EXHIBIT 10.20
PERRY'S MAJESTIC
May 4, 1998
Village Cannery of Vermont, Inc.
000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxx, Xxxxxxx 00000
Att: Xxxxxx Xxxxxxx
Dear Xx. Xxxxxxx:
Xxxxx'x Majestic Beer, Inc., a Delaware corporation (the "'Buyer"), is pleased
to make this proposal whereby Buyer will acquire substantially all of the assets
and the business (collectively, the "Assets") of Village Cannery of Vermont,
Inc., a Vermont corporation ("Village Cannery"), upon terms and conditions set
forth below.
1. Purchase Price. Seller agrees to sell and convey to Buyer the Assets of
Village Cannery (the "transaction"). In consideration for the Assets, Buyer
agrees that at closing on the transaction (the "Closing"), Buyer shall pay to
Village Cannery the sum of $2,000,000 in cash.
Additionally, as and for further consideration for the Assets, Buyer will
enter into written employment agreements with Xxxx Xxxxxxx and Xxxxxx Xxxxxxx
(the "Employment Agreements"). Such Employment Agreements shall provide for
annual compensation to Mr. and Xxx. Xxxxxxx in the aggregate amount of (to be
allocated at their direction) of $100,000 (the "Base Salary'). Each employment
agreement shall (i) be for a term of five (5) years, with the Base Salary
adjusted annually to account for cost of living increase, if any; (ii) provide
for medical insurance coverage for Mr. and Xxx. Xxxxxxx, (iii) grant to Mr. and
Xxx. Xxxxxxx options to purchase (a) 200,000 shares of Common Stock (the "Common
Stock") of Buyer each year during the term of the Employment Agreement and (b)
200,000 shares of Common Stock of Buyer upon execution of the letter of intent,
all at an exercise price based upon fair market value of the Common Shares; and
(iv) appoint Xxxx Xxxxxxx and Xxxxxx Xxxxxxx to the Board of Directors of Buyer.
Mr. and Xxx. Xxxxxxx shall have the right to designate a third member of the
Board of Directors unless one of the present members of the Board of Directors
resigns prior to closing.
The Buyer and Village Cannery hereby agree that Buyer has the right to
convert this Transaction into a Stock Purchase Agreement, on terms and
conditions acceptable to all parties, at any time prior to the execution of a
definitive agreement which contains the provisions outlined above in Section 1.
2. Exclusivity. The acceptance of this letter by Village Cannery will
constitute Village Cannery's grant to the Buyer of an exclusive option for the
period commencing on the date hereof through and ending September 1, 1998 (the
"Option Period") to consummate the Transaction in accordance with the terms of
the Definitive Agreement (as hereinafter defined) and your agreement that during
the Option Period neither Village Cannery nor any of its officers, directors,
representatives or affiliates shall directly or indirectly solicit, initiate,
engage in or continue any discussions with respect to the possible sale or other
disposition of all or part of Village Cannery's business, assets or capital
stock including the Assets, whether by sale, merger or other business
combination, or enter into any other transaction which is inconsistent with the
transaction contemplated hereby. In consideration for the Option, the Buyer
shall pay to Seller, upon execution of this Agreement, the
sum of One Thousand Dollars ($1,000) which sum shall be applied against the the
purchase price at Closing. The Buyer and Village Cannery agree that upon
execution of this Agreement they shall negotiate in good faith toward the
execution of the Definitive Agreement. In the event the Buyer determines that it
will not proceed with the transaction, it shall promptly notify Village Cannery
in writing whereupon Village Cannery's obligations pursuant to this paragraph 2
shall terminate with no further force and effect; provided however, that such a
determination was a result of a breach of Village Cannery of its obligations
under this paragraph 2, then, in addition to any other remedies available to the
Buyer, Village Cannery shall be obligated to reimburse the Buyer for all costs
and expenses incurred by the Buyer in connection herewith; provided, however,
that in no event will Village Cannery be required to pay in excess of $10,000 in
the event of such breach by Village Cannery.
3. Investigation. From the date hereof, Village Cannery shall (i) permit
the Buyer and its accounting, legal and other representatives to conduct an
investigation and evaluation of Village Cannery, (ii) provide such assistance to
any one of the foregoing as is reasonably requested, and (ii) give access at
mutually agreeable times during business hours to all things related to Village
Cannery. Xxxx Xxxxxxx shall have the right to be present at all times Buyer
conducts suet, investigation and evaluation.
