<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): February 2, 1999
----------------
Atlantic Premium Brands, Ltd.
(Exact Name of Registrant as Specified in Charter)
--------------------------------------------------
Delaware 1-13747 36-3761400
- ---------------------------- ----------- -------------------
(State or Other Jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
650 Dundee Road, Suite 370, Northbrook, Illinois 60062
------------------------------------------------ -----
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (847) 480-4000
--------------
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Atlantic Premium Brands, Ltd. (the "Company") has completed the sale of
substantially all the assets of its Beverage Division. The operations of the
Beverage Division consisted of the wholesale purchasing, marketing and
distribution of nonalcoholic beverages to retail trade accounts in the greater
Baltimore and Washington D.C. metropolitan areas.
The disposition of the Beverage Division's distribution rights and
inventories for the Mistic(R), Stewart's(R) and AriZona(TM) brands, along with
certain other related assets, occurred in two stages on December 1, 1998 and
January 11, 1999. The purchaser of these assets was Canada Dry Potomac
Corporation. The remaining accounts receivable and inventory, as well as
substantially all the furniture and equipment, of the Beverage Division were
sold to Master Distributors, Inc. on February 2, 1999.
The consideration received by the Company from these transactions totaled
approximately $3,500,000 and consisted of approximately $3,100,000 in cash, a
promissory note payable to the Company for $260,000 and the assumption by the
purchasers of approximately $140,000 in liabilities and obligations of the
Beverage Division.
The Company has been advised that a former manager of the Beverage Division
is a shareholder of Master Distributors, Inc.
<PAGE> 3
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Not Applicable.
(b) The pro forma financial information required by Item 7(b) relating to the
disposition of the Company's Beverage Division described in Item 2 is
included in pages F-1 through F-6.
(c) Exhibits.
2.1 Asset Purchase Agreement dated as of November 24, 1998 between the
Company and Canada Dry Potomac Corporation*
2.2 Asset Purchase Agreement dated February 2, 1999 between the Company
and Master Distributors, Inc.*
- --------------
* Filed herewith.
<PAGE> 4
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma consolidated balance sheet as of September 30,
1998 and the unaudited pro forma consolidated statements of operations for the
nine months ended September 30, 1998 and for the year ended December 31, 1997
give effect to the sale of the Beverage Division described in this Form 8-K. In
March 1998, the Company acquired J.C. Potter Sausage Company, Inc. The unaudited
pro forma consolidated statments of operations have been adjusted to give effect
to (i) the consummation of the acquisition of the J.C. Potter Sausage Company,
Inc., (ii) the acquisition of new debt to complete the transaction described in
(i) and (iii) the retirement of existing debt in conjunction with the
transaction. The unaudited pro forma consolidated balance sheet is presented as
if the sale of the Beverage Division had occurred on September 30, 1998. The
unaudited pro forma consolidated statements of operations are presented as if
the sale of the Beverage Division and the acquisition of J.C. Potter Sausage
Company, Inc. had occurred at the beginning of the periods presented. The
unaudited pro forma information is presented for illustrative purposes only and
may not be indicative of the results that would have been obtained had the sale
of the Beverage Division and acquisition of J.C. Potter Sausage Company, Inc.
actually occurred on the dates assumed, nor is it necessarily indicative of the
future consolidated results of operations.
F-1
<PAGE> 5
ATLANTIC PREMIUM BRANDS, LTD.
PRO FORMA CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Reclassify
Beverage
Division to
Discontinued
Historical Operations
----------------- -----------------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash 2,453,265
Account receivable, net of allowance for doubtful 9,156,255 (2,160,815)
accounts of $217,000
Notes receivable - -
Inventory 6,545,753 (1,372,643)
Prepaid expenses and other 827,841 (166,059)
Net current assets of division held for
disposition 2,019,921
----------------- -----------------
Total current assets 18,983,114 (1,679,596)
PROPERTY, PLANT AND EQUIPMENT, net 13,507,726 (1,094,879)
GOODWILL, net 13,168,338
OTHER ASSETS, net 1,745,107 (231,066)
Net non-current assets of division held for
disposition 1,286,896
----------------- -----------------
Total Assets 47,404,285 (1,718,645)
================= =================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank overdraft 3,109,277 (521,080)
Line of credit 4,035,620
Current portion of long-term debt 1,284,110
Accounts payable 7,199,847 (906,872)
Accrued expenses 2,546,728 (251,644)
----------------- -----------------
Total current liabilities 18,175,582 (1,679,596)
LONG-TERM DEBT, net of current portion 17,311,121
CAPITAL LEASE (39,049)
PUT WARRANTS 1,435,000
----------------- -----------------
Total Liabilities 36,921,703 (1,718,645)
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
PREFERRED STOCK
COMMON STOCK 74,355
ADDITIONAL PAID IN CAPITAL 12,200,124
ACCUMULATED DEFICIT (1,791,897)
----------------- -----------------
Total Stockholders' Equity 10,482,582 -
Total Liabilities and Stockholders' Equity 47,404,285 (1,718,645)
================= =================
<CAPTION>
Pro Forma
Adjustments Pro Forma
------------------ ------------------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash 2,453,265
Account receivable, net of allowance for doubtful 6,995,440
accounts of $217,000
Notes receivable 260,000 (g) 260,000
Inventory 5,173,110
Prepaid expenses and other 661,782
Net current assets of division held for
disposition (2,019,921)(h) -
------------------ ------------------
Total current assets (1,759,921) 15,543,597
PROPERTY, PLANT AND EQUIPMENT, net 12,412,847
GOODWILL, net 13,168,338
OTHER ASSETS, net 1,514,041
Net non-current assets of division held for
disposition (1,286,896)(h) -
------------------ ------------------
Total Assets (3,046,817) 42,638,823
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank overdraft 2,588,197
Line of credit 4,035,620
Current portion of long-term debt 1,284,110
Accounts payable 6,292,975
Accrued expenses 264,093(i) 2,559,177
------------------ ------------------
Total current liabilities - 16,760,079
LONG-TERM DEBT, net of current portion (3,110,910)(j) 14,200,211
CAPITAL LEASE (39,049)
PUT WARRANTS 1,435,000
------------------ ------------------
Total Liabilities (2,846,817) 32,356,241
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
PREFERRED STOCK
COMMON STOCK 74,355
ADDITIONAL PAID IN CAPITAL 12,200,124
ACCUMULATED DEFICIT (200,000)(k) (1,991,897)
------------------ ------------------
Total Stockholders' Equity (200,000) 10,282,582
Total Liabilities and Stockholders' Equity (3,046,817) 42,638,823
================== ==================
</TABLE>
See accompanying notes to pro forma financial information.
F-2
<PAGE> 6
ATLANTIC PREMIUM BRANDS, LTD.
PRO FORMA CONSOLIDATED STATEMENT
OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
J.C. Potter Pro Forma Pro Forma
The Company Sausage Adjustments Combined
------------------ ---------------- ---------------- --------------
<S> <C> <C> <C> <C>
Net Sales 172,198,494 37,028,436 (1,143,576)(a) 208,083,354
Cost Sales 152,608,121 29,920,230 (1,143,576)(a) 181,384,775
----------------- ---------------- ---------------- --------------
Gross Profit 19,590,373 7,108,206 - 26,698,579
----------------- ---------------- ---------------- --------------
Selling, general and
administrative expenses:
Salaries and benefits 7,997,062 1,402,721 - 9,399,783
Other operating expenses 8,493,832 2,719,638 - 11,213,470
Depreciation and amortization 1,381,221 821,043 (17,948)(b) 2,184,316
----------------- ---------------- ---------------- --------------
Total operating expense 17,872,115 4,943,402 (17,948) 22,797,569
----------------- ---------------- ---------------- --------------
Income from operations 1,718,258 2,164,804 17,948 3,901,010
Interest income (expense) (1,692,610) 63,705 (822,503)(c) (2,451,408)
Other income 381,209 568,180 - 949,389
----------------- ---------------- ---------------- --------------
Total nonoperating income (expense) (1,311,401) 631,885 (822,503) (1,502,019)
----------------- ---------------- ---------------- --------------
Income before income tax provision 406,857 2,796,689 (804,555) 2,398,991
Income tax provision 50,000 513,725 565,797 (d) 1,129,522
----------------- ---------------- ---------------- --------------
Income from continuing operations 356,857 2,282,964 (1,370,352) 1,269,469
----------------- ---------------- ---------------- --------------
<CAPTION>
Reclassify
Beverage
Division to
Discontinued Pro Forma
Operations Adjustments Pro Forma
------------------ ---------------- ------------------
<S> <C> <C> <C>
Net Sales (21,149,844) 186,933,510
Cost Sales (14,990,879) 166,393,896
------------------ ---------------- ------------------
Gross Profit (6,158,965) 20,539,614
------------------ ---------------- ------------------
Selling, general and
administrative expenses:
Salaries and benefits (3,392,401) 6,007,382
Other operating expenses (2,162,723) 9,050,747
Depreciation and amortization (444,125) 1,740,191
------------------ ---------------- ------------------
Total operating expense (5,999,249) 16,798,320
------------------ ---------------- ------------------
Income from operations (159,716) 3,741,294
Interest income (expense) 265,732 278,737(e) (1,906,939)
Other income 12,457 961,846
------------------ ---------------- ------------------
Total nonoperating income (expense) 253,275 278,737 (970,007)
------------------ ---------------- ------------------
Income before income tax provision 93,559 2,492,550
Income tax provision (15,000) 105,920(f) 1,220,442
------------------ ---------------- ------------------
Income from continuing operations 108,559 384,657 1,762,685
------------------ ---------------- ------------------
</TABLE>
See accompanying notes to pro forma financial information.
