EXHIBIT 2(a)
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ASSET PURCHASE AGREEMENT
BETWEEN
HEUBLEIN, INC.
AND
CANANDAIGUA WINE COMPANY, INC.
DATED August 3, 1994
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TABLE OF CONTENTS
RECITALS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. CERTAIN DEFINITIONS . . . . . . . . . . . . . . . . 1
SECTION 2. PURCHASE AND SALE . . . . . . . . . . . . . . . . . 5
2.1. Assets To Be Purchased From Heublein. . . . . . . . 5
2.2. Excluded Assets . . . . . . . . . . . . . . . . . . 7
2.3. Purchase Price. . . . . . . . . . . . . . . . . . . 8
2.4. Adjustment To Estimated Cash Purchase Price.. . . . 9
2.5. Payment Of Adjustment Amount. . . . . . . . . . . . 10
2.6. Disagreements As To Book Values . . . . . . . . . . 10
2.7. Quantity And Merchantability Of Specified
Inventories . . . . . . . . . . . . . . . . . . . . 11
2.8. Allocation Of Purchase Price. . . . . . . . . . . . 11
2.9. Sales Taxes And Other Charges . . . . . . . . . . . 11
2.10. Liabilities Not Assumed . . . . . . . . . . . . . . 11
2.11. Prorations. . . . . . . . . . . . . . . . . . . . . 11
SECTION 3. OTHER AGREEMENTS. . . . . . . . . . . . . . . . . . 12
SECTION 4. CLOSING . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 5. REPRESENTATIONS AND WARRANTIES OF HEUBLEIN. . . . . 14
5.1. Good Standing And Corporate Power . . . . . . . . . 14
5.2. Accuracy Of Information . . . . . . . . . . . . . . 15
5.3. No Material Adverse Change. . . . . . . . . . . . . 15
5.4. Equipment . . . . . . . . . . . . . . . . . . . . . 17
5.5. Title To Properties; Encumbrances . . . . . . . . . 17
5.6. Specified Inventories . . . . . . . . . . . . . . . 18
5.7. Contracts . . . . . . . . . . . . . . . . . . . . . 18
5.8. Employees . . . . . . . . . . . . . . . . . . . . . 19
5.9. Legal Proceedings . . . . . . . . . . . . . . . . . 19
5.10. Authorization . . . . . . . . . . . . . . . . . . . 19
5.11. No Conflict . . . . . . . . . . . . . . . . . . . . 19
5.12. Binding Nature Of Agreements. . . . . . . . . . . . 20
5.13. Governmental Approvals. . . . . . . . . . . . . . . 20
5.14. Brokers and Finders . . . . . . . . . . . . . . . . 20
5.15. Employee Benefits . . . . . . . . . . . . . . . . . 20
5.16. Compliance With Laws. . . . . . . . . . . . . . . . 20
5.17. Environmental Matters . . . . . . . . . . . . . . . 21
5.18. Licenses And Registrations. . . . . . . . . . . . . 22
5.19. Intangible Property . . . . . . . . . . . . . . . . 23
5.20. Product Liability . . . . . . . . . . . . . . . . . 24
5.21. Promotional Programs. . . . . . . . . . . . . . . . 24
5.22. Non-Foreign Status. . . . . . . . . . . . . . . . . 24
5.23. Material Misstatements or Omissions . . . . . . . . 24
SECTION 6. REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . 25
6.1. Good Standing And Corporate Power . . . . . . . . . 25
6.2. Reports Filed With SEC. . . . . . . . . . . . . . . 25
6.3. Legal Proceedings . . . . . . . . . . . . . . . . . 25
6.4. Authorization . . . . . . . . . . . . . . . . . . . 25
6.5. No-Conflict . . . . . . . . . . . . . . . . . . . . 25
6.6. Binding Nature Of Agreements. . . . . . . . . . . . 26
6.7. Governmental Approvals. . . . . . . . . . . . . . . 26
6.8. Brokers And Finders . . . . . . . . . . . . . . . . 26
6.9. Funding . . . . . . . . . . . . . . . . . . . . . . 26
6.10. Material Misstatements or Omissions . . . . . . . . 26
SECTION 7. LIMITATIONS ON REPRESENTATIONS AND WARRANTIES . . . 27
7.1. Expiration. . . . . . . . . . . . . . . . . . . . . 27
7.2. No Implied Representations. . . . . . . . . . . . . 27
SECTION 8. CERTAIN PRECLOSING COVENANTS OF HEUBLEIN. . . . . . 27
8.1. Conduct Of The Business . . . . . . . . . . . . . . 27
8.2. Access. . . . . . . . . . . . . . . . . . . . . . . 28
8.3. Filings Under H-S-R Act . . . . . . . . . . . . . . 28
8.4. Conditions. . . . . . . . . . . . . . . . . . . . . 29
8.5. No Other Offers . . . . . . . . . . . . . . . . . . 29
8.6. Title Matters . . . . . . . . . . . . . . . . . . . 29
8.7. Other Matters . . . . . . . . . . . . . . . . . . . 29
SECTION 9. CERTAIN PRECLOSING COVENANTS OF BUYER . . . . . . . 29
9.1. SEC Reports . . . . . . . . . . . . . . . . . . . . 30
9.2. Filings Under H-S-R Act . . . . . . . . . . . . . . 30
9.3. Confidentiality . . . . . . . . . . . . . . . . . . 30
9.4. Conditions. . . . . . . . . . . . . . . . . . . . . 30
9.5. Other Matters . . . . . . . . . . . . . . . . . . . 30
SECTION 10. CONDITIONS TO OBLIGATION OF BUYER TO CLOSE . . . 30
10.1. H-S-R Act . . . . . . . . . . . . . . . . . . . . . 30
10.2. Title To Facilities . . . . . . . . . . . . . . . . 31
10.3. No Material Adverse Change. . . . . . . . . . . . . 31
10.4. Required Consents . . . . . . . . . . . . . . . . . 31
10.5. Representations and Warranties True . . . . . . . . 31
10.6. Performance . . . . . . . . . . . . . . . . . . . . 32
10.7. Compliance Certificate. . . . . . . . . . . . . . . 32
10.8. Opinion Of Counsel. . . . . . . . . . . . . . . . . 32
10.9. Financing . . . . . . . . . . . . . . . . . . . . . 32
10.10. Additional Closing Documents . . . . . . . . . . 32
10.11. Due Authorization. . . . . . . . . . . . . . . . 32
10.12. No Bar . . . . . . . . . . . . . . . . . . . . . 32
SECTION 11. CONDITIONS TO OBLIGATION OF HEUBLEIN TO CLOSE. . 33
11.1. H-S-R Act . . . . . . . . . . . . . . . . . . . . . 33
11.2. Representations And Warranties True . . . . . . . . 33
11.3. Performance . . . . . . . . . . . . . . . . . . . . 33
11.4. Compliance Certificate. . . . . . . . . . . . . . . 33
11.5. Opinion Of Counsel. . . . . . . . . . . . . . . . . 33
11.6. Additional Closing Documents. . . . . . . . . . . . 33
11.7. Due Authorization . . . . . . . . . . . . . . . . . 33
11.8. No Bar. . . . . . . . . . . . . . . . . . . . . . . 33
11.9. MGC Agreement . . . . . . . . . . . . . . . . . . . 34
SECTION 12. REQUIRED CONSENTS; RELEASES. . . . . . . . . . . 34
12.1. Efforts To Obtain . . . . . . . . . . . . . . . . . 34
12.2. Absence Of Required Consents. . . . . . . . . . . . 34
SECTION 13. EMPLOYEE MATTERS . . . . . . . . . . . . . . . . 35
13.1. Collective Bargaining Agreement . . . . . . . . . . 35
13.2. Employment. . . . . . . . . . . . . . . . . . . . . 35
13.3. Severance . . . . . . . . . . . . . . . . . . . . . 36
13.4. No Third Party Beneficiaries. . . . . . . . . . . . 36
SECTION 14. ENVIRONMENTAL MATTERS. . . . . . . . . . . . . . 36
14.1. Environmental Site Assessment . . . . . . . . . . . 36
14.2. Access. . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 15. TERMINATION OF AGREEMENT . . . . . . . . . . . . 36
15.1. Right To Terminate Agreement. . . . . . . . . . . . 36
15.2. Effect Of Termination . . . . . . . . . . . . . . . 37
SECTION 16. CERTAIN POST-CLOSING COVENANTS . . . . . . . . . 37
16.1. Assistance In Collecting Certain Amounts. . . . . . 37
16.2. Differentiation Between Products Of Heublein and
Buyer . . . . . . . . . . . . . . . . . . . . . . . 37
16.3. Further Assurances. . . . . . . . . . . . . . . . . 38
16.4. Books And Records . . . . . . . . . . . . . . . . . 38
16.5. Surplus Equipment . . . . . . . . . . . . . . . . . 38
16.6. Transitional Services . . . . . . . . . . . . . . . 38
16.7. Foreign Duty Credits. . . . . . . . . . . . . . . . 39
16.8. Brokers And Distributors. . . . . . . . . . . . . . 39
16.9. Certain Audited Financial Information . . . . . . . 39
16.10. Intangible Property. . . . . . . . . . . . . . . 39
16.11. Promotional Programs; Coupon Redemptions . . . . 40
16.12. Use Up Rights. . . . . . . . . . . . . . . . . . 40
16.13. Possession . . . . . . . . . . . . . . . . . . . 40
16.14. Option for Brandy. . . . . . . . . . . . . . . . 40
SECTION 17. INDEMNIFICATION. . . . . . . . . . . . . . . . . 40
17.1. Indemnification By Heublein . . . . . . . . . . . . 40
17.2. Indemnification By Buyer. . . . . . . . . . . . . . 41
17.3. Knowledge Of Breach . . . . . . . . . . . . . . . . 42
17.4. Deductible Amount . . . . . . . . . . . . . . . . . 42
17.5. Subrogation . . . . . . . . . . . . . . . . . . . . 42
17.6. Exclusivity . . . . . . . . . . . . . . . . . . . . 43
17.7. Right To Cure Breach Of Section 5.6 . . . . . . . . 43
17.8. Defense Of Claims . . . . . . . . . . . . . . . . . 43
SECTION 18. USE OF CERTAIN NAMES . . . . . . . . . . . . . . 44
18.1. Inglenook Name. . . . . . . . . . . . . . . . . . . 44
18.2. Certain Restrictions And Agreements On Use Of
Certain Specified Brands. . . . . . . . . . . . . . 44
SECTION 19. MISCELLANEOUS. . . . . . . . . . . . . . . . . . 45
19.1. Notices . . . . . . . . . . . . . . . . . . . . . . 45
19.2. Publicity . . . . . . . . . . . . . . . . . . . . . 46
19.3. Table Of Contents And Headings. . . . . . . . . . . 46
19.4. Counterparts. . . . . . . . . . . . . . . . . . . . 46
19.5. Governing Law . . . . . . . . . . . . . . . . . . . 46
19.6. Successors And Assigns. . . . . . . . . . . . . . . 47
19.7. Entire Agreement. . . . . . . . . . . . . . . . . . 47
19.8. Waiver. . . . . . . . . . . . . . . . . . . . . . . 47
19.9. Amendments. . . . . . . . . . . . . . . . . . . . . 47
19.10. Parties In Interest. . . . . . . . . . . . . . . 47
19.11. Fees And Expenses. . . . . . . . . . . . . . . . 47
19.12. No Set-Off.. . . . . . . . . . . . . . . . . . . 47
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made as
of August 3, 1994 between HEUBLEIN, INC., a Connecticut
corporation ("Heublein") and CANANDAIGUA WINE COMPANY, INC., a
Delaware corporation (the "Buyer"),
RECITALS:
A. Heublein is engaged in the business of producing,
bottling, selling and distributing wines from certain facilities
in California, and is also the owner of certain trademarks and
tradenames, including the brands "Almaden" and "Inglenook," which
are used by Heublein in connection with its business.
B. Heublein wishes to sell, and Buyer wishes to
purchase, certain of the assets, of Heublein, including without
limitation, certain of Heublein's facilities, trademarks and
brands, and other assets, and in connection therewith, Buyer is
willing to assume certain liabilities as expressly provided
herein relating to the assets being purchased.
AGREEMENT:
For good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties,
intending to be legally bound, agree as follows:
SECTION 1. CERTAIN DEFINITIONS
For purposes of this Agreement and the exhibits and
schedules attached hereto, the following terms shall have the
respective meanings set forth below:
"Accounting Methodology" shall mean the accounting
principles and procedures described on Exhibit 2.3D hereto, which
accounting principles and procedures shall be employed by the
parties in calculating Book Value for all purposes under or
relating to this Agreement.
"Adjustment Amount" shall have the meaning assigned to that
term in Section 2.4(a).
"Approval" shall have the meaning assigned to such term in
Section 5.18.
"Assigned Contracts" shall have the meaning assigned to that
term in Section 2.1(e) hereof.
"Assumed Balance Sheet Liabilities" shall have the meaning
assigned to that term in Section 2.3(a).
"Assumed Liabilities" shall mean the debts, liabilities and
obligations to be assumed by Buyer pursuant to the Assumption of
Liabilities.
"Assumption of Liabilities" shall mean the Assumption of
Liabilities referred to in Section 4(b)(ii) hereof.
"Book Value" of any Purchased Assets, as of any date on or
prior to the Closing Date shall mean the net value of such assets
as determined in accordance with the Accounting Methodology and
in accordance with generally accepted United States accounting
principles consistently applied by Heublein (except as otherwise
noted in the Accounting Methodology) on the basis of the
information contained in the internal books and records of
Heublein. The Book Value of Specified Inventories shall be
determined as set forth above and shall reflect write downs for
wine determined to be not Merchantable in accordance with the
Inventory Testing Procedures.
"Book Value Price" shall have the meaning assigned to that
term in Section 2.3(a)(5).
"Business" shall mean the production, processing, packaging,
marketing, importation, distribution and selling of wines,
brandies, juices and concentrates (i) at or from the Facilities
and, in the case of wines and brandies, bearing or produced for
sale under any of the Specified Brands, or (ii) conducted by
Heublein at the Facilities under contracts with third parties.
"Buyer's Accountants" shall mean the independent certified
public accounting firm of Arthur Andersen & Co.
"Cash Purchase Price" shall have the meaning assigned to
that term in Section 2.3(a).
"Chase" shall mean The Chase Manhattan Bank, N.A.
"Closing" shall have the meaning assigned to that term in
Section 4 hereof.
"Closing Date" shall mean the time and date as of which the
Closing takes place.
"Closing Date Net Book Value" shall have the meaning
assigned to that term in Section 2.4(a).
"Closing Statement" shall have the meaning assigned to that
term in Section 2.4(a).
