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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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): January 2, 2000
TRIARC COMPANIES, INC.
(Exact Name of Registrant as Specified in Charter)
DELAWARE 1-2207 38-0471180
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
280 Park Avenue
New York, New York 10017
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212)451-3000
-----------------------------
(Former Name or Former Address, if
Changed Since Last Report)
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Item 5. Other Events.
Acquisition of Snapple Distributors of Long Island, Inc.
On January 2, 2000, Snapple Beverage Corp., a subsidiary of Triarc
Companies, Inc. completed its acquisition of all of the outstanding capital
stock of Snapple Distributors of Long Island, Inc. from the shareholders of Long
Island Snapple for $16.8 million in cash, subject to certain post-closing
adjustments. Snapple also agreed to pay $2.0 million over a 10-year period in
consideration for a 3-year non-compete agreement by the sellers. Long Island
Snapple was the largest non-company owned distributor of Snapple(R) products and
a major distributor of Stewart's(R) products. Long Island Snapple had net sales
of approximately $28 million in 1998.
A copy of the Stock Purchase Agreement and the press release with
respect to the closing of the acquisition are being filed as exhibits hereto.
Acquisition of Airplane
On January 19, 2000, Triarc acquired all of the outstanding membership
interests of 280 Holdings, LLC from Triangle Aircraft Services Corporation, a
corporation owned by the Chairman and Chief Executive Officer and President and
Chief Operating Officer of Triarc, for $27.2 million, consisting of $9.2 million
of cash and the assumption of $18.0 million of debt. In December 1999, 280
Holdings acquired from Triangle Aircraft the airplane that had been leased to
Triarc by Triangle Aircraft. In addition, Triangle Aircraft refunded to Triarc
$1.2 million, representing the unamortized portion of the payment relating to
the airplane that Triarc made to Triangle Aircraft in 1997 in connection with
a five year extension of the lease of the airplane.
A copy of the Purchase Agreement with respect to the closing of the
acquisition is being filed as an exhibit hereto.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
(c) Exhibits
10.1 Stock Purchase Agreement, dated January 2, 2000, by and among
Snapple Beverage Corp. and the shareholders of Snapple
Distributors of Long Island, Inc.
10.2 Purchase Agreement dated January 19, 2000 by and among Triarc
Companies, Inc., Triangle Aircraft Services Corporation,
Nelson Peltz and Peter W. May.
99.1 Press release dated January 4, 2000.
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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 hereunto duly authorized.
TRIARC COMPANIES, INC.
Date: January 24, 2000 By: JOHN L. BARNES, JR.
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John. L. Barnes, Jr.
Executive Vice President
and Chief Financial Officer
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Exhibit Index
Exhibit
No. Description Page No.
10.1 Stock Purchase Agreement, dated
January 2, 2000, by and among Snapple
Beverage Corp. and the shareholders of
Snapple Distributors of Long Island, Inc.
10.2 Purchase Agreement dated January 19, 2000 by
and among Triarc Companies, Inc., Triangle
Aircraft Services Corporation, Nelson Peltz
and Peter W. May.
99.1 Press release dated January 4, 2000.
<PAGE>
EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
by and among
SNAPPLE BEVERAGE CORP.,
and the
SHAREHOLDERS
of
SNAPPLE DISTRIBUTORS OF LONG ISLAND, INC.
for all of the issued and outstanding capital stock of
SNAPPLE DISTRIBUTORS OF LONG ISLAND, INC.
JANUARY 2, 2000
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TABLE OF CONTENTS
Page
ARTICLE I Sale and Purchase of Shares..............................1
1.1 Sale and Purchase of Shares..............................1
1.2 Payment of Purchase Price................................2
1.3 Purchase Price Adjustments...............................2
1.4 Delivery of Shares.......................................6
1.5 Sellers' Representative..................................7
1.6 Cash Exclusion...........................................8
ARTICLE II Closing; Closing Date ...................................8
ARTICLE III Representations and Warranties of the Sellers as to
the Company..............................................8
3.1 Due Incorporation and Authority..........................8
3.2 Subsidiaries and Other Affiliates........................8
3.3 Qualification............................................8
3.4 Outstanding Capital Stock................................9
3.5 Options or Other Rights..................................9
3.6 Charter Documents and Corporate Records..................10
3.7 Financial Statements.....................................10
3.8 No Material Adverse Change...............................11
3.9 Taxes ................................................11
3.10 Compliance with Laws.....................................15
3.11 Permits..................................................15
3.12 No Breach................................................16
3.13 Environmental Matters....................................17
3.14 Claims and Proceedings...................................20
3.15 Contracts................................................21
3.16 Real Estate..............................................23
3.17 Inventory................................................24
3.18 Receivables..............................................24
3.19 Tangible Property........................................25
3.20 Intellectual Property....................................25
3.21 Title to Properties......................................26
3.22 Accounts Payable.........................................26
3.23 Liabilities..............................................27
3.24 Suppliers and Customers..................................27
3.25 Employee Benefit Plans...................................28
3.26 Employee Relations.......................................34
3.27 Insurance................................................34
3.28 Officers, Directors and Employees........................35
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3.29 Year 2000 Compliance.....................................36
3.30 Operations of the Company................................36
3.31 Potential Conflicts of Interest..........................39
3.32 Full Disclosure..........................................39
3.33 Limitation on Representations............................39
ARTICLE IV Representations and Warranties of Each Seller............40
4.1 Title to the Shares......................................40
4.2 Authority to Execute and Perform Agreement...............40
4.3 No Consent, Conflict Etc.................................41
4.4 Retirement of Gilbert and Marilyn Kaplan.................42
ARTICLE V Representations and Warranties of the Buyer..............42
5.1 Due Incorporation and Authority..........................42
5.2 Authority to Execute and Perform Agreement...............42
5.3 No Consents, Conflicts, Etc..............................43
5.4 Full Disclosure..........................................44
5.5 Claims and Proceedings...................................44
5.6 Investment Intent........................................45
5.7 Buyer Claims Against Company.............................45
ARTICLE VI Covenants and Agreements.................................45
6.1 Expenses.................................................45
6.2 Indemnification Against Brokerage Claim..................45
6.3 Permit Transfers.........................................46
6.4 [INTENTIONALLY OMITTED]..................................46
6.5 Tax Covenants............................................46
6.6 Further Assurances.......................................51
6.7 Accounts and Notes Receivable............................51
6.8 Suspension of Operations.................................52
ARTICLE VII Closing Deliveries of the Sellers........................53
7.1 Share Certificates ......................................53
7.2 Certificate of Good Standing.............................53
7.3 Opinion of Counsel to the Sellers........................53
7.4 Escrow Agreement.........................................53
7.5 Releases.................................................53
7.6 Resignations.............................................53
7.7 FIRPTA Affidavit.........................................54
7.8 Release from Bank Debt...................................54
ARTICLE VIII Closing Deliveries of the Buyer..........................54
8.1 Purchase Price...........................................54
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8.2 Officer's Certificate....................................54
8.3 Certificate of Good Standing.............................55
8.4 Escrow Agreement.........................................55
8.5 Opinion of Counsel to the Buyer..........................55
ARTICLE IX Seller Covenants.........................................55
9.1 Seller Acknowledgments...................................55
9.2 Rights and Remedies Upon Breach..........................58
9.3 Severability of Covenants................................59
9.4 Blue-Pencilling..........................................59
9.5 Enforceability in Jurisdictions..........................60
ARTICLE X Survival of Representations and Warranties...............60
10.1 Survival of Representations and Warranties of
the Sellers..............................................60
10.2 Survival of Representations and Warranties of the Buyer..61
ARTICLE XI General Indemnification..................................61
11.1 Obligation of the Sellers to Indemnify...................61
11.2 Obligation of the Buyer to Indemnify.....................62
11.3 Notice and Opportunity to Defend.........................63
11.4 Limitations on Indemnification ..........................66
11.5 Insurance................................................68
ARTICLE XII [INTENTIONALLY OMITTED]..................................69
ARTICLE XIII Miscellaneous............................................69
13.1 Certain Definitions......................................69
13.2 Consent to Jurisdiction and Service of Process;
Waiver of Jury Trial.....................................77
13.3 Notices..................................................79
13.4 Entire Agreement.........................................80
13.5 Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies.................................80
13.6 Governing Law............................................81
13.7 Binding Effect; Assignment...............................81
13.8 Usage ................................................81
13.9 Counterparts.............................................81
13.10 Exhibits and Schedules; Cross References.................82
13.11 Headings.................................................82
13.12 Interpretation...........................................82
13.13 Severability of Provisions...............................83
13.14 No Other Representations.................................83
13.15 No Third Party Rights....................................83
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT, dated January 2, 2000, is made by and
among Snapple Beverage Corp., a Delaware corporation (the "Buyer"), and the
holders listed on Schedule 4.1(a) (each a "Seller" and, collectively, the
"Sellers") of all of the issued and outstanding shares of capital stock of
Snapple Distributors of Long Island, Inc., a New York corporation (the
"Company").
The Sellers are, in the aggregate, the beneficial and record owners of
all of the issued and outstanding shares of the Series A Common Stock, no par
value per share, and Series B Common Stock, par value $.01 per share
(collectively, the "Shares"), of the Company. The Sellers wish to sell to the
Buyer, and the Buyer wishes to purchase from the Sellers, all of the Shares upon
the terms and subject to the conditions of this Agreement.
Certain terms used in this Agreement are defined in Section 13.1.
Accordingly, the parties agree as follows:
ARTICLE I
Sale and Purchase of Shares
1.1 Sale and Purchase of Shares. At the closing provided for in Article
2 (the "Closing"), upon the terms and subject to the conditions of this
Agreement and, with respect to the Buyer, in reliance upon the representations,
warranties and agreements of the Sellers contained herein, and, with respect to
the Sellers, in reliance upon the representations, warranties and agreements of
the Buyer contained herein, the Sellers shall sell to the Buyer, and the Buyer
shall purchase from the Sellers, all of the Shares for an aggregate purchase
price (the "Purchase Price") equal to Sixteen Million Eight Hundred Thousand
Dollars ($16,800,000.00), subject to adjustment as set forth in Section 1.3.
1.2 Payment of Purchase Price. At the Closing, the Purchase Price
shall be paid by the Buyer as follows:
(a) the Buyer shall deliver to the Sellers' Representative a
bank or certified check, payable to the Sellers' Representative, in the amount
of $16,800,000, less amounts deposited by the Buyer into the Escrow Accounts
pursuant to Section 1.2(b), which payment shall be allocated among the Sellers
by the Sellers' Representative, and (b) the Buyer shall deliver to The Bank of
New York (the "Escrow Agent") two (2) bank or certified checks, each payable to
the Escrow Agent and each in the amount of $500,000.00, and each to be deposited
into and held in a separate escrow account (together, the "Escrow Accounts") in
accordance with the terms of an escrow agreement in the form of Exhibit A among
the Buyer, the Escrow Agent and each of the Sellers (the "Escrow Agreement").
1.3 Purchase Price Adjustments.
(a) The Sellers shall cause the accounting firm of Nussbaum
Yates & Wolpow, P.C. ("NY&W") to prepare and deliver to the Buyer within ninety
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2
(90) days following the Closing Date, (i) a statement of working capital of
the Company as of the Closing Date (the "Closing Statement of Working Capital"),
prepared in the manner specified in Schedule 1.3 hereto, together with a
calculation of the amount, if any, payable under subparagraph (b) of this
Section (the "Working Capital Payment Calculation"), and (ii) the balance sheet
of the Company as of December 31, 1999 and the related statements of income,
shareholders' equity and changes in financial position for the year ended
December 31, 1999 (the "Closing Date Financials"), together with a calculation
of the amount, if any, payable under subparagraph (c) of this Section (the
"EBITDA Payment Calculation" and, together with the Working Capital Payment
Calculation, the "Payment Calculations"). Except as otherwise specifically set
forth on Schedule 1.3, the Closing Statement of Working Capital and the Closing
Date Financials shall be prepared, and the EBITDA, as defined in Section 1.3(c),
of the Company for the year ended December 31, 1999 shall be calculated for
purposes of Section 1.3(c) hereof, in accordance with United States generally
accepted accounting principles ("GAAP") consistently applied, utilizing the same
accounting standards, policies and procedures previously applied by the Company
in the preparation of the Annual Financial Statements (as such term is defined
in Section 3.7 hereof); provided, however, that working capital, for purposes of
the Closing Statement of Working Capital, and EBITDA, for purposes of
calculating the EBITDA Payment Calculation, shall be calculated using the items
set forth in Schedule 1.3 hereto. On or about the Closing Date, the Sellers
shall cause the Company to take and complete a physical inventory of the
Company. The Buyer and its representatives shall be permitted to observe such
inventory process. The results of such physical inventory shall be used in the
preparation of the Closing Date Financials and the Closing Statement of Working
Capital. The Company, the Buyer and each Seller shall take any action, and
provide all such books, records and other information, as is reasonably
requested by NY&W in connection with the preparation of the Closing Statement of
Working Capital, the Closing Date Financials and the Payment Calculations. The
Buyer and its accountants shall be entitled to review the work papers,
schedules, memoranda and other documents and procedures used in the preparation
of the Closing Statement of Working Capital, the Payment Calculations and the
Closing Date Financials and shall have the right to perform reasonable
procedures necessary to verify the accuracy thereof and their conformity to the
requirements of this Agreement. In the event that the Buyer shall in good faith
disagree with the Closing Statement of Working Capital or the Closing Date
Financials or either of the Payment Calculations, the Buyer shall, within ten
(10) Business Days of the Buyer's receipt thereof, notify the Sellers'
Representative of such disagreement (such a notice, a "Buyer Calculation
Objection") and the Sellers' Representative and the Buyer shall, during the
forty-five (45) days after delivery to the Sellers' Representative of the Buyer
Calculation Objection, negotiate in good faith to resolve such disagreements.
If, at the end of such 45-day period, no such resolution is reached, such
disagreement shall be resolved within a period of forty-five (45) days
thereafter by a nationally recognized firm of independent public accountants
selected by the Buyer from among the list of independent national accounting
firms set forth on Schedule 1.3(a) hereto (the "Resolution Accountants"). The
Resolution Accountants will make a determination as to each of the items in
dispute. Such determination will be (i) in writing, (ii) furnished to the Buyer
and the Sellers' Representative as promptly as practicable after the items in
dispute have been referred to the Resolution Accountants, (iii) made in
accordance with this Section 1.3(a), and (iv) conclusive and binding on the
parties hereto. In connection with their determination of the disputed items,
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3
the materials prepared by NY&W, the Buyer and the Buyer's accountants in
connection with the Closing Date Financials, the Closing Statement of Working
Capital and the Payment Calculations. The Buyer and the Sellers' Representative
will use their reasonable best efforts to cause the Resolution Accountants to
render their decision as soon as practicable, including, without limitation, by
promptly complying with all reasonable requests by the Resolution Accountants
for information, books, records and similar items. The documented reasonable
fees and expenses of the Resolution Accountants will be borne 50% by the Buyer
and 50% by the Sellers. Neither party will disclose to the Resolution
Accountants, and the Resolution Accountants will not consider for any purpose,
any settlement offer made by either party.
(b) If the amount of Working Capital shown on the Closing
Statement of Working Capital shall be less than $2,000,000, the Sellers shall
pay to the Buyer, as a Purchase Price adjustment, an amount equal to the
difference between such Working Capital amount and $2,000,000(such amount, the
"Working Capital Deficiency"). Subject to Section 1.3(d), such payment shall be
made within five (5) calendar days after the final determination of the Closing
Statement of Working Capital and Working Capital Payment Calculation by wire
transfer of immediately available funds to an account designated in writing by
the Buyer. If the amount of Working Capital shown on the Closing Statement of
Working Capital shall exceed $2,000,000, the Buyer shall pay, or shall cause
Triarc Companies, Inc. to pay, to the Sellers, as a purchase price adjustment,
an amount equal to such excess, up to a maximum amount of $1,000,000. Such
payment shall be made within five (5) calendar days after the final
determination of the Closing Statement of Working Capital and of the Working
Capital Payment Calculation by wire transfer of immediately available funds to
an account designated by the Shareholder's Representative.
(c) If the Closing Date Financials show that the Company's
Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") for
the year ended December 31, 1999 was less than $2,500,000, the Sellers shall,
subject to Section 1.3(d), pay to the Buyer, as a Purchase Price adjustment, an
amount equal to the sum of (i) the difference, up to a maximum of $500,000,
between the Company's EBITDA for 1999 and $2,500,000, and (ii) the product of
(x) 7.20, and (y) the difference, in excess of $500,000, between the Company's
EBITDA for 1999 and $2,500,000 (the sum of (i) and (ii), the "EBITDA
Deficiency"). Such payment shall be made, within five (5) calendar days of the
final determination of the Closing Date Financials and the EBITDA Payment
Calculation, by wire transfer of immediately available funds to an account
designated in writing by the Buyer. The calculation of the Company's EBITDA for
purposes of this paragraph (c) shall be calculated prior to any deduction
therefrom of any amounts paid by the Company to any Seller in the form of
salary, bonus, dividend or other compensation, benefits or distribution and
consistently with the methodology set forth on Schedule 1.3 hereto.
(d) The Buyer and each Seller acknowledge and agree that in
the event that the Sellers are required to make any payment pursuant to Section
1.3(b) and/or Section 1.3(c), the Buyer shall first deduct from the Escrow
Accounts, in accordance with the terms of the Escrow Agreement, the amount
payable by the Sellers for any Working Capital Deficiency and/or EBITDA
Deficiency. In the event that the amounts held in the Escrow Accounts are
insufficient to fully extinguish the liabilities of the Sellers with respect to
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4
any Working Capital Deficiency and/or EBITDA Deficiency, the Buyer shall be
entitled to pursue any other remedy against the Sellers to recover such amounts;
provided, however, that the Buyer agrees that it shall not have the right, at
any time, to offset the amounts it is owed for any Working Capital Deficiency
and/or EBITDA Deficiency against the Covenant Payments it is required to make
pursuant to the terms of Section 9.1(a).
1.4 Delivery of Shares. At the Closing, each Seller shall deliver, or
cause to be delivered, to the Buyer stock certificates representing the number
of Shares set forth opposite such Seller's name on Schedule 4.1(a), collectively
constituting all of the issued and outstanding capital stock of the Company,
duly endorsed in blank or accompanied by stock powers duly executed in blank, in
proper form for transfer.
1.5 Sellers' Representative. Each Seller hereby appoints Marilyn Kaplan
to act as such Seller's attorney-in-fact and representative (the "Sellers'
Representative"), to do any and all things and to execute any and all documents,
including the Escrow Agreement, in such Seller's name, place and stead, in any
way which such Seller could do, if personally present, in connection with this
Agreement and the Escrow Agreement and the transactions contemplated hereby and
thereby ("Contemplated Transactions"), including to accept on such Seller's
behalf any amount payable to such Seller under this Agreement or the Escrow
Agreement, to allocate and distribute among the Sellers any amount payable to
the Sellers hereunder or under the Escrow Agreement, and to amend, cancel or
extend, or waive any of the terms of, this Agreement or the Escrow Agreement.
The Buyer shall be entitled to rely, as being binding upon such Seller, upon any
document or other paper believed by the Buyer to be genuine and correct and to
have been signed by the Sellers' Representative, and the Buyer shall not be
liable to any Seller for any action taken or omitted to be taken by the Buyer in
such reliance. The appointment pursuant hereto of the Sellers' Representative
shall be irrevocable except in the event of her death or physical or mental
disability, in which event the Sellers shall unanimously designate in writing
(such designation not to be unreasonably withheld or delayed) the successor to
Marilyn Kaplan as the Sellers' Representative. The Sellers' Representative shall
have the sole and exclusive right on behalf of the Sellers to take any action or
provide any waiver or amendment pursuant to Section 13.5 or Article 8, 11 or 12.
1.6 Cash Exclusion. Notwithstanding anything to the contrary contained
in this Agreement, the Company shall be permitted to distribute to the Sellers'
Representative all cash of the Company prior to the Closing (other than cash
representing tax withholdings).
ARTICLE II
Closing; Closing Date
The Closing of the sale and purchase of the Shares contemplated hereby
shall take place at the offices of Rubin Baum LLP, counsel to the Buyer, 30
Rockefeller Plaza, New York, New York, simultaneously with the execution hereof.
The time and date upon which the Closing occurs is herein called the "Closing
Date."
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5
ARTICLE III
Representations and Warranties of the Sellers as to the Company
The Sellers, jointly and severally, represent and warrant to the Buyer
as follows:
3.1 Due Incorporation and Authority. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
New York and has all requisite power and authority to own, lease and operate its
properties and to carry on its business as now being conducted.
3.2 Subsidiaries and Other Affiliates. The Company does not directly
or indirectly own any interest in any other person or entity.
3.3 Qualification. The Company is duly qualified or otherwise
authorized as a foreign corporation to transact business, and is in good
standing, in each jurisdiction set forth on Schedule 3.3, which are the only
jurisdictions in which the failure so to qualify or be authorized could
reasonably be expected to have a material adverse effect on the properties,
business, results of operations or financial condition of the Company
(collectively, the "Condition of the Company").
3.4 Outstanding Capital Stock. The Company is authorized to issue two
hundred (200) shares of voting Series A common stock, without par value, and one
thousand (1,000) shares of non-voting Series B common stock, par value $.01 per
share (collectively, the "Common Stock"). Twenty (20) shares of Series A common
stock and one thousand (1,000) shares of Series B common stock are issued and
outstanding. All of the issued and outstanding shares of Common Stock are owned
by the Sellers, in the respective amounts set forth on Schedule 4.1(a), free and
clear of any Liens. All of the issued and outstanding shares of Common Stock are
duly authorized and validly issued, fully paid and, subject to Section 630 of
the New York Business Corporation Law, as amended ("Section 630") nonassessable.
No class of capital stock other than the Common Stock, or any other ownership
interests in the Company, is authorized. The Common Stock is not registered
under any Federal or State securities laws. The Sellers jointly and severally
agree to indemnify, and hold the Buyer harmless from and against, any amounts
not properly accrued in the Closing Date Financials (or in any schedule thereto)
that the Buyer may be required to pay pursuant to Section 630 in respect of any
debts, wages or salaries for services performed on behalf of the Company prior
to the Closing.
3.5 Options or Other Rights. There is no outstanding right,
subscription, warrant, call, unsatisfied preemptive right, option or other
agreement of any kind to purchase or otherwise to receive from the Company or
any Seller any of the outstanding, authorized but unissued, unauthorized or
treasury shares of the capital stock or any other security of the Company, and
there is no outstanding security of any kind of the Company convertible into any
such capital stock.
3.6 Charter Documents and Corporate Records. The Sellers have heretofore
delivered, or have caused the Company to deliver, to the Buyer true and complete
copies of the Articles of Incorporation (certified by the Secretary of State of
New York) and By-laws (certified by the Company's Secretary or an Assistant
Secretary) of the Company as in effect on the date hereof. All of the minute
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6
books and stock books, or comparable records, in the possession or under the
control of the Company or any of the Sellers have heretofore been made available
to the Buyer for its inspection.