F-3
<PAGE> 7
ATLANTIC PREMIUM BRANDS, LTD.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
J.C. Potter Pro Forma Pro Forma
The Company Sausage Adjustments Combined
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales 145,463,948 7,446,259 (285,894) (a) 152,624,313
Cost Sales 123,946,263 5,108,207 (285,894) (a) 128,768,576
----------- ---------- --------- -----------
Gross Profit 21,517,685 2,338,052 23,855,737
----------- ---------- --------- -----------
Selling, general and
administrative expenses:
Salaries and benefits 8,555,208 372,045 8,927,253
Other operating expenses 8,504,189 804,374 9,308,563
Depreciation and amortization 1,505,918 152,793 47,981 (b) 1,706,692
----------- ---------- --------- -----------
Total operating expense 18,565,315 1,329,212 47,981 19,942,508
----------- ---------- --------- -----------
Income from operations 2,952,370 1,008,840 (47,981) 3,913,229
Interest income (expense) (1,902,521) 28,338 (264,951) (c) (2,139,134)
Other income 189,239 189,239
----------- ---------- --------- -----------
Total nonoperating income (expense) (1,713,282) 28,338 (264,951) (1,949,895)
----------- ---------- --------- -----------
Income before income tax provision 1,239,088 1,037,178 (312,932) 1,963,334
Income tax provision 9,500 369,602 30,749 (d) 409,851
----------- ---------- --------- -----------
Income from continuing operations 1,229,588 667,576 (343,681) 1,553,483
----------- ---------- --------- -----------
<CAPTION>
Reclassify
Beverage
Division to
Discontinued Pro Forma
Operations Adjustments Pro Forma
---------------- --------------- --------------
<S> <C> <C> <C>
Net Sales (16,047,607) 136,576,706
Cost Sales (11,378,883) 117,389,693
--------------- --------------- --------------
Gross Profit (4,668,724) 19,187,013
--------------- --------------- --------------
Selling, general and
administrative expenses:
Salaries and benefits (2,622,521) 6,304,732
Other operating expenses (1,745,069) 7,563,494
Depreciation and amortization (447,924) 1,258,768
--------------- --------------- --------------
Total operating expense (4,815,514) 15,126,994
--------------- --------------- --------------
Income from operations (146,790) 3,766,439
Interest income (expense) 86,243 217,452(e) (1,835,439)
Other income 4,151 193,390
---------------- --------------- --------------
Total nonoperating income (expense) 90,394 217,452 (1,642,049)
---------------- --------------- --------------
Income before income tax provision (237,184) 217,452 1,943,602
Income tax provision (315,500) 82,632(f) 176,983
--------------- --------------- --------------
Income from continuing operations 78,316 134,820 1,766,619
--------------- --------------- --------------
</TABLE>
F-4
See accompanying notes to pro forma financial information.
<PAGE> 8
NOTES TO PRO FORMA
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- ------------
<S> <C> <C>
(a) Adjustment to eliminate sales between
J.C. Potter Sausage and Atlantic
Premium Brands subsidiaries
(b) To reflect the impact of the different
bases of acquired property, plant and
equipment as calculated below:
Depreciation expense on acquired assets $ 200,774 803,095
Less: Depreciation expense recorded
by acquired company (152,793) (821,043)
--------- ----------
$ 47,981 (17,498)
--------- ----------
(c) To reflect interest expense in connection
with the debt refinancing
Interest on term debt $(255,313) (1,021,250)
Interest on senior subordinated note (162,500) (650,000)
Amortization of discount on senior
subordinated note (51,250) (205,000)
Interest on line of credit (159,716) (638,863)
Interest expense on old debt 363,827 (1,692,610)
--------- ----------
$(264,951) (4,207,723)
--------- ----------
(d) Income tax provision attributable to
adjustments (b) and (c).
(e) To record assumed reduction in interest
expense arising from the repayment of
indebtedness using the funds received
from the sale of the Beverage Division.
It is assumed that the indebtedness
repaid had an average interest rate of
9.32% and 8.96% for the nine months
ended September 30, 1998 and the year
ended December 31, 1997, respectively.
(f) To record income tax expense attributable
to adjustment (e) at a combined Federal,
state, and local tax rate of 38%.
(g) To record the $260,000 note receivable
acquired in conjunction with the
sale of the Beverage Division.
(h) To record the sale of the assets and
liabilities of the Beverage Division.
(i) In connection with the sale of the
Beverage Division, the Company
recorded liabilities primarily
related to severance, legal and
accounting expenses, and lease
obligations which have no future
benefit.
</TABLE>
F-5
<PAGE> 9
NOTES TO PRO FORMA
FINANCIAL INFORMATION
(j) To record the assumed reduction in long-term debt arising from the
receipt of cash in conjunction with the sale of the Beverage Division.
(k) To record the effects of adjustments (g), (h) and (i) on shareholders'
equity.
F-6
<PAGE> 10
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.
ATLANTIC PREMIUM BRANDS, LTD.
By: /s/ Thomas M. Dalton
---------------------
Name: Thomas M. Dalton
Title: Senior Vice President and
Chief Financial Officer
Dated: February 15, 1999
<PAGE> 11
Exhibit Index
-------------
Exhibit # Description
- ------------------- -----------------------------------------------------
2.1 Asset Purchase Agreement dated as of November 24,
1998 between the Company and Canada Dry Potomac
Corporation.*
2.2 Asset Purchase Agreement dated February 2, 1999
between the Company and Master Distributors, Inc.*
- --------------
* Filed herewith.
<PAGE> 1
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("AGREEMENT") is made as of the 24th day
of November, 1998, by and between Atlantic Premium Brands, Ltd. ("SELLER"), and
Canada Dry Potomac Corporation ("PURCHASER").
W I T N E S S E T H:
WHEREAS, Seller, through its beverage division, is engaged in the
business of distributing specialty beverages (the "Business"); and
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, certain properties and assets relating to the Business as
described herein under the terms and conditions herein set forth; and
WHEREAS, unless otherwise defined herein, capitalized terms shall have
the meanings ascribed to such terms in Article 15 hereof; and
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
1. PURCHASE AND SALE OF ASSETS.
1.1 Purchase and Sale of Acquired Assets. Seller shall assign,
transfer, convey and deliver to Purchaser, and Purchaser shall purchase from
Seller, all of Seller's right title and interest in and to the Acquired Assets.
1.2 Liabilities. Purchaser shall not assume any liability or
responsibility whatsoever under the terms, conditions or other provisions of
this Agreement or otherwise for any liability or obligation of Seller (absolute,
contingent, accrued or otherwise), which has not been specifically assumed by
Purchaser pursuant to this Agreement. If and only if Purchaser agrees to assume
any liability or obligation of Seller, such liabilities and obligations shall be
discharged by Purchaser after Closing when and as they become due.
2. PRE-CLOSING ACTIVITIES, CLOSING, CONSIDERATION.
2.1 Procedures before Closing. The following procedures shall be
conducted by the parties before the Closing occurs:
2.1.1 Glass Door Merchandisers. Within one (1) business day
after the execution and delivery hereof, Seller shall deliver to Purchaser a
list of all glass door merchandising machines carried on Seller's books of
account, itemized by location and described in detail reasonably sufficient for
each such machine to be identified by physical inspection (herein, the "Cooler
List"). Purchaser may avail itself of the time before Closing to survey these
machines to determine the extent to which they are still in place and in working
order. If it appears to Purchaser, after a good faith effort to find the
machines (or a fairly representative sample of them), that less than eleven
hundred (1,100) of such machines can be found in working order, including those
machines in Seller's warehouse in good working order, Purchaser shall give
notice to Seller and the parties shall adjust the Purchase Price according to
the number of machines that will
1
<PAGE> 2
be available to Purchaser after Closing, each machine to have a current fair
market value of $300. Notwithstanding the foregoing, Purchaser acknowledges that
all of such machines are delivered on an "asis", "where-is", "if-is" basis
subject to Seller's warranty of good title. There shall be no other indemnity
respecting such machines except as provided in this Section 2.1.1 and in
Sections 3.5 and 5.5. With respect to the number of glass door merchandisers,
there shall not be any adjustment to the Purchase Price other than pursuant to
this Section 2.1.1 and Section 3.11 and Section 2(c) of the Escrow Agreement.
2.1.2 Verification of Annual Case Sales. In the place and at
the time set forth in the Escrow Agreement, Seller shall make available to
representatives of Purchaser the Customer List in written format of EXHIBIT
2.1.2 for all sales of Beverages in the Territory during the period November 1,
1997 through October 31, 1998, for the purpose of verifying the number of Cases
of Beverages sold by Seller in the Territory for ultimate sale to consumers
within the Territory. Such records shall be sorted, as well as may be, between
Seller's Baltimore and Washington, D.C. areas of operations, and further sorted
by channels of trade. Purchaser's representatives may examine such records at
the place reasonably designated by Seller but shall not remove the records from
such place, nor shall any reproductions be made. Seller's representatives may
attend Purchaser's representatives throughout the examination. If Purchaser
disputes (in good faith and with reasonable evidence) the total number of Cases
or disputes (in good faith and with reasonable evidence) that any particular
sale of Cases resulted in an ultimate consumer purchase within the Territory.
Purchaser shall notify the Seller and the parties shall endeavor in good faith
to resolve the dispute if any; provided, however, that whether Cases sold to
Giant Food in the Territory were for ultimate sales to consumers within the
Territory may not be disputed. Any dispute which is not resolved shall be
entered in the Disputed Case Sales Statement and shall be dealt with as set
forth in the Escrow Agreement. In the event that Undisputed Case Sales are less
than 900,000, Purchaser may elect to terminate this Agreement by notice to
Seller. With respect to the number of cases sold by Seller in the Territory,
there shall not be any adjustment to the Purchase Price or indemnification or
any other remedy other than pursuant to this Section 2.1.2 and Section 3.11 and
Articles 10 and 13 and the Escrow Agreement.
2.1.3 Counting of Acquired Inventory. The physical counting,
valuing and removal of the Acquired Inventory shall be performed in accordance
with paragraph 3 of the Escrow Agreement.
2.2 Time of Closing. The Closing for the sale and purchase of the
Acquired Assets shall be held on Monday, November 30, 1998, at the Washington,
D.C. offices of Blank Rome Comisky & McCauley LLP or such other place as may be
agreed upon by the parties. The Closing shall be deemed to be effective as of
5:01 p.m. on the Closing Date.
2.3 Closing Procedure. At the Closing, each party will cause to be
prepared, executed and delivered all other documents reasonably required to be
delivered by such party pursuant to Articles 7 and 8 of this Agreement and all
other necessary, appropriate and customary documents as another party or its
counsel may reasonably request for the purpose of consummating the transactions
contemplated by this Agreement. Title to the Acquired Assets shall be delivered
to Purchaser at the place of Closing by means of the Bill of Sale and
Assignment. All actions taken at the Closing shall be deemed to have been taken
simultaneously at the time the last of any such actions is taken or completed.
2.4 Purchase Price. The Purchase Price shall be delivered to the Escrow
Agent and the Seller in accordance with the provisions of the Escrow Agreement.
The Purchase Price shall be allocated among the Acquired Assets in the manner
set forth in SCHEDULE 2.4, attached.
