Exhibit 2.1
--------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BETWEEN
REDHOOK ALE BREWERY, INCORPORATED
AND
XXXXXX BROTHERS BREWING COMPANY
November 13, 2007
--------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
1. Definitions.............................................................1
2. Basic Transaction.......................................................8
(a) The Merger........................................................8
(b) The Closing.......................................................8
(c) Merger Consideration..............................................8
3. Effect of Merger........................................................8
(a) General...........................................................8
(b) Articles of Incorporation.........................................8
(c) Bylaws............................................................8
(d) Directors.........................................................9
(e) Conversion of Target Shares.......................................9
(f) Fractional Shares.................................................9
(g) Exchange of Certificates..........................................9
4. The Closing............................................................10
5. Representations and Warranties of Target...............................11
(a) Organization, Qualification, and Corporate Power.................11
(b) Capitalization...................................................11
(c) Authorization of Transaction.....................................12
(d) Noncontravention.................................................12
(e) Brokers' Fees....................................................13
(f) Title to Properties; Encumbrances; Condition of Properties.......13
(g) Subsidiaries.....................................................13
(h) Financial Statements.............................................13
(i) Internal Controls................................................13
(j) No Undisclosed Liabilities.......................................14
(k) Books and Records................................................14
(l) Absence of Certain Changes.......................................14
(m) Legal Compliance.................................................16
(n) Licenses and Permits.............................................16
(o) Tax Matters......................................................16
(p) Real Property....................................................16
(q) Intellectual Property............................................17
(r) Contracts........................................................17
(s) Customers and Suppliers..........................................18
(t) Accounts Receivable..............................................19
(u) Disputed Accounts Payable........................................19
(v) Affiliate Transactions...........................................19
i
TABLE OF CONTENTS
(continued)
Page
(w) Litigation.......................................................19
(x) Employee Benefits................................................19
(y) Employees........................................................22
(z) Environmental, Health, and Safety Matters........................23
(aa) Insurance........................................................23
(bb) Bank Accounts....................................................24
(cc) Product Liability................................................24
(dd) Outstanding Indebtedness.........................................24
(ee) Keg Deposits.....................................................24
(ff) Product Quality..................................................24
(gg) Correctness of Representations and Warranties....................24
6. Representations and Warranties of Buyer................................24
(a) Organization.....................................................24
(b) Authorization of Transaction.....................................25
(c) Noncontravention.................................................25
(d) Capitalization...................................................25
(e) Brokers' Fees....................................................26
(f) No Buyer Material Adverse Effect.................................26
(g) Tax Matters......................................................26
(h) Tax Treatment....................................................26
(i) Licenses and Permits.............................................26
(j) Product Quality..................................................27
(k) Correctness of Representations and Warranties....................27
(l) SEC Filings; Buyer Financial Statements..........................27
7. Covenants..............................................................28
(a) From Execution through Closing...................................28
(b) From and After the Date of Closing...............................33
8. Conditions to Obligation to Close......................................34
(a) Conditions to Obligation of Buyer................................34
(b) Conditions to Obligation of Target...............................36
9. Specific Performance...................................................38
10. Termination............................................................38
(a) Termination of Agreement.........................................38
(b) Effect of Termination............................................39
ii
TABLE OF CONTENTS
(continued)
Page
11. Miscellaneous..........................................................39
(a) Nonsurvival of Representations, Warranties, and Agreements.......39
(b) Press Releases and Public Announcements..........................39
(c) No Third-Party Beneficiaries.....................................39
(d) Entire Agreement.................................................39
(e) Succession and Assignment........................................40
(f) Counterparts.....................................................40
(g) Headings.........................................................40
(h) Notices..........................................................40
(i) Governing Law and Disputes.......................................40
(j) Consent to Jurisdiction; Waivers of Trial by Jury................41
(k) Amendments and Waivers...........................................41
(l) Severability.....................................................41
(m) Fees and Expenses................................................41
(n) Construction.....................................................41
(o) Further Assurances...............................................42
Exhibit A: Form of Articles of Merger
Exhibit B: Form of Shareholder Lock-Up Agreements
Exhibit C: Form of Non-Competition and Non-Solicitation Agreements
Exhibit D: Form of Opinion of Target's Counsel
Exhibit E: Form of Opinion of Buyer's Counsel
iii
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger ("Agreement") is entered into
effective as of November 13, 2007, by and between Redhook Ale Brewery,
Incorporated, a Washington corporation ("Buyer"), and Xxxxxx Brothers Brewing
Company, an Oregon corporation ("Target"). Buyer and Target are referred to
collectively herein as the "Parties."
WHEREAS, the respective Boards of Directors of Buyer and Target deem
it advisable and in the best interests of their respective shareholders to
consummate the business combination provided for herein;
WHEREAS, in furtherance thereof, the respective Boards of Directors
of Buyer and Target have approved this Agreement and the Merger, upon the terms
and subject to the conditions set forth in this Agreement;
WHEREAS, the Board of Directors of Buyer has authorized, and shall
recommend to the shareholders of Buyer, for their approval, the issuance of
shares of Buyer Common Stock pursuant to the Merger;
WHEREAS, the Board of Directors of Target has authorized and shall
recommend to the shareholders of Target, for their approval, the Merger and this
Agreement; and
WHEREAS, for federal income tax purposes, it is intended that the
acquisition of Target by Buyer pursuant to this Agreement shall qualify as a
reorganization under the provisions of Section 368(a) of the Code;
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, and intending to be legally bound hereby, the
Parties agree as follows.