3.7 Financial Statements. The balance sheets of the Company as of
December 31, 1996, December 31, 1997 and December 31, 1998 and the related
statements of income and retained earnings, and statement of cash flows, for the
years then ended, including the footnotes thereto, which have been reviewed by
NY&W (the "Annual Financial Statements"), and the unaudited balance sheets of
the Company as of June 30, 1998 and June 30, 1999, and the related statements of
income and retained earnings, statement of cash flows, and general and
administrative expenses for the six-month periods then ended (the "Interim
Financial Statements" and, together with the Annual Financial Statements, the
"Financials") have been delivered to the Buyer. The Financials fairly present in
all material respects the financial position of the Company as at such dates and
the results of operations of the Company for such respective periods, in each
case in accordance with GAAP consistently applied for the periods covered
thereby, subject to normal year-end adjustments and accruals and, in the case of
the Interim Financial Statements, the absence of footnotes. The balance sheet of
the Company as of December 31, 1998 included in the Annual Financial Statements
is sometimes herein called the "Balance Sheet", and December 31, 1998 is
sometimes herein called the "Balance Sheet Date."
3.8 No Material Adverse Change. Since the Balance Sheet Date, there has
been no material adverse change in the Condition of the Company, and the Sellers
do not know of any such change which is threatened, nor has there been any
damage, destruction or loss which has had, or could reasonably be expected to
have, a material adverse effect on the Condition of the Company, whether or not
covered by insurance.
3.9 Taxes.
(a) For purposes of this Agreement, "Taxes" means all federal,
state, county, local, foreign and other taxes of any kind whatsoever (including,
without limitation, income, profits, premium, estimated, excise, sales, use,
occupancy, gross receipts, franchise, ad valorem, value added, severance,
capital, capital stock, production, transfer, license, stamp, environmental,
withholding, employment, unemployment compensation, payroll related, property,
import duties and other governmental charges, fees, levies, imposts and
assessments), whether or not measured in whole or in part by net income, and
including deficiencies, interest, additions to tax or interest, fines and
penalties with respect thereto, and including expenses associated with
contesting any proposed adjustment related to any of the foregoing and shall
include any transfer liability in respect of Taxes. The Company has timely filed
all returns, reports and declarations with respect to Taxes (the "Tax Returns")
required to be filed and has filed or will file, on a timely basis and in a
manner consistent with prior years and applicable law and regulations, all Tax
Returns required to be filed on or before the Closing Date. All such Tax Returns
are or will be true and complete in all material respects. The Company has
timely paid all Taxes due and payable and has timely paid or will timely pay all
Taxes due and payable through the Closing Date. With respect to any period for
which Tax Returns have not yet been filed, or for which Taxes are not yet due
<PAGE>
7
or owing, the Company has no liability for Taxes other than Taxes that are
consistent with prior years and have been incurred in the ordinary course of
business or Taxes arising from the Contemplated Transactions. The Company has
made all required current estimated Tax payments. The Sellers have heretofore
made available to the Buyer true and complete copies of all Tax Returns filed by
the Company in respect of any period, or partial period, within the three (3)
years ended December 31, 1999.
(b) There are no liens or encumbrances of any kind with
respect to Taxes upon any of the assets of the Company (except for liens for
Taxes not yet due) or on the stock of the Company.
(c) Neither any of the Sellers nor the Company have executed
or filed any agreements or waivers or have any arrangements extending the
statutory period of limitation applicable to any claim for, or the period for
collection or assessment of, Taxes due from or with respect to the Company for
any taxable period. No requests for waivers of the time to assess any Taxes are
pending. No power of attorney with respect to the Taxes has been executed or
filed with any taxing authority. No closing agreement pursuant to Section 7121
of the Internal Revenue Code of 1986, as amended (the "Code") or any similar
provision of any state, local or foreign law has been entered into by or with
respect to the Company.
(d) No federal, state, local, foreign or other audit or other
proceeding by any court, governmental body or other taxing authority is pending
or, to the knowledge of the Sellers, threatened against the Sellers or the
Company with respect to any Taxes or Tax Returns due from or with respect to the
Company. To the knowledge of the Sellers, no assessment of Tax is proposed
against the Company or any of its assets.
(e) No election under any of Section 108, 168, 338, 472, 1017,
1033, or 4977 of the Code (or any predecessor provisions) has been made or filed
by or with respect to the Company. No consent to the application of Section
341(f)(2) of the Code (or any predecessor provision) has been made or filed by
or with respect to any of the properties of the Company. None of the properties
of the Company is an asset or property that is or will be required to be treated
as being (i) owned by any person (other than the Company) pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended
and in effect immediately before the enactment of the Tax Reform Act of 1986, or
(ii) tax-exempt use property within the meaning of Section 168(h)(1) of the
Code.
(f) The Company has not agreed to, nor is it required to, make
any adjustment pursuant to Section 481(a) of the Code (or any predecessor
provision) by reason of any change in any accounting method and there is no
application by the Company pending with any taxing authority requesting
permission for any changes in any accounting method of the Company. The IRS has
not proposed any such adjustment or change in accounting method.
(g) The Company has not, at any time within the time period
covered by any applicable statute of limitations, been in violation, and is not
presently in violation (nor, with notice or lapse of time or both, would it be
in violation), of any applicable law relating to the payment or withholding of
<PAGE>
8
taxes relating to employment and has, at all times within the time period
covered by any applicable statute of limitations, duly and timely withheld from
employee salaries, wages, and other compensation, and timely paid over to the
appropriate taxing authorities, all amounts required to be so withheld and paid
over for all periods under all applicable laws.
(h) The Company is not party to, bound by, or has any
obligation under, any Tax sharing agreement, Tax indemnification agreement or
similar contract.
(i) There is no contract, plan or arrangement covering any
person that, individually or collectively, could give rise to the payment of any
amount that would not be deductible by the Company by reason of Section 280G of
the Code.
(j) No Seller is a "foreign person," within the meaning of
Section 1445(b)(2) of the Code nor subject to any other law, regulation or
ruling that would require any withholding of the purchase price.
(k) The Company is an S Corporation under Section 1361 of the
Code and has no liability for federal income taxes (including any tax imposed
under Section 1374 or Section 1375 of the Code). The Sellers have timely paid
and will timely pay any tax liability determined under Section 1366 of the Code.
The Company has had a valid Selection in effect since January 1, 1989.
(l) The Company is a New York State S Corporation and has a
valid Selection under Section 660, Article 22 of the New York State Tax Law in
effect since January 1, 1989. The Sellers have properly included all amounts
required by Section 660, Article 22 of the New York State Tax Law in their
respective New York State taxable income.
(m) Neither any of the Sellers nor the Company has received a
Tax ruling or made or entered into a Tax agreement, consent or election that
will or could reasonably be expected to have a continuing adverse effect after
the Closing Date on the Company, and there are no applications or negotiations
pending with respect to any of the foregoing.
3.10 Compliance with Laws. Except as set forth on Schedule 3.10, the
Company is not in violation of any applicable order, judgment, injunction,
award, decree or writ (collectively, "Orders"), or any applicable law, statute,
code, ordinance, regulation or other requirement (collectively, "Laws"), of any
government or political subdivision thereof, whether Federal, state, local or
foreign, or any agency or instrumentality of any such government or political
subdivision (including, without limitation, all Laws relating to employment or
labor relations), or any insurance company or fire rating or any other similar
board or organization or other non-governmental regulating body (to the extent
that the rules, regulations or orders of such body have the force of law) or any
court or arbitrator (collectively, "Governmental Bodies") (but not including,
however, Safety and Environmental Laws, which are addressed in Section 3.13),
which violation has had, or could reasonably be expected to have, a material
adverse effect on the Condition of the Company (including, without limitation,
in connection with the sale by the Company of a distribution route to My Girls
<PAGE>
9
Beverage, Inc. on December 20, 1999, or in connection with the sale by the
Company of a distribution route to Yankee Distributors, Inc. on April 21, 1998).
3.11 Permits. To the knowledge of the Sellers, the Company has, or is
in the process of applying for, all licenses, permits, exemptions, consents,
waivers, authorizations, rights, certificates of occupancy, franchises, orders
or approvals of, and has made all required registrations with, any Governmental
Body that are material to the conduct of the business of, or the intended use of
any properties of, the Company (collectively, "Permits"), not including,
however, Permits relating to compliance with Safety and Environmental Laws,
which are addressed in Section 3.13. To the knowledge of the Sellers, all
Permits (with the exception of Permits required pursuant to Safety and
Environmental Laws, which are addressed in Section 3.13) are listed on Schedule
3.11 and are in full force and effect; no material violations are or have been
recorded at any time since January 1, 1997 in respect of any Permit and, since
January 1, 1997, no act has been taken or omitted in material violation of any
Permit; and no proceeding is pending or, to the knowledge of the Sellers,
threatened to revoke or limit any Permit. To the knowledge of the Sellers, no
action by any of the Sellers, the Company or the Buyer is required in order that
all Permits will remain in full force and effect following the consummation of
the Contemplated Transactions.
3.12 No Breach. Each of the consents set forth on Schedule 3.12
(collectively, the "Scheduled Consents") has been obtained by the Sellers and
remains in effect on the date hereof or has been waived by the Buyer. Assuming
that each Scheduled Consent has in fact been obtained and remains in effect or
has been waived, the execution and delivery by the Sellers of this Agreement and
each and every other agreement and instrument required to be delivered by the
Sellers pursuant hereto, the consummation of the Contemplated Transactions and
the performance by the Sellers of this Agreement and each such other agreement
and instrument in accordance with their respective terms and conditions will not
(with or without notice and/or the lapse of time):
(a) violate any provision of the Articles of Incorporation
or By-laws (or comparable instruments) of the Company;
(b) require the Company to obtain any consent, approval,
authorization or action of, or make any filing with or give any notice to, any
Governmental Body or any other person (other than CC Beverage (U.S.)
Corporation), where the failure to take any action referred to in this
subparagraph (b) has, or could reasonably be expected to have, a material
adverse effect on the Condition of the Company or give rise to a challenge to
the validity of the Contemplated Transactions;
(c) (i) violate, conflict with or result in the breach of any
of the terms and conditions of or, (ii) other than the possible termination of
the Company's distribution agreement with CC Beverage (U.S.) Corporation, result
in a material modification of the effect of, otherwise cause the termination of,
or give any other contracting party the right to terminate, or (iii) constitute
a default under, any contract, agreement, indenture, note, bond, loan,
instrument, lease, conditional sale contract, mortgage, license, franchise,
commitment or other binding arrangement (collectively, the "Contracts") required
<PAGE>
10
to be listed on Schedule 3.15, or result in the creation of any Lien upon any of
the properties of the Company pursuant to the terms of any such Contract;
(d) violate any Law of any Governmental Body;
(e) violate any Order of any Governmental Body applicable to
the Company or to its securities, properties or business; or
(f) violate or result in the revocation or suspension of any
Permit.
3.13 Environmental Matters. Except as disclosed on Schedule 3.13:
(a) the Company is not and has not been in violation of any
applicable Safety and Environmental Law which violation could impose any
material obligation on the Company after the consummation of the Contemplated
Transactions;
(b) the Company has all Permits required pursuant to Safety
and Environmental Laws that are material to the conduct of the business of the
Company, all such Permits are in full force and effect, no Claim to revoke,
limit or modify any of such Permits is pending and the Company is in compliance
in all material respects with all terms and conditions thereof. All such Permits
are listed on Schedule 3.13;
(c) the Company has not received any Environmental Claim;
(d) the Company has filed all notices required under Safety
and Environmental Laws indicating the past or present Release, generation,
treatment, storage or disposal of Hazardous Substances, all of which notices are
listed on Schedule 3.13;
(e) the Company has not entered into any written agreement
with any Governmental Body or any other person respecting any Safety and
Environmental Laws or any Remedial Action including, without limitation, any
agreement by which the Company has assumed responsibility, either directly or as
a guarantor or surety, for the remediation of any condition arising from or
relating to a Release or threatened Release of Hazardous Substances into the
Environment;
(f) there is not now and has not been at any time in the past
a Release or threatened Release of Hazardous Substances into the Environment for
which the Company may be directly or indirectly responsible in whole or in part;
(g) to the knowledge of the Sellers, except as set forth on
Schedule 3.13, there is not now and has not been at any time in the past at, on
or in any of the real properties owned, leased or operated by the Company, and,
to the knowledge of the Sellers, there was not at, on or in any real property
previously owned, leased or operated by the Company or any predecessor;
<PAGE>
11
(i) any generation, use, handling, Release, treatment,
recycling, storage or disposal of any Hazardous Substances; (ii) any underground
storage tank, surface impoundment, lagoon, landfill, solid waste disposal area,
or other containment facility (past or present) for the storage, treatment or
disposal of Hazardous Substances; (iii) any asbestos-containing material; (iv)
any polychlorinated biphenyls (PCBs) used in hydraulic oils, electrical
transformers or other equipment; (v) any Release or threatened Release, or any
visible signs of Releases or threatened Releases, of a Hazardous Substance to
the Environment in form or quantity requiring Remedial Action under Safety and
Environmental Laws; or (vi) any Hazardous Substances present at such property,
excepting such quantities as are handled in accordance with all applicable
manufacturer's instructions and Safety and Environmental Laws and in proper
storage containers, and as are necessary for the operations in the ordinary
course of the Company;
(h) to the knowledge of the Sellers, there is no basis or
reasonably anticipated basis for any Environmental Claim or Environmental
Compliance Costs;
(i) to the knowledge of the Sellers, the Company has not
transported, stored, treated or disposed, nor, to the knowledge of the Sellers,
has it allowed or arranged for any third persons to transport, store, treat or
dispose, any Hazardous Substance to or at: (i) any location other than a site
lawfully permitted to receive such substances for such purposes, or (ii) any
location designated for Remedial Action pursuant to Safety and Environmental
Laws; nor has it performed, arranged for or allowed such transportation or
disposal in contravention of any Safety and Environmental Laws; and
(j) none of the past or present operations of the Company are
subject to (i) any judicial or administrative proceeding alleging the violation
of any Safety and Environmental Law, or (ii) to the knowledge of the Sellers,
any investigation by any Governmental Body evaluating whether any Remedial
Action is required to respond to a Release or threatened Release of a Hazardous
Substance.
3.14 Claims and Proceedings. There are no outstanding Orders of any
Governmental Body against or involving the Company. Except as set forth on
Schedule 3.14, there are no actions, causes of action, suits, claims,
complaints, demands, litigations or legal, administrative or arbitral
proceedings, or, to the knowledge of the Sellers, inquiries or investigations
(collectively, "Claims") (whether or not the defense thereof or liabilities in
respect thereof are covered by insurance) pending, or to the knowledge of the
Sellers, threatened, against or involving the Company or any of its properties,
owned or leased, or which relate to, or could reasonably be expected to have a
material adverse effect on, the Contemplated Transactions. Except as set forth
on Schedule 3.14, to the knowledge of the Sellers, no event has occurred that
may reasonably be expected to give rise to any Claim that would be required to
be set forth on Schedule 3.14 if currently pending or threatened. All notices
required to have been given to any insurance company listed as insuring against
any Claim set forth on Schedule 3.14 have been timely and duly given and, except
as set forth on Schedule 3.14, no insurance company has asserted, orally or in
writing, that such Claim is not covered by the applicable policy relating to
such Claim. Except as set forth on Schedule 3.14, there are no pending, or to
the knowledge of the Sellers, threatened product liability Claims against or
involving the
<PAGE>
12
Company or any product marketed or distributed at any time by the Company
("Company Products").
3.15 Contracts.
(a) Schedule 3.15 sets forth all of the following currently
effective Contracts to which the Company is a party or by or to which any of its
properties are bound or subject: (i) Contracts with any current or former
officer, director, shareholder, Employee, consultant, agent or other
representative or with an entity in which any of the foregoing, or any member of
the immediate family of any of the foregoing, has a direct or indirect economic
interest; (ii) Contracts with any labor union or association representing any
Employee; (iii) Contracts with any person to sell, deliver, distribute or
otherwise market any of the Company Products including, without limitation,
contracts with area route distributors ("Route Distribution Agreements"); (iv)
Contracts for the purchase of materials, supplies, goods, services, equipment or
other assets providing for any annual payment by the Company of, or pursuant to
which in the last year the Company paid in the aggregate, $25,000 or more; (v)
licensing, distributorship, sales representative, marketing, brokerage, agency,
dealer or other similar Contracts; (vii) Contracts for the sale of any
properties other than in the ordinary course of business or for the grant to any
person of any option or preferential rights to purchase any properties; (viii)
partnership or joint venture agreements; (ix) Contracts under which the Company
agrees to indemnify, or to guarantee any indebtedness or other obligations of,
any party or to share any Tax liability of any party; (x) Contracts which cannot
be canceled without liability, premium or penalty on less than ninety (90) days
notice; (xi) Contracts with customers, subdistributors or suppliers for the
sharing of fees, the rebating of charges or other similar arrangements; (xii)
Contracts containing covenants of the Company not to compete in any line of
business or with any person in any geographical area or covenants of any other
person not to compete with the Company in any line of business or in any
geographical area; (xiii) Contracts relating to the acquisition by the Company
of any operating business or the capital stock of any other person; (xiv)
Contracts relating to the borrowing of money; (xv) Contracts containing
obligations or liabilities of any kind to holders of the capital stock of the
Company as such (including an obligation to register any of such securities
under any Federal or state securities Laws); (xvi) Contracts for the payment of
fees or other consideration to any officer or director of the Company or to any
other entity in which any of the foregoing has an interest; (xvii) options or
rights of first refusal for the purchase or lease of any property for an
aggregate purchase price in excess of $25,000 or of any real property; (xviii)
Contracts pursuant to which the Company may hold or use any interest owned or
claimed by the Company in or to any material property; and (xix) any other
Contracts pursuant to the terms of which there is either a current or future
obligation or right of the Company, absolute or contingent, to make or receive
payments in excess of $25,000. Other than this Agreement, there are no Contracts
currently in negotiation or proposed by the Company of a type which, if entered
into by the Company, would be required to be listed on Schedule 3.15.
(b) There have been delivered to the Buyer true and complete
copies of all of the Contracts set forth on Schedule 3.15 (and of all
amendments, supplements, and modifications thereto and thereof), except as
otherwise set forth on Schedule 3.15 with respect to Route Distribution
<PAGE>
13
Agreements. All of the Contracts set forth on Schedule 3.15 are valid and
binding upon the Company and, to the knowledge of the Sellers, upon each other
party thereto, in accordance with their terms and are in full force and effect.
Except as set forth on Schedule 3.15, the Company is not in default in any
material respect under any of such Contracts, nor, to the knowledge of the
Sellers, does any condition exist that with notice or lapse of time or both
would constitute such a material default thereunder. To the knowledge of the
Sellers, except as set forth on Schedule 3.15, no other party to any such
Contract is in default thereunder in any material respect nor does any condition
exist that with notice or lapse of time or both would constitute such a material
default thereunder. Except as otherwise set forth on Schedule 3.15, the terms of
each currently effective Route Distribution Agreement are identical in all
material respects.
3.16 Real Estate.
(a) Leased Properties. The Company does not own any real
property. Schedule 3.16 is a true, correct and complete schedule of all leases,
subleases, licenses and other agreements (collectively, the "Real Property
Leases") under which the Company uses or occupies or has the right to use or
occupy, now or in the future, any real property (the land, buildings and other
improvements covered by the Real Property Leases being herein called the "Leased
Real Property"), The Sellers have heretofore delivered to, or have caused the
Company to deliver to, the Buyer true, correct and complete copies of all Real
Property Leases (including all modifications, amendments and supplements
thereto). Each Real Property Lease is valid, binding and in full force and
effect; all rent and other sums and charges payable by the Company as tenant,
subtenant, licensee or otherwise thereunder are current; to the knowledge of the
Sellers, no notice of default or termination under any Real Property Lease is
outstanding; and no casualty, condemnation (or taking in lieu thereof or similar
action), termination event or condition or uncured default on the part of the
Company, or to the knowledge of the Sellers, the landlord (and/or sub-landlord),
exists under or with respect to any Real Property Lease. The Company holds the
leasehold estate and interest in each Real Property Lease free and clear of all
Liens (other than Liens in respect of a Real Property Lease that are permitted
by the express terms thereof or as have arisen by operation of law). Except as
set forth in Schedule 3.16, the Sellers and the Company have no ownership,
financial or other interest in the landlord (or sub-landlord) under any Real
Property Lease. In the event that the Company elects not to renew its sublease
of the premises known as 120-180 Adams Blvd., Farmingdale, New York beyond its
current initial term, the Company will not (other than as the result of any
actions that may be taken on or after the Closing by, or on behalf of, the
Buyer), be obligated to pay to the sub-landlord or master landlord of said
premises, or otherwise expend, in excess of $10,000 in order to surrender said
premises in the condition required by the terms of such sublease.
(b) Entire Premises. All of the land, buildings, structures
and other improvements used by the Company in the conduct of its businesses are
represented by the Leased Real Property. The Leased Real Property is sometimes
hereinafter referred to as the "Real Property."
3.17 Inventory. The inventory of the Company is in good and
merchantable condition, and suitable and usable or salable in the ordinary
course of business, and within normal and customary time frames, for the
<PAGE>
14
purposes for which intended. Except as otherwise set forth on Schedule 1.3
hereto, the Sellers have no reason to believe that, in light of the past
business experience of the Company and the current volume of its inventory, any
of the Company's current inventory is or will become obsolete or unsuitable for
sale prior to its sale by the Company in the ordinary course of business.
3.18 Receivables. Schedule 3.18 hereto sets forth, and the Closing Date
Financials will set forth, a true and complete list of all accounts and notes
receivable of the Company as of October 31, 1999 and the Closing Date,
respectively. All such accounts and notes receivable, and all accounts and notes
receivable arising subsequent to October 31, 1999 which will be reflected on the
Closing Date Financials, (i) have arisen or will arise in the ordinary course of
business of the Company, (ii) are, as set forth on Schedule 3.18, or will be, as
will be set forth in the Closing Date Financials, subject to a reserve for bad
debts computed in a manner consistent with past practice and reasonably
estimated to reflect the probable results of collection, and (iii) have been
collected or are collectible in the ordinary course of business of the Company,
net of any such reserves.
3.19 Tangible Property. Except as set forth on Schedule 3.19, the
facilities, machinery, equipment (including, without limitation, motor
vehicles), furniture, buildings and other improvements, fixtures, vehicles,
structures, any related capitalized items and other tangible property material
to the business of the Company (the "Tangible Property") are and will be in good
operating condition and repair, subject to normal wear and tear and continued
repair and replacement in accordance with past practice and the Real Property
Leases, and are suitable for their current use. Set forth on Schedule 3.19 is a
list of each item of Tangible Property of the Company as of October 31, 1999
which individually has a fair market value of in excess of $500.
