by any federal,
state, local or foreign governmental body or agency, (ii) as may be reasonably
necessary with respect to the prosecution or defense of any audit, suit, action,
litigation or administrative arbitration or other proceeding or investigation
that is then pending or threatened, or (iii) that is equivalent to the period
established by any applicable statute of limitations (or any extension or waiver
thereof) with respect to matters pertaining to taxes; provided, that with
respect to clauses (ii) and (iii), Buyer shall have given written notice to the
Company of any such proceedings and Buyer's need for such books and records in
connection with any such proceedings. The Company agrees to retain such books,
records or other documents for a period which is no shorter than that required
by its normal document retention policies.
Buyer shall afford to the Company and its employees, counsel and other
authorized representatives, at the Company's expense, during normal business
hours and upon reasonable notice (which shall in no event be less than three (3)
business days), (i) complete access, at all reasonable times, to the books and
records of the Business and all information relating to such accounting,
business, financial or tax affairs relating to the Business prior to the Closing
and provided to Buyer in accordance with this Agreement and (ii) the reasonable
services of Buyer's employees to assist the Company with respect to such
matters. The Company hereby agrees that any information provided to the Company
under this Section 5.2(c) shall be treated as confidential and the Company shall
not, and shall cause its officers, directors, employees, agents and
representatives not to disclose, divulge, use or appropriate any such
information for any reason or purpose whatsoever, except as may be required by
law, without the
39
prior written approval of Buyer, and in such instances only to those officers,
directors, employees, representatives and agents of the Company who have been
made aware of this covenant and have agreed to be bound by the terms and
conditions hereof.
(d) MANAGEMENT OF COMPANY ENVIRONMENTAL MATTERS. The Company shall
manage, at its sole cost and expense, any matters and activities relating to any
Environmental Action which are retained by the Company as Retained Liabilities
("Managed Environmental Contamination"). The Company shall provide Buyer with
regular reports on a schedule which permits Buyer to be reasonably apprised of
the ongoing status of any such activities, and shall cooperate with Buyer and
coordinate with Buyer any activities that are to take place on Buyer's
properties in order to avoid or minimize disruption to Buyer's business to the
extent reasonably practicable taking into account technical, cost, timing and
other considerations. Such management shall include, but not be limited to, the
conduct of, and decision-making regarding all studies, investigation,
characterization, monitoring, and removal, remediation or other cleanup of soil,
surface water, groundwater or other media ("environmental response"), provided
that the Company shall, to the extent reasonably practicable, provide Buyer with
at least five (5) business days notice of such activities and consult with Buyer
with respect thereto. If ordered to be performed by a governmental entity
pursuant to an applicable Environmental Law, the Company, at its sole cost and
expense, shall, after consultation with Buyer, and after exhaustion of any
appeals or other legal challenges that the Company may, in good faith, choose to
pursue (and if pursued, prosecute diligently and expeditiously), act diligently
to take all environmental response required to address the Managed Environmental
Contamination, including without limitation selection of remediation standards
and methods of attainment of such standards pursuant to the Pennsylvania Land
Recycling and Environmental Remediation Standards Act, 35 P.S. ▇▇.▇▇.
6026.101-6026.908, or any other applicable law. Placement of commercially
reasonable institutional and engineering controls on the activities and uses of
the Purchased Assets and real estate being transferred pursuant to the Real
Estate Purchase Agreement, shall be allowed as part of an environmental
response, provided that the Company shall make commercially reasonable efforts
to avoid or minimize any disruption to Buyer's business which would be caused by
such action to the extent reasonably practicable taking into account technical,
cost and other considerations. Buyer shall reasonably cooperate with and assist
the Company, at the Company's expense, in the Company's performance of
environmental response activities, including without limitation pursuit of
appeals or legal challenges pursuant to this paragraph, shall grant the Company
and its contractors and consultants access to the Buyer's properties to perform
environmental response, and shall not initiate or encourage any action by any
person, entity or government agency that would trigger or increase the Company's
obligations under this paragraph or otherwise. To the extent the Company expends
monies pursuant to this paragraph, Buyer hereby assigns to Company any and all
claims and rights that Buyer may have against any person, entity or government
agency for the recovery of the monies expended and agrees to reasonably
cooperate with the Company in the event the Company chooses to pursue such
rights or claims.