1. Definitions.
"A-B" means Anheuser-Xxxxx, Incorporated, and its Affiliate, Xxxxx
Investment Corporation.
"A-B Agreements" means the Exchange and Recapitalization Agreement
dated June 30, 2004 between Target and A-B, Letter Agreement regarding the
Exchange and Recapitalization Agreement dated July 1, 2004 between Target and
A-B, and the Registration Rights Agreement dated July 1, 2004 between Target and
A-B.
"Affiliate" has the meaning set forth in Rule 12b-2 of the Exchange
Act.
"Affiliate Transactions" means any contract or other arrangement
between or among Target on the one hand, and an Affiliate, or employees,
directors or family members of an Affiliate, on the other hand.
"Articles of Merger" shall mean the Articles of Merger filed to
consummate the Merger and substantially in the form attached hereto as Exhibit
A.
"Balance Sheet" means the audited balance sheet of Target as of
December 31, 2006.
"Balance Sheet Date" means December 31, 2006.
"Bonus Plans" has the meaning set forth in Section 5(y).
"Business" means the business conducted by Target prior to and as of
the Closing Date.
"Buyer" has the meaning set forth in the preface above.
"Buyer Common Stock" means the Common Stock, Par Value $0.005 Per
Share, of Buyer.
"Buyer Disclosure Schedule" has the meaning set forth in Section 6.
"Buyer Material Adverse Effect" means any fact, circumstance,
occurrence, change, or development which has a material adverse effect on the
business, assets, liabilities, prospects, capitalization, or condition
(financial or otherwise), of Buyer and its Subsidiaries, taken as a whole, or on
the ability of Buyer to consummate the Transactions in accordance with the terms
of this Agreement and the Documents; provided, however, that none of the
following shall be deemed, either alone or in combination, to constitute, and
none of the following shall be taken into account in determining whether there
has been or will be a Buyer Material Adverse Effect: any fact, circumstance,
occurrence, change or development primarily arising out of or resulting from:
(A) changes, after the date hereof, in laws, rules or regulations of general
applicability or interpretations thereof by any courts or Governmental
Authority; (B) changes, after the date hereof, in global or national political
conditions or in general U.S. economic or market conditions affecting Buyer's
business; or (C) public disclosure of the transactions contemplated hereby,
including the impact thereof on customers, suppliers, licensors, and employees.
"Buyer Nondisclosure Agreement" means that Non-Disclosure Agreement
dated January 3, 2007 between Buyer and Target relating to the confidential
information of Buyer.
"CBA" means Craft Brands Alliance LLC, an Oregon limited liability
company, of which Buyer and Target are the sole members.
"CBA Agreements" means the CBA Restated Operating Agreement dated
July 1, 2004, as amended; the Supply, Distribution and Licensing Agreement dated
July 1, 2004 between CBA and Target; the Management Services Agreement dated
July 1, 2004 between CBA and Target; the Consulting Services Agreement dated
July 1, 2004 between CBA and Target, and the Cross-Indemnity Agreement dated
July 1, 2004 between CBA, Target and Buyer.
2
"Certificates" means the stock certificates issued to the Target
Shareholders representing the Target Shares.
"Claim" means any claim, demand, cause of action, chose in action,
right of recovery or right of set-off of whatever kind or description against
any Person.
"Closing" has the meaning set forth in Section 2(b).
"Closing Date" has the meaning set forth in Section 2(b).
"Code" means the Internal Revenue Code of 1986, as amended.
"Consulting Agreement" means a one-year Consulting Agreement between
Buyer and Xxxx Xxxxxxx.
"Copyrights" has the meaning set forth in the definition of the term
"Intellectual Property Rights".
"Dissenting Share" means any Target Share as to which the holder of
record thereof has exercised his, her or its appraisal rights under the Oregon
Business Corporation Act.
"Documents" means the Buyer Disclosure Schedule, the Consulting
Agreement, the Non-Competition and Non-Solicitation Agreements, the Shareholder
Lock-Up Agreements, the Target Disclosure Schedule, the Employment Agreements,
the Articles of Merger and any other agreements or certificates required to be
executed or delivered by Target or Buyer in accordance with Section 4 or Section
8.
"Effective Time" means the date and time specified in the Articles
of Merger as the effective date of the consummation of the Merger.
"Employee Benefit Plan" means any employment, bonus, deferred
compensation, incentive compensation, stock purchase, stock option, stock
appreciation right or other stock-based incentive, severance, change-in-control,
or termination pay, hospitalization or other medical, disability, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension, or
retirement plan, program, agreement or arrangement and each other employee
benefit plan, program, agreement or arrangement, sponsored, maintained or
contributed to or required to be contributed to by Target, or any ERISA
Affiliate for the benefit of any current or former employee, consultant or
director of Target, or any ERISA Affiliate.