3.20 Intellectual Property. To the knowledge of the Sellers, the
Company owns or is licensed or otherwise has all reasonably necessary rights to
use, practice, sell, license and dispose of, without restriction, all
Copyrights, Trade Secrets, Trademarks, computer software and equipment and other
proprietary rights (collectively, the "Intellectual Property") that are used in
connection with the business of the Company, free and clear of any Liens (other
than restrictions on the scope or use thereof set forth in any license of
Intellectual Property that do not materially impair or interfere with the value
or use thereof in connection with the Company's business). Schedule 3.20 lists
all Intellectual Property material to the business of the Company. To the
knowledge of the Sellers, none of the Intellectual Property infringes the rights
of any other person, nor have any of the Company's rights thereto been
challenged. All Intellectual Property owned by the Company has, where
appropriate, been duly registered with the United States Patent and Trademark
Office, and each such registration is valid and effective. Notwithstanding the
foregoing, the Sellers make no representation with respect to any Intellectual
Property used by the Company which is owned by the Buyer or its Affiliates.
3.21 Title to Properties. The Company has good title to all of its
properties, including all of the assets reflected as owned by the Company on the
Balance Sheet, in each case free and clear of any Lien, except for;
<PAGE>
15
(a) Liens specifically described in the Financials;
(b) properties disposed of, or subject to purchase or sales
orders, in the ordinary course of business since the Balance Sheet Date;
(c) Liens securing Taxes, assessments, governmental charges or
levies, or the claims of materialmen, carriers, landlords and like persons, all
of which are not yet due and payable or are being contested in good faith, so
long as such contest does not involve any substantial danger of the sale,
forfeiture or loss of any assets; and
(d) Liens set forth on Schedule 3.21.
3.22 Accounts Payable. Schedule 3.22 sets forth, and the Closing Date
Financials will be delivered together with, a true and correct aged list of all
accounts payable of the Company as of October 31, 1999 and the Closing Date,
respectively.
3.23 Liabilities. Except as otherwise set forth on Schedule 3.23, as at
the Balance Sheet Date, the Company did not have any direct or indirect
indebtedness, liability, Claim, loss, damage, deficiency, obligation or
responsibility, known or unknown, fixed or unfixed, liquidated or unliquidated,
secured or unsecured, accrued, absolute, inchoate, contingent or otherwise
("Liabilities") that (a) were not fully and adequately reflected or reserved
against on the Balance Sheet, or (b) were of a type not required to be reflected
or reserved against under GAAP. Except as set forth on Schedule 3.23, the
Company has not, except in the ordinary course of business, incurred any
material Liabilities since the Balance Sheet Date. The Sellers have no knowledge
of any circumstance, condition or event that could reasonably be expected to
give rise to any Liabilities of the Company after the date hereof except in the
ordinary course of business or as otherwise set forth on Schedule 3.23. Except
as set forth on Schedule 3.23, the Company has no long or short term
indebtedness, other than indebtedness constituting trade accounts payable
incurred in the ordinary course of business, certain accrued expenses reflected
in the Closing Date Financials relating to Employee vacations and the Company's
401(k) Benefit Plan.
3.24 Suppliers and Customers. Schedule 3.24 lists, by dollar volume
paid for the nine (9) months ended on September 30, 1999, the ten (10) largest
beverage suppliers and the ten (10) largest beverage customers of the Company.
To the knowledge of the Sellers, the relationship of the Company with such
suppliers and customers, respectively, other than with CC Beverage (US)
Corporation, are good commercial working relationships. Except for CC Beverage
(U.S.) Corporation, no person listed on Schedule 3.24 (i) has, within the nine
(9) months preceding the date hereof, threatened in writing to limit in any
material respect, cancel or otherwise terminate or, in a manner adverse to the
Company, materially modify the relationship of such person with the Company or,
(ii) to the knowledge of the Sellers, intends to cancel or otherwise terminate
or, in a manner materially adverse to the Condition of the Company, modify the
relationship of such person with the Company.
<PAGE>
16
3.25 Employee Benefit Plans.
(a) Schedule 3.25(a) lists all Benefit Plans. Except as
disclosed in Schedule 3.25(a), with respect to each such Benefit Plan, the
Sellers heretofore have delivered, or have caused the Company heretofore to have
delivered, to the Buyer true, correct and complete copies of (i) all plan texts
and agreements and related trust agreements or annuity contracts; (ii) all
summary plan descriptions; (iii) the three most recent annual reports (including
all schedules thereto) if applicable; (iv) the most recent actuarial valuation;
(v) the most recent annual reviewed or audited financial statement and opinion;
(vi) the most recent annual and periodic accounting of plan assets; (vii) if the
plan is intended to qualify under Code Section 401(a) or 403(a), the most recent
determination letter received from the IRS; and (viii) all material
communications with any Governmental Body (including the DOL, IRS and PBGC).
(b) With respect to each Benefit Plan, no event has occurred,
and there exists no condition or set of circumstances in connection with which
the Company could, directly or indirectly (through a Commonly Controlled Entity
or otherwise), be subject to any liability under ERISA, the Code or any other
applicable Law, except liability for benefits claims and funding obligations
payable in the ordinary course.
(c) The Company has performed all material obligations
required to be performed by it under each Benefit Plan including, but not
limited to, the timely filing of all Forms 5500 and all schedules thereto
(Annual Report) and the distribution to participants in the Benefit Plans,
respectively, of all Summary Plan Descriptions required to be distributed by
applicable law. Except as set forth on Schedule 3.25(c), each Benefit Plan
conforms to, and its administration is in material compliance with, all
applicable Laws (including, but not limited to, non-discrimination, top heavy
and coverage testing), and each Benefit Plan has been maintained in accordance
with its terms. Except as otherwise set forth on Schedule 3.25(c), each Benefit
Plan can be amended, terminated, or otherwise discontinued after the Closing in
accordance with its terms, without liability to the Company or the Buyer or any
of their respective Affiliates. All premiums required by any Benefit Plan have
been paid thereunder; all outstanding indebtedness for services performed or
accrued vacation, holiday pay, earned commissions, accrued bonuses or other
benefits owed to any Employee have been paid when due or accrued on the books of
the Company. No "prohibited transaction" within the meaning of Section 4975 of
the Code or Section 406 of ERISA has occurred with respect to any Benefit Plan;
no action or failure to act with respect to any Benefit Plan could subject the
Company, any of the Sellers or the Buyer or any Benefit Plan to any material
tax, penalty or other liability, for breach of fiduciary duty or otherwise,
under ERISA or any other applicable law, whether by way of indemnity or
otherwise.
(d) The Company, and each Commonly Controlled Entity, has made
all payments due from such respective entity to date with respect to each
Benefit Plan.
(e) Except as disclosed in Schedule 3.25(e), with respect to
each Benefit Plan, there are no funded benefit obligations for which
contributions have not been made or properly accrued and there are no unfunded
<PAGE>
17
benefit obligations that have not been accounted for by reserves, or otherwise
properly footnoted in accordance with GAAP, on the Reviewed Financials.
(f) With respect to each Benefit Plan subject to Code Section
412 or ERISA Section 302: (i) such plan uses a funding method permissible under
ERISA and the actuarial assumptions used in connection therewith are reasonable
individually and in the aggregate; (ii) no such plan has incurred an accumulated
funding deficiency, whether or not waived; and (iii) except as disclosed on
Schedule 3.25(f), the fair market value of the assets of such Plan exceed or
equal the "projected benefit obligation" (as defined in Statement of Financial
Accounting Standard No. 87), and the "amount of unfunded benefit liabilities",
as defined in ERISA Section 4001(a)(18), is zero.
(g) Except as disclosed on Schedule 3.25(g), with respect to
each Benefit Plan that is or was subject to Title IV of ERISA, no such Benefit
Plan has been terminated, no filing of a notice of intent to terminate such a
Benefit Plan has been made, and the PBGC has not initiated any proceeding to
terminate any such Benefit Plan. The termination of any such Benefit Plan has
not resulted and, except as disclosed on Schedule 3.25(g), will not result, in
any liability to the Company or any Controlled Entity for any reason including,
without limitation, as a result of the failure of the Company to obtain a
favorable determination from the IRS in connection with such termination. No
event has occurred and there exists no condition or set of circumstances which
presents a material risk that any Pension Plan has or is likely to experience a
"partial termination" within the meaning of Code Section 411(d)(3).
(h) Except as disclosed on Schedule 3.25(h), no Benefit Plan
(i) is a "multiemployer plan" as defined in Code Section 414(f) or ERISA
Sections 3(37) or 4001(a)(3) and the Company has no liability with respect to
any "multiemployer plan," (ii) is a multiple employer plan within the meaning of
Code Section 413(c) or ERISA Sections 4063, 4064 or 4066, or (iii) is a
"multiple employer welfare arrangement" as defined in ERISA Section 3(40).
(i) No "reportable event" within the meaning of ERISA Section
4043 has occurred or may be reasonably expected to occur with respect to any
Benefit Plan.
(j) There are no Claims or Liens pending or, to the knowledge
of the Sellers, threatened (other than routine claims for benefits) or
anticipated with respect to any Benefit Plan or against the assets of any
Benefit Plan and there are no facts that could reasonably be expected to give
rise to any such Claim or Lien. No assets of the Company are subject to any Lien
under ERISA Section 302(f) or Code Section 412(n). Neither the Company nor any
Commonly Controlled Entity has provided or would be required to provide security
pursuant to Code Section 401(a)(29).
(k) Each Benefit Plan which is intended to qualify under Code
Section 401(a) or 403(a) so qualifies and its related trust is exempt from
taxation under Code Section 501(a) and has received a favorable determination
letter from the IRS to the effect that such Benefit Plan and related trust are
qualified and exempt from Federal income taxes under Section 401(a) and 501(a),
respectively (including any amendments thereto effected by the Tax Reform Act of
1986 and subsequent legislation), or is within the applicable remedial
<PAGE>
18
amendment period pursuant to the Treasury Regulations in which to apply for such
determination letter, and no such determination letter has been revoked nor has
revocation been threatened. To the knowledge of the Sellers, nothing has
occurred or is reasonably expected to occur that would adversely affect the
qualified status of any such Benefit Plan or any trust related thereto
subsequent to the issuance of such determination letter.
(l) Each Pension Plan that is not qualified under Code section
401(a) or 403(a) is exempt from Part 2, 3 and 4 of Title I of ERISA as an
unfunded plan that is maintained primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees,
pursuant to ERISA Sections 201(2), 301(a)(3) and 401(a)(1).
(m) Except as disclosed in Schedule 3.25(m), no assets of the
Company are allocated to or held in a "rabbi trust" or similar funding vehicle.
(n) Each Benefit Plan that is a "group health plan" (as
defined in ERISA Section 607(l) or Code Section 5000(b)(1)) has been operated at
all times in compliance with the provisions of COBRA and any applicable similar
state Law.
(o) Except as disclosed in Schedule 3.25(o), there are no
reserves, assets, surpluses or prepaid premiums with respect to any Welfare
Plan.
(p) No Benefit Plan is, or has ever been, a Retiree Welfare
Plan.
(q) Except as disclosed in Schedule 3.25(q), the consummation
of the Contemplated Transactions will not (i) entitle any current or former
Employee to severance pay, unemployment compensation or any similar payment;
(ii) accelerate the time of payment or vesting, or increase the amount of any
compensation due to, or in respect of, any current or former Employee; (iii)
result in or satisfy a condition to the payment of compensation that would, in
combination with any other payment, result in an "excess parachute payment"
within the meaning of Code Section 280G(b); or (iv) constitute or involve a
prohibited transaction (as defined in ERISA Section 406 or Code Section 4975),
constitute or involve a breach of fiduciary responsibility within the meaning of
ERISA Section 502(l) or otherwise violate Part 4 of Subtitle B of Title I of
ERISA.
(r) Neither the Company, any Commonly Controlled Entity, nor
any entity with which the Company could be considered a single employer under 29
U.S.C. Section 2101 (a)(1) or under any relevant case law, has incurred any
liability or obligation under the Worker Adjustment and Retraining Notification
Act, as it may be amended from time to time (the "Warn Act"), and within the
ninety (90) day period immediately following the Closing, will not incur any
such liability or obligation if, during such ninety (90) day period, only
terminations of employment in the normal course of operations occur.
(s) There is no plan or commitment, whether legally binding
or not, to establish any new Benefit Plan or to modify or terminate any Benefit
<PAGE>
19
Plan, nor has any intention or commitment to do any of the foregoing been
communicated.
(t) Set forth on Schedule 3.25(t) hereto is a list of all
former or present Employees of the Company receiving payments of workmen's
compensation benefits or long or short term disability benefits and, with
respect to each such Employee, the amount of any such benefits.
(u) The Company is not an "administrator" within the meaning
of Section 3(16)(A) of ERISA or a "plan sponsor" within the meaning of Section
3(16)(B) of ERISA or a "fiduciary" within the meaning of Section 3(21) of ERISA
with respect to the Benefit Plans that are sponsored by the Union and to which
the Company must contribute by reason of a collective bargaining agreement
("Union Plans"), and the Company has no liability or responsibility with respect
to the Union Plans other than to make said contributions.
(v) Notwithstanding anything herein to the contrary, the
representations and warranties in the second and fifth sentences of Section
3.25(c); Section 3.25(k); Section 3.25(n); and Section 3.25(o) are, with respect
to the Union Plans, to the knowledge of the Sellers.
3.26 Employee Relations. Schedule 3.26 lists as of the date hereof the
number of Employees in the aggregate, the number of full-time personnel and the
number of independent contractors engaged by the Company to perform services on
the Company's behalf on a regular or scheduled basis. The Company is not a party
to any collective bargaining agreement or any other agreement with any labor
union or association representing any Employee other than that certain
Agreement, dated September 23, 1999, between the Company and the Union. Without
limiting anything elsewhere set forth herein, the Company has not at any time
during the last five (5) years had, nor to the knowledge of the Sellers, is
there now pending or threatened (i) a strike, picket, work stoppage, work
slowdown or other labor dispute, or (ii) any legal, administrative or arbitral
proceeding, inquiry or investigation relating to the alleged violation of any
Law pertaining to labor relations or employment matters (including, without
limitation, any charge or complaint filed by an employee or union with the
National Labor Relations Board, the Equal Employment Opportunity Commission, or
any comparable Governmental Body), organizational activity, or other labor or
employment dispute against or affecting the Company. To the knowledge of the
Sellers, no event has occurred or circumstance exists that could reasonably be
expected to provide the basis for any work stoppage or other labor dispute.
There is no lock-out of any employees by the Company, and no such action is
contemplated by the Company.
3.27 Insurance. Schedule 3.27 sets forth a list (specifying the
insurer, describing each pending claim thereunder of more than $25,000 and
setting forth the aggregate amounts paid out under each such policy since
January 1, 1998 and the aggregate limit, if any, of the insurer's liability
thereunder) of all policies or binders of fire, liability, product liability,
worker's compensation, vehicular and other insurance held by or on behalf of the
Company. The Sellers have heretofore delivered, or caused the Company to
deliver, to the Buyer true and complete copies of all such policies and binders
as currently in effect. Such policies and binders are valid and binding in
<PAGE>
20
accordance with their terms, are in full force and effect, and insure against
risks and liabilities to an extent and in a manner customary in the industry in
which the Company operates. The Company has not failed to give any notice or
present any claim under any such policy or binder in due and timely fashion and
to the knowledge of the Sellers, the Company is not in default with respect to
any provision contained in any such policy or binder. Except for claims set
forth on Schedule 3.27, there are no outstanding unpaid claims under any such
policy or binder, and the Company has not received any notice of cancellation or
non-renewal of any such policy or binder.
3.28 Officers, Directors and Employees. Schedule 3.28 sets forth (a)
the name, title and total compensation of each officer and director of the
Company; (b) the name, title and total compensation of each other Employee; (c)
all wage and salary increases, bonuses and increases in any other direct or
indirect compensation received by such persons since December 31, 1998; (d) any
payments or commitments to pay any accrued vacation, severance or termination
pay to any such persons; and (e) any accrual for, or any commitment or agreement
by the Company to pay, such increases, bonuses or pay. Except as set forth on
Schedule 3.28, there are no accruals, commitments or agreements regarding the
payment of such vacation, termination or severance pay or of such increases,
bonuses or pay, whether to any officer, director or employee of the Company,
including, but not limited to, any Seller. Except as set forth on Schedule 3.28,
the Company does not currently engage, nor has it engaged at any time within the
past year, any consultant, agent or other representative.
3.29 Year 2000 Compliance. Except to the extent set forth on Schedule
3.29, the Condition of the Company will not be adversely affected in any
material respect as the result of the failure of any computer or other equipment
of the Company to be Year 2000 Compliant. "Year 2000 Compliant" means either of
the following: (i) in the case of technical systems (including software and
equipment), the ability to (A) correctly process, provide, interpret,
manipulate, store, calculate, compare, sequence and receive date/time data from,
into and between the twentieth and twenty-first centuries, and years 1999 and
2000 and leap year calculations, without causing logical or mathematical
inconsistencies, processing errors, loss of functionality or performance or
other errors, and (B) interoperate with other technical system having the
characteristics described in (A) and with date/time date of the twentieth and
twenty-first centuries; or (ii) in the case of date/time data, that such data
contains such information or is so formatted as to permit a technical system to
correctly process, provide, interpret, manipulate, store, calculate, compare,
sequence and receive such data from, into and between the twentieth and
twenty-first centuries, and the years 1999 and 2000 and leap year calculations,
without causing logical or mathematical inconsistencies, processing errors, loss
of functionality or performance or other errors with respect to such technical
system.
3.30 Operations of the Company. Except as set forth on Schedule 3.30
(and subject to the terms of Section 1.6 hereof), since the Balance Sheet Date,
the Company has not:
(a) declared or paid any dividends or declared or made any
other distributions of any kind to its shareholders, or made any direct or
indirect redemption, retirement, purchase or other acquisition of any shares of
its capital stock or granted any general increase in the compensation payable,
<PAGE>
21
or to become payable, to officers or other Employees;
(b) except for short-term bank borrowings in the ordinary
course of business, incurred any indebtedness for borrowed money;
(c) reduced its cash or short-term investments or their
equivalents other than (i) to meet, consistent with past practices, cash needs
arising in the ordinary course of business, and (ii) to the extent of cash
distributions made pursuant to Section 1.6 hereof;
(d) cancelled any material debt to the Company or waived any
material right of the Company under any Contract or other agreement of the type
required to be set forth on any Schedule other than the payoff of a liability to
The Chase Manhattan Bank N.A. ("Chase Bank") as described in Section 6.4 hereof;
(e) made any change in its accounting methods or practices or
made any change in depreciation or amortization policies or rates adopted by it;
(f) materially changed any of its business policies, including
advertising, investment, marketing, pricing, purchasing, personnel, sales,
returns, budget or product acquisition policies;
(g) made any loan or advance to, or guaranteed any
indebtedness or other obligation of, any of its shareholders, officers,
directors, present or former Employees, consultants, agents or other
representatives (other than travel advances made in the ordinary course of
business), or made any other loan or advance, or guaranteed the indebtedness or
other obligation of any party;
(h) allowed or permitted any of its properties to become
subject to any Lien (except for Liens excepted in Section 3.21 hereof), or,
except for inventory in the ordinary course of business, sold, abandoned or made
any other disposition of any of its properties or assets material to the
Condition of the Company or made any acquisition of all or any part of the
properties, capital stock or business of any other person;
(i) paid, directly or indirectly, any of its material
Liabilities (other than its indebtedness to Chase Bank for money borrowed)
before the same became due in accordance with its terms or otherwise than in the
ordinary course of business or written down the value of any inventory or
written off as uncollectible any accounts receivable, except as required by
GAAP;
(j) terminated or failed to renew any Contract or other
agreement that is or was material to the Condition of the Company;
(k) amended its Articles of Incorporation or By-laws (or
comparable instruments) or merged with or into or consolidated with any other
person, subdivided or in any way reclassified any shares of its capital stock or
changed or agreed to change in any manner the rights of its outstanding capital
stock or the character of its business;
<PAGE>
22
(l) engaged in any other material transaction other than in
the ordinary course of business or as disclosed on any Schedule hereto; or
(m) committed to take, or taken any action to authorize the
taking of, any of the foregoing actions.
3.31 Potential Conflicts of Interest. Except as set forth on Schedule
3.31, no Seller, and no officer, director or Affiliate of the Company, and no
relative or spouse (or relative of such spouse) of any Seller, or of any such
officer or director, and no entity directly or indirectly controlled by one or
more of the foregoing (i) owns, directly or indirectly, in whole or in part, any
property that the Company uses in the conduct of its business; or (ii) has any
Claim whatsoever against, or owes any amount to, the Company and Claims that the
Company would be required to indemnify such Seller, officer or director against
under any applicable law other than any Claim for indemnification from any
liability hereunder (any such Claim to indemnification other than from a
liability hereunder, an "Indemnification Claim"). To the knowledge of the
Sellers, no Indemnification Claim, or any facts, events or circumstances that
could reasonably be expected to give rise to an Indemnification Claim, currently
exist(s).
3.32 Full Disclosure. There is no fact or facts known to any of the
Sellers that has not been disclosed by the Sellers to the Buyer in writing that
materially adversely affects or, so far as the Sellers can now reasonably
foresee, will materially adversely affect, the Condition of the Company or the
ability of the Sellers to perform this Agreement. No representation or warranty
of the Sellers in this Agreement or the Escrow Agreement, contains an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements made, in the context in which
made, not materially false or misleading.
3.33 Limitation on Representations.
(a) The term "to the knowledge of the Sellers" (or any
variation thereof), as used herein, shall mean the actual knowledge of Gilbert
Kaplan, Robin Kaplan and Irene Graulich, after reasonable inquiry. For purposes
of the preceding sentence, "reasonable inquiry" shall be understood to include,
without limitation, inquiry of all Employees of the Company who perform any
managerial functions on the Company's behalf.
(b) The Sellers shall have no liability hereunder or otherwise
with respect to any breach of representation or warranty arising out of or
relating to the recognition of income or accrual of liabilities resulting solely
from timing differences in the accounting treatment between the Financials and
any future methodology utilized by the Company; provided, that, except as
otherwise specifically provided in Section 1.3 and Schedule 1.3, any such
accounting treatment reflected in the Financials is in accordance with GAAP.
<PAGE>
23
ARTICLE IV
Representations and Warranties of Each Seller
Each Seller, severally and not jointly, represents and warrants to the
Buyer as follows (except as to Section 4.4 which is the representation and
warranty solely of Gilbert and Marilyn Kaplan):
4.1 Title to the Shares. As of the Closing Date, such Seller owns,
beneficially and of record and free and clear of any Lien, the Shares set forth
opposite such Seller's name on Schedule 4.1, and, upon delivery of and payment
for such Shares at the Closing as herein provided, such Seller will convey to
the Buyer good and valid title thereto, free and clear of any Lien.
4.2 Authority to Execute and Perform Agreement. Such Seller has full
legal right and power, and all authority and approvals required, to enter into,
execute and deliver this Agreement and each and every agreement and instrument
contemplated hereby to which such Seller is a party including the Escrow
Agreement, and to perform fully such Seller's obligations hereunder and
thereunder. This Agreement has been duly executed and delivered by such Seller
(and if an individual has executed this Agreement on such Seller's behalf, such
individual is duly authorized to sign, and bind such Seller to its obligations
under, this Agreement), and each and every agreement and instrument contemplated
hereby to which such Seller is a party, including the Escrow Agreement, has been
duly executed and delivered by such Seller and (assuming due execution and
delivery hereof and thereof by the other parties hereto and thereto) this
Agreement and each such other agreement and instrument are the valid and binding
obligations of such Seller enforceable against such Seller in accordance with
their respective terms. If any action is required to authorize such Seller to
enter into this Agreement and the Escrow Agreement, such action has been duly
taken.