"Collective Bargaining Agreements" shall mean the agreements
identified as such on Part 5.15 of the Disclosure Schedule.
"Commitment Letter" shall have the meaning assigned to that
term in Section 6.9.
"Confidentiality Agreement" shall mean that certain letter
agreement dated April 12, 1994 between Heublein and Buyer.
"Covenant Not to Compete" shall have the meaning assigned to
that term in Section 4(a)(x).
"Damages" shall mean liabilities, damages, losses,
reasonable costs and expenses, including expenses for settlement
or compromise of claims and reasonable attorneys' fees and
expenses; provided that for purposes of computing the amount of
Damages incurred by either party hereto or its affiliates, there
shall be deducted an amount equal to the amount of any insurance
proceeds (other than from self-insurance) directly or indirectly
received or receivable by such party or any of its affiliates in
connection with such Damages or the circumstances giving rise
thereto.
"Designated Employees" shall mean the employees designated
by Heublein pursuant to Section 13.2(b).
"Disclosure Schedule" shall mean the Disclosure Schedule
delivered by Heublein to Buyer concurrently with the execution
and delivery of this Agreement.
"Environmental Law" shall have the meaning assigned to such
term in Section 5.17.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"Escalon Facility" shall have the meaning assigned to that
term in Section 2.1(b).
"Estimated Cash Purchase Price" shall have the meaning
assigned to that term in Section 2.3(b).
"Excluded Assets" shall have the meaning assigned to that
term in Section 2.2.
"Facilities" shall mean the Madera Facility and the Escalon
Facility.
"Financial Statement Delivery Requirements" shall have the
meaning assigned to that term in Section 16.9.
"Foreign Duty Credits" shall have the meaning assigned to
that term in Section 2.1(h).
"Foreign Duty Credits Note" shall have the meaning assigned
to that term in Section 16.7.
"Hazardous Substance" shall have the meaning assigned to
such term in Section 5.17.
"Heublein's Accountants" shall mean the independent
certified public accounting firm of KPMG Peat Marwick.
"H-S-R Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules promulgated
thereunder.
"Inventory Testing Procedures" shall mean the procedures for
verifying the Merchantability and quantities of Specified
Inventories described in Exhibit 2.7 hereto.
"Knowledge," "known to," or "aware of," or a similar phrase
with respect to Heublein, shall mean the actual knowledge as of
the date of this Agreement or of any certificate delivered
pursuant hereto of David J. Scott, Christopher P. Mottern,
Robert M. Furek, Len Cairney, James A. Beckman, Douglas Waddell,
Min Okino, Richard Fuller, Robert Fowles, and Joe Rossi, or any
of them individually, and with respect to Buyer, shall mean the
actual knowledge as of the date of this Agreement or of any
certificate delivered pursuant hereto of Marvin Sands, Richard
Sands, Robert Sands, Ellis M. Goodman, Chris Kalabokes,
Bertram E. Silk, Lynn K. Fetterman, Perry Humphrey, Lloyd
Rockwell, Howard Jacobson and Mark Gabrielli, or any of them
individually.
"Madera Facility" shall have the meaning assigned to that
term in Section 2.1(a).
"Material Specified Contracts" shall have the meaning
assigned to such term in Section 5.7.
"Merchantability" or "Merchantable," with respect to any of
the Specified Inventories, shall have the meaning assigned to
those terms as set forth in Exhibit 2.7 hereto.
"New Employees" shall mean all Heublein employees relating
to the Business who become employees of Buyer following the
Closing.
"Option Agreement" shall have the meaning assigned to that
term in Section 2.3(c).
"Permitted Encumbrance" shall mean any encumbrance, lien,
security interest, easement, restriction or other matter
(i) created under the terms of, or by operation of law in
connection with, any of the Specified Contracts, (ii) created by
or through Buyer, (iii) relating to any taxes or other
governmental charges or levies that are not yet due and payable,
(iv) created by operation of law in favor of producers,
processors, warehousemen, mechanics and others, but only to the
extent that Heublein is not in default to the holder thereof in
performance of the obligation secured thereby, (v) that is one of
the Assumed Liabilities, (vi) that does not interfere with the
use of any material Purchased Asset and that, in the aggregate,
involve amounts of less than $50,000 or (vii) identified in
Part 5.5 of the Disclosure Schedule.
"Pot 3 Specified Inventories" shall have the meaning
assigned to that term in Section 2.1.
"Prime Rate" shall mean the rate of interest announced from
time to time by Chase as its prime or base rate.
"Promotional Programs" shall mean contracts, arrangements or
understandings with wholesalers, retailers or any other person or
entity regarding offers of special purchase allowances, post-
offs, other off-invoice discounts, depletion allowances, entity
grants or other similar forms of promotional allowances, in each
case with respect to finished goods bearing the Specified Brands.
"Purchased Assets" shall mean the Specified Brands and all
of the assets described in Section 2.1.
"Related Agreements" shall mean the other agreements
referred to in Section 3, the Assumption of Liabilities, the
Foreign Duty Credits Note, the Covenant Not to Compete, the
Option Agreement, all documents, instruments and certificates
described in Section 4, and all other documents, instruments and
certificates to be delivered pursuant to this Agreement or in
connection herewith.
"Required Consents" shall mean all consents, approvals,
authorizations and waivers required to be obtained from
governmental authorities and other persons in order to enable
Heublein to sell, convey and transfer to Buyer, and Buyer to
acquire, the Purchased Assets and to enable Buyer to assume, pay,
perform, satisfy and discharge the Assumed Liabilities.
"Specified Brands" shall have the meaning assigned to that
term in Section 2.1(i) hereof.
"Specified Contracts" shall have the meaning assigned to
that term in Section 2.1(e) hereof.
"Specified Inventories" shall have the meaning assigned to
that term in Section 2.1 hereof.
SECTION 2. PURCHASE AND SALE
2.1. Assets To Be Purchased From Heublein. Subject to the
terms and conditions set forth in this Agreement, Heublein shall
sell, convey, transfer, and assign to Buyer, and Buyer shall
purchase from Heublein, on the Closing Date, all of the
following:
(a) all of Heublein's right, title and interest
in and to that certain improved real property and fixtures
thereto in Madera, California, described in Exhibit 2.1A hereto
(the "Madera Facility");
(b) all of Heublein's leasehold interest in and
to that certain improved real property in Escalon, California,
described in Exhibit 2.1B hereto (the "Escalon Facility");
(c) all items of machinery, equipment, trade
fixtures, furnishings, tooling, grape presses, repair parts,
vehicles and other tangible personal property, including such
items as are referred to on Exhibit 2.1C hereto (but with such
additions thereto and deletions therefrom as may be contemplated
or permitted by this Agreement), owned by Heublein as of the
Closing Date (and not listed elsewhere in this Section 2.1) that
are used at the Facilities primarily in the conduct of the
Business;
(d) all of Heublein's Specified Inventories (as
defined below) as of the Closing Date;
(e) subject to Section 12, all of Heublein's
rights under the agreements and other instruments identified on
Exhibit 2.1E hereto (the "Specified Contracts") and Heublein's
rights as of the Closing Date under all other contracts
(excluding broker and distributor contracts, the Collective
Bargaining Agreements and any other collective bargaining
agreements), commitments, purchase orders, sales orders, product
warranties, personal property leases, licenses, agreements,
equipment leases, and transferable approvals, authorizations,
consents, governmental orders and permits to the extent that the
foregoing relate primarily to, and arise in the ordinary course
of, the Business (all of which, together with the Specified
Contracts, are referred to herein as the "Assigned Contracts");
(f) books and records (including label and
formula approvals and registrations, price schedules or postings
and control state listings) and software and systems of Heublein
relating exclusively to the Business and located at the
Facilities (provided that Buyer shall, after Closing, retain such
books and records and make them available to Heublein for
inspection and copying in accordance with Section 16.4) and
provided Heublein shall furnish copies of pertinent parts of
books and records, software, and systems of Heublein which relate
primarily to the Business;
(g) all of Heublein's right, title and interest
in and to promotional and advertising literature and point of
sale advertising materials to the extent such literature and
materials are in reasonably good condition, are not obsolete and
relate primarily to the Specified Brands (it being understood
that Heublein will dispose of obsolete materials on or before
Closing) and (to the extent it can be transferred without
violation of legal or contractual restrictions and to the extent
it relates primarily to the Specified Brands) market research as
of the Closing Date, wherever located;
(h) all of Heublein's right, title and interest
in and to those certain foreign duty credits more specifically
described on Exhibit 2.1H in the approximate amount of
$3.7 million as of the date of this Agreement relating to
Heublein's grape concentrate business (the "Foreign Duty
Credits");
(i) all of Heublein's right, title and interest
in and to the trademarks and tradenames identified on
Exhibit 2.1I hereto (the "Specified Brands"), and any
registrations or applications therefore and the goodwill
appurtenant thereto, together with all trade dresses, label
designs, and bottle and container designs used in association
with said trademarks and tradenames; and
(j) all of Heublein's right, title and interest
in and to all patents, applications for patents, copyrights,
transferable license agreements and other intellectual property
rights primarily related to the Business.
Heublein's "Specified Inventories" as of any particular date
shall be comprised of such of the inventories as are referred to
on Exhibit 2.1D and owned by Heublein as of such date including
(i) all bulk wine and brandy referred to as the Pot 3 Specified
Inventories, (ii) all finished goods, wherever located, bearing
the Specified Brands, (iii) all supplies (including grapes, grape
materials, juices, ingredients, high proof alcohol, bottles,
labels and packaging materials) located at the Facilities as of
such date and related exclusively to the Business, (iv) grape
concentrates located at the Facilities, and (v) all prepaid
expenses related to the purchase of grapes for the vintage year
1994 crush.
2.2. Excluded Assets. Notwithstanding anything to the
contrary contained herein, the Purchased Assets shall not include
any of the following (collectively, the "Excluded Assets"):
(i) any real property or interests therein owned or leased by
Heublein other than the Facilities, (ii) any rights or other
assets relating to any business or operations of Heublein or any
of its affiliates other than the Business, (iii) any brand names,
trademarks, or tradenames owned by Heublein other than the
Specified Brands, (iv) any cash, reserves, bank balances or other
cash equivalents or similar investments of Heublein, (v) foreign
duty credit reserves, Almaden Grape contract reserves, and all
other reserves of Heublein associated with the Excluded Assets,
(vi) supplies, materials and change parts relating exclusively to
Heublein's Smirnoff, Jose Cuervo, Club Cocktails or Blossom Hill
operations or to Heublein's Christian Brothers dessert wine
operations, (vii) any accounts receivable of Heublein, (viii) any
of Heublein's rights under any agreement or other instrument
that is not an Assigned Contract, (ix) the wine and brandy
inventory described on Exhibit 2.2, (x) glass molds used for
products not bearing the Specified Brands, (xi) any item of
tangible personal property located at or used in connection with
the Facilities which is identified on Exhibit 2.2, (xii) the
computer equipment and computer software described on
Exhibit 2.2, (xiii) any library wines bearing the Inglenook
brand, (xiv) any personal property located at that certain real
property and improvements in Napa Valley, California commonly
known as the Inglenook Winery, or (xv) any rights or assets that
are not referred to in Section 2.1.
2.3. Purchase Price.
(a) As consideration for the sale of the
Purchased Assets to Buyer (which consideration is collectively
referred to herein as the "Purchase Price"), on the Closing Date
Buyer shall issue the options referred to in Section 2.3(c) and
shall: (1) deliver to Heublein the Foreign Duty Credits Note,
(2) assume, pay, discharge and perform on a timely basis the
Assumed Liabilities, (3) pay to Heublein $500,000 pursuant to the
Covenant Not to Compete, (4) pay to Heublein $25,000,000 for the
assignment of the "Almaden" Specified Brands (as provided in the
assignments described in Section 4(a)(v)), and (5) pay to
Heublein in the manner hereinafter provided an amount calculated
as follows (which payment to Heublein is referred to herein as
the "Book Value Price"):
The sum of the Book Values as of the Closing Date of
each of the following:
(i) the Specified Inventories, except with
respect to bulk inventory of brandy or brandy
designate, which shall be valued at the
lesser of $3.21 per proof gallon or the Book
Value of such brandy or brandy designate;
(ii) the prepaid expenses included in the
Purchased Assets (including without
limitation the items described in
subparagraph (g) of Section 2.1); and
(iii) the property, plant and equipment and
deferred mold charges included in the
Purchased Assets (including without
limitation the Facilities and the items
described in subparagraphs (c) and (f)
of Section 2.1).
Less the sum of:
(x) the Book Value of those Assumed Liabilities
of the type specified on Exhibit 2.3A hereto
as of the Closing Date (the "Assumed Balance
Sheet Liabilities"); and
(y) $47,575,000.
The sum of the Book Value Price, the $500,000 amount
described in Section 2.3(a)(3) and the $25,000,000 amount
described in Section 2.3(a)(4) is referred to herein as the
"Cash Purchase Price."
(b) At the Closing, Buyer shall pay to Heublein
an estimate of the Cash Purchase Price (the "Estimated Cash
Purchase Price") which has been previously calculated by the
parties and is $130,554,577. The Estimated Cash Purchase Price
shall be paid to Heublein at Closing in immediately available
funds by wire transfer to such bank account as Heublein may
designate.
(c) In addition to the Estimated Cash Purchase
Price to be paid at the Closing by Buyer pursuant to
Section 2.3(b), Buyer shall issue to Heublein an option to
purchase 200,000 shares of Buyer's Class A Common Stock, par
value $.01 per share, at an exercise price per share of $30 and
another option to purchase 400,000 of such shares at an exercise
price per share of $35, which options shall be exercisable at any
time during the period commencing on the Closing Date and ending
on the second anniversary of the Closing Date, all pursuant to
the terms of an agreement in the form of Exhibit 2.3C hereto (the
"Option Agreement").
(d) The accounting principles and procedures set
forth in the Accounting Methodology shall be used in calculating
the Book Values described in Section 2.3(a) for purposes of
calculating the Book Value Price paid to Heublein.
2.4. Adjustment To Estimated Cash Purchase Price.
(a) Within 60 days after the Closing Date,
Heublein will prepare and deliver to Buyer and Buyer's
Accountants a statement (the "Closing Statement") setting forth
the aggregate Book Values as of 12:01 A.M. Eastern Standard Time
on the Closing Date of the Purchased Assets described in clauses
(i) through (iii) of Section 2.3(a) and setting forth and
deducting therefrom the Book Value of the Assumed Balance Sheet
Liabilities set forth in clause (x) of Section 2.3(a) as of 12:01
A.M. Eastern Standard Time on the Closing Date (the resulting
amount being referred to herein as the "Closing Date Net Book
Value"). The Closing Statement shall also set forth a
calculation of the amount (the "Adjustment Amount") by which the
Closing Date Net Book Value exceeds, or is less than,
$152,629,577 (constituting the difference between the estimated
Book Value of the Purchased Assets described in
Sections 2.3(a)(5)(i)-(iii) and the estimated Book Value of the
Assumed Balance Sheet Liabilities as of the Closing Date, all as
identified on Part 5.2 of the Disclosure Schedule). The
Estimated Cash Purchase Price paid pursuant to Section 2.3(b)
shall be increased or decreased, as the case may be, by the
Adjustment Amount.