"Employment Agreements" means employment agreements between Buyer
and each of Xxxx Xxxxxx, Xxxxxx Xxxxxx, Xxxxx Xxxxxxxxxx, Xxxxx Xxxxxxxxx,
Xxxxxxx XxXxxx, Xxxxxx Xxxx, and Xxxxxxxxx Xxxxxxx.
"Encumbrances" means any and all encumbrances, liens, charges,
security interests, easements, servitudes, rights of others, assessments, zoning
or planning limitations, or any similar limitations and restrictions,
restrictions on transfer, rights of first refusal or first offer, options,
claims, mortgages or pledges of any nature whatsoever.
3
"Environmental Claim" means any written claim, action, cause of
action, suit, proceeding, investigation, order, demand, notice or other
communications by any Person alleging potential Liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries, or penalties) arising out of, based on or resulting from (a)
the presence, or release into the environment, of, or exposure to, any Material
of Environmental Concern at any location, whether or not owned or operated by
Target or (b) circumstances forming the basis of any violation, or alleged
violation, of any Environmental Law, and any enforcement order or injunction
relating to or arising under any Environmental Law.
"Environmental Laws" means all federal, state, local and foreign
laws, regulations, ordinances, requirements of governmental authorities, and
common law regulating the protection or clean up of the environment or relating
to pollution or protection, health or safety of human health, wildlife or the
environment (including, without limitation, ambient air, surface water, ground
water, land surface or subsurface strata, and natural resources), including,
without limitation, laws and regulations relating to emissions, discharges,
releases or threatened releases of, or exposure to, Materials of Environmental
Concern, or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Materials of
Environmental Concern.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" means any trade or business, whether or not
incorporated, that together with Target would be deemed a "single employer"
within the meaning of Section 414(b), (c), (m) or (o) of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Agent" has the meaning set forth in Section 3(g)(i).
"Financial Statements" has the meaning set forth in Section 5(h).
"FSB" means Xxxxxx Street Brewery, LLC, an Illinois limited
liability company.
"GAAP" means United States generally accepted accounting principles.
"Governmental Authority" means any court, administrative agency or
commission or other federal, state or local governmental authority or
instrumentality.
"Indebtedness" means (i) all indebtedness (including any current
portion) for borrowed money or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the ordinary course
of business and payable in accordance with customary practices), (ii) any other
indebtedness (including any current portion) that is evidenced by a note, bond,
debenture or similar instrument, (iii) all obligations (including any current
portion) under financings (other than operating leases), (iv) all liabilities
secured by any Encumbrances on any property, and (v) all guarantee obligations.
4
"Intellectual Property Rights" means intellectual property rights
arising from or in respect of the following, whether protected, created or
arising under the laws of the United States or any other jurisdiction: (i) trade
names, trademarks and service marks (whether registered or unregistered,
including any applications for registration of any of the foregoing), logos,
Internet domain names, trade dress rights, together with the goodwill associated
with any of the foregoing; (ii) patents and applications therefor, including
continuation, divisional, continuation in part, or reissue patent applications
and patents issuing thereon (collectively, "Patents"); (iii) copyrights and
registrations and applications therefor (collectively, "Copyrights") and mask
work rights; (iv) know how, inventions, discoveries, concepts, ideas, methods,
processes, designs, formulae, technical data, drawings, specifications, and
databases to the extent proprietary and confidential to Target, including
customer lists, in each case excluding any rights in respect of any of the
foregoing that comprise or are protected by Copyrights, mask work rights or
Patents (collectively, "Trade Secrets"); (v) all other proprietary rights, (vi)
all copies and tangible embodiments thereof (in whatever form or medium), and
(vii) License Agreements.
"Interim Balance Sheet" means the unaudited balance sheet of Target
as of September 30, 2007.
"Interim Balance Sheet Date" means September 30, 2007.
"Knowledge of Buyer" (or any formulation thereof) means the actual
knowledge of any of Xxxx Xxxxxxx, Xxxxx Xxxxxxxxx and Xxx Xxxxxxxx.
"Knowledge of Target" (or any formulation thereof) means the actual
knowledge of any of: (i) Xxxx Xxxxxx, Xxxxxx Xxxxxx, and Xxxxx Xxxxxxxxxx; (ii)
Xxxxxxx XxXxxx, Xxxxxx Xxxx, and Xxxxxxxxx Xxxxxxx with respect to Sections
5(l), 5(r) and 5(s) only; and (iii) Xxxx Xxxxxx with respect to Sections 5(l),
5(r), 5(s), and 5(x) only.
"Kona" means Kona Brewery LLC, a Hawaii limited liability company.
"Lease" has the meaning set forth in Section 5(p).
"Leased Real Property" has the meaning set forth in Section 5(p).
"Liability" means any liability or obligation (whether known or
unknown, whether asserted or unasserted, whether absolute, contingent, fixed or
otherwise, whether accrued or unaccrued, whether liquidated or unliquidated, and
whether due or to become due), including any liability for Taxes.
"License Agreements" means all material written agreements between
Target, and third parties, other than those which have expired or been
terminated by the parties thereto, and in which: (i) such third party has
licensed or granted to Target any right to use, exploit or practice any of such
third party's Intellectual Property Rights or technology; or (ii) Target (x) has
granted to such third party any right to use, exploit or practice any of
Target's Intellectual Property Rights or technology, or (y) has agreed to any
restriction on the right of Target to use or enforce any of Target's
Intellectual Property Rights or technology owned by Target.