2.5 Notice and Payment of Seller's Creditors. At Closing, Seller
shall (a) identify all of its
2
<PAGE> 3
creditors to Purchaser, (b) give notice of the bulk sale of its assets to all of
its creditors and (c) pay certain of its creditors, all as set forth in Section
13, below.
2.6 Delivery of Acquired Assets.
2.6.1 Acquired Inventory (and on-site glass door
merchandisers) shall be delivered to Purchaser F.O.B. Seller's premises in
Jessup, Maryland. For purposes of delivery of the Acquired Inventory to
Purchaser, Seller shall provide access to Purchaser and the use of Seller's fork
lifts to load the Acquired Inventory onto Purchaser's trucks. Risk of loss to
the Acquired Inventory shall pass from Seller to Purchaser upon the physical
removal of the Acquired Inventory by Purchaser from Seller's place of business.
Purchaser shall reimburse Seller for any physical damage to Seller's warehouse
proximately caused by Purchaser removing the Acquired Inventory. Seller shall
reimburse Purchaser for all expenses incurred by Purchaser if the Acquired
Inventory is not made available for delivery pursuant to this Agreement and the
Escrow Agreement, including loss of the Acquired Inventory. Purchaser
acknowledges that Seller does not make any guarantee or representation that
there is a market for the Acquired Inventory or at what price or prices it may
be sold, and that Seller expressly disclaims any such representation, warranty
or guarantee. With respect of number of Cases of Beverages delivered, there
shall not be any adjustment to the Purchase Price or indemnification or any
other remedy other than through the process enumerated in this Section 2.6, and
the Escrow Agreement.
2.6.2 The Customer Lists shall be delivered at Closing.
Immediately after the execution and delivery of this Agreement, Seller shall
deliver to Purchaser in written form the names and addresses of all the
Customers with an indication for each Customer whether such Customer pays cash
or is extended credit terms for inspection by Purchaser pursuant to the Escrow
Agreement.
3. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller hereby represents and warrants to Purchaser, as follows:
3.1 Organization; Good Standing. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware, and has all requisite power and authority to own and lease its
properties and carry on its business as currently conducted.
3.2 Due Authorization. Seller has full power and authority to enter
into and perform this Agreement and to carry out the transactions contemplated
hereby. Seller has taken all necessary action to approve the execution and
delivery of this Agreement and the transactions contemplated hereby. This
Agreement constitutes the legal, valid and binding obligation of Seller,
enforceable against it in accordance with its terms, except as may be limited by
the availability of equitable remedies or by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally.
3.3 Execution and Delivery. Neither the execution and delivery by
Seller of this Agreement nor the consummation by it of the transactions
contemplated hereby will: (a) conflict with or result in a breach of the
Articles of Incorporation or Bylaws of Seller; (b) violate any statute, law,
rule or regulation or any order, writ, injunction or decree of any court or
governmental authority, which violation, either individually or in the
aggregate, might reasonably be expected to have a material adverse effect on the
Business or operations of Seller or Purchaser's ownership of the Acquired
Assets; or (c) except as disclosed on SCHEDULE
3
<PAGE> 4
3.3, violate or conflict with or constitute a default under (or give rise to any
right of termination, cancellation or acceleration under), or result in the
creation of any lien on any of the Acquired Assets pursuant to any material
agreement, indenture, mortgage or other instrument to which Seller is a party or
by which it is bound or affected.
3.4 Governmental and Other Consents. No approval, authorization,
consent, order or other action of, or filing with, any governmental authority or
administrative agency is required in connection with the execution and delivery
by Seller of this Agreement or the consummation of the transactions contemplated
hereby or thereby, other than filings related to the WARN Act, compliance with
which shall be the sole responsibility of Seller. Except as set forth in
SCHEDULE 3.4, no approval, authorization or consent of any other third party is
required in connection with the execution and delivery by Purchaser of this
Agreement and the consummation of the transactions contemplated hereby, except
as may have been previously obtained by Seller (or Purchaser in the Distribution
Agreements (as defined below)), or those which will be obtained prior to
Closing.
3.5 Title to Acquired Assets. Except for leased or licensed property
set forth in SCHEDULE 3.5A, Seller is the sole and exclusive legal owner of all
right, title and interest in the Acquired Assets, and when delivered to
Purchaser, the Acquired Assets constituting personal property shall be free and
clear of liens, claims, security interests, judgments, restrictions,
reservations, conditional sales, prior assignments, or other encumbrances,
burdens or charges of any nature except liens for taxes not yet payable, and
liens permitted or incurred by Purchaser. Within the past ten years, Seller has
not done business under or been known by any name other than its present
corporate name, or done business at any address other than the names and
addresses set forth in SCHEDULE 3.5B.
3.6 Storage of Inventory. None of the Acquired Inventory, as of the
Closing Date, will consist of items that have been mishandled or not stored by
Seller or on Seller's behalf in strict accordance with the requirements of the
Supplier whose trademarks it bears.
3.7 Case Volume. The Annual Case Sales Statement set forth on
SCHEDULE 3.7 is an accurate listing of the Case sales volumes for the Beverages
by beverage brand, flavor and package which Seller has sold in the Territories
during the period commencing November 1, 1997 through October 31, 1998.)
3.8 Litigation. There is no order of any court, governmental agency or
authority and no action, suit, proceeding or publicly disclosed investigation,
judicial, administrative or otherwise that is pending or, to Seller's knowledge
(without any inquiry whatsoever), threatened against or affecting the Seller
which, if adversely determined, might materially and adversely affect the
Business, the Acquired Assets or the operations, properties or conditions
(financial or otherwise) of the Seller or which challenges the validity or
propriety of any of the transactions contemplated by this Agreement.
3.9 Finders and Brokers. Except as set forth in SCHEDULE 3.9, no
person has, as a result of any agreement entered into by Seller, any valid claim
against any of the parties hereto for a brokerage commission, finder's fee or
other like payment.
3.10 No Adverse Distribution Rights. Except as described in SCHEDULE
3.10, the Seller holds the Acquired Distribution Rights free of any and all
adverse claims of any Third Party and no Third Party has any adverse license,
right or color of right, existing or inchoate, expressed or implied, vested or
contingent, to purchase, sell, distribute, promote, market or otherwise deal in
any Beverages in any portion of the Territories, provided, however, the Seller
makes the foregoing representations only to the best of its
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knowledge, information and belief with respect to any claims or rights in Third
Parties that may arise or exist on account of any actions taken by or on behalf
of any of the Suppliers.
3.11 No Untrue Written Statements. All representations or warranties by
Seller in this Agreement and in any Schedule, all other written statements
attached hereto, and all certificates furnished or to be furnished to Purchaser
by or on behalf of Seller in connection with this Agreement including, without
limitation, the Customer Lists, the Statement of Net Selling Price, and the
lists provided pursuant to Section 13.1, are true, accurate and correct in all
material respects to the best knowledge and belief of Seller. No representations
are made with respect to any statements, written or otherwise, not included in
or attached to this Agreement or referenced in this Section 3.11.
3.12 No Other Representations. Except for the express representations
and warranties contained in this Agreement, Seller makes no other
representations or warranties of any nature whatsoever, and Seller hereby
disclaims any and every other representation and warranty of any nature
whatsoever.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser hereby represents and warrants to Seller as follows:
4.1 Organization and Good Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of Pennsylvania
and has all requisite power and authority to own and lease its properties and
carry on its business as currently conducted.
4.2 Due Authorization. Purchaser has full power and authority to
enter into and perform this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Purchaser. This Agreement has been duly executed
and delivered by Purchaser and constitutes the legal, valid and binding
obligation of Purchaser, enforceable against it in accordance with its
respective terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights generally
or general equitable principles.
4.3 Execution and Delivery. Neither the execution and delivery by
Purchaser of this Agreement nor the consummation by it of the transactions
contemplated hereby will: (a) conflict with or result in a breach of the
Articles of Incorporation or Bylaws of Purchaser; (b) violate any law, statute,
rule or regulation or any order, writ, injunction or decree of any court or
governmental authority; or (c) violate or conflict with or constitute a default
under (or give rise to any right of termination, cancellation or acceleration
under) any indenture, mortgage, lease, contract or other instrument to which
Purchaser is a party or by which it is bound or affected.
4.4 Consents. No consent, approval, authorization, license, exemption
of, filing or registration with any court, governmental authority, commission,
board, bureau, agency or instrumentality, domestic or foreign, is required by
Purchaser in connection with the execution and delivery of this Agreement or the
consummation by it of any transaction contemplated hereby or thereby. Except as
set forth in SCHEDULE 4.4, no approval, authorization or consent of any other
Third Party is required in connection with the execution and delivery by
Purchaser of this Agreement and the consummation of the transactions
contemplated hereby, except as may have been previously obtained by Purchaser or
Seller.
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4.5 Finders and Brokers. No person has, as a result of any agreement
entered into by Purchaser, any valid claim against any of the parties hereto for
a brokerage commission, finder's fee or other like payment.
4.6 Litigation. There is no order of any court, governmental agency or
authority and no action, suit, proceeding or publicly disclosed investigation,
judicial, administrative or otherwise that is pending or, to Purchaser's
knowledge (without any inquiry whatsoever), threatened against or affecting
Purchaser which, if adversely determined, might materially and adversely affect
the assets, operations, properties or conditions (financial or otherwise) of
Purchaser or which challenges the validity or propriety of any of the
transactions contemplated by this Agreement.
4.7 Distribution Agreements. Purchaser is ready, willing and able to
enter into, Purchaser's Distribution Agreements with the Suppliers as of the
Closing which Distribution Agreements are acceptable to Purchaser and which
contain express consents from the Suppliers to the termination of Seller's
distribution rights in the Territories.
4.8 No Other Representations. Except for the express representations
and warranties contained in this Agreement, Purchaser makes no other
representations or warranties of any nature whatsoever, and Purchaser hereby
disclaims any and every other representation and warranty of any nature
whatsoever.
5. CERTAIN COVENANTS AND AGREEMENTS.
5.1 Reasonable Efforts. Each of Seller and Purchaser shall take all
reasonable action necessary and cooperate in good faith to consummate the
transactions contemplated by this Agreement and will use all necessary and
reasonable means at its disposal to obtain all necessary consents and approvals
of other persons and governmental authorities required to enable it to
consummate the transactions contemplated by this Agreement. Except as otherwise
provided herein, each of Seller and Purchaser acknowledges and agrees that it
shall pay all costs, fees and expenses incurred by it in obtaining such
necessary consents and approvals. Each party shall make, if any, all filings,
applications, statements and reports to all governmental agencies or entities
which are required to be made prior to the Closing Date by or on its behalf
pursuant to any statute, rule or regulation in connection with the transactions
contemplated by this Agreement, and copies of all such filings, applications,
statements and reports shall be provided to the other.