(e) FURTHER ASSURANCES. From time to time after the date hereof,
without further consideration, the Company will, at its own expense, execute and
deliver such documents to Buyer as Buyer may reasonably request in order more
effectively to vest in Buyer good title to the Purchased Assets and take such
other actions, as reasonably requested by Buyer, as may be
40
necessary to carry out the transactions contemplated hereby and the Company will
assist Buyer in accordance with the terms and conditions of the Administrative
Services Agreement to transition the order entry and accounts receivable
functions to Buyer*s facilities. From time to time after the date hereof,
without further consideration, Buyer will, at its own expense take such actions
as reasonably requested by the Company, as may be necessary to carry out the
transactions contemplated hereby.
(f) VINTAGE LICENSE. Buyer shall cooperate with and assist the
Company, at the Company's expense, in its registration of the trademark VINTAGE
for use in connection with non-carbonated water as set forth in Section 2.2(m)
hereof. If the Company is unable to secure such registration with the United
States Patent & Trademark Office for any reason, Buyer shall grant to the
Company an exclusive, royalty-free right and license to use and to sublicense
others to use the VINTAGE trademark in the promotion, advertising, packing,
bottling, canning, sale and distribution of all forms of non-carbonated waters.
The aforementioned license shall be contained in a trademark license agreement
to be negotiated in good faith between Buyer and the Company, and shall provide
the Company with the economic and practical equivalent of a separate and valid
registration of the VINTAGE trademark for all forms of non-carbonated waters to
the fullest extent permissible under applicable laws.
(g) ACCOUNTS RECEIVABLE. In the event (i) a proceeding under
bankruptcy, reorganization, insolvency or receivership law is filed by or
against any obligor under an Account Receivable, or (ii) an Account Receivable
is not a valid or enforceable obligation, or (iii) an Account Receivable is
subject to customer reductions authorized by the Company in writing, (any of the
foregoing being referred to herein as (the "Assignable Accounts Receivable"),
Buyer shall have the right, during the 90 day period immediately following the
Closing, in its sole discretion, to assign to the Company any of such Assignable
Accounts Receivable for the face value of the Assignable Accounts Receivable
being assigned to the Company, and the Company shall pay such face value to
Buyer. Upon any such assignment, the Company shall have the right, after
consultation with Buyer, to take any actions it deems necessary to collect such
Accounts Receivable, including, without limitation, the filing of a lawsuit
against the debtor under such Accounts Receivable for its own account.
(h) ACCOUNTS PAYABLE. Following the Closing Date, Buyer shall pay
those accounts payable reflected on the Closing Working Capital Statement in
accordance with its regular payable policies and shall not postpone or delay the
payment of such accounts payable except in the ordinary course of business.
(i) CO-PACKING AGREEMENT. Promptly after the Closing Date, Buyer and
the Company shall negotiate in good faith a co-packing agreement to be effective
upon termination of the Co-Packing Agreement reflecting standard commercial
terms to effect the packing by Buyer of certain beverages on behalf of
Affiliates of the Company which had, prior to the termination of the Co-Packing
Agreement, been manufactured by the Company.
