Exhibit 3(i)
EXECUTION COPY
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PURCHASE AGREEMENT
by and among
XXXXXX INTERNATIONAL BREWING GROUP, LLC
Buyer
and
XXXXXX X. XXXXX, XXXXXXXXX X. XXXXX, XXXXXX XXXXXXXXXX,
XXXXXXXX X. XXXXX
and VISHNAMPET S. JAYANTHIMATH
Sellers
Dated as of August 24, 1999
TABLE OF CONTENTS
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Page
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PURCHASE AGREEMENT ......................................................1
RECITALS ................................................................1
AGREEMENT ...............................................................1
ARTICLE I DEFINITIONS ...................................................1
1.1 Defined Terms ..........................................1
ARTICLE II PURCHASE AND SALE OF THE SELLER UNITS ........................4
2.1 Transfer of the Seller Units ...........................4
2.2 FCNB Payment ...........................................4
2.3 Purchase Price .........................................5
2.4 Closing ................................................5
2.5 Closing Deliveries by Sellers...........................7
2.6 Closing Deliveries by Buyer.............................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS....................7
3.1 Ownership of Seller Units...............................7
3.2 Ownership of Blue II....................................7
3.3 Authorization...........................................7
3.4 Organization and Standing...............................7
3.5 No Conflict; Required Filings and Consents .............8
3.6 Consents and Approvals .................................8
3.7 Litigation .............................................8
3.8 Financial Statements ...................................8
3.9 Taxes ..................................................8
3.10 Leased Premises ........................................9
3.11 Zoning ................................................10
3.12 Environmental Issues ..................................10
3.13 Contracts .............................................10
3.14 Insurance .............................................11
3.15 Related Party Transactions ............................11
3.16 Compliance with Laws ..................................11
3.17 No Reliance ...........................................11
3.18 Broker's Fees .........................................11
3.19 Full Disclosure .......................................12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER .....................12
4.1 Authorization .........................................12
4.2 Consents and Approvals ................................12
4.3 No Conflict or Violation ..............................12
4.4 Litigation ............................................12
4.5 Acquisition for Investment ............................12
4.6 Broker's Fees..........................................12
ARTICLE V COVENANTS AND AGREEMENTS .....................................13
5.1 Further Assurances ....................................13
5.2 Refinancing of Blue II's Debt Obligations .............13
5.3 Release of Claims .....................................13
5.4 Limited Release of Sellers ............................13
ARTICLE VI INDEMNIFICATION ............................................14
6.1 Survival Periods ......................................14
6.2 Indemnification .......................................14
6.3 Claims ................................................14
ARTICLE VII MISCELLANEOUS ..............................................15
7.1 Successors and Assigns ................................15
7.2 Notices ...............................................15
7.3 Choice of Law .........................................16
7.4 Consent To Jurisdiction And Service Of Process ........16
7.5 Entire Agreement; Amendments and Waivers ..............16
7.6 Counterparts ..........................................16
7.7 Invalidity ............................................16
7.8 Headings ..............................................16
7.9 Expenses ..............................................17
7.10 No Third Party Beneficiaries ..........................17
Schedules
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3.5 No Conflicts
3.8 Financial Statements
3.13 Contracts
3.14 Insurance
3.16 Compliance with Laws
3.19 Full Disclosure
PURCHASE AGREEMENT
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THIS PURCHASE AGREEMENT, dated as of August 24, 1999 (this "Agreement")
is by and among XXXXXX X. XXXXX ("Xxxxx"), XXXXXXXXX X. XXXXX ("XX Xxxxx"),
XXXXXX XXXXXXXXXX ("Xxxxxxxxxx"), XXXXXXXX X. XXXXX ("Xxxxx") and XXXXXXXXXX X.
JAYANTHIMATH ("Jayanthimath") (Scott, CD Scott, Schuerholz, Foris and
Jayanthimath are, individually, a "Seller" and, collectively, the "Sellers") and
XXXXXX INTERNATIONAL BREWING GROUP, LLC, an Ohio limited liability company
("Buyer").
RECITALS
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A. The Sellers are parties to the Operating Agreement of Blue II, dated
as of December 20, 1995 (the "Operating Agreement"). Pursuant to such Operating
Agreement, the Sellers own 100% of the outstanding membership interests of Blue
II.
B. The Sellers desire to sell, assign and transfer to Buyer all of the
Sellers' right, title and interest in and to their membership interests in Blue
II (the "Membership Interests") and any and all other rights and interests in
Blue II (such Membership Interests, rights and interests are, collectively, the
"Seller Units"), and Buyer desires to purchase from the Sellers the Seller
Units, subject to and in accordance with the terms of this Agreement.
C. The obligations (other than Section 2.2) of the Buyer and Sellers
hereunder are conditioned on consummation of Buyer's investment of up to $2.0
million in FBC (the "Investment Closing").
AGREEMENT
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NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements contained in this Agreement and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and subject to the terms and conditions set forth below, Buyer and
the Sellers hereby agree as follows:
ARTICLE I
DEFINITIONS
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1.1 Defined Terms. For purposes of this Agreement the following terms
have the meanings (such meanings to be equally applicable to both singular and
plural forms of the defined terms) set forth below:
"Actions" means any action, suit, or legal, administrative or arbitral
proceeding before any Governmental Authority.
"Additional Loan Documents" has the meaning set forth in Section
2.4(e).
"Assignment" has the meaning set forth in Section 2.4(a).
"Agreement" has the meaning set forth in the preamble to this
Agreement.
"Blue II" means Blue II, LLC, a Maryland limited liability company.
"Buyer" has the meaning set forth in the preamble to this Agreement.
"XX Xxxxx" has the meaning set forth in the preamble to this Agreement.
"Claims" means any and all claims, Actions, suits, liabilities, costs,
demands, assessments, accounts, causes of action, rights of levy, execution or
recission, remedies, judgments, obligations, damages, expenses, interest,
penalties and charges of every kind and nature whatsoever, whether in law or in
equity, whether known or unknown, foreseen or unforeseen, matured or unmatured,
absolute or contingent, determined or determinable.
"Closing" has the meaning set forth in Section 2.3.
"Closing Date" has the meaning set forth in Section 2.3.
"Contracts" has the meaning set forth in Section 3.13.
"Cross Receipt" has the meaning set forth in Section 2.4(b).
"CTIC" has the meaning set forth in Section 2.4(g).
"Damages" has the meaning set forth in Section 6.2.
"Environmental Damages" means any and all Claims which are incurred at
any time as a result of the existence (a) at or prior to Closing of Hazardous
Materials upon, about or beneath the Leased Premises or migrating or threatening
to migrate to or from the Leased Premises, or (b) of a violation of
Environmental Requirements pertaining to the Leased Premises, regardless of
whether the existence of such Hazardous Materials or the violation of
Environmental Requirements arose prior to the present ownership or operation of
the Leased Premises.
"Environmental Requirements" means all applicable Laws, Permits and
similar items of any Governmental Authority relating to the protection of human
health or the environment, including, without limitation, (a) all requirements
pertaining to reporting, licensing, permitting, investigation, and remediation
of emissions, discharges, releases, or threatened releases of Hazardous
Materials; (b) all requirements pertaining to the protection of the health and
safety of employees or the public; and (c) all other limitations, restrictions,
conditions, standards, prohibitions, obligations, schedules and timetables
contained therein or in any notice or demand letter issued, entered, promulgated
or approved thereunder.
"FBC" means Frederick Brewing Co., a Maryland corporation.
"FCNB" has the meaning set forth in Section 2.4(e).
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"Foris" has the meaning set forth in the preamble to this Agreement.
"Governmental Authority" means any government or political subdivision,
whether federal, state, local or foreign, or any agency or instrumentality of
any such government or political subdivision, or any federal, state, local or
foreign court or arbitrator.
"Hazardous Materials" means any substance: (a) the presence of which
requires investigation or remediation under any Environmental Requirement; (b)
which is or has been identified as a potential hazardous waste, hazardous
substance, pollutant or contaminant under any Environmental Requirement; or (c)
which is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic, reactive, or otherwise hazardous and has been
identified as regulated by any Governmental Authority.