4.3 No Consent, Conflict Etc. Except as set forth on Schedule 4.3, the
execution and delivery by such Seller of this Agreement and each and every
agreement and instrument contemplated hereby to which such Seller is a party,
including the Escrow Agreement, the consummation of the transactions
contemplated hereby and thereby and the performance by such Seller of this
Agreement and each such other agreement and instrument in accordance with their
respective terms and conditions will not:
(a) require such Seller to obtain any consent, approval,
authorization or action of, or make any filing with or give any notice to, any
Governmental Body or any other person;
(b) with or without notice and/or lapse of time, violate,
conflict with or result in the breach of any of the terms and conditions of,
result in a material modification of the effect of, otherwise cause the
termination of or give any other contracting party the right to terminate, or
constitute a default under, any Contract by or to which the Shares held by such
Seller are or may be bound or subject or which could reasonably be expected to
have a material adverse effect on the ability of such Seller to consummate the
Contemplated Transactions;
(c) violate any Law or Order of any Governmental Body
applicable to such Seller or to the Shares held by such Seller;
<PAGE>
24
(d) result in the creation of any Lien on the Shares held by
such Seller; or
(e) as applicable, violate or breach the terms of any trust
agreement or other agreement under which such Seller was created.
4.4 Retirement of Gilbert and Marilyn Kaplan. Each of Gilbert Kaplan
and Marilyn Kaplan hereby represents and warrants to the Buyer that he/she
intends to retire from any active participation in any commercial enterprise
within the food and beverage industry immediately following the Closing.
ARTICLE V
Representations and Warranties of the Buyer
The Buyer represents and warrants to the Sellers as follows:
5.1 Due Incorporation and Authority. The Buyer is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now being and as
heretofore conducted.
5.2 Authority to Execute and Perform Agreement. The Buyer has the power
and authority, and all approvals required to enter into, execute and deliver
this Agreement and each and every agreement and instrument contemplated hereby
to which the Buyer is a party including the Escrow Agreement, and to perform
fully its obligations hereunder and thereunder. This Agreement has been duly
executed and delivered by the Buyer, and each and every agreement and instrument
contemplated hereby to which the Buyer is a party, including the Escrow
Agreement, has been duly executed and delivered by the Buyer and (assuming due
execution and delivery hereof and thereof by the other parties hereto and
thereto) this Agreement and each such other agreement and instrument are the
valid and binding obligations of the Buyer enforceable against the Buyer in
accordance with their respective terms.
5.3 No Consents, Conflicts, Etc. Except as set forth on Schedule 5.3,
the execution and delivery by the Buyer of this Agreement and each and every
other agreement and instrument contemplated hereby to which the Buyer is a
party, including the Escrow Agreement, the consummation of the transactions
contemplated hereby and thereby and the performance by the Buyer of this
Agreement and each such other agreement and instrument in accordance with their
respective terms and conditions will not:
(a) violate any provision of the Articles of Incorporation
or By-laws of the Buyer;
(b) require the Buyer to obtain any consent, approval,
authorization or action of, or make any filing with or give any notice to, any
Governmental Body or any other person;
<PAGE>
25
(c) violate, conflict with or result in the breach of any of
the terms and conditions of, result in a material modification of the effect of,
otherwise cause the termination of or give any other contracting party the right
to terminate, or constitute (or with notice or lapse of time or both constitute)
a default under, any Contract to which the Buyer is a party or by or to which
the Buyer or any of its properties is or may be bound or subject; or
(d) violate any Law or Order of any Governmental Body
applicable to the Buyer.
5.4 Full Disclosure. There is no fact or facts known to the Buyer that
has not been disclosed by the Buyer to the Sellers in writing that materially
adversely affects or, so far as the Buyer can now reasonably foresee, will
materially adversely affect the ability of the Buyer to perform this Agreement.
No representation or warranty of the Buyer contained in this Agreement or the
Escrow Agreement contains an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements made, in the context in which made, not materially false or
misleading.
5.5 Claims and Proceedings. As of the date of this Agreement, there are
no outstanding Orders of any Governmental Body against or involving the Buyer
which could reasonably be expected to have a material adverse effect on the
ability of the Buyer to consummate the Closing or any of the other Contemplated
Transactions. Except as set forth on Schedule 5.5, to the knowledge of the
Buyer, as of the date of this Agreement, there are no Claims (whether or not the
defense thereof or liabilities in respect thereof are covered by insurance)
pending, or to the knowledge of the Buyer, threatened, against the Buyer or any
of its properties, owned or leased, which could reasonably be expected to have a
material adverse effect on the ability of the Buyer to consummate the Closing or
any of the other Contemplated Transactions. Except as set forth on Schedule 5.5,
to the knowledge of the Buyer, no event has occurred that may reasonably be
expected to give rise to any Claim that would be required to be set forth on
Schedule 5.5. All notices required to have been given to any insurance company
listed as insuring agent against any Claim set forth on Schedule 5.5 have been
timely and duly given and, except as set forth on Schedule 5.5, no insurance
company has asserted, orally or in writing, that such Claim is not covered by
the applicable policy relating to such Claim.
5.6 Investment Intent. The Buyer is acquiring the Shares for its own
account and not with a view to their distribution within the meaning of Section
2(11) of the Securities Act of 1933, as amended.
5.7 Buyer Claims Against Company. To the knowledge of the Buyer, after
inquiry of employees of the Buyer with management responsibilities relating to
Contracts between the Buyer, or any Affiliate of the Buyer, and the Company, (i)
neither the Buyer, nor any Affiliate of the Buyer, has any material Claim
against the Company under the terms of, and (ii) the Company is not in material
breach or violation of the terms of, any Contract between the Company, on the
one hand, and the Buyer or any Affiliate of the Buyer, on the other.
<PAGE>
26
ARTICLE VI
Covenants and Agreements
6.1 Expenses. The parties to this Agreement shall, except as otherwise
specifically provided herein or in the Escrow Agreement, bear their respective
expenses incurred in connection with the preparation, execution and performance
of this Agreement and the Contemplated Transactions, including, without
limitation, all fees and expenses of their respective agents, representatives,
counsel and accountants; provided, however, that all fees and other expenses
payable to the Escrow Agent under the terms of the Escrow Agreement shall be
borne evenly by the Sellers and the Buyer.
6.2 Indemnification Against Brokerage Claim. The Sellers represent and
warrant to the Buyer that no broker, finder, agent or similar intermediary (a
"Broker") has acted on behalf of the Company or any of the Sellers in connection
with this Agreement or the Contemplated Transactions, and that there are no
brokerage commissions, finder's fees or similar fees or commissions payable in
connection therewith based on any agreement, arrangement or understanding with
the Company, or any of the Sellers, or any action taken by the Company, or any
of the Sellers. The Sellers agree, jointly and severally, to indemnify and hold
harmless the Buyer from any Claim or demand for commission or other compensation
by any Broker claiming to have been employed by or on behalf of the Company, or
any of the Sellers, and to bear the cost of the documented reasonable legal
expenses incurred in defending against any such claim. The Buyer represents and
warrants to the Sellers that no Broker has acted on behalf of the Buyer in
connection with this Agreement or the Contemplated Transactions, and that there
are no brokerage commissions, finders' fees or similar fees or commissions
payable in connection therewith based on any agreement, arrangement or
understanding with the Buyer, or any action taken by the Buyer. The Buyer agrees
to indemnify and hold harmless the Sellers from any Claim or demand for
commission or other compensation by any Broker claiming to have been employed by
or on behalf of the Buyer, and to bear the cost of documented reasonable legal
expenses incurred in defending against any such claim.
6.3 Permit Transfers. The Sellers covenant to the Buyer that they have
caused the transfer, reissuance or modification of all Permits (including any
Permits issued pursuant to Safety and Environmental Laws) to the extent that
such is required to cause the Permits to remain in full force and effect in the
possession of the Company after the Closing.
6.4 [INTENTIONALLY OMITTED]
6.5 Tax Covenants.
(a) The Sellers shall join with the Buyer and its Affiliates
in making an election under Section 338(h)(10) of the Code (and comparable
elections pursuant to state and local law) with respect to the purchase and sale
of the Shares (such election under Section 338(h)(10) of the Code, coupled with
all comparable state and local elections, being collectively referred to as the
"Section 338 Election") and shall not take any position inconsistent with the
Section 338 Election. Sellers shall (a) cause an IRS Form 8023 that has been
<PAGE>
27
completed in accordance with Treasury Regulations Section 1.338(h) (10)-1 and
all comparable forms required or appropriate pursuant to any relevant state law
to be executed at the Closing (or at such other time as may be determined by the
Buyer), and (b) take such other action as the Buyer shall reasonably request,
including, but not limited to, providing the Buyer with any requested
information and causing appropriate persons to take any action required or
appropriate for the making of such Section 338 Election in accordance with
Treasury Regulations Section 1.338(h)(10)-1 and Form 8023 (and in accordance
with relevant state and local law). The Section 338 Election shall be based upon
the Purchase Price allocation determined by the Buyer; provided, however, that
fixed assets shall be valued at their respective tax basis, as set forth in the
Tax Return of the Company for the year ended December 31, 1999, unless otherwise
mutually agreed by the Sellers and the Buyer. The Sellers shall, together with
the Buyer, appropriately and timely prepare and file an IRS Form 8594 (and any
other forms required by Section 338(h)(10)(C) or 1060 of the Code) reporting the
sale and purchase made pursuant to this Agreement (and in accordance with
relevant state and local law). The Sellers shall be jointly and severally
responsible for the payment of, and shall jointly and severally indemnify Buyer,
Buyer's Affiliates and the Company against, any Taxes resulting from the Section
338 Election, including any Taxes under Section 1374 of the Code or comparable
state provision.
(b) The Sellers shall timely prepare all Tax Returns with
respect to periods ending on or before the Closing Date in a manner consistent
with prior years and all applicable laws and regulations, except as otherwise
agreed to by the Buyer in writing. The Buyer shall cooperate in all such
respects as the Sellers may reasonably request in connection with the
preparation of such Tax Returns. The Sellers shall, at least thirty (30) days
prior to the date upon which such Tax Returns are required to be filed (as
applicable to each Tax Return, the "Filing Date"), submit a copy of each such
Tax Return to the Buyer, and the Sellers shall first obtain the consent of the
Buyer prior to filing any such Tax Return, which consent shall not be
unreasonably withheld or delayed. If the Buyer shall reasonably disagree with
the Sellers on the proper reporting of such Tax Returns, either (i) the Sellers
will revise such Tax Returns in a manner acceptable to the Buyer, or (ii) the
Buyer and the Sellers shall submit their disagreement to the Resolution
Accountants for resolution, whose decision shall be conclusive and binding upon
the parties. The fees and expenses of the Resolution Accountants shall be borne
equally by the Buyer and the Sellers. If any dispute between the Sellers and the
Buyer with respect to a Tax Return that is submitted to the Buyer for review at
least thirty (30) days prior to the Filing Date of such Tax Return has not been
resolved (either by mutual agreement of the Sellers and the Buyer or by the
determination of the Resolution Accountants) prior to such Filing Date, and, as
a result, any penalties and/or interest are payable in respect of such Tax
Return, the Buyer shall, upon demand, reimburse the Sellers for such penalties
or interest if the dispute relating to such Tax Return is resolved in favor of
the Sellers (or if the dispute is resolved partially in favor of the Sellers,
such proportion of such penalties and/or interest as most closely approximates
the proportion of the dispute that is resolved in favor of the Sellers). The
Buyer shall prepare all Tax Returns with respect to periods ending on or after
the Closing Date, including any Tax Return with respect to a period beginning on
or before the Closing Date and ending after the Closing Date.
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(c) The Sellers hereby agree, jointly and severally, to
indemnify the Buyer and its Affiliates (including the Company) against, and hold
them harmless from, (i) all liability for Taxes of the Company and the Sellers
attributable to taxable years or periods ending on or before the Closing Date
and, in the case of taxable years or periods beginning before and ending after
the Closing Date, the portion of such period ending on and including the Closing
Date (assuming that the Closing Date were the last day of the Company's taxable
year), and (ii) all liability for Taxes resulting from the Contemplated
Transactions.
(d) If the Buyer receives written notice of any assessment,
official inquiry, examination or administrative or judicial proceeding ("Tax
Audit") that could give rise to an official determination with respect to Taxes
for which the Sellers are required to indemnify the Buyer and/or its Affiliates,
the Buyer shall promptly so notify the Sellers in writing. If the Sellers
receive written notice of any Tax Audit that could give rise to any official
determination with respect to Taxes due or payable by the Buyer and/or its
Affiliates, the Sellers shall promptly so notify the Buyer.
(e) Except with respect to any taxable year that begins on or
before the Closing Date and ends after the Closing Date, the Sellers shall have
the right, at the Sellers' expense, to control and direct the contest and/or
settlement of any issue raised in a Tax Audit that could reasonably be expected
to give rise to an official determination with respect to Taxes for which the
Sellers are required to indemnify the Buyer and/or its Affiliates; provided,
however, that the Buyer may, at its own expense, participate in any such Tax
Audit; and provided further, that the Sellers shall not, without the Buyer's
consent (which consent shall not be unreasonably withheld), settle any such
issue or take any action that could give rise to an increase in Taxes (or a
decrease in tax benefits) in any period for which the Sellers are not required
to indemnify the Buyer and/or its Affiliates. The Buyer shall fully cooperate
with the Sellers, as the Sellers may reasonably request, in any such Tax Audit.
Any contest and/or settlement of any issue raised in any Tax Audit that could
reasonably be expected to result in an official determination with respect to
Taxes due or payable that relate to a period beginning on or before the Closing
Date and ending after the Closing Date shall be conducted jointly by the Buyer
and the Sellers and a settlement (at the administrative level or during the
course of judicial proceedings) may only be entered into with the consent of
both the Buyer and the Sellers which consent shall not be unreasonably withheld
or delayed.
(f) The Sellers shall be liable for any stock transfer Taxes
and other sales, use, conveyance, stamp, duty, transfer, reporting and similar
fees and Taxes applicable in connection with the transfer of the Shares.
(g) Without the consent of the Sellers, neither the Buyer or
the Company shall extend any applicable statute of limitations for any period
ended prior to the Closing Date.
(h) The parties acknowledge that the Contemplated Transactions
will result in the termination of the Company's S corporation election for
federal and New York corporate income tax purposes effective as of the Closing
Date. Pursuant to Code Section 1362, the Company will be required to file a
short period tax return as an S corporation for the period from January 1, 2000
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29
through the Closing Date ("S short year") and will be required to file a short
period tax return as a C corporation for the period from and including the date
immediately following the Closing Date through the end of its tax year ("C short
year"). In order to apportion the Company's 2000 income and expenses between the
S short year and the C short year, such income and expenses shall be
apportioned, for tax and accounting purposes, under the closing of the books
method consistent with Code sections 1362(e)(3) and 1362(e)(6)(D) and the
Regulations thereunder. The Sellers, the Company and the Buyer shall take all
action necessary to make the election to have the closing of the books method
apply and shall timely file such elections and reports, including the election
required under Regulation Section 1.1362-6(a)(5), as may be required to
effectuate the use of the closing of the books method.
(i) The representations and warranties contained in Section
3.9 will survive until six (6) months after the expiration of any applicable
statute of limitations (including extensions) and the provisions contained in
this Section 6.5 shall survive indefinitely.
6.6 Further Assurances. Each of the parties shall, promptly upon
request, execute such documents and instruments, and take such further actions,
as may be reasonably required or desirable to carry out the provisions hereof
and consummate the Contemplated Transactions.
6.7 Accounts and Notes Receivable. (a) After the Closing, the Buyer
shall cause the Company to use its commercially reasonable best efforts to
collect any and all of its uncollected accounts and notes receivable
("Uncollected Receivables"). The Buyer agrees to consult with Gilbert Kaplan and
Irene Graulich concerning the procedures to be followed with respect to, and to
permit Irene Graulich to assist with, such collection efforts and to employ, in
connection with such collection efforts, procedures similar to those generally
employed in similar collection situations by Snapple brand beverage distributors
in the New York, New Jersey and Connecticut region (including, without
limitation, Millrose Distributors, Inc. and Mr. Natural); provided, however,
that in no event shall the Buyer be obligated to commence any legal proceedings
in connection with any such collection efforts. The Buyer further agrees to use
its commercially reasonable best efforts to cause the Company to apply any
amounts received by the Company with respect to such Uncollected Receivables,
first, against the oldest outstanding accounts receivable on the books and
records of the Company from such account debtor; provided, however, that if an
account debtor specifically requests, without any inducement from the Company or
the Buyer, that any amounts received by the Company from such account debtor be
applied other than against the oldest outstanding accounts receivable from such
account debtor, the Company shall be free to comply with such request.
6.8 Suspension of Operations. The Sellers agree that they shall not
permit the Company to conduct any business or operations on January 1, or
January 2, 2000, nor to take any action on or as of January 1, or January 2,
2000 (other than the consummation of the Contemplated Transactions), that would
cause or could reasonably be expected to result in any material change in the
information to be set forth in the Closing Date Financials from that existing as
of December 31, 1999. Nothing in this Section shall, in the event that the
Closing Date is extended beyond January 2, 2000, prohibit the Company from
conducting its operations in the normal course of its business on and after
January 3, 2000 until the Closing Date.
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ARTICLE VII
Closing Deliveries of the Sellers
The following have been delivered by the Sellers at the Closing:
7.1 Share Certificates. Each Seller has, in accordance with Section
1.4, delivered to the Buyer the stock certificate or certificates representing
the Shares owned by such Seller.
7.2 Certificate of Good Standing. The Sellers have delivered to the
Buyer a certificate of good standing of the Company certified by the Secretary
of State of the State of New York.
7.3 Opinion of Counsel to the Sellers. The Sellers have delivered to
the Buyer the opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P., counsel to
the Sellers, dated the date of the Closing and addressed to the Buyer, in the
form of Exhibit B.
7.4 Escrow Agreement. The Sellers have each executed and delivered to
the Buyer a copy of the Escrow Agreement.
7.5 Releases. Each officer and director of the Company has executed and
delivered to the Company and the Buyer duplicate counterparts of a Release and
Waiver Agreement, dated the date of the Closing, in the form of Exhibit C.
7.6 Resignations. The written resignations, effective as of the Closing
Date, of all of the directors and officers of the Company, and, to the extent
applicable, the written resignations, effective as of the Closing Date, of the
Sellers, respectively, (i) as the trustees of the Benefit Plans of the Company,
respectively, and (ii) as Employees of the Company, have been delivered to the
Buyer.
7.7 FIRPTA Affidavit. Each Seller has delivered to the Buyer an
affidavit, sworn to under penalty of perjury, setting forth such Seller's name,
address and Federal tax identification number and stating that such Seller is
not a "foreign person" within the meaning of Section 1445 of the Code.
7.8 Release from Bank Debt. The Sellers have delivered to the Buyer the
written acknowledgment of the appropriate officers of Chase Bank to the effect
that the Company no longer has any liabilities or obligations to Chase Bank (the
"Chase Payoff Letter"), together with UCC-3 Termination Statements executed by
appropriate officers of Chase Bank (the "UCC-3 Termination Statements") which
evidence the termination of all security interests of Chase Bank in any property
of the Company.
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ARTICLE VIII
Closing Deliveries of the Buyer
8.1 Purchase Price. The Buyer has paid the Purchase Price in the manner
specified in Section 1.2.
8.2 Officer's Certificate. The Buyer has delivered to the Sellers a
certificate, dated as of the Closing Date, executed by the President or a Vice
President of the Buyer, certifying that (i) the Board of Directors of the Buyer
has duly adopted resolutions, copies of which are attached to such certificate,
(A) approving the terms of this Agreement and any agreement to be delivered in
accordance with this Agreement and authorizing the consummation of the
Contemplated Transactions, and (B) authorizing an officer of the Buyer to
execute and deliver this Agreement and all necessary ancillary documents; and
(ii) all of such resolutions are in full force and effect.
8.3 Certificate of Good Standing. The Buyer has delivered to the
Sellers a certificate of good standing of the Buyer certified by the appropriate
official of the State of Delaware.
8.4 Escrow Agreement. The Buyer has executed and delivered to the
Sellers a copy of the Escrow Agreement.
8.5 Opinion of Counsel to the Buyer. The Buyer has delivered to the
Sellers the opinion of Rubin Baum LLP, counsel to the Buyer, dated the date of
Closing and addressed to the Sellers, in the form of Exhibit D.
ARTICLE IX
Seller Covenants
9.1 Seller Acknowledgments. Each Seller acknowledges that (i) the
Company is engaged in the business of the sale and distribution of beverage
products (the "Company Business"); (ii) the Company Business is conducted
throughout Nassau and Suffolk Counties in the State of New York; (iii)
his/her/its relationship with the Company has given and will continue to give
him/her/it trade secrets of and confidential information concerning the Company;
(iv) the agreements and covenants contained in this Article 9 are essential to
protect the business and goodwill of the Company, all of the issued and
outstanding Shares of which are being purchased by the Buyer; and (v) the Buyer
would not purchase the Shares but for such agreements and covenants.
(a) Non-Compete. (i) Each of Irene Graulich and Robin
Kaplan-Goldstein (each, an "Active Seller") and each of Gilbert Kaplan and
Marilyn Kaplan (together with the Active Sellers, the "Restricted Sellers")
agrees that for a period of three (3) years following the Closing (the
"Restricted Period"), she or he shall not, in the States of Connecticut, New
York, New Jersey and Pennsylvania, directly or indirectly (1) engage in the
Company Business for such Restricted Seller's own account; (2) except as agreed
to in writing by the Buyer, directly or indirectly render any services to any
person engaged in such activities; or (3) become interested in any such person
in any capacity, including as a partner, shareholder, principal, agent, trustee
or consultant; provided, however, a Restricted Seller may own, directly or
indirectly, solely as an investment, securities of any person traded on any
national securities exchange or quoted in the NASDAQ system or the
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32
over-the-counter market if such Restricted Seller is not a controlling person
of, or a direct or indirect member of a group which controls, such person and
does not, directly or indirectly, own, of record or beneficially, 5 % or more of
any class of securities of such person. The Buyer acknowledges and agrees that
nothing in this paragraph (a)(i) shall be deemed to impose any restriction or
limitation on Kurt Graulich, the husband of Irene Graulich. Each Restricted
Seller hereby expressly waives any right that such Restricted Seller may have
under applicable law to hereafter engage in the Company Business, except to the
extent permitted under the terms of this Agreement.
(ii) In consideration of the covenants of the Active Sellers
set forth in subparagraph (a)(i) above, the Buyer agrees to pay to each of the
Active Sellers the sum of $1,000,000. Such sum shall be payable in twenty (20)
equal installments, without interest (such installment payments, the "Covenant
Payments"). The first Covenant Payment shall be due and payable on July 2, 2000
and the balance of the Covenant Payments at consecutive six-month intervals
thereafter. Each of the Active Sellers hereby agrees that in the event of the
breach or violation by either Active Seller of her covenants set forth in this
Section 9.1(a), the Buyer shall be entitled (without limiting any other right to
remedy available to it) to terminate the payment of all Covenant Payments.
