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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): SEPTEMBER 30, 1997
HAWAIIAN NATURAL WATER COMPANY, INC.
(Exact name of registrant as specified in its charter)
HAWAII 0-29280 99-0314848
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
248 Mokauea Street
Honolulu, Hawaii 96819
(Address of principal executive offices)
(808) 832-4550
(Registrant's telephone number, including area code)
N/A
(Former name or address, if changed since last report)
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INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On September 30, 1997, the registrant acquired the bottle making
equipment (the "Equipment") used to manufacture the plastic (PET) bottles
used in its bottling operations. The registrant will continue to
use the Equipment for this purpose. The registrant bottles, markets and
distributes natural water from Hawaii.
The Equipment was previously owned by Bottles Packaging, Inc. ("BPI"), a
California bottle supplier, but was installed at the registrant's bottling
facility on the Big Island of Hawaii. The Equipment became fully operational
in July 1996. The registrant had previously entered into a Blow Molding
Agreement with BPI, pursuant to which BPI had agreed to install and operate
the Equipment on the registrant's behalf, and the registrant had agreed to
purchase all of its requirements for PET plastic bottles from BPI at specified
prices, subject to a minimum purchase requirement of $750,000 per year during
the three year term of the agreement. The registrant failed to meet this
minimum purchase requirement during the first year of the term.
The consideration for the Equipment was an aggregate of $1.2 million
in cash, payable in installments as follows:
(i) $50,000 as a good faith deposit previously paid;
(ii) $325,000, paid at the closing on September 30, 1997 (the
"Closing");
(iii) $330,000, payable in monthly installments of $13,750 during
the two years following the Closing; and
(iv) the balance of $495,000, payable in three annual
installments of $165,000 thereafter, plus interest
on the outstanding balance, at the annual rate of 5%.
In connection with the transfer of the Equipment, the parties entered into a
mutual release with respect to all obligations under the Blow Molding
Agreement, other than payment obligations of the registrant with respect to
invoices outstanding as of the Closing. The registrant was released from any
obligation arising out of its failure to meet the minimum purchase requirement
during the first year of the Blow Molding Agreement as described above.
The consideration and manner of payment were determined by means of
arms' length negotiation between the registrant's executive officers and
BPI. Nathan Keller, a director of the registrant, is the Chief Financial
Officer of BPI. The acquisition of the Equipment was approved by a
majority of the Board of Directors of the registrant, excluding Mr.
Keller.
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The $375,000 in aggregate payments made at or prior to the Closing
were drawn from the registrant's cash on hand. This cash was derived
from the proceeds of the registrant's initial public offering consummated
in May 1997. The registrant expects to make the installment payments due
during the next five years either out of its cash reserves or out of
earnings, if available. These installments are evidenced by a promissory
note, which is secured by a first priority security interest in the
Equipment.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits
Exhibit
Number Description
------- -----------
10.1 Asset Purchase Agreement between the Registrant and
Bottles Packaging, Inc. ("BPI")
10.2 Bill of Sale between the Registrant and BPI evidencing the
transfer of assets pursuant to the Asset Purchase
Agreement
10.3 Promissory Note evidencing an aggregate of $825,000 in
indebtedness of the registrant to BPI in connection with
the Asset Purchase Agreement
10.4 Security Agreement between the registrant and BPI securing
the obligations of the registrant to BPI under the
Promissory Note
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
HAWAIIAN NATURAL WATER COMPANY, INC.
(Registrant)
October 3, 1997 By: /s/ MARCUS BENDER
-----------------------------------
Marcus Bender
President & Chief Executive Officer
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EXHIBIT INDEX
Exhibit
Number Description
------ -----------
10.1 Asset Purchase Agreement between the Registrant and
Bottles Packaging, Inc. ("BPI")
10.2 Bill of Sale between the Registrant and BPI evidencing the
transfer of assets pursuant to the Asset Purchase
Agreement
10.3 Promissory Note evidencing an aggregate of $825,000 in
indebtedness of the registrant to BPI in connection with
the Asset Purchase Agreement
10.4 Security Agreement between the registrant and BPI securing
the obligations of the registrant to BPI under the
Promissory Note
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ASSET PURCHASE AGREEMENT
THIS IS AN ASSET PURCHASE AGREEMENT dated as of September 30, 1997 (the
"Agreement") between Bottles Packaging, Inc., a California corporation, with its
corporate headquarters at 10625 Ellis Avenue, Unit "A," Fountain Valley,
California 92708 ("Seller") and Hawaiian Natural Water Company, Inc., a Hawaii
corporation, with its corporate headquarters at 248 Mokauea Street, Honolulu,
Hawaii 96819 ("Buyer").
RECITALS
WHEREAS, Seller owns and operates as a division that certain water
bottling blow molding system manufactured by Gerosa 3 S.R.L. Kegging, Bottling
and Packaging Systems ("Gerosa System") that is currently physically situated at
16-305 Volcano Road, Keaau, Hawaii 96749 together with related tangible and
intangible assets (collectively, the "Division Assets").
WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase
from Seller the Division Assets.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises contained
herein and other consideration, the value, receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows.
1. SALE AND PURCHASE OF ASSETS.
Subject to the terms and conditions of this Agreement, Seller
will sell, convey, transfer, assign and deliver to Buyer, and Buyer will
purchase from Seller, at the Closing (defined in Section 5) for the Purchase
Price (defined in Section 3) all right, title and interest of Seller in and to
the Division Assets, more particularly described as all machinery and equipment
owned by or leased to Seller which is used in connection with the operation of
Gerosa System and which is described in Exhibit "A" (the "Machinery").
2. NO ASSUMPTION OF LIABILITIES. Buyer is purchasing only the
Division Assets and will not and does not expressly or otherwise assume under
this Agreement or by reason of any transactions contemplated hereby, any debts,
liabilities (contingent or otherwise), or obligations of Seller whether related
to Gerosa System or not.
3. PURCHASE PRICE.
The purchase price for the Division Assets ("Purchase Price")
shall be One Million Two Hundred Thousand and No/100 dollars ($1,200,000.00)
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4. TERMS OF PAYMENT.
(a) INITIAL GOOD FAITH DEPOSIT. Buyer has previously deposited
with Seller the sum of $50,000.00 as an initial good faith deposit, the receipt
of which is hereby acknowledged by Seller.
(b) DOWN PAYMENT. $325,000.00 payable at Closing.
(c) SELLER FINANCING. $825,000.00 payable over a five (5) year
period with no interest to accrue during the first two years and with a simple
interest to accrue at a rate of five percent (5%) per annum during the last
three years of this five-year period, with no prepayment penalty, as follows:
(i) during the first two years after the Closing, principal
will be paid in 24 equal monthly installments of $13,750 on the first day
of each month, with no interest, commencing with the first day of the first
calendar month after Closing;
(ii) during the subsequent three years, interest and
principal will be paid together on the first business day of October of
each calendar year, beginning with the first business day of October of the
year 2000, in the principal amount of $165,000, plus a payment of simple
interest accrued at a rate of .417% per month on the then outstanding
unpaid principal balance.
5. CLOSING.
Subject to the fulfillment of the conditions precedent
specified in Section 10 herein, the purchase and sale of the Division Assets
shall be consummated at a closing (the "Closing") to be held at 11:59 p.m.,
Hawaii Standard Time, at the offices of Tam, O'Connor & Henderson on
September 30, 1997 or at such later date or at such other time as Seller and
Buyer shall mutually agree after the satisfaction or waiver of conditions
precedent specified in Section 10 of this Agreement (such date and time being
referred to as the "Closing Date").