(j) ▇▇▇▇▇▇▇▇▇ BEVERAGE MANUFACTURING PLANT. In the event that during
the five year period following the Closing Date, the Company determines to sell
all or
41
substantially all of the equipment located at the ▇▇▇▇▇▇▇▇▇ Beverage
Manufacturing Plant, it shall notify Buyer in writing of its intention to sell
such equipment, and Buyer shall have thirty (30) days from the date of its
receipt of such notice to notify the Company of its desire to purchase such
equipment at which time representatives of the Company and Buyer shall meet to
negotiate the terms and conditions of such sale and the parties shall use
commercially reasonable efforts to consummate such sale in a timely manner. In
the event that the parties are unable to reach agreement in accordance with the
foregoing sentence, the Company shall have the right to sell all or
substantially all of the equipment located at the ▇▇▇▇▇▇▇▇▇ Beverage
Manufacturing Plant to a third party on terms and conditions no less favorable
to the Company than the terms and conditions previously proposed by Buyer and
rejected by the Company; provided, however, that the Company shall not sell such
equipment to (i) any Person for purposes of operating such equipment at the
▇▇▇▇▇▇▇▇▇ Beverage Manufacturing Plant unless such Person agrees in writing not
to use such equipment or facility for purposes of engaging in any capacity,
either directly or indirectly, in the Private Label Carbonated Beverage Business
(as defined in the Non-Competition Agreements) or (ii) any Person for purposes
of engaging, directly or indirectly, in the Private Label Carbonated Beverage
Business in any of the States of New York, Pennsylvania, Maryland or the
District of Columbia.
ARTICLE VI
INDEMNIFICATION
6.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Each and every
representation and warranty set forth in this Agreement shall survive until
March 31, 2002, except with respect to (a) the representations and warranties
set forth in Sections 3.3, 3.8 and 3.9, which shall survive until March 31, 2001
and (b) the first two sentences of Sections 3.2 and 4.2 and the first sentence
of Section 3.6, which shall survive the Closing without limitation. From and
after the applicable period of survival with respect to such respective
representations and warranties of the Company and Buyer, neither of the Company
or any Affiliate of the Company nor Buyer or any Affiliate of Buyer shall have
any liability whatsoever with respect to any such representation or warranty,
except for breaches as to which any party shall have notified the other party
prior to such date and continued to prosecute in good faith, and claims for
fraud. This Section 6.1 shall have no effect upon any other obligation of the
parties hereto, whether to be performed before or after the Closing Date.
6.2 INDEMNIFICATION.
(a) The Company shall indemnify, defend and hold Buyer, and its
officers, directors, consultants, employees, owners, agents and
Affiliates (the "Buyer Group"), harmless from and against any and
all damages, losses, obligations, deficiencies, liabilities,
claims, encumbrances, penalties, costs and expenses, including,
without limitation, reasonable attorneys' fees and costs
(collectively, "Indemnification Losses") which Buyer may suffer
or incur, resulting from or arising out of any of the following:
(i) any breach of a representation or warranty of the Company in
this Agreement, (ii) the nonfulfillment of any of the covenants
of the Company in this Agreement;
42
(iii) fraud on the part of the Company; (iv) any of the Retained
Assets or Retained Liabilities; (v) any Taxes required to be paid
by the Company with respect to the Purchased Assets, the
Concordville Beverage Manufacturing Plant or the Business for or
with respect to any period ending on or before the effective time
of the Closing; (vi) the ▇▇▇▇▇▇▇▇▇ Beverage Manufacturing Plant
(including, without limitation, the closing of such facility) and
the Concordville Beverage Manufacturing Plant (to the extent
arising from acts or failures to act prior to the Closing); (vii)