5.2 Public Announcements. Prior to the Closing Date, all notices to
third parties and other publicity relating to the transaction contemplated by
this Agreement shall be made only after joint planning and agreement by Seller
and Purchaser. Additionally, the parties reaffirm and incorporate by reference
the terms and provisions of that certain Confidentiality Letter Agreement dated
August 21, 1998.
5.3 Obligations Pending Closing. During the period from the date hereof
to the Closing Date, unless the prior consent of Purchaser is first obtained,
Seller shall not knowingly take any action which would cause any representation
contained in Article 3 to be untrue as of the Closing Date. Purchaser
acknowledges that Seller has taken and will take certain actions to curtail its
normal conduct of the Business. In addition, during the period from the date
hereof to the Closing Date, unless the prior consent of Seller is first
obtained, Purchaser shall not knowingly take any action which would cause any
representation contained in Article 4 to be untrue as of the Closing Date
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5.4 Seller to Pay Creditors as of Closing Date. Seller shall deliver
checks representing payment in full of all known fixed, liquidated and
non-disputed obligations owed to all of its creditors as of the Closing Date
(except for those obligations and creditors identified in SCHEDULE 5.4) and
neither Purchaser nor any of the Acquired Assets at any time after Closing shall
be subjected to any damage, claim or expense by or on behalf of any creditor of
Seller with respect to any obligation owed or claimed to be owed to any such
creditor by Seller.
5.5 Glass Door Merchandisers. For the six months immediately following
the Closing Date, Purchaser shall allow Seller to use one shelf of each glass
door merchandiser machine sold hereunder for Seller's beverage inventory which
is not being sold hereunder. Seller shall reimburse Purchaser for any physical
damage to such machines proximately caused by Seller placing such beverages in
such machines and Seller shall defend and indemnify Purchaser from all claims of
whatever nature made by any Third Party against Purchaser relating to Seller's
use of such machines after Closing.
6. CONDITIONS TO PURCHASER'S CLOSING.
All obligations of Purchaser under this Agreement shall be subject to
the fulfillment at or prior to the Closing of the following conditions, it being
understood that Purchaser may, in its sole discretion, waive any or all of such
conditions in whole or in part:
6.1 Representations, Etc. Seller shall have performed in all material
respects the covenants and agreements contained in this Agreement that are to be
performed by it at or prior to the Closing, and the representations and
warranties of Seller contained in this Agreement shall be true and correct in
all material respects as of the Closing Date with the same effect as though made
at such time (except as contemplated or permitted by this Agreement).
6.2 No Adverse Litigation. No order or temporary, preliminary or
permanent injunction or restraining order shall have been entered and no action,
suit or other legal or administrative proceeding by any court or governmental
authority, agency or other person shall be pending or threatened on the Closing
Date which may have the effect of (i) making any of the transactions
contemplated hereby illegal, or (ii) making Purchaser liable for the payment of
damages to any person in respect of the Business or the Acquired Assets.
6.3 Closing Deliveries. Purchaser shall have received each of the
documents or items required to be delivered to it pursuant to Section 8.1
hereof.
7. CONDITIONS TO SELLER'S CLOSING.
All obligations of Seller under this Agreement shall be subject to the
fulfillment at or prior to the Closing of the following conditions, it being
understood that Seller may, in its sole discretion, waive any or all of such
conditions in whole or in part:
7.1 Representations, Etc. Purchaser shall have performed in all
material respects the covenants and agreements contained in this Agreement that
are to be performed by Purchaser as of the Closing, and the representations and
warranties of Purchaser contained in this Agreement shall be true and correct in
all material respects as of the Closing Date with the same effect as though made
at such time (except as contemplated or permitted by this Agreement).
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7.2 No Adverse Litigation. No order or temporary, preliminary or
permanent injunction or restraining order shall have been entered and no action,
suit or other legal or administrative proceeding by any court or governmental
authority, agency or other person shall be pending or threatened on the Closing
Date which may have the effect of (i) making any of the transactions
contemplated hereby illegal, or (ii) making Seller liable for the payment of
damages to any person in respect of the Business or the Acquired Assets.
7.3 Closing Deliveries. Seller shall have received each of the
documents or items required to be delivered to it pursuant to Section 8.1.
7.4 WARN Act. Seller shall be satisfied, in its sole but reasonable
discretion, that it has complied with the mandates of the WARN Act.
8. DOCUMENTS TO BE DELIVERED AT OR BEFORE CLOSING.
8.1 To Purchaser. At or before the Closing, there shall be delivered to
Purchaser:
8.1.1 The Bill of Sale and Assignment.
8.1.2 A certificate, signed by an executive officer of Seller,
as to the fulfillment of the conditions set forth in Section 6.1
hereof.
8.1.3 All other items reasonably requested by Purchaser.
8.1.4 he Escrow Agreement.
8.2 To Seller. At or before the Closing, there shall be
delivered to Seller:
8.2.1 A certificate, signed by an executive officer of
Purchaser, as to the fulfillment of the conditions set forth in Section
7.1 hereof.
8.2.2 The Escrow Agreement.
8.2.3 That portion of the Purchase Price determined pursuant
to the Escrow Agreement.
8.2.4 All other items reasonably requested by Seller.
8.3 To Escrow Agent. At or before the Closing, there shall be
delivered to the Escrow Agent:
8.3.1 The Escrow Agreement, and
8.3.2 Those amounts determined pursuant to paragraph 2.4
which are required to be delivered to the Escrow
Agent, and
8.3.3 All other items reasonably requested by Escrow Agent.
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9. SURVIVAL.
All representations, warranties, covenants and agreements made by any
party to this Agreement or pursuant hereto shall be deemed to have been relied
upon by the parties hereto and shall survive the Closing as follows:
9.1 The representations and warranties in Sections 3.6 and 5.4 and
Article 13 shall survive indefinitely (subject to applicable
statutes of limitations).
9.2 Seller shall remain liable for one year after Closing for its
representations in Section 3.10, and notice of any claim of
any nature thereunder seeking indemnification or any other
remedy must be given within one (1) year from the Closing
Date, and if not, shall be deemed waived and forfeited.
9.3 All other claims for indemnification or otherwise shall be
made, if at all, not later than the 185th day after the later
of the Closing Date, or the public dissemination of the
transactions contemplated hereby, and if not made shall be
deemed waived and forfeited.
10. INDEMNIFICATION OF PURCHASER.
Subject to the limitations set forth in Articles 9 and 12, Seller shall
defend, indemnify and hold Purchaser harmless from, against, for and in respect
of:
10.1 any and all damages, losses, settlement payments, obligations,
liabilities, claims, actions or causes of action and encumbrances suffered,
sustained, incurred or required to be paid by Purchaser because of the breach of
any written representation, warranty, agreement or covenant of Seller contained
in this Agreement or any certificate or agreement executed in connection with
this Agreement;
10.2 any and all liabilities, obligations, claims and demands arising
out of the ownership or the Acquired Assets or operation of the Business at all
times prior to the Closing Date); and
10.3 any and all liabilities, obligations, claims and demands arising
out of alleged defects in products sold by Seller at any time; and
10.4 all reasonable costs and expenses (including, without limitation,
attorney's fees, interest and penalties) incurred by Purchaser in connection
with any action, suit, proceeding, demand, assessment or judgment incident to
any of the matters indemnified against in this Article 10.
11. INDEMNIFICATION OF SELLER.
Subject to the limitations set forth in Articles 9 and 12, Purchaser
shall indemnify and hold Seller harmless from, against, for and in respect of:
11.1 any and all damages, losses, settlement payments, obligations,
liabilities, claims, actions or causes of action and encumbrances suffered,
sustained, incurred or required to be paid by Seller because of the breach of
any written representation, warranty, agreement or covenant of Purchaser
contained in this Agreement or any certificate or agreement executed in
connection with this Agreement;
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11.2 any and all liabilities, obligations, claims and demands arising
out of the ownership of the Acquired Assets and operation of Purchaser's
business on and after the Closing Date, except to the extent the same arises
from a breach of any written representation, warranty, agreement or covenant of
Seller contained in this Agreement or any certificate or agreement executed in
connection with this Agreement;
11.3 all reasonable costs and expenses (including, without limitation,
attorney's fees, interest and penalties) incurred by Seller in connection with
any action, suit, proceeding, demand, assessment or judgment incident to any of
the matters indemnified against in this Article 11.
12. GENERAL RULES REGARDING INDEMNIFICATION.
The obligations and liabilities of each indemnifying party hereunder
with respect to claims resulting from the assertion of liability by the other
party or indemnified third parties shall be subject to the following terms and
conditions:
12.1 The indemnified party shall give prompt written notice (which in
no event shall exceed thirty (30) days from the date on which the indemnified
party first became aware of such claim or assertion) to the indemnifying party
of any claim which might give rise to a claim by the indemnified party against
the indemnifying party based on the indemnity agreements contained in Articles
10 or 11 hereof, stating the nature and basis of said claims and the amounts
thereof, to the extent known;
12.2 If any action, suit or proceeding is brought against the
indemnified party with respect to which the indemnifying party may have
liability under the indemnity agreements contained in Articles 10 or 11 hereof,
the action, suit or proceeding shall, upon the written acknowledgment by the
indemnifying party that it is obligated to indemnify under such indemnity
agreement, be defended (including all proceedings on appeal or for review which
counsel for the indemnified party shall deem appropriate) by the indemnifying
party. The indemnified party shall have the right to employ its own counsel in
any such case, but the fees and expenses of such counsel shall be at the
indemnified party's own expense unless (a) the employment of such counsel and
the payment of such fees and expenses both shall have been specifically
authorized in writing by the indemnifying party in connection with the defense
of such action, suit or proceeding, or (b) counsel to such indemnified party
shall have reasonably concluded and specifically notified the indemnifying party
that there may be specific defenses available to it which are different from
those available to the indemnifying party, in any of which events the
indemnifying party, to the extent made necessary by such defenses, shall not
have the right to direct the defense of such action, suit or proceeding on
behalf of the indemnified party. In the latter such case only that portion of
such fees and expenses of the indemnified party's separate counsel reasonably
related to matters covered by the indemnity agreements contained in Articles 10
or 11 hereof shall be borne by the indemnifying party. The indemnified party
shall be kept fully informed of such action, suit or proceeding at all stages
thereof whether or not it is represented by separate counsel.
