EXHIBIT 2.1
ASSET PURCHASE
AGREEMENT
Asset Purchase Agreement, dated
September 21, 2009 (“ Agreement ”), by and
between Castle Brands Inc., a Delaware corporation (“
Buyer ”) and Betts & Scholl, LLC, a Florida
limited liability company (“ Seller ”). Dennis
Scholl and Richard Betts, individuals and the sole members of
Seller (collectively, “ Members ”), are parties
to this Agreement for purposes of Articles IV, VI, VII and VIII
only. Capitalized terms used herein and not otherwise defined shall
have the meanings given to them in Article I hereof.
RECITALS
A. Seller is engaged in the
production, marketing and sale of premium wines (the “
Business ”);
B. Seller desires to sell,
transfer and assign to Buyer’s subsidiary, Castle Brands
(USA) Corp. (“ Castle USA”) , and Castle USA
desires to purchase and assume from Seller, certain assets and
liabilities related to the Business, all as more specifically
provided herein; and
C. Members constitute the sole
members of Seller, and, accordingly, the transaction contemplated
hereby will inure to their direct benefit.
NOW, THEREFORE, in consideration of
the promises and the mutual representations, warranties and
covenants and subject to the conditions contained in this
Agreement, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain
Definitions . As used in this Agreement, the following terms
have the following meanings:
“ Action or Proceeding
” means any action, suit, proceeding or arbitration by any
Person, or any investigation, inquiry (whether formal or informal),
administrative proceeding, suit, claim, whether civil or criminal,
charge or Audit by or before any Governmental Authority or
arbitrator.
“ Affiliate ”
means with respect to any Person, any other Person controlling,
controlled by or under common control with such first Person. For
the purposes of this definition, “ control ”
means, with respect to a Person, the ownership by another Person of
50% or greater of the income or voting interests of such Person or
such other arrangement as constitutes the direct or indirect
ability to direct the management, affairs or actions of such
Person.
“ Ancillary Agreements
” means each of the agreements to be delivered pursuant to
Section 3.2 and any other documents executed by any party to
this Agreement and delivered at the Closing.
“ Assets ” has the
meaning set forth in Section 2.1 of this Agreement.
“ Assumed Liabilities
” has the meaning set forth in Section 2.3 of this
Agreement.
“ Audit ” means
any audit, inquiry, investigation, assessment of Taxes, other
examination by any Tax Authority, and any other proceeding or
appeal of such proceeding relating to Taxes
“ Business ” has
the meaning set forth in Recital “A” of this
Agreement.
“ Business Day ”
means any day on which commercial banks are not authorized or
required by law to close in New York, New York, USA.
“ Business Employee
” means any employee of Seller employed in the Business.
“ Code ” means the
Internal Revenue Code of 1986, as amended, and any reference to a
particular Code section shall be interpreted to include any
revision of or successor to that section.
“ Contracts and Other
Agreements ” means all executory contracts, agreements,
understandings, indentures, notes, bonds, loans, instruments,
leases, mortgages, franchises, licenses or commitments which are
legally binding.
“ Environment ”
means the indoor and outdoor environment including the air, surface
water, underground water, any land, wetland, sediment, soil or
subsurface strata, and natural resources and the environment as
defined in any Environmental Laws.
“ Environmental Laws
” means any all applicable federal, state, local or foreign
laws, rules and regulations in effect at the date of this Agreement
relating to pollution, the protection of the environment or to the
use, transport, treatment, storage, disposal, or Release of a
Hazardous Substance, including but not limited to, as amended, the
Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. §§ 9601 et seq.; the Resource
Conservation and Recovery Act, 42 U.S.C. §§ 6901 et
seq. ; the Federal Water Pollution Control Act, 33 U.S.C.
§§ 1251 et seq. ; and the Emergency Planning,
Community Right To Know Act, 42 U.S.C. §§ 11001 et
seq . Without limiting the foregoing, the term
“ Environmental Laws ” also includes all
permits, licenses, registrations, consent orders, consent
agreements, administrative settlements, cease and desist orders and
all other orders or directives issued by a Governmental Entity
under an applicable Environmental Law.
“ Environmental Permit
” means any consent, license, permit, permission, grant,
waiver, order, registration, authorization, concession, approval,
exemption or similar right or privilege issued by any Governmental
Authority relating to any Environmental Laws.