5
"Material Contract" has the meaning set forth in Section 5(r).
"Materials of Environmental Concern" means chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum and
petroleum products, asbestos or asbestos-containing materials or products,
polychlorinated biphenyls, lead or lead-based paints or materials, radon,
fungus, mold or other substances that may have an adverse effect on human
health.
"Merger" has the meaning set forth in Section 2(a).
"Merger Consideration" has the meaning set forth in Section 2(c).
"Multiemployer Plan" has the meaning set forth in ERISA Section
3(37).
"Non-Competition and Non-Solicitation Agreements" means the
agreements attached hereto as Exhibit C, to be executed by Xxxx Xxxxxx and
Xxxxxx Xxxxxx.
"Oregon Business Corporation Act" means the Business Corporation Act
of the State of Oregon, as amended.
"Owned Real Property" has the meaning set forth in Section 5(p).
"Patents" has the meaning set forth in the definition of the term
"Intellectual Property Rights."
"Party" has the meaning set forth in the preface above.
"Per Share Consideration" means 2.1551 shares of Buyer Common Stock.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization, a governmental entity (or any
department, agency, or political subdivision thereof) or any other entity or
organization.
"Portland Brewery Project" means the expansion of the brewing
facility owned by Target located at 0000 X. Xxxxxxxxxxx, Xxxxxxxx, Xxxxxx.
"Requisite Shareholder Approval" means the affirmative vote or
written consent of the holders of at least a majority of the outstanding shares
of Target Common Stock in favor of this Agreement and the Merger, voting as a
single class.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Shareholder Lock-Up Agreements" means Shareholder Lock-Up
Agreements in substantially the form attached hereto as Exhibit B.
6
"Subsidiary" means any Person with respect to which a specified
Person (or a Subsidiary thereof) owns a majority of the common stock or other
securities or has the power to vote or direct the voting of sufficient
securities to elect a majority of the board of directors or similar body.
"Surviving Corporation" has the meaning set forth in Section 2(a).
"Target" has the meaning set forth in the preface above.
"Target Common Stock" means the Common Stock, $.01 par value per
share, of Target.
"Target Disclosure Schedule" has the meaning set forth in Section 5.
"Target Material Adverse Effect" means any fact, circumstance,
occurrence, change, or development which has a material adverse effect on the
Business, assets, liabilities, prospects, capitalization, or condition
(financial or otherwise), of Target, or on the ability of Target to consummate
the Transactions in accordance with the terms of this Agreement and the
Documents, or on the ability of Buyer to operate the Business immediately after
the Closing; provided, however, that none of the following shall be deemed,
either alone or in combination, to constitute, and none of the following shall
be taken into account in determining whether there has been or will be a Target
Material Adverse Effect: any fact, circumstance, occurrence, change or
development primarily arising out of or resulting from: (A) changes, after the
date hereof, in laws, rules or regulations of general applicability or
interpretations thereof by any courts or Governmental Authority; (B) changes,
after the date hereof, in global or national political conditions or in general
U.S. economic or market conditions affecting the Business; or (C) public
disclosure of the transactions contemplated hereby, including the impact thereof
on customers, suppliers, licensors, and employees.
"Target Nondisclosure Agreement" means that Non-Disclosure Agreement
dated January 3, 2007 between Buyer and Target relating to the confidential
information of Target.
"Target Series D Preferred Stock" means the Series D Preferred
Stock, $.01 par value per share, of Target.
"Target Shareholder" means any Person who or which holds any Target
Shares.
"Target Shares" means collectively, outstanding shares of the Target
Common Stock and the Target Series D Preferred Stock.
"Tax" or "Taxes" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
Section 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, workers compensation, disability,
real property, personal property, sales, use, transfer, registration, value
added, alternative or add-on minimum, estimated, or other tax of any kind
whatsoever, including any interest, penalty, or addition thereto, whether
disputed or not.
7
"Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Trade Secrets" has the meaning set forth the definition of the term
"Intellectual Property Rights."
"Transactions" means all the transactions provided for by this
Agreement and the other Documents.
"TTB" means the Alcohol and Tobacco Tax and Trade Bureau of the U.S.
Department of the Treasury.
"Washington Business Corporation Act" means the Business Corporation
Act of the State of Washington, as amended.
2. Basic Transaction.
(a) The Merger. On and subject to the terms and conditions of this
Agreement, Target will merge with and into Buyer (the "Merger") at the Effective
Time. Buyer shall be the corporation surviving the Merger (the "Surviving
Corporation").
(b) The Closing. The closing of the Transactions (the "Closing")
as provided in Section 4 shall take place at the offices of Xxxxxxx Xxxxxxxx
X.X., 0000 Xxxxxx Xxxxxx, Xxxxx 0000, in Seattle, Washington, commencing at 9:00
a.m. local time on a day agreeable to Buyer and Target and no later than three
business days following the satisfaction or waiver of all conditions to closing
set forth in Section 8. The date on which the Closing occurs is referred to
herein as the "Closing Date".