12.3 The indemnified party shall make available, upon reasonable
notice, to the indemnifying party and its attorneys and accountants all books
and records of the indemnified party relating to such proceedings or litigation
and the parties hereto agree to render to each other such assistance as they may
reasonably require of each other in order to ensure the proper and adequate
defense of any such action, suit or proceeding.
12.4 The indemnified party shall not make any settlement of any claims
without the written consent of the indemnifying party, which consent shall not
be unreasonably withheld or delayed.
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12.5 If any claims are made by an indemnified party for which an
indemnifying party would be liable, and it appears likely that such claims might
also be covered by the indemnified party's insurance policies, the indemnified
party shall make a timely claim under such policies and to the extent that such
party obtains any recovery from such insurance, such recovery shall be offset
against any sums due from an indemnifying party (or shall be repaid to the
indemnifying party by the indemnified party to the extent that an indemnifying
party has already paid any such amounts). In addition, any claim for indemnity
hereunder shall be reduced by any tax-related benefit reasonably expected by
Purchaser to be received or actually received by Purchaser, viewing such claim
without being affected by any of Purchaser's other activities.
12.6 The indemnified party shall not make any claim unless and until it
has incurred indemnified losses, damages and expenses in the cumulative
aggregate amount of $25,000.00, and then only in respect of the excess over such
$25,000.00 minimum. All claims for indemnification and liability pursuant
thereto shall not, in any event, exceed $500,000 provided, however, that there
shall be no limit and no deductible with respect to claims by Seller's
creditors.
12.7 Purchaser and Seller acknowledge and agree that the foregoing
indemnification provisions in Articles 10, 11 and 12 hereof shall be the sole
and exclusive remedies for breaches or defaults of any representation, warranty,
covenant or agreement contained herein or in any other document or instrument
delivered in connection herewith, except in the case of fraud.
12.8 All amounts owed under this Article 12 not paid when due shall
bear interest at a rate equal to 15% per annum.
13. NOTICE OF CREDITORS OF SELLER.
13.1 Identification of Seller's Creditors. Seller will furnish to
Purchaser at Closing a written list, signed and sworn to or affirmed by Seller,
of the names and business addresses of all creditors of Seller, with the amounts
of indebtedness due, when known, ("List of Creditors"), and also the names of
all persons known to assert claims against Seller, even if such claims are
disputed.
13.2 Payment of Creditors. Seller shall notify by registered or
certified mail posted at Closing all Creditors whose names appear on the List of
Creditors (except those identified in SCHEDULE 5.4), and all other persons known
to Purchaser to hold or assert claims against Seller, that a bulk transfer has
been made and shall identify the Acquired Inventory and the glass door
merchandisers as have been sold to Purchaser. Each notice shall be delivered
together with Seller's check evidencing payment in full the amount deemed by the
notice to be owed. For purposes of this Section 13, the word "creditors"
includes, without limitation, all taxing authorities and all employees of the
Seller.
13.3 Purchaser Assuming no Obligations of Seller. It is especially
understood and agreed that Purchaser is not assuming any obligations or
liabilities of Seller hereunder, and Seller hereby represents and warrants that
all of Seller's creditors shall be paid in full as the obligations to such
creditors become due.
14. MISCELLANEOUS PROVISIONS.
14.1 Expenses. Except as otherwise expressly provided herein, each
party shall pay the fees and expenses incurred by it in connection with the
transactions contemplated by this Agreement. Purchaser shall be responsible for
all transfer taxes, fees or other charges levied as a result of the transaction
described by
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this Agreement.
14.2 Accounts Receivable. As of and following Closing, Seller will
collect for itself all accounts receivable with respect to Business which relate
to any period prior to the Closing. Within sixty (60) days following Closing,
(a) Seller shall deliver to Purchaser a complete and detailed statement setting
forth all collections of accounts receivable which relate to the Business during
the period after the Closing, along with, if applicable, the cash proceeds of
all such accounts receivable collected on behalf of Purchaser, and (b) Purchaser
shall deliver to Seller a complete and detailed statement setting forth all
collections of accounts receivable which relate to any period prior to the
Closing, along with, if applicable, the cash proceeds of all such accounts
receivable collected on behalf of Seller. Payments on accounts receivable shall
be credited to the invoice reasonably identified by amount paid, invoice,
invoice number, or other customer identification indicating that a specific
invoice is being paid. In the event that a payment cannot be matched to a
particular invoice or if an invoice is overpaid, it shall be applied against the
oldest invoice first. Both parties shall be entitled, upon reasonable prior
written notice to the other, to inspect the books and records of the other
solely for the purpose of verifying the accuracy of the reports delivered
hereunder, and shall make a good faith effort to match payments on accounts
receivables to the appropriate invoice.
14.3 Amendment. This Agreement may be amended at any time but only by
an instrument in writing signed by the parties hereto.
14.4 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if mailed by certified mail, return receipt
requested, or by nationally recognized "next-day" delivery service, to the
parties at the addresses set forth below (or at such other address for a party
as shall be specified by like notice), or sent by confirmed facsimile with a
cover page to the number set forth below (or such other number for a party as
shall be specified by proper notice hereunder):
If to Purchaser: Canada Dry Potomac Corporation
1201 East West Highway
Silver Spring, Maryland 20910
Attn: Richard E. Wolfe
Fax: (301) 589-5019
With a copy to : Kent Walker, Esq.
Blank Rome Comisky & McCauley LLP
One Logan Square
Philadelphia, Pennsylvania 19103
Fax: (215) 832-5783
If to Seller: Atlantic Premium Brands, Ltd.
650 Dundee Road, Suite 370
Northbrook, Illinois 60062
Attn: Chief Financial Officer
Fax: (847) 480-0199
With a copy to : Tom D. Wippman, Esq.
650 Dundee Road, Suite 370
Northbrook, Illinois 60062
Fax: (847) 480-1251
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14.5 Assignment. This Agreement may not be assigned by either party
without the prior consent of the other party. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors, heirs and permitted assigns.
14.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14.7 Headings. The headings of the Articles and Sections of this
Agreement are inserted for convenience only and shall not constitute a part
hereof.
14.8 Entire Agreement. This Agreement and the documents referred to
herein contain the entire understanding of the parties hereto in respect of the
subject matter contained herein. There are no restrictions, promises,
warranties, conveyances or undertakings other than those expressly set forth
herein. This Agreement supersedes any prior agreements and understandings
between the parties with respect to the subject matter.
14.9 Waiver. No attempted waiver of compliance with any provision or
condition hereof, or consent pursuant to this Agreement, will be effective
unless evidenced by an instrument in writing by the party against whom the
enforcement of any such waiver or consent is sought.
14.10 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Maryland.
14.11 Intended Beneficiaries. The rights and obligations contained in
this Agreement are hereby declared by the parties hereto to have been provided
expressly for the exclusive benefit of such entities as set forth herein and
shall not benefit, do not benefit and may not be relied upon by any unrelated
third parties.
14.12 Mutual Contribution. The parties to this Agreement and their
counsel have mutually contributed to its drafting. Consequently, no provision of
this Agreement shall be construed against any party on the ground that such
party drafted the provision or caused it to be drafted or the provision contains
a covenant of such party.
15. Definitions. For the purposes of this Agreement, except as otherwise
expressly provided, the terms defined in this Article 15 have the meanings
assigned to them in this Article, wherever they appear in the Agreement; the
plural form of a defined term shall have the same meaning as the defined
singular term and the singular form of a defined term shall have the same
meaning as a defined plural form.
15.1 The term "ACQUIRED ASSETS" shall mean the tangible and intangible
property set forth on SCHEDULE 15.1 attached hereto.
15.2 The term "ACQUIRED DISTRIBUTION RIGHTS" shall mean the exclusive
rights of the Seller to market, sell and deliver Beverages within Territories,
provided, however, that such term shall not include the rights to distribute
Arizona products unless Purchaser has entered into an Arizona Agreement.
15.3 The term "ACQUIRED INVENTORY" shall mean those stocks and
inventories of the Beverages and of Hires, Crush and Vernors branded products
owned by and in the possession of the Seller on the Closing Date, (i) which are
packed into cartons or trays and assembled on to pallets ready for shipment,
(ii)
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which are free of all apparent defects in quality, whether of contents or
packaging, and (iii) whose age (since date of manufacture) is not less than the
following: AriZona Regular and Diet: 110 days; Mistic and Stewarts Regular:
eleven (11) months; Mistic and Stewarts Diet: five (5) months: Hires, Crush and
Vernors, eleven (11) months. The Acquired Inventory shall include any of those
sku's listed in SCHEDULE 15.3.
15.4 The term "ARIZONA AGREEMENT" shall mean any agreement between
Purchaser and Hornell Brewing Co., Inc. for the exclusive wholesale distribution
by Purchaser of AriZona-brand beverages in the Territory.
15.5 The term "BEVERAGES" shall mean any and all beverage products
identified with the AriZona, Stewarts or Mistic trademarks.
15.6 The term "BILL OF SALE AND ASSIGNMENT" shall mean a document in
form and substance of EXHIBIT 15.6 attached.
15.7 The term "CASE" shall mean a carton or tray containing
twenty-four bottles or their equivalent number (e.g., for example, a carton of
twelve bottles of whatever size shall count as one-half case).
15.8 The term "CLOSING" shall mean the transfer of the Assets to
Purchaser simultaneous with the payment of the Purchase Price to the Seller and
to the Escrow Agent pursuant to this Agreement.
15.9 The term "CLOSING DATE" shall mean the date on which the Closing
occurs.
15.10 The term "CUSTOMER" shall mean each and every Person who
purchased Beverages from the Seller during the period from November 1, 1997
through October 31, 1998.
15.11 The term "CUSTOMER LIST" shall mean a list or lists which
collectively includes all Customers identified by name, address, telephone
number, principal contact and each sale of Beverages made by Seller in the
Territories, described by brand, flavor, package, date of sale, place of
delivery, and net selling price, during the period from November 1, 1997 through
October 31, 1998, in the format of EXHIBIT 15.11.