(b) Confidential Information; Personal Relationships. Each
Seller promises and agrees that, neither during the Restricted Period nor at any
time thereafter, shall he/she/it disclose to any person (except to the Buyer or
an Affiliate of the Buyer, or to an Employee or other person engaged to render
services to the Company in furtherance of the duties and responsibilities to be
performed by such Employee or engaged person on the Company's behalf), and that
he/she/it will not use for the benefit of himself/herself/itself or others, any
Confidential Information or Trade Secrets of the Company obtained by such Seller
while an officer, director, employee and/or stockholder of the Company;
provided, however, that this provision shall not preclude the Sellers from use
or disclosure of information if, but solely to the extent that, (i) use or
disclosure of such information shall be required by applicable Law or Order of
any Governmental Body (provided prompt written disclosure of such requirement is
delivered to the Buyer and the Buyer may seek, if it deems it appropriate, a
protective order); (ii) use or disclosure of such information is reasonably
required in connection with any Claim against or involving such Seller; or (iii)
such information is readily ascertainable from public or published information
or trade sources (other than information known generally to the public as a
result of a violation of this Section 9.1(b) by any Restricted Seller).
(c) Property of the Company. Each Seller agrees that all
memoranda, notes, lists, records and other documents (and all copies thereof and
extracts therefrom), including such items stored in computer memories, on
microfiche or by any other means, made or compiled by or on behalf of the
Company or a Seller, or made available to a Seller, relating to the Company, are
and shall be the property of the Company, and shall be delivered to the Company
promptly after the Closing or at any other time thereafter promptly upon the
written request of the Buyer. Each Seller agrees to deliver to the Company,
promptly after the Closing or at any other time thereafter promptly upon the
written request of the Buyer, all property previously supplied, paid for or
delivered by the Company including, without limitation, telephones, computers,
automobiles, fax machines and any other Company property. Anything herein to
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33
the contrary notwithstanding, each Seller shall be entitled to make and retain
copies of such records, documents and other materials relating to such Sellers'
ownership of Shares that may be reasonably necessary to the preparation of any
tax return of such Seller, provided that all such records, documents and other
materials shall be held by such Seller in strict confidence (other than to the
extent reasonably required to prepare such tax returns) and subject to the
confidentiality obligations set forth in Section 9.1(b) above.
(d) Employees of the Company. Each Seller agrees that, except
as agreed to in writing by the Buyer and such Seller, during the Restricted
Period, such Seller shall not, directly or indirectly on behalf of any other
individual or any corporation or other business entity, hire or solicit any
Employee, or encourage or induce any such Employee, to leave his or her
employment with the Company.
9.2 Rights and Remedies Upon Breach. If any Seller breaches, or
threatens to commit a breach of, any of the provisions of Section 9.1 (the
"Restrictive Covenants"), the Buyer and the Company shall have the following
rights and remedies, each of which rights and remedies shall be independent of
the others and severally enforceable, and each of which is in addition to, and
not in lieu of, any other available rights and remedies available hereunder or
under Law (including, without limitation, in the event of a breach of Section
9.1(a) by either Active Seller, ceasing to make further Covenant Payments and,
if appropriate, the recovery of Covenant Payments already made) or in equity:
(a) Specific Performance. The right and remedy to have the
Restrictive Covenants specifically enforced by any court of competent
jurisdiction, it being agreed that any breach or threatened breach of the
Restrictive Covenants would cause irreparable injury to the Company and that
money damages would not provide an adequate remedy.
(b) Accounting. The right and remedy to require each Seller to
account for and pay over to the Company all compensation, profits, monies,
accruals, increments or other benefits derived or received by such Seller as the
result of any transactions by such Seller constituting a breach of the
Restrictive Covenants.
9.3 Severability of Covenants. Each Seller acknowledges and agrees that
as to it the Restrictive Covenants applicable to such Seller are reasonable and
valid in geographical and temporal scope and in all other respects. If any court
determines that any of the Restrictive Covenants, or any part thereof, is
invalid or unenforceable as to the Sellers or as to any Seller, the remainder of
the Restrictive Covenants shall not thereby be affected and shall be given full
effect as to the Sellers or such Seller, without regard to the invalid portions.
9.4 Blue-Pencilling. If any court determines that any of the
Restrictive Covenants, or any part thereof, is unenforceable as to the Sellers
or to any Seller because of the duration or geographic scope of such provision,
such court shall have the power to reduce the duration or scope of such
provision, as the case may be, as to the Sellers or such Seller, and, in its
reduced form, such provision shall then be enforceable.
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9.5 Enforceability in Jurisdictions. The Buyer and each Seller intend
to and hereby confer jurisdiction to enforce the Restrictive Covenants upon the
courts of any jurisdiction within the geographical scope of the Restrictive
Covenants. If the courts of any one or more of such jurisdictions hold the
Restrictive Covenants unenforceable by reason of the breadth of such scope or
otherwise, it is the intention of the Buyer and each Seller that such
determination not bar or in any way affect the Buyer's or the Company's right to
the relief provided above in the courts of any other jurisdiction within the
geographical scope of the Restrictive Covenants, as to breaches of the
Restrictive Covenants in such other respective jurisdictions, the Restrictive
Covenants as they relate to each jurisdiction being, for this purpose, severable
into diverse and independent covenants.
ARTICLE X
Survival of Representations and Warranties
10.1 Survival of Representations and Warranties of the Sellers.
Notwithstanding any right of the Buyer to investigate fully the affairs of the
Company and notwithstanding any knowledge of facts determined or determinable by
the Buyer pursuant to such investigation or right of investigation, the Buyer
has the right to rely fully upon the representations, warranties, covenants and
agreements of the Sellers contained in this Agreement or in any Documents
delivered pursuant to this Agreement. All such representations, warranties,
covenants and agreements shall survive the execution and delivery of this
Agreement and the Closing hereunder. Except for those representations and
warranties in Sections 3.4, 3.5, 4.1, 4.2 and 6.2 (all of which representations
and warranties shall survive without limitation), all representations and
warranties of the Sellers contained in this Agreement shall terminate and expire
(a) on June 30, 2001, with respect to any General Claim based upon, arising out
of or otherwise in respect of any fact, circumstance or Claim of which the Buyer
prior to that date shall not have given notice to the Sellers (containing a
description of such General Claim in reasonable detail); (b) as provided in
Section 6.5(i), with respect to any Tax Claim; (c) three (3) years after the
Closing Date, with respect to any Safety and Environmental Claim based upon,
arising out of or otherwise in respect of any fact, circumstance or Claim of
which the Buyer prior to that date shall not have given notice to the Sellers
(containing a description of such Claim in reasonable detail); and (d) with
respect to any ERISA Claim based upon, arising out of or otherwise in respect of
any fact, circumstance or Claim of which the Buyer prior to that date shall not
have given notice to the Sellers (containing a description of such Claim in
reasonable detail), thirty (30) days after the date upon which the liability to
which any such ERISA Claim may relate is barred by all applicable statutes of
limitations.
10.2 Survival of Representations and Warranties of the Buyer. The
representations and warranties of the Buyer shall survive the execution and
delivery of this Agreement and the Closing hereunder (i) with respect to the
representations and warranties in Sections 5.1, 5.2 and 5.6, indefinitely, and
(ii) with respect to the representations and warranties in Sections 5.3, 5.4,
5.5 and 5.7, until June 30, 2001.
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ARTICLE XI
General Indemnification
11.1 Obligation of the Sellers to Indemnify.
(a) Subject to the limitations contained in Article 10 and
Section 11.4, the Sellers jointly and severally agree to indemnify, defend and
hold harmless the Buyer, and its directors, officers, employees, Affiliates
(including, without limitation, the Company), successors and assigns, from and
against all Claims, losses, liabilities, damages, deficiencies, judgments,
assessments, fines, settlements, costs or expenses (including interest,
penalties and documented reasonable fees and expenses of attorneys, experts,
personnel and consultants incurred by the indemnified party in any action or
proceeding between the indemnifying party and the indemnified party or between
the indemnified party and any third party, or otherwise) ("Losses") based upon,
arising out of or otherwise in respect of any inaccuracy in or any breach of any
representation, warranty, covenant or agreement of the Sellers, or any of them,
contained in this Agreement or in any documents or instruments delivered by the
Sellers pursuant to this Agreement, except to the extent otherwise covered by
Section 11. 1 (b).
(b) Each Seller, severally and not jointly, agrees to
indemnify, defend and hold harmless the Buyer, and its directors, employees,
officers, Affiliates (including, without limitation, the Company), successors
and assigns, from and against all Losses based upon, arising out of or otherwise
in respect of (i) any inaccuracy in or any breach of any representation or
warranty of such Seller contained in Article 4; or (ii) any breach of any
covenant or agreement of such Seller contained in Article 9; provided, however,
that notwithstanding anything in this Section 11.1 to the contrary, the Buyer
shall have the right to cease making all Covenant Payments and, if appropriate,
to recover all Covenant Payments already made, in the event of the breach by
either Active Seller of Section 9.1(a).
11.2 Obligation of the Buyer to Indemnify. The Buyer agrees to
indemnify, defend and hold harmless (i) the Sellers from and against all Losses
based upon, arising out of or otherwise in respect of any inaccuracy in or any
breach of any representation, warranty, covenant or agreement of the Buyer
contained in this Agreement or in any documents contemplated hereby to be
delivered by the Buyer or any claim asserted against the Sellers relating to or
arising from the ownership or operation of the Company and its business on or
after the Closing Date, and (ii) Meryll Foods, Inc. from and against all Losses
based on or arising from any action or omission of the Buyer that constitutes a
breach or violation of the terms of the Lease (except to the extent such claim
arises from or relates to any misrepresentation of a Seller herein or any breach
or violation by a Seller of any covenant or agreement contained herein or any
action by Meryll Foods, Inc.), and (iii) the Sellers on an after-Tax basis
against any additional Tax imposed on the Sellers that is attributable to a
difference in federal income tax rates between long term capital gain and
ordinary income, which additional tax may result from the shipment between
December 27 and 31, 1999 to the Company of up to 75 trailers of Snapple products
being included in the Company's inventory for purposes of the computation of the
Sellers' federal tax liability under Sections 263(a) and 338(h)(10) of the Code.
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11.3 Notice and Opportunity to Defend.
(a) All claims under this Article 11 by any party entitled to
indemnification under this Article 11 (an "Indemnitee") shall be asserted and
resolved as follows: promptly after receipt by the Indemnitee of notice of any
Claim or circumstances which, with the lapse of time, could reasonably be
expected to give rise to a Claim or the commencement (or threatened
commencement) of a Claim including any action, proceeding or investigation (an
"Asserted Liability") that may result in a Loss, the Indemnitee shall give
prompt notice thereof (the "Claims Notice") to the party from whom the
Indemnitee is seeking indemnification under this Article 11 (the "Indemnifying
Party"); provided, however that failure by Indemnitee to promptly give a Claims
Notice shall not affect the Indemnitee's rights hereunder unless the ability of
the Indemnifying Party to defend the subject Claim is prejudiced thereby. The
Claims Notice shall describe the Asserted Liability in reasonable detail, 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. Anything herein
to the contrary notwithstanding, if the Indemnifying Party is a Seller or all of
the Sellers, the Claims Notice shall be given to the Sellers' Representative.
(b) (i) The Indemnifying Party may elect to compromise or
defend, at its own expense and by its own counsel, any Asserted Liability,
except (A) any Asserted Liability by any supplier, grantor of product
distribution rights, subdistributor, area route distributor or customer of the
Company with respect to the business conducted by the Company prior to the
Closing, which shall be subject to Section 11.3(b)(ii); or (B) any Asserted
Liability concerning the compliance of the operations or properties of the
Company with Safety and Environmental Laws, which shall be subject to Section
11.3(b)(iii). If the Indemnifying Party elects to compromise or defend such
Asserted Liability, it shall within thirty (30) calendar 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 all such manners as the
Indemnifying Party reasonably requests, at the expense of the Indemnifying
Party, in the compromise of, or defense against, such Asserted Liability. If the
Indemnifying Party elects not to compromise or defend the Asserted Liability,
fails to notify the Indemnitee of its election as herein provided or contests
its obligation to indemnify under this Agreement, the Indemnitee may (without
limiting the indemnification liability of the Indemnifying Party hereunder) pay,
compromise or defend such Asserted Liability. Notwithstanding the foregoing,
neither the Indemnifying Party nor the Indemnitee may settle or compromise any
Asserted Liability over the objection of the other; provided, however, consent
to settlement or compromise shall not be unreasonably withheld or delayed. 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
available to the Indemnifying Party any books, records or other documents within
its control that are necessary or appropriate for such defense.
(ii) Notwithstanding anything to the contrary in Section
11.3(b)(i), in the case of any Asserted Liability by any supplier, grantor of
product distribution rights, subdistributor, area route distributor or customer
of the Company with respect to the business conducted by the Company prior
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to the Closing in connection with which the Buyer may make a claim against the
Sellers for indemnification pursuant to Section 11.1, the Buyer shall have the
exclusive right at its option to defend any such Asserted Liability, subject to
the duty of the Buyer to consult with the Indemnifying Party and its attorneys
in connection with such defense and provided that no such Asserted Liability
shall be compromised or settled by the Buyer without the prior consent of the
Indemnifying Party, which consent shall not be unreasonably withheld or delayed.
The Indemnifying Party shall have the right to recommend in good faith to the
Buyer proposals to compromise or settle Asserted Liabilities brought by a
supplier, grantor of product distribution rights, subdistributor, area route
distributor or customer of the Company. All amounts required to be paid in
connection with any such Asserted Liability pursuant to the determination of any
Governmental Body, and all amounts required to be paid in connection with any
such compromise or settlement consented to by the Indemnifying Party, shall be
borne and paid by the Indemnifying Party. The parties agree to cooperate fully
with one another in the defense, compromise or settlement of any such Asserted
Liability.
(iii) Notwithstanding anything to the contrary in Section
11.3(b)(i), in the case of any Asserted Liability likely to result in
Environmental Compliance Costs in connection with which the Buyer may make a
claim against the Sellers for indemnification pursuant to Section 11. 1, the
Buyer shall have the exclusive right at its option to defend any such Asserted
Liability, subject to the duty of the Buyer to provide copies of all relevant
documentation generated in connection with the defense of such Asserted
Liability to the Indemnifying Party and provided that the Environmental
Compliance Costs incurred by the Buyer shall be indemnifiable by the Sellers
only to the extent that they are Commercially Reasonable Costs.
11.4 Limitations on Indemnification. The indemnification provided for
in Section 11.1 shall be subject to the following limitations:
(a) The Sellers will have no liability and shall not be
obligated to pay any amounts for indemnification under Section 11.1, except
those based upon, arising out of or otherwise in respect of Sections 3.4, 3.5,
3.6, 3.9, 3.25, 6.1 and 6.2, the last sentence of Section 3.16(a), and Articles
4 and 9 (the "Basket Exclusions"), until the aggregate amounts for
indemnification under Section 11.1, exclusive of those based on the Basket
Exclusions, equals $175,000 (the "Basket Amount"), whereupon the Sellers shall
be obligated to provide indemnification hereunder solely for the amount of the
Sellers' indemnification liability under Section 11.1 in excess of the Basket
Amount.
(b) The Sellers shall be obligated to pay any amounts for
indemnification based on the Basket Exclusions (in accordance with their
liability as set forth in Section 11.1) without regard to the individual or
aggregate amounts thereof and without regard to whether all other
indemnification payments shall have exceeded, in the aggregate, the Basket
Amount.
(c) In no event shall the aggregate amount of the Sellers'
indemnification obligations hereunder exceed $16,800,000.
<PAGE>
38
(d) Except with respect to Claims involving fraud, the
indemnification afforded by this Agreement will be the sole and exclusive remedy
against any Indemnifying Party for any Claims of any Indemnified Party and its
directors, officers, and employees with respect to matters arising out of this
Agreement.
(e) The Indemnifying Party shall not have any liability with
respect to Claims to the extent that the Indemnifying Party can establish that
they are caused solely by the Indemnified Party's failure to provide the
Indemnifying Party with prompt and continuing notice as provided in Section
11.3.
(f) The Sellers shall not be obligated to pay any amounts for
indemnification under Section 11.1 with regard to any Claims arising out of, or
otherwise based upon a breach of, Sections 3.17, 3.18 or 3.22 if the matters
constituting the basis for such Claim are clearly disclosed on the Closing Date
Financials or are otherwise disclosed to the Buyer and taken into account in the
calculation of working capital or the EBITDA payment pursuant to Section 1.3.
(g) The Sellers shall have no obligation to pay any amounts
for indemnification under Section 3.13 with respect to any Losses arising from
any violation of Safety and Environmental Laws, or otherwise arising from any
event or circumstance referred to in Section 3.13(g), unless (1) any of the
Sellers have knowledge of such violation, event or circumstance, (2) such
violation, event or circumstance arose from any act or omission of or
attributable to the Company or any of its Affiliates, any past or current
Employee of the Company or any of its Affiliates, or any other person acting on
behalf of, or in the service or upon the direction of, the Company or any of its
Affiliates, or any other person for whom the Company may be held responsible, or
(3) such Losses constitute Environmental Compliance Costs arising out of or
relating to, or incurred as the result of, or Losses otherwise resulting from,
any Remedial Action performed , or required to be performed, pursuant or in
response to (i) any Environmental Claim of any federal, state or local
governmental agency or other authority, or (ii) any Claim, Order or other ruling
or determination of any federal, state or local governmental agency or other
authority, or (iii) any notice to the Company, written or oral, from any third
party of any event or circumstances constituting a breach or violation of any
Safety and Environmental Laws for which the Company, or any Affiliate of the
Company, could reasonably be expected to be legally responsible in whole or in
part.
11.5 Insurance. To the extent that a party entitled to indemnification
hereunder is at any time paid by an insurance company for any Losses with
respect to which payment was previously received by or remains due to such party
from an Indemnifying Party hereunder, the Indemnified Party will promptly
reimburse such Indemnifying Party from such insurance proceeds in an amount up
to the amount of the prior payment received from such Indemnifying Party by the
Indemnified Party, or if there is an amount remaining due, provide a credit for
such amount.
ARTICLE XII
[INTENTIONALLY OMITTED]
<PAGE>
39
ARTICLE XIII
Miscellaneous
13.1 Certain Definitions.
(a) As used in this Agreement, the following terms have the
following meanings:
"Affiliate" means, with respect to any person, any other
person controlling, controlled by or under common control with, or the parents,
spouse, lineal descendants or beneficiaries of, such person.
"business day" means any date upon which banks in the City of
New York are not authorized or required to be closed.
"Benefit Plan" means any employee benefit plan, arrangement,
policy or commitment (whether or not formal or in writing and whether or not an
employee benefit plan within the meaning of section 3(3) of ERISA), including
any employment, consulting or deferred compensation agreement, executive
compensation, bonus, incentive, pension, profit-sharing, savings, retirement,
stock option, stock purchase or severance pay plan, any life, health, disability
or accident insurance plan or any holiday or vacation practice, as to which the
Company or any Commonly Controlled Entity has or in the future could have any
direct or indirect, actual or contingent liability.
"COBRA" means the provisions of Code section 4980B and Part 6
of Subtitle B of Title I of ERISA.
"Commercially Reasonable Costs" means the costs, payments and
expenses which a prudent person, acting in a commercially reasonable manner and
seeking to minimize or mitigate his expenses to the extent reasonably
practicable, would expend to resolve the matter; provide , however, that any
payments or expenses expended pursuant to an Order, a written demand for
remedial or compliance action or a written demand for payment by any
Governmental Body shall be deemed to be Commercially Reasonable Costs.
"Commonly Controlled Entity" means any entity which is under
common control with the Company within the meaning of Code section 414(b), (c),
(m), (o) or (t).
"Confidential Information" means any information concerning
the business or affairs of the Company other than Trade Secrets that are not
generally available to the public (or became generally available to the public
as the result of any violation of Section 9.1(b) hereof).
"Copyrights" means any foreign or United States copyright
registrations and applications for registration thereof, and any non-registered
copyrights.
"DOL" means the United States Department of Labor.
<PAGE>
40
"Employee" means any individual employed by the Company
presently and, where indicated, in the past, except that, for purposes of
Section 3.25 hereof, the term "Employee" shall include any current or former
employee, officer, independent contractor, agent or consultant of the Company.
"Environment" means navigable waters, waters of the contiguous
zone, ocean waters, natural resources, surface waters, ground water, drinking
water supply, land surface, subsurface strata, ambient air, both inside and
outside of buildings and structures, man-made buildings and structures, and
plant and animal life on earth.
"Environmental Claims" means any notification, whether direct
or indirect, formal or informal, written or oral, pursuant to Safety and
Environmental Laws or principles of common law relating to pollution, protection
of the Environment or public health and safety, that any of the current or past
operations of the Company, or any by-product thereof, or any of the property
currently or formerly owned, leased or operated by the Company, or the
operations or property of any predecessor of the Company is or may be implicated
in or subject to any Claim, Order, hearing, notice, agreement or evaluation by
any Governmental Body or any other person.
"Environmental Compliance Costs" means any documented and
reasonable expenditures, costs, assessments or expenses (including any
documented and reasonable expenditures, costs, assessments or expenses in
connection with the conduct of any Remedial Action, as well as documented and
reasonable fees, disbursements and expenses of attorneys, experts, personnel and
consultants), whether direct or indirect, necessary to cause the operations,
real property, assets, equipment or facilities owned, leased, operated or used
by the Company to be in compliance with any and all requirements, as in effect
at the Closing Date, of Safety and Environmental Laws, principles of common law
concerning pollution, protection of the Environment or health and safety, or
Permits issued pursuant to Safety and Environmental Laws; provide , however,
that Environmental Compliance Costs do not include expenditures, costs,
assessments or expenses necessary in connection with normal maintenance of such
real property, assets, equipment or facilities or the replacement of equipment
in the normal course of events due to ordinary wear and tear.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"ERISA Claim" means any claim based upon, arising out of or
otherwise in respect of any inaccuracy in or any breach of representation or
warranty of the Sellers contained in Section 3.25.
"General Claim" means any claim (other than a Tax Claim, a
Safety and Environmental Claim or an ERISA Claim) based upon, arising out of or
otherwise in respect of any inaccuracy in or any breach of any representation or
warranty of the Sellers, or any of them, contained in this Agreement.
<PAGE>
41
"Hazardous Substance" means any toxic waste, pollutant,
contaminant, hazardous substance, toxic substance (including, without
limitation, asbestos), hazardous waste, special waste, industrial substance or
waste, petroleum or petroleum-derived substance or waste, radioactive substance
or waste, or any constituent of any such substance or waste, or any other
substance regulated under or defined by any Safety and Environmental Law.
"IRS" means the Internal Revenue Service.
"Lease" means that certain Lease Agreement, dated August 2,
1995, between Mary Adamowicz, as Landlord, and Meryll Foods, Inc., as tenant,
covering premises known as 120-180 Adams Boulevard, Farmingdale, New York, as
heretofore modified, amended and/or extended.