“ Exchange Act ”
shall mean the Securities Exchange Act of 1934, as amended.
“ GAAP ” means
United States generally accepted accounting principles and
practices in effect from time to time applied consistently
throughout the periods involved.
“ Governmental Authority
” means any court, tribunal, arbitrator or any government or
political subdivision thereof, whether federal, state, municipal,
county, local or foreign, or any agency, authority, official or
instrumentality of any such government or political subdivision or
any self-regulatory organization, chamber or association and any
official, political or other subdivision, department or branch of
any of the foregoing.
“ Intellectual Property
” means the intellectual property rights related to the
Business including: patents, trademarks (including the Trademarks),
service marks, brand names, certification marks, copyrights and
copyrightable works (and any registrations, applications or
renewals relating thereto), license rights, software rights, trade
dress, trade secrets, technology, know-how, ways of doing business
and confidential information and proprietary information,
processes, drawings, plans and files used in the production of any
bottles and packaging, all bottle or package designs and molds,
labels (including all rights to use the artwork contained on such
labels in the production of such labels on a royalty-free basis),
all design rights and registered and unregistered designs,
formulae, customer lists and data, process technology, recipes,
methodologies, and all other similar or allied proprietary or
industrial property rights in any of the foregoing, whether such
rights are now known or hereafter discovered, whether patentable or
unpatentable, registrable or unregistrable, assumed names, trade
names and other indications of origin, the goodwill associated with
the foregoing and registrations in any jurisdiction of, and
applications in any jurisdiction to register, the foregoing,
including any extension, modification or renewal of any such
registration or application; inventions and industrial designs
(including any applications therefor, continuations, divisionals,
continuations-in-part, re-examinations, provisionals and reissues),
discoveries and ideas, whether patentable or not in any
jurisdiction; domain name registrations; all other intellectual
property rights which are used or useful, or which have been used
in connection with the Business; and any claims, causes of action
or rights to past, present and future damages arising out of or
related to any infringement or misappropriation of any of the
foregoing.
“ Inventory ”
means all blended and unblended bulk wine and finished goods (in
each case, whether in process, in barrels or in bottles); unlabeled
case goods, raw materials (whether expensed or not), including work
in process; wine library; packaging supplies, labels, corks and
capsules; and merchandise, packaging materials and other supplies
related thereto.
“ Law ” or “
Laws ” means any constitution, law, statute, treaty,
rule, standard, regulation, ordinance or other pronouncement having
the effect of law in the United States of America, any foreign
country or any domestic or foreign state, municipal, county, city
or other political subdivision or of any Governmental
Authority.
“ Leased Property
” means all real property that is subject to a Real Property
Lease.
“ Lien ” means any
lien, mortgage, pledge, security interest, lease, restriction,
conditional sale or other title retention agreement, charge or
encumbrance of any kind, whether voluntary or involuntary.
“ Material Adverse
Effect ” means any circumstance, change in or effect on
the Business or the Seller that, individually or in the aggregate
with all other circumstances, changes in or effects on the Business
or the Seller: (a) is or is reasonably likely to be materially
adverse to the business, operations, Assets or Assumed Liabilities,
customer or supplier relationships, prospects, results of
operations or the condition (financial or otherwise) of the
Business or (b) is reasonably likely to materially adversely effect
the ability of the Buyer to operate or conduct the Business in
substantially the same manner in which it is operated or conducted
by the Seller
.prior to the
Closing Date
“ Order ” means
any writ, judgment, decree, injunction, or similar order or
requirement of any Governmental Authority or arbitral tribunal, in
each case whether preliminary or final with respect to the
operation of the Business.
“ Permits ” means
any notification, license, concession, permit (including without
limitation any Environmental Permit, any import, export,
construction and operation permit), authorization, approval,
franchise, certificate, exemption, classification, registration,
qualification or similar document or authority that has been issued
or granted by any Governmental Authority, and applications
therefor.
“ Permitted Lien ”
means (i) any Lien for Taxes not yet due or being contested in
good faith by appropriate proceedings and for which adequate
reserves have been established, (ii) any statutory Lien
arising in the ordinary course of business by operation of Law with
respect to an obligation or liability that is not yet due and
(iii) any minor imperfection of title or similar Lien or
encumbrance which individually or in the aggregate with other such
imperfections of title, Liens or encumbrances on such property
would not reasonably be expected to materially affect the value or
use of such property.