15.12 The term "DISPUTED CASE SALES" shall mean the Case volumes for
AriZona, Mistic and Stewarts products by Beverage brand, and channel of
distribution, which Seller claims to have sold in the Territories during the
period from November 1, 1997 through October 31, 1998, which claims are disputed
in good faith in writing stating the reason such Case(s) is (are) disputed by
Purchaser, to be delivered in the form of SCHEDULE 15.12 (the "DISPUTED CASE
SALES STATEMENT.")
15.13 The term "DISTRIBUTOR CLAIM" shall main any written assertion by
or on behalf of any Person made to any other Person that the Person by or on
behalf of whom the assertion is made has any license, right or color of right,
existing or inchoate, expressed or implied, vested or contingent, to purchase,
sell, distribute, promote, market or otherwise deal in any Beverages in any of
the Territories. Distributor Claims include, without limitation, all statements
or assertions (whether or not addressed to a party to this Agreement) made in
any letter, notice, demand, memorandum, complaint, suit or action in any court
or to any administrative agency or arbitration association or arbitrator.
15.14 The term "ESCROW AGENT" shall mean those Persons designated as
such by the Escrow Agreement.
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15.15 The term "ESCROW AGREEMENT" shall mean that document in form
and substance of Exhibit 15.15, attached.
15.16 The term "ESCROW FUND" shall mean those funds delivered to the
Escrow Agent at Closing, as such funds may be increased by interest and
diminished by payments and expenses from time to time.
15.17 The term "INVENTORY COST LIST" shall mean the schedule of all
stock keeping units ("SKU's") of the Acquired Inventory separately priced by
each SKU (or package size). The price for each shall be as set forth on SCHEDULE
15.17.
15.18 The term "PERSON" shall mean any natural person, corporation or
other legal business, governmental, charitable, fraternal, religious or social
entity, association or organization and any agent of the foregoing.
15.19 The term "PURCHASE PRICE" shall mean the sum of (i) the
Undisputed Case Sales, multiplied by $2.50, plus (ii) the value of the Acquired
Inventory, determined by reference to the Inventory Cost List and the physical
count of the Acquired Inventory conducted pursuant to paragraph 2.1.3, and (iii)
the Disputed Case Sales determined after Closing pursuant to arbitration as
provided by the Escrow Agreement to have been made for ultimate sale to
consumers in the Territory, multiplied by $2.50.
15.20 The term "PURCHASER'S DISTRIBUTION AGREEMENTS" shall mean
agreements Purchaser has entered into, or is ready, willing and able to enter
into, with the Suppliers respecting the Acquired Distribution Rights, which
agreements are acceptable to Purchaser, in its sole discretion, and which
contain express consents from the Suppliers to the termination of Seller's
distribution rights in the Territories.
15.20A The term "STATEMENT OF NET SELLING PRICE" shall mean the list of
selling prices, by channel, brand and package size, after all discounts, but
before recoveries for the Beverages sold by Seller for the 12 month period ended
August 31, 1998 set forth in EXHIBIT 15.20A, which net prices Seller represents
were no less for the twelve months ended October 31, 1998.
15.21 The term "SUPPLIER" shall mean each of Hornell Brewing Co.,
Inc., Cable Car Beverage Corporation (or its successor), Mistic Brands, Inc. and
Triarc Companies, Inc.
15.22 The term "TERRITORIES" shall mean the exclusive territories for
the marketing, sale and distribution of AriZona, Stewarts and Mistic products as
contractually designated by the Suppliers of those products, as set forth in
SCHEDULE 15.22.
15.23 The term "THIRD PARTY" shall mean any Person, other than the
Seller and the Purchaser.
15.24 The term "UNDISPUTED CASE SALES" shall mean the actual number of
Cases of Beverages which Purchaser and Seller agree that Seller sold in the
Territories (for ultimate resale to consumers in the Territories) during the
period from November 1, 1997 through October 31, 1998.)
15.25 The term "WARN ACT" shall mean Worker Adjustment and Retraining
Notification Act ("WARN"), 29 U.S.C. Sections 2101-2109, which took effect on
February 4, 1989.
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<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ATLANTIC PREMIUM BRANDS, LTD.
By /s/ ALAN F. SUSSNA
-------------------------------
Alan F. Sussna, President
CANADA DRY POTOMAC CORPORATION
By /s/ RICHARD E. WOLFE
-------------------------------
Richard E. Wolfe, President
16
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INDEX TO SCHEDULES AND EXHIBITS
Schedules:
----------
2.4 Allocation of Purchase Price.
3.3 Seller's Conflicts with Laws and other Contracts.
3.4 Seller Required Third Party Consents.
3.5A Seller's Leased and Licensed Acquired Assets.
3.5B Seller's Former Names and Addresses.
3.7 Annual Case Sales Statement.
3.9 Seller's Finders and Brokers.
3.10 Distribution Rights of Third Parties Adverse to Purchaser.
4.4 Purchaser Required Third Party Consents.
5.4 Seller's Creditors and Obligations NOT Paid at Closing.
15.1 Acquired Assets.
15.3 SKU's for Acquired Inventory.
15.11 Customers List.
15.12 Form of Disputed Case Sales Statement.
15.17 Inventory Cost List.
15.22 Territories.
Exhibits
--------
15.5 Bill of Sale and Assignment.
15.15 Escrow Agreement.
15.20A Statement of Net Selling Prices.
THE COMPANY AGREES TO FURNISH SUPPLEMENTALLY A COPY OF ANY OF THE
SCHEDULES AND EXHIBITS LISTED ABOVE TO THE SECURITIES AND EXCHANGE COMMISSION
UPON REQUEST.
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EXHIBIT 2.2
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT"), dated the 2ND day of
February, 1999 by and between ATLANTIC PREMIUM BRANDS, LTD, a Delaware
corporation ("SELLER") and Master Distributors, Inc., a Maryland corporation
(collectively, "BUYER").
R E C I T A L S:
WHEREAS, Seller is engaged in the business (the "BUSINESS") of the
distribution of non-alcoholic beverages;
WHEREAS, Buyer desires to acquire, and Seller desires to sell, certain
assets of Seller, all upon the terms and conditions hereinafter set forth; and
WHEREAS, Buyer desires to assume, and Seller desires to assign to
Buyer, certain liabilities of Seller, all upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, and in consideration of the mutual premises and
representations, warranties and covenants and other good and valuable
consideration, the receipt and sufficiency of which being acknowledged, the
parties agree as follows:
1. PURCHASE AND SALE OF ASSETS AND ASSUMPTION OF CERTAIN LIABILITIES.
A. Purchase and Sale of Assets. Subject to the conditions set
forth in this Agreement, at the Closing (as defined hereinafter), Seller shall
assign, transfer, convey and deliver to Buyer, and Buyer shall purchase from
Seller, all of Seller's right title and interest in and to only the property and
assets which relate to the Seller's beverage division expressly as set forth on
SCHEDULE I attached hereto (collectively, the "ASSETS"). The Assets shall be
sold "As Is, Where Is" and without any other warranty or representation, except
as otherwise explicitly provided herein. Notwithstanding the foregoing, Seller
shall not deliver title to the Assets to Buyer until the Seller has fully and
finally extinguished its payment obligations under the Note.
B. Assumption of Liabilities. At the Closing, Buyer shall
assume only those liabilities (collectively, the "ASSUMED LIABILITIES"), if any,
pursuant to those contracts (the "CONTRACTS") as are both set forth on SCHEDULE
II, attached hereto, and Buyer agrees to assume, pay and perform the Assumed
Liabilities after the Closing Date, when and as such assumption, payment and
performance obligations come due and in conformity with the assumption agreement
to be entered into at the Closing as is contemplated by Section 2(E) hereof.
C. Post-Closing Responsibilities. Buyer and Seller agree that
from and after the Closing Date, as between Buyer and Seller, Buyer shall have
the sole and absolute responsibility to perform, pay and otherwise discharge the
Assumed Liabilities and, subject to Section 1(A), to own and use the Assets.
Accordingly, Buyer shall indemnify and hold harmless Seller against any and all
liabilities, costs, expenses, actions, demands, charges, or other claims which
relate to or arise out of, directly or indirectly, any Assumed Liability or to
any Asset. The obligations contained in this Section 1(C) shall survive Closing.
2. CONSIDERATION; CLOSING.
A. Purchase Price. The purchase price ("PURCHASE PRICE") to be
received by Seller in exchange for the Assets shall be the sum of (i)
thirty-five thousand six hundred dollars ($35,600) for the Assets, plus (ii) an
amount equal to the Inventory Cost, as determined pursuant to Section 2(B)
hereof, less a credit in the amount of one-hundred thousand dollars ($100,000),
for Buyer's prior payment of that amount pursuant to the terms of that certain
<PAGE> 2
letter agreement regarding "Purchase of Beverage Inventory" between Buyer and
Seller, dated January 22,1999 (the "DEPOSIT"), plus (iii) the Accounts
Receivable Amount, as determined pursuant to Section 2(C) hereof less (iv)
one-hundred thirty-five thousand dollars ($135,000) which Buyer and Seller agree
is a credit amount which relates to Buyer's assumption of the Ryder truck
leases.
B. Payment of Purchase Price. The Purchase Price shall be paid
as follows: (i) At Closing, Buyer and its four principals shall deliver to
Seller a Promissory Note in the amount of three hundred thousand dollars
($300,000) in of EXHIBIT 1B, attached hereto (the "NOTE"), (ii) at Closing,
Buyer shall deliver cash, in an amount equal to the net sums set forth in
Sections 2(A)(i) and 2(A)(ii) above less the sum set forth in 2(A)(iv), and
(iii) to the extent that, as ultimately calculated, the actual Purchase Price
varies from the face value of the Note plus the cash delivered at Closing, then
the parties agree and covenant that after the final payment has been made under
the Note to pay to the other such party any additional amounts or rebate any
paid amounts (as the case may be) so that the aggregate amounts paid by Buyer
equal the Purchase Price, plus interest under the Note.
C. Inventory Valuation. The inventory to be purchased is
quantified and valued by case as is set forth on the list attached hereto as
SCHEDULE I(c) (the "INVENTORY LIST") on hand as of such time. The Inventory List
shall be segregated by beverage brand and number of cases of each such brand.
The price of each such case is also listed on SCHEDULE I(c). Buyer shall take
delivery of all of such brands described on SCHEDULE I(c) (the "ACQUIRED
INVENTORY"), which shall be valued as, the sum of (i) each case of Acquired
Inventory, multiplied by (ii) the price for each such case (the "INVENTORY
COST").