"Lien" means any lien, pledge, mortgage, deed of trust,
security interest, claim, lease, license, charge, option, right of first
refusal, easement, servitude, transfer restriction (other than transfer
restrictions under Federal or State securities laws applicable to non-registered
securities), encumbrance or any other restriction or limitation whatsoever (but
shall not be understood to include any restriction, or limitation of, any right
or other asset of the Company that inherently defines the scope or permitted use
of such asset including, without limitation, any lease, license or similar right
disclosed hereunder to use any assets which are not owned by the Company
outright.)
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means any Benefit Plan which is a pension plan
within the meaning of ERISA section 3(2) (regardless of whether the plan is
covered by ERISA).
"person" means any individual, corporation, partnership,
limited liability company, firm, joint venture, association, joint-stock
company, trust, unincorporated organization, Governmental Body or other entity.
"property" or "properties" means real, personal or mixed
property, tangible or intangible.
"Release" means any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into or through the indoor or outdoor Environment or into, through or
out of any property, including the movement of Hazardous Substances through or
in the air, soil, surface water, ground water or property.
"Remedial Action" means all actions, whether voluntary or
involuntary, reasonably necessary to comply with, or discharge any obligation
under, Safety and Environmental Laws to (i) clean up, remove, treat, cover or in
any other way adjust Hazardous Substances in the indoor or outdoor Environment;
(ii) prevent or control the Release of Hazardous Substances so that they do not
migrate or endanger or threaten to endanger public health or welfare or the
Environment; or (iii) perform remedial studies, investigations, restoration and
post-remedial studies, investigations and monitoring on, about or in any real
property.
<PAGE>
42
"Retiree Welfare Plan" means any Welfare Plan that provides
benefits to current or former Employees beyond their retirement or other
termination of service (other than coverage mandated by COBRA, the cost of which
is fully paid by the current or former Employee or his or her dependents).
"Safety and Environmental Claim" means any claim based upon,
arising out of or otherwise in respect of any inaccuracy in or any breach of any
representation or warranty of the Sellers contained in this Agreement
related to Safety and Environmental Laws.
"Safety and Environmental Laws" means all Laws and Orders
relating to pollution, protection of the Environment, public or worker health
and safety, or the emission, discharge, release or threatened release of
Hazardous Substances into the Environment or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Substances including the Comprehensive
Environmental Response, Compensation and Liability Act, 42 U.S.C. ss. 9601 et
seq., the Resource Conservation and Recovery Act, 42 U.S. C. ss. 6901 et seq.,
the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq., the Federal Water
Pollution Control Act, 33 U.S.C. ss. 1251 et seq., the Clean Air Act, 42 U.S.C.
ss. 7401 et seq., the Federal Insecticide, Fungicide and Rodenticide Act,
7 U.S.C. ss. 121 et seq., the Occupational Safety and Health Act, 29 U.S.C. ss.
651 et seq., the Asbestos Hazard Emergency Response Act, 15 U. S. C. ss. 2601
et seq., the Safe Drinking Water Act, 42 U. S. C. ss. 300f et seq., the Oil
Pollution Act of 1990, 33 U.S.C. ss. 2701 et seq., and analogous state acts.
"Tax Claim" means any claim based upon, arising out of or
otherwise in respect of any inaccuracy in or any breach of any representation,
warranty or covenant of the Sellers contained in this Agreement related to
Taxes.
"Title Defects" means any Lien, restrictive covenant,
encroachment or other survey defect.
"Trade Secrets" means any trade secrets, research records,
processes, procedures, manufacturing formulae, technical know-how, technology,
blue prints, designs, plans, inventions (whether patentable and whether reduced
to practice), invention disclosures and improvements thereto.
"Trademarks" means any trademarks, service marks, trade dress,
trade names, brand names, designs and logos, corporate names, product or service
identifiers, whether registered or unregistered, and all registrations and
applications for registration thereof.
"Union" means Highway and Local Motor Freight Drivers,
Dockmen and Helpers, Local Union 707, affiliated with the International
Brotherhood of Teamsters, Chauffeurs, Warehousemen and Helpers of America.
"Welfare Plan" means any Benefit Plan which is a welfare plan
within the meaning of ERISA section 3(l) (regardless of whether the plan is
covered by ERISA).
<PAGE>
43
(b) The following capitalized terms are defined in the
following Sections of this Agreement:
Term Section
---- -------
Active Seller 9.1(a)
Agent 13.2
Annual Financial Statements 3.7
Asserted Liability 11.3(a)
Reviewed Financials 3.7
Balance Sheet 3.7
Balance Sheet Date 3.7
Basket Amount 11.4(a)
Basket Exclusions 11.4(a)
Broker 6.2
Buyer Preamble
Buyer Calculation Objection 1.3(a)
C Short Year 6.5(h)
Chase Bank 3.30(d)
Chase Payoff Letter 6.4
Claims 3.14
Claims Notice 11.3(a)
Closing 1.1
Closing Date 2
Closing Date Financials 1.3(a)
Closing Statement of Working Capital 1.3(a)
Code 3.9(c)
Common Stock 3.4
Company Preamble
Company Business 9.1
Company Products 3.14
Condition of the Company 3.3
Contemplated Transactions 1.5
Contracts 3.12(c)
Covenant Payments 9.1(a)
EBITDA 1.3(c)
EBITDA Deficiency 1.3(c)
EBITDA Payment Calculation 1.3(a)
Escrow Accounts 1.2(b)
Escrow Agent 1.2(b)
Escrow Agreement 1.2(b)
Financials 3.7
GAAP 1.3(a)
Governmental Bodies 3.10
<PAGE>
44
Indemnification Claim 3.31(a)
Indemnifying Party 11.3(a)
Indemnitee 11.3(a)
Intellectual Property 3.20
Interim Financial Statements 3.7
Laws 3.10
Leased Real Property 3.16(b)
Liabilities 3.23
Losses 11. 1 (a)
NY&W 1.3(a)
Orders 3.10
Payment Calculations 1.3(a)
Permits 3.11
Purchase Price 1.1
Real Property 3.16(b)
Real Property Leases 3.16(a)
Resolution Accountants 1.3(a)
Restricted Period 9.1(a)
Restricted Seller 9.1(a)
Restrictive Covenants 9.2
Route Distribution Agreements 3.15 (a)
S Short Year 6.5(h)
Scheduled Consents 3.12
Section 338 Election 6.5(a)
Sellers Preamble
Sellers/Company Information 12.3
Sellers' Representative 1.5
Shares Preamble
Tangible Property 3.19
Tax Audit 6.5(d)
Tax Returns 3.9(a)
Taxes 3.9(a)
UCC-3 Termination Statements 6.4
Uncollected Receivables 6.7
Warn Act 3.25(r)
Working Capital Payment Calculation 1.3(a)
Year 2000 Compliant 3.29
13.2 Consent to Jurisdiction and Service of Process; Waiver of Jury
Trial. (a) Any Claim arising out of or relating to this Agreement, the Escrow
Agreement or the Contemplated Transactions may be instituted in any Federal
court of the Southern District of New York or the Supreme Court of the State of
New York, New York County, and each party agrees not to assert, by way of
motion, as a defense or otherwise, in any such Claim, any claim that it is not
subject personally to the jurisdiction of such court, that the Claim is brought
<PAGE>
45
in an inconvenient forum, that the venue of the Claim is improper or that this
Agreement, the Escrow Agreement or the subject matter hereof or thereof may not
be enforced in or by such court. Each party further irrevocably submits to the
jurisdiction of such court in any such Claim. Each Seller hereby appoints the
Sellers' Representative (the "Agent"), at the address of the Sellers' Agent set
forth in Section 13.3 (or at such other address as the Sellers' Representative,
or a successor Sellers' Representative, may hereafter furnish to Buyer in
writing), as such Seller's authorized agent to accept and acknowledge on such
Sellers' behalf service of any and all process that may be served in any such
Claim. Any and all service of process and any other notice in respect of any
such Claim shall be effective against any party if given personally or by
registered or certified mail, return receipt requested, or by any other means of
mail that requires a signed receipt, postage prepaid, mailed to the appropriate
party as hereinbelow in Section 13.3 provided, or by personal service on the
appropriate party with a copy of such process mailed to such party by first
class mail or registered or certified mail, return receipt requested, postage
prepaid. Nothing herein contained shall be deemed to affect the right of any
party to serve process in any manner permitted by law or to commence legal
proceedings or otherwise proceed against any other party in any other
jurisdiction.
(b) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH OF
THE PARTIES HERETO HEREBY WAIVES, AND COVENANTS THAT IT WILL NOT ASSERT (WHETHER
AS PLAINTIFF, DEFENDANT OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM
IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF
OR BASED UPON THIS AGREEMENT, ANY RELATED AGREEMENT OR THE SUBJECT MATTER
HEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN
CONTRACT, IN TORT OR OTHERWISE.
13.3 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be delivered personally, sent by
electronically confirmed facsimile transmission or sent by certified, registered
or express mail, postage prepaid and return receipt requested. Any such notice
shall be deemed given when so delivered personally, or the next business day
after being sent by electronically confirmed facsimile transmission, on the next
business day after being sent via an established overnight courier for priority
delivery, or, if mailed, five (5) days after the date of deposit in the United
States mails, as follows:
(i) if to the Buyer, to:
SNAPPLE BEVERAGE CORP.
709 Westchester Ave.
White Plains, NY 10604
Attention: Gary G. Lyons, Esq.
Telephone: (914) 397-9295
Facsimile: (914) 397-9368
<PAGE>
46
with a copy to (which shall not by itself constitute notice):
TRIARC COMPANIES, INC.
280 Park Avenue
New York, NY 10017
Attention: Brian L. Schorr, Esq.
Telephone: (212) 451-3045
Facsimile: (212) 451-3216
(ii) if to the Sellers or to the Sellers' Representative, to:
Marilyn Kaplan
15 Meryll Place
Plainview, New York 11803
with a copy to (which shall not by itself constitute notice):
AKIN, GUMP, STRAUSS, HAUER & FELD, L.L.P.
590 Madison Avenue
New York, New York 10022
Attention: Daniel R. Kaplan, Esq.
Telephone: (212) 872-1000
Facsimile: (212) 872-1002
Any party may by notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder
(subject to Section 1.5 hereof).
13.4 Entire Agreement. This Agreement, the Escrow Agreement, and any
other collateral agreements executed in connection with the consummation of
the Contemplated Transactions contain the entire agreement among the parties
with respect to the purchase of the Shares and supersede all prior agreements,
written or oral, with respect thereto.
13.5 Waivers and Amendments; Non-Contractual Remedies; Preservation of
Remedies. This Agreement may be amended, superseded, canceled, renewed or
extended, and the terms hereof may be waived, only by a written instrument
signed by the Buyer and the Sellers' Representative or, in the case of a
waiver, by the Buyer or the Sellers' Representative, whichever is waiving
compliance. No delay on the part of any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof, nor shall any waiver
on the part of any party of any such right, power or privilege, nor any single
or partial exercise of any such right, power or privilege, preclude any
further exercise thereof or the exercise of any other such right, power or
privilege. Except as otherwise expressly provided herein, the rights and
remedies herein provided are cumulative and are not exclusive of any rights or
remedies that any party may otherwise have at law or in equity. The rights and
remedies of any party based upon, arising out of or otherwise in respect of
any inaccuracy in or breach of any representation, warranty, covenant or
<PAGE>
47
agreement contained in this Agreement or any Documents delivered pursuant to
this Agreement shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement contained in this Agreement or any Documents
delivered pursuant to this Agreement (or in any other agreement between the
parties) as to which there is no inaccuracy or breach.
13.6 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York applicable to agreements
made and to be performed entirely within such State.
13.7 Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors and
legal representatives. This Agreement is not assignable except by operation of
law, except that the Buyer may assign its rights hereunder to any of its
affiliates or to any successor to all or substantially all of its business or
assets.
13.8 Usage. All pronouns and any variations thereof refer to the
masculine, feminine or neuter, singular or plural, as the context may require.
All terms defined in this Agreement in their singular or plural forms have
correlative meanings when used herein in their plural or singular forms,
respectively. Unless otherwise expressly provided, the words "include,"
"includes" and "including" do not limit the preceding words or terms and shall
be deemed to be followed by the words "without limitation."
13.9 Counterparts. This Agreement may be executed by the parties hereto
in separate counterparts, each of which when so executed and delivered shall
be an original, but all such counterparts shall together constitute one and
the same instrument. Each counterpart may consist of a number of copies hereof
each signed by less than all, but together signed by all of the parties
hereto.
13.10 Exhibits and Schedules; Cross References. The Exhibits and
Schedules are a part of this Agreement as if fully set forth herein and all
references to this Agreement shall be deemed to include the Exhibits and
Schedules. All references herein to Sections, Exhibits and Schedules shall be
deemed references to such parts of this Agreement, unless the context shall
otherwise require. Disclosure of any fact or item in any Schedule hereto
referenced by a particular Section in this Agreement shall not be deemed
disclosed with respect to any other Section or Schedule unless an explicit
cross-reference appears indicating the other Sections or Schedules to which
such fact or item also relates.
13.11 Headings. The headings in this Agreement are for reference only,
and shall not affect the interpretation of this Agreement.
13.12 Interpretation. The parties acknowledge and agree that:
(i) each party and its counsel
<PAGE>
48
reviewed and negotiated the terms and provisions of this Agreement and have
contributed to its revision; (ii) the rule of construction to the effect that
any ambiguities are resolved against the drafting party shall not be employed in
the interpretation of this Agreement; and (iii) the terms and provisions of this
Agreement shall be construed fairly as to all parties hereto, regardless of
which party was generally responsible for the preparation of this Agreement.
13.13 Severability of Provisions.
(a) If any provision or any portion of any provision of this
Agreement shall be held invalid or unenforceable, the remaining portion of
such provision and the remaining provisions of this Agreement shall not be
affected thereby.
(b) If the application of any provision or any portion of any
provision of this Agreement to any person or circumstance shall be held
invalid or unenforceable, the application of such provision or portion of such
provision to persons or circumstances other than those as to which it is held
invalid or unenforceable shall not be affected thereby.
13.14 No Other Representations. It is the explicit intention and
understanding of each party hereto that (i) neither the Sellers nor the
Company are making any representations or warranties whatsoever, express or
implied, except for those representations and warranties contained in Articles
III and IV hereof, and (ii) the Buyer is making no representations or
warranties whatsoever, express or implied, except for those representations
and warranties contained in Article V hereof.
13.15 No Third Party Rights. This Agreement and all of its provisions
and conditions are for the sole and exclusive benefit of the parties to this
Agreement and their successors and assigns. Except as may be expressly set
forth herein, none of the terms hereof shall be for the benefit of any third
party.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
BUYER:
SNAPPLE BEVERAGE CORP.
By: GARY G. LYONS
----------------------------
Name: Gary G. Lyons
Title: Senior Vice President
[SIGNATURES CONTINUED ON NEXT PAGE]
<PAGE>
49
SELLERS:
By: GILBERT KAPLAN
-------------------------
Name: Gilbert Kaplan
By: MARILYN KAPLAN
-------------------------
Name: Marilyn Kaplan
By: ROBIN KAPLAN-GOLDSTEIN
-------------------------
Name: Robin Kaplan-Goldstein
By: IRENE GRAULICH
-------------------------
Name: Irene Graulich
GILBERT KAPLAN 12/30/93 TRUST
By: MARILYN KAPLAN
-------------------------
Marilyn Kaplan, Trustee
GILBERT KAPLAN 12/31/93 TRUST
By: MARILYN KAPLAN
-------------------------
Marilyn Kaplan, Trustee
<PAGE>
50
LIST OF OMITTED EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit A: Escrow Agreement
Exhibit B: Opinion of Counsel to Sellers
Exhibit C: Company Officer and Director Releases
Exhibit D: Opinion of Counsel to Buyer
SCHEDULES
Schedule 1.3 - Form of Closing Statement of Working Capital
Schedule 1.3(a) - Candidates for Resolution Accountants
Schedule 1.3(c) - Methodology for EBITDA Calculation
Schedule 3.3 - Jurisdictions of Qualification
Schedule 3.11 - Permits
Schedule 3.12 - Obtained Consents
Schedule 3.13 - Environmental Matters
Environmental Permits
Environmental Notices
Schedule 3.14 - Claims
Schedule 3.15 - Contracts
Schedule 3.16 - Real Property Leases
Schedule 3.17 - Inventory
Schedule 3.18 - Receivables
Schedule 3.19 - Tangible Property
Schedule 3.20 - Intellectual Property
Schedule 3.21 - Liens
Schedule 3.22 - Accounts Payable
Schedule 3.23 - Liabilities
Schedule 3.24 - Suppliers and Customers
Schedule 3.25(a) - Benefit Plans
Schedule 3.25(e) - Unfunded Obligations
Schedule 3.25(f) - Fair Market Value of Plan Assets
Schedule 3.25(g) - Benefit Plan Terminations
Schedule 3.25(o) - Reserves, Assets, etc.
Schedule 3.25(q) - Result of Transaction Consummation
Schedule 3.25(s) - Workmen's Compensation and Disability Benefits
Schedule 3.26 - Employees
Schedule 3.27 - Insurance Policies
Schedule 3.28 - Officers, Directors and Employees
Schedule 3.30 - Operations
Schedule 3.31 - Conflicts of Interest
Schedule 4.1 - Shareholders and Share Holdings
Schedule 4.3 - Seller Consents
Schedule 5.3 - Buyer Consents
Schedule 5.5 - Claims Against Buyer
The Registrant hereby agrees to furnish supplementally a copy of any omitted
exhibit or schedule to the Securities and Exchange Commission upon its
request.
<PAGE>
EXHIBIT 10.2
- -----------------------------------------------------------------------------
PURCHASE AGREEMENT
by and among
TRIARC COMPANIES, INC.,
TRIANGLE AIRCRAFT SERVICES CORPORATION,
NELSON PELTZ
and
PETER W. MAY
-------------------------
for all of the outstanding membership interests
of
280 HOLDINGS, LLC
-------------------------
January 19, 2000
-------------------------
- -----------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
1. Sale and Purchase of Interests..................................1
1.1. Sale and Purchase of Interests.....................1
1.2. Payment of Purchase Price..........................2
1.3. Delivery of Interests..............................2
1.4. Payment by Seller..................................2
2. Closing; Closing Date...........................................2
3. Representations and Warranties of the Seller as to the Company..3
3.1. Due Organization and Authority.....................3
3.2. Subsidiaries and Other Affiliates..................3
3.3. Qualification......................................3
3.4. Outstanding Membership Interests...................3
3.5. Options or Other Rights............................4
3.6. Compliance with Laws; Permits......................4
3.7. No Breach..........................................4
3.8. Claims and Proceedings.............................5
3.9. Contracts..........................................6
3.10. Real Estate........................................6
3.11. Title to Properties................................7
3.12. Liabilities........................................7
3.13. Insurance..........................................8
3.14 Transfer of Airplane...............................8
3.15. Full Disclosure....................................8
3.16. Representations and Warranties on Closing Date.....9
4. Representations and Warranties of Each Seller...................9
4.1. Title to the Interests.............................9
4.2. Authority to Execute and Perform Agreement.........10
4.3. Representations and Warranties on Closing Date.....11
5. Representations and Warranties of the Guarantors................11
5.1. Authority to Execute and Perform Agreement.........11
<PAGE>
6. Representations and Warranties of the Buyer.....................12
6.1. Due Incorporation and Authority....................12
6.2. Authority to Execute and Perform Agreement.........12
6.3. Purchase for Investment............................14
6.4. Representations and Warranties on Closing Date.....14
7. Covenants and Agreements........................................14
7.1. Conduct of Business................................14
7.2. Corporate Examinations and Investigations..........14
7.3. Publicity..........................................15
7.4. Expenses...........................................16
7.5. Indemnification of Brokerage.......................16
7.6. Related Parties....................................17
7.7. Termination of Agreements..........................17
7.8. Permit and Warranty Transfers......................17
7.9. Further Assurances.................................17
8. Conditions Precedent to the Obligation of the Buyer to Close....18
8.1. Representations and Covenants......................18
8.2. Consents and Approvals.............................18
8.3. Resignations.......................................18
8.4. No Claims..........................................18
8.5. Termination of Agreements..........................19
8.6. Consent of CIT.....................................19
8.7. Consent of CIT.....................................19
9. Conditions Precedent to the Obligation of the Sellers to Close..19
9.1. Representations and Covenants......................20
9.2. No Claims..........................................20
9.3. Releases from CIT..................................20
10. Guaranty........................................................20
10.1. Guaranty...........................................20
10.2. Guaranty Unconditional.............................21
10.3. Discharge; Reinstatement...........................22
10.4. Waiver by the Guarantors...........................22
11. Survival of Representations and Warranties of the Sellers
After Closing...................................................22
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12. General Indemnification.........................................23
12.1. Obligation of the Sellers to Indemnify.............23
12.2. Obligation of the Buyer to Indemnify...............24
12.3. Notice and Opportunity to Defend...................24
13. Termination of Agreement........................................25
13.1. Termination........................................25
13.2. Survival After Termination.........................26
14. Miscellaneous...................................................27
14.1. Certain Definitions................................27
14.2. Consent to Jurisdiction and Service of Process.....28
14.3. Notices............................................29
14.4. Entire Agreement...................................30
14.5. Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies...........................30
14.6. Governing Law......................................31
14.7. Binding Effect; Assignment.........................31
14.8. Usage..............................................31
14.9. Counterparts.......................................32
14.10. Schedules..........................................32
14.11. Headings...........................................32
14.12. Interpretation.....................................32
14.13. Severability of Provisions.........................32
SCHEDULES
3.3 Qualification Jurisdictions
3.9 Contracts
3.10(b) Real Property Leases
3.13 Insurance
3.14 Transfer of Airplane
<PAGE>
PURCHASE AGREEMENT
AGREEMENT, dated January 19, 2000, by and among Triarc
Companies, Inc., a Delaware corporation (the "Buyer"), Triangle Aircraft
Services Corporation (the "Seller"), Nelson Peltz ("Peltz") and Peter W. May
("May" and together with Peltz, the "Guarantors") for the purchase and sale of
all of the issued and outstanding membership interests of 280 Holdings, LLC, a
Delaware limited liability company (the "Company").
The Seller is the beneficial and record owner of all of the
issued and outstanding membership interests (the "Interests") of the Company.
The Seller wishes to sell to the Buyer, and the Buyer wishes to purchase from
the Seller, all of the Interests upon the terms and subject to the conditions of
this Agreement.
The Guarantors are the sole stockholders of the Seller and
have executed guarantees (the "Guarantees") of $18.0 million principal amount of
indebtedness (the "Company Debt") of the Company owed to The CIT Group/Equipment
Financing Group, Inc. ("CIT").
Certain terms used in this Agreement are defined in
Section 14.1.