“ Permitted Transfer
” shall mean, with respect to any Person, any Transfer by
such Person to: (a) any Affiliate of such Person; and
(b) if such Person is a natural person, (i) any lineal
descendant or ancestor or sibling (by birth or adoption) of such
Person, (ii) any spouse or former spouse of any of such Person
or any such descendant, ancestor or sibling of such Person,
(iii) any legal representative or estate of such Person or any
such descendant, ancestor or sibling of such Person, (iv) any
trust maintained for the benefit of such Person or any such
descendant, ancestor or sibling of such Person and (v) any
corporation, private charitable foundation or other organization
controlled by such Person or any such descendant, ancestor or
sibling of such Person.
“ Person ” means
any individual, sole proprietorship, entity, limited liability
company, corporation, partnership, firm, joint venture,
association, unincorporated syndicate, joint-stock company, trust,
unincorporated organization, Governmental Authority, body corporate
or other entity (in each case whether or not having separate legal
personality).
“ Plan ” means all
material compensation or benefit plans, programs, policies, or
practices, contracts or arrangements which are sponsored,
administered, maintained or contributed to by Seller or any
Affiliate for the benefit of Business Employees (or former
employees of the Business) or under which Seller has any liability
or obligation of any kind relating to employee benefits of any kind
in respect of the Business Employees, including any retirement,
retirement savings or pensions, bonus, incentive or deferred
compensation, post-retirement medical or life insurance, profit
sharing, stock option, severance or termination pay, health,
medical, dental, life, disability or other insurance and
supplemental employment or unemployment benefits, whether written
or unwritten, tax-qualified or non-qualified, funded or
unfunded.
“ Real Property Leases
” means any leases, subleases of real property as to which
Seller is the lessor, sublessor, landowner, lessee, sublessee, or
assignee/successor in interest thereof, together with any options
to purchase the underlying property, its profits or products and
leasehold improvements thereon.
“ SEC ” shall mean
the United States Securities and Exchange Commission.
“ Securities Act ”
shall mean the Securities Act of 1933, as amended.
“ Seller’s
knowledge ” means the actual knowledge of either Richard
Betts or Dennis Scholl.
“ Subsidiary ”
means with respect to any Person (the “ Owner
”), any corporation or other Person of which securities or
other interests having the power to elect a majority of that
corporation’s or other Person’s board of directors or
similar governing body, or otherwise having the power to direct the
business and policies of that corporation or other Person (other
than securities or other interests having such power only upon the
happening of a contingency that has not occurred), are directly or
indirectly held by the Owner and/or one or more of its Subsidiaries
or any corporation or other Person in which the Owner and/or one or
more of its Subsidiaries directly or indirectly has the right
(whether by contract, organizational agreement or otherwise) to
elect a majority of that corporation’s or other
Person’s board of directors or similar governing body or to
direct the business and policies of that corporation or other
Person.
“ Tangible Property
” means all tangible personal property including personal
property, plant and equipment, furniture, fixtures, equipment
(including motor vehicles), machinery and spare parts.
“ Tax ” and
“ Taxes ” means (a) any income, gross
receipts, gains (including capital gains), license, occupancy,
payroll, employment, excise, financial institutions, severance,
stamp, occupation, fringe benefits, group, goods and services,
alcoholic beverage, franking deficits, debits, premium, windfall or
excess profits, environmental (including Taxes under Section 59A of
the Code), customs duties, capital stock, franchise, unincorporated
business, profits, withholding, information, social security (or
similar), unemployment, disability, workers’ compensation,
land, real property, personal property, unclaimed property or
escheat, ad valorem, production, sales, use, license, transfer,
registration, value added, alternative or add-on minimum,
accumulated earnings, personal holding company, estimated, or other
tax, report or assessment of any kind whatsoever imposed by any
Governmental Authority, including any interest, penalty,
assessment, or addition thereto, whether disputed or not; and
(b) any obligations under any agreements or arrangements with
respect to any Taxes described in clause (a) above.
“ Tax Authority ”
means the Internal Revenue Service and any governmental, federal,
state, local or foreign authority, agency or commission which is
competent to assess, impose, enforce, levy and/or collect a
Tax.
“ Tax Claim ”
means any claim by a Tax Authority which, if successful, might
result in additional tax liability.