(b) Buyer will provide Heublein and Heublein's
Accountants access at all reasonable times to the books and
records of the Business for the purpose of preparing the Closing
Statement. The Closing Statement shall be accompanied by an
auditor's report, prepared by Heublein's Accountants, with an
opinion that the Book Values as of the Closing Date for the
Purchased Assets and the Assumed Balance Sheet Liabilities
covered thereby have been determined in accordance with the
definition of Book Value provided in this Agreement.
Representatives of Buyer's Accountants shall be entitled to be
present at and to observe the activities of Heublein's
Accountants with respect to the gathering of information and data
relating to and comprising the basis of the Closing Statement
prepared by Heublein in accordance with this Section. Heublein's
Accountants shall make their audit work papers and their
preliminary opinions with respect to the Closing Statement
available to Buyer's Accountants as soon as practicable.
2.5. Payment Of Adjustment Amount. Subject only to the
provisions of Section 2.6 herein, the Adjustment Amount, together
with interest thereon at the Prime Rate from the Closing Date to
the date of payment, shall be paid to Heublein by Buyer, or to
Buyer by Heublein, as appropriate, subject to no deduction or
offset, within 45 days after receipt by Buyer of the Closing
Statement or the 75th day after the Closing Date, whichever is
later. Any Adjustment Amount required by this Section 2.5 or by
Section 2.6 shall be paid in immediately available funds to the
party entitled to receive such Adjustment Amount by wire transfer
to a bank account specified by such receiving party, together
with interest thereon at the Prime Rate for the period from the
Closing Date to the date of payment, as provided herein, or
promptly after the final determination of any disputed items
pursuant to Section 2.6, as applicable.
2.6. Disagreements As To Book Values. Unless Buyer,
within 45 days after receipt of the Closing Statement, or the
75th day after the Closing Date, whichever is later, gives
Heublein notice objecting in good faith to a Book Value
calculation set forth in the Closing Statement, specifying the
basis for such objection and its computation of such Book Values,
the Book Values and calculations as set forth in the Closing
Statement shall be final and binding upon the parties. If such
notice is given by Buyer in good faith and within said period,
the parties shall negotiate in good faith with a view to agreeing
upon such Book Values and calculations. If such negotiations
fail to resolve all disputed items within ten days after Buyer's
notice is given to Heublein, the remaining disputed items shall
be submitted to an internationally recognized firm of independent
public accountants, designated jointly by Heublein and Buyer, for
final resolution. After affording each of the parties and their
accountants the opportunity to present their positions as to such
determination (which opportunity shall not extend for more than
45 days), the accounting firm selected pursuant to this Section
shall determine the disputed items and the Adjustment Amount and
such determination shall be final and binding. The fees, costs
and expenses of the accounting firm selected pursuant to this
Section shall be borne equally by Heublein and Buyer. If Buyer
provides Heublein with notice of objection in accordance with
Section 2.6, any portion of the Adjustment Amount not in dispute,
together with interest thereon, shall be paid immediately to
Heublein pursuant to Section 2.5 without deduction or offset.
2.7. Quantity And Merchantability Of Specified
Inventories. For purposes of determining as of the Closing Date
the quantity of the Specified Inventories and whether such
Specified Inventories are Merchantable, Heublein and Buyer shall
follow the procedures set forth on Exhibit 2.7 hereto and shall
be bound by the provisions thereof.
2.8. Allocation Of Purchase Price. Notwithstanding
anything to the contrary contained herein, the total
consideration for the Purchased Assets shall be allocated in
accordance with Section 1060 of the Internal Revenue Code of 1986
or any successor law and regulations issued thereunder.
2.9. Sales Taxes And Other Charges. Buyer shall bear and
promptly pay when due (or promptly reimburse Heublein for) any
and all sales taxes, use taxes, transfer taxes, recording fees,
title insurance premiums and similar taxes, fees, charges and
expenses (other than any real property gains tax or income or
franchise taxes, which shall be paid by Heublein) required to be
paid in connection with the sale, conveyance or transfer of the
Purchased Assets to Buyer in connection with the transactions
contemplated hereby, including any and all additional
assessments, interest and penalties made or imposed (as a result
of any audit or otherwise) in connection with the collection of
any such taxes.
2.10. Liabilities Not Assumed. Except as provided in this
Agreement, the Assumption of Liabilities, and the other Related
Agreements, it is expressly understood and agreed that Buyer
shall not be liable for and shall not assume any liabilities,
obligations, claims against, or contracts of Heublein of any kind
or nature, at any time existing or asserted, whether or not
accrued, whether fixed, contingent or otherwise, whether known or
unknown, and whether or not recorded on the books and records of
Heublein, arising out of or by reason of this transaction or any
other transaction or event occurring prior to or subsequent to
Closing with respect to the Business or the Purchased Assets or
any other business activities of Heublein.
2.11. Prorations. With respect to (i) water, sewer,
electricity, gas, telephone and other utility charges,
(ii) rental charges and other amounts payable or receivable under
the lease of the Escalon Facility, and (iii) ad valorem taxes and
general and special assessments upon the Purchased Assets, for a
period commencing before and ending after the Closing Date,
Heublein and Buyer shall, except as may be otherwise provided
herein and except to the extent that the items in clauses (i)
through (iii) are included in the calculation of the Purchase
Price, make such arrangements as may be necessary such that
Heublein will bear such expenses up to the Closing Date and Buyer
will bear such expenses thereafter. Such arrangements will
include a net payment from one party to the other on the Closing
Date to the extent practicable.
SECTION 3. OTHER AGREEMENTS
At the Closing, Heublein and Buyer shall enter into and
deliver:
(a) a Table Wine Production and Related Services
Agreement in the form attached hereto as Exhibit 3A;
(b) a Madera Bottling Agreement in the form
attached hereto as Exhibit 3B;
(c) a Brandy Bottling Agreement in the form
attached hereto as Exhibit 3C; and
(d) a Storage Agreement in the form attached
hereto as Exhibit 3D.
SECTION 4. CLOSING
The closing of the transactions contemplated by this
Agreement (the "Closing") shall be held at the offices of Harter,
Secret & Emery in Rochester, New York at 10:00 a.m., local time,
on August 5, 1994, or, if later, promptly following satisfaction
of the filing and waiting period requirements of the H-S-R Act or
at such other place, time or date as may be agreed upon by the
parties hereto. The Closing shall be deemed to be effective as
of 12:01 a.m. Eastern Standard Time on the Closing Date. At the
Closing:
(a) Heublein will deliver to Buyer:
(i) the agreements referred to in Section 3, duly
executed on behalf of Heublein;
(ii) a Bill of Sale substantially in the form of
Exhibit 4A(ii) hereto;
(iii) a Grant Deed substantially in the form of
Exhibit 4A(iii) hereto and all other documents
necessary to transfer title to the Madera Facility
which, under California law or local custom, are
required to be filed, recorded or otherwise included
with the grant deed by a seller of real property;
(iv) a Lease Assignment substantially in the form
of Exhibit 4A(iv) hereto with respect to the Escalon
Facility;
(v) appropriate assignment forms for each
jurisdiction in which any of the Specified Brands is
registered, or in which such registration is pending,
assigning all rights of Heublein with respect to the
Specified Brands to Buyer, and, where applicable
under the laws of such jurisdictions, common law
rights to any trade dress, label design, and bottle
or container designs used in association with the
Specified Brands;
(vi) such assignments and other instruments of
sale, transfer, conveyance and assignment as Buyer
and its counsel may reasonably request, including
assignments of any copyrights for trade dresses,
labels, bottle or container designs used in
association with the Specified Brands, promotional,
advertising and point of sale materials and "work for
hire" agreements related to the foregoing;
(vii) a certificate executed on behalf of
Heublein to the effect that each of Heublein's
representations and warranties in this Agreement was
accurate in all material respects as of the date of
this Agreement and is accurate in all material
respects as of the Closing Date as if made on the
Closing Date;
(viii) a copy of the Certificate of Incorporation
of Heublein and all amendments thereto, certified as
of a date reasonably proximate to the Closing Date by
the Secretary of State of Connecticut;
(ix) a certificate of the Secretary of State of
Connecticut attesting to the good standing of
Heublein in such jurisdiction as of dates reasonably
proximate to the Closing Date;
(x) a Covenant Not to Compete restricting
Heublein from engaging in certain activities (the
"Covenant Not to Compete") in the form attached
hereto as Exhibit 4A(x), duly executed by Heublein;
(xi) a UCC search in Connecticut and California
made by a search agency acceptable to Buyer stating
to the effect that as of a date reasonably proximate
to the Closing Date there are no encumbrances or
judgments of record against any of the tangible
personal property included in the Purchased Assets,
except for Permitted Encumbrances;
(xii) the Option Agreement, duly executed by
Heublein;
(xiii) appropriate assignment forms necessary to
transfer the Foreign Duty Credits to Buyer, duly
executed by Heublein; and
(xiv) all other certificates, exhibits,
instruments and documents to be delivered by Heublein
pursuant to this Agreement.
(b) Buyer will deliver to Heublein:
(i) the Estimated Cash Purchase Price, payable in
the manner described in Section 2.3(b);
(ii) an Assumption of Liabilities, in the form
attached as Exhibit 4B(ii) duly executed on behalf of
Buyer;
(iii) the agreements referred to in Section 3,
duly executed on behalf of Buyer;
(iv) a certificate executed on behalf of Buyer to
the effect that each of Buyer's representations and
warranties in this Agreement was accurate in all
material respects as of the date of this Agreement
and is accurate in all material respects as of the
Closing Date as if made on the Closing Date;
(v) the Foreign Duty Credits Note, duly executed
by Buyer;
(vi) a copy of the Certificate of Incorporation
of Buyer and of all amendments thereto, certified as
of a date reasonably proximate to the Closing Date by
the Secretary of State of Delaware;
(vii) a certificate of the Secretary of State of
Delaware, attesting to the good standing of Buyer in
such jurisdiction as of a date reasonably proximate
to the Closing Date;
(viii) the Covenant Not to Compete, duly executed
by Buyer;
(ix) the Option Agreement, duly executed by
Buyer; and
(x) all other certificates, exhibits, instruments
and documents to be delivered by Buyer pursuant to
this Agreement.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF HEUBLEIN
Heublein represents and warrants to Buyer that:
5.1. Good Standing And Corporate Power. Heublein is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Connecticut and has all necessary
corporate power to own, use and transfer the Purchased Assets, to
transact the Business as now being conducted and to execute and
deliver this Agreement and the Related Agreements to which it is
a party, and to perform its obligations under this Agreement and
under each of the Related Agreements to which it is a party.
5.2. Accuracy Of Information.
(a) The financial information regarding the
Business which is set forth in Part 5.2 of the Disclosure
Schedule was prepared in accordance with the Accounting
Methodology and, as of the dates thereof, reflects in all
material respects the information contained in Heublein's
internal books and records.
(b) The Estimated Cash Purchase Price reflects
Heublein's good faith estimate of such amount.
(c) Heublein acknowledges that certain financial
information provided heretofore by Heublein to Buyer in
connection with the transaction contemplated hereby was used by
Buyer for the purpose of negotiating and formulating the Purchase
Price. To the knowledge of Heublein, Heublein has not provided
to Buyer any such information which is material and which has
been designed intentionally by Heublein to mislead Buyer and upon
which Buyer has relied in negotiating and formulating the
Purchase Price.
5.3. No Material Adverse Change. Except as disclosed in
Part 5.3 of the Disclosure Schedule, since March 31, 1994 and
except for the transactions contemplated or permitted by this
Agreement or any of the Related Agreements, there has not been
any material adverse change in the condition (financial or
otherwise) of the Purchased Assets, Assumed Liabilities or
Business. Except as disclosed in Part 5.3 of the Disclosure
Schedule and except for the transactions contemplated or
permitted by this Agreement or any of the Related Agreements,
since March 31, 1994 Heublein has not with respect to the
Business:
(a) created, assumed or permitted to be created
any encumbrance, other than Permitted Encumbrances, on any of the
Purchased Assets;
(b) sold, leased or otherwise transferred any of
the Purchased Assets, or cancelled any of its rights or claims,
other than in each such case in the ordinary course of business;
(c) sold, assigned or transferred any patent,
trademark, trade name, copyright or other intellectual property
rights related to the Business;
(d) incurred any other liability or obligation,
whether absolute or contingent other than liabilities in an
aggregate amount not exceeding $500,000, or other than those
incurred in the ordinary course of business;
(e) paid, prepaid or discharged any liability or
obligation except as required or permitted pursuant to the terms
thereof or in the ordinary course of business;
(f) lost, surrendered or had revoked or limited
any license, permit or other right granted by any governmental
authority necessary to operate the Business in the manner in
which it is currently operated;
(g) entered into any Assigned Contract related to
the Business not in the ordinary course of business, or
cancelled, modified adversely, assigned, encumbered or in any way
discharged or terminated (other than by performance) any Assigned
Contract other than in the ordinary course of business;
(h) received any notice of termination of or
default under any Assigned Contract;
(i) to the knowledge of Heublein, allowed to
occur or exist any event of default under any Assigned Contract;
(j) made any loan or advance, acquired any
accounts receivable or otherwise extended any credit, except in
the ordinary course of business;
(k) made any capital expenditures, or any
commitments therefor, with respect to the Business in excess of
$3,000,000, in the aggregate;
(l) made any material change in the rate of
compensation payable or to become payable by Heublein to any of
its officers, employees or agents involved in the conduct of the
Business or in the formula for determining any such compensation,
or entered into or amended in any material respect any contract
providing for such compensation or benefits;
(m) made any commitment (through negotiations or
otherwise) or incurred any liability to any labor organization
other than pursuant to the Collective Bargaining Agreements or in
the ordinary course of business, or become aware of any material
threat of a strike or other interruption of work arising from
labor difficulties;
(n) reduced or failed to carry insurance in at
least the respective amounts carried on March 31, 1994;
(o) caused any material adverse change in its
relationship with its suppliers, distributors, dealers or
customers, taken as a whole;
(p) caused any other change in the Business
(other than changes of general applicability in the industry)
which would be likely to have a material adverse effect on the
Business or Purchased Assets, taken as a whole, after
consummation of the transactions contemplated hereby;
(q) altered or revised any of its accounting
principles, procedures, methods or practices; or
(r) agreed to do any of the things described in
this Section 5.3.