"Indemnified Party" has the meaning set forth in Section 6.2.
"Indemnifying Party" has the meaning set forth in Section 6.2.
"Investment Closing" has the meaning set forth in recitals to this
Agreement.
"Jayanthimath" has the meaning set forth in the preamble to this
Agreement.
"knowledge" means the actual knowledge of such Person.
"Laws" means any law, statute, code, ordinance, regulation or legally
enforceable rule of any Governmental Authority.
"Lease Agreement" means the Lease Agreement and Option to Purchase,
dated July 17, 1996, by and between Blue II and FBC.
"Leased Premises" means the land and building where FBC's brewery is
located, as more particularly described in the Lease Agreement.
"Liens" means any mortgage, lien, Option, pledge, adverse claim,
interest, charge or other encumbrance.
"Loan and Financing Agreement" has the meaning set forth in Section
2.4(e).
"Material Adverse Effect" means, with respect to Blue II, a material
adverse effect on the business, assets (including, without limitation, the
Leased Premises), liabilities or financial condition of Blue II, taken as a
whole.
"MEDCO" has the meaning set forth in Section 2.5(e).
"Membership Interest" has the meaning set forth in the recitals to this
Agreement.
"MIDFA" has the meaning set forth in Section 2.4(e).
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"Operating Agreement" has the meaning set forth in the recitals to this
Agreement.
"Option" means any option, warrant, call, convertible or exchangeable
security, subscription, preemptive right or voting trust or agreement, any
agreement restricting sale or transfer or other agreement or right of similar
nature.
"Orders" means any order, judgment, ruling, injunction, assessment,
award, decree or writ of any Governmental Authority.
"Permits" means any licenses, permits, approvals, variances,
registrations, certificates, including, without limitation, certificates of
occupancy and other evidence of authority.
"Person" means any natural person and any corporation, firm,
partnership, trust, estate, limited liability company or any other entity.
"Phase I Report" means the Phase I Environmental Site Assessment, dated
April 19, 1996, prepared by Compliance Consulting Group, Inc., Project Number
0396-001.100.
"Policy" has the meaning set forth in Section 2.4(g).
"Purchase Price" has the meaning set forth in Section 2.2.
"Representatives" means, with respect to a party, the party's present
and former employees, shareholders, partners, agents, attorneys, officers,
directors, representatives or Affiliates and the present and former employees,
shareholders, partners, agents, attorneys, officers, directors or
representatives of any such Affiliates.
"Schuerholz" has the meaning set forth in the preamble to this
Agreement.
"Xxxxx" has the meaning set forth in the preamble to this Agreement.
"Seller" and "Sellers" have the meaning set forth in the preamble to
this Agreement.
"Seller Units" has the meaning set forth in the recitals to this
Agreement.
"Transaction" has the meaning set forth in Section 2.1.
"Warrants" has the meaning set forth in Section 2.2.
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ARTICLE II
PURCHASE AND SALE OF THE SELLER UNITS
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2.1 Transfer of the Seller Units. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, (a) each Seller shall
sell, assign and transfer the number of Seller Units set forth opposite his name
on Exhibit A to Buyer, free and clear of all Liens, (b) the Sellers shall
deliver to Buyer the Assignment evidencing the sale, assignment and transfer of
their respective Seller Units, (d) Buyer shall purchase the Seller Units free
and clear of any and all Liens and (e) Buyer shall pay and deliver to Seller the
Purchase Price as provided in Section 2.2 below (the "Transaction").
2.2 FCNB Payment. On the date of this Agreement, Buyer shall pay to
FCNB Bank ("FCNB") an amount equal to $60,000 to be credited by FCNB in respect
of the delinquent mortgage payments due under the Loan and Financing Agreement
(as defined below) on June 30, 1999 and July 31, 1999 (the "FCNB Payment").
2.3 Purchase Price. In full consideration for the Seller Units and the
release set forth in Section 5.3 hereof, at the Closing:
(a) Buyer shall pay on behalf of each Seller, by wire transfer
of immediately available funds to the Sellers' broker account designated by the
Sellers, an amount equal to $250,000 in the aggregate (exclusive of the FCNB
Payment); and
(b) Buyer shall issue to the Sellers warrants to purchase an
aggregate of 132,000 shares of common stock of FBC at price per share of $1.00,
and such warrants will be in the form substantially set forth on Exhibit B (the
"Warrants") and will not be subject to restrictions on resale other than those
provided under federal and state securities Laws (Sections 2.2 and 2.3(a)-(b)
are, collectively, the "Purchase Price").
2.4 Closing. The closing with respect to the Transaction (the
"Closing") will be held at the offices of Xxxxx, Day, Xxxxxx & Xxxxx, 000
Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000-0000 on August 24, 1999 (the "Closing
Date") simultaneously with the consummation of the Investment Closing. If the
Investment Closing does not occur, Buyer shall have no obligation or liability
to the Sellers under this Agreement except with respect to the FCNB Payment. If
the Investment Closing occurs, the Sellers shall be obligated to consummate; the
transactions contemplated by this Agreement simultaneously with the Investment
Closing provided, however, that the period between the date hereof and the date
of the consummation of the Investment Closing shall not exceed thirty days.
After the date of this Agreement until the Closing or the receipt of written
notice from the Buyer that the Investment Closing shall not occur, none of the
Sellers shall, directly or indirectly, (i) initiate, discuss or negotiate any
sale or merger of Blue II or sale or other transaction involving the Leased
Premises or entertain any inquiries concerning the foregoing or (ii) provide any
information relating to Blue II or any aspects of its business or the Leased
Premises to any Person, with the exception of information necessary to comply
with the requirements of any Governmental Authority.
2.5 Closing Deliveries by Sellers. At the Closing, the Sellers shall
deliver to Buyer:
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(a) An instrument of assignment, transfer and conveyance
substantially in the form set forth on Exhibit C (the "Assignment"), executed by
each Seller, evidencing the assignment, transfer and conveyance by each Seller
of his respective Seller Units to Buyer;
(b) A cross receipt substantially in the form set forth on
Exhibit D hereto (the "Cross Receipt"), executed by each Seller, evidencing
receipt by the Sellers of the Purchase Price;
(c) Resignation of Xxxxx as Managing Member of Blue II,
executed by Xxxxx;
(d) Resignation of each other Seller as a manager and/or
officer of Blue II, to the extent applicable;
(e) Evidence from FCNB and the Maryland Industrial Development
Financing Authority ("MIDFA") in form satisfactory to the Buyer, in its sole
discretion, (i) consenting to the change in control and ownership of Blue II
contemplated by this Agreement, (ii) certifying that such change in control and
ownership (x) is not a default under Section 10.1 of the Loan and Financing
Agreement by and among the Maryland Economic Development Corporation ("MEDCO"),
Blue II, FBC and FCNB, as successor to Signet Bank, dated July 19, 1996, as
amended (the "Loan and Financing Agreement"), (y) does not violate any other
provision of the Loan and Financing Agreement and (z) does not violate, or
constitute a default under, any other documentation entered into in connection
with the Loan and Financing Agreement (the "Additional Loan Documents") and
(iii) approving Buyer's proposed amendments and modifications to the Lease
Agreement.
(f) Evidence that the Sellers have terminated or caused Blue
II to terminate the Petition-For Warrant of Restitution filed on behalf of Blue
II with the District Court of Maryland for Xxxxxxxxx County.
(g) The Sellers shall deliver to Chicago Title Insurance
Company ("CTIC") such affidavits and/or indemnities required by CTIC in order
for CTIC to issue such an ALTA Owner's Policy of Title Insurance and
endorsements insuring that Blue II is the owner of fee simple title to the
Leased Premises in the amount of $2,920,000 and showing such exceptions and
otherwise in such form as reasonably satisfactory to the Buyer, which Policy
shall include, without limitation, a non-imputation endorsement (the "Title
Policy").
(h) [intentionally omitted]
(i) A zoning letter from the County of Frederick, Maryland in
form reasonably satisfactory to the Buyer, certifying that the use of the Leased
Premises as a beer manufacturing and distribution facility and other related
uses complies with all applicable Laws.
(j) Articles of organization of Blue II, certified by the
Secretary of State of Maryland;
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(k) Good standing certificate of Blue II, or an equivalent
document, issued by the Secretary of State of Maryland; and
(1) A certificate of the Managing Member of Blue II certifying
as to (i) resolutions authorizing this Agreement and the Transaction and the
other transactions contemplated hereby, (ii) the Operating Agreement and (iii)
the incumbency of each officer of Blue II executing any documents in connection
with this Agreement.
2.6 Closing Deliveries by Buyer. At the Closing, Buyer shall deliver
to the Sellers:
(a) The Purchase Price, including the Convertible Note,
executed by Buyer; and
(b) The Cross Receipt, executed by Buyer, acknowledging
receipt by Buyer of the Assignment of the Sellers.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
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The Sellers, jointly and severally, represent and warrant to Buyer as
follows (except with respect to Sections 3.1 and 3.3 which each Seller
represents and warrants as to himself only):
3.1 Ownership of Seller Units. Each Seller is the sole and exclusive
owner of, and has valid title to, the Seller Units set forth opposite his name
on Exhibit A, and such Seller Units constitute all of the Seller's right, title
and interest (membership or otherwise) in and to Blue II. After giving effect to
the Transaction, (a) Buyer will acquire valid title to such Seller Units, free
and clear of all Liens, (b) each Seller will no longer be a member of, or own
any Membership Interests or other interests in, Blue II and (c) no other Person
(other than Buyer) will have any right to or interest in such Seller Units.
3.2 Ownership of Blue II. The Sellers own all of the outstanding
Membership Interests in Blue II. Upon the sale, transfer and conveyance of the
Seller Units hereunder, Buyer will own the entire right, title and interest in
and to Blue II. There are no agreements, commitments or contracts relating to
the issuance, sale or transfer of any equity securities or other securities of
Blue II.
3.3 Authorization. Each Seller has the legal capacity, power and
authority to enter into this Agreement and perform his obligations under this
Agreement and has received all necessary authorization to consummate the
Transaction and to perform Seller's obligations under this Agreement. This
Agreement has been duly executed and delivered by each Seller and is the legal,
valid and binding obligation of each Seller, enforceable against each Seller in
accordance with its terms.
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3.4 Organization and Standing. Blue II is duly organized, validly
existing and in good standing under the laws of the State of Maryland and is
duly qualified to do business in the State of Maryland.
3.5 No Conflict; Required Filings and Consents. Neither the execution
and delivery of this Agreement by the Sellers, nor the consummation by the
Sellers of the Transaction, nor compliance by the Sellers with any of the
provisions hereof, will (i) conflict with or result in a breach of any provision
of the Operating Agreement or any other organizational document of Blue II, (ii)
except as set forth in Schedule 3.5, constitute or result in the breach of any
term, condition or provision of, or constitute a default under, or give rise to
any right of termination, cancellation or acceleration with respect to, or
result in the creation or imposition of any Lien upon any property or assets of
Blue II pursuant to, any note, bond, mortgage, indenture, license, agreement,
lease or other instrument or obligation to which any of the Sellers or Blue II
is a party or by which any of Blue II's properties or assets may be subject, and
that would, in any such event, have a Material Adverse Effect on Blue II or a
material adverse effect on any material assets or property of, or used by, Blue
II, or (iii) violate any Order or Law applicable to Blue II or any of its
properties or assets.
3.6 Consents and Approvals. Except for the consent of MIDFA and FCNB,
required by the Loan and Financing Agreement, no approval or authorization of,
or declaration, filing or registration with, any Governmental Authority is
required to be made or obtained by the Sellers in connection with the execution,
delivery and performance of this Agreement and the consummation of the
Transaction.
3.7 Litigation. Except for any enforcement action relating to the Tap
Agreement, there are no Actions instituted or pending or, to the Sellers'
knowledge, threatened against, any of the Sellers or Blue II or against any
property, asset, interest or right of Blue II or any Seller. None of the Sellers
or Blue II are subject to any Order relating to Blue II or this performance of
their obligations under this Agreement.
3.8 [intentionally omitted]
3.9 Taxes.
(a) Blue II is a limited liability company but for federal and the
State of Maryland income tax purposes is treated as a partnership and no actions
have been taken by Blue II or any of the Sellers that is inconsistent with the
foregoing, nor with any such actions be taken in the future.
(b) All tax returns (federal, state and local) of Blue II have been
timely filed and all information contained in any such tax returns is true and
complete.
(c) Sellers will be responsible for any and all taxes of Blue II for
all transactions through the Closing Date and must promptly reimburse Buyer for
any such taxes upon demand except for any real property taxes on the real
property and improvements constituting the Leased Premises and any utility
related charges, including those under the Tap Agreement.
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(d) Sellers are all U.S. Persons and Blue II has not been required to
withhold any amounts pursuant to Section 1441 et. seq. of the Internal Revenue
Code of 1986, as amended.
3.10 Leased Premises. Blue II has good and marketable fee simple title
to the Leased Premises, free and clear of all Liens except those shown on the
Policy delivered to Buyer pursuant to Section 2.4(g) of this Agreement and the
Connection Fee Agreement and Mortgage, dated July 19, 1996, by and between Blue
II and The Board of County Commissioners of Xxxxxxxxx County, Maryland (the "Tap
Agreement"). With respect to the Leased Premises:
(a) No portion of the Leased Premises is subject to any
pending condemnation proceeding or, except for the enforcement of the Tap
Agreement, any other Action adverse to the Leased Premises and, to the knowledge
of the Sellers, there is no threatened condemnation proceeding or other Action
with respect to the Leased Premises;
(b) To the Sellers' knowledge, the business located on the
Leased Premises is supplied with utilities and other services necessary for the
operation of the business as presently conducted, and all of such services are
adequate to conduct the business currently operated on the Leased Premises;
(c) The Leased Premises are not located in either a special
service district or an area for which federal flood risk insurance is necessary;
(d) To the Sellers' knowledge, there is no water diffusion or
other intrusion into any buildings, structures or other improvements included in
the Leased Premises that would impair the value or use of the Leased Premises in
connection with the conduct of the business currently operated thereon;
(e) No notice of any increase in the assessed valuation of the
Leased Premises and, except for the enforcement of the Tap Agreement, no notice
of any contemplated special assessment has been received by the Sellers and, to
the knowledge of the Sellers, there is no threatened special assessment
pertaining to the Leased Premises;
(f) Except for the Tap Agreement, the Loan and Financing
Agreement and the Additional Loan Documents, there are no contracts or
agreements to which any of the Sellers or Blue II is a party or by which the
Leased Premises are bound, granting to any person or entity the right of use or
occupancy of any portion of the Leased Premises, except for the Lease Agreement,
and the Lease Agreement is in full force and effect and there are no defaults
thereunder or matters which, upon the passage of time or giving of notice, would
rise to the level of a default under the Lease Agreement;
(g) There is no person or entity (other than FBC) in
possession of the Leased Premises;
(h) Except as shown in the survey delivered pursuant to
Section 2.4(h) of this Agreement, the Leased Premises do not encroach upon the
property of others; and
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(i) Except for those listed in Schedule B, Item 2 of the Title
Policy, Blue II is not a member of any property association nor is the Leased
Premises subject to any restrictive covenants.
3.11 Zoning. As of the date hereof, the zoning of the Leased Premises
permits the presently existing improvements and the continuation of the business
currently operated on the Leased Premises as a conforming use. The existing use
of each tract of the Leased Premises is not dependent on the use or availability
of any other tract except for offsite easements for storm water management
facilities and utilities, or on the right to continue the operation of the
business currently operated thereon.
3.12 Environmental Issues.
(a) Since the date Blue II acquired the real property
constituting the Leased Premises and except to the extent set forth in writing
in the Phase I Report, neither the Sellers nor, to the Sellers' knowledge, any
other Person has engaged in or permitted any operations or activities upon, or
any use or occupancy of, the Leased Premises, or any portion thereof, resulting
in the storage, emission, release, discharge, dumping or disposal of any
Hazardous Materials on, under, in or about the Leased Premises, nor have any
Hazardous Materials migrated from the Leased Premises to, upon, about or beneath
the Leased Premises.
(b) To the Sellers' knowledge, except to the extent set forth
in writing in the Phase I Report, (i) there is not, nor has there been, applied,
placed, deposited, stored, disposed of or located on the Leased Premises any
asbestos, or lead paint, (ii) no underground improvements, including, without
limitation, treatment or storage tanks, pumps, sumps, or water, gas or oil xxxxx
are or have been located on the Leased Premises, (iii) there are no
polychlorinated biphenyls (PCBs) or transformers, capacitors, ballasts, or other
equipment containing PCBs constructed, placed, deposited, stored, disposed of or
located on the Leased Premises, (iv) neither the Sellers nor any prior owner or
occupant of the Leased Premises, has received any notice or other communication
concerning any alleged violation of Environmental Requirements, whether or not
corrected to the satisfaction of the appropriate Governmental Authority, or any
notice or other communication concerning alleged liability for Environmental
Damages in connection with the Leased Premises and (v) there exist no Claims
pending or, to the knowledge of the Sellers, threatened, relating to the
ownership, use, maintenance or operation of the Leased Premises by any Person,
or arising from the alleged violation of Hazardous Materials on the Leased
Premises or potential migration to the Leased Premises, and there are no
existing facts or conditions that could give rise to any such violation or
liabilities.
(c) To the Sellers' knowledge, no Lien has been filed, and no
circumstances or conditions exist that could result in the filing of a Lien,
against the Leased Premises under any Environmental Requirement.
3.13 Contracts. Except for the ownership and leasing of the Leased
Premises, Blue II has not engaged, directly or indirectly, in any business or
activity of any type or kind or entered into any agreement or arrangement with
any Person and is not bound by any obligation or undertaking except for the
Lease Agreement, the Loan and Financing Agreement, the Additional Loan Documents
and the Tap Agreement (the Lease Agreement, the Loan and Financing Agreement and
the Additional Loan Documents are, collectively, the "Contracts").
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Blue II has not incurred, directly or indirectly, any liabilities or obligations
except for those under the Contracts. Except as set forth on Schedule 3.13, each
of the Contracts is in full force and effect and is a legal, valid and binding
contract or agreement, and there is no default or breach (or any event that,
with the giving of notice or lapse of time or both, would result in a material
default or breach) by Blue II, or, to the Sellers' knowledge, any other party,
in the timely performance of any obligation to be performed or paid under the
Contracts or any other material provision of the Contracts, that, individually
or in the aggregate, would have a Material Adverse Effect on Blue II. Except as
set forth in Schedule 3.13, Blue II has not received from any party to any
Contract notice of cancellation, termination or failure to renew such Contract.
Blue II is not party to any agreement that restricts it from conducting its
business as presently conducted.
3.14 Insurance. Schedule 3.14 lists all policies of insurance covering
Blue II. Except as set forth in Schedule 3.14, (a) Blue II's policies of
insurance are valid and enforceable policies duly in force; (b) the amounts and
types of coverage under such policies of insurance are customary and reasonable
with respect to risks usually insured against by businesses with similar
operations or, in the case of property insurance, with similar properties in the
localities where such properties are located; (c) Blue II has not during the
last three fiscal years, been denied or had revoked or rescinded any policy of
insurance; (d) all policies are held by and for the benefit of Blue II; (e) all
insurance proceeds under such policies, if and when received, shall be the
property of Blue II; (f) all insurance premiums have been paid when due or
within any applicable grace period; (g) to the Sellers' knowledge, there has
occurred no insurable event or occurrence for which notice was not timely given
by Blue II to the appropriate insurer; and (h) to the Sellers' knowledge, Blue
II is in compliance with all material conditions of each insurance policy.
3.15 Related Party Transactions. No Person related to or controlled by
the Sellers other than Xxxxx, Xxxxx & Xxxxx Commercial Real Estate, Inc. ("KSV")
and Xxxxxxxx Xxxxx (a) has any direct or indirect interest (i) in, or is a
director, officer or employee of, any entity which is a client, customer,
supplier, lessor, lessee, debtor or creditor of Blue II, or (ii) in any
property, asset or right which is owned or used by Blue II in the conduct of its
business, or (b) is a party to any contract with Blue II.
3.16 Compliance with Laws. Except as set forth in Schedule 3.16, Blue
II as to itself and exclusive of the Leased Premises: (a) is in compliance with
all Laws and Orders applicable to its business or employees or members
conducting its business; and (b) has received no notification or communication
from any Governmental Authority (i) asserting that Blue II is not in compliance
with any Law or Order or (ii) threatening to revoke any Permit of any
Governmental Authority. To the Sellers' knowledge, except as set forth in
Schedule 3.16, Blue II with respect to the Leased Premises: (a) is in compliance
with all Laws and Orders applicable to its business or employees or members
conducting its business; and (b) has received no notification or communication
from any Governmental Authority (i) asserting that Blue II is not in compliance
with any Law or Order or (ii) threatening to revoke any Permit of any
Governmental Authority.
3.17 No Reliance. Each Seller has (a) served as a member of Blue II
through the date of this Agreement and has had access to information regarding
Blue II, its business and financial condition, (b) had an opportunity to ask
questions of, and obtain additional information from, Blue II regarding its
business, financial condition and prospects and
11
(c) had the opportunity to seek legal counsel regarding the Transaction and this
Agreement. The sale by each Seller of the Seller Units pursuant to this
Agreement is not done in reliance upon any representation made, or information
provided by, Buyer, Blue II, FBC or any of their respective Representatives,
except for the representations and warranties set forth in this Agreement.
3.18 Broker's Fees. Except for KSV, no person has acted directly or
indirectly as a broker, finder or financial advisor for the Sellers in
connection with the Transaction or this Agreement, and except for KSV, whose fee
shall be the sole responsibility of the Sellers, no person is entitled to any
fee or commission or like payment in connection with the Transaction or this
Agreement.
3.19 Full Disclosure. To the Sellers' knowledge, except as set forth on
Schedule 3.19, no representation or warranty made by Sellers in this Agreement
or in any schedule hereto contains any untrue statement of material fact or
omits to state a material fact necessary to make the statements herein or
therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants to Seller as follows:
4.1 Authorization. Buyer has the legal capacity, power and authority to
enter into this Agreement and perform its obligations under this Agreement, and
has taken all actions necessary to consummate the Transaction and to perform
Buyer's obligations under this Agreement. This Agreement has been duly executed
and delivered by Buyer and is the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms.
4.2 Consents and Approvals. No approval or authorization of, or
declaration, filing or registration with, any Governmental Authority is required
to be made or obtained by Buyer in connection with the execution, delivery and
performance of this Agreement and the consummation of the Transaction.
4.3 No Conflict or Violation. Neither the execution, delivery or
performance of this Agreement nor the consummation of the Transaction will
result in (a) a violation by Buyer of any Laws or Orders applicable to Buyer,
which violation would have a material adverse effect on Buyer or the ability of
Buyer to consummate the Transaction, or (b) a violation or conflict with any
provision of any contract or agreement to which Buyer is a party.
4.4 Litigation. There are no Actions instituted or pending against
Buyer that seek to prevent or prohibit the consummation of the Transaction.
Buyer is not subject to any Order.
4.5 Acquisition for Investment. Buyer is acquiring the Seller Units for
investment purposes for its own account and not with a view to a distribution or
resale of such Seller Units.
12
4.6 Broker's Fees. No person has acted directly or indirectly as a
broker, finder or financial advisor for Buyer in connection with the Transaction
or this Agreement, and no person is entitled to any fee or commission or like
payment in connection with the Transaction or this Agreement.
ARTICLE V
COVENANTS AND AGREEMENTS
------------------------
5.1 Further Assurances. Following the Closing, Buyer and Seller shall
perform such further deeds, acts, things and assurances as are necessary,
reasonable, advisable or appropriate to consummate the Transaction and otherwise
to carry out or facilitate the performance of the terms of this Agreement. If,
at any time after the Closing, any further action is necessary or desirable to
carry out this Agreement or the Transaction, Buyer and/or the Seller shall take
all such necessary action.
5.2 Refinancing of Blue II's Debt Obligations. Following the Closing,
Buyer agrees to use its reasonable commercial efforts to refinance the terms and
conditions of the Loan and Financing Agreement and the Additional Loan Documents
or to enter into new credit arrangements reasonably satisfactory to Buyer, in
its sole discretion, as soon as reasonably practicable. In connection therewith,
Buyer has received letters from FCNB and MIDFA consenting to the release of the
Sellers from the Guaranty, dated July 19, 1996, by the Sellers in favor of MEDCO
and FCNB, as successor to Signet Bank.
5.3 Release of Claims. Each Seller, on behalf of himself and his
dependents, successors, assigns, heirs, executors, administrators and
Representatives (the "Releasors"), hereby releases, remises, acquits and
discharges forever, irrevocably and unconditionally, Buyer, Blue II and FBC and
their respective Representatives, successors and assigns (the "Releasees"),
from, against and with respect to any and all Claims which any of the Releasors
has, ever had or may hereafter have against the Releasees, at any time on or
prior to the date of this Agreement or on account of or arising out of any
matter, cause or event occurring on or prior to the date of this Agreement;
provided, however, that nothing in this Section 5.3 will operate to release any
obligation of Buyer arising under this Agreement. Each Seller, on behalf of
himself and the other Releasors, hereby irrevocably covenants to refrain from,
directly or indirectly, asserting any Claim, or commencing, instituting or
causing to be commenced or instituted, any Action of any kind against any party
released under this Section 5.3 based on any matter purported to be released
under this Section 5.3. The provisions of this Section 5.3 are intended to be
for the benefit of, and will be enforceable by, each Releasee, his, her or its
heirs and his, her or its Representatives, successors and assigns.
5.4 Limited Release of Sellers. Buyer hereby releases Sellers from all
claims arising from or related to any failure to assert or waiver of any of its
rights to enforce the terms of the Lease Agreement and the Tap Agreement,
including but not limited to claims for delinquent rent and other damages
arising thereunder. Buyer hereby irrevocably covenants to refrain from, directly
or indirectly, asserting any claims, or commencing, instituting or causing to be
commenced or instituted any action of any kind against Sellers based on any
matter purported to be released under this Section 5.4. The provisions in this
Section 5.4 are intended
13
to be for the benefit of and will be enforceable by the Sellers, his, her or its
heirs, personal representatives, successors and assigns.
ARTICLE VI
INDEMNIFICATION
---------------
6.1 Survival Periods. The representations and warranties of the parties
contained in this Agreement will survive the Closing Date, but expire on the
first anniversary of the Closing Date, except (a) that the expiration date for
any claim relating to breach of the representations and warranties set forth in
Section 3.9 will be the expiration of the statute of limitations applicable to
such claims, and (b) there will be no expiration date for any claim relating to
a breach of representations and warranties set forth in Sections 3.1, 3.2, 3.3
and 3.18. The covenants and agreements of the parties hereto will survive the
Closing in accordance with their terms. From and after the Closing, the Sellers,
jointly and severally, hereby agree to indemnify and hold harmless Buyer and
Blue II, and Buyer hereby agrees to indemnify and hold harmless each Seller,
against certain liabilities, in accordance with the terms of this Article VI.
6.2 Indemnification. Subject to the other provisions of this Article
VI, from and after the Closing, a party providing indemnification pursuant to
this Article VI (an "Indemnifying Party") shall indemnify and hold harmless the
other party (the "Indemnified Party") from and against any costs or expenses
(including, without limitation, reasonable attorneys' fees), judgments, fines,
losses, claims and damages (collectively, "Damages") to the extent they are the
result of any inaccuracy of any representation or warranty or failure to perform
or breach of any covenant or agreement made by the Indemnifying Party under this
Agreement.
6.3 Claims. (a) If an Indemnified Party intends to seek indemnification
pursuant to this Article VI, such Indemnified Party shall promptly notify the
Indemnifying Party in writing of such claim describing such claim in reasonable
detail; provided, that the failure to provide such notice will not affect the
obligations of the Indemnifying Party unless such Party is actually prejudiced
thereby. If such claim involves a claim by a third party against the Indemnified
Party, the Indemnifying Party will have 30 days after receipt of such notice to
decide whether it will undertake, conduct and control, through counsel of its
own choosing and at its own expense, the settlement or defense of such claim,
and if it so decides, the Indemnified Party shall cooperate with the
Indemnifying Party in connection with the settlement or defense; provided, that
the Indemnified Party may participate in such settlement or defense through
counsel chosen by it; and provided further, that the reasonable fees and
expenses of such counsel must be paid by the Indemnified Party. The Indemnifying
Party shall not, without the written consent of the Indemnified Party, settle or
compromise any action in any manner that would materially and adversely affect
the Indemnified Party. If the Indemnifying Party does not notify the Indemnified
Party within 30 days after the receipt of the Indemnified Party's notice of a
claim of indemnity under this Agreement that it elects to undertake the defense
of such claim, the Indemnified Party will have the right to contest, settle or
compromise the claim but does not thereby waive any right to indemnity for such
claim pursuant to this Agreement. As long as the Indemnifying Party is
contesting any such claim in good faith, the Indemnified Party shall not pay or
settle any such claim. Notwithstanding the foregoing, the Indemnified Party will
have the right to pay or settle any such claim; provided,
14
that as long as the Indemnifying Party is contesting such claim in good faith,
any such settlement must include as an unconditional term thereof the delivery
by the claimant or plaintiff to the Indemnifying Party of a duly executed
written release of the Indemnifying Party from all liability and obligation in
respect of such action; and provide further, that in such event Indemnified
Party shall waive any right to indemnity for such claim by the Indemnifying
Party; and provided further, that the Indemnified Party shall provide the
Indemnifying Party reasonable advance notice of any proposed settlement or
payment and may not pay or settle any claim if the Indemnifying Party reasonably
objects.
(b) The Indemnified Party shall cooperate fully in all aspects
of any investigation, defense, pretrial activities, trial, compromise,
settlement or discharge of any claim in respect of which indemnity is sought
pursuant to Article VI, including, without limitation, by providing the other
party with reasonable access to any employees (including as witnesses) and other
information.
ARTICLE VII
MISCELLANEOUS
-------------
7.1 Successors and Assigns. This Agreement is binding upon and inures
to the benefit of the parties and their respective successors and assigns, but
is not assignable by any party without the prior written consent of the other
parties.
7.2 Notices. Unless otherwise provided in this Agreement, any notice,
request, instruction or other document to be given under this Agreement by Buyer
or the Sellers must be in writing and will be deemed duly given (a) when
received if personally delivered or sent by facsimile, (b) within one business
day after being sent by recognized overnight delivery service or (c) within five
business days after being mailed by certified mail, postage prepaid, return
receipt requested, and in each case addressed as follows:
If to a Seller:
To the address set forth opposite of the Seller's name on Exhibit A
hereto.
If to Buyer:
Xxxxxx International Brewing Group, LLC
0000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Facsimile: (000) 000-0000
Attn: C. Xxxxx Xxxxxx
15
With a copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
North Point
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx
Facsimile: (000) 000-0000
or to such other place and with such other copies as any of the foregoing may
designate by written notice to the other party.
7.3 Choice of Law. This Agreement is governed by and will be construed
and enforced in accordance with the laws of the State of Ohio without regard to
principles of conflicts of laws.
7.4 Consent To Jurisdiction And Service Of Process. Any and all Actions
arising out of or relating to this Agreement and any other Actions by or among
the Sellers (or any of them) or the Buyer and the Sellers (or any of them) must
be brought in a court within the State of Ohio. Each Seller irrevocably consents
to the jurisdiction of the state and federal courts located in the State of Ohio
and waives any objection which the Seller may now or hereafter have to the
choice of forum whether personal jurisdiction, venue, forum non conveniens or on
any other ground. Each Seller irrevocably consents to the service of process
outside of the territorial jurisdiction of said courts by mailing copies thereof
by registered or certified United States mail, postage prepaid, to such Seller's
address as set forth pursuant to Section 7.2 hereof, with the same effect as if
the Seller were a resident of the State of Ohio and had been lawfully served in
such state. Nothing in this Agreement prohibits service of process in any other
manner permitted by law. Each Seller further agrees that final judgment after
all rights to appeal have been exhausted against him in any such Action will be
conclusive and may be enforced in any other jurisdiction within or outside the
State of Ohio by suit on the judgment, a certified or exemplified copy of which
will be conclusive evidence of the fact and the amount of such judgment.
7.5 Entire Agreement; Amendments and Waivers. This Agreement, together
with all Exhibits, constitutes the entire agreement of the parties pertaining to
this subject matter and supersedes all prior agreements, understandings,
negotiations or discussions, whether oral or written, of the parties, including,
without limitation, the Letter Agreement, dated July 28, 1999, by and among
Buyer and each of the Sellers. No supplement, modification or waiver of this
Agreement will be binding unless executed in writing by the party or the parties
to be bound thereby. No waiver of any of the provisions of this Agreement will
be deemed or will constitute a waiver of any other provision of this Agreement
(whether or not similar), nor will such waiver constitute a continuing waiver
unless otherwise expressly provided.
7.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
16
7.7 Invalidity. If any one or more of the provisions contained in this
Agreement or in any other instrument referred to in this Agreement, is, for any
reason, held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability will not affect any other provision
of this Agreement.
7.8 Headings. The headings of the Articles and Sections herein are
inserted for convenience of reference only and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
7.9 Expenses. The Sellers and Buyer are liable for their own costs and
expenses incurred in connection with the negotiation, preparation, execution and
performance of this Agreement.
7.10 No Third Party Beneficiaries. Except as set forth in Section 5.3,
nothing expressed or implied in this Agreement is intended, or will be
construed, to confer upon or give any person or entity other than the parties
hereto any rights or remedies under or by reason of this Agreement.
17
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
SELLERS:
/s/ Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxxxx X. Xxxxx
/s/ Xxxxxx Xxxxxxxxxx
-----------------------------------
Xxxxxx Xxxxxxxxxx
/s/ Xxxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxxx X. Xxxxx
/s/ Vishnampet S. Jayanthimath
-----------------------------------
Vishnampet S. Jayanthimath
BUYER:
XXXXXX INTERNATIONAL BREWING
GROUP, LLC
By: /s/ C. Xxxxx Xxxxxx
-------------------------------
Name: C. Xxxxx Xxxxxx
Title: Chairman and CEO
18
EXHIBIT A
---------
--------------------------------------------------------------------------------
Number of
Seller Address
Seller Units
--------------------------------------------------------------------------------
Xxxxxx X. Xxxxx 25 000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
with a copy to:
Xxxxx Xxxxxx
Xxxxxxxx & Xxxxxxxx
00 Xxxxx Xxxxx Xx.
Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
--------------------------------------------------------------------------------
Xxxxxxxxx X. Xxxxx 15 000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
with a copy to:
Xxxxx Xxxxxx
Xxxxxxxx & Xxxxxxxx
00 Xxxxx Xxxxx Xx.
Xxxxxxxxx, XX 00000'
Facsimile: 000-000-0000
--------------------------------------------------------------------------------
Xxxxxx Xxxxxxxxxx 25 000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
with a copy to:
Xxxxx Xxxxxx
Xxxxxxxx & Xxxxxxxx
00 Xxxxx Xxxxx Xx.
Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
--------------------------------------------------------------------------------
Xxxxxxxx X. Xxxxx 25 000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
with a copy to:
Xxxxx Xxxxxx
Xxxxxxxx & Xxxxxxxx
00 Xxxxx Xxxxx Xx.
Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Number of
Seller Seller Address
Units
--------------------------------------------------------------------------------
Vishnampet S. 10 000 X. Xxxxxxx Xxxxxx
Xxxxxxxxxxxx Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
with a copy to:
Xxxxx Xxxxxx
Xxxxxxxx & Xxxxxxxx
00 Xxxxx Xxxxx Xx.
Xxxxxxxxx, XX 00000
Facsimile: 000-000-0000
--------------------------------------------------------------------------------
EXHIBIT B
---------
FORM OF WARRANT
EXECUTION COPY
--------------
THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE
STATE SECURITIES LAWS. THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE
OF THIS WARRANT MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THIS WARRANT UNDER SAID
ACT AND APPLICABLE STATE SECURITIES LAWS OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO XXXXXXXXX BREWING CO. THAT SUCH REGISTRATION IS NOT REQUIRED.
Right to Purchase 33,000 Shares of Common
Stock of Xxxxxxxxx Brewing Co. (subject
to adjustment as provided herein)
COMMON STOCK PURCHASE WARRANT
No. B-1 August 24, 1999
XXXXXXXXX BREWING CO., a corporation organized under the laws of the
State of Maryland (the "Company"), hereby certifies that, for value received,
XXXXXX X. XXXXX or his assigns, is entitled, subject to the terms set forth
below, to purchase from the Company after August 24, 1999 (the "Effective
Date"), at any time or from time to time before 5:00 p.m., Cleveland, Ohio time,
on August 24, 2002, (the "Expiration Date"), up to 33,000 fully paid and
nonassessable shares of Common Stock (as hereinafter defined), $.0004 par value
per share, of the Company, at a per share purchase price of $1.00 per share
(such purchase price per share as adjusted from time to time as herein provided
is referred to herein as the "Purchase Price"). The number and character of such
shares of Common Stock and the Purchase Price are subject to adjustment as
provided herein.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The term "Company" includes Xxxxxxxxx Brewing Co. and any
corporation which succeeds or assumes the obligations of Xxxxxxxxx Brewing Co.
hereunder.
(b) The term "Common Stock" includes (a) the Company's Common Stock,
$.0004 par value per share, as authorized on the Effective Date, (b) any other
capital stock of any class or classes (however designated) of the Company,
authorized on or after such date, the holders of which shall have the right,
without limitation as to amount, either to all or to a share of the balance of
current dividends and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference, and the holders of which
shall ordinarily, in the absence of contingencies, be entitled to vote for the
election of a majority of directors of the Company (even if the right so to vote
has been suspended by the happening of such a contingency) and (c) any other
securities into which or for which any of the securities described in (a) or (b)
may be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
(c) The term "Other Securities" refers to any stock (other than Common
Stock) and other securities of the Company or any other person (corporate or
otherwise) which the holder of the Warrant at any time shall be entitled to
receive, or shall have received, on the exercise of the Warrant, in lieu of or
in addition to Common Stock, or which at any time shall be issuable or shall
have been issued in exchange for or in replacement of Common Stock or Other
Securities pursuant to Section 4 or otherwise.
1. Exercise of Warrant.
1.1. Number of Shares Issuable upon Exercise. From and after
the Effective Date, through and including the Expiration Date, the holder hereof
shall be entitled to receive, upon exercise of this Warrant in whole in
accordance with the terms of Subsection 1.2 or upon exercise of this Warrant in
part in accordance with Subsection 1.3, shares of Common Stock of the Company,
subject to adjustment pursuant to Section 4.
1.2. Full Exercise. This Warrant may be exercised in full by
the holder hereof by surrender of this Warrant, with the form of subscription
attached as Exhibit A hereto (the "Subscription Form") duly executed by such
holder, to the Company at its principal office or at the office of its Warrant
agent (as provided in Section 11), accompanied by payment, in cash or by
certified or official bank check payable to the order of the Company, in the
amount obtained by multiplying the number of shares of Common Stock for which
this Warrant is then exercisable by the Purchase Price (as hereinafter defined)
then in effect.
1.3. Partial Exercise. This Warrant may be exercised in part
(but not for a fractional share) by surrender of this Warrant in the manner and
at the place provided in Subsection 1.2 except that the amount payable by the
holder on such partial exercise shall be the amount obtained by multiplying (a)
the number of shares of Common Stock designated by the holder in the
Subscription Form by (b) the Purchase Price then in effect. On any such partial
exercise, the Company, at its expense, will forthwith issue an deliver to or
upon the order of the holder hereof a new Warrant of like tenor, in the name of
the holder hereof or as such holder (upon payment by such holder of any
applicable transfer taxes), may request, the number of shares of Common Stock
for which such Warrant may still be exercised.
1.4. Fair Market Value. Fair Market Value of a share of Common
Stock as of the date of exercise of this Warrant (the "Determination Date")
shall mean the Fair Market Value of a share of the Company's Common Stock. Fair
Market Value of a share of Common Stock as of the Determination Date shall mean:
(a) If the Company's Common Stock is traded on an
exchange or is quoted on the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") National Market System or the NASDAQ SmallCap
Market, then the closing or last sale price, respectively, reported for the last
business day immediately prior to the Determination Date.
(b) If the Company's Common Stock is not traded on an
exchange or on the NASDAQ National Market System or the NASDAQ SmallCap Market
but is traded in the over-the-counter market, then the mean of the closing bid
and asked prices reported for the last business day immediately prior to the
Determination Date.
2
(c) If the Company's Common Stock is not publicly
traded, then as the Holder and the Company agree or, in the absence of
agreement, by arbitration in accordance with the rules then standing of the
American Arbitration Association, before a single arbitrator to be chosen from a
panel of persons qualified by education and training to pass on the matter to be
decided.
(d) If the Determination Date is the date of a
liquidation, dissolution or winding up, or any event deemed to be a liquidation,
dissolution or winding up pursuant to the Company's charter, then all amounts to
be payable per share to holders of the Common Stock pursuant to the charter in
the event of such liquidation, dissolution or winding up, plus all other
amounts to be payable per share in respect of the Common Stock in liquidation
under the charter, assuming for the purposes of this clause (d) that all of the
shares of Common Stock then issuable upon exercise of all of the Warrants are
outstanding at the Determination Date.
1.5. Company Acknowledgment. The Company will, at the time of
the exercise of the Warrant, upon the request of the holder hereof acknowledge
in writing its continuing obligation to afford to such holder any rights to
which such holder shall continue to be entitled after such exercise in
accordance with the provisions of this Warrant. If the holder shall fail to make
any such request, such failure shall not affect the continuing obligation of the
Company to afford to such holder any such rights.
1.6. Trustee for Warrant Holders. In the event that a bank or
trust company shall have been appointed as trustee for the holders of the
Warrants pursuant to Subsection 3.2, such bank or trust company shall have all
the powers and duties of a warrant agent appointed pursuant to Section 10 and
shall accept, in its own name for the account of the Company or such successor
person as may be entitled thereto, all amounts otherwise payable to the Company
or such successor, as the case may be, on exercise of this Warrant pursuant to
this Section 1.
2. Delivery of Stock Certificates, etc. on Exercise. The Company agrees
that the shares of Common Stock purchased upon exercise of this Warrant shall be
deemed to be issued to the holder hereof as the record owner of such shares as
of the close of business on the date on which this Warrant shall have been
surrendered and payment made for such shares as aforesaid. As soon as
practicable after the exercise of this Warrant in full or in part, and in any
event within ten (10) business days thereafter, the Company at its expense
(including the payment by it of any applicable issue taxes) will cause to be
issued in the name of and delivered to the holder hereof, or as such holder
(upon payment by such holder of any applicable transfer taxes) may direct in
compliance with applicable securities laws, a certificate or certificates for
the number of duly and validly issued, fully paid and nonassessable shares of
Common Stock (or Other Securities) to which such holder shall be entitled on
such exercise, plus, in lieu of any fractional share to which such holder would
otherwise be entitled, cash equal to such fraction multiplied by the then Fair
Market Value of one full share, together with any other stock or other
securities and property (including cash, where applicable) to which such holder
is entitled upon such exercise, pursuant to Section 1 or otherwise.
3. Adjustment for Reorganization, Consolidation,- Merger, etc.
3.1. Reorganization, Consolidation, Merger, etc. In case at
any time or from time to time, the Company (a) effects a reorganization, (b)
consolidates with or merges into any other person, or (c) transfers all or
substantially all of its properties or assets to any other person under any
3
plan or arrangement contemplating the dissolution of the Company, then, in each
such case, as a condition to the consummation of such a transaction, proper and
adequate provision shall be made by the Company whereby the holder of this
Warrant, on the exercise hereof as provided in Section 1 at any time after the
consummation of such reorganization, consolidation or merger or the effective
date of such dissolution, as the case may be, shall receive, in lieu of the
Common Stock (or Other Securities) issuable on such exercise prior to such
consummation or such effective date, the stock and other securities and property
(including cash) to which such holder would have been entitled upon such
consummation or in connection with such dissolution, as the case may be, if such
holder had so exercised this Warrant, immediately prior thereto, all subject to
further adjustment thereafter as provided in Section 4.
3.2. Dissolution. In the event of any dissolution of the
Company following the transfer of all or substantially all of its properties or
assets, the Company, prior to such dissolution, shall at its expense deliver or
cause to be delivered the Common Stock and Other Securities and property
(including cash, where applicable) receivable by the holders of the Warrants
after the effective date of such dissolution pursuant to this Section 3 to a
bank or trust company having its principal office in Cleveland, Ohio, as trustee
for the holder or holders of the Warrants.
3.3. Continuation of Terms. Upon any reorganization,
consolidation, merger or transfer (and any dissolution following any transfer)
referred to in this Section 3.3, this Warrant shall continue in full force and
effect and the terms hereof shall be applicable to the shares of Common Stock
and Other Securities and property receivable on the exercise of this Warrant
after the consummation of such reorganization, consolidation or merger or the
effective date of dissolution following any such transfer, as the case may be,
and shall be binding upon the issuer of any such stock or other securities,
including, in the case of any such transfer, the person acquiring all or
substantially all of the properties or assets of the Company, whether or not
such person shall have expressly assumed the terms of this Warrant as provided
in Section 4. In the event this Warrant does continue in full force and effect
after the consummation of the transaction described in this Section 3.3, then
only in such event will the Company's Other Securities and property (including
cash, where applicable) receivable by the holders of the Warrants be delivered
to the Trustee as contemplated by Section 3.2.
4. Extraordinary Events Regarding Common Stock. In the event that the
Company shall (a) issue additional shares of the Common Stock as a dividend or
other distribution on outstanding Common Stock, (b) subdivide its outstanding
shares of Common Stock, or (c) combine its outstanding shares of the Common
Stock into a smaller number of shares of the Common Stock, then, in each such
event, the Purchase Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the then Purchase Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such event and the denominator of which shall be the number
of shares of Common Stock outstanding immediately after such event, and the
product so obtained shall thereafter be the Purchase Price then in effect. The
Purchase Price, as so adjusted, shall be readjusted in the same manner upon the
happening of any successive event or events described herein in this Section 4.
The number of shares of Common Stock that the holder of this Warrant shall
thereafter, on the exercise hereof as provided in Section 1, be entitled to
receive shall be increased or decreased to a number determined by multiplying
the number of shares of Common Stock that would otherwise (but for the
provisions of this Section 4) be issuable on such exercise by a fraction of
which (a) the numerator is the Purchase Price that
4
would otherwise (but for the provisions of this Section 4) be in effect, and (b)
the denominator is the Purchase Price in effect on the date of such exercise.
5. Certificate as to Adjustments. In each case of any adjustment or
readjustment in the shares of Common Stock (or Other Securities) issuable on the
exercise of the Warrants, the Company at its expense will promptly cause its
Chief Financial Officer or other appropriate designee to compute such adjustment
or readjustment in accordance with the terms of the Warrant and prepare a
certificate setting forth such adjustment or readjustment and showing in detail
the facts upon which such adjustment or readjustment is based, including a
statement of (a) the consideration received or receivable by the Company for any
additional shares of Common Stock (or Other Securities) issued or sold or deemed
to have been issued or sold, (b) the number of shares of Common Stock (or Other
Securities) outstanding or deemed to be outstanding, and (c) the Purchase Price
and the number of shares of Common Stock to be received upon exercise of this
Warrant, in effect immediately prior to such adjustment or readjustment and as
adjusted or readjusted as provided in this Warrant. The Company will forthwith
mail a copy of each such certificate to the holder of the Warrant and any
Warrant agent of the Company (appointed pursuant to Section 10 hereof).
6. Reservation of Stock, etc. Issuable on Exercise of Warrant;
Financial Statements. The Company will at all times reserve and keep available,
solely for issuance and delivery on the exercise of the Warrants, all shares of
Common Stock (or Other Securities) from time to time issuable on the exercise of
the Warrant. This Warrant entitles the holder hereof to receive copies of all
financial and other information distributed or required to be distributed to the
holders of the Company's Common Stock.
7. Assignment; Exchange of Warrant. Subject to compliance with
applicable securities laws, this Warrant, and the rights evidenced hereby, may
be transferred by any registered holder hereof (a "Transferor") with respect to
any or all of the Shares. On the surrender for exchange of this Warrant, with
the Transferor's endorsement in the form of Exhibit B attached hereto (the
"Transferor Endorsement Form") and together with evidence reasonably
satisfactory to the Company demonstrating compliance with applicable Securities
Laws, the Company at its expense but with payment by the Transferor of any
applicable transfer taxes will issue and deliver to or on the order of the
Transferor thereof a new Warrant or Warrants of like tenor, in the name of the
Transferor and/or the transferee(s) specified in such Transferor Endorsement
Form (each a "Transferee"), calling in the aggregate on the face or faces
thereof for the number of shares of Common Stock called for on the face or faces
of the Warrant so surrendered by the Transferor.
8. Replacement of Warrant. On receipt of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or mutilation of
this Warrant and, in the case of any such loss, theft or destruction of this
Warrant, on delivery of an indemnity agreement or security reasonably
satisfactory in form and amount to the Company or, in the case of any such
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu thereof, a new Warrant of like tenor.
9. Warrant Agent. The Company may, by written notice to each holder of
the Warrant, appoint an agent for the purpose of issuing Common Stock (or Other
Securities) on the exercise of this Warrant pursuant to Section 1, exchanging
this Warrant pursuant to Section 7, and replacing this
5
Warrant pursuant to Section 8, or any of the foregoing, and thereafter any such
issuance, exchange or replacement, as the case may be, shall be made at such
office by such agent.
10. Transfer on the Company's Books. Until this Warrant is transferred
on the books of the Company, the Company may treat the registered holder
hereof as the absolute owner hereof for all purposes, notwithstanding any notice
to the contrary.
11. Notices, etc. Unless otherwise provided in this Warrant, any
notice, request, instruction or other document to be given under this Warrant
from the Company to the holder of this Warrant must be in writing and will be
deemed duly given (a) when received if personally delivered or sent by
facsimile, (b) within one (1) business day after being sent by recognized
overnight delivery service or (c) within five (5) business days after being
mailed by certified mail, postage prepaid, return receipt requested, and in each
case addressed to such address as may have been furnished to the Company in
writing by tile holder of this Warrant or, until such holder furnishes to the
Company an address, then to, and at the address of, the last holder of this
Warrant who has so furnished an address to the Company.
12. Miscellaneous. This Warrant and any term hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement of such change, waiver, discharge or termination
is sought. This Warrant shall be construed and enforced in accordance with and
governed by the laws of the State of Ohio without giving effect to any conflicts
of laws principles. Any dispute relating to this Warrant shall be adjudicated in
the State of Ohio. The headings in this Warrant are for purposes of reference
only, and shall not limit or otherwise affect any of the terms hereof. The
invalidity or unenforceability of any provision hereof shall in no way affect
the validity or enforceability of any other provision.
IN WITNESS WHEREOF, the Company has executed this Warrant under seal as
of the date first written above.
XXXXXXXXX BREWING CO.
By: /s/ C. Xxxxx Xxxxxx
--------------------------------
Name: C. Xxxxx Xxxxxx
Title: Chairman and CEO
Witness:
/s/ [ILLEGIBLE]
-----------------------------
6
Exhibit A
FORM OF SUBSCRIPTION
(To be signed only on exercise of Warrant)
TO: Xxxxxxxxx Brewing Co.
The undersigned, the holder of the within Warrant, hereby irrevocably elects to
exercise this Warrant for, and to purchase thereunder, _________ shares of
Common Stock of Xxxxxxxxx Brewing Co. and herewith makes payment of $_________
therefor, and requests that the certificates for such shares be issued in the
name of, and delivered to ____________ whose address is _______________________
_____________________.
The undersigned represents and warrants that all offers and sales by the
undersigned of the securities issuable upon exercise of the within Warrant shall
be made pursuant to registration of the Common Stock under the Securities Act of
1933, as amended (the "Securities Act") or pursuant to an exemption from
registration under the Securities Act.
Dated:
----------------------
--------------------------------------------
(Signature must conform to name of holder as
specified on the face of the Warrant)
--------------------------------------------
(Address)
Exhibit B
FORM OF TRANSFEROR ENDORSEMENT
(To be signed only on transfer of Warrant)
For value received, the undersigned hereby sells, assigns, and
transfers unto the person(s) named below under the heading "Transferees" the
right represented by the within Warrant to purchase the percentage and number of
shares of Common Stock of Xxxxxxxxx Brewing Co. to which the within Warrant
relates specified under the headings "Percentage Transferred" and "Number
Transferred," respectively, opposite the name(s) of such person(s) and appoints
each such person Attorney to transfer its respective right on the books of
Xxxxxxxxx Brewing Co. with full power of substitution in the premises.
--------------------------------------------------------------------------------
Tranferees Percentage Number
Transferred Transferred
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Dated: , 19
----------- -- --------------------------------------------
(Signature must conform to name of holder as
specified on the face of the warrant)
Signed in the presence of:
----------------------------- --------------------------------------------
(Name) (address)
--------------------------------------------
ACCEPTED AND AGREED: (address)
[TRANSFEREE]
-----------------------------
(Name)
EXECUTION COPY
--------------
INSTRUMENT OF ASSIGNMENT, TRANSFER AND CONVEYANCE
-------------------------------------------------
FOR VALUE RECEIVED, upon the terms and subject to the conditions set
forth in that certain Purchase Agreement (the "Purchase Agreement"), dated as of
August 24, 1999, by and among the undersigned and Xxxxxx International Brewing
Group, LLC ("Buyer"), each of the undersigned hereby sell, assign, transfer and
convey to Buyer all of their respective right, title and interest in and to the
Seller Units (as defined in the Purchase Agreement).
IN WITNESS WHEREOF, the undersigned have executed this Instrument of
Assignment, Transfer and Conveyance as of August 24, 1999.
/s/ Vishnampet S. Jayanthimath
-----------------------------------
Vishnampet S. Jayanthimath
/s/ Xxxxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxxxx X. Xxxxx
/s/ Xxxxxx Xxxxxxxxxx
-----------------------------------
Xxxxxx Xxxxxxxxxx
/s/ Xxxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx
EXECUTION COPY
--------------
CROSS RECEIPT
-------------
Xxxxxx X. Xxxxx, Xxxxxxxxx X. Xxxxx, Xxxxxx Xxxxxxxxxx, Xxxxxxxx X.
Xxxxx and Xxxxxxxxxx X. Jayanthimath (the "Sellers") have this day delivered to
Xxxxxx International Brewing Group, LLC ("Buyer") an Instrument of Assignment,
Transfer and Conveyance (the "Assignment") pursuant to that certain Purchase
Agreement, dated as of August 24, 1999, by and among the Sellers and Buyer (the
"Purchase Agreement"). Buyer hereby acknowledges receipt from the Sellers on the
date hereof of the Assignment evidencing the assignment, transfer and conveyance
of the Seller Units (as defined in the Purchase Agreement) to Buyer.
In connection with the Sellers' delivery of the Assignment pursuant to
the Purchase Agreement, each Seller hereby acknowledges receipt on the date
hereof from Buyer of the Purchase Price, representing payment in full for the
Seller Units.
IN WITNESS WHEREOF, the undersigned have executed this Cross Receipt as
of August 24, 1999.
SELLERS:
/s/ Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxxxx X. Xxxxx
/s/ Xxxxxx Xxxxxxxxxx
-----------------------------------
Xxxxxx Xxxxxxxxxx
/s/ Xxxxxxxx X. Xxxxx
-----------------------------------
Xxxxxxxx X. Xxxxx
/s/ Vishnampet S. Jayanthimath
-----------------------------------
Vishnampet S. Jayanthimath
BUYER
By: /s/ C. Xxxxx Xxxxxx
-------------------------------
Name: C. Xxxxx Xxxxxx
Title: Chairman and CEO