4. Principal Conditions. The parties hereby agree to commence negotiations
in good faith toward the execution and delivery of a definitive agreement (the
"Definitive Agreement"), subject to the satisfaction of the following conditions
precedent:
a. Further Investigation. The Buyer and its agents and representatives
shall have completed, and shall be satisfied with the results of, its continuing
due diligence review of Village Cannery;
b. Material Adverse Changes. The absence of any material adverse change in
the financial condition, assets, liabilities, business or prospects of Village
Cannery;
c. Definitive Agreement. The Definitive Agreement shall contain customary
representations, warranties, covenants, indemnities and conditions to the
Closing of the Transaction, including inter alia: (i) traditional
representations and warranties, which will survive the Closing, as to the
condition and value of the Assets; (ii) satisfactory compliance with applicable
laws; (iii) obtaining all necessary consents in order to consummate the
Transaction including landlord and other third party consents; (iv) non-compete
provisions; (v) obtaining required Vermont and Federal licenses and permits; and
(vi) the fulfillment of other conditions as the Buyer may reasonably request.
d. Financing. The Transaction is expressly contingent upon the ability of
the Buyer to secure financing of the $2,000,000 cash portion of the Purchase
Price on terms and conditions acceptable to Buyer.
e. Required Approvals. Seller and Buyer shall have received all such
approvals of their respective directors and stockholders as may be required
pursuant to the laws of their respective states of incorporation and any
regulatory authorities.
5. Press Release. Except as otherwise required under applicable federal
securities law, Village Cannery and the Buyer shall agree on the content and
timing of all public announcements relating to the Transaction to the financial
community, governmental agencies and the public generally.
6. Confidential Business Information. Buyer agrees end acknowledges that
in connection with its review of Village Cannery's records and financial
information as called for hereunder it shall have access to confidential
business information, the use or disclosure of which could result in serious
damage or harm to Village Cannery. As a consequence and as a material inducement
to Village Cannery to enter into this letter of intent, Buyer agrees that it
shall not at any time furnish, publish or disclose to any person or entity, or
make use in any way, any trade secrets or other business or financial
information, data or other expertise acquired through review of Village
Cannery's financial or business information as called for hereunder or which
relates to Village Cannery's business, products, processes, methods, recipes,
formulas, sales techniques, routes, customers, equipment or services including,
but not limited to, customer lists, route lists and pricing and profit margin
information. Buyer acknowledges and agrees that all of the information described
above is the exclusive property of and belongs absolutely to Village Cannery,
and Buyer hereby acknowledges and agrees that all right, title and interest in
and to said information is, and shall remain at all times exclusively the
property by Village Cannery. Buyer agrees to keep all such information strictly
secret and confidential at all times and not to make any use of such information
except as may be expressly authorized by Village Cannery. Upon termination of
this letter of intent without execution of a Definitive Agreement as
contemplated hereunder, Buyer shall, without further demand by Village Cannery,
immediately and unconditionally return all copies or originals of all records,
documents, information and other property of or regarding Village Cannery,
including computer records, magnetic and other electronic media, to Village
Cannery.
This paragraph 6 shall survive the termination of this letter of intent.
Upon breach of any of the covenants contained herein, Village Cannery may have
resort to all rights and remedies available to it at law or in equity,
including, but not limited to, money damages, recovery of profits derived from
unauthorized use of disclosure of trade secrets or other confidential business
information and injunctive relief restraining disclosure or use of any such
information by Buyer or any third party to whom disclosure is made, it being
expressly acknowledged by Buyer that money damages alone may not be an adequate
remedy for breach of this Covenant.
7. Legal Effect: Acquisition of the Buyer's Securities. Your acceptance of
this letter will constitute your representation to the Buyer that neither the
Buyer, its agents, employees, affiliates or controlling persons will incur any
liability in connection with the consummation of the Transaction to any third
party with whom you or your directors, employees, agents or representatives have
had discussions regarding the disposition of the assets, stock or business of
Village Cannery, including without any limitation to any broker, finder or
investment banker. Village Cannery and its affiliates and controlling persons
agree that for a period of three (3) years following the date hereof will not,
without the prior written consent of the Buyer (i) acquire, offer to acquire, or
agree to acquire, directly or indirectly, by purchase or otherwise, any voting
securities of the Buyer, or any successor thereto (ii) make or in any way
participate, directly or indirectly in any "solicitation" or "proxies" to vote
(as such terms are defined and used in the rules, regulations and releases of
the Securities and Exchange Commission), (iii) make any public announcement or
offer with respect to, or submit proposal for, any transaction involving the
Buyer or its securities or assets, or (iv) in connection with the foregoing,
seek to advise or influence any person or entity or form or join or in any way
participate in a "group" as defined in Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended.
It is expressly understood that this Agreement is a non-binding letter of
intent and that no obligation of any nature whatsoever is intended to be
created, except as set forth in paragraphs 2,5 and 7 hereof. This letter may be
signed in counterparts. If you are in agreement with the terms of this letter,
please execute the enclosed copy of this letter in the space provided below and
return it to the undersigned by no later than May 11, 1998.
The Buyer looks forward to your response to this offer and to working with
you on a mutually beneficial and successful transaction.
Very truly yours,
PERRY'S MAJESTIC BEER, INC.
By:/s/ Xxxxxx X. Xxxxxx
-----------------------
Xxxxxx X. Xxxxxx, President
Agreed to and Accepted as of
the Date First Written Above:
VILLAGE CANNERY OF VERMONT, INC.
By: /s/ Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxx, President