6. DELIVERIES OF SELLER.
At the Closing, Seller shall deliver to Buyer in form reasonably
satisfactory to Buyer, the following:
(a) a Bill of Sale substantially in the form of Exhibit "C"
attached hereto, covering the Division Assets, as necessary or desirable, to
transfer, assign, and convey to Buyer, as of the Closing Date, good and
marketable title to the Division Assets, free and clear of all liens, claims,
encumbrances, and other covenants and restrictions, except as provided in that
certain Security Agreement dated September 26, 1997 (the "Security Agreement"),
executed by Buyer and Seller and attached as Exhibit "D" hereto.
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(b) a written warranty ("Warranty"), covering the Division
Assets, executed by Seller and attached hereto.
(c) a credit memo to offset Seller's invoice F7-3 for
$331,681.86 issued under that certain Blow Molding Agreement dated November 28,
1995, by and between Seller and Buyer (the "Blow Molding Agreement").
7. DELIVERIES OF BUYER.
At the Closing, Buyer shall deliver to Seller in form reasonably
satisfactory to Seller, the following:
(a) $325,000.00, in the form of a cashier's check or wire
transfer;
(b) a fully executed promissory note between Buyer and Seller
dated September 30, 1997 ("Promissory Note"), attached as Exhibit "B" hereto;
(c) a Security Agreement and related UCC-1 Financing Statement,
each fully executed by Buyer; and
(d) a cashier's check or wire transfer for the amount equal to
the amount paid by Seller to Seller's suppliers for Seller's then remaining
inventory of raw materials, such raw materials being usable preforms for the
manufacture of the PET bottles.
8. REPRESENTATIONS AND WARRANTIES OF SELLER.
As an inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated herein, Seller hereby represents and
warrants as follows as of the Closing.
(a) AUTHORIZATION AND APPROVAL. Each document to which Seller is
a party herein constitutes the legal, valid, and binding obligation of Seller,
enforceable in accordance with its terms. Each document to which Seller is a
party herein has been duly and validly authorized by Seller. No further
approvals or consents of any third party is required in connection with the
execution and delivery by Seller of this Agreement, any other document to which
Seller is a party, or the consummation by Seller of the transactions
contemplated by any of the documents.
(b) NO VIOLATION. Neither the execution and delivery of any of
the documents to which Seller is a party herein, nor the consummation of the
transactions required of it under any of the documents required herein will (i)
violate any provision of the Articles of Incorporation or the Bylaws of Seller,
(ii) violate or give rise to any right of termination, cancellation, or
acceleration under any of the terms, conditions, or provisions of any lease,
license, contract, agreement, mortgage, deed of trust or other instrument or
document to which
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Seller is a party or by which the Division Assets may be bound, or (iii) violate
any order, writ, decree, law, statute, rule or regulation of any court or
governmental authority applicable to Seller or the Division Assets.
(c) TITLE TO DIVISION ASSETS. Seller has good, valid, and
marketable title to the Division Assets. The Division Assets are free and clear
of all defects of title or objections, restrictions, claims, liens, charges,
security interests, or other encumbrances of any kind or nature whatsoever. Upon
delivery of the Bill of Sale, and acceptance thereof, Buyer will have good,
valid, and marketable title to the Division Assets, free and clear of any
restriction, claim, lien, charge, encumbrance, or equity whatsoever, except as
provided in the Security Agreement.
(d) OPERATING CONDITION OF DIVISION ASSETS. Gerosa System is in
good operating condition and repair and is structurally sound. The Division
Assets are not in need of maintenance or repairs, except for ordinary, routine
maintenance and repairs which are not material in cost or expenditure of time.
(e) NO BROKER OR FINDER. Seller has not engaged any broker,
finder, or third party to act on behalf of Seller, directly or indirectly, as a
broker or finder in connection with this Agreement or the transactions
contemplated hereby, or has consented to or acquiesced in anyone so acting, and
Seller knows of no claim for compensation from any broker, finder, or third
party for so acting on behalf of Seller or of any basis for such a claim.
(f) ACCURACY OF REPRESENTATIONS. No representation or warranty
made in this Agreement or any other document delivered in connection herewith,
by or on behalf of Seller to Buyer, contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statement
so made, in light of the circumstances under which it was made, not misleading.
9. REPRESENTATIONS AND WARRANTIES OF BUYER.
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated herein, Buyer hereby represents and
warrants as follows as of the Closing.
(a) AUTHORIZATION AND APPROVAL. Each document to which Buyer is
a party herein, specifically including, but in no way limited to, the Promissory
Note and Security Agreement, constitutes the legal, valid, and binding
obligation of Buyer, enforceable in accordance with its terms. Each document to
which Buyer is a party herein, specifically including, but in no way limited to,
the Promissory Note and Security Agreement, has been duly and validly authorized
by Buyer. No further approvals or consents of any third party are required in
connection with the execution and delivery by Buyer of this Agreement, any other
document to which Buyer is a party, or the consummation by Buyer of the
transactions contemplated by any of the documents.
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(b) NO VIOLATION. Neither the execution and delivery of any of
the documents to which Buyer is a party herein, nor the consummation of the
transactions required of it under any of the documents required herein will (i)
violate any provision of the Articles of Incorporation or the Bylaws of Buyer,
(ii) violate or give rise to any right of termination, cancellation, or
acceleration under any of the terms, conditions, or provisions of any lease,
license, contract, agreement, mortgage, deed of trust or other instrument or
document to which Buyer is a party may be bound, or (iii) violate any order,
writ, decree, law, statute, rule, or regulation of any court or governmental
authority applicable to Seller.
(c) NO BROKER OR FINDER. Buyer has not engaged any broker,
finder or third party to act on behalf of Buyer, directly or indirectly, as a
broker or finder in connection with this Agreement or the transactions
contemplated hereby, or has consented to or acquiesced in anyone so acting, and
Buyer knows of no claim for compensation from any broker, finder, or third party
for so acting on behalf of Buyer or of any basis for such a claim.
(d) ACCURACY OF REPRESENTATIONS. No representation or warranty
made in this Agreement or any other document delivered in connection herewith,
by or on behalf of Buyer to Seller, contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statement
so made, in light of the circumstances under which it was made, not misleading.
10. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BUYER.
The obligations of Buyer to enter into or to complete the Closing
hereunder are subject, at the option of Buyer, to the fulfillment prior to or at
the Closing of each of the following conditions, any one or more of which may be
waived by Buyer.
(a) REPAIR OF DIVISION ASSETS. Prior to Closing and at its sole
expense, Seller has retained and employed an authorized representative of the
manufacturer or distributor of the Gerosa System who conducted a detailed,
thorough and complete inspection of the Gerosa System and corrected and repaired
the Gerosa System in order that the Gerosa System is properly operated and
maintained. Within 45 days from the Closing Date, Seller shall prepare a
detailed WRITTEN SUMMARY of the condition of the Gerosa System.
(b) WARRANTY OF DIVISION ASSETS. At its sole expense, Seller
shall provide or will obtain from the manufacturer an unconditional written
warranty to Buyer in connection with the operation of Gerosa System, identical
to the terms and conditions of the original manufacturer's warranty, in favor of
Buyer, and its successors and assigns, the term of which will commence upon the
Closing Date, for a period of one (1) year.
(c) RECOMMENDED SPARE PARTS. At its sole expense, Seller shall
prepare a written summary of recommended spare parts for the Gerosa System it
deems necessary or prudent for Buyer to presently maintain and possess.
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11. SELLER'S INDEMNIFICATION.
Notwithstanding anything herein to the contrary, any claims for
indemnification which may be asserted against Seller arising out of or related
to this Agreement shall be enforceable only against the assets of the Seller,
and Buyer further agrees that any such indemnification claims shall not be
enforceable against any officer, director, shareholder, employee, or agent of
Seller.