(c) Merger Consideration. Subject to the terms and conditions of
this Agreement, the merger consideration payable by Buyer hereunder is the
number of shares of Buyer Common Stock calculated by multiplying 2.1551 times
the number of Target Shares that are outstanding at the Effective Time and are
not Dissenting Shares (the "Merger Consideration").
3. Effect of Merger.
(a) General. The Merger shall have the effect set forth in the
Articles of Merger and the Washington Business Corporation Act.
(b) Articles of Incorporation. The Restated Articles of
Incorporation set forth in the Articles of Merger shall be the articles of
incorporation of the Surviving Corporation until further amended in accordance
with the terms thereof and the laws of the State of Washington.
(c) Bylaws. The Amended and Restated Bylaws of Buyer dated April
7, 2004, amended as provided in the Articles of Merger, shall be the bylaws of
the Surviving Corporation until further duly amended in accordance with the
terms thereof, Buyer's Restated Articles of Incorporation and the laws of the
State of Washington.
8
(d) Directors. The directors of the Surviving Corporation at and
as of the Effective Time shall be the directors listed in the Articles of
Merger.
(e) Conversion of Target Shares. At and as of the Effective Time,
by virtue of the Merger and without any action on the part of Target or the
Target Shareholders, all of the Target Shares shall be canceled and converted
into and represent the right to receive the following consideration:
(i) Target Shares. Each Target Share that is not a
Dissenting Share shall be converted into the right to receive the Per Share
Consideration. Each Target Share converted into the right to receive the Per
Share Consideration will automatically be canceled and retired and cease to
exist as of the Effective Time, and each Certificate shall thereafter represent
only the right to receive the portion of the Merger Consideration, and any cash
to be paid in lieu of fractional shares, payable with respect to the Target
Shares previously represented by such Certificate, in each case without any
interest.
(ii) Dissenting Shares. Each Dissenting Share shall be
automatically canceled and retired and cease to exist as of the Effective Time
and shall thereafter solely have the rights set forth in ORS 60.551 to 60.594 of
the Oregon Business Corporation Act.
(f) Fractional Shares. No fractional shares of Buyer Common Stock
will be issued by virtue of the Merger and any Target Shareholder otherwise
entitled hereunder to receive a fractional share of Buyer Common Stock (after
aggregating all fractional shares of Buyer Common Stock that would otherwise be
received by such holder) will be entitled to receive in lieu of such fractional
share (rounded to the nearest ten thousandth of a share) a cash payment in an
amount, rounded to the nearest cent, equal to such fraction multiplied by the
closing price of the Buyer Common Stock reported on the Nasdaq Stock Market on
the last trading day before the Closing Date.
(g) Exchange of Certificates.
(i) At or prior to the Closing Date, Buyer will enter into
an agreement with Mellon Investor Services (or such other bank or trust company
in the United States as may be designated by Buyer, the "Exchange Agent"), which
will provide that Buyer will, as part of the Closing, deliver to the Exchange
Agent the shares of Buyer Common Stock representing the Merger Consideration.
Buyer will pay the fees and expenses of the Exchange Agent.
(ii) As soon as reasonably practicable after the Effective
Time, Buyer will cause the Exchange Agent to deliver or mail to each holder of
record of an outstanding Certificate: (i) a letter of transmittal specifying
that delivery of each Certificate is effected, and risk of loss and title to the
Certificate passes, only upon actual delivery of the Certificate to the Exchange
Agent, which transmittal letter will be in such form as Buyer and Target may
reasonably specify or the Exchange Agent may reasonably request; and (ii)
instructions for surrendering Certificates. Upon surrender of a Certificate to
the Exchange Agent, together with a duly executed transmittal letter and other
documents reasonably required by the Exchange Agent, the holder of such
Certificate will receive in exchange therefor the portion of the Merger
Consideration, and any cash to be paid in lieu of fractional shares, payable
with respect to the Target Shares previously represented by such Certificate, in
each case without any interest.
9
(iii) All Merger Consideration paid upon the surrender of
Certificates will be deemed to have been paid in full satisfaction of all rights
pertaining to Target Shares represented by such Certificates. If, after the
Effective Time, Certificates are presented to Buyer or the Exchange Agent for
any reason, they will be exchanged as provided in this Section 3, except as
otherwise provided by law.
(iv) None of Buyer or any of its Affiliates or the Exchange
Agent is liable to any person in respect of any shares of Buyer Common Stock or
cash delivered to a public official in accordance with any applicable abandoned
property, escheat or other similar law. If any Certificate is not surrendered
within three years of the Effective Time (or immediately prior to such earlier
date on which any amounts payable in accordance with this Section 3 would
otherwise escheat to or become the property of any governmental entity), any
such amounts will, to the extent permitted by applicable law, become the
property of Buyer, free and clear of all claims or interest of any Person
previously entitled thereto.
(v) If any Certificate is lost, stolen or destroyed, upon
the execution and delivery to the Exchange Agent by the holder of record of such
Certificate of such additional documentation that the Exchange Agent may
reasonably request, the payment to the Exchange Agent by such holder of any
indemnity/surety bond in such amount as required by the Exchange Agent and the
payment to the Exchange Agent by such holder of any handling or other fee
required by the Exchange Agent, the Exchange Agent will pay and issue in
exchange for such lost, stolen or destroyed Certificate the portion of the
Merger Consideration, and any cash to be paid in lieu of fractional shares,
payable with respect to the Target Shares previously represented thereby, in
each case without any interest.