5.4. Equipment. As of the Closing Date, the items
referred to in Section 2.1(c) and items leased under Assigned
Contracts will include all of the equipment, trade fixtures,
furnishings and vehicles (other than data processing equipment
used by Heublein for or at locations other than the Facilities
and other than the items specifically listed on Exhibit 2.2
hereto) necessary to permit the operations at the Facilities to
be conducted in substantially the same manner as said operations
have heretofore been conducted. Except as disclosed in Part 5.4
of the Disclosure Schedule, such equipment, trade fixtures,
furnishings and vehicles, in each case, taken as a whole, are in
good operating condition (ordinary wear and tear excepted), and
have been maintained in accordance with good practice prevailing
in the industry. Each of the buildings included in the
Facilities is in good condition (ordinary wear and tear
excepted).
5.5. Title To Properties; Encumbrances.
(a) Except as disclosed in Part 5.5 of the
Disclosure Schedule, Heublein has good title to or a valid
leasehold interest in all the Facilities and has good and
marketable title to the items of tangible personal property
included in the Purchased Assets, subject to no liens,
encumbrances, security interests, easements, restrictions or
other similar matters, except the following: (i) Permitted
Encumbrances, (ii) zoning laws, (iii) real and personal property
and excise taxes and real property assessments which are a lien
but not yet delinquent, and (iv) excise and other taxes on
alcoholic beverages not yet due and payable. With respect to the
real property included in the Purchased Assets, except as
disclosed in Part 5.5 of the Disclosure Schedule, Heublein is not
aware of and has not received written notice from any
governmental agencies or authorities that such property and the
use and operation thereof are not in compliance with all
applicable laws, ordinances, regulations, orders, licenses,
permits and authorizations. Except as disclosed in Part 5.5 of
the Disclosure Schedule and except for Environmental Laws (which
are separately dealt with in Section 5.17 hereof), there are no
(a) pending requests, applications or proceedings known to
Heublein to alter or restrict the zoning or other use
restrictions applicable to any such property, (b) existing
condemnation proceedings that would affect any of such properties
in any way, or (c) presently pending public improvements that
would result in the creation of any lien upon any of such
properties; and, except as disclosed in Part 5.5 of the
Disclosure Schedule, Heublein is not aware of and has not
received any written notice from governmental agencies or
authorities of any (d) threatened requests, applications, or
proceedings to alter or restrict the zoning or other use
restrictions applicable to any of such properties, (e) plans,
studies or efforts by any governmental agency or authority that
would affect the present use or zoning of any such property or
that would modify or realign any adjacent street or highway,
(f) proposed or contemplated condemnation proceedings that would
affect any of such properties in any way, or (g) planned public
improvements that would result in any charge being levied or
assessed against, or would result in the creation of any lien
upon, any of such properties.
(b) With respect to the lease of the Escalon
Facility, there is not (i) any event of default on the part of
Heublein as lessee thereunder, or (ii) to Heublein's knowledge,
any event of default on the part of the lessor thereunder, or
(iii) any event that with the giving of notice or passage of time
or both would constitute such an event of default on the part of
Heublein, or, to Heublein's knowledge, on the part of any such
lessor.
(c) The Facilities have access, sufficient for
the conduct of the Business as presently conducted, to public
roads and all utilities (including electricity, sanitary and
storm sewer, natural gas and other utilities) used in the
operation of the Business. The Facilities and the use, operation
and maintenance thereof by Heublein do not (i) contravene any
zoning, subdivision, use or building law, ordinance or
administrative regulation, or (ii) violate any easement or right
incident thereto, agreement, restrictive covenant or provision of
law, the effect of which in each case interferes materially with
or materially prevents the continued use thereof for the purposes
for which they are now being used, or would materially affect the
value thereof.
5.6. Specified Inventories. Except as disclosed in
Part 5.6 of the Disclosure Schedule, as of the Closing Date, the
Specified Inventories will be Merchantable. The Merchantability
of all Specified Inventories shall be determined in the manner
provided in the Inventory Testing Procedures.
5.7. Contracts. Except as set forth in Part 5.7 of the
Disclosure Schedule, Heublein has delivered to Buyer true,
correct and complete copies of each of the Specified Contracts
which (i) has a term of one year or more except for any routine
contract entered into in the ordinary course of business
consistent with past practice involving payments or obligations
which do not exceed $25,000 in the aggregate, or (ii) has a term
of less than one year and involves payments over the term thereof
that aggregate $10,000 or more (collectively, "Material Specified
Contracts"). Except as set forth in Part 5.7 of the Disclosure
Schedule, all of the Material Specified Contracts are valid,
binding and in full force and effect and are enforceable in
accordance with their terms. Except as disclosed in Part 5.7 of
the Disclosure Schedule, there is no event of default on the part
of Heublein nor any event caused by Heublein which after notice
or lapse of time or both would give rise to a right to accelerate
against or a loss of rights by Heublein under any of said
contracts and, to Heublein's knowledge, there is no event of
default by any other party under any of said contracts. Except
for obtaining any consents, waivers or approvals or giving any
notice listed in Part 5.7 of the Disclosure Schedule, each of the
Material Specified Contracts is fully assignable to, and
assumable by, Buyer. Assigned Contracts which are not Specified
Contracts shall not, in the aggregate, involve payments over the
terms thereof of greater than $250,000.
5.8. Employees. Except as disclosed in Part 5.8 of the
Disclosure Schedule, there is no pending or, to the knowledge of
Heublein, threatened labor dispute, strike, walk-out, work
stoppage or slowdown, contractual grievance, arbitration
proceedings, charge before or investigation by any federal, state
or other regulatory agency or court litigation which involves or
may involve any employee or former employee of Heublein relating
to the Business.
5.9. Legal Proceedings. Except as disclosed in Part 5.9
of the Disclosure Schedule, there is no legal, equitable,
arbitration or administrative proceeding, citation or action
(other than actions of general applicability) pending or to the
knowledge of Heublein, threatened against Heublein or any of the
Purchased Assets which, if adversely determined (i) would be
likely to prevent the consummation of the transactions
contemplated by this Agreement, (ii) would be likely to adversely
affect Heublein's ability to perform its obligations under this
Agreement or any of the Related Agreements to which Heublein is a
party, (iii) would be likely to adversely affect the Business
after the Closing, or (iv) would be likely to prevent Buyer from
obtaining the necessary federal and state permits and licenses
required to conduct the Business as presently conducted.
5.10. Authorization. The execution, delivery and
performance by Heublein of this Agreement and the Related
Agreements to which Heublein is a party, and its compliance with
the provisions of this Agreement and of the Related Agreements to
which it is a party, have been duly and validly authorized by all
necessary corporate action on the part of Heublein. Heublein has
the absolute and unrestricted right, power, authority, and
capacity to execute and deliver this Agreement and such Related
Agreements and to perform its obligations under this Agreement
and such Related Agreements.
5.11. No Conflict. Neither the execution, delivery or
performance by Heublein of this Agreement and the Related
Agreements to which Heublein is a party, nor the consummation of
the transactions contemplated hereby, will (i) conflict with or
result in a breach of any provision of Heublein's articles of
incorporation or bylaws, (ii) assuming the Required Consents are
duly obtained, result in a default, or give rise to any right of
termination, cancellation or acceleration, under any term,
condition or provision of any Specified Contract or other
instrument or obligation to which Heublein is a party and which
affects the Business or the Purchased Assets, except for such
Specified Contracts, instruments and obligations disclosed in
Part 5.7 or Part 5.11 of the Disclosure Schedule; or (iii)
violate any order, writ, injunction, decree, statute, rule or
regulation applicable to the Business or the Purchased Assets.
ARCHI Binding Nature Of Agreements. This Agreement and the
Related Agreements to which Heublein is a party are the legal,
valid and binding obligations of Heublein.
5.13. Governmental Approvals. Except for filings with
regulatory authorities necessary to transfer or assign the
Specified Brands pursuant to this Agreement,the filing required
under the H-S-R Act and required alcoholic beverage permits or
authorizations, no authorization, consent or approval of, or
registration or filing with, any governmental authority is
required to be obtained or made by Heublein on or before the
Closing Date in connection with the execution, delivery or
performance of this Agreement or any of the Related Agreements to
which Heublein is a party, except those that have been obtained
or made or where the failure to obtain or make any such
authorization, consent, approval, registration or filing would
not subject Buyer or the Purchased Assets to a penalty or loss.
5.14. Brokers and Finders. Neither Heublein nor its
officers, directors, employees or agents has retained or employed
any broker, finder or agent or incurred or agreed to pay any
brokerage fees, finder's fees or other similar fees or
commissions with respect to the transactions contemplated by this
Agreement; and, to the knowledge of Heublein, no person is
entitled to receive any such fees or commissions in connection
with such transactions.
5.15. Employee Benefits. Part 5.15 of the Disclosure
Schedule identifies (i) each "employee benefit plan", as such
term is defined in Section 3(3) of ERISA which is covered by
Title I of ERISA, and which is maintained, or otherwise
contributed to, by Heublein or any affiliate of Heublein for the
benefit of New Employees (a "Plan"), copies or descriptions of
which have been furnished or made available to Buyer, and
(ii) each other material plan or arrangement maintained by
Heublein or any affiliate of Heublein for the benefit of New
Employees which provides for deferred compensation, bonuses,
employee insurance coverage or similar benefits.
5.16. Compliance With Laws. Except as disclosed in
Part 5.16 of the Disclosure Schedule and except for Environmental
Laws, (i) Heublein is not in violation of any applicable law,
rule, regulation, judgment, injunction, order, directive, decree
or other requirement of any court or tribunal or governmental
body, agency or official, in each case relating to the Business;
and, to Heublein's knowledge, there is no basis for any action,
suit or proceeding arising out of or in connection therewith;
(ii) Heublein has not received any notice of any violation of any
such law, rule, regulation, judgment, injunction, order,
directive, decree, or other requirement of any court or tribunal
or governmental body, agency or official, in each case relating
to the Business; and (iii) Heublein is not subject to any
settlement agreement or consent decree with continuing
obligations or restrictions on Heublein relating to the Business.
5.17. Environmental Matters. Except as disclosed in
Part 5.17 of the Disclosure Schedule, (i) Heublein is in
compliance with all applicable Environmental Laws except where
the failure to be in compliance, individually or in the
aggregate, would result in the payment of fines, penalties and
investigation, remediation, court and other similar costs of less
than $250,000, (ii) Heublein has not received from any
governmental authority or other person any notification that is
currently outstanding that Heublein is or may be in violation of
any Environmental Law except where the failure to be in
compliance, individually or in the aggregate, would result in the
payment of fines, penalties and investigation, remediation, court
and other similar costs of less than $250,000, (iii) Heublein has
not caused or permitted any of the Facilities to be used, and no
Facility is being or has been used by Heublein, to generate,
manufacture, refine, transport, treat, store, handle, dispose of,
transfer, produce or process any Hazardous Substances in
violation of any Environmental Law and, to Heublein's knowledge,
no former owners or operators of the Facilities have used,
generated, manufactured, refined, transported, treated, stored,
handled, disposed of, transferred, produced or processed any
Hazardous Substances in violation of any Environmental Law
(except in each case where such violation has been remediated to
be in compliance with all applicable Environmental Laws and
except where such violation, individually or in the aggregate,
would result in the payment of fines, penalties and
investigation, remediation, court and other similar costs of less
than $250,000), (iv) Heublein has all licenses, permits and
authorizations which are required from any governmental authority
having jurisdiction over any Hazardous Substance located in, on
or under each Facility and has filed, in a timely manner, all
reports or disclosures concerning use or maintenance of Hazardous
Substances under applicable Environmental Law, (v) to Heublein's
knowledge, there are not as of the Closing Date any underground
petroleum or Hazardous Substance storage tanks of any kind
located on any portion of any of the Facilities, (vi) all permits
and other governmental authorizations and approvals currently
held by Heublein for the Business pursuant to applicable
Environmental Laws are identified in Part 5.17(vi) or 5.18 of the
Disclosure Schedule, and (vii) there is no claim pending, or to
the knowledge of Heublein, threatened against Heublein arising
out of an alleged violation of any Environmental Law with respect
to the Facilities, and (viii) to Heublein's knowledge, there is
no asbestos contained in or forming part of the Facilities or
equipment located therein which is friable, deteriorating and
reasonably in need of removal or replacement pursuant to
applicable Environmental Laws for the protection of human health.
For purposes of this Section 5.17, the term "Hazardous
Substance" shall mean any substance, chemical or waste that is
listed, or contains material amounts of one or more components
that are defined, designated, classified, or listed, as
hazardous, toxic, radioactive, or dangerous under any applicable
law, rule or regulation; as well as any asbestos or asbestos
containing materials, petroleum, petroleum product or by-product,
crude oil or any fraction thereof, natural gas, natural gas
liquids, liquefied natural gas, synthetic gas usable as fuel, or
polychlorinated biphenyls (PCBs).
The term "Environmental Law" shall mean all governmental
statutes, ordinances, rules, regulations and directives and
guidance documents applicable to the Business, regulating or
involving (1) air emissions, (2) liquid discharges to streams,
ponds, ditches or other surface waters, (3) liquid discharges to
ground waters, (4) liquid discharges to publicly-owned treatment
works, (5) disposal of solid and/or hazardous wastes, (6)
marking, maintenance and/or removal of electrical equipment
containing PCBs, (7) manufacture and/or construction (including
renovation) involving asbestos materials, (8) activities in or
adjacent to fresh water wetlands, flood hazard areas, coastal
zone management areas and/or historic preservation areas, (9)
registration, operation, testing and/or removal or replacement
of storage tanks for petroleum products and/or Hazardous
Substances, (10) emergency, planning and community right-to-know
laws, including submission of hazardous substance inventory
information to Federal, state or local authorities, (11) cleanup
or remediation of environmental contamination resulting from
prior use, storage, handling or disposal of Hazardous Substances,
and (12) legal requirements designed to minimize, prevent,
punish, or remedy the consequences of actions that damage or
threaten the environment (including soil, land surface or
subsurface strata, surface waters, ground waters, drinking water
supply, stream sediments, ambient air, plant and animal life, and
any other environmental medium or natural resource) or public
health and safety.
5.18. Licenses And Registrations. Heublein has all
permits, licenses, registrations and approvals (collectively,
"Approvals") necessary to carry on the Business as presently
conducted and as required by applicable laws, rules, ordinances,
orders and regulations and is not in violation or breach of any
of the terms, requirements or conditions of any of said
Approvals. Part 5.18 of the Disclosure Schedule sets forth a
complete and accurate listing of all of the material Approvals
issued to, possessed by, or otherwise in effect with respect to
the Business as of the date of this Agreement.