Seller shall indemnify and hold harmless Buyer, and its officers,
directors, agents, and employees at all times from and after the date of this
Agreement, against and in respect of the following:
(a) any obligation, action or cause of action, loss, claim,
liability, expense, or other damage incurred, sustained or suffered by Buyer
caused by, resulting from or arising out of any failure of Seller to perform any
covenant in this Agreement or any breach of any representation or warranty made
by Seller in this Agreement or other instrument or certificate delivered
pursuant thereto, including without limitation the Security Agreement;
(b) all the liabilities of Seller or claims of any nature,
whether accrued, absolute, contingent or otherwise, against Seller or the
Division Assets, arising prior to the Closing;
(c) all reasonable costs and expenses (including reasonable
attorneys' fees) incidental to any of the foregoing, as well as reasonable costs
and expenses (including reasonable attorneys' fees) incurred by Buyer enforcing
its rights hereunder; and
(d) all reasonable costs and expenses incurred by Buyer directly
or indirectly resulting from Seller's failure to timely and diligently release
its security interests in the Division Assets after full satisfaction of the
payment obligations contained in the Promissory Note.
12. BUYER'S INDEMNIFICATION.
Notwithstanding anything herein to the contrary, any claims for
indemnification which may be asserted against Buyer arising out of or related to
this Agreement shall be enforceable only against the assets of the Buyer, and
Seller further agrees that any such indemnification claims shall not be
enforceable against any officer, director, shareholder, employee, or agent of
Buyer.
Buyer shall indemnify and hold harmless Seller, and its officers,
directors, agents, and employees at all times from and after the date of this
Agreement, against and in respect of the following:
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(a) any obligation, action or cause of action, loss, claim,
liability, expense, or other damage incurred, sustained or suffered by Seller
caused by, resulting from or arising out of any failure of Buyer to perform any
covenant in this Agreement or any breach of any representation or warranty made
by Buyer in this Agreement or other instrument or certificate delivered pursuant
thereto, including without limitation the Promissory Note and Security
Agreement;
(b) all the liabilities of Buyer or claims of any nature,
whether accrued, absolute, contingent or otherwise, against Buyer or the
Division Assets, arising after the Closing; and
(c) all reasonable costs and expenses (including reasonable
attorneys' fees) incidental to any of the foregoing, as well as reasonable costs
and expenses (including reasonable attorneys' fees) incurred by Seller enforcing
its rights hereunder.
13. TERMINATION.
The obligations of the parties hereto to consummate the purchase
and sale contemplated hereby may be terminated and abandoned at any time before
the Closing Date, without cost, expense, or liability to either party, by
(a) the mutual agreement of Seller and Buyer;
(b) Buyer, if there has been a material breach by Seller of any
of its representations, warranties, or covenants set forth in this Agreement;
(c) Seller, if there has been a material breach by Buyer of any
of its representations, warranties, or covenants set forth in this Agreement;
and
(d) any party, who has not intentionally delayed the Closing, if
Closing has not taken place by November 1, 1997.
14. NOTICES.
Any notice, request or other communication hereunder shall be
given in writing and shall be served either personally delivered, transmitted by
facsimile or delivered by certified or registered mail, postage prepaid and
addressed to the following addresses:
If to Buyer: Mr. Marcus Bender, President
Hawaiian Natural Water Company, Inc.
248 Mokauea Street
Honolulu, Hawaii 96819
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If to Seller: Mr. Nate Keller, CFO
Bottles Packaging Inc.
10625 Ellis Avenue, Unit "A,"
Fountain Valley, California 92708
Notices shall be deemed received upon actual receipt if sent as described above.
15. SURVIVAL OF REPRESENTATION AND WARRANTIES.
The representations and warranties of Seller and Buyer in this
Agreement and in any statement, certificate, warranty, instrument, schedule or
other similar document delivered pursuant to this Agreement shall survive the
Closing until the fifth (5th) anniversary of the Closing Date, except as
otherwise expressly provided herein.
16. ENTIRE AGREEMENT.
This Agreement, including any exhibits or schedules attached
hereto and other documents referred to herein, contains the entire understanding
of the parties hereto in respect of its subject matter. There are no
restrictions, promises, warranties, covenants, or undertakings, other than those
expressly set forth herein and therein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to the subject
matter contained and described herein this Agreement.
17. AMENDMENTS; WAIVER.
This Agreement may not be amended, supplemented, cancelled or
discharged, except by written instrument executed by the parties hereto. No
failure to exercise and no delay in exercising any right, power, or privilege,
or partial exercise of any right, power, or privilege hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any right, power,
or privilege hereunder preclude the exercise of any other right, power, or
privilege hereunder or otherwise. No waiver of any breach of any agreement
hereunder or any other agreement shall be deemed to be a waiver of any preceding
or succeeding breach of the same or any other agreement. No extension of time of
performance of any obligations or other acts hereunder or under any other
agreement shall be deemed to be an extension of the time for performance of any
other obligations or any other acts. The rights and remedies of the parties
under this Agreement, and the exhibits attached hereto, are in addition to all
other rights and remedies, at law or in equity, that the parties may have
against each other.
18. TIME.
Time is of the essence in the performance of the parties'
respective obligations contained herein.
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19. SEVERABILITY.
Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
20. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the benefit of
Seller and Buyer, and their respective successors and assigns.
21. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance
with the internal laws of the State of Hawaii in all respects, including matters
of construction, enforcement, and performance, without giving effect to the
principles of choice-of-laws thereof.
22. COUNTERPARTS: INTEGRATION. EFFECTIVENESS. This Agreement may be
signed in any number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement constitutes the entire agreement and understanding
among the parties hereto and supersedes any and all prior agreements and
understandings, oral or written, relating to the subject matter hereof. This
Agreement shall become effective when executed by each of the parties hereto and
delivered to Seller.
23. SETTLEMENT AND RELEASE OF CLAIMS UNDER BLOW MOLDING AGREEMENT. By
their execution of this Agreement, Seller and Buyer hereby release and discharge
(and agree not to sue or claim against) one another (and such party's respective
successors and assigns), from all liability and responsibility whatsoever,
whether previously incurred, now existing, or hereafter arising, whether known
or unknown, with respect to the terms, requirements, and conditions contained in
the Blow Molding Agreement, PROVIDED, HOWEVER, that nothing contained herein
shall serve as a release or discharge of any claims being herein expressly
reserved that Seller or Buyer may possess against one another under: (a) that
certain Seller's Invoice to Buyer, dated June 17, 1997, in the amount of
$71,186.70, and (b) any and all other of Seller's outstanding invoices to Buyer
in connection with Seller's manufacture and production of bottles pursuant to
the Blow Molding Agreement, which invoices have been provided to Buyer and
remain unpaid by Buyer in whole or part prior to Closing, and which will
continue to be governed by the Blow Molding Agreement after the Closing.
Notwithstanding anything to the contrary contained herein, the release and
discharge contained in this Section 23 are explicitly subject to the Buyer's
continuing compliance with all of Buyer's obligations under the Promissory Note,
subject to Buyer's offset rights under the Warranty.
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24. WAIVER OF THE STATUTE OF LIMITATIONS UNDER BLOW MOLDING
AGREEMENT. Seller and Buyer hereby waive any and all defenses under Hawaii Rules
of Civil Procedure Rule 12, that Seller's or Buyer's cause(s) of action under
the Blow Molding Agreement may be barred by the statute of limitations, and
Seller and Buyer hereby consent to the bringing of a cause of action against it
arising out of or in connection with the Blow Molding Agreement, regardless of
the effects of the Hawaii Rules of Civil Procedure limiting the time period
within which such actions must be commenced. This Section and the waivers
provided herein shall be void and of no legal effect upon the satisfaction of
Buyer's obligations under the Promissory Note.
IN WITNESS WHEREOF, the parties have caused this instrument to be
executed the day and year first above written.