Accordingly, the parties agree as follows:
1. Sale and Purchase of Interests.
1.1. Sale and Purchase of Interests. At the
closing provided for in Article 2 (the "Closing"), upon the terms and subject to
the conditions of this Agreement and in reliance upon the representations,
warranties and agreements of the Seller and the Guarantors contained herein, the
Seller shall sell to the Buyer, and the Buyer shall purchase from the Seller,
all of the Interests for an aggregate purchase price (the "Purchase Price")
equal to $27.2 million, payable (i) $9.2 million, in cash, to be paid in
accordance with Section 1.2 and (ii) $18.0 million, through the assumption of
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2
the Company Debt and the release of obligations of the Seller and the Guarantors
with respect to the Company Debt.
1.2. Payment of Purchase Price. At the Closing,
the Purchase Price shall be paid by the Buyer as follows:
(a) the Buyer shall deliver to the Seller
cash by wire transfer of immediately available funds, in an aggregate amount of
$9.2 million.
(b) the Buyer shall deliver to CIT a full
and unconditional guarantee of the Company Debt and CIT shall deliver to the
Seller and the Guarantors a full and unconditional release from all obligations
with respect to the Company Debt, including all obligations of the Guarantors
under the Guarantees.
1.3. Delivery of Interests. At the Closing,
Seller shall deliver to the Buyer a certificate representing the Interests
constituting all of the outstanding membership interests of the Company, duly
endorsed in blank or accompanied by stock powers (or other powers satisfactory
to the Buyer) duly executed in blank, in proper form for transfer, and with all
appropriate stock transfer tax stamps affixed.
1.4. Payment by Seller. At the closing, the
Seller shall deliver to the Buyer cash, by wire transfer of immediately
available funds, in an aggregate amount of $1.2 million, representing the
unamortized portion of the payment made by the Buyer to the Seller in 1997 in
connection with the extension of the lease of the Airplane by the Buyer.
2. Closing; Closing Date. The Closing of the sale and purchase
of the Interests contemplated hereby shall take place at the offices of the
Buyer, at 10:00 a.m. local time, on January 19, 2000, or such other time or
<PAGE>
3
date as the parties may mutually agree in writing, provided that all of the
conditions to the Closing set forth in Articles 8 and 9 have been satisfied or
waived by the party entitled to waive the same. The time and date upon which the
Closing occurs is herein called the "Closing Date."
3. Representations and Warranties of the Seller as to the
Company. The Seller represents and warrants to the Buyer as follows:
3.1. Due Organization and Authority. The Company
is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of Delaware and has all requisite power and
lawful authority to own, lease and operate its properties and to carry on its
business as now being and heretofore conducted.
3.2. Subsidiaries and Other Affiliates. The
Company does not directly or indirectly own any interest in any other person.
3.3. Qualification. The Company is duly
qualified or otherwise authorized as a foreign limited liability company to
transact business and is in good standing in each jurisdiction set forth on
Schedule 3.3, which are the only jurisdictions in which such qualification or
authorization is required by Law or in which the failure so to qualify or be
authorized could have a material adverse effect on the properties, business,
prospects, results of operations or financial condition of the Company
(collectively, the "Condition of the Company"). The Company does not own or
lease property in any jurisdiction other than its jurisdiction of organization
and the jurisdictions set forth on Schedule 3.3.
<PAGE>
4
3.4. Outstanding Membership Interests. All of
the issued and outstanding membership interests of the Company are owned by the
Seller, free and clear of any Lien. All of the outstanding membership interests
of the Company are duly authorized and validly issued, fully paid and
nonassessable. No other class of ownership interests of the Company is
authorized or outstanding.
3.5. Options or Other Rights. There is no
outstanding right, subscription, warrant, call, unsatisfied preemptive right,
option or other agreement of any kind to purchase or otherwise to receive from
the Company or the Seller any of the outstanding, authorized but unissued or
unauthorized membership interests or other securities of the Company, and there
is no outstanding security of any kind of the Company convertible into any such
ownership interest.
3.6. Compliance with Laws; Permits. Neither the
Seller nor the Company is in violation of any applicable order, judgment,
injunction, award, decree or writ (collectively, "Orders"), or any applicable
law, statute, code, ordinance, regulation or other requirement (collectively,
"Laws") of any government or political subdivision thereof, whether federal,
state, local or foreign or any agency or instrumentality of any such government
or political subdivision, or any court or arbitrator (collectively,
"Governmental Bodies"). The Company has all licenses, permits, exemptions,
consents, waivers, authorizations, rights, orders or approvals of, and has made
all required registrations with, any Governmental Body (collectively,
"Permits").
3.7. No Breach. The execution and delivery by
the Seller and the Guarantors of this Agreement and each and every other
agreement and instrument contemplated hereby, the consummation of the
transactions contemplated hereby and thereby and the performance by the Seller
<PAGE>
5
and the Guarantors of this Agreement and each such other agreement and
instrument in accordance with their respective terms and conditions will not (a)
violate any provision of any of the organizational documents of the Company; (b)
require the Company to obtain any consent, approval, authorization or action of,
or make any filing with or give any notice to, any Governmental Body or any
other person, except for notification to CIT; (c) violate, conflict with or
result in the breach of any of the terms and conditions of, result in a material
modification of the effect of, otherwise cause the termination of or give any
other contracting party the right to terminate, or constitute (or with notice or
lapse of time or both constitute) a default under, any contract, agreement,
indenture, note, bond, loan, instrument, lease, conditional sale contract,
mortgage, license, franchise, commitment or other binding arrangement
(collectively, the "Contracts") to which the Company is a party or by or to
which the Company or any of its properties is or may be bound or subject, or
result in the creation of any Lien upon any of the properties of the Company
pursuant to the terms of any such Contract; (d) violate any Law of any
Governmental Body; (e) violate any Order of any Governmental Body applicable to
the Company or to its securities, properties or business; or (f) violate or
result in the revocation or suspension of any Permit.
3.8. Claims and Proceedings. There are no
outstanding Orders of any Governmental Body against or involving the Company and
there are no actions, causes of action, suits, claims, complaints, demands,
litigations or legal, administrative or arbitral proceedings or investigations
(collectively, "Claims") (whether or not the defense thereof or liabilities in
respect thereof are covered by insurance) pending or threatened against or
involving the Company or any of its properties, owned or leased, or which relate
to, or could have any effect on, the Contemplated Transactions. There are no
<PAGE>
6
Claims pending or threatened that would give rise to any right of
indemnification on the part of any director or officer of the Company or the
heirs, executors or administrators of such director or officer, against the
Company or any successor to the business of the Company.
3.9. Contracts.
(a) Schedule 3.9 sets forth a list of
all the material Contracts to which the Company is a party or by or to which it
or any of its properties may be bound or subject. Schedule 3.9 also lists and
describes the status of all Contracts currently in negotiation or proposed by
the Company of a type which if entered into by the Company would be required to
be listed on Schedule 3.9 or on any other Schedule ("Proposed Contracts").
(b) There have been delivered to the
Buyer true and complete copies of (i) all of the Contracts set forth on Schedule
3.9 or on any other Schedule and (ii) the most recent draft, letter of intent or
term sheet (or if none exist, a reasonably detailed written summary) embodying
the terms of all of the Proposed Contracts set forth on Schedule 3.9. All of the
Contracts referred to in the preceding clause (i) are valid and binding upon the
Company, in accordance with their terms. The Company is not in default in any
material respect under any of such Contracts, nor does any condition exist that
with notice or lapse of time or both would constitute such a material default
thereunder. To the knowledge of the Seller, the Company or any of the
Guarantors, no other party to any such Contract is in default thereunder in any
material respect nor does any condition exist that with notice or lapse of time
or both would constitute such a material default thereunder.
<PAGE>
7
3.10. Real Estate.
(a) Leased Properties. Schedule 3.10(a)
is a true, correct and complete schedule of all leases, subleases, licenses and
other agreements (collectively, the "Real Property Leases") under which the
Company uses or occupies or has the right to use or occupy, now or in the
future, any real property that is not owned by the Company (the land, buildings
and other improvements covered by the Real Property Leases being herein called
the "Leased Real Property"). The Seller has heretofore delivered to, or have
caused the Company to deliver to, the Buyer true, correct and complete copies of
all Real Property Leases (including all modifications, amendments and
supplements). Each Real Property Lease is valid, binding and in full force and
effect, all rent and other sums and charges payable by the Company as tenant
thereunder are current, no notice of default or termination under any Real
Property Lease is outstanding, and no termination event or condition or uncured
default on the part of the Company, or, to the knowledge of any of the Seller,
the Company or any of the Guarantors, the landlord, exists under any Real
Property Lease. The Company holds the leasehold estate and interest in each Real
Property Lease free and clear of all Liens. The Seller, the Company and the
Guarantors have no ownership, financial or other interest in the landlord under
any Real Property Lease.
(b) The Company owns no real property.
3.11. Title to Properties. The Company owns
outright and has good title to the Airplane, free and clear of any Lien, except
for the Lien in favor of CIT granted in connection with the issuance of the
Company Debt.
3.12. Liabilities. At the Closing, the Company
will not have any direct or indirect indebtedness, liability, Claim, loss,
<PAGE>
8
damage, deficiency, obligation or responsibility, known or unknown, fixed or
unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured,
accrued, absolute, contingent or otherwise, whether or not of a kind required by
generally accepted accounting principles to be set forth on a financial
statement or in the notes thereto, other than the Company Debt.
3.13. Insurance. Schedule 3.13 sets forth a list
of all policies or binders of fire, liability, product liability, worker's
compensation, vehicular and other insurance held by or on behalf of the Company.
Such policies and binders are valid and binding in accordance with their terms,
are in full force and effect, and insure against risks and liabilities to an
extent and in a manner customary in the industries in which the Company
operates. The Company is not in default with respect to any provision contained
in any such policy or binder or has failed to give any notice or present any
claim under any such policy or binder in due and timely fashion. There are no
outstanding unpaid claims under any such policy or binder, and the Company has
not received any notice of cancellation or non-renewal of any such policy or
binder. The Company has not received any notice from any of its insurance
carriers or any Governmental Body that any insurance premiums will or may be
materially increased in the future or that any insurance coverage listed on
Schedule 3.13 will or may not be available in the future on substantially the
same terms as now in effect.
3.14. Transfer of Airplane. The Seller has
contributed to the Company all of its right, title and interest in and to the
Airplane and to all equipment, spare parts, agreements (other than agreements
which by their terms are unassignable and which are listed on Schedule 3.14
hereto) and other assets relating to the Airplane and to the ownership and
operation thereof.
<PAGE>
9
3.15. Full Disclosure. All documents, Contracts,
instruments, certificates, notices, consents, affidavits, letters, telegrams,
telexes, statements, schedules (including Schedules to this Agreement), exhibits
(including Exhibits to this Agreement) and any other papers whatsoever
(collectively, "Documents") delivered by or on behalf of the Seller, the Company
or any of the Guarantors in connection with this Agreement and the Contemplated
Transactions are true, complete and authentic. No representation or warranty of
the Seller contained in this Agreement, and no Document furnished by or on
behalf of the Seller, the Company or any of the Guarantors to the Buyer pursuant
to this Agreement or in connection with the Contemplated Transactions, contains
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements made, in the
context in which made, not materially false or misleading. There is no fact or
facts known to the Seller that the Seller has not disclosed to the Buyer in
writing that materially adversely affects or, so far as the Seller can now
reasonably foresee, will materially adversely affect, the Condition of the
Company or the ability of the Seller to perform this Agreement.
3.16. Representations and Warranties on Closing
Date. The representations and warranties contained in this Article 3 shall be
true and correct on and as of the Closing Date with the same force and effect as
though such representations and warranties had been made on and as of the
Closing Date (unless such representations and warranties relate solely to a
specific date, in which case such representations and warranties shall be true
and correct as of such specified date).
4. Representations and Warranties of the Seller. The Seller
represents and warrants to the Buyer as follows:
<PAGE>
10
4.1. Title to the Interests. As of the Closing Date,
the Seller shall own beneficially and of record, free and clear of any Lien, or
shall own of record and have full power and authority to convey free and clear
of any Lien, the Interests, and, upon delivery of and payment for such Interests
at the Closing as herein provided, the Seller will convey to the Buyer good and
valid title thereto, free and clear of any Lien.
4.2. Authority to Execute and Perform Agreement.
The Seller has full legal right and power and all authority and approvals
required to enter into, execute and deliver this Agreement and each and every
agreement and instrument contemplated hereby to which the Seller is or will be a
party and to perform fully its obligations hereunder and thereunder. This
Agreement has been duly executed and delivered by the Seller, and on the Closing
Date, each and every agreement and instrument contemplated hereby to which the
Seller is a party will be duly executed and delivered by the Seller and
(assuming due execution and delivery hereof and thereof by the other parties
hereto and thereto) this Agreement and each such other agreement and instrument
will be valid and binding obligations of the Seller enforceable against it in
accordance with their respective terms. The execution and delivery by the Seller
of this Agreement and each and every agreement and instrument contemplated
hereby to which the Seller is a party, the consummation of the transactions
contemplated hereby and thereby and the performance by the Seller of this
Agreement and each such other agreement and instrument in accordance with their
respective terms and conditions will not (a) violate any provision of the
Certificate of Incorporation or By-laws (or comparable instruments) of the
Seller; (b) require the Seller to obtain any consent, approval, authorization or
action of, or make any filing with or give any notice to, any Governmental Body
<PAGE>
11
or any other person, except for notification to CIT; (c) violate, conflict with
or result in the breach of any of the terms and conditions of, result in a
material modification of the effect of, otherwise cause the termination of or
give any other contracting party the right to terminate, or constitute (or with
notice or lapse of time or both constitute) a default under, any Contract to
which the Seller is a party or by or to which the Seller is, or the Interests
may be, bound or subject; (d) violate any Law or Order of any Governmental Body
applicable to the Seller or to the Interests; or (e) result in the creation of
any Lien on the Interests.
4.3. Representations and Warranties on Closing
Date. The representations and warranties contained in this Article 4 shall be
true and correct on and as of the Closing Date with the same force and effect as
though such representations and warranties had been made on and as of the
Closing Date (unless such representations and warranties relate solely to a
specific date, in which case such representations and warranties shall be true
and correct as of such specified date).
5. Representations and Warranties of the Guarantors. Each
Guarantor, severally and not jointly, represents and warrants to the Buyer as
follows:
5.1. Authority to Execute and Perform Agreement
Such Guarantor has full legal right and power and all authority and approvals
required to enter into, execute and deliver this Agreement and each and every
agreement and instrument contemplated hereby to which such Guarantor is or will
be a party and to perform fully such Guarantor's obligations hereunder and
thereunder. This Agreement has been duly executed and delivered by such
Guarantor, and on the Closing Date, each and every agreement and instrument
contemplated hereby to which such Guarantor is a party will be duly executed and
delivered by such Guarantor and (assuming due execution and delivery hereof
<PAGE>
12
and thereof by the other parties hereto and thereto) this Agreement and each
such other agreement and instrument will be valid and binding obligations of
such Guarantor enforceable against such Guarantor in accordance with their
respective terms. The execution and delivery by such Guarantor of this Agreement
and each and every agreement and instrument contemplated hereby to which such
Guarantor is a party, the consummation of the transactions contemplated hereby
and thereby and the performance by such Guarantor of this Agreement and each
such other agreement and instrument in accordance with their respective terms
and conditions will not (a) require such Guarantor to obtain any consent,
approval, authorization or action of, or make any filing with or give any notice
to, any Governmental Body or any other person, except for notification to CIT;
(b) violate, conflict with or result in the breach of any of the terms and condi
tions of, result in a material modification of the effect of, otherwise cause
the termination of or give any other contracting party the right to terminate,
or constitute (or with notice or lapse of time or both constitute) a default
under, any Contract to which such Guarantor is a party or by or to which such
Guarantor is or any of the properties of such Guarantor are or may be bound or
subject; (c) violate any Law or Order of any Governmental Body applicable to
such Guarantor; or (d) result in the creation of any Lien on the Interests.
6. Representations and Warranties of the Buyer. The Buyer
represents and warrants to the Seller as follows:
6.1. Due Incorporation and Authority. The Buyer
is a corporation duly organized, validly existing and in good standing under the
Laws of the State of Delaware and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
<PAGE>
13
as now being and as heretofore conducted.
6.2. Authority to Execute and Perform Agreement.
The Buyer has the full legal right and power and all authority and approvals
required to enter into, execute and deliver this Agreement and each and every
agreement and instrument contemplated hereby to which the Buyer is or will be a
party and to perform fully its obligations hereunder and thereunder. This
Agreement has been duly executed and delivered by the Buyer, and on the Closing
Date, each and every agreement and instrument contemplated hereby to which the
Buyer is a party will be duly executed and delivered by the Buyer and (assuming
due execution and delivery hereof and thereof by the other parties hereto and
thereto) this Agreement and each such other agreement and instrument will be
valid and binding obligations of the Buyer enforceable against the Buyer in
accordance with their respective terms. The execution and delivery by the Buyer
of this Agreement and each and every other agreement and instrument contemplated
hereby to which the Buyer is a party, the consummation of the transactions
contemplated hereby and thereby and the performance by the Buyer of this
Agreement and each such other agreement and instrument in accordance with their
respective terms and conditions will not (a) violate any provision of the
Certificate of Incorporation or By-laws (or comparable instruments) of the
Buyer; (b) require the Buyer to obtain any consent, approval, authorization or
action of, or make any filing with or give any notice to, any Governmental Body
or any other person; (c) violate, conflict with or result in the breach of any
of the terms and conditions of, result in a material modification of the effect
of, otherwise cause the termination of or give any other contracting party the
right to terminate, or constitute (or with notice or lapse of time or both
constitute) a default under, any Contract to which the Buyer is a party or by or
to which the Buyer or any of its properties is or may be bound or subject; or
<PAGE>
14
(d) violate any Law or Order of any Governmental Body applicable to the Buyer.
6.3. Purchase for Investment. The Buyer is
purchasing the Interests for its own account for investment and not for resale
or distribution.
6.4. Representations and Warranties on Closing
Date. The representations and warranties contained in this Article 6 shall be
true and correct on and as of the Closing Date with the same force and effect as
though such representations and warranties had been made on and as of the
Closing Date (unless such representations and warranties relate solely to a
specific date, in which case such representations and warranties shall be true
and correct as of such specified date).
7. Covenants and Agreements.
7.1. Conduct of Business. From the date hereof
through the Closing Date, the Seller agrees that it (a) shall cause the Company
to conduct its business in the ordinary course and (b) shall cause the Company
to conduct its business in a manner such that the representations and warranties
contained in Article 3 shall continue to be true and correct on and as of the
Closing Date as if made on and as of the Closing Date; and (c) shall conduct its
affairs in a manner such that the representations and warranties contained in
Article 4 shall continue to be true and correct on and as of the Closing Date as
if made on and as of the Closing Date. The Seller shall give the Buyer prompt
notice of any event, condition or circumstance occurring from the date hereof
through the Closing Date that would constitute a violation or breach of (i) any
representation or warranty, whether made as of the date hereof or as of the
Closing Date, or (ii) any covenant of the Seller contained in this Agreement.
<PAGE>
15
7.2. Corporate Examinations and Investigations.
Prior to the Closing Date, the Seller agrees that the Buyer shall be entitled,
through its employees and representatives (collectively, the "Representatives"),
to make such investigation of the properties, businesses and operations of the
Seller and the Company, and such examination of the books, records and financial
condition of the Company, as it wishes. Any such investigation and examination
shall be conducted at reasonable times and under reasonable circumstances, and
the Seller shall, and shall cause the Company to, cooperate fully therein. No
investigation by the Buyer shall diminish or obviate any of the representations,
warranties, covenants or agreements of the Seller contained in this Agreement.
In order that the Buyer may have full opportunity to make such physical,
business, accounting and legal review, examination or investigation as it may
wish of the affairs of the Seller and the Company, the Seller shall make
available and shall cause the Company to make available to the Representatives
during such period all such information and copies of documents concerning the
affairs of the Seller and the Company as the Representatives may reasonably
request, shall permit the Representatives access to the properties of the Seller
and the Company and shall cause their officers, employees, consultants, agents,
accountants and attorneys to cooperate fully with the Representatives in
connection with such review and examination. The Seller shall make available and
shall cause the Company and the Subsidiaries to make available to the
Representatives during such period all reports, assessments, audits, reviews,
plans, analyses and other documents or correspondence in the possession or
control of the Seller or the Company relating to the operations of the Company,
the airworthiness of the Airplane and the compliance of the Company with all
applicable Laws.
<PAGE>
16
7.3. Publicity. The parties agree that no
publicity release or announcement concerning this Agreement or the Contemplated
Transactions shall be made by the Seller or the Guarantors without advance
approval thereof by the Buyer.
7.4. Expenses. The parties to this Agreement
shall, except as otherwise specifically provided herein, bear their respective
expenses incurred in connection with the preparation, execution and performance
of this Agreement and the Contemplated Transactions, including all fees and
expenses of agents, representatives, counsel and accountants.
7.5. Indemnification of Brokerage. The Seller
and the Guarantors, jointly and severally, represent and warrant to the Buyer
that no broker, finder, agent or similar intermediary (a "Broker") has acted on
behalf of the Company, the Seller or the Guarantors in connection with this
Agreement or the Contemplated Transactions, and that there are no brokerage
commissions, finder's fees or similar fees or commissions payable in connection
therewith based on any agreement, arrangement or understanding with the Company,
the Seller or the Guarantors, or any action taken by the Company, the Seller or
the Guarantors. The Seller and the Guarantors, jointly and severally, agree to
indemnify and hold harmless the Buyer from any Claim or demand for commission or
other compensation by any Broker claiming to have been employed by or on behalf
of the Company, the Seller or the Guarantors, and to bear the cost of legal
expenses incurred in defending against any such claim. The Buyer represents and
warrants to the Seller and the Guarantors that no Broker has acted on behalf of
the Buyer in connection with this Agreement or the Contemplated Transactions,
and that there are no brokerage commissions, finders' fees or similar fees or
commissions payable in connection therewith based on any agreement, arrangement
or understanding with the Buyer, or any action taken by the Buyer. The Buyer
<PAGE>
17
agrees to indemnify and hold harmless the Seller and the Guarantors from any
Claim or demand for commission or other compensation by any Broker claiming to
have been employed by or on behalf of the Buyer, and to bear the cost of legal
expenses incurred in defending against any such claim.
7.6. Related Parties. The Seller shall, prior to
the Closing, pay or cause to be paid to the Company all amounts owed to the
Company by the Seller or any of the Guarantors. At and as of the Closing, any
debts of the Company owed to the Seller or to the Guarantor shall be canceled.
7.7. Termination of Agreements. The Seller
shall, prior to the Closing, terminate or cause to be terminated all Contracts
between the Company, on the one hand, and the Seller or the Guarantors, on the
other hand, and the Company shall retain no obligations under such Contracts.
7.8. Permit and Warranty Transfers. The Seller
shall, at and as of the Closing, at its sole expense, cause the transfer,
reissuance or modification of any Permits to the extent that such is required to
cause the Permits to remain in full force and effect in the possession of the
Company after the Closing. To the extent that any manufacturers' warranties
(express or implied) are still in effect with respect to the Airplane (other
than warranties which by their terms are unassignable or which would be
extinguished by their assignment), the Seller agrees to assign such warranties
to the Company at or prior to the time of the Closing and agrees to take such
other reasonable steps as will enable the Buyer or the Company to process
warranty claims directly with the manufacturer.