D. Accounts Receivable Valuation. Buyer shall purchase
Seller's accounts receivable as of 5:01p.m. on February 1, 1999 for an amount
(the "ACCOUNTS RECEIVABLE AMOUNT") equal to sixty-four and ten one hundreths
percent (64.10%) of the book value of such accounts receivable, as determined by
Buyer in accordance with GAAP and consistent with Seller's past practice. To
determine such Accounts Receivable Amount, the parties agree that on or about
February 3, 1999, Seller shall provide Buyer with the precise Accounts
Receivable Amount, an accounts receivable trial balance and, upon request,
supporting documentation, utilized by Seller to determine such Accounts
Receivable Amount.
E. Time of Closing. The closing (the "CLOSING") for the sale
and purchase of the Assets shall be held at the offices of Seller in Jessup,
Maryland (or such other place as may be agreed upon by the parties in writing)
on February 1, 1999 at 9:00 a.m. local time (the "CLOSING DATE"). The Closing
shall be deemed to be effective as of 5:01 p.m. on the Closing Date.
F. Delivery and Transport of Assets.
(i) Upon consummation of the transactions described
herein, the Assets and Inventory shall be deemed delivered to Buyer
f.o.b. Seller's premises in Jessup, Maryland, and Buyer shall bear sole
responsibility for the risk, cost and effort attendant to the storage
and transportation of the Assets and Inventory from Seller's premises.
Seller shall provide no personnel or equipment in connection with such
storage and transportation. Buyer's ability to occupy such premises,
and store the Assets at such facility shall be governed by a Sublease
Agreement in the form of EXHIBIT 2D(i), attached hereto (the
"SUBLEASE").
(ii) Buyer shall be solely responsible to remove
those leased Ryder truck vehicles, the leases for which Buyer is
assuming as are identified on SCHEDULE II attached hereto.
(iii) From and after the Closing, Buyer shall have
the use and operation of the Assets pursuant hereto as if title for
such Assets had transferred, provided that Seller shall not release to
Buyer the title to the Assets until Seller has fully and finally
extinguished its payment obligations under the Note.
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<PAGE> 3
G. Closing Procedure. At the Closing, Seller shall deliver to
Buyer the Inventory List, a bill of sale, and similar documents as Buyer shall
reasonably request. Against such delivery, Buyer shall (a) issue and deliver to
Seller the purchase price in accordance with Section 2A above and (b) execute
and deliver assumption agreements with respect to the Assumed Liabilities, as
Seller shall reasonably request. All actions taken at the Closing shall be
deemed to have been taken simultaneously at the time the last of any such
actions is taken or completed.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents
and warrants to Buyer, as follows:
A. Organization; Good Standing; Due Authorization. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the state of Delaware, and has all requisite power and authority to own and
lease its properties and carry on its business as currently conducted. Seller
has full power and authority to enter into and perform this Agreement and to
carry out the transactions contemplated hereby. Seller has taken all necessary
action to approve the execution and delivery of this Agreement and the
transactions contemplated hereby. This Agreement constitutes the legal, valid
and binding obligation of Seller, enforceable against it in accordance with its
terms, except as may be limited by the availability of equitable remedies or by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally.
B. Execution and Delivery. Neither the execution and delivery
by Seller of this Agreement nor the consummation by it of the transactions
contemplated hereby will: (i) conflict with or result in a breach of the
Articles of Incorporation or Bylaws of Seller; (ii) violate any statute, law,
rule or regulation or any order, writ, injunction or decree of any court or
governmental authority, which violation, either individually or in the
aggregate, might reasonably be expected to have a material adverse effect on the
Business or operations of Seller or Buyer's ownership of the Assets; or (iii)
conflict with or constitute a default under (or give rise to any right of
termination, cancellation or acceleration under), or result in the creation of
any lien on any of the Assets pursuant to any material agreement, indenture,
mortgage or other instrument to which Seller is a party or by which it is bound
or affected.
C. Governmental and Other Consents. No approval,
authorization, consent, order or other action of, or filing with, any
governmental authority or administrative agency is required in connection with
the execution and delivery by Seller of this Agreement or the consummation of
the transactions contemplated hereby or thereby. No approval, authorization or
consent of any other third party is required in connection with the execution
and delivery by Buyer of this Agreement and the consummation of the transactions
contemplated hereby, except as may have been previously obtained by Buyer. Buyer
takes the full risk and responsibility of procuring all consents appropriate for
the distribution of any items of inventory acquired by Buyer hereunder.
D. Title to Personal Property Assets. Except for leased or
licensed property, Seller is the sole and exclusive legal owner of all right,
title and interest in, and when delivered to Buyer, the Assets constituting
personal property shall be free and clear of liens, claims and encumbrances
except liens for taxes not yet payable, and liens permitted or incurred by
Buyer.
E. Finders and Brokers. No person has, as a result of any
agreement entered into by Seller, any valid claim against any of the parties
hereto for a brokerage commission, finder's fee or other like payment.
F. No Other Representations. Except for the express
representations and warranties contained in this Section 3, Seller makes no
other representations or warranties of any nature whatsoever, and Seller hereby
disclaims any and every other representation and warranty of any nature
whatsoever.
4. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents and
warrants to Seller as follows:
A. Organization and Good Standing; Due Authorization. Buyer
is a corporation duly organized,
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validly existing and in good standing under the laws of Maryland and has all
requisite power and authority to own and lease its properties and carry on its
business as currently conducted. Buyer has full power and authority to enter
into and perform this Agreement and to carry out its obligations hereunder. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Buyer. This Agreement has been duly executed and
delivered by Buyer and constitutes the legal, valid and binding obligation of
Buyer, enforceable against it in accordance with its respective terms, except as
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting creditors' rights generally or general equitable
principles.
B. Execution and Delivery. Neither the execution and delivery
by Buyer of this Agreement nor the consummation by it of the transactions
contemplated hereby will: (a) conflict with or result in a breach of the
Articles of Incorporation or Bylaws of Buyer; (b) violate any law, statute, rule
or regulation or any order, writ, injunction or decree of any court or
governmental authority; or (c) violate or conflict with or constitute a default
under (or give rise to any right of termination, cancellation or acceleration
under) any indenture, mortgage, lease, contract or other instrument to which
Buyer is a party or by which it is bound or affected.
C. Consents. No consent, approval, authorization, license,
exemption of, filing or registration with any court, governmental authority,
commission, board, bureau, agency or instrumentality, domestic or foreign, is
required by Buyer in connection with the execution and delivery of this
Agreement or the consummation by it of any transaction contemplated hereby or
thereby. No approval, authorization or consent of any other third party is
required in connection with the execution and delivery by Buyer of this
Agreement and the consummation of the transactions contemplated hereby, except
as may have been obtained by Buyer prior to Closing.
D. Finders and Brokers. No person has, as a result of any
agreement entered into by Buyer, any valid claim against any of the parties
hereto for a brokerage commission, finder's fee or other like payment.
E. Buyer Acknowledgments. Buyer acknowledges that no other
representations or warranties except the express warranties and representations
in Section 3 hereof have been made by Seller, or any of Seller's agents and
representatives, and Buyer has not relied, and will not rely, on any statements
made by Seller or its representatives or agents other than those expressly set
forth herein. In furtherance of the foregoing, Buyer acknowledges that: (i)
Buyer takes the Assets with the full risk of operating, owning and managing
same; (ii) except with respect to the representation contained in Section 2D,
all of the Assets are being sold as-is, where-is, and Buyer will take the Assets
exclusively on an as is-where-is basis; (iii) Seller has made absolutely no
representation or warranty (a) concerning the future performance of the
Business, (b) that any inventory acquired hereunder is saleable in any respect,
(c) that Buyer will have the right to sell any inventory without the consent of
the supplier thereof, (d) that Buyer will have the right to place any Inventory
in any Visi-Coolers or other glass door coolers, or any other similar beverage
dispensing assets previously owned by Seller and sold to Canada Dry Potomac
Corporation, or (e) concerning the quality of any of the items of Acquired
Inventory; (iv) sales and profitability of "new age" and other beverages sold by
Seller have decreased materially in recent years. Buyer hereby represents and
warrants that the failure to obtain any consent shall not serve as a
justification for Buyer not consummating the transactions contemplated hereby,
and shall not serve in any means as a failure to satisfy any of the conditions
described in Section 6 hereof. Buyer takes the full risk and responsibility of
procuring all consents appropriate for the distribution of any items of
inventory acquired by Buyer hereunder.
5. CERTAIN COVENANTS AND AGREEMENTS.
A. Reasonable Efforts. Each of Seller and Buyer shall take all
reasonable action necessary and cooperate in good faith to consummate the
transactions contemplated hereby. Each of Seller and Buyer acknowledges and
agrees that each shall pay all costs, fees and expenses incurred by it in
obtaining any consents and approvals.
B. Public Announcements. Prior to the Closing Date, all
notices to third parties and other publicity relating to the transactions
contemplated hereby shall be made only after joint planning and agreement by
Seller and
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Buyer. Additionally, Buyer agrees to abide by all of the terms and provisions of
that certain Confidentiality Letter Agreement dated December 16, 1998 between
Seller and Morris Stoddard.
C. Use of the Atlantic Beverage Name. Seller agrees that
within seven (7) business days of the Closing, and in conjunction with Buyer,
Seller shall file with the State of Maryland documentation which releases the
Seller's right, title and interest in the name "Atlantic Beverage" and/or
"Atlantic Beverage Company." Seller consents hereby to Buyer's use of such name
after Closing when and if it becomes available.
D. Bulk Transfer Compliance. Buyer and Seller agree that the
sale as contemplated hereby shall be conducted in accordance with Title 6 of the
Commercial Law Article of the Maryland Code (the "BULK TRANSFER ACT"). Buyer and
Seller agree to submit to the State of Maryland such affidavits and other
documents as are required to comply with such Bulk Transfer Act.
E. Post-Closing Lock-Box and Access Covenants. From and after
Closing, Buyer and Seller agree that all funds collected under those accounts
receivable purchased by Buyer from Seller hereunder, shall be deposited into a
"lock-box" account under the sole and exclusive control of Seller. Seller's
employee shall supervise such collection and shall assist Buyer in complying
with the terms of this Section 5(E). Seller shall have the right to apply
amounts received from the accounts receivable against amounts then owed by
Buyer, and others, under the Note. Additionally, Buyer agrees to afford Seller,
and its employees, agents and representatives, full, complete and unfettered
access to the Jessup, Maryland facility and any and all books and records
(including computer and database records) of the Business or which relate to the
Assets or Assumed Liabilities or other commercially reasonable matters for which
Buyer requires such access. Buyer and Seller agree to cooperate and work in good
faith to implement the provisions of this Section 5(E).