5.19. Intangible Property.
(a) Part 5.19 of the Disclosure Schedule lists
all controversies pending or, to Heublein's knowledge, threatened
by or against Heublein which involves the infringement, validity,
or ownership of the Specified Brands or in which the Specified
Brands are involved in questions of infringement, validity or
ownership of third parties-owned properties.
(b) Except as set forth in Part 5.19 of the
Disclosure Schedule, (i) Heublein has no knowledge that the
Specified Brands and the use thereof by Heublein infringe on any
patents, trademarks, copyrights or other intellectual property
rights of any third parties, (ii) there is no action, suit or
proceeding pending or, to the knowledge of Heublein, threatened
by or against Heublein with respect thereto, and (iii) Heublein
has no knowledge that any third party is using a mark confusingly
similar to the Specified Brands.
(c) Except as set forth in Part 5.19 of the
Disclosure Schedule:
(i) all registrations, to the extent listed in
Exhibit 2.1I of the Disclosure Schedule, are
subsisting in the trademark register set forth
therein and are in full force and effect, have not
been abandoned, and any applications listed in the
Disclosure Schedule are pending in the jurisdictions
shown thereon with the governmental entities shown
thereon and have not been finally rejected on any
grounds;
(ii) there currently exist no impediments peculiar
to any of the Specified Brands which would adversely
affect Buyer's right to conduct the Business
thereunder in substantially the manner heretofore
conducted by Heublein;
(iii) Heublein has not mortgaged, pledged,
transferred or assigned to any third party any right,
title or interest in or to the Specified Brands, and
none of the Specified Brands is held subject to any
security interest, lien, trust or similar right, in
favor of any third party and Heublein owns and has
the exclusive right to use the Specified Brands in
connection with the Business as presently conducted
and none of the Specified Brands are the subject of
any outstanding order, ruling, decree, judgment or
stipulation by any court, arbitrator or
administrative agency; and
(iv) the Specified Brands and the other
intellectual property rights referred to in this
Section 5.19 include all of the trademarks,
tradenames and service marks (including all
applications, registrations, extensions and renewals
thereof) which are necessary to permit the
continuation of the Business in substantially the
same manner as currently conducted by Heublein.
(d) Except as set forth in Part 5.19 of the
Disclosure Schedule: (i) Heublein has no patents, applications
for patents, copyrights or license agreements used in the
Business; (ii) none of the past or present employees, officers,
directors or shareholders of Heublein has any rights in any of
the inventions, whether or not patented, which are used by
Heublein in the Business; (iii) Heublein has not granted any
outstanding licenses or other rights to know-how or other
intellectual property owned by or licensed to Heublein and used
in the Business; and (iv) Heublein is not liable, nor has it made
any contract whereby it may become liable, to any person for any
royalty or other compensation for the use of any invention
(whether or not patented) trademark, tradename or copyright used
in the Business.
5.20. Product Liability. Except as disclosed in Part 5.20
of the Disclosure Schedule, (i) there are no outstanding claims
against or liabilities of Heublein relating to personal injury or
property damage involving products of the Business, nor to
Heublein's knowledge are there any threats regarding any such
claims, and (ii) all Specified Inventories of the Business
manufactured by Heublein have been produced and labeled in
conformity with all applicable federal, state and local laws and
regulations.
5.21. Promotional Programs. Part 5.21 of the Disclosure
Schedule sets forth all of Heublein's current Promotional
Programs.
5.22. Non-Foreign Status. Heublein is not a "foreign
person" within the meaning of Section 1445 of the Internal
Revenue Code of 1986, as amended, and will furnish to Buyer under
penalties of perjury the certification required in the form
attached hereto as Exhibit 5.22.
5.23. Material Misstatements or Omissions. To Heublein's
knowledge, no representation or warranty of Heublein made in this
Agreement or in any Related Agreement to which it is a party
contains any untrue statement of a material fact, or omits to
state a material fact necessary in order to make the statement of
facts made therein not misleading; provided, however, that the
representation and warranty set forth in this Section 5.23 shall
not be breached in the event that Buyer has knowledge of such
untrue statement or omission prior to the Closing.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Heublein as follows:
6.1. Good Standing And Corporate Power. Buyer is a
corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Buyer has all necessary
corporate power to purchase and own the Purchased Assets, to
execute and deliver this Agreement and the Related Agreements to
which it is a party, and to perform its obligations under this
Agreement and under each of the Related Agreements to which it is
a party.
6.2. Reports Filed With SEC. Buyer has caused to be filed
with the Securities and Exchange Commission ("SEC") all reports
and other documents that are required to have been filed with the
SEC on behalf of Buyer since January 1, 1993. Each of the
reports and other documents filed with the SEC on behalf of Buyer
since January 1, 1993 contains all financial information that is
required to be contained therein, and all such financial
information contained therein is, as of the date of their
respective filings, accurate and complete in all material
respects. None of such reports or other documents omits to state
any material fact necessary to make the statements and other
information contained therein, in light of the circumstances
under which they were made, not misleading.
6.3. Legal Proceedings. Except as disclosed to Heublein
in a letter dated the date of this Agreement, there is no legal,
equitable, arbitration or administrative proceeding, citation or
action (other than actions of general applicability) pending or
to the knowledge of Buyer, threatened against Buyer which, if
adversely determined (i) would be likely to prevent the
consummation of the transactions contemplated by this Agreement,
or (ii) would be likely to adversely affect Buyer's ability to
perform its obligations under this Agreement or any of the
Related Agreements to which Buyer is a party.
6.4. Authorization. The execution, delivery and
performance by Buyer of this Agreement and the Related Agreements
to which Buyer is a party, and its compliance with the provisions
of this Agreement and of the Related Agreements to which it is a
party, have been duly and validly authorized by all necessary
corporate action on the part of Buyer. Buyer has the absolute
and unrestricted right, power, authority, and capacity to execute
and deliver this Agreement and such Related Agreements and to
perform its obligations under this Agreement and such Related
Agreements.
6.5. No-Conflict. Neither the execution, delivery or
performance by Buyer of this Agreement and the Related Agreements
to which Buyer is a party, nor the consummation of the
transactions contemplated hereby, will (i) conflict with or
result in a breach of any provision of Buyer's certificate of
incorporation or bylaws, (ii) result in a default, or give rise
to any right of termination, cancellation or acceleration, under
any term, condition or provision of any agreement or other
instrument or obligation to which Buyer is a party, or (iii)
violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Buyer.
6.6. Binding Nature Of Agreements. This Agreement and the
Related Agreements to which Buyer is a party are the legal, valid
and binding obligations of Buyer.
6.7. Governmental Approvals. Except for the filing
required under the H-S-R Act, required filings under applicable
federal and state securities laws and regulations, and required
alcoholic beverage permits or authorizations, no authorization,
consent or approval of, or registration or filing with, any
governmental authority is required to be obtained or made by
Buyer on or before the Closing Date in connection with the
execution, delivery or performance of this Agreement or the
Related Agreements to which Buyer is a party, except those that
have been obtained or made or where the failure to obtain or make
any such authorization, consent, approval, registration or filing
would not subject Heublein to a penalty or loss.
6.8. Brokers And Finders. Neither Buyer nor its officers,
directors, employees or agents has retained or employed any
broker, finder or agent or incurred or agreed to pay any
brokerage fees, finder's fees or other fees or commissions with
respect to the transactions contemplated by this Agreement; and,
to the knowledge of Buyer, no person or entity is entitled to
receive any such fees or commissions in connection with such
transactions.
6.9. Funding. Buyer has previously delivered to Heublein
a true, correct and complete copy of a commitment (the
"Commitment Letter") for financing of the payment obligations on
its part contemplated hereby from Chase and with respect to a
proposed increase in Buyer's credit facilities. The Commitment
Letter has been duly executed and delivered by Buyer and Buyer
has paid all fees and expenses required thereby or in connection
therewith. Buyer is capable of satisfying, and shall use its
best efforts to satisfy, all conditions to funding of the loan
described in the Commitment Letter which are reasonably within
its exclusive control and Buyer has no knowledge that such loan
will not be funded in connection with the Closing. Buyer will
use its best efforts to comply with all covenants and to satisfy
all conditions to funding set forth in the Commitment Letter.
6.10. Material Misstatements or Omissions. To Buyer's
knowledge no representation or warranty of Buyer made in this
Agreement or in any Related Agreement to which it is a party
contains any untrue statement of a material fact, or omits to
state a material fact necessary in order to make the statement of
facts made therein not misleading; provided, however, that the
representation and warranty set forth in this Section 6.10 shall
not be breached in the event that Heublein has knowledge of such
untrue statement or omission prior to the Closing.
SECTION 7. LIMITATIONS ON REPRESENTATIONS AND WARRANTIES
7.1. Expiration. All of the representations and
warranties of the parties hereto that are set forth herein or in
any certificate delivered pursuant hereto shall terminate and
expire, and shall cease to be of any force or effect, at
midnight, San Francisco time, on November 30, 1995 (except for
the representations and warranties contained in Section 5.6,
which shall terminate and expire, and cease to be of any force or
effect, at midnight, San Francisco time, on November 5, 1994),
and any and all liability of the parties hereto with respect to
such representations and warranties shall thereupon be
extinguished; provided, however, that if, at any time on or prior
to November 30, 1995 (or, with respect to Section 5.6, November
5, 1994), a party delivers to the other party hereto a written
notice indicating that such party has determined, in good faith,
that there has been a breach of a representation or warranty by
such other party or parties (and setting forth in reasonable
detail the basis for such determination and a calculation of the
Damages incurred as a result thereof or in connection therewith),
then such alleged breach shall survive until all indemnification
claims relating to such breach have been fully and finally
resolved. This Section 7.1 shall not affect any covenant of any
party that is permitted or required to be performed, in whole or
in part, after the Closing.
7.2. No Implied Representations. The parties hereto
acknowledge that, except as expressly provided in this Agreement
or the Related Agreements, neither party hereto has made or is
making any representations or warranties whatsoever, implied or
otherwise, to the other party hereto. WITHOUT LIMITING THE
GENERALITY OR THE EFFECT OF THE FOREGOING, BUYER ACKNOWLEDGES
THAT EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, BUYER IS
ACQUIRING THE PURCHASED ASSETS WITHOUT ANY EXPRESS OR IMPLIED
REPRESENTATIONS OR WARRANTIES AS TO THE FITNESS, MERCHANTABILITY
OR CONDITION OF THE PURCHASED ASSETS OR AS TO ANY OTHER MATTER.
SECTION 8. CERTAIN PRECLOSING COVENANTS OF HEUBLEIN
8.1. Conduct Of The Business. Except as contemplated by
this Agreement or by the Related Agreements or as necessary to
carry out the transactions contemplated hereby or by the Related
Agreements, from the date hereof until the Closing Date
(i) Heublein shall conduct the Business, including the
advertising and promotion of the Specified Brands, in
substantially the same manner as it has heretofore been
conducted, (ii) Heublein shall not, without Buyer's consent,
enter into any transactions relating to the Business, other than
transactions that are entered into in the ordinary course of
Heublein's current business, and provided further, Heublein shall
not engage in sales of finished goods inventory to wholesalers in
excess of that amount which wholesalers would purchase in the
ordinary course of Heublein's current business, and
(iii) Heublein shall not, without Buyer's prior written consent,
amend any of the Material Specified Contracts; provided, however,
that nothing herein shall be construed to require Heublein to
(1) make any capital or extraordinary expenditures with respect
to the Purchased Assets or the Business, or (2) take or refrain
from taking any action in the conduct of its operations,
including those with respect to the Business, that does not
materially adversely affect the Business or require the
assumption of any significant additional Assumed Liabilities by
Buyer. In addition, from April 20, 1994 until the Closing Date,
Heublein shall not have either (a) added to the Pot 3 Specified
Inventories as described on Exhibit 2.1 or (b) produced finished
Specified Inventories from inventories other than the Pot 3
Specified Inventories.
8.2. Access. Subject to the provisions of the
Confidentiality Agreement and Section 9.3 hereof:
(a) Heublein shall, after receiving reasonable
advance notice from Buyer, afford Buyer and its representatives
reasonable access (during normal business hours) to the
Facilities and to Heublein's books and records, employees,
licenses, permits and other information relating exclusively to
the Business or pertinent parts thereof that relate primarily to
the Business.
(b) Buyer may, at any time prior to the Closing
Date, directly or through its representatives, make such
investigation of the Purchased Assets and Business (including,
without limitation, investigation of titles to property and the
condition of property and equipment, and, in accordance with the
Inventory Testing Procedures, the confirmation of the Specified
Inventories) as Buyer reasonably deems necessary, but such
investigation shall not, subject to Section 17.3, affect the
representations and warranties of Heublein contained or provided
for herein or require Heublein to disclose to Buyer or its
representatives any information relating to businesses,
properties or assets other than the Business and the Purchased
Assets. Heublein, its officers and employees, shall furnish
Buyer, and/or its representatives such existing, available
financial and operating data and other information relating
exclusively to the Business or the Purchased Assets or pertinent
parts thereof that relate primarily to the Business or the
Purchased Assets, as Buyer and/or its duly authorized
representatives shall from time to time reasonably request.
8.3. Filings Under H-S-R Act. Heublein shall use its best
efforts to proceed as expeditiously as possible to cause to be
made the filings required to be made under the H-S-R Act with
respect to the transactions contemplated by this Agreement and
shall thereafter use its best efforts to attempt to ensure that
the waiting period thereunder expires or otherwise terminates at
the earliest possible time.
8.4. Conditions. Subject to the provisions regarding
Required Consents in Section 12, Heublein shall use its best
efforts to cause the conditions set forth in Sections 10 and 11
hereof to be satisfied on a timely basis; provided that the
foregoing shall not require Heublein to incur any material
expense or liability to remove a lien, encumbrance or restriction
on the Facilities not permitted by Section 5.5 if Heublein shall
not have imposed or consented to the imposition of such lien,
encumbrance or restriction.
8.5. No Other Offers. Prior to August 31, 1994, Heublein
will not solicit or encourage any other offers from third parties
to acquire the Business, unless Buyer shall be in material breach
of this Agreement or shall have abandoned the transactions
contemplated hereby, or it shall reasonably appear that any
condition to closing to be performed by Buyer, or any other
condition to closing affected by governmental or regulatory
action or inaction, is not likely to be satisfied.