any third party claims arising from finished goods produced by
the Company prior to the Closing except to the extent that such
claims arise from actions or failures to act of any Person after
the Closing; (viii) failure to comply with the Bulk Sales Laws in
connection with the transactions contemplated by this Agreement;
or (ix) any and all actions, suits, investigations, proceedings,
demands, assessments, audits, judgments and claims arising out of
any of the foregoing; provided, however, that the Buyer Group
shall be entitled to indemnification hereunder with respect to
Indemnification Losses specified in Section 6.2(a)(i) and (ix)
(to the extent of claims arising under clause (i)) when the
aggregate of all such Losses exceeds three hundred seventy five
thousand dollars ($375,000) (the "Threshold") (in which event
Buyer shall be entitled to seek indemnification for any and all
Indemnification Losses irrespective of the amount of any such
Indemnification Loss or Losses). The aggregate liability of the
Company for any Indemnification Loss or Losses incurred under
Section 6.2(a)(i) and (ix) (to the extent arising from clause
(i)) shall not exceed seven million one hundred thousand dollars
($7,100,000) (the "Cap"). Notwithstanding the foregoing, the
Company's liability with respect to any claim for an
Indemnification Loss or Losses arising from any claims based upon
a breach of (A) the representation and warranties set forth in
the first two sentences of Section 3.2, the first sentence of
Section 3.6, or Sections 3.8, 3.9 and 3.21 or (B) Section
6.2(a)(ii) through (ix) (other than to the extent arising from
Section 6.2(a)(i), except as said claim may arise upon a breach
of a representation and warranty set forth in the first two
sentences of Section 3.2, the first sentence of Section 3.6, or
Sections 3.8, 3.9 and 3.21), shall not be subject to either the
Threshold or the Cap; provided that in no event shall the
aggregate liability of the Company pursuant to this Section
6.2(a) exceed the excess of the Purchase Price over any amounts
paid in respect of the Honickman Guaranty.
(b) Buyer shall indemnify, defend and hold the Company, and its
officers, directors, consultants, employees, owners, agents and
Affiliates (the "Company Group"), harmless from and against any
and all Indemnification Losses which the Company may suffer or
incur, resulting from or arising out of any of the following: (i)
any breach of a representation or warranty of Buyer in this
Agreement, (ii) the nonfulfillment of any of the covenants of
Buyer in this Agreement; (iii) fraud on the part of Buyer; (iv)
any of the Purchased Assets (to the extent
43
arising from acts or failures to act of any Person after to the
Closing) or Assumed Liabilities; (v) any Taxes required to be
paid by Buyer with respect to the Purchased Assets, the
Concordville Beverage Manufacturing Plant or the Business for or
with respect to any period beginning on or after the effective
time of the Closing; (vi) any third party claims arising from
finished goods produced by the Company prior to the Closing to
the extent that such claims arise from acts or failures to act of
any Person after the Closing Date, or produced by Buyer after the
Closing Date; (vii) any claim by a governmental entity relating
to the provision of the COBRA services set forth in Section
5.2(b)(ii) or (viii) any and all actions, suits, investigations,
proceedings, demands, assessments, audits, judgments and claims
arising out of any of the foregoing.
(c) For purposes of this Article VI, in the event of a breach of a
representation or warranty (after consideration of all applicable
qualifications, including, without limitation, qualifications as
to materiality or Material Adverse Effect, for purposes of
determining whether there was in fact such a breach), the amount
of Indemnification Losses actually suffered or incurred by the
indemnified party shall not be reduced in consideration of the
materiality of such Indemnification Losses except to the extent
of the limits on Indemnification Losses specifically set forth
herein.