4. The Closing. At the Closing,
(i) Target shall deliver to Buyer the various certificates,
instruments and documents referred to in Section 8(a) below, to the extent not
previously delivered;
(ii) Buyer shall deliver to Target the various certificates,
instruments and documents referred to in Section 8(b) below, to the extent not
previously delivered;
(iii) The Surviving Corporation shall file with the Secretary
of State of the State of Washington and the Secretary of State of the State of
Oregon the Articles of Merger; and
(iv) Buyer shall deposit the Merger Consideration with the
Exchange Agent.
10
5. Representations and Warranties of Target. Target represents and
warrants to Buyer that the statements contained in this Section 5 are: (x)
correct and complete as of the date of this Agreement; and (y) will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 5) except as set forth in the disclosure schedule accompanying this
Agreement (the "Target Disclosure Schedule"). The Target Disclosure Schedule is
arranged in paragraphs and subparagraphs corresponding to the lettered and
numbered paragraphs and subparagraphs contained in this Section 5, as
applicable, and any fact or item disclosed on any disclosure schedule shall be
deemed disclosed on all other disclosure schedules to which such disclosure is
appropriately cross-referenced and otherwise full, fair, and in sufficient
detail to enable a reasonable person to identify the other article, section, or
subsection of this Agreement to which the disclosure is responsive.
(a) Organization, Qualification, and Corporate Power. Target is a
corporation duly organized, validly existing, and in good standing under the
laws of the jurisdiction of its incorporation. Target is duly authorized to
conduct business and is in good standing and holds all material licenses and
registrations required to conduct its Business in the jurisdictions set forth in
Section 5(a) of the Target Disclosure Schedule, which are all of the
jurisdictions in which the character of the property owned or leased by it or
the conduct of its Business makes such qualification necessary, except where the
failure to be so duly qualified and in good standing would not materially and
adversely affect the ongoing Business of Target. Target has not received notice
from any jurisdiction in which it is not duly qualified of a requirement to
register in such jurisdiction. Target has full corporate power and authority to
carry on the businesses in which it is engaged as such are being conducted and
to own and use the properties owned and used by it. Target has made available to
Buyer complete and correct copies of the Articles of Incorporation and Bylaws or
other applicable organizational documents of Target as presently in effect.
(b) Capitalization. The entire authorized capital stock of Target
consists of 25,000,000 shares of Target Common Stock, $0.01 par value, with
3,793,603 shares outstanding; 2,000,000 shares of preferred stock, $.01 par
value, of which 120,000 shares have been designated as Target Series A Shares,
with zero issued and outstanding, 1,404,398 shares have been designated as
Target Series B Shares, with zero shares issued and outstanding, 42,730.6 shares
have been designated as Target Series C Shares, with zero shares issued and
outstanding, and 78,155 shares have been designated as Target Series D Preferred
Stock, with 78,155 shares issued and outstanding. All of the issued and
outstanding Target Shares have been duly authorized and are validly issued,
fully paid, and nonassessable. Target is not obligated to purchase, and Target
does not own, directly or indirectly, any equity securities or securities
convertible into or exchangeable or exercisable for equity securities of any
Person. Except for Target's ownership interests in CBA, FSB, and Kona, Target
does not have any direct or indirect equity or ownership interest in any Person.
All securities of Target have been issued in compliance with applicable laws.
There are no voting trusts or other agreements or understandings in respect of
the voting of the securities of Target. Section 5(b) of the Target Disclosure
Schedule sets forth the name of each shareholder of Target and opposite the name
of each such shareholder, the number and type of Target Shares held by such
Person, as of the date of this Agreement. Except as set forth in Section 5(b) of
the Target Disclosure Schedule, there are no outstanding or authorized options,
11
warrants, purchase rights, subscription rights, conversion rights, exchange
rights, or other securities, contracts or commitments that could require Target
to: (i) issue, sell, or otherwise cause to become outstanding any of its
securities (equity, debt, convertible or otherwise); (ii) acquire any of its
securities (equity, debt, convertible or otherwise); (iii) pay any dividends on
any of its securities (equity, debt, convertible or otherwise); or (iv)
purchase, redeem or retire any outstanding shares of any of its securities
(equity, debt, convertible or otherwise). There are no outstanding or authorized
restricted stock, restricted units, stock appreciation, phantom stock, stock
options, stock warrants or similar rights with respect to Target.
(c) Authorization of Transaction. Target has the requisite
corporate power and authority to execute and deliver each of this Agreement and
the Documents, to perform its obligations hereunder and thereunder and to
consummate the Transactions. Upon execution and delivery by Target, each of this
Agreement and the Documents to which Target is a party will constitute the
legal, valid and binding obligation of Target, enforceable against Target in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law). The Board of Directors of Target has: (i) adopted resolutions approving
this Agreement and the Transactions; (ii) determined that this Agreement and the
Transactions are in the best interests of the Target Shareholders and
recommended approval of this Agreement and the Transactions to the Target
Shareholders; and (iii) authorized the submission of this Agreement to the
Target Shareholders for their approval.