8.6. Title Matters. As soon as possible after the date
hereof, Heublein shall provide to Buyer all reasonable assistance
as Buyer shall require in order to enable it to obtain, at
Buyer's expense, the following documents covering each of the
Facilities, each dated as of a date approved by Buyer, which
approval shall not be unreasonably withheld: (i) Federal and
state tax searches, (ii) a preliminary report of title prepared
by Chicago Title Insurance Company, and (iii) a map of an
instrument survey, prepared by a surveyor duly licensed by the
State of California, acceptable to and certified to Chicago Title
Insurance Company, Buyer, Buyer's counsel and Buyer's lender,
delineating all boundary lines, all boundary fences, all
improvements, all rights of way, roads and easements, including
all overhead and underground easements, water lines, sanitary and
storm sewers, drainage lines, gas lines and mains, electrical and
telephone easements, whether shown of record, referred to in the
preliminary report or visible on inspection. The survey map need
not show any improvements, rights of way, roads or easements
located more than 10 feet inside any boundary line except to the
extent of any encroachment of such improvements on any such
rights of way, roads or easements.
8.7. Other Matters. Heublein shall deliver to Buyer such
other instruments and documents as shall be reasonably requested
by counsel to Buyer and as Heublein shall, in its reasonable
judgment, determine to be necessary, on or before the Closing
Date.
SECTION 9. CERTAIN PRECLOSING COVENANTS OF BUYER
Buyer agrees that, between the date of this Agreement and
the Closing Date (and after the Closing Date in the case of
Section 9.3):
9.1. SEC Reports. Buyer shall promptly deliver to
Heublein a copy of each report or other document filed with the
SEC on behalf of Buyer.
9.2. Filings Under H-S-R Act. Buyer shall use its best
efforts to proceed as expeditiously as possible to make the
filings required to be made under the H-S-R Act with respect to
the transactions contemplated by this Agreement and shall
thereafter use its best efforts to attempt to ensure that the
waiting period thereunder expires or otherwise terminates at the
earliest possible time.
9.3. Confidentiality. Buyer shall hold in strict
confidence all documents and information obtained by it with
respect to Heublein, the Purchased Assets or the Business, shall
not disclose or convey any of such documents or information to
any other person without the consent of Heublein, and shall
return to Heublein all such documents and information, without
retaining copies thereof, if this Agreement shall terminate
without the occurrence of the Closing contemplated hereby.
Notwithstanding anything in this Agreement to the contrary, Buyer
shall comply in all respects with the provisions of the
Confidentiality Agreement prior to and after the Closing Date.
9.4. Conditions. Subject to Section 12, Buyer shall use
its best efforts to cause the conditions set forth in Sections 10
and 11 hereof to be satisfied on a timely basis.
9.5. Other Matters. Buyer shall deliver to Heublein such
other instruments and documents as shall be reasonably requested
by counsel to Heublein and as Buyer shall, in its reasonable
judgment, determine to be necessary, on or before the Closing
Date.
SECTION 10. CONDITIONS TO OBLIGATION OF BUYER TO CLOSE
The obligation of Buyer to purchase the Purchased Assets and
otherwise to consummate the transactions that are to be
consummated at the Closing is subject to the satisfaction, on or
before the Closing Date, of the following conditions (any of
which may be waived by Buyer in whole or in part):
10.1. H-S-R Act. The filing requirements of the H-S-R Act
relating to the purchase of the Purchased Assets hereunder shall
have been fulfilled and the related waiting period (including any
extension thereof due to a request for additional information)
shall have expired or otherwise terminated; and no injunction or
order prohibiting the consummation of such purchase shall have
been issued by a court of competent jurisdiction and remain in
effect.
10.2. Title To Facilities. Buyer shall have received the
commitment of Chicago Title Insurance Company to issue, upon
payment of its regularly scheduled premium, an American Land
Title Association form of fee title insurance policy (including a
covenant to reissue) insuring that Buyer is vested with fee title
to the Madera Facility and with a leasehold interest in the
Escalon Facility created under Lease dated July 24, 1987,
executed by Erly Industries, Inc., a California corporation, as
Lessor, and Heublein, Inc., a Connecticut corporation, as Lessee,
as referenced in a Memorandum of Lease recorded July 30, 1987,
Instrument No. 87071318, San Joaquin County Records, subject to
(i) the exceptions referred to in Section 1 of Part 5.5 of the
Disclosure Schedule, (ii) standard printed exceptions to coverage
of such title insurance company, and (iii) such matters as may be
disclosed by surveys of the Facilities, provided that such
matters do not interfere with or prevent the continued use of the
Facilities for the purposes for which they are now being used and
do not materially affect the value thereof. Such policy shall be
in the form and shall include the endorsements described in
Exhibit 10.2
10.3. No Material Adverse Change. There shall not have
occurred any material adverse change (whether or not covered by
insurance) since the date of this Agreement to the Purchased
Assets or to the operations conducted at the Facilities relating
primarily to the Business, in each case taken as a whole, except
for changes, (i) contemplated or permitted by this Agreement or
any of the Related Agreements, or (ii) otherwise occurring as a
result of the transactions contemplated hereby or thereby or the
disclosure thereof or any action by Buyer.
10.4. Required Consents. All Required Consents and all
other consents or approvals referred to in Section 12.1 shall
have been duly obtained or obviated, except where (i) the failure
to obtain any such Required Consents and other consents and
approvals would not preclude Buyer from operating the Business in
substantially the same manner as has been operated by Heublein or
would not subject Buyer to any material penalty or loss,
(ii) such Required Consent or other consent or approval relates
to an Assigned Contract or a related Assumed Liability as to
which Heublein elects to proceed pursuant to Section 12.2(c), or
(iii) Buyer has failed to satisfy its obligations under
Section 12.2(b).
10.5. Representations and Warranties True. The
representations and warranties of Heublein set forth in Section 5
hereof shall be true and correct in all material respects (except
to the extent any such representation or warranty contains the
term "material" in which case such representation or warranty
shall be true and correct in all respects in accordance with its
terms) on the Closing Date as though such representations and
warranties were made as of such date, except to the extent that
(i) the truth or correctness of any of such representations or
warranties is affected as a result of the transactions
contemplated hereby or by any of the Related Agreements or the
disclosure thereof or any action by Buyer, or (ii) Heublein shall
agree to indemnify Buyer, to Buyer's reasonable satisfaction,
against any resulting loss, liability or expense.
10.6. Performance. Heublein shall have complied with and
performed, in all material respects, all obligations required by
this Agreement to be complied with or performed by Heublein on or
before the Closing Date.
10.7. Compliance Certificate. Heublein shall have
delivered to Buyer a certificate, dated as of the Closing Date,
to the effect that the conditions set forth in Sections 10.5 and
10.6 hereof have been satisfied or waived.
10.8. Opinion Of Counsel. Buyer shall have received an
opinion of counsel to Heublein dated the Closing Date,
substantially to the effect set forth in Exhibit 10.8.
10.9. Financing. Chase or any other participating lenders
shall have funded the loan described in the Commitment, provided
that Buyer shall not be excused from performance of its
obligations hereunder if the failure to fund is due to any
failure of Buyer to perform its obligations under Section 6.9 or
any other provision of this Agreement.
10.10. Additional Closing Documents. All of the
documents listed in Sections 4(a) shall have been executed and
delivered to Buyer by Heublein and Buyer shall have received
delivery of a glass supply agreement duly executed by Madera
Glass Company (the "Glass Supply Agreement") substantially in the
form attached hereto as Exhibit 10.10.
10.11. Due Authorization. Execution and delivery of this
Agreement by Heublein and compliance with the provisions hereof
and the consummation of all of the transactions contemplated
hereby by Heublein shall have been duly and validly authorized by
all necessary corporate action on the part of Heublein and Buyer
shall have received duly certified copies of all resolutions
adopted by Heublein's Board of Directors regarding the same.
10.12. No Bar. There shall not be in effect any
judgment, decree or order of, or position taken by, any court or
administrative body of competent jurisdiction, nor shall there
have been any action, suit, proceeding or known investigation
instituted or threatened, nor shall any law or regulation have
been enacted or any action taken thereunder, which would be
likely to restrain or prohibit, make illegal, or subject Buyer to
material damage as a result of, the consummation of the
transactions contemplated hereby.
SECTION 11. CONDITIONS TO OBLIGATION OF HEUBLEIN TO CLOSE
The obligations of Heublein to sell the Purchased Assets to
Buyer and otherwise to consummate the transactions that are to be
consummated at the Closing are subject to the satisfaction, on or
before the Closing Date, of the following conditions (any of
which may be waived by Heublein in whole or in part):
11.1. H-S-R Act. The filing requirements of the H-S-R Act
relating to the purchase of the Purchased Assets hereunder shall
have been fulfilled and the related waiting period (including any
extension thereof due to a request for additional information)
shall have expired; and no injunction or order prohibiting the
consummation of such purchase shall have been issued by a court
of competent jurisdiction and remain in effect.
11.2. Representations And Warranties True. The
representations and warranties of Buyer set forth in Section 6
hereof shall be true and correct in all material respects (except
to the extent any such representation or warranty contains the
term "material" in which case such representation or warranty
shall be true and correct in all respects in accordance with its
terms) on the Closing Date as though such representations and
warranties were made as of such date.
11.3. Performance. Buyer shall have complied with and
performed, in all material respects, all obligations required by
this Agreement and the Confidentiality Agreement to be complied
with or performed by Buyer on or before the Closing Date.
11.4. Compliance Certificate. Buyer shall have delivered
to Heublein a certificate, dated as of the Closing Date, to the
effect that the conditions set forth in Sections 11.2 and 11.3
hereof have been satisfied or waived.
11.5. Opinion Of Counsel. Heublein shall have received an
opinion of counsel to Buyer, dated the Closing Date,
substantially to the effect set forth in Exhibit 11.5.
11.6. Additional Closing Documents. All of the documents
listed in Section 4(b) shall have been executed and delivered to
Heublein by Buyer.
11.7. Due Authorization. Execution and delivery of this
Agreement by Buyer and compliance with the provisions hereof and
the consummation of all of the transactions contemplated hereby
by Buyer shall have been duly and validly authorized by all
necessary corporate action on the part of Buyer, and Heublein
shall have received duly certified copies of all resolutions
adopted by Buyer's Board of Directors regarding the same.
11.8. No Bar. There shall not be in effect any judgment,
decree or order of, or position taken by, any court or
administrative body of competent jurisdiction, nor shall there
have been any action, suit, proceeding or known investigation
instituted or threatened, nor shall any law or regulation have
been enacted or any action taken thereunder, which would be
likely to restrain or prohibit, make illegal, or subject Heublein
to material damage as a result of, the consummation of the
transactions contemplated hereby.
11.9. MGC Agreement. Buyer and Madera Glass Company
shall have executed and delivered the Glass Supply Agreement.
SECTION 12. REQUIRED CONSENTS; RELEASES
12.1. Efforts To Obtain. Both parties hereto shall use all
reasonable efforts to obtain before the Closing Date all of the
Required Consents and all other consents or approvals Buyer may
reasonably request to enable it to conduct the Business following
the Closing, and Buyer shall use all reasonable efforts (both
before and after the Closing Date) (i) to cause Heublein to be
fully and unconditionally released and discharged from any and
all Assumed Liabilities under or relating to the Assigned
Contracts and (ii) to cause Buyer to be substituted in the place
of Heublein for all purposes under the Assigned Contracts.
12.2. Absence Of Required Consents.
(a) To the extent that any Purchased Assets or
Assumed Liabilities related thereto are not assignable or
transferable without a Required Consent, the absence of which
might reasonably be expected to subject either party hereto to a
material penalty or loss, and such Required Consent is not
obtained, this Agreement shall not constitute an assignment or
transfer thereof, or an attempted assignment or transfer.
(b) Buyer will cooperate with any reasonable
proposal from Heublein designed to obviate any such Required
Consent with respect to any Assigned Contract.
(c) So long as any such Required Consent is not
obtained or obviated with respect to an Assigned Contract,
Heublein may use all reasonable efforts to (i) provide to Buyer
the benefits of such Assigned Contract (such benefits to be at
Buyer's cost) and cooperate in any reasonable and lawful
arrangement designed to provide such benefits to Buyer, without
incurring any financial obligation to Buyer other than to provide
such benefits, and (ii) subject to indemnification arrangements
reasonably satisfactory to Heublein, enforce at the request,
under the direction, for the account and at the expense of Buyer
any rights of Heublein arising from such Assigned Contracts
against the other party or parties thereto. To the extent that
Buyer is provided the benefits pursuant to this subsection of any
Assigned Contract, Buyer will perform for the benefit of the
other party or parties thereto the obligations of Heublein under
or in connection with such Assigned Contract and any Assumed
Liability related thereto. If performance by Buyer is not
permitted under the Assigned Contract and would result in any
material penalty or loss to Heublein, Buyer shall take such
action as Heublein may reasonably request, in view of the
obligations under the Assigned Contract, to enable Heublein to
perform such obligations without expense or liability to
Heublein.
SECTION 13. EMPLOYEE MATTERS
13.1. Collective Bargaining Agreement. Effective as of the
Closing Date, Buyer shall continue in effect the terms and
conditions of employment related to wages and benefits set forth
in the Collective Bargaining Agreements until Buyer, as successor
employer, negotiates new such terms and conditions of employment.
Without in any way limiting the foregoing, it is understood that
Buyer shall not assume or be obligated in any manner with respect
to any benefits payable pursuant to the terms of the Collective
Bargaining Agreements to any employee of Heublein who is retired
on the date of this Agreement or who retires prior to the Closing
Date.
13.2. Employment.
(a) Exhibit 13.2A identifies the employees not
covered by the Collective Bargaining Agreements who are employed
by Heublein primarily in connection with the Business ("Available
Employees"). Buyer agrees to offer to all Available Employees,
except for those Available Employees to whom Buyer will not make
an offer of employment and identified on Exhibit 13.2B (and
except for up to 5 additional Available Employees with whom Buyer
has made other mutually acceptable arrangements for continued
employment), employment with Buyer following the Closing on terms
(including, without limitation, compensation and vacation
benefits, insurance benefits and other benefits) that are
comparable to the terms provided by Buyer to its own employees of
the same rank and seniority, and, in the case of wages and
salaries that are in no event less than the wages and salaries
being paid by Heublein to such employees immediately prior to the
Closing Date. Without limiting the generality of the foregoing,
Buyer shall recognize the seniority of all non-union employees
who are hired by Buyer (including, where appropriate, awarding
credit under any pension plans or other benefit plans maintained
by Buyer for all service credited to the New Employees under any
of Heublein's pension plans or other benefit plans, but only for
purposes of eligibility and vesting and only to the extent
permitted by law and by such plans). On the Closing Date,
subject to any authorized offsets or deductions Heublein is
otherwise entitled to make, Heublein shall pay to the New
Employees the benefits associated with any unused vacation time
of such employees with respect to their employment by Heublein.