6. CONDITIONS TO BUYER'S CLOSING. Subject to Buyer's acknowledgment in
Section 4(E) hereof, all obligations of Buyer under this Agreement shall be
subject to the fulfillment at or prior to the Closing of the following
conditions, it being understood that Buyer may, in its sole discretion, waive
any or all of such conditions in whole or in part:
A. Representations, Etc. Seller shall have performed in all
material respects the covenants and agreements contained in this Agreement that
are to be performed by it as of the Closing, and the representations and
warranties of Seller contained in this Agreement shall be true and correct in
all material respects as of the Closing Date with the same effect as though made
at such time (except as contemplated or permitted by this Agreement).
B. No Adverse Litigation. No order or temporary, preliminary
or permanent injunction or restraining order shall have been entered and no
action, suit or other legal or administrative proceeding by any court or
governmental authority, agency or other person shall be pending or threatened on
the Closing Date which may have the effect of (i) making any of the transactions
contemplated hereby illegal, or (ii) making Buyer liable for the payment of
damages to any person in respect of the Business or the Assets.
C. Closing Deliveries. Buyer shall have received each of the
documents or items required to be delivered to it pursuant to Section 8A hereof.
7. CONDITIONS TO SELLER'S CLOSING. All obligations of Seller under this
Agreement shall be subject to the fulfillment at or prior to the Closing of the
following conditions, it being understood that Seller may, in its sole
discretion, waive any or all of such conditions in whole or in part:
A. Representations, Etc. Buyer shall have performed in all
material respects the covenants and agreements contained in this Agreement that
are to be performed by Buyer as of the Closing, and the representations and
warranties of Buyer contained in this Agreement shall be true and correct in all
material respects as of the Closing Date with the same effect as though made at
such time (except as contemplated or permitted by this Agreement).
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B. No Adverse Litigation. No order or temporary, preliminary
or permanent injunction or restraining order shall have been entered and no
action, suit or other legal or administrative proceeding by any court or
governmental authority, agency or other person shall be pending or threatened on
the Closing Date which may have the effect of (i) making any of the transactions
contemplated hereby illegal, or (ii) making Seller liable for the payment of
damages to any person in respect of the Business or the Assets.
C. Closing Deliveries. Seller shall have received each of the
documents or items required to be delivered to it pursuant to Section 8B.
8. DOCUMENTS TO BE DELIVERED AT CLOSING. At the Closing, there shall
be delivered:
A. To Buyer:
(i) Thebulk sales affidavit, the bills of sale,
agreements of assignment and similar instruments of transfer to the
Assets contemplated by Section 2D hereof.
(ii) All other items reasonably requested by Buyer.
B. To Seller:
(i) The Note, validly executed by the makers
thereto.
(ii) An assumption agreement pursuant to which Buyer
shall assume the Assumed Liabilities, if any.
(iii) All other items reasonably requested by Seller.
C. To one another, the Sublease, validly executed.
9. SURVIVAL. The representations, warranties, covenants and agreements
made by any party to this Agreement or pursuant hereto shall be deemed to have
been relied upon by the parties hereto and shall not survive the Closing for any
length of time whatsoever, except for the representations and warranties
contained in Section 3 hereof, which will shall survive the Closing for a period
of three (3) months, and notice of any claim of any nature hereunder seeking
reimbursement or any other remedy must be given within three (3) months from the
Closing Date, and if not, shall be deemed waived and forfeited. No
representation or warranty contained herein shall be deemed to be made at any
time after the date of this Agreement or, if made in a certificate, the date of
such certificate. Notwithstanding the foregoing, the covenant contained in
Section 1(C) shall survive the Closing indefinitely.
10. INDEMNIFICATION RULES. Except as otherwise provided herein, if any
claim(s) for indemnity or other remedy is made arising out of any matter
hereunder, such claim must be made within three (3) months after the Closing,
and, if it appears likely that such claims might also be covered by the
insurance policies of the party asserting such claim(s), such party shall make a
timely claim under such policies and to the extent that such party obtains any
recovery from such insurance, such recovery shall be offset against any sums due
from the other party (or shall be repaid to the other party by the claiming
party to the extent that the claiming party has already paid any such amounts).
In addition, any claim(s) hereunder shall be reduced by any tax-related benefit
reasonably expected by Buyer to be received or actually received by Buyer,
viewing such claim without being affected by any of Buyer's other activities. In
any respect, Buyer, shall not make any claim unless and until it has incurred
indemnified losses, damages and expenses in the cumulative aggregate amount of
$25,000, and then only in respect of the excess over such $25,000 minimum. All
claims for indemnification and liability pursuant thereto shall not, in any
event, exceed $100,000.
11. TERMINATION. This Agreement may be terminated prior to Closing by
either Buyer or Seller (as set
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forth below), if either such party is not then in Default upon written notice to
the other upon the occurrence of any of the following:
A. By the non-Defaulting party, if the other party Defaults
and such Default has not been cured within 30 days of written notice of such
Default by the other party; or
B. Subject to the provisions of Sections 6 and 7 hereof, by
Seller or Buyer if on the Closing Date any of the conditions precedent to the
obligations of Seller or Buyer, respectively, set forth in this Agreement have
not been satisfied in all material respects or waived by such party; or
C. By mutual consent of Seller and Buyer.
In the event that this Agreement is validly terminated by the Buyer, and Buyer
is not then in Default hereunder, then Seller shall promptly refund to Buyer the
Deposit.
12. MISCELLANEOUS PROVISIONS.
A. Expenses. Except as otherwise expressly provided herein,
each party shall pay the fees and expenses incurred by it in connection with the
transactions contemplated by this Agreement. Buyer shall be responsible for all
transfer taxes, fees or other charges levied as a result of the transaction
described by this Agreement.
B. Accounts Receivable. Subject to Section 5E, as of and
following Closing, Buyer, with the aid and supervision of Seller's employee,
shall collect for its own account all of Seller's accounts receivable which it
shall purchase pursuant to this Agreement. Seller makes absolutely no warranties
of any kind as to the collectibility, value or quality of such accounts
receivable. The accounts receivable shall be deemed to be an Asset hereunder.
C. Amendment. This Agreement may be amended at any time but
only by an instrument in writing signed by the parties hereto.
D. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if mailed by certified mail,
return receipt requested, or by nationally recognized "next-day" delivery
service, to the parties at the addresses set forth below (or at such other
address for a party as shall be specified by like notice), or sent by confirmed
facsimile with a cover page to the number set forth below (or such other number
for a party as shall be specified by proper notice hereunder):
If to Buyer: Master Distributors, Inc.
307-A Dellwood Court
Annapolis, MD 21401-2910
Attention: President
Fax: (410) 573-1462
With a copy to : Eugene E. Pitrof, Esq.
Pitrof and Starkey
P.O. Box 130
14713 Main Street
Upper Marlboro, Maryland 20773
Fax: (301) 627-9084
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<PAGE> 8
If to Seller: Atlantic Premium Brands, Ltd.
650 Dundee Road, Suite 370
Northbrook, Illinois 60062
Attn: Chief Financial Officer
Fax: (847) 480-0199
With a copy to : Tom D. Wippman, Esq .
650 Dundee Road, Suite 370
Northbrook, Illinois 60062
Fax: (847) 480-1251
E. Assignment. This Agreement may not be assigned by either
party without the prior consent of the other party. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors, heirs and permitted assigns.
F. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
G. Headings. The headings of the Sections of this Agreement
are inserted for convenience only and shall not constitute a part hereof.
H. Entire Agreement. This Agreement and the documents referred
to herein contain the entire understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties, conveyances or undertakings other than those expressly set forth
herein. This Agreement supersedes any prior agreements and understandings
between the parties with respect to the subject matter.
I. Waiver. No attempted waiver of compliance with any
provision or condition hereof, or consent pursuant to this Agreement, will be
effective unless evidenced by an instrument in writing by the party against whom
the enforcement of any such waiver or consent is sought.
J. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland.
K. Intended Beneficiaries. The rights and obligations
contained in this Agreement are hereby declared by the parties hereto to have
been provided expressly for the exclusive benefit of such entities as set forth
herein and shall not benefit, do not benefit and may not be relied upon by any
unrelated third parties.
L. Mutual Contribution. The parties to this Agreement and
their counsel have mutually contributed to its drafting. Consequently, no
provision of this Agreement shall be strictly construed against any party on the
ground that such party drafted the provision or caused it to be drafted or the
provision contains a covenant of such party.
M. Buyer Acknowledgment. Buyer acknowledges that Seller has
informed it that during and after Seller's sale of certain assets to the Canada
Dry Potomac corporation ("CDP") and its affiliates, that CDP was permitted broad
access to Seller's computer system, including all records and databases
contained therein. In connection with such review, CDP may have viewed and
recorded competitive business information and/or proprietary trade secrets of
the Business (including, without limitation, customer lists, distribution
routes, pricing and financial information, etc.). Accordingly, Buyer agrees that
it enters the transactions as contemplated hereby with actual knowledge of such
occurrence and expressly and irrevocably waives any and all demands, suits,
rights of action or other claims relating, directly or indirectly, to such
occurrence as described by this Section 12M.
**************************
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<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ATLANTIC PREMIUM BRANDS, LTD.
By /s/ THOMAS M. DALTON
-----------------------------------------
Thomas M. Dalton, Chief Financial Officer
MASTER DISTRIBUTORS, INC.
By /s/ MORRIS STODARD
-----------------------------------------
Morris Stodard, President
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<PAGE> 10
INDEX OF SCHEDULES AND EXHIBITS
Schedules:
----------
Schedule I Assets
Schedule I(a) Vehicles
Schedule I(c) Inventory List
Schedule I(c) Fixed Assets, etc.
Schedule II Contracts and Assumed Liabilities
Schedule III Purchase Price Allocation
Exhibits:
---------
Exhibit 1B Form of Note
Exhibit 2D(i) Form of Sublease
THE COMPANY AGREES TO FURNISH SUPPLEMENTALLY A COPY OF ANY OF THE
SCHEDULES AND EXHIBITS LISTED ABOVE TO THE SECURITIES AND EXCHANGE COMMISSION
UPON REQUEST.
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