6.3 NOTICE AND OPPORTUNITY TO DEFEND. The party making a claim under this
Article VI is referred to as the "Indemnitee," and the party against whom such
claims are asserted under this Article VI is referred to as the "Indemnifying
Party." Promptly after receipt by the Indemnitee of notice of the assertion of
any Claim, knowledge that a Claim may be asserted or the commencement (or
threatened commencement) of a Claim, including any action, proceeding or
investigation (an "Asserted Liability), the Indemnitee shall promptly notify the
Indemnifying Party; provided, however, that the failure so to notify the
Indemnifying Party will not relieve the Indemnifying Party from any liability it
may have under this Article VI unless such failure so to notify materially
prejudices the Indemnifying Party or results in the loss of substantive rights
or defenses. The notice shall describe the Asserted Liability in such detail as
is reasonably available to Indemnitee, and shall indicate the amount (estimated,
if necessary and to the extent feasible) of the Loss that has been or may be
suffered by the Indemnitee. The Indemnifying Party may elect to compromise or
defend, at its own expense and by its own counsel, any Asserted Liability. If
the Indemnifying Party elects to compromise or defend such Asserted Liability,
it shall within thirty (30) days (or sooner, if the nature of the Asserted
Liability so requires) notify the Indemnitee of its intent to do so, and the
Indemnitee shall cooperate in the compromise of, or defense against, such
Asserted Liability. If the Indemnifying Party elects not to compromise or defend
the Asserted Liability, or fails to notify the Indemnitee of its election as
herein provided, the Indemnitee may pay, compromise or defend such Asserted
Liability at the Indemnifying Party's cost to the extent that the Asserted
Liability is a Claim for which the Indemnifying Party has an obligation to
indemnify the Indemnitee under the terms of this Agreement. Notwithstanding the
foregoing, neither the Indemnifying Party nor the Indemnitee may settle or
compromise any Asserted Liability over the objection of the other and any
proceedings with respect to such Claim subsequent to any such objection by the
Indemnitee shall
44
be subject to the terms of the following paragraph; provided, however, that any
consent to settlement or compromise shall not be unreasonably withheld; and
provided further that the Indemnifying Party shall not enter into any compromise
or settlement if such settlement or compromise would lead to liability or create
any financial or other obligation on the part of the Indemnitee for which the
Indemnitee is not entitled to indemnification hereunder. In any event, the
Indemnitee and the Indemnifying Party may participate, at their own expense, in
the defense of such Asserted Liability. If the Indemnifying Party chooses to
defend any Asserted Liability, the Indemnitee shall make reasonably available to
the Indemnifying Party any books, records or other documents within its control
that are reasonably necessary or appropriate for such defense.
In the event that the Indemnitee objects to a bona fide offer of settlement
or compromise of any Asserted Liability (which must include the unconditional
release of the Indemnitee from all liability with respect to the Claim at
issue), the obligation of the Indemnifying Party to the Indemnitee shall be
equal to the lesser of (i) the amount of the offer or settlement which the
Indemnitee refused to accept plus the indemnifiable costs and expenses of the
Indemnitee prior to the date Indemnifying Party notified the Indemnitee of the
offer of settlement and (ii) the actual out-of-pocket amount the Indemnitee is
obligated to pay as a result of their continuing to pursue such matter and the
Indemnitee may continue to pursue such matter, free of any participation by the
Indemnifying Party, at the sole expense of the Indemnitee.
6.4 ADJUSTMENT FOR INSURANCE AND TAXES. The amount which the Indemnifying
Party is required to pay to, for or on behalf of any Indemnitee pursuant to this
Article VI shall be adjusted (including, without limitation, retroactively) (i)
by any insurance proceeds actually recovered by or on behalf of such Indemnitee
or any Affiliate of such Indemnitee in reduction of the related indemnifiable
loss (the "Indemnifiable Loss") and (ii) to take account of any Tax benefit
received by the Indemnitee or any Affiliate of such Indemnitee as a result of
any Indemnifiable Loss. Amounts required to be paid, as so reduced, are
hereafter sometimes called an "Indemnity Payment." If an Indemnitee or an
Indemnitee's Affiliate shall have received or shall have had paid on its behalf
an Indemnity Payment in respect of an Indemnifiable Loss and shall subsequently
receive insurance proceeds in respect of such Indemnifiable Loss, or receive any
Tax benefit as a result of such Indemnifiable Loss, then the Indemnitee shall
pay to the Indemnifying Party the amount of such insurance proceeds or Tax
benefit or, if lesser, the amount of the Indemnity Payment.
6.5 SUBROGATION. Following indemnification as provided for hereunder, the
Indemnifying Party shall be subrogated to all rights of the Indemnitee with
respect to all third Persons relating to the matter for which indemnification
has been made (except with respect to insurance policies of the Indemnitee).