<PAGE>
18
7.9. Further Assurances. Each of the parties
shall execute such Documents and take such further actions as may be reasonably
required or desirable to carry out the provisions hereof and the Contemplated
Transactions. Each such party shall use its best efforts to fulfill or obtain
the fulfillment of the conditions to the Closing set forth in Articles 8 and 9.
8. Conditions Precedent to the Obligation of the Buyer to
Close. The obligation of the Buyer to enter into and complete the Closing is
subject, at the option of the Buyer acting in accordance with the provisions of
Article 13 with respect to termination of this Agreement, to the fulfillment on
or prior to the Closing Date of the following conditions, any one or more of
which may be waived by the Buyer:
8.1. Representations and Covenants. The
representations and warranties of the Seller and the Guarantors contained in
this Agreement shall be true and correct on and as of the Closing Date with the
same force and effect as though made on and as of the Closing Date (unless such
representations and warranties relate solely to a specific date, in which case
such representations and warranties shall be true and correct as of such
specified date). The Seller shall have performed and complied with all covenants
and agreements required by this Agreement to be performed or complied with by
the Seller on or prior to the Closing Date. The Seller shall have delivered to
the Buyer a certificate, dated the date of the Closing and signed by the Seller,
to the foregoing effect.
8.2. Consents and Approvals. All required
notices to CIT shall have been delivered.
<PAGE>
19
8.3. Resignations. All resignations of the
managers and officers of the Company which have been previously requested by the
Buyer shall have been delivered to the Buyer.
8.4. No Claims. No Claims shall be pending or,
to the knowledge of the Buyer, the Company, or of the Sellers or any of the
Guarantors, threatened, before any Governmental Body to restrain or prohibit, or
to obtain damages in respect of, this Agreement or the consummation of the
Contemplated Transactions.
8.5. Termination of Agreements. The Buyer shall
have received evidence satisfactory to it of the termination of all Contracts
required to be terminated pursuant to Sections 7.6 and 7.7 and of the release of
any obligations under such Contracts of the Company.
8.6 Consent of CIT. The Buyer shall have
received documents satisfactory to its evidencing the consent of CIT to the
transfer of the Interests to the Buyer.
8.7 Condition of the Airplane. At the time of
the Closing (i) the Airplane shall be in an airworthy condition with all systems
functioning in accordance with any applicable manufacturers' specifications;
(ii) the Airplane shall be free of material corrosion or damage history; (iii)
the Airplane shall be current with respect to its manufacturer's recommended
maintenance program, with all calendar and hourly inspections current through
the time of the Closing, and Buyer shall have received satisfactory evidence
thereof; and (iv) the Airplane shall be in compliance with all Airworthiness
Directives, Mandatory Aircraft Services Changes and all Mandatory Customer
Bulletins and any other applicable regulation of the Federal Aviation
Administration.
<PAGE>
20
9. Conditions Precedent to the Obligation of the Seller and
Guarantors to Close. The obligation of the Seller and the Guarantors to enter
into and complete the Closing is subject, at the option of the Seller and the
Guarantors acting in accordance with the provisions of Article 13 with respect
to termination of this Agreement, to the fulfillment on or prior to the Closing
Date of the following conditions, any one or more of which may be waived by the
Sellers and the Guarantors:
9.1. Representations and Covenants. The
representations and warranties of the Buyer contained in this Agreement shall be
true and correct on and as of the Closing Date with the same force and effect as
though made on and as of the Closing Date (unless such representations and
warranties relate solely to a specific date, in which case such representations
and warranties shall be true and correct as of such specified date). The Buyer
shall have performed and complied with all covenants and agreements required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date. The Buyer shall have delivered to the Seller a certificate, dated the date
of the Closing and signed by an officer of the Buyer, to the foregoing effect.
9.2. No Claims. No Claims shall be pending or,
to the knowledge of the Buyer, the Company, any of the Guarantors or the Seller,
threatened, before any Governmental Body to restrain or prohibit, or to obtain
damages in respect of, this Agreement or the consummation of the Contemplated
Transactions.
9.3 Releases from CIT. The Seller and the Guarantors
shall have received evidence reasonably satisfactory to them that, concurrent
with the transfer of the Interests, the Seller and the Guarantors shall be fully
and unconditionally released from any and all obligations with respect to the
<PAGE>
21
Company Debt or the Guarantees.
10. Guaranty.
10.1 Guaranty. Each Guarantor hereby irrevocably
and unconditionally guarantees, jointly and severally, the full and complete
observance of all covenants of the Seller hereunder, including, without
limitation, the full and punctual payment of all amounts payable by the Seller
hereunder.
10.2 Guaranty Unconditional. The obligations of
the Guarantors hereunder shall be unconditional and absolute and, without
limiting the generality of the foregoing, shall not be released, discharged or
otherwise affected by:
(a) any extension, renewal, settlement,
compromise, waiver or release in respect of any obligation of the Seller under
this Agreement, by operation of law or otherwise;
(b) any modification or amendment of or
supplement to this Agreement, provided that any such modification which
increases the obligations of the Guarantors hereunder shall not be effective as
to the Guarantors without their consent;
(c) any change in the corporate existence,
structure or ownership of the Seller, or any insolvency, bankruptcy,
reorganization or other similar proceeding affecting the Seller or its assets or
any resulting release or discharge of any obligation of the Seller contained in
this Agreement;
(d) the existence of any claim, set-off
or other rights which the Guarantors may have at any time against the Seller,
the Company, the Buyer or any other person, whether in connection with this
<PAGE>
22
Agreement or any unrelated transactions, provided that nothing herein shall
prevent the assertion of any such claim by separate suit or compulsory
counterclaim;
(e) any invalidity or unenforceability
relating to or against the Seller for any reason of this Agreement, or any
provision of applicable law or regulation;
(f) any other act or omission to act or
delay of any kind by the Seller or any other person or any other circumstance
whatsoever which might, but for the provisions of this section, constitute a
legal or equitable discharge of or defense to the Guarantors' obligations
hereunder.
10.3 Discharge; Reinstatement. The Guarantors'
obligations hereunder shall remain in full force and effect until all
obligations of the Seller under this Agreement shall have terminated and all
amounts, if any, payable by the Seller under this Agreement shall have been paid
in full. If at any time any payment of any amount payable by the Seller under
this Agreement is rescinded or must be otherwise restored or returned upon the
insolvency, bankruptcy or reorganization of the Seller or otherwise, the
Guarantors' obligations hereunder with respect to such payment shall be
reinstated as though such payment had been due but not made at such time.
10.4 Waiver by the Guarantors. The Guarantors
irrevocably waive acceptance hereof, presentment, demand, protest and any notice
provided for herein, as well as any requirement that at any time any action be
taken by any person against the Seller or any other person.
11. Survival of Representations and Warranties of the Seller
and Guarantors After Closing. Notwithstanding any right of the Buyer to
investigate fully the affairs of the Company and notwithstanding any knowledge
of facts determined or determinable by the Buyer pursuant to such investigation
<PAGE>
23
or right of investigation, the Buyer has the right to rely fully upon the
representations, warranties, covenants and agreements of the Seller and the
Guarantors contained in this Agreement or in any documents delivered pursuant to
this Agreement. All such representations, warranties, covenants and agreements
shall survive the execution and delivery of this Agreement and the Closing
hereunder. Except for those representations and warranties in Sections 3.4, 3.5,
4.1, 5.1 and 7.5 all of which representations and warranties shall survive
without limitation), all representations and warranties of the Sellers contained
in this Agreement shall terminate and expire two years after the Closing Date.
12. General Indemnification.
12.1. Obligation of the Seller and the Guarantors
to Indemnify.
(a) Subject to the limitations contained
in Article 11, the Seller agrees to indemnify, defend and hold harmless the
Buyer (and its directors, officers, employees, affiliates, successors and
assigns) from and against all Claims, losses, liabilities, damages,
deficiencies, judgments, assessments, fines, settlements, costs or expenses
(including interest, penalties and fees, expenses and disbursements of
attorneys, experts, personnel and consultants incurred by the indemnified party
in any action or proceeding between the indemnifying party and the indemnified
party or between the indemnified party and any third party, or otherwise)
("Losses") based upon, arising out of or otherwise in respect of any inaccuracy
in or any breach of any representation, warranty, covenant or agreement of the
Seller contained in this Agreement or in any Documents delivered by the Seller
pursuant to this Agreement.
<PAGE>
24
(b) Each Guarantor, (i) severally and
not jointly, agrees to indemnify, defend and hold harmless the Buyer (and its
directors, employees, officers, affiliates, successors and assigns) from and
against all Losses based upon, arising out of or otherwise in respect of any
inaccuracy in or any breach of any representation or warranty of such Guarantor
contained in Article 5; and (ii), jointly and severally, agrees to indemnify,
defend and hold harmless the Buyer (and its directors, employees, officers,
affiliates, successors and assigns) from and against all Losses based upon,
arising out of or otherwise in respect of any breach of any covenant or
agreement of such Guarantor contained in Article 10.
12.2. Obligation of the Buyer to Indemnify. The
Buyer agrees to indemnify, defend and hold harmless the Seller from and against
all Losses based upon, arising out of or otherwise in respect of any inaccuracy
in or any breach of any representation, warranty, covenant or agreement of the
Buyer contained in this Agreement or in any documents delivered by the Buyer
pursuant to this Agreement.
12.3. Notice and Opportunity to Defend.
(a) Notice of Asserted Liability. The
party making a claim under this Article 12 is referred to as the "Indemnitee,"
and the party against whom such claims are asserted under this Article 12 is
referred to as the "Indemnifying Party." All claims by any Indemnitee under this
Article 12 shall be asserted and resolved as follows: Promptly after receipt by
the Indemnitee of notice of any Claim or circumstances which, with the lapse of
time, would or might give rise to a Claim or the commencement (or threatened
commencement) of a Claim including any action, proceeding or investigation (an
"Asserted Liability") that may result in a Loss, the Indemnitee shall give
<PAGE>
25
notice thereof (the "Claims Notice") to the Indemnifying Party. The Claims
Notice shall describe the Asserted Liability in reasonable detail, 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.
(b) Opportunity to Defend. 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 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, at the
expense of the Indemnifying Party, in the compromise of, or defense against,
such Asserted Liability. If the Indemnifying Party elects not to compromise or
defend the Asserted Liability, fails to notify the Indemnitee of its election as
herein provided or contests its obligation to indemnify under this Agreement,
the Indemnitee may pay, compromise or defend such Asserted Liability.
Notwithstanding the foregoing, neither the Indemnifying Party nor the Indemnitee
may settle or compromise any Asserted Liability over the objection of the other;
provided, however, consent to settlement or compromise shall not be unreasonably
withheld. 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 available to the Indemnifying Party any books, records or other
documents within its control that are necessary or appropriate for such defense.
<PAGE>
26
13. Termination of Agreement.
13.1. Termination. This Agreement may be
terminated prior to the Closing as follows:
(a) at the election of the Seller if any
one or more of the conditions to the obligation of the Seller to close set forth
in Article 9 has not been fulfilled as of the scheduled Closing Date;
(b) at the election of the Buyer, if any
one or more of the conditions to the obligation of the Buyer to close set forth
in Article 8 has not been fulfilled as of the scheduled Closing Date;
(c) at the election of the Seller or the
Buyer, if any legal proceeding is commenced or threatened by any Governmental
Body seeking to prevent the consummation of the Closing or any other
Contemplated Transaction and the Seller or the Buyer, as the case may be,
reasonably and in good faith deems it impracticable or inadvisable to proceed in
view of such legal proceeding;
(d) at the election of the Seller if the
Buyer has breached any material representation, warranty, covenant or agreement
contained in this Agreement, which breach cannot be or is not cured by the
Closing Date;
(e) at the election of the Buyer, if the
Seller or the Guarantors have breached any material representation, warranty,
covenant or agreement contained in this Agreement, which breach cannot be or is
not cured by the Closing Date; or
<PAGE>
27
(f) at any time on or prior to the
Closing Date, by mutual written consent of the Seller and the Buyer.
If this Agreement so terminates, it shall become null and void
and have no further force or effect, except as provided in Section 13.2.
13.2. Survival After Termination. If this
Agreement terminates pursuant to Section 13.1 and the Contemplated Transactions
are not consummated, this Agreement shall become null and void and have no
further force or effect, except that any such termination shall be without
prejudice to the rights of any party on account of the nonsatisfaction of the
conditions set forth in Articles 8 and 9 resulting from the intentional or
willful breach or violation of the representa tions, warranties, covenants or
agreements of another party under this Agreement. Notwithstanding anything in
this Agreement to the contrary, Sections 7.3, 7.4 and 7.5, this Section 13.2 and
Articles 10 and 14 shall survive any termination of this Agreement.
14. Miscellaneous.
14.1. Certain Definitions.
(a) As used in this Agreement, the
following terms have the following meanings:
"affiliate" means, with respect to any person, any other person
controlling, controlled by or under common control with, or the parents, spouse,
lineal descendants or beneficiaries of, such person.
"Airplane" means the Boeing 727, Serial number 21948, Tail number
N31TR, owned by the Company.
<PAGE>
28
"person" means any individual, corporation, partnership, limited
liability company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Body or other entity.
"property" or "properties" means real, personal or mixed property,
tangible or intangible.
(b) The following capitalized terms are
defined in the following Sections of this Agreement:
Term Section
---- -------
Asserted Liability 12.3(a)
Broker 7.5
Buyer Preamble
Claims 3.8
Claims Notice 12.3(a)
Closing 1.1
Closing Date 2
Company Preamble
Company Debt Preamble
Condition of the Company 3.3
Contemplated Transactions 3.9(k)
Contracts 3.7
Documents 3.15
Governmental Bodies 3.6
Guarantees Preamble
Guarantors Preamble
Indemnifying Party 12.3(a)
Indemnitee 12.3(a)
Interests Preamble
Laws 3.6
Leased Real Property 3.10(b)
Losses 12.1(a)
Orders 3.6
Permits 3.6
Proposed Contracts 3.9(a)
Purchase Price 1.1
Real Property Leases 3.10(a)
Representatives 7.2
Seller Preamble
14.2. Consent to Jurisdiction and Service of Process.
Any Claim arising out of or relating to this Agreement or the Contemplated
Transactions may be instituted in any Federal court of the Southern District of
New York or any state court located in New York County, State of New York, and
each party agrees not to assert, by way of motion, as a defense or otherwise, in
any such Claim, any Claim that it is not subject personally to the jurisdiction
of such court, that the Claim is brought in an inconvenient forum, that the
venue of the Claim is improper or that this Agreement, or the subject matter
hereof may not be enforced in or by such court. Each party further irrevocably
submits to the jurisdiction of such court in any such Claim. Any and all service
of process and any other notice in any such Claim shall be effective against any
party if given personally or by registered or certified mail, return receipt
requested, or by any other means of mail that requires a signed receipt, postage
prepaid, mailed to such party as herein provided. Nothing herein contained shall
be deemed to affect the right of any party to serve process in any manner
permitted by law or to commence legal proceedings or otherwise proceed against
any other party in any other jurisdiction.
14.3. Notices. Any notice or other communication
required or permitted hereunder shall be in writing and shall be delivered
personally, sent by facsimile transmission or sent by certified, registered or
express mail, postage prepaid. Any such notice shall be deemed given when so
delivered personally, or sent by facsimile transmission or, if mailed, five days
after the date of deposit in the United States mails, as follows:
<PAGE>
29
(i) if to the Seller, to:
Triangle Aircraft Services Corporation
85 Towers Road
White Plains, New York 10604
Attention: Chairman
Telephone: (212) 451-3000
Facsimile: (212) 451-3023
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Neale M. Albert, Esq.
Telephone: (212) 373-3341
Facsimile: (212) 757-3990
(ii) if to the Buyer:
Triarc Companies, Inc.
280 Park Avenue
New York, NY 10017
Attention: Brian L. Schorr, Esq.
Executive Vice President and General Counsel
Telephone: (212) 451-3045
Facsimile: (212) 451-3216
Any party may by notice given in accordance with this Section to the other
parties designate another address or person for receipt of notices hereunder.
14.4. Entire Agreement. This Agreement and any
collateral agreements executed in connection with the consummation of the
Contemplated Transactions contain the entire agreement among the parties with
respect to the purchase of the Interests and supersedes all prior agreements,
written or oral, with respect thereto.
<PAGE>
30
14.5. Waivers and Amendments; Non-Contractual
Remedies; Preservation of Remedies. This Agreement may be amended, superseded,
canceled, renewed or extended, and the terms hereof may be waived, only by a
written instrument signed by the Buyer, the Seller and the Guarantors or, in the
case of a waiver, by the party waiving compliance. No delay on the part of any
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any such right,
power or privilege, nor any single or partial exercise of any such right, power
or privilege, preclude any further exercise thereof or the exercise of any other
such right, power or privilege. The rights and remedies herein provided are
cumulative and are not exclusive of any rights or remedies that any party may
otherwise have at law or in equity. The rights and remedies of any party based
upon, arising out of or otherwise in respect of any inaccuracy in or breach of
any representation, warranty, covenant or agreement contained in this Agreement
or any documents delivered pursuant to this Agreement shall in no way be limited
by the fact that the act, omission, occurrence or other state of facts upon
which any claim of any such inaccuracy or breach is based may also be the
subject matter of any other representation, warranty, covenant or agreement
contained in this Agreement or any documents delivered pursuant to this
Agreement (or in any other agreement between the parties) as to which there is
no inaccuracy or breach.
14.6. Governing Law. This Agreement shall be
governed and construed in accordance with the laws of the State of New York
applicable to agreements made and to be performed entirely within such State.
<PAGE>
31
14.7. Binding Effect; Assignment. This Agreement
shall be binding upon and inure to the benefit of the parties and their
respective successors and legal representatives. This Agreement is not
assignable except by operation of law, except that the Buyer may assign its
rights hereunder to any of its affiliates, to any successor to all or
substantially all of its business or assets or to any bank or other financial
institution that may provide financing to it for the Contemplated Transactions
or otherwise.
14.8. Usage. All pronouns and any variations
thereof refer to the masculine, feminine or neuter, singular or plural, as the
context may require. All terms defined in this Agreement in their singular or
plural forms have correlative meanings when used herein in their plural or
singular forms, respectively. Unless otherwise expressly provided, the words
"include," "includes" and "including" do not limit the preceding words or terms
and shall be deemed to be followed by the words "without limitation."
14.9. Counterparts. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute one and the same instrument. Each counterpart may consist of
a number of copies hereof each signed by less than all, but together signed by
all of the parties hereto.
14.10. Schedules. The Schedules hereto are a part
of this Agreement as if fully set forth herein and all references to this
Agreement shall be deemed to include the Schedules. All references herein to
Sections and Schedules shall be deemed references to such parts of this
Agreement, unless the context shall otherwise require.
<PAGE>
32
14.11. Headings. The headings in this Agreement
are for reference only, and shall not affect the interpretation of this
Agreement.
14.12. Interpretation. The parties acknowledge and
agree that: (i) each party and its counsel reviewed and negotiated the terms and
provisions of this Agreement and have contributed to its revision; (ii) the rule
of construction to the effect that any ambiguities are resolved against the
drafting party shall not be employed in the interpretation of this Agreement;
and (iii) the terms and provisions of this Agreement shall be construed fairly
as to all parties hereto, regardless of which party was generally responsible
for the preparation of this Agreement.
14.13. Severability of Provisions. If any
provision or any portion of any provision of this Agreement shall be held
invalid or unenforceable, the remaining portion of such provision and the
remaining provisions of this Agreement shall not be affected thereby. If the
application of any provision or any portion of any provision of this Agreement
to any person or circumstance shall be held invalid or unenforceable, the
application of such provision or portion of such provision to persons or
circumstances other than those as to which it is held invalid or unenforceable
shall not be affected thereby.
<PAGE>
33
IN WITNESS WHEREOF, the parties have executed this
Agreement on the date first above written.
TRIARC COMPANIES, INC.
By: JOHN L. BARNES, JR.
----------------------------
Name: John L. Barnes, Jr.
Title: Executive Vice President
TRIANGLE AIRCRAFT
SERVICES CORPORATION:
By: PETER W. MAY
----------------------------
Name: Peter W. May
Title: President
NELSON PELTZ
--------------------------------
Nelson Peltz
PETER W. MAY
--------------------------------
Peter W. May
<PAGE>
34
LIST OF OMITTED SCHEDULES
SCHEDULES
Schedule 3.3 - Qualification Jurisdictions
Schedule 3.9 - Contracts
Schedule 3.10(b) - Real Property Leases
Schedule 3.13 - Insurance
Schedule 3.14 - Transfer of Airplane
The Registrant hereby agrees to furnish supplementally a copy of any omitted
schedule to the Securities and Exchange Commission upon its request.
<PAGE>
EXHIBIT 99.1
For Immediate Release
CONTACT: Anne A. Tarbell
Triarc Companies, Inc.
212/451-3030
www.triarc.com
TRIARC BEVERAGE GROUP ACQUIRES SNAPPLE DISTRIBUTORS OF
LONG ISLAND
New York, NY, January 4, 2000 - Triarc Companies, Inc. (NYSE: TRY) announced
today that its subsidiary Snapple Beverage Corp., has acquired Snapple
Distributors of Long Island, Inc. (Long Island Snapple) for $16.8 million in
cash, subject to certain post-closing adjustments, plus certain other
consideration.
Long Island Snapple is the largest non-company owned distributor of
Snapple(R) products and a major distributor of Stewart's(R) products. With a
distribution territory including Nassau and Suffolk counties, Long Island
Snapple had net sales of approximately $28 million in 1998.
Commenting on the transaction, Michael F. Weinstein, Chief Executive
Officer of the Triarc Beverage Group said: "As with our recently completed
acquisition of Millrose Distributors, we believe this transaction will enhance
our ability to serve key retail customers while providing financial benefits to
Triarc. We have watched the Kaplan family build Long Island Snapple over the
last 20 years into a highly successful distribution operation. Throughout this
time, we have enjoyed an excellent relationship with Gil Kaplan and his team.
We look forward to rapidly integrating their operations into Mr. Natural and
Millrose, our company-owned New York City, Westchester County and northern New
Jersey distributors."
<PAGE>
Weinstein added: "To further enhance our leadership in the premium
beverage segment, Triarc Beverage Group will continue to evaluate opportunities
to strengthen our distribution network, particularly in regions which are
contiguous to our company-owned operations. With the acquisition of Long Island
Snapple, company-owned operations now account for approximately 22% of our
premium beverage volume."
Triarc is a branded consumer products company in beverages
(Snapple(R), Mistic(R), Stewart's(R) and Royal Crown(R)) and restaurants
(Arby's(R), T.J. Cinnamons(R) and Pasta Connection(TM)).
# # #
Note Follows
<PAGE>
NOTE
There can be no assurance that Long Island Snapple will be successfully
integrated with the operations of Triarc and its subsidiaries, including Mr.
Natural, Inc. and Millrose Distributors, Inc. In addition, there can be no
assurance that Triarc will be able to identify and effect any other acquisitions
or business combinations or, if completed, that any such acquisitions or
business combinations will be successfully integrated with the operations of
Triarc and its subsidiaries.
<PAGE>