BOTTLES PACKAGING, INC., a California corporation
By: /s/ OLEG G. DIMITRIEV
--------------------------------------
Name: Oleg G. Dimitriev
------------------------------------
Its: President
------------------------------------
"Seller"
STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On this 26th day of September, 1997, before me personally appeared
Oleg G. Dimitriev and ____________________, to me personally known, who being
by me duly sworn, did say that he is the President of BOTTLES PACKAGING INC.,
a California corporation, and that the instrument was signed and sealed in
behalf of the corporation by authority of its Board of Directors, and the
said ____________________ acknowledged the instrument to be the free act and
deed of the corporation.
Illegible
-------------------------------------------
Notary Public, State of California
My commission expires: October 20, 2000
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HAWAIIAN NATURAL WATER COMPANY, INC., a
Hawaii corporation
By: /s/ Marcus Bender
--------------------------------------
Name: Marcus Bender
------------------------------------
Its: President
------------------------------------
"Buyer"
STATE OF HAWAII )
) ss.
CITY AND COUNTY OF HONOLULU )
On this 30th day of September, 1997, before me personally appeared
Marcus Bender, to me personally known, who being by me duly sworn, did say that
he is the President of HAWAIIAN NATURAL WATER COMPANY, INC., a Hawaii
corporation, and the said Marcus Bender acknowledged the instrument to be the
free act and deed of the corporation.
/s/ DARRYL M. TAIRA
------------------------------------------------
Notary Public, State of Hawaii
My commission expires: June 29, 1999
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EXHIBIT "A"
MACHINERY
QUANTITY DESCRIPTION
1 3 cavity blow-molding machine complete with 3 molds for l.5, 1.0
and 0.5 liter bottles
1 Mechanical preform container overturner
1 Bottle ejection device
1 Refrigerator type EGF 18/AE
1 Sterilizing filter PA11-V3A10399 complete with cartridge
1 Coalescent filter PMT11-VV3A14185 complete with cartridge
1 Deodorizing filter PMT11 - V3A10516 complete with cartridge
1 Drier DFR-43 - 268 m/h @ 40 bar
1 1,000 liter vertical tank - 42 bar
1 Cooling tower PMS 6-65
1 1,500 liter vertical tank - 12 bar
1 High pressure reduce R123 L1 1" PI 50 bar PU 5/50 bar
1 Hydraulic, pneumatic and electric installation
1 Electrical distribution switchboard, main lug only, N1 enclosure,
120/208 V, 3 PH
1 Hydraulic pallet jack
1 Electric pallet jack
1 Electrical wiring for equipment, lights, switches and receptacles
1 Simpli-flex modular conveyor system to convey PET water bottles
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LAND COURT REGULAR SYSTEM
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After recordation, return by mail ( ) pickup ( ) to:
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BILL OF SALE
Seller: BOTTLES PACKAGING INC., a California corporation
Buyer: HAWAIIAN NATURAL WATER COMPANY, INC., a Hawaii corporation
Division Assets: Gerosa 3 S.R.L. Kegging Bottling and Packaging System water
bottling blow molding system situated at 16-305 Old Volcano
Road, Keaau, Hawaii 96749
- -----------------------------------------------------------------------------
This Bill of Sale made as of the 30th day of September, 1997, by
and between BOTTLES PACKAGING INC., a California corporation ("Seller"), and
HAWAIIAN NATURAL WATER COMPANY, INC., a Hawaii corporation, the post office
address of which is 248 Mokauea Street, Honolulu, Hawaii 96819 ("Buyer").
W I T N E S S E T H:
THAT, for and in consideration of the sum of ONE MILLION TWO HUNDRED
THOUSAND AND NO/100 DOLLARS ($1,200,000.00) in the form of cash and promissory
note, the receipt of which is hereby acknowledged, Seller does hereby grant,
sell, transfer and deliver to Purchaser all of the assets more specifically
described on Exhibit "A" attached hereto and incorporated herein by reference
(the "Division Assets").
TO HAVE AND TO HOLD the Division Assets and all the right, title,
interest and estate of the Seller in and to the Division Assets, forever,
subject to the Security Agreement of even date herewith between Seller and
Buyer.
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AND in consideration of the premises, Seller does hereby covenant and
agree to and with the Buyer that Seller is the lawful owner of all of the right,
title and interest of the Division Assets; that Seller has good right to sell,
assign and transfer said interest in the same; that the Seller's interests in
the same are free and clear of all liens, charges and encumbrances suffered or
incurred by Seller and other covenants and restrictions; and that Seller will
WARRANT AND DEFEND the same unto the Buyer against the lawful claims and demands
of all persons arising or accruing under the property on or before the date
hereof. Seller's warranty herein shall not abridge or abrogate other existing
warranties given by Seller to Buyer, including, but not limited to, warranties
of title, merchantability, and fitness for a particular purpose, if any.
Seller and Buyer make no representations or warranties whatsoever to
each other, either expressed or implied, with respect to the tax consequences to
the other in connection with the transactions contemplated by this Bill of Sale.
Seller and Buyer understand and agree that Seller and Buyer have each made their
own respective determination concerning the tax consequences to each of them and
Seller and Buyer shall assume all risks in connection therewith.
The provisions of this Bill of Sale shall be binding upon and inure to
the benefit of Seller and Buyer and their respective successors and permitted
assigns.
This Bill of Sale may be executed in any number of counterparts (which
may be signed and transmitted by telecopier facsimile if original counterparts
in recordable form shall
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be mailed concurrently), each of which counterparts shall be deemed to be an
original and all of which taken together shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have caused this instrument to be
executed the day and year first above written.
BOTTLES PACKAGING, INC., a California corporation
By: /s/ OLEG G. DIMITRIEV
--------------------------------------
Name: Oleg G. Dimitriev
------------------------------------
Its: President
------------------------------------
"Seller"
HAWAIIAN NATURAL WATER COMPANY, INC., a Hawaii
corporation
By: /s/ Marcus Bender
---------------------------------------
Name: Marcus Bender
-------------------------------------
Its: President
--------------------------------------
"Buyer"
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STATE OF CALIFORNIA )
) ss.
COUNTY OF LOS ANGELES )
On this 26TH day of September, 1997, before me personally appeared
Oleg G. Dimitriev, to me personally known, who being by me duly sworn, did say
that he is the President of BOTTLES PACKAGING INC., a California corporation,
and that the instrument was signed and sealed in behalf of the corporation by
authority of its Board of Directors, and the said _________________________
acknowledged the instrument to be the free act and deed of the corporation.
/s/ CECILIA PALMER
-------------------------------------------
Notary Public, State of California
My commission expires: May 5, 1999
---------------------
STATE OF HAWAII )
) ss.
CITY AND COUNTY OF HONOLULU )
On this 30th day of September, 1997, before me personally appeared
Marcus Bender, to me personally known, who being by me duly sworn, did say
that he is the President of HAWAIIAN NATURAL WATER COMPANY, INC., a Hawaii
corporation, and the said Marcus Bender acknowledged the instrument to be the
free act and deed of the corporation.
/s/ DARRYL M. TAIRA
-------------------------------------------
Notary Public, State of Hawaii
My commission expires: June 29, 1999
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PROMISSORY NOTE
$825,000.00 September 30, 1997
-----------
Honolulu, Hawaii
FOR VALUE RECEIVED, the undersigned ("Maker") promises to pay to the
order of BOTTLES PACKAGING INC. ("Payee"), a California corporation, at 10625
Ellis Avenue, Unit "A," Fountain Valley, California 92708, or at such other
place or places as it shall designate, the principal sum of EIGHT HUNDRED TWENTY
FIVE THOUSAND AND NO/100 DOLLARS ($825,000.00), with interest as follows:
(c) during the first two years after the Closing, principal will be
paid in 24 equal monthly installments of $13,750 on the first day of each
calendar month, with no interest, commencing with the first day of the first
calendar month after Closing;
(d) during the subsequent three years, interest and principal will be
paid together on the first business day of October of each calendar year,
beginning with the first business day of October of the year 2000, in the
principal amount of $165,000, plus payment of simple interest accrued at a rate
of .417% per month on the then outstanding unpaid principal balance.
Maker may prepay at any time all or any part of the principal amount
of this note without the payment of any penalties or premiums provided that all
accrued unpaid interest is paid at the time of any prepayment of principal.
Maker hereby waives presentment for payment, notice of dishonor,
protest and notice of protest.
IN CASE OF ANY DEFAULT for more than fifteen (15) days in the payment
of any installment of principal or interest which shall hereafter become due
under the foregoing terms, and the continuance of such default after written
notice of default is made, the balance of said principal sum then remaining
unpaid, together with all accrued interest thereon, shall, at the option and
upon the demand of the holder or holders hereof, become immediately due and
payable; and in case steps shall be taken whether by suit or otherwise, to
collect any sum or sums which shall hereafter become due under the foregoing
terms, Maker further promise(s) to pay all costs thereby incurred, including all
reasonable attorneys' fee.
PRINCIPAL AND INTEREST payable only in lawful money of the United
States of America.
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This Note is secured by a Security Agreement of even date herewith
between Maker and Payee and is governed by and shall be construed in accordance
with the laws of the State of Hawaii.
HAWAIIAN NATURAL WATER COMPANY, INC.
By: /s/ Marcus Bender
---------------------------------------------
Name: Marcus Bender
---------------------------------------
Title: President
---------------------------------------
STATE OF HAWAII )
)ss.
CITY AND COUNTY OF HONOLULU )
On this 29th day of August, 1997, before me personally appeared Marcus
Ira Bender, to me personally known, who being by me duly sworn, did say that he
is the President of HAWAIIAN NATURAL WATER COMPANY, INC., a Hawaii corporation,
and that the instrument was signed and sealed in behalf of the corporation by
authority of its Board of Directors, and the said Marcus Ira Bender acknowledged
the instrument to be the free act and deed of the corporation.
/s/ [ILLEGIBLE]
---------------------------------------------
Notary Public, State of Hawaii
My commission expires: March 8, 1999
2
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<PAGE>
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of the 26th day of September, 1997,
by and between HAWAIIAN NATURAL WATER COMPANY, INC., a Hawaii corporation, the
principal place of business and post office address of which is 248 Mokauea
Street, Honolulu, Hawaii 96819, (hereinafter called the "Pledgor"), and
BOTTLES PACKAGING, INC., a California corporation, the principal place of
business and post office address of which is 10625 Ellis Avenue, Unit "A,"
Fountain Valley, California 92708, (hereinafter called the "Secured Party").
W I T N E S S E T H T H A T:
1. PLEDGE OF COLLATERAL. To secure the repayment of: (a) a purchase
money loan made by the Secured Party to Pledgor, in the principal amount of
EIGHT HUNDRED TWENTY FIVE THOUSAND AND NO/100 DOLLARS ($825,000.00), together
with interest thereon, which loan is evidenced by that certain promissory note
dated concurrently herewith executed by the Pledgor, as Maker, and payable to
the Secured Party (the "Note"), the making of which loan will be of benefit to
the Pledgor and (b) all Secured Party expenses as described in Sections
4.2 and 8 hereof (collectively, the "Indebtedness"), the Pledgor hereby
pledges unto the Secured Party, its successors and assigns, and grants to
Secured Party, its successors and assigns, a security interest in, the
Collateral described herein.
2. THE COLLATERAL. The collateral subject to the security interest
hereinabove granted is the following (Sections 2.1 and 2.2 being collectively
referred to as the "Collateral"):
2.1 EQUIPMENT. The Pledgor's equipment described in Exhibit A
attached hereto and incorporated by reference herein and any replacements
thereof (the "Equipment"); and
2.2 SALES AND OTHER PROCEEDS. Any proceeds or
distributions received, whether voluntary or involuntary, from the sale,
exchange, or other disposition of the Equipment, and any and all other proceeds
of any insurance payable to or on account of Pledgor with respect to the
Equipment, and any and all payments made or due and payable to Pledgor in
connection with any confiscation, condemnation, seizure or forfeiture
by any governmental entity (or any person acting under color of
governmental authority).
3. APPLICATION OF CREDIT PROCEEDS. If all or part of the Collateral
is being acquired with the proceeds of the Indebtedness, no part of the
proceeds of the Indebtedness will be used for personal, family or household
purposes. No part of the proceeds of the Indebtedness will be used by the
Pledgor for any purpose inconsistent with any statement given by the Pledgor
to the Secured
<PAGE>
Party with respect to the regulation thereof under Regulation U of the Board of
Governors of the Federal Reserve System.
4. WARRANTIES. The Pledgor warrants to Secured Party upon execution
of this Security Agreement, until the full payment, performance and
satisfaction in full of the Indebtedness, as follows:
4.1 LOCATION OF EQUIPMENT. Pledgor shall keep the
Equipment within the State of Hawaii; provided, however, that Pledgor may
change the location of Equipment so long as (a) Pledgor shall notify Secured
Party of such change by written notice not less than thirty (30) days prior to
the date on which the Equipment is moved to such new location, (b) such new
location is in the United States, and (c) at the time of such written
notification, Pledgor executes and delivers any financing statements necessary
to perfect and continue Secured Party's security interests in the Equipment.
4.2 OTHER ENCUMBRANCES. At the time of execution of this
Security Agreement, no financing statement has been executed by Pledgor showing
any secured party other than the Secured Party and covering any of the
Collateral or any proceeds thereof is on file in any public office, except for
the security interest granted hereby. The Pledgor will keep the Collateral free
from any other security interest or voluntary encumbrance and will assist in the
preparation of and will execute from time to time, alone or with the Secured
Party, such financing statements or other documents and do, make, execute,
file and/or deliver such other acts or instruments as the Secured
Party may reasonably request to establish and maintain the perfection of the
security interests in the Collateral hereby granted and otherwise to protect and
defend the Collateral against all claims, demands, rights and interests of third
parties. At its option the Secured Party may discharge taxes, license fees,
assessments, liens, security interests and other encumbrances and charges of
every kind, to whomsoever assessed or chargeable, at any time levied
or placed on the Collateral or any interest therein and may make any advances
or incur such expenses or otherwise act as may in the Secured Party's reasonable
judgment seem advisable to protect the Secured Party's security hereunder
(notwithstanding the invalidity of any tax, assessment, rate, encumbrance or
charge paid in such behalf by the Secured Party).
4.3 INSURANCE. With respect to the Equipment, Pledgor shall
maintain, in full force and effect, comprehensive general property damage
insurance, naming Pledgor and Secured Party as joint insured payees. In
the event of destruction of the Equipment, such insurance proceeds shall be
utilized by Pledgor to purchase comparable equipment, in Pledgor's reasonable
judgment, with equal or greater productivity capacity than the Equipment, and
Secured Party shall assist and cooperate with Pledgor in endorsing
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any insurance proceeds check(s) to Pledgor's acquisition of such replacement
equipment. Alternatively, Pledgor shall be granted the discretion to apply all
or a portion of the insurance proceeds payable herein to the prepayment of the
then outstanding balance of the Note. In the event of destruction of the
Equipment, Pledgor shall have the right to immediately defer payments of
principal and interest under the Note to Secured Party for the period commencing
upon such destruction and ending upon the earlier of (i) one hundred
eighty (180) days after Pledgor's receipt of insurance proceeds, or (ii) the
installation of replacement equipment. Pledgor shall give to Secured Party
written notice of its intention to defer payments within five (5) days
after the event of destruction. In the event of such deferral, Pledgor
will be obligated to accrue additional simple interest monthly at the rate of
0.8834 on the entire outstanding balance of the Note at the beginning of such
deferral period. It is expressly understood that any such interest resulting
from a deferral will be in addition to the principal and interest repayment
obligations under the Note. The maximum deferral period herein shall not exceed
three hundred sixty (360) days. Beginning with the earlier of (i) one hundred
eighty one (181) days after the Pledgor's receipt of insurance proceeds, or (ii)
the installation of the replacement equipment, Pledgor will resume to pay
principal and interest as follows: The interest and principal under the Note
and additional interest deferred during the deferral period will be amortized
over the remaining repayment period of the Note, and such amortized amounts will
be added in equal amounts to each payment under the Note made by Pledgor to
Secured Party. Such insurance shall be in an amount no less than the lower of
the then outstanding balance of the Note or the replacement value of the
Equipment, and shall contain an agreement by the insurer that the insurance
shall not be canceled without at least ten (10) days prior notice to Secured
Party. All insurance required pursuant to this Subsection shall be effected
under valid and enforceable policies issued by insurance companies authorized to
do business in the State of Hawaii.
INSURANCE NOTICE: THE PLEDGOR IS FREE TO OBTAIN ANY INSURANCE
REQUIRED UNDER THIS SECURITY AGREEMENT FROM ANY INSURANCE COMPANY AUTHORIZED TO
DO BUSINESS IN THE STATE OF HAWAII. THE SECURED PARTY SHALL NOT MAKE THE
GRANTING OF ANY LOAN OR DISBURSEMENT OF ANY FUNDS SECURED BY THIS
SECURITY AGREEMENT CONTINGENT UPON THE PLEDGOR'S OBTAINING OF ANY INSURANCE
FROM AN INSURANCE COMPANY DESIGNATED BY THE SECURED PARTY.
4.4 PRESERVATION OF COLLATERAL. The Pledgor shall do and perform
all acts that may be necessary and appropriate to maintain, preserve and protect
the Collateral.
4.5 COMPLIANCE WITH LAWS. ETC. The Pledgor shall comply with all
laws, regulations, and ordinances, and all policies of insurance, relating to
possession, operation, maintenance and control of the Collateral.
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4.6 CHANGE IN NAME. TRADE NAME. OR FEDERAL
IDENTIFICATION NUMBER. The Pledgor shall not change its corporate name, trade
name or federal identification number, provided, however, that Pledgor make such
changes so long as such amendment occurs by written notice to Secured Party no
less than thirty (30) days prior to the date on which such new name, trade name,
or federal identification number becomes valid, and at the time of such written
notification, Pledgor executes and delivers any financing statements amendments
necessary to continue to perfect Secured Party's security interests in the
Collateral.
4.7 DISPOSITION OF THE COLLATERAL. The Pledgor shall not
surrender or lose possession of (other than to Secured Party), sell, or
otherwise dispose of or transfer any of the Collateral or any right or interest
therein, except to the extent permitted by this Security Agreement. Not
Withstanding any other provision in this Security Agreement to the contrary,
Pledgor shall be entitled to place subordinate liens on the Collateral.
4.8 NOTICE TO SECURED PARTY. Pledgor shall promptly provide
written notice, upon its receipt of the same, to Secured Party of any notice of
default or acceleration of any underlying indebtedness secured by the
Collateral.
5. RECORDS. The Pledgor will keep and maintain at its own cost
and expense, complete files and records concerning the Collateral and all
dealings with regard thereto. Upon the occurrence of an Event of Default (as
defined herein), the Pledgor shall, at its own expense, deliver any such files
and records to the Secured Party at any time at the Secured Party's request.
Upon the occurrence of an Event of Default, the Secured Party or any one
designated by it may at any time inspect the same and make extracts therefrom as
it deems advisable.
6. SECURED PARTY'S RIGHTS AND REMEDIES.
6.1 FURTHER ASSURANCES. Pledgor, upon the reasonable request of
the Secured Party, will execute and deliver such further instruments as may be
necessary and proper to carry out more effectively the purposes of this Security
Agreement and to subject to the lien and security interest hereof any of the
Collateral herein described and any substitutions or replacements thereto.
Pledgor hereby irrevocably makes, constitutes, and appoints Secured Party (and
its officers, employees, and agents) as Pledgor's true and lawful attorney with
power to sign the name of Pledgor on any of the above-referenced instruments
which need to be executed, recorded, or filed, and to do any and all things
necessary in the name of Pledgor, in order to perfect, or continue the
perfection of, Secured Party's security interests in the Collateral, PROVIDED,
HOWEVER, that Secured Party shall only exercise rights under this power of
attorney upon the occurrence of an Event of Default (as hereinafter defined),
and further upon Pledgor's refusal or failure
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to execute any of the above-described or similar documents required herein
after two (2) business days prior written notice from Secured Party.
6.2 EVENT OF DEFAULT. Upon the occurrence of an Event of Default
(as hereinafter defined), the Secured Party shall have the following rights and
remedies:
(a) In the event of any public sale of the Collateral
hereunder, or if any of the Collateral subject hereto may not be publicly
offered or sold by the Secured Party, at any time when the Secured Party shall
determine to exercise its right to sell all or part of the Collateral pursuant
to this Security Agreement, and in the Secured Party's reasonable judgment, the
Secured Party is hereby authorized, after advance written notification to
Pledgor, to sell such of the Collateral as it may determine by public or private
sale, in such manner, method, time, place and terms which are deemed
commercially reasonable under the Hawaii Uniform Commercial Code;
(b) Secured Party may notify any person liable for any
payment with respect to any of the Collateral or require Pledgor to notify such
person to make payment directly to the Secured Party and the Secured Party may
exercise all remedies for the enforcement of payment of any receivable,
including without limitation, the commencement and prosecution of legal
proceedings, which Pledgor could exercise;
(c) Secured Party may assign this Security Agreement
and in such event (i) the assignee shall be entitled, upon notifying the
Pledgor, to payment and performance of all obligations of the Pledgor hereunder,
(ii) the assignee shall be entitled to all of the Secured Party's rights and
remedies hereunder and (iii) the Pledgor will assert against assignee no claims
or defenses it may have against the Secured Party except those arising under the
Note;
(d) The Secured Party may apply the whole or any part of any
payment by the Pledgor or any proceeds constituting the Collateral hereunder
against any of the Indebtedness, PROVIDED, HOWEVER, that any surplus funds after
payment of the Indebtedness and any other allowable expenses or charges under
this Security Agreement shall be promptly returned to Pledgor;
(e) Secured Party may, but shall not be required to, set off
any obligations owing by the Secured Party to the Pledgor against any of the
Indebtedness whether the Indebtedness has matured or not or is absolute or
contingent, without first resorting to the Collateral and without prejudice to
any other rights or remedies of the Secured Party or the security interest in
the Collateral; and
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(f) Secured Party shall have the rights and remedies with
respect to any and all of the Indebtedness and the Collateral provided in this
Security Agreement and the Uniform Commercial Code in force in the State of
Hawaii on the date hereof.
6.3 ACCELERATION. Whenever an Event of Default has occurred or
is continuing and after the running of any applicable cure periods, the whole
amount of the Indebtedness secured hereby shall at the option of the Secured
Party become at once due and payable.
6.4 DEFAULT. The Pledgor shall be in default hereunder if any
one or more of the following events (herein called "Events of Default") shall
happen, that is to say:
(a) if the Pledgor shall default in the payment of any
amount of interest or principal payable under the Note, except as may be
provided under Section 4.3 herein, and the Pledgor shall fail to remedy the same
within any cure periods provided in the Note; or
(b) if the Pledgor shall default in the payment of any cost,
charge or advance under this Security Agreement; or
(c) if the Pledgor shall default in the due observance or
performance of any covenant, condition or agreement contained in this Security
Agreement (other than those described in Subsections 6.4(a) and (b)) and the
Pledgor shall fail to remedy the same (if capable of being remedied) within
thirty (30) days after written notice and demand for cure shall have been given
to the Pledgor by the Secured Party; or
(d) if the Pledgor shall become insolvent, or shall make an
assignment for the benefit of creditors, or shall admit in writing any inability
to pay its debts as they become due, or shall be the subject of a voluntary or
involuntary petition in bankruptcy, or shall be adjudicated a bankrupt or
insolvent, or shall file any petition or answer seeking for itself any
arrangement, composition, adjustment, liquidation, dissolution or similar relief
to which it may be entitled under any present or future statute, law or
regulation, or shall file any answer admitting the material allegations of any
petition filed against it in any such proceedings, or shall seek or consent to
or acquiesce in the appointment of any trustee, receiver or liquidator of all or
a substantial part of its properties or assets, including the Collateral; or
(e) if there shall be any other sale, transfer,
hypothecation, assignment, conveyance, lease or sublease of the Collateral, or
any portion thereof or interest therein, without the secured Party's prior
written consent, except as provided under Section 4.7 of this Security
Agreement; or
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(f) if any material representation or warranty herein shall
be untrue in any substantial respect and the Pledgor shall fail to remedy the
same (if capable of being remedied) within thirty (30) days after written notice
and demand for cure shall have been given to the Pledgor by the Secured Party;
or
(g) if the Collateral or any part thereof shall be seized,
attached, executed, confiscated, levied upon under any legal process or under
claim of legal right, or subject to forfeiture proceedings under state or
federal laws, and the Pledgor shall fail to secure release or discharge of the
Collateral from such seizure within thirty (30) days of such seizure, or if the
Collateral or any part thereof is destroyed, lost or substantially damaged and
the Pledgor shall fail to replace the Collateral within one hundred eighty (180)
days after Pledgor's receipt of insurance proceeds paid as a result of such
destruction, loss or damage; or
(h) if Pledgor fails to pay when due any payment of any
other underlying indebtedness secured by the Collateral, after the running of
any applicable cure periods associated with such indebtedness; or
(i) any event or condition occurs that results in the
acceleration of the maturity of any other underlying indebtedness secured by the
Collateral or permits the holders of such underlying indebtedness to accelerate
the maturity thereof.
6.5 UPON DEFAULT. Whenever an Event of Default under this
Security Agreement shall have occurred and be continuing, the Secured Party
shall have the following rights and remedies in addition to, and not in lieu of,
those stated above:
(a) Secured Party is hereby authorized to cause to be
transferred or registered to its name or to the name of any other person or
corporation as pledgee or trustee or otherwise any of the Collateral and such
transferee may exercise all of the other rights and privileges in connection
with the Collateral to which said transferee may be entitled by virtue of being
the tile holder of record thereof in addition to the rights and privileges
otherwise granted to the Secured Party hereunder, but the Secured Party or said
transferee shall not be obliged to exercise any of said rights or privileges;
(b) Secured Party need not keep the Collateral in its
possession identifiable. Secured Party may, after giving such notice as may be
required by law, if any, sell, transfer, compromise, discharge or extend the
whole or any part of the Collateral;
(c) Secured Party shall have the rights and remedies
provided herein and in the Hawaii Uniform Commercial Code, including the right
to assume active control over the Collateral,
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to deal with the Collateral, and to sell, assign and deliver the whole, or any
part of the Collateral, or any substitutions or additions thereto, at one or
more public or private sales, after advance written notification to Pledgor;
provided, however, the Secured Party and Pledgor shall have the right to
purchase this Collateral in whole or part at any public or private sale;
(d) Upon any sale of the Collateral, the Pledgor or the
Secured Party or its designated agent shall assign and deliver the Collateral to
the purchaser or purchasers and, after deducting all reasonable costs and
expenses of collection, and sale, including reasonable attorney's fees, shall
retain the residue of the proceeds of such collection, sale or sales, to the
Secured Party who after deducting all reasonable costs and expenses incurred by
it as a result of the Pledgor's default, including reasonable attorney's fees,
shall apply the remainder of the residue of the proceeds to the payment of the
Note. Any surplus of the residue of the proceeds of such sale shall be forthwith
returned to the Pledgor, subject to the right of the Secured Party to offset any
such excess against any other Indebtedness, secured or unsecured, which the
Pledgor may at the time owe to the Secured Party. The Pledgor agrees that the
Secured Party may conduct such sale of Collateral hereunder in accordance with
the provisions herein; and
(e) The Pledgor shall be liable for any deficiency between
the proceeds of any Collateral collected or disposed of by the Secured Party and
the unpaid balance of the Indebtedness.
7. PLEDGOR'S RIGHTS AND REMEDIES. At any time, before or after the
occurrence of any Event of Default, the Pledgor shall have the rights and
remedies provided herein and in the Hawaii Uniform Commercial Code. No failure
or delay on the part of the Secured Party exercising any power or right under
this Security Agreement nor any other power, right on default, and no single or
partial exercise of any such power or right shall preclude or be deemed a waiver
or election of any other legal remedy, power or right or further exercise
thereof. The Secured Party, notwithstanding any such failure or delay, shall
have the right thereafter to insist upon the strict performance by the Pledgor
of any and all of the terms and provisions of this Security Agreement to be
performed by the Pledgor, or to declare all Indebtedness secured hereby at once
due and payable because of the occurrence of any Event of Default.
8. SECURED PARTY EXPENSES. All expenses, reasonable attorneys' fees,
collectors' fees, and reasonable legal expenses, which the Secured Party may
incur in determining, protecting, enforcing or exercising its interests, rights
or remedies hereunder or in connection with the Collateral, shall be paid by the
Pledgor to the Secured Party upon demand, shall constitute a portion of the
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Indebtedness and shall bear interest from the date of demand until paid at the
rate of interest then charged under the Note.
9. NOTICES. Whenever notice is required, including notice of any
intended public or private sale or of the time after which any other authorized
disposition of the Collateral is to be made, reasonable notice shall be deemed
to be ten (10) days. All notices, demands or documents which are required or
permitted to be given or served hereunder shall be in writing and sent by first
class, registered or certified mail, postage prepaid, or by hand delivery, or by
facsimile telecopier, addressed as follows:
To Secured Party at:
BOTTLES PACKAGING, INC.
10625 Ellis Avenue, Unit "A"
Fountain Valley, California 92708
Facsimile No. (714) 460-6472
To Pledgor at:
HAWAIIAN NATURAL WATER COMPANY, INC.
248 Mokauea Street
Honolulu, Hawaii 96819
Facsimile No. (808) 832-4559
Any such address may be changed from time to time by serving
notice to all other parties as above provided. Service of such notice or demand
shall be deemed complete on the date of actual delivery or at the expiration of
the fifth (5th) day after the date of mailing, whichever is earlier.
The Pledgor's remedies for the Secured Party's sale or other
disposition of Collateral without required notice shall be limited to those
expressly stated in Section 9-507(1) of the Uniform Commercial Code, aforesaid
(Section 490:9-507(1), Hawaii Revised Statutes).
10. TIME. Time and each of the terms, covenants and conditions hereof
are hereby declared to be of the essence and no indulgence or acceptance by the
Secured Party of delinquent or partial payments constitute a waiver of the
Secured Party's rights or of any provision of this agreement. No waiver of any
existing default shall be deemed to waive any subsequent default.
11. INTEGRATION. This writing is intended by the parties as a final
expression of their agreement and is intended also as a complete and exclusive
statement of the terms of their agreement. No waiver, consent or approval by
the Secured Party or modification or amendment hereof shall be effective unless
in writing signed by the Secured Party.
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12. CAPTIONS AND DESIGNATIONS. The captions of the various sections,
subsections and clauses hereof are for convenience only and shall not control,
limit or otherwise affect the meaning or construction hereof. All collective
designations shall refer to the subjects thereof severally as well as
collectively.
13. PARTIES. This Security Agreement shall inure to the benefit of
BOTTLES PACKAGING, INC., the named "Secured Party," and its successors and
assigns, and inure to the benefit of and shall be binding upon HAWAIIAN NATURAL
WATER COMPANY, INC., the named "Pledgor," and its successors and assigns. The
terms "Secured Party" and "Pledgor" shall include the plural, and shall include
the masculine when the Secured Party or Pledgor, is a male, and shall include
the feminine when the Secured Party or Pledgor is a female, and shall include a
corporation, its successors and assigns, when the Secured Party or Pledgor is a
corporation.
14. FURTHER INSTRUMENTS. The Pledgor upon the reasonable request of
the Secured Party, will execute and deliver such further instruments and do such
further acts as may be necessary and proper to carry out more effectively the
purposes of this Security Agreement and to subject to the lien and security
interest hereof any of the Collateral herein described and any renewals,
additions, substitutions, replacements or betterments thereto.
15. ACKNOWLEDGMENT OF INDEBTEDNESS. Within ten (10) days after
request by the Secured Party in writing, the Pledgor will furnish to the Secured
Party or to any proposed assignee of this Security Agreement a written
statement, duly acknowledged, of the amount due on Indebtedness secured by this
Security Agreement and whether any offsets, counterclaims or defenses exist
against the Indebtedness.
16. RIGHT OF SECURED PARTY TO EXTEND TIME OF PAYMENT, SUBSTITUTE,
RELEASE SECURITY. ETC. Without affecting the liability of any person, including
the Pledgor, for the payment of any Indebtedness secured hereby, or the lien of
this Security Agreement on the Collateral (or the remainder thereof), for the
full amount of any Indebtedness unpaid, the Secured Party may from time to time,
without notice and without affecting or impairing any of its rights under this
Security Agreement: (a) release any person liable for the payment of any of the
Indebtedness; (b) extend the time or otherwise alter the terms of payment of any
of the Indebtedness or accept a renewal note or notes to evidence such an
extension or alteration; (c) accept additional security therefor of any kind,
including (but not limited to) deeds of trust, mortgages and security
agreements; (d) alter, substitute or release any Collateral securing the
Indebtedness; (e) resort for the payment of the Indebtedness secured hereby to
any securities therefor in such order and manner as it may see fit; (f) join in
granting any extension or subordination or other agreement affecting this
Security Agreement or the lien or charge thereof.
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17. LOSS. DESTRUCTION. ETC. OF THE NOTE. The Pledgor will, in the
event that the Note shall be mutilated, destroyed, lost or stolen, deliver to
the Secured Party, in substitution therefor, a new Note containing as the old
Note with a notation thereon of the unpaid principal and accrued unpaid
interest. The Pledgor shall be furnished with satisfactory evidence of the
mutilation, destruction, loss or theft of the Note and also such security or
indemnity as may be reasonably requested by the Pledgor; PROVIDED, HOWEVER, that
if the original Secured Party named herein is then the Secured Party under this
Security Agreement, an unqualified indemnity from the original Secured Party
named herein shall be deemed to be satisfactory security for indemnification.
18. DEFINITIONS. The terms "advances," "costs" and "expenses" shall
include, but shall not be limited to, reasonable attorneys' fees whenever
incurred. The terms "Indebtedness", "loan" and "obligations" shall mean and
include, but shall not be limited to all claims, demands, obligations and
liabilities whatsoever, however arising, whether owing by the Pledgor,
individually or as a partner, or jointly or in common with any others, and
whether absolute or contingent, and whether owing by the Pledgor, as principal
debtor or as accommodation maker or as indorser, liquidated or unliquidated, and
whenever contracted, accrued or payable.
19. GOVERNING LAW. This Security Agreement is governed by and shall
be construed in accordance with the laws of the State of Hawaii. Secured Party
submits to the personal jurisdiction of the courts of the State of Hawaii and
the federal courts of the United States for the District of Hawaii and any
appellate court from any such state or federal court and hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such Hawaii court or to the extent
permitted by law, in such federal court. In addition, each party hereby
irrevocably and unconditionally waives, to the fullest extent permitted by law,
(a) any objection which it may now have or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to this Agreement
or any related matter in any Hawaii state or federal court, (b) the defense of
an inconvenient forum to the maintenance of any suit, action, or proceeding in
any such court, and (c) trial by jury in any such suit, action or proceeding.
If any provision of this Security Agreement is held to be invalid or
unenforceable, such will not affect the validity or enforceability of the other
provisions of this Security Agreement.
20. SEVERABILITY. If any provision of this Security Agreement is held
to be invalid or unenforceable, the validity and enforceability of the other
provisions of this Security Agreement will remain unaffected.
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IN WITNESS WHEREOF, the parties hereto have executed this Security
Agreement effective as of the day and year first above written.
HAWAIIAN NATURAL WATER COMPANY, INC.
By /s/ Marcus Bender
--------------------------------
Its President
Pledgor
BOTTLES PACKAGING, INC.
By Oleg G. Dimitriev
--------------------------------
Its
Secured Party
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STATE OF HAWAII )
) SS.
CITY AND COUNTY OF HONOLULU )
On this 30th day of September, 1997, before me personally appeared
Marcus Bender, to me personally known, who being by me duly sworn, did say
that he is the President of HAWAIIAN NATURAL WATER COMPANY, INC., a Hawaii
corporation, and that the instrument was signed and sealed in behalf of the
corporation by authority of its Board of Directors, and the said Marcus
Bender acknowledged the instrument to be the free act and deed of the
corporation.
/s/ Darryl M. Taira
--------------------------------------------
Notary Public, State of Hawaii
My commission expires: 6-29-99
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STATE OF CALIFORNIA )
) SS.
COUNTY OF ORANGE )
On this_____day of_________________, 1997, before me personally
appeared______________________, to me personally known, who being by me duly
sworn, did say that he is the______________________of BOTTLES PACKAGING, INC., a
California corporation, and that the instrument was signed and sealed in behalf
of the corporation by authority of its Board of Directors, and the said
_________________________ acknowledged the instrument to be the free act and
deed of the corporation.
--------------------------------------------
Notary Public, State of California
My commission expires: ____________________
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EXHIBIT "A"
MACHINERY
QUANTITY DESCRIPTION
1 3 cavity blow-molding machine complete with 3 molds for 1.5, 1.0
and 0.5 liter bottles
1 Mechanical preform container overturner
1 Bottle ejection device
1 Refrigeration type EGF 18/AE
1 Sterilizing filter PA11-V3A10399 complete with cartridge
1 Coalescent filter PMT11-V3A14185 completes with cartridge
1 Deodorizing filter MPT11-V3A10516 complete with cartridge
1 Drier DFR-43 - 268 m/h @ 40 bar
1 1,000 liter vertical tank - 42 bar
1 Cooling tower PMS 6-65
1 1,500 liter vertical tank - 12 bar
1 High pressure R123 L1 1" PI 50 bar PU 5/50 bar
1 Hydraulic and electric installation
1 Electrical distribution switchboard, main lug only, N1 enclosure,
120/208 V, 3 PH
1 Hydraulic pallet jack
1 Electric pallet jack
l Electrical wiring for equipment, lights, switches and receptacles
1 Simpli-flex modular conveyor system to convey PET water bottles
