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Actionable news in FARM: Farmer Brothers Company,

Entry into a Material Definitive

On November 16, 2015, Farmer Bros. Co., a Delaware corporation (the Company), entered into an Asset Purchase Agreement (the Asset Purchase Agreement) with Harris Spice Company Inc., a California corporation (Buyer), pursuant to which the Company has agreed to sell to Buyer, and Buyer has agreed to purchase from the Company, certain assets associated with the Companys manufacture, processing and distribution of raw, processed and blended spices and certain other culinary products (collectively, the Spice Products Division). The following description of the Asset Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the Asset Purchase Agreement, a copy of which is attached hereto as Exhibit 2.1 and incorporated herein by reference.

Pursuant to the Asset Purchase Agreement, Buyer will acquire substantially all of the Companys personal property used exclusively in connection with the Spice Products Division, including certain equipment; trademarks, tradenames and other intellectual property assets; contract rights under sales and purchase orders and certain other agreements; and the list of the Companys customers for the Spice Products Division, other than customers that purchased spice and culinary products through the Companys direct store delivery network or DSD Customers. The purchase price for the acquired assets consists of $6.0 million in cash payable at closing, an earnout amount of up to $5.0 million, and the assumption by Buyer of certain liabilities of the Spice Products Division. The earnout amount will be determined and paid in cash over the three (3) years following the closing date based upon a percentage of certain annual institutional spice sales, subject to an aggregate earnout cap of $5.0 million over the three-year period.

The Companys and Buyers obligations to close the asset purchase are subject to the satisfaction or waiver of certain customary closing conditions, including consent by the lender under the Companys revolving credit facility. The Company and/or Buyer have the right to terminate the Asset Purchase Agreement under various circumstances, including, among other things, if the asset purchase has not been consummated by May 16, 2016.

In connection with and as a condition to the closing of the asset purchase, the Company and Buyer will enter into certain other agreements, including a transitional co-packaging supply agreement pursuant to which the Company will provide Buyer with certain transition services for a limited time period following the closing of the asset sale, and an exclusive supply agreement pursuant to which spice and culinary products that were previously manufactured by the Spice Products Division after the closing of the asset sale, on negotiated pricing terms. After the closing of the asset sale, the Company will continue to sell certain spice and other culinary products purchased from Buyer under that supply agreement to the Companys DSD Customers.

The Asset Purchase Agreement contains standard and customary representations, warranties and covenants. The Asset Purchase Agreement also includes certain post-closing covenants relating to, among other...


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