“ Tax Return ”
means any return, report, information return, or other document
(including any related or supporting information) filed or required
to be filed with any federal, state or foreign governmental entity
or other authority in connection with the determination, assessment
or collection of any Tax or the administration of any laws,
regulations or administrative requirements relating to any Tax.
“ Trademarks ”
means the trademarks, service marks, trade names and other
indications of origin of the Business (including “Betts &
Scholl”), and all other registered and unregistered
trademarks, service marks, trade names, brand names, fictitious or
assumed names, corporate names, domain names, URLs (including
www.bettsandscholl.com ), logos, designs, slogans, labels,
and trade dress, authorizations to use denominations or indicia of
origin and other source indicators, all registrations,
applications, pending applications, and renewals relating thereto
together with the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing, including any extension,
modification or renewal of any such registration or application;
and any claims, causes of action or rights to past, present and
future damages arising out of or related to any infringement or
misappropriation of any of the foregoing.
“ Transfer ” shall
mean any sale, assignment, pledge, hypothecation or other
disposition or encumbrance, either voluntarily or involuntarily and
with or without consideration.
ARTICLE II
PURCHASE AND
CONSIDERATION
Section 2.1 Purchase of
Assets . (a) On the terms and subject to the conditions
set forth in this Agreement, Seller hereby sells, transfers,
assigns, conveys and delivers to Castle USA, all of Seller’s
right, title and interest in and to all of the assets, properties
and rights owned or used by Seller in the conduct of the Business
or useful in the conduct of the Business and to the extent existing
at the Closing other than the Excluded Assets (such assets,
properties and rights and the Trademarks are collectively referred
to as “ Assets ”), in each case, free and clear
of all Liens other than Permitted Liens and Castle USA hereby
purchases and acquires the Assets from Seller.
(b) Without limitation of the
foregoing, but except as provided in Section 2.2, the Assets
include the following as and to the extent existing at the
Closing:
(i) Inventory . All
Inventory which is owned by Seller with respect to the conduct of
the Business;
(ii) Tangible Personal
Property . All Tangible Property owned or used by Seller with
respect to the conduct of the Business, including the Tangible
Property set forth on Schedule 4.4(A) ;
(iii) Contracts . All
contracts and other agreements to which Seller is a party or by
which its assets, rights or properties are bound and which relate
to the conduct of the Business (“ Contracts ”),
including those set forth on Schedule 4.4(D) ;
(iv) Prepaid Expenses .
All prepaid expenses, credits and advance payments relating to the
conduct of the Business;
(v) Intellectual
Property . All Intellectual Property owned or used by Seller
with respect to, or useful in, the conduct of the Business,
including the Intellectual Property described on
Schedule 4.4(B) , in each case whether or not used or
registered before a Governmental Authority;
(vi) Permits . To the
extent assignable or permitted by Law, all Permits relating to the
conduct of the Business;
(vii) Books and Records
. All general, financial and personnel records, correspondence and
other files and records, including customer lists and sales
records, of Seller pertaining to the conduct of the Business, the
Assets or to the Assumed Liabilities;
(viii) Goodwill . To
the extent assignable or permitted by Law, all of Seller’s
goodwill associated with the Business and the Assets;
(ix) Claims . All right
to pursue claims, causes of action, rights of recovery and rights
of set-off other than against the Members arising out of the
conduct of the Business;
(x) Cash and Bank
Accounts . All cash, marketable securities, commercial paper,
certificates of deposit and other bank deposits, treasury bills and
other cash equivalents; and all rights with respect to bank
accounts of Seller; and
(xi) Other Assets . Any
other assets of Seller pertaining to the conduct of the Business or
the Assumed Liabilities (including all assets reflected on the
Statement of Assets, Liabilities and Members’ Equity as of
June 30, 2009 (other than assets sold since such date in the
ordinary course of business consistent with past practice)).
Section 2.2 Excluded
Assets . Any provision of this Agreement to the contrary
notwithstanding, neither Buyer nor Castle USA will acquire and
there will be excluded from the Assets the following (the “
Excluded Assets ”): (i) minute books, stock
records and corporate seals of Seller; (ii) all accounts
receivable owned by Seller as of the Closing Date and arising out
of the conduct of the Business and (iii) personal property of
Seller not used in the conduct of the Business.