(d) Noncontravention. Neither the execution and delivery of this
Agreement or any Document, nor the performance by Target of its obligations
hereunder or thereunder and consummation of the Transactions will: (i) violate
any constitution, statute, law, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government or Governmental
Authority to which Target is subject or any provision of the Articles of
Incorporation or Bylaws of Target; (ii) contravene, conflict with, or result in
a violation of any of the terms or requirements of, or give any Governmental
Authority the right to revoke, withdraw, suspend, cancel, terminate, or modify,
any Permit that is held by Target or that otherwise relates to the Business of,
or any of the assets owned or used by, Target, except such as would not
constitute a Target Material Adverse Effect; or (iii) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, materially modify, or cancel, or
require any notice under any agreement, contract, lease, license, instrument, or
other arrangement to which Target is a party or by which Target is bound or to
which any of its assets is subject, except such as would not result in a Target
Material Adverse Effect (but this exception shall not apply to Affiliate
Transactions). Section 5(d) of the Target Disclosure Schedule lists all notices,
filings, authorizations, consents and approvals required to be given by Target
to, made by Target with or obtained by Target from any Governmental Authority or
third party in order for the Parties to consummate the Transactions, except such
as relate to the regulation of alcoholic beverages or would not result in a
Target Material Adverse Effect.
12
(e) Brokers' Fees. Target does not have any Liability or
obligation to pay any fees or commissions to any broker, finder, or agent with
respect to the Transactions.
(f) Title to Properties; Encumbrances; Condition of Properties.
Target has good, valid and marketable title to all the properties and assets
reflected in the Interim Balance Sheet and all of the properties and assets
purchased or otherwise acquired by Target since the Interim Balance Sheet Date,
in each case free and clear of all Encumbrances, except for: (i) any of such
properties or assets sold or otherwise disposed of in the ordinary course of
business and consistent with past practice; (ii) liens for current taxes not yet
due or which are being contested in good faith by appropriate proceedings and
for which appropriate reserves have been established and disclosed on the Target
Disclosure Schedule; (iii) Encumbrances which are not material to the value of
the properties or assets encumbered and which do not impair in any material
respect the current use or operation of such properties and assets; (iv) liens
and security interests securing Indebtedness incurred in the ordinary course of
business, including, without limitation, all Indebtedness incurred in connection
with the Portland Brewery Project; and (v) mechanics', materialmen's, carriers',
warehousemen's and other like liens arising in the ordinary course of business
in respect of obligations not overdue for a period in excess of 90 days or that
are being contested in good faith by appropriate proceedings and for which
appropriate reserves have been established and disclosed on the Target
Disclosure Schedule. Target has the right to use all assets and properties not
owned by Target but utilized in connection with its Business. The rights,
properties and other assets presently owned, leased, licensed or otherwise used
by Target include all such rights, properties and other assets necessary to
permit Target to conduct its Business in all material respects in the same
manner as such Business has been conducted prior to the date hereof or the
Closing Date, as applicable. The equipment and other tangible property or assets
owned or used by Target are in the aggregate in sufficient condition and
adequate for the uses to which they are being put, and conform with applicable
laws.
(g) Subsidiaries. Target has no Subsidiaries.
(h) Financial Statements. Copies of the following financial
statements of Target have been provided to Buyer: (i) audited consolidated
balance sheets and statements of income, changes in stockholders' equity and
cash flows as of and for the fiscal years ended December 31, 2004, 2005 and
2006; and (ii) the Interim Balance Sheet and an unaudited consolidated statement
of income as of the Interim Balance Sheet Date and for the partial fiscal year
then ended (collectively the "Financial Statements"). The Financial Statements
(including the notes thereto) have been prepared from, are in accordance with
and accurately reflect the books and records of Target, have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby and fairly present the financial condition of Target as of such
dates and the results of operations of Target for such periods; provided,
however, that the Financial Statements for periods subsequent to January 1, 2007
are subject to normal year-end adjustments in accordance with past practice and
do not contain complete footnotes.
(i) Internal Controls. Target's internal accounting controls are
effective to provide reasonable assurance that: (a) transactions are executed in
accordance with management's general or specific authorization; (b) transactions
are recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability for assets; (c) material
misstatements in Target's annual and interim financial statements will be
prevented or detected on a timely basis; (d) access to assets is permitted only
in accordance with management's general or specific authorization; and (e) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
13
(j) No Undisclosed Liabilities. Target does not have any
Liabilities, except: (a) as and to the extent reflected or reserved against on
the Interim Balance Sheet; and (b) Liabilities incurred in the ordinary course
of business and consistent with past practice since the Interim Balance Sheet
Date. The reserves reflected in the Financial Statements are reasonable and have
been calculated consistent with past practice.
(k) Books and Records. The books and records of Target are
complete and correct in all material respects and have been maintained in
accordance with sound business practices. True and complete copies of all minute
books and stock record books of Target have heretofore been made available to
Buyer, except for minutes relating to the Transaction and the consideration of
other potential transactions similar to the transactions contemplated by this
Agreement.
(l) Absence of Certain Changes. Since the Balance Sheet Date,
there has not occurred any event or circumstance constituting or giving rise to
a Target Material Adverse Effect and Target is not aware of any events or
circumstances which could, upon the passage of time or otherwise, give rise to a
Target Material Adverse Effect. During the period commencing on July 1, 2007,
and ending on the date of this Agreement, Target has conducted its Business only
in the normal and ordinary course in a manner consistent with past practice and
there has not been any:
(i) change in Target's authorized or issued equity
securities; grant of any option or right to purchase equity securities of
Target; issuance of or grant of any option or right to purchase, any security
convertible into or exchangeable or exercisable for such equity securities;
grant of any registration rights; purchase, redemption, retirement, or other
acquisition by Target of any equity securities; or declaration or payment of any
dividend or other distribution or payment by Target in respect of equity
securities;
(ii) amendment to the Articles of Incorporation or Bylaws of
Target;
(iii) labor dispute or claim of unfair business practices
involving Target; entry into or change in the compensation payable or to become
payable to any of the officers, directors or employees of Target who have total
annual compensation in excess of $50,000; any change of compensation payable to
or to become payable to a class or category of employees of Target other than in
the ordinary course of business, consistent with past practices; any change, or
to the Knowledge of Target any prospective change (other than changes which may
occur in connection with the Transactions) with respect to the employment status
or compensation of any officer or director of Target; any grant of any severance
or termination pay to any officer, director or employee of Target; or any change
in benefits payable under any existing severance or termination pay policies,
employment agreements or other generally applicable compensation policies;
14
(iv) grant, issuance, acceleration, payment, accrual or
agreement to pay or make any accrual or arrangement for payment of salary or
other payments or benefits pursuant to, or adoption or amendment of, any new or
existing Employee Benefit Plan;
(v) entry into, termination or amendment of, or receipt of
notice (oral or written) of termination of or reduction of business under any
Material Contract;
(vi) change in any method of calculating any bad debt,
contingency or other reserves, or any other change in the accounting methods or
practices used by Target;
(vii) cancellation or waiver of any claims or rights with a
value to Target greater than $25,000 individually;
(viii) new election or change in any existing election
relating to Taxes, settlement of any claim or assessment relating to Taxes,
consent to any claim or assessment relating to Taxes, or waiver of the statute
of limitations for any such claim or assessment;
(ix) write-down or write-off of any notes or accounts
receivable, either individually or in the aggregate, in excess of $25,000;
(x) disposal or lapse of or material amendment to any
material Intellectual Property Rights;
(xi) declaration, payment or setting aside for payment of
any dividend or other distribution in respect of equity securities of Target or
redemption, purchase or other acquisition, directly or indirectly, of any equity
securities or other securities of Target;
(xii) payment, loan or advance of any amount to, or sale,
transfer or lease of any properties or assets (real, personal or mixed, tangible
or intangible) to, agreement or arrangement with, or change in its existing
borrowing or lending arrangements for or on behalf of, Target's officers or
directors or any Affiliate of any of its officers or directors except for
directors' fees and compensation to officers as disclosed to Buyer;
(xiii) change in the methods, practices, or timing of Target's
collection of receivables or payment of payables;
(xiv) material destruction, damage or loss (casualty or other)
to any properties or other assets of Target;
(xv) purchase, sale or other disposition, or any agreement or
other arrangement for the purchase, sale or other disposition, of any of the
properties or assets of Target other than in the ordinary course of business
consistent with past practice; or
15
(xvi) agreement, whether oral or written, by Target or any of
its Affiliates to do any of the foregoing.
(m) Legal Compliance. Target has materially complied, and is in
material compliance, with all applicable laws (including rules, regulations,
codes, plans, injunctions, judgments, orders, decrees, rulings, and charges
thereunder) of federal, state, local, and foreign governments (and all agencies
thereof), including but not limited to laws and regulations applicable to the
production and sale of alcoholic beverage products, "dram shop" laws, safety
laws or regulations, or laws or regulations relating to illegal payments,
kickbacks or commercial bribery. Target has provided to Buyer a copy of the
audit report from its recent audit by the TTB.
(n) Licenses and Permits. All governmental, agency or commission
licenses, approvals, registrations and permits (the "Permits") required by
applicable law to be held or secured by Target are listed on Section 5(n) of the
Target Disclosure Schedule. Target is and at all times has been, in material
compliance with all of the terms and requirements of such Permits. Each Permit
is in full force and effect, and will continue to be so upon consummation of the
Transaction, and all necessary renewals have been, and upon consummation of the
Transaction will be, duly filed.
(o) Tax Matters.
(i) All Tax returns, statements, reports, forms and similar
statements (including estimated Tax returns, claims for refunds, amended returns
and reports and information returns and reports) required to be filed with any
taxing authority by or on behalf of Target (the "Target Returns"), were filed
when due (including any applicable extension periods) in accordance with all
applicable laws and were correct and complete. In the past six years, no Claim
has been made by an authority in a jurisdiction where Target does not file Tax
returns that Target may be subject to taxation in that jurisdiction.
(ii) Target has timely paid, or withheld and remitted to the
appropriate taxing authority, all Taxes due and payable by Target under any
applicable law.
(iii) The charges, accruals and reserves for Taxes on the
Interim Balance Sheