Exhibit 2
STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT (this "Agreement") is made and entered into
as of September 27, 1999, by and among Liquid Holdings Inc., a Delaware
corporation ("Parent"), Xxxx Xxxxxxxxx ("Xx. Xxxxxxxxx") and Xxxxxxx X. Xxxx
("Xx. Xxxx," and together with Xx. Xxxxxxxxx, the "Stockholders," and each
singly, a "Stockholder").
WHEREAS, the Stockholders desire that Parent, Liquid Acquisition Corp.,
a Massachusetts corporation and wholly owned subsidiary of Parent ("Sub"), and
Xxxxxxxxx & Xxxx, Inc., a Massachusetts corporation (the "Company"), enter into
an Agreement and Plan of Merger, dated as of the date hereof (as the same may
be amended or supplemented, the "Merger Agreement") with respect to the merger
of Sub with and into the Company (the "Merger"); and
WHEREAS, the Stockholders are executing this Agreement as an inducement
to Parent to enter into and execute, and to cause Sub to enter into and
execute, the Merger Agreement;
NOW, THEREFORE, in consideration of the execution and delivery by
Parent and Sub of the Merger Agreement and the mutual covenants, conditions and
agreements contained herein and therein, the parties agree as follows:
1. Representations and Warranties. Each Stockholder represents and
warrants to Parent as follows:
(a) The Stockholder is the record and beneficial owner of the
number of shares (the "Stockholder's Shares") of capital stock, $0.01
par value, of the Company ("Company Capital Stock") set forth below
such Stockholder's name on the signature page hereof. The Stockholder's
Shares of Xx. Xxxx are subject to a Pledge Agreement dated July 27,
1997 (the "Pledge Agreement") between the Stockholder and BankBoston,
N.A. This Agreement has been duly authorized, executed and delivered
by, and constitutes a valid and binding agreement of, the Stockholder,
enforceable in accordance with its terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws of general application respecting
creditors' rights and by general equitable principles. In the case of
Xx. Xxxx, Xx. Xxxx has delivered to the Parent a true and correct copy
of the Pledge Agreement as in effect on the date hereof.
(b) Except for the obligations of Xx. Xxxx pursuant to the
Pledge Agreement, neither the execution and delivery of this Agreement
nor the consummation by the Stockholder of the transactions
contemplated hereby will result in a violation of, or a default under,
or conflict with, any contract, trust, commitment, agreement,
understanding, arrangement or restriction of any kind to which the
Stockholder is a party or bound or to which the Stockholder's Shares
are subject. If the Stockholder is married and the Stockholder's Shares
constitute community property, this Agreement has been duly authorized,
executed and delivered by, and constitutes a valid and binding
agreement of, the Stockholder's spouse, enforceable against such person
in accordance with its terms. Consummation by the Stockholder of the
transactions contemplated hereby will not violate, or require any
consent, approval, or notice under, any provision of any judgment,
order, decree, statute, law, rule or regulation applicable to the
Stockholder or the Stockholder's Shares.
(c) Except for the security interest in the Stockholder's Shares
of Xx. Xxxx under the Pledge Agreement, the Stockholder's Shares and
the certificates representing the Stockholder's Shares are now, and at
all times during the term hereof will be, held by the Stockholder, or
by a nominee or custodian for the benefit of such Stockholder, free and
clear of all liens, security interests, proxies, voting trusts or
voting agreements or any other encumbrances whatsoever, except for any
such encumbrances or proxies arising hereunder.
(d) No broker, investment banker, financial adviser or other
person is entitled to any broker's, finder's, financial adviser's or
other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of the
Stockholder.
(e) The Stockholder understands and acknowledges that Parent is
entering into, and causing Sub to enter into, the Merger Agreement in
reliance upon the Stockholder's execution and delivery of this
Agreement. The Stockholder acknowledges that the irrevocable proxy set
forth in Section 4 and, in the case of Xx. Xxxxxxxxx only, the option
in Section 5, are granted in consideration for the execution and
delivery of the Merger Agreement by Parent and Sub.
2. Voting Agreements. Each Stockholder agrees with, and covenants to,
Parent as follows:
(a) At any meeting of stockholders of the Company called to vote
upon the Merger and the Merger Agreement or at any adjournment thereof
or in any other circumstances upon which a vote, consent or other
approval with respect to the Merger and the Merger Agreement is sought
(the "Stockholders' Meeting"), the Stockholder shall vote (or cause to
be voted) the Stockholder's Shares in favor of the Merger, the
execution and delivery by Company of the Merger Agreement, and the
approval of the terms thereof and each of the other transactions
contemplated by the Merger Agreement.
(b) At any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which their
vote, consent or other approval is sought, the Stockholder shall vote
(or cause to be voted) the Stockholder's Shares against (i) any merger
agreement or merger (other than the Merger Agreement and the Merger),
consolidation, combination, sale of substantial assets, reorganization,
recapitalization, dissolution, liquidation or winding up of or by the
Company or (ii) any amendment of the Company's Articles of Organization
or Bylaws or other proposal or transaction involving the Company or any
of its subsidiaries which amendment or other proposal or transaction
would in any manner impede, frustrate, prevent or nullify the Merger,
the Merger Agreement or any of the other transactions contemplated by
the Merger Agreement (each of the foregoing in clause (i) or (ii)
above, a "Competing Transaction").
3. Covenants.
(a) Xx. Xxxxxxxxx agrees with and covenants to Parent, and
Parent agrees with and covenants to Xx. Xxxxxxxxx, that, in the event of the
exercise of the Option pursuant to the terms hereof, Xx. Xxxxxxxxx shall
cooperate with the Company and Parent, and Parent shall cooperate with Xx.
Xxxxxxxxx and the Company, at the request of the Company, in the preparation of
any necessary filings with regulatory authorities concerning the Alcoholic
Beverage Licenses (as defined in the Merger Agreement), including amendments to
existing filings, and any related requests for approvals.
(b) Except, in the case of Xx. Xxxx, in accordance with the
Pledge Agreement, each Stockholder agrees with, and covenants to, Parent that
such Stockholder shall not, except as expressly permitted by Section 4.5 of the
Merger Agreement, (i) transfer (which term shall include, without limitation,
for the purposes of this Agreement, any sale, gift, pledge or other
disposition), or consent to any transfer of, any or all of the Stockholder's
Shares or any interest therein, except pursuant to the Merger; (ii) enter into
any contract, option or other agreement or understanding with respect to any
transfer of any or all of the Stockholder's Shares or any interest therein;
(iii) grant any proxy, power of attorney or other authorization in or with
respect to such shares, except for this Agreement; (iv) deposit such shares
into a voting trust or enter into a voting agreement or arrangement with
respect to such shares; (v) initiate, solicit or request, or take any action to
facilitate the making of, any offer or proposal which constitutes or is
reasonably likely to lead to an Acquisition Proposal (as such term is defined
in the Merger Agreement); or (vi) in the event of any unsolicited proposed
Acquisition Proposal, engage in negotiations with or discussions with, or
provide any information or data to, any person or entity (other than Parent,
any of its affiliates or representatives) relating to any Acquisition Proposal;
provided, that the Stockholder may transfer (as defined above) any of the
Stockholder's Shares to any other person or entity who is on the date hereof,
or to any family member of a person or to any charitable institution which
prior to the Stockholders Meeting and prior to such transfer becomes, a party
to this Agreement bound by all the obligations of the "Stockholder" hereunder.
4. Grant of Irrevocable Proxy; Appointment of Proxy.
(a) Each Stockholder hereby irrevocably grants to, and appoints,
Parent and Xxxxxx X. Xxxx, Chief Executive Officer of Parent, and Xxxxx X.
Xxxxxxxx, Chief Financial Officer of Parent, in their respective capacities as
officers of Parent, and any individual who shall hereafter succeed to any such
office of Parent, and each of them individually, the Stockholder's proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of the Stockholder, to vote the Stockholder's Shares, or grant a
consent or approval in respect of the Stockholder's Shares (i) in favor of the
Merger, the execution and delivery of the Merger Agreement and approval of the
terms thereof and each of the other transactions contemplated by the Merger
Agreement, and (ii) against any Competing Transaction.
(b) Each Stockholder represents that any proxies heretofore
given in respect of the Stockholder's Shares are not irrevocable, and that any
such proxies are hereby revoked.
(c) Each Stockholder hereby affirms that the irrevocable proxy
set forth in this Section 4 is given in connection with the execution of the
Merger Agreement, and that such irrevocable proxy is given to secure the
performance of the duties of the Stockholder under this Agreement. Each
Stockholder hereby further affirms that the irrevocable proxy is coupled with
an interest sufficient in law to support an irrevocable power and may under no
circumstances be revoked. Each Stockholder hereby ratifies and confirms all
that such irrevocable proxy may lawfully do or cause to be done by virtue
hereof. Such irrevocable proxy is executed and intended to be irrevocable in
accordance with the provisions of Section 41 of the Massachusetts Business
Corporation Law.
5. Option to Acquire Shares. In the event that the Merger Agreement
is terminated by the Sub in accordance with Section 6.1(c) of the Merger
Agreement or by the Company in accordance with Section 6.1(d) of the Merger
Agreement, at the option of the Parent, Xx. Xxxxxxxxx shall sell to the Parent
or an Affiliate (as defined in the Merger Agreement) of the Parent that number
of Stockholder's Shares of Xx. Xxxxxxxxx set forth on the signature page hereof
(the "Option Shares"), at a purchase price equal to the Per Share Merger
Consideration (as defined in the Merger Agreement). This right of the Parent to
acquire shares of Company Capital Stock is sometimes referred to in this
Agreement as the "Option" and the entity purchasing such shares is sometimes
referred to as the "Option Share Purchaser". In the event that the Parent is
entitled to and wishes to purchase all or some of the Option Shares, the Parent
shall give Xx. Xxxxxxxxx written notice (the date of which being herein
referred to as the "Notice Date") within fifteen (15) days of the termination
of the Merger Agreement specifying (i) the total number of Option Shares it
will purchase, and (ii) a place and date not earlier than three (3) business
days nor later than sixty (60) business days from the Notice Date for the
closing of such purchase (the "Closing"); provided that if prior notification
to or approval of any regulatory agency is required in connection with such
purchase, the Parent and Xx. Xxxxxxxxx shall promptly file the required notice
or application for approval and shall expeditiously process the same and the
period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which any required notification periods have expired
or been terminated or such approvals have been obtained and any requisite
waiting period or periods shall have passed; and provided further, that the
Parent may, in the written notice referred to above, make the sale and purchase
of the Option Shares and other securities referred to above contingent on the
occurrence of the consummation of the transaction that is the subject of the
Acquisition Proposal (as defined in the Merger Agreement) or Superior Proposal
(as defined in the Merger Agreement) relating to any termination pursuant to
Section 6.1(c) or Section 6.1(d) of the Merger Agreement, in which case (i) the
Parent may defer the sale and purchase referred to above up to the time
immediately prior to the consummation of such other transaction and (ii) such
Option shall expire on the one year anniversary of the termination of the
Merger Agreement. The term "business day" for purposes of this Agreement means
any day, excluding Saturdays, Sundays and any other day that is a legal holiday
in the Commonwealth of Massachusetts or a day on which banking institutions in
the Commonwealth of Massachusetts are authorized by law or executive order to
close. At the Closing, the Option Share Purchaser shall pay to Xx. Xxxxxxxxx
the aggregate purchase price for the Option Shares purchased from Xx. Xxxxxxxxx
pursuant to this Section 5 in immediately available funds by a wire transfer to
a bank account designated by Xx. Xxxxxxxxx. At such Closing, simultaneously
with the delivery of immediately available funds as provided in this Section 5,
Xx. Xxxxxxxxx shall deliver to the Option Share Purchaser the certificate or
certificates representing the number of Option Shares being sold at such
Closing and any other documents reasonably requested by the Parent to effect
the transfer of the Option Shares from Xx. Xxxxxxxxx to the Parent.
6. Voting. The Parent agrees that if it or any of its Affiliates
acquire any Option Shares pursuant to Section 5 of this Agreement, and if any
vote or consent is requested in connection with any Acquisition Proposal or
Superior Proposal relating to the termination of the Merger Agreement that
caused the Option to become exercisable, then the Option Share Purchaser will
vote the Option Shares as directed by Xx.
Xxxxxxxxx.
7. Grant of Irrevocable Proxy; Appointment of Proxy.
(a) The Parent hereby irrevocably grants to, and appoints, the Company
and Xxx X. Xxxx, Chief Executive Officer of the Company, and Xxxxx X. Xxxxxx,
Chief Financial Officer of the Company, in their respective capacities as
officers of the Company, and any individual who shall hereafter succeed to any
such office of the Company, and each of them individually, the proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of the Option Share Purchaser, to vote the Option Shares, or grant a
consent or approval in respect of the Option Shares, as provided in Section 6.
(b) The Parent represents that any proxies heretofore given in
respect of the Option Shares are not irrevocable, and that any such proxies are
hereby revoked.
(c) The Parent hereby affirms that the irrevocable proxy set
forth in this Section 7 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance
of the duties of the Parent and any other Option Share Holder under this
Agreement. The Parent hereby further affirms that the irrevocable proxy is
coupled with an interest sufficient in law to support an irrevocable power and
may under no circumstances be revoked. The Parent hereby ratifies and confirms
all that such irrevocable proxy may lawfully do or cause to be done by virtue
hereof. Such irrevocable proxy is executed and intended to be irrevocable in
accordance with the provisions of Section 41 of the Massachusetts Business
Corporation Law.
8. Certain Events. Each Stockholder agrees that this Agreement and
the obligations hereunder shall attach to the Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of any
or all of the Stockholder's Shares shall pass, whether by operation of law or
otherwise, including without limitation the Stockholder's successors or
assigns. In the event of any stock split, stock dividend, merger,
reorganization, recapitalization or other change in the capital structure of
the Company affecting the Company Capital Stock, or the acquisition of
additional shares of Company Capital Stock or other voting securities of the
Company by any Stockholder, the number of the Stockholder's Shares subject to
the terms of this Agreement shall be adjusted appropriately and this Agreement
and the obligations hereunder shall attach to any additional shares of Company
Capital Stock or other voting securities of Company issued to or acquired by
the Stockholder. In addition, each Stockholder agrees that in the event that
Xx. Xxxx enters into an agreement with Parent, at any time after the date
hereof and prior to the closing under the Merger Agreement, pursuant to which
Xx. Xxxx grants an option (the "Xxxx Option") to Parent to purchase
Stockholder's Shares of Xx. Xxxx on terms identical to those for the Option
granted by Xx. Xxxxxxxxx hereunder, and either free of the restrictions imposed
by the Pledge Agreement or requiring the pledgee under the Pledge Agreement to
observe the terms of the Xxxx Option in a form satisfactory to the Parent, then
the number of Stockholder's Shares of Xx. Xxxxxxxxx subject to the Option
hereunder shall be reduced by the number of Stockholder's Shares subject to the
Xxxx Option.
9. Legends. Each Stockholder agrees that at the request of the
Purchaser such Stockholder will place a legend, referring to this Agreement and
in a form reasonably satisfactory to the Parent, on the certificates
representing such Stockholder's Shares.
10. Further Assurances. Each Stockholder shall, upon request of
Parent, execute and deliver any additional documents and take such further
actions as may reasonably be deemed by Parent to be necessary or desirable to
carry out the provisions hereof and to vest the power to vote the Stockholder's
Shares as contemplated by Section 4 in Parent and the other irrevocable proxies
described therein at the expense of Parent.
11. Termination. This Agreement, and all rights and obligations of
the parties hereunder shall terminate, and the Option shall expire, upon the
termination of the Merger Agreement pursuant to and in accordance with Section
6.1(a), (b), (e), (f), (g) or (h) thereof or upon consummation of the Merger
(as defined in the Merger Agreement). In the event of a termination of the
Merger Agreement pursuant to Section 6.1(c) or Section 6.1(d) thereof, (i) this
Agreement and the rights and obligations of the parties hereunder shall
terminate if the Option is not timely exercised pursuant to Section 5, (ii)
this Agreement and the rights and obligations of the parties hereunder, other
than the Stockholders' obligations under Sections 2, 3(b) and 4, shall survive
and remain in full force and effect if the Option is timely exercised pursuant
to Section 5 and (iii) the obligations of the Stockholders under Sections 2,
3(b) and 4 shall terminate effective upon such termination of the Merger
Agreement.
12. Enforcement Costs. If any party institutes an action for the
enforcement of this Agreement, the prevailing party shall be entitled to
reimbursement on demand of all costs and expenses of such action including
reasonable legal fees.
13. Miscellaneous.
(a) Capitalized terms used and not otherwise defined in this
Agreement shall have the respective meanings assigned to them in the Merger
Agreement.
(b) All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice): (i) if to Parent, to the
address provided in the Merger Agreement; and (ii) if to a Stockholder, to its
address shown below its signature on the last page hereof.
(c) The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
(d) This Agreement may be executed in two or more counterparts,
each of which shall be considered an original hereof and one and the same
agreement.
(e) This Agreement (including the documents and instruments
referred to herein) constitutes the entire agreement, and supersedes all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof.
(f) This Agreement shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
(g) Neither this Agreement nor any of the rights, interests or
obligations under this Agreement shall be assigned, in whole or in part, by
operation of law or otherwise, by any of the parties without the prior written
consent of the other parties, except as expressly contemplated by the proviso
to Section 3(b). Any assignment in violation of the foregoing shall be void.
(h) Each Stockholder agrees that irreparable damage would occur
and that Parent would not have any adequate remedy at law in the event that any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that Parent
shall be entitled to an injunction or injunctions to prevent breaches by any
Stockholder of this Agreement and to enforce specifically the terms and
provisions of this Agreement in any court, this being in addition to any other
remedy to which they are entitled at law or in equity. In addition, each of the
parties hereto (i) consents to submit such party to the personal jurisdiction
of any Federal court located in the Commonwealth of Massachusetts or any
Commonwealth of Massachusetts state court in the event any dispute arises out
of this Agreement or any of the transactions contemplated hereby, (ii) agrees
that such party will not attempt to deny or defeat such personal jurisdiction
by motion or other request for leave from any such court and (iii) agrees that
such party will not bring any action relating to this Agreement or any of the
transactions contemplated hereby in any court other than a Federal court
sitting in the Commonwealth of Massachusetts or a Massachusetts state court.
The foregoing remedies are in addition to, and not in lieu of, any payment
required to be made by the Company pursuant to the terms of the Merger
Agreement.
(i) If any term, provision, covenant or restriction herein, or
the application thereof to any circumstance, shall, to any extent, be held by a
court of competent jurisdiction to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions herein and the
application thereof to any other circumstances, shall remain in full force and
effect, shall not in any way be affected, impaired or invalidated, and shall be
enforced to the fullest extent permitted by law.
(j) No amendment, modification or waiver in respect of this
Agreement shall be effective against any party unless it shall be in writing
and signed by such party.
14. Special Covenant. Each of the Stockholders agrees that,
effective upon consummation of the Merger, (i) the Company shall be released
from any obligation it may have to provide medical and dental coverage to the
Stockholders and their families and (ii) such Stockholder will indemnify the
Parent, the Sub and the Company from any and all claims by such Stockholder or
any member of his family with respect to the medical and dental coverage
referred to above.
IN WITNESS WHEREOF, the undersigned parties have executed and delivered this
Agreement as of the day and year first above written.
LIQUID HOLDINGS INC.
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Executive Vice President
and Chief Financial Officer
STOCKHOLDERS:
/s/ Xxxx Xxxxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxxxx
Address: 000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Number of Shares:
Beneficially Owned: 864,000
Number of Shares
Subject to Option: 543,333, subject to
adjustment as provided in
Section 8 of this
Agreement
/s/ Xxxxxxx X. Xxxx
-----------------------------------
Name: Xxxxxxx X. Xxxx
Address: 00 Xxxxx Xxxx Xxxx
Xxxxxxx, XX 00000
Number of Shares
Beneficially Owned: 451,000