6.6 NO RIGHT OF SET-OFF. So long as the Promissory Note (Escrow) remains
outstanding in accordance with its terms, Buyer's sole remedy for any
Indemnification Losses incurred under clause (i) and (ix) (to the extent arising
from clause (i)) of Section 6.2(a) shall be a claim pursuant to the Escrow
Agreement. Buyer shall not have the right to set off any indemnification claim
which is made under this Article VI against any amounts owed to the Company,
whether pursuant to the Promissory Note (Balance), the Cott Guaranty, the Cott
Parent Guaranty, an indemnification claim by the Company under this Article VI
or otherwise.
45
6.7 EXCLUSIVE REMEDY; NO CONSEQUENTIAL DAMAGES. The indemnification
provisions of this Article VI shall be the sole and exclusive remedy of the
parties hereto for any breach of the representations and warranties of the
parties set forth herein and the other terms and conditions of this Agreement,
except that each party retains the right to pursue its remedies of specific
performance and injunctive relief. Notwithstanding anything to the contrary in
this Agreement, no party shall be liable to any other party for punitive or
exemplary damages or for lost profits, damage to reputation (or comparable
damages that do not either entail an expense or payment to a third party or
adversely affect the values at which the Buyer reflects assets (other than good
will) or its balance sheet. Except as expressly set forth in the immediately
preceding sentence, the term "Losses" as used herein shall be deemed to invade
all consequential or indirect damages, losses or liabilities.
ARTICLE VII
MISCELLANEOUS
7.1 FEES AND EXPENSES. Each of the parties hereto will pay and discharge
its own expenses and fees in connection with the negotiation of and entry into
this Agreement and the consummation of the transactions contemplated hereby.
7.2 PUBLICITY AND DISCLOSURES. No press release or other public
disclosure, either written or oral, of the transactions contemplated by this
Agreement shall be made by any party without the prior knowledge and written
consent of the Company and Buyer, as the case may be, except as required by law
or the requirements of any stock exchange or securities regulatory authority
7.3 NOTICES. All notices, requests, demands, consents and communications
necessary or required under this Agreement or any other Purchase Document shall
be made in the manner specified, or, if not specified, shall be delivered by
hand (including, delivery by courier service) or sent by registered or certified
mail, return receipt requested to:
if to Buyer:
Concord Beverage LP
c/o Cott Corporation
▇▇▇ ▇▇▇▇▇'▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
Attention: Senior Vice President, General Counsel & Secretary
with a copy to:
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
A Professional Corporation
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
46
if to the Company:
Concord Beverage Company
c/o Pepsi-Cola and National Brand Beverages, Ltd.
▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
with a copy to:
Concord Beverage Company
c/o Pepsi-Cola and National Brand Beverages, Ltd.
▇▇▇▇ ▇.▇. ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
with a copy to:
Wolf, Block, ▇▇▇▇▇▇ and ▇▇▇▇▇-▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
All such notices, requests, demands, consents and other communications
shall be deemed to have been duly given or sent five (5) days following the date
on which mailed, or on the date on which delivered by hand (including delivery
by courier service), as the case may be, and addressed as aforesaid.
7.4 SUCCESSORS AND ASSIGNS. All covenants and agreements set forth in this
Agreement and made by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the successors and assigns of such party, whether or not
so expressed, provided that any assignment of any of a party's obligations
hereunder shall not release such party from such assigned obligations.
7.5 COUNTERPARTS; DESCRIPTIVE HEADINGS; VARIATIONS IN PRONOUNS. This
Agreement may be executed in any number of counterparts and by the different
parties hereto on separate counterparts, each of which when so executed and
delivered shall be an original, but all of which together shall constitute one
and the same instrument, and it shall not be necessary in making proof of this
Agreement to produce or account for more than one such counterpart. The headings
of the sections and paragraphs of this Agreement have been inserted for
convenience of reference only and shall not be deemed to be part of this
Agreement. All pronouns and any variations
47
thereof refer to the masculine, feminine or neuter, singular or plural, as the
identity of the Person or Persons may require.