(b) Heublein shall be free to make offers of
continued employment to any Available Employee who does not
become a New Employee or is no longer an employee of Buyer or its
affiliates. Heublein shall not make any offer of employment to
any New Employee within two years of the Closing Date unless such
New Employee is no longer an employee of Buyer or its affiliates.
Notwithstanding the foregoing, Heublein desires to retain as
employees of Heublein those Available Employees identified on
Exhibit 13.2C (the "Designated Employees"). Except for those
Designated Employees set forth on Exhibit 13.2D and identified
thereon as Designated Employees to whom Buyer may make offers of
employment, Buyer shall not within two years of the Closing Date
directly or indirectly itself or through any affiliate of Buyer
make any offer for employment to any Designated Employee.
13.3. Severance. Buyer shall reimburse Heublein for all
severance or separation payments as described in Exhibit 13.3
(the "Separation Allowance"). Such reimbursement shall be made
by Buyer after Heublein has incurred such expense and within 15
days after Heublein invoices Buyer for the same.
13.4. No Third Party Beneficiaries. No provision of this
Section 13 shall create any third party beneficiary rights in any
employee or former employee (including any beneficiary or
dependent thereof) of Heublein or any of its affiliates in
respect of continued employment (or resumed employment) or in
respect of any benefits that may be provided, directly or
indirectly, under any Plan.
SECTION 14. ENVIRONMENTAL MATTERS
14.1. Environmental Site Assessment. Buyer has engaged, at
Buyer's expense, the environmental consulting firm of The
Twinings Laboratories, Inc. (the "Environmental Consultants") to
conduct an environmental site assessment of the Facilities.
14.2. Access. Heublein and its independent environmental
consultants and other representatives shall have access (on a
current basis) to all data and information collected and
conclusions reached by the Environmental Consultants, including,
without limitation, raw data, boring logs, splits of all samples
taken and laboratory results obtained by the Environmental
Consultants, and may contact the Environmental Consultants
directly. Heublein shall be provided with a draft of the
environmental surveys at least five days prior to its issuance
and shall be entitled to receive from the Environmental
Consultants any information Heublein reasonably requests
regarding matters reflected or referred to in such draft
environmental surveys. Buyer shall use its best efforts to cause
the Environmental Consultants to comply with the provisions of
this Section 14.
SECTION 15. TERMINATION OF AGREEMENT
15.1. Right To Terminate Agreement. This Agreement may be
terminated before the Closing:
(a) by written agreement of Heublein and Buyer;
(b) by either Heublein or Buyer at any time after
August 31, 1994 (or such later date as the parties may, in their
discretion, agree upon) if the Closing shall not have occurred by
such time unless the failure of the Closing to take place on or
before such time is attributable to the breach by such party of
its obligation to consummate the transactions contemplated hereby
or of any of its other obligations hereunder; or
(c) by either Heublein or Buyer if the purchase
of the Purchased Assets or Business contemplated hereby shall
violate any non-appealable final order, decree or judgment of any
court or governmental body having competent jurisdiction or if
there shall be a statute, rule or regulation that makes such
purchase illegal or otherwise prohibited.
15.2. Effect Of Termination. Upon the termination of this
Agreement pursuant to Section 15.1 hereof, (a) Buyer shall
promptly return to Heublein all documents and information
received from Heublein in connection with this Agreement and the
transactions contemplated hereby, including all copies made by
Buyer of any of such documents or information, and (b) no party
hereto shall have any liability or obligation to any other party
hereto; provided, however, that (i) Buyer and Heublein shall
remain bound by the provisions of the Confidentiality Agreement,
and (ii) the respective parties shall remain bound by the
provisions of this Section and Sections 5.14, 6.8, 9.3 and 19.2.
SECTION 16. CERTAIN POST-CLOSING COVENANTS
16.1. Assistance In Collecting Certain Amounts. From and
after the Closing Date, Buyer shall assist, cooperate with and
consult with Heublein in connection with the collection of
accounts receivable relating to products or goods shipped or sold
by Heublein before the Closing Date, and Buyer shall remit
promptly to Heublein any payments or other sums received by Buyer
that relate to any sales, shipments or other matters occurring
before the Closing Date or that otherwise are properly for the
account of Heublein. If, after the Closing Date, Heublein shall
wish to make a claim or otherwise take action under an Assigned
Contract with respect to a liability or expense of Heublein that
is not an Assumed Liability, Buyer shall assist, cooperate and
consult with Heublein with respect to such action and shall remit
promptly to Heublein any payments or other sums received by Buyer
that relate thereto. Heublein shall remit promptly to Buyer any
payments or other sums received by Heublein after the Closing
Date that relate to any sales or shipments made by Buyer after
the Closing Date.
16.2. Differentiation Between Products Of Heublein and
Buyer. After the Closing, Buyer will continue date coding
products in the manner heretofore utilized by Heublein, or
another reasonably appropriate manner, to insure that products
and goods of the Business finished and sold by Buyer can be
distinguished from products of the Business finished and sold by
Heublein.
16.3. Further Assurances. From and after the Closing Date,
each party hereto shall provide to the other party hereto such
additional instruments and documents as such other party may
reasonably request for the purpose of carrying out or evidencing
the transactions contemplated by this Agreement or any of the
Related Agreements, including, without limitation, any document
as may be required by the Trademark Office in any jurisdiction to
effect transfer of any trademark registrations and pending
applications for trademarks as contemplated by this Agreement.
16.4. Books And Records. Buyer agrees that all books and
records which are delivered to Buyer by Heublein hereunder shall
be retained and available for inspection by Heublein or its
representatives at any time upon reasonable prior notice during
regular business hours. All such Books and Records which may be
reasonably necessary for the purpose of preparing tax returns and
financial statements and responding to tax audits covering
Heublein's operations as of or prior to the Closing Date shall be
retained and made available to Heublein for the period open for
assessments or refunds as determined or required by applicable
tax laws, rules or regulations and if, at the end of such period,
Heublein or its successors or assigns shall be involved in any
tax audit, investigation, litigation or other proceeding, then
for such additional period as Heublein may reasonably request in
connection therewith. Notwithstanding the foregoing, Buyer shall
not have any liability to Heublein for any consequential, special
or punitive damages arising out of any destruction of any
documents by an agent or employee of Buyer other than a willful
destruction in violation of this Section 16.4.
16.5. Surplus Equipment. If any equipment not used in the
conduct of the Business, not acquired by Buyer at Closing and
identified by Heublein to Buyer prior to the Closing (to the
extent practicable) remains in the Facilities after the Closing,
Buyer will permit Heublein to remove such equipment at Heublein's
expense upon reasonable notice from Heublein.
16.6. Transitional Services. For a period of up to 12
months after the Closing Date, Heublein will provide and make
available to Buyer reasonable access to data processing services
and to perform various administrative and ministerial functions
reasonably requested by Buyer to facilitate the continued
operations and functions of the Business on a transitional basis,
including payroll information for purposes of various continuing
employment tax requirements and, for a period not to exceed 60
days, toll-free customer relations telephone service currently
being conducted by or for the benefit of Heublein, and Buyer
shall pay Heublein for such services at a reasonable rate to be
agreed upon. Buyer will use its reasonable efforts to effect a
transition as expeditiously as possible. Following the Closing
and if so requested by Buyer, Heublein shall, to the extent
permitted by law, maintain in effect, at Buyer's expense, all
licenses, permits, authorizations, approvals and land use
variances relating to the Business (the "Permits") which Buyer
has been unable to obtain using reasonable efforts and shall
permit Buyer, for such reasonable period as Buyer lacks the
Permits necessary to conduct the Business, to act as the agent of
Heublein and to exercise Heublein's rights and privileges
thereunder so that there will be no interruption in sales of
products sold under the Specified Brands. Buyer shall indemnify,
defend and hold harmless Heublein from and against any and all
Damages incurred by Heublein based upon or arising out of Buyer
acting as agent of Heublein and exercising Heublein's rights and
privileges under the Permits or otherwise arising out of
Heublein's maintenance of the Permits on behalf of Buyer.
16.7. Foreign Duty Credits. At the Closing Buyer shall
execute and deliver to Heublein a nonrecourse promissory note in
the form attached as Exhibit 16.7 (the "Foreign Duty Credits
Note"), pursuant to which Buyer shall pay to Heublein certain
duty drawback amounts Buyer receives resulting from concentrate
exports relating to the Business, as more specifically described
in the Foreign Duty Credits Note.
16.8. Brokers And Distributors. Buyer and Heublein shall
make such arrangements as they may agree with respect to any
brokers or distributors of products of the Business in connection
with the consummation of the transactions contemplated by this
Agreement, it being understood and agreed, however, that Buyer
will assume no broker or distributor related obligations of
Heublein which are not Assumed Liabilities, except as required by
applicable laws.
16.9. Certain Audited Financial Information. Heublein
shall provide or cause to be provided to Buyer, pursuant to the
terms of Exhibit 16.9, the audited and unaudited financial and
other information required for the preparation of selected and
summary financial data and pro forma financial information
regarding the Business for all periods required by applicable
provisions of Regulations S-X and S-K promulgated under the
Securities Act of 1933, as amended, and the Securities Exchange
Act of 1934, as amended (the "Financial Statement Delivery
Requirements"). Expenses associated with providing the foregoing
information, including expenses associated with obtaining the
consent of Heublein's auditors to include such information in
required reports and filings, shall be paid solely by Heublein.
16.10. Intangible Property. After Closing, Heublein (i)
will not infringe upon any intellectual property rights relating
to the Specified Brands, (ii) shall reasonably cooperate with
Buyer at Buyer's expense in Buyer's efforts after the Closing to
maintain, protect, and enforce such intellectual property rights
and shall execute all documents reasonably required to enable
Buyer to accomplish such efforts, and (iii) shall, at its sole
expense, take all reasonable steps to cause registrations and
pending applications for trademarks related to the Specified
Brands to be: (a) of record in each applicable jurisdiction in
the name of Heublein, and (b) in all other respects in condition
for transfer to Buyer, provided however that nothing in part
(iii) of this Section 16.10 shall require Heublein to take any
such action where it would be commercially impractical to do so.
Nothing in this Section 16.10 shall in any way limit Heublein's
rights under Section 18.1 of this Agreement.
16.11. Promotional Programs; Coupon Redemptions.
Following the Closing, Buyer shall (i) discharge all of the
obligations under Promotional Programs put into effect by
Heublein prior to Closing which obligations relate to sales made
by Buyer following the Closing, and (ii) discharge all of the
obligations under Promotional Programs related to sales made by
Heublein prior to Closing, only if such Promotional Programs
constitute Assumed Balance Sheet Liabilities. Following the
Closing, Heublein shall discharge all coupon redemption
obligations related to coupons for the Specified Brands
distributed by Heublein prior to the Closing, regardless of the
dates on which the coupon redemption periods expire.
16.12. Use Up Rights. For a period of one year following
the Closing Date, Heublein shall cooperate with Buyer, at
Buyer's sole expense, in connection with Buyer's reasonable
efforts to obtain "use-up" rights with respect to labels and
trade dress included in the Purchased Assets including, if so
requested by Buyer, confirmation to federal and state alcoholic
beverage authorities that Buyer is authorized by Heublein to use
such labels and trade dress.
16.13. Possession. Heublein shall deliver to Buyer
actual possession of the Purchased Assets to the extent actual
possession of such Purchased Assets can reasonably be delivered.
16.14. Option for Brandy. Buyer shall have the option
for a period of three months following the Closing Date to
purchase from Heublein the brandy identified on Exhibit 16.14 at
a price of $3.21 per proof gallon payable in cash within 15 days
following Buyer's exercise of its option. Buyer shall exercise
such option by giving written notice to Heublein of such exercise
at any time during the three month period and delivery of the
brandy being acquired shall be made to Buyer by Heublein upon its
receipt of payment.
SECTION 17. INDEMNIFICATION
17.1. Indemnification By Heublein. Subject to the
limitations contained in this Section 17 and in the other
provisions of this Agreement (including the provisions of
Exhibit 2.7 and Section 7 hereof), from and after the Closing
Date, Heublein shall hold harmless and indemnify Buyer and its
affiliates (which term includes, directors and employees) from
and against any Damages actually incurred by them (or any of
them) as a result of or in connection with:
(a) any breach by Heublein of any representation
or warranty of Heublein set forth in this Agreement or in any
certificate delivered pursuant hereto;
(b) any breach by Heublein of any covenant or
agreement of Heublein set forth in this Agreement or in any other
agreement referred to herein; or
(c) any failure by Heublein to pay, perform,
satisfy or discharge any debt, liability or obligation of
Heublein with respect to the Business or any matter relating to
this Agreement or the transactions contemplated hereby, that
existed before the Closing and relates to product liability for
finished goods produced by Heublein before the Closing except in
each case for any debt, liability or obligation included in the
Assumed Liabilities or otherwise assumed by Buyer pursuant to or
in connection with this Agreement or for which Heublein expressly
has no responsibility pursuant to the provisions of this
Agreement or any Related Agreements.
17.2. Indemnification By Buyer. Subject to the limitations
contained in this Section 17 and in the other provisions of this
Agreement (including the provisions of Section 7 hereof), from
and after the Closing Date, Buyer shall hold harmless and
indemnify Heublein and its affiliates (which term includes
directors and employees) from and against any Damages actually
incurred by them (or any of them) as a result of or in connection
with:
(a) any breach by Buyer of any representation or
warranty of Buyer set forth in this Agreement or in any
certificate delivered pursuant hereto;
(b) any breach by Buyer of any covenant or
agreement of Buyer set forth in this Agreement or in any other
agreement referred to herein;
(c) any failure by Buyer to pay, perform, satisfy
or discharge any debt, obligation or liability included in the
Assumed Liabilities or otherwise assumed by Buyer pursuant to or
in connection with this Agreement or any of the Related
Agreements;
(d) any failure by Buyer to pay, perform, satisfy
or discharge any debt, obligation or liability that relates to
claims or matters based upon action or inaction of Buyer after
the Closing or otherwise in respect of Buyer's conduct of the
Business or ownership and operation of the Purchased Assets from
and after the Closing Date;
(e) any disclosure or other communication by
Buyer that is subject to the requirements of any federal or state
securities laws, including the Securities Act of 1933 and the
Securities Exchange Act of 1934, or any failure on the part of
Buyer to make any required disclosure or communication under such
laws or any other applicable federal or state securities laws;
(f) any federal or state claim or cause of action
brought by any security holder or former security holder of Buyer
(including any derivative action); or
(g) any change made at or after the Closing by
Buyer (or any of its successors or assigns) in the brokerage or
distribution arrangements relating to any products or goods being
sold under any of the Specified Brands (including, without
limitation, any change arising from or relating to (i) any
termination by Buyer of any broker or distributor, (ii) any
withdrawal by Buyer of any brand or product item from any broker
or distributor, or (iii) any appointment by Buyer of any broker
or distributor to broker or distribute any brand or product
item).