Section 2.3 Assumed
Liabilities . Subject to the terms and conditions set forth in
this Agreement, Castle USA will assume and thereafter pay, perform
and discharge when due all obligations and liabilities relating to
the Assets or the Business arising out of any circumstance,
condition, occurrence or event occurring after the Closing
(collectively, “ Assumed Liabilities ”).
Section 2.4 Excluded
Liabilities . Other than the Assumed Liabilities, neither Buyer
nor Castle USA will assume by virtue of this Agreement or the
transactions contemplated hereby or otherwise, and will have no
liability for, any obligations and liabilities of (x) the
Business or the Assets or of Seller, any Member or any of their
respective Affiliates, of any kind, character or description
whatsoever, including any liabilities and obligations (including
accounts payable) that relate to or arise out of any occurrence,
condition, circumstance or event occurring on or prior to the
Closing and the note payable to Morada Ventures or (y) the
Excluded Assets (collectively, “ Excluded Liabilities
”).
Section 2.5 Consideration
. The aggregate purchase price (“ Purchase Price
”) for the Assets will be (i) 7,142,858 shares of Buyer
common stock (“ Stock Consideration ”), of which
3,571,429 shares shall be issued to each of the Members;
(ii) a promissory note in the aggregate principal amount equal
to the Estimated Inventory Balance (as defined below) in the form
of Exhibit A hereto (“ Note ”); and
(iii) the assumption by Buyer of the Assumed Liabilities. The
Purchase Price will be allocated among the Assets in the manner set
forth on Schedule 2.5 . Each of the parties hereto will not,
and will not permit any of its Affiliates to, take a position
(except as required pursuant to any final, non-appealable Order) on
any Tax Return, before any Governmental Authority or in any
judicial proceeding, that is in any way inconsistent with the
Purchase Price allocation set forth on Schedule 2.5 .
Following Buyer’s post-closing review of the actual Inventory
amounts, the parties will amend the Note, as needed, to reflect the
revised, mutually-agreed aggregate principal amount.
Section 2.6 Inventory
Balance . Schedule 2.6 sets forth Seller’s
calculation and description (including the location of such
Inventory) of the amount of Inventory, at cost, as of the Closing
(“ Estimated Inventory Balance ”), certified by
Seller and prepared on the accounting basis used by Seller for
income tax purposes, which is a comprehensive basis of accounting
other than GAAP.
Section 2.7 Lock-Up .
Each Member agrees for a period of six (6) months following
the Closing Date that, except for a Permitted Transfer, such Member
shall not, directly or indirectly, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase
any option or contract to sell, grant any option right or warrant
to purchase, lend or otherwise transfer or dispose of, directly or
indirectly, any of the Stock Consideration, and/or (ii) enter
into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of
any of the Stock Consideration. The Stock Consideration shall bear
an appropriate legend reflecting the foregoing restrictions.
ARTICLE III
CLOSING
Section 3.1 Closing . The
consummation of the transactions contemplated hereby (the “
Closing ”) shall take place by wire transfer,
telecopy, email delivery and/or overnight delivery on the date
hereof (the “ Closing Date ”).
Section 3.2 Procedure at
Closing . All of the actions to be taken and documents to be
executed and delivered at the Closing shall be deemed to be taken,
executed and delivered simultaneously, and no such action,
execution or delivery shall be effective until all actions to be
taken and executions and deliveries to be effected at the Closing
are complete. At the Closing:
(a) Seller shall execute and
deliver to Buyer the following documents, in all cases in form
reasonably satisfactory to Buyer and Buyer’s counsel:
(i) a Bill of Sale and
Assignment Agreement with respect to the Assets and such other
assignments, bills of sale, endorsements, and other instruments of
sale, conveyance, transfer and assignment, and other customary
instruments and documents and certificates sufficient to vest in
Castle USA good, valid and marketable title to the Assets;
(ii) a certified copy of the
resolutions of the Members authorizing the transaction contemplated
hereby;
(iii) a good standing
certificate of Seller dated not more than fifteen (15) days
prior to the Closing Date;
(iv) a Security Agreement;
and
(v) written evidence of the
termination of all employment agreements between Seller and any
Business Employee with no liability for such termination accruing
toward or being assumed by the Buyer.