7.6 SEVERABILITY; ENTIRE AGREEMENT. In the event that any one or more of
the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for any
reason in any jurisdiction, the validity, legality and enforceability of any
such provision in every other respect and of the remaining provisions hereof
shall not be in any way impaired or affected, it being intended that each of the
parties' rights and privileges shall be enforceable to the fullest extent
permitted by law, and any such invalidity, illegality and unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction. To the fullest extent permitted by law, the parties
hereby waive any provision of any law, statute, ordinance, rule or regulation
which might render any provision hereof invalid, illegal or unenforceable. This
Agreement, including the Schedules and Exhibits referred to herein, is complete,
and all promises, representations, understandings, warranties and agreements
with reference to the subject matter hereof, and all inducements to the making
of this Agreement relied upon by any of the parties hereto, have been expressed
herein or in said Schedules or Exhibits. This Agreement may not be amended
except by an instrument in writing signed on behalf of the Company and Buyer.
7.7 ATTORNEYS' FEES. In any action or proceeding brought to enforce any
provision of this Agreement or the other Purchase Documents, or where any
provision hereof or thereof is validly asserted as a defense, the successful
party shall be entitled to recover reasonable attorneys' fees in addition to any
other available remedy.
7.8 COURSE OF DEALING. No course of dealing and no delay on the part of
any party hereto in exercising any right, power, or remedy conferred by this
Agreement shall operate as a waiver thereof or otherwise prejudice such party's
rights, powers and remedies. The failure of any of the parties to this Agreement
to require the performance of a term or obligation under this Agreement or the
waiver by any of the parties to this Agreement of any breach hereunder shall not
prevent subsequent enforcement of such term or obligation or be deemed a waiver
of any subsequent breach hereunder. No single or partial exercise of any rights,
powers or remedies conferred by this Agreement shall preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
7.9 TAX MATTERS. The Company and Buyer agree that all real property
transfer Taxes, sales Taxes, transfer Taxes, stock transfer Taxes, bulk sales
Taxes, documentary stamp Taxes, recording charges and other similar Taxes
resulting from, arising under or in connection with the transfer of the
Purchased Assets and the Concordville Beverage Manufacturing Plant under the
Purchase Documents, whether imposed in accordance with Federal, state or local
law and imposed upon either Buyer, the Company or any of their respective
Affiliates, shall be borne 50% by the Company and 50% by Buyer.
7.10 GOVERNING LAW. THIS AGREEMENT, INCLUDING THE VALIDITY HEREOF AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER, SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA,
WITHOUT GIVING EFFECT TO ANY
48
CHOICE OR CONFLICT OF LAW PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION OF
THE LAWS OF ANY OTHER JURISDICTION.
7.11 WAIVER OF JURY TRIAL. EACH OF BUYER AND THE COMPANY HEREBY EXPRESSLY
WAIVES ITS OR HIS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, ANY OTHER PURCHSE DOCUMENT,
THE CONCORDVILLE BEVERAGE MANUFACTURING PLANT OR THE PURCHASED ASSETS OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT. THE
COMPANY AND BUYER FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED THIS
WAIVER WITH ITS LEGAL COUNSEL; AND THAT EACH VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE AND
MAY ONLY BE MODIFIED IN AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO
THIS AGREEMENT OR ANY OTHER PURCHASE DOCUMENT, AS APPLICABLE. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL (WITHOUT
A JURY) BY THE COURT.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF the parties hereto have executed this Agreement as of
the date first set forth above.
ATTEST: CONCORD BEVERAGE LP
By: CONCORD HOLDING GP INC.
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ III
-------------------------------------- ------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇ III
Title: President
ATTEST: CONCORD BEVERAGE COMPANY
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------------- ------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: V.P & Asst. Secretary