17.3. Knowledge Of Breach. For purposes of this
Section 17, neither party hereto shall be deemed to have breached
any representation, warranty or covenant if (i) such party shall
have notified the other party hereto in writing, on or prior to
the Closing Date, of the breach of, or of any facts or
circumstances constituting or resulting in the breach of, such
representation, warranty or covenant and (ii) none of such
party's principal representatives who actively participated in
the negotiation of this Agreement can be shown to have had actual
knowledge of such breach, facts or circumstances on or prior to
the date of this Agreement and to have willfully failed to
disclose them.
17.4. Deductible Amount. Without limiting the effect of
any of the other limitations set forth herein, Heublein shall not
be required to make any indemnification payments hereunder with
respect to any breach of any of its representations and
warranties, except to the extent that the cumulative amount of
the Damages actually incurred by Buyer as a direct result of all
such breaches actually exceeds $1,000,000; and Heublein shall
only be required to pay, and shall only be liable for, the amount
by which the cumulative amount of the Damages actually incurred
by Buyer as a direct result of all such breaches actually exceeds
$1,000,000.
17.5. Subrogation. To the extent that either party hereto
(the "Indemnifying Party") makes or is required to make any
indemnification payment hereunder to the other party hereto (the
"Indemnitee"), the Indemnifying Party shall be subrogated to, and
shall be entitled to exercise, any rights and remedies (including
rights of indemnity, rights of contribution and other rights of
recovery) that the Indemnitee or any of the Indemnitee's
affiliates may have against any other person with respect to any
claim or other matter, or with respect to any Damages or
circumstances, to which such indemnification payment relates.
The Indemnitee shall permit the Indemnifying Party to use the
name of the Indemnitee and the names of the Indemnitee's
affiliates in any transaction or any proceeding or other matter
involving any of such rights or remedies; and the Indemnitee
shall take such actions as the Indemnifying Party may reasonably
request for the purpose of enabling the Indemnifying Party to
perfect or exercise its right of subrogation hereunder.
17.6 Exclusivity. The right of each party hereto to
demand and receive indemnification payments pursuant to this
Section 17 shall be the sole remedy exercisable by such party and
its affiliates with respect to any breach by any other party
hereto of any representation, warranty, covenant or agreement set
forth herein or in the certificates delivered pursuant hereto; it
being understood that the foregoing shall not prohibit specific
performance if available under applicable law as a remedy
exercisable by either party with respect to any breach by the
other party hereto of any provision of this Agreement.
17.7. Right To Cure Breach Of Section 5.6. In lieu of
making any indemnification payments that it would otherwise be
required to make to Buyer with respect to any diminution in the
value of the items referred to in Section 5.6 in connection with
any breach of the representation and warranty set forth in
Section 5.6 hereof, Heublein may, at its option, replace the
items that do not conform to the standard set forth in said
Section 5.6 with items that do conform to such standard, as
provided in the Inventory Testing Procedures attached hereto as
Exhibit 2.7; it being understood that the foregoing shall not
prevent Buyer from recovering any Damages to which it might
otherwise be entitled by reason of the breach of Section 5.6
hereof.
17.8. Defense Of Claims. If either party hereto (the
"Indemnitee") receives notice or otherwise obtains knowledge of
any claim or other matter with respect to which the other party
hereto (the "Indemnifying Party") may become obligated to hold
harmless or indemnify the Indemnitee hereunder (irrespective of
the deductible set forth in Section 17.4), then the Indemnitee
shall promptly deliver to the Indemnifying Party a written notice
describing such claim or other matter in reasonable detail and
specifying the estimated amount of the Damages that may be
incurred by the Indemnitee in connection therewith. The
Indemnifying Party shall have the right, at its option, to assume
the defense of such claim or other matter at its own expense and
with its own counsel, provided such counsel is reasonably
satisfactory to the Indemnitee. If the Indemnifying Party elects
to assume the defense of such claim or other matter,
(i) notwithstanding anything to the contrary contained herein,
the Indemnifying Party shall not be required to pay or otherwise
indemnify the Indemnitee against any attorneys' fees or other
expenses incurred on behalf of the Indemnitee in connection with
such claim or other matter following the Indemnifying Party's
election to assume the defense of such claim or other matter,
(ii) the Indemnitee shall fully cooperate as reasonably requested
by the Indemnifying Party in the defense or settlement of such
claim or other matter, (iii) the Indemnifying Party shall keep
the Indemnitee informed of all material developments and events
relating to such claim or other matter, and (iv) the Indemnitee
shall have the right to participate, at its own expense, in the
defense of such claim or other matter. In no event will the
Indemnifying Party be liable for any settlement or admission of
liability with respect to such claim or other matter without its
prior written consent.
SECTION 18. USE OF CERTAIN NAMES
18.1. Inglenook Name. Buyer agrees that notwithstanding
the fact that "Inglenook" is one of the Specified Brands being
sold to Buyer, Heublein and its affiliates, successors and
assigns shall have the perpetual right to continue to use,
without payment of any fee or other amount, the names "Inglenook
Chateau" and "Inglenook Winery" (and variations thereof approved
in writing by Buyer) in connection with the ownership and
operation of that certain real property and improvements in Napa
Valley, California owned by Heublein and commonly known as the
"Inglenook Winery;" provided, however, that such name shall not
be used (i) as a part of the brand name, tradename, trademark or
logo of, or used on the label of, any beverage or food product or
other consumer product or service produced by Heublein or any of
its affiliates, successors or assigns, or (ii) otherwise to sell
or distribute any beverage or food product by Heublein or any of
its affiliates, successors or assigns. Notwithstanding the
foregoing, (x) the right to use the name "Inglenook Chateau" and
"Inglenook Winery" and variations thereof shall cease in the
event that Heublein or its affiliates, successors and assigns
fail to make use of such names for a consecutive period in excess
of two years or use such names in a manner which has a material
adverse impact on the use of such names by Buyer in the sale of
its wines, and (y) Heublein and its affiliates, successors and
assigns shall have the right to sell and distribute any or all of
the Inglenook library wines which are being retained by Heublein
as a part of the Excluded Assets.
18.2. Certain Restrictions And Agreements On Use Of Certain
Specified Brands. Buyer acknowledges that those Specified Brands
set forth on Exhibit 18.2 hereto are subject to certain
restrictions and agreements on the use thereof in advertising or
marketing, as more specifically described on Exhibit 18.2. Buyer
agrees to comply (and agrees to require each of its successors in
interest and assigns to comply) with the restrictions and
agreements set forth on Exhibit 18.2, and Buyer further
acknowledges and agrees that De La Salle Institute, a nonprofit
religious corporation organized under the laws of California, is
a third party beneficiary of the provisions of this Section 18.2,
with rights to enforce the restrictions and agreements set forth
on Exhibit 18.2 and in this Section 18.2 as against Buyer and
each of its successors and assigns. Buyer further agrees that in
the event of the breach or threatened breach of the covenant set
forth in this Section 18.2, the damage or imminent damage to
Heublein will be irreparable and extremely difficult to estimate,
making any remedy at law or in damages inadequate. Accordingly,
the parties agree that Heublein and, as set forth above, the De
La Salle Institute, each shall be entitled to injunctive relief
against Buyer and each of its successors and assigns in the event
of any breach or threatened breach of such covenant by Buyer or
any of its successors or assigns, in addition to any other relief
(including damages) available to Heublein under this Agreement or
under law. Heublein represents that (i) it has fully complied
with restrictions contained in, and is not in default under the
restrictions and agreements related to the use of Specified
Brands set forth in Exhibit 18.2, and (ii) the restrictions and
agreements described in Exhibit 18.2 constitute all restrictions
and agreements regarding the use of the Specified Brands in
advertising or marketing contained in the agreement referred to
in Exhibit 18.2.
SECTION 19. MISCELLANEOUS
19.1. Notices. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will
be deemed to have been duly given when (a) delivered by hand
(with written confirmation of receipt), (b) sent by telecopier
(with written confirmation of receipt), provided that a copy is
also mailed to such party, or (c) when received by the addressee,
if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses
and telecopier numbers set forth below (or to such other
addresses and telecopier numbers as a party may designate by
notice to the other parties):
If to Heublein:
Heublein, Inc.
16 Munson Road
Farmington, Connecticut 06032
Attention: General Counsel
With a copy to:
Randal B. Short, Esq.
Pettit & Martin
101 California Street, 35th Floor
San Francisco, CA 94111
If to Buyer:
Canandaigua Wine Company, Inc.
116 Buffalo Street
Canandaigua, New York 14424
Attention: General Counsel
With a copy to:
James A. Locke, Esq.
Harter, Secrest & Emery
700 Midtown Tower
Rochester, New York 14604
19.2. Publicity.
(a) No press release, notice or disclosure to any
person or other publicity concerning the transactions
contemplated by this Agreement or the other agreements referred
to herein shall be issued, given, made or otherwise disseminated
at any time before or after the Closing Date without the prior
approval of both of the parties hereto; provided, however, that
(i) such approval shall not be unreasonably withheld,
(ii) subject to Section 9.3 and the requirement set forth in the
second sentence of this Section, the parties hereto, and their
respective affiliates, shall be entitled, without obtaining any
such approval, to make any disclosures required by applicable
laws or governmental regulations, or required in conjunction or
connection with any application or licenses or permits,
registrations or other filings with federal or state agencies
which regulate the distribution, sale or taxation of alcoholic
beverages or required to prevent the suspension of trading in
Buyer's stock, and (iii) Heublein shall be entitled, without
obtaining any such approval, to make disclosures regarding the
transactions contemplated by this Agreement for the purpose of
attempting to obtain the Required Consents or otherwise
attempting to facilitate the consummation of the transactions
contemplated hereby.
(b) Notwithstanding anything to the contrary contained
in this Agreement or any other document referred to herein,
Heublein shall have no liability in respect of any Damages that
may be incurred by Buyer or its affiliates as a result of or in
connection with any disclosure or communication by Buyer that is
subject to the requirements of any federal or state securities
laws, including the Securities Act of 1933 and the Securities
Exchange Act of 1934, or the inaccuracy or insufficiency of any
information contained therein provided, however, this clause
shall not be deemed to limit Buyer's right to seek
indemnification hereunder for any other Damages arising out of or
in respect of Heublein's breach of this Agreement.
19.3. Table Of Contents And Headings. The table of
contents of this Agreement and the underlined headings contained
herein are for convenience of reference only, shall not be deemed
to be a part of this Agreement and shall not be referred to in
connection with the interpretation hereof.
19.4. Counterparts. This Agreement may be executed in
several counterparts, each of which shall constitute an original
and all of which, when taken together, shall constitute one
agreement.
19.5. Governing Law. This Agreement shall be construed
in accordance with, and governed in all respects by, the laws of
the State of California.
19.6. Successors And Assigns. This Agreement shall be
binding upon the parties hereto and their respective successors
and assigns, if any, and, except as otherwise provided herein,
shall inure to the benefit of the parties hereto and their
respective successors and assigns, if any. Neither party hereto
may assign any of its rights or delegate any of its obligations
hereunder without the prior written consent of the other party
hereto, provided that Buyer may assign its rights and obligations
hereunder to a wholly-owned subsidiary of Buyer if Buyer shall
irrevocably and unconditionally guarantee the performance of such
obligations by an instrument satisfactory to Heublein.
19.7. Entire Agreement. This Agreement and the other
instruments and agreements referred to herein or executed in
connection herewith set forth the entire understanding of the
parties hereto and supersede all other agreements and
understandings between the parties hereto relating to the subject
matter hereof.
19.8. Waiver. No failure on the part of either party
hereto to exercise any power, right, privilege or remedy
hereunder, and no delay on the part of either party hereto in
exercising any power, right, privilege or remedy hereunder, shall
operate as a waiver thereof; and no single or partial exercise of
any such power, right, privilege or remedy shall preclude any
other or further exercise thereof or of any other power, right,
privilege or remedy.
19.9. Amendments. This Agreement may not be amended,
modified, altered or supplemented except by means of an agreement
or other instrument executed on behalf of both of the parties
hereto.
19.10. Parties In Interest. Nothing in this Agreement is
intended to provide any rights or remedies to any person other
than the parties hereto and, pursuant to Section 18.2, the De La
Salle Institute, and their respective successors and assigns, if
any.
19.11. Fees And Expenses. Except as otherwise provided
herein, each party hereto shall pay all fees, costs and expenses
that it incurs in connection with the negotiation and preparation
of this Agreement and each of the Related Agreements and in
carrying out the transactions contemplated hereby and thereby
(including, without limitation, all fees and expenses of its
counsel and accountants).
19.12. No Set-Off. Any payment required to be made
pursuant to Sections 2.3, 2.5, 2.9, 2.11 or 13.3 of this
Agreement shall be paid without any set-off, counterclaim or
deduction any party may have against the other.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above written.
HEUBLEIN, INC.
By:/s/ David J. Scott
David J. Scott
Senior Vice President and
General Counsel
CANANDAIGUA WINE COMPANY, INC.
By: /s/ Robert S. Sands
Robert S. Sands
Executive Vice President and
General Counsel
Asset Purchase Agreement
by and between
Heublein, Inc.
and
Canandaigua Wine Company, Inc.
Identification of Contents of Omitted Exhibits
Exhibit
2.1A Description of Madera Facility
2.1B Description of Escalon Facility
2.1C Personal Property
2.1D Specified Inventories
2.1E Specified Contracts
2.1H Foreign Duty Credits
2.1I Specified Brands
2.2 Excluded Assets
2.3A Assumed Balance Sheet Liabilities
2.3C Option Agreement
2.3D Accounting Methodology
2.7 Merchantability of Specified Inventories
3A Table Wine Production and Related Services Agreement
3B Madera Bottling Agreement
3C Brandy Bottling Agreement
3D Storage Agreement
4A(ii) Bill of Sale
4A(iii) Madera Grant Deed
4A(iv) Escalon Lease Assignment
4A(x) Covenant Not to Compete
4B(ii) Assumption of Liabilities
5.22 Certification of Non-Foreign Status
10.2 Endorsements to Title Policies
10.8 Form of Opinion of Counsel to Heublein
10.10 Glass Supply Agreement
11.5 Opinions of Counsel to Buyer
13.2A Available Employees
13.2B Available Employees To Whom Buyer Will Not Offer
Employment
13.2C Designated Employees
13.2D Designated Employees To Whom Buyer May Make Offers of
Employment
13.3 Separation Allowance
16.7 Foreign Duty Credits Note
16.9 Financial Statement Delivery Requirements
16.14 Brandy Subject to Purchase Option
18.2 Restrictions and Agreements on Use of Certain
Specified Brands