(b) Buyer or Castle USA, as
applicable, shall execute and deliver to Seller the following
documents, in all cases in form reasonably satisfactory to Seller
and Seller’s counsel:
(i) an Assumption Agreement
providing for the assumption by Castle USA of the Assumed
Liabilities;
(ii) a certified copy of the
resolutions of the Buyer’s Board of Directors authorizing the
transactions contemplated hereby;
(iii) a good standing
certificate of Buyer dated not more than fifteen (15) days
prior to the Closing Date; and
(iv) the Note and Security
Agreement.
(c) Buyer shall deliver to
Seller a copy of an instruction letter to Continental Stock
Transfer & Trust Company (“ Continental ”),
the transfer agent for Buyer’s common stock (the “
Buyer Common Stock ”), duly executed by an officer of
Buyer directing Continental to promptly issue certificates
representing the Stock Consideration (bearing a legend that such
securities have not been registered under the Securities Act or any
state securities laws) and shall deliver such letter to
Continental;
(d) Each of Buyer and Seller
shall execute and deliver documents acknowledging receipt from the
other, respectively, of the Assets and the Purchase Price;
(e) Each of Buyer and Richard
Betts shall execute and deliver an employment agreement in
substantially the form of Exhibit B hereto;
(f) Each of Buyer, Castle USA
and Seller will execute any required Governmental Agency
notifications and filings (including filings with any federal,
state, local, municipal, provincial, foreign and other Governmental
Authority regulating the alcoholic beverage business); and
(g) Buyer will appoint Dennis
Scholl as a member of the Board of Directors of Buyer until the
earlier to occur of his resignation or until his successor shall
have been elected and/or appointed, and Dennis Scholl will accept
such appointment.
ARTICLE IV
REPRESENTATIONS AND
WARRANTIES OF SELLER AND MEMBERS
Seller and each of the Members,
jointly and severally, represent and warrant to Buyer as
follows:
Section 4.1 Organization,
Power, Standing and Qualification . Seller is a limited
liability company duly incorporated and validly existing under the
laws of Florida, and has all requisite corporate power and
authority to own, lease, use and operate the portion of the Assets
owned by it and to carry on the Business as currently conducted by
it. With respect to the Business, Seller is duly qualified and in
good standing to do business as a foreign corporation in each
jurisdiction in which the ownership of the portion of the Assets
owned by it and the conduct of the Business by it makes such
qualification or good standing necessary, except for any failure to
be so qualified or in good standing that would not, individually or
in the aggregate, have a Material Adverse Effect. Seller has all
requisite corporate power and authority to enter into and perform
this Agreement and each Ancillary Agreement to which it is a party.
Each Member has legal capacity to execute and deliver this
Agreement and the other Ancillary Agreements to which Seller and/or
a Member is a party, and to perform his obligations hereunder and
thereunder. The Members constitute the sole members of Seller and
each owns 50% of the outstanding membership interests of
Seller.
Section 4.2 Due
Authorization . The execution, delivery and performance of this
Agreement and each Ancillary Agreement, and the transactions
contemplated hereby and thereby, where applicable, have been duly
and validly authorized by all necessary corporate action of Seller
and the Members. This Agreement has been duly and validly executed
and delivered by Seller and the Members and is a valid and binding
obligation of each of Seller and each Member enforceable against
each of Seller and the Members in accordance with its terms, and
each Ancillary Agreement to which Seller or each Member is a party
will, upon the Closing, be duly and validly executed and delivered
by Seller or each Member and be a valid and binding obligation of
Seller or each Member enforceable against Seller or each Member, as
applicable, in accordance with its terms, except, in respect of
this Agreement and each such Ancillary Agreement, as such
enforcement may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium and other laws of general application
affecting the rights and remedies of creditors, and
(ii) general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law.
Section 4.3 Compliance with
Other Instruments and Laws . Except as set forth on
Schedule 4.3 , the execution and delivery of this
Agreement does not, and the performance of this Agreement and the
consummation of the transactions contemplated hereby will not,
(i) violate or conflict with the provisions of the articles of
organization or operating agreement of Seller, (ii) result in
the imposition of any Lien under, cause the acceleration of any
obligation under, result in a material breach of, constitute a
default under or otherwise violate or conflict with the terms,
conditions or provisions of, any note, indenture, trust, pledge,
mortgage, lease, guaranty or other agreement or instrument to which
Seller is a party or by which Seller is bound or which is otherwise
included in the Assets, (iii) result in a breach or violation
by Seller of any of the terms, conditions or provisions of any Law
or Order or (iv) require any consent or approval of, filing
with or notice to, any Governmental Authority (including any
federal, state, local, municipal, provincial, foreign and other
Governmental Authority regulating the alcoholic beverage
business).
Section 4.4 Assets .
(a) Tangible Property .
Schedule 4.4(A) sets forth a true, correct and complete
list, as of the date of this Agreement, of each material item of
Tangible Property owned by Seller and used with respect to the
conduct of the Business. None of the Tangible Property included in
the Assets is subject to any Lien other than a Permitted Lien as
set forth on Schedule 4.4(A) . Except as set forth on
Schedule 4.4(A) , no contract or other agreement to
which Seller or any Member is a party or by which any of them or
their assets, rights or properties is bound exists that would
materially impede or prevent Seller from selling, assigning,
transferring, conveying and delivering to Buyer all of
Seller’s right, title and interest in and to the Tangible
Property of the Business.
(b) Intellectual
Property .
(i)
Schedule 4.4(B)(I) sets forth a true, correct and
complete list, as of the date of this Agreement, of all
Intellectual Property owned, registered or used by Seller in or
with respect to the conduct of the Business (whether or not used or
registered before any Governmental Authority). The Intellectual
Property included in the Assets is all of the Intellectual Property
necessary to conduct the Business in all material respects as
currently conducted. Except as set forth on
Schedule 4.4(B)(I) , Seller possesses or otherwise owns
all right, title and interest in and to the Intellectual Property
set forth on Schedule 4.4(B)(I) or otherwise included
in the Assets, free of all Liens (other than Permitted Liens), and
owns such Intellectual Property outright. All material
registrations and applications in relation to such Intellectual
Property have been registered, filed and/or issued in or by the
appropriate registry for the benefit of Seller, are unexpired and
subsisting, and have not been abandoned or cancelled. None of the
Intellectual Property set forth on Schedule 4.4(B)(I)
or otherwise included in the Assets (1) infringes upon,
misappropriates or violates (and within the last five years, has
not infringed, misappropriated or violated) the rights of any other
Person, (2) is infringed upon, misappropriated, misused, or
violated (and within the last five years has not been infringed
upon, misused or violated) by any other Person, (3) is the
subject of a written notice or a pending or, to Seller’s
knowledge, threatened claim and there has been no such pending, or
to Seller’s knowledge, threatened claim in the last five
years either (x) asserting any infringement on or by any other
Person or (y) challenging the legality, validity,
enforceability, use or ownership of the Intellectual Property or
(4) is subject to any outstanding injunction, judgment, order,
decree or ruling that would challenge the ownership or use thereof.
No claim is pending or, to Seller’s knowledge, threatened to
the effect that the present or past operations of Seller or the
Business infringe or conflict in any material respect with the
rights of others in respect of any Intellectual Property or any
intellectual property rights of others. Except as set forth on
Schedule 4.4(B)(I) , no contract or other agreement to
which Seller is a party or by which any of its assets, rights or
properties is bound exists which would impede or prevent Seller
from selling, assigning, transferring, conveying and delivering to
Buyer, the entire right, title and interest in and to any
Intellectual Property that, individually or in the aggregate, is
material to the Business. Immediately after the Closing, Buyer will
own all of the Intellectual Property included in the Assets free
and clear of all Liens (other than Permitted Liens and Liens
created, or suffered or permitted to exist after the Closing by
Buyer), and Buyer will own or have the right to use in the
operation of the Business all of the Intellectual Property
necessary to run the Business, on terms and conditions
substantially the same as those in effect immediately prior to the
Closing.
(ii) The Intellectual Property
includes complete and accurate written instructions (including
those currently in use by Seller or the Business) of all formulae
and processes for each of the wines produced or sold by Seller or
the Business or in development for production or sale by Seller or
the Business (such products, collectively, “ Products
”), true and complete copies of which instructions have been
delivered to the Buyer. Such instructions shall include the lists
and specifications of all ingredients, the name and address of each
manufacturer and each supplier (if different) of such ingredients,
country of origin, grape varietal composition, source origin of
grapes and crushed grapes and each vendor from whom Seller
purchases (or, during the past five years, has purchased) each
ingredient, a description of any special requirements for storage
of ingredients, and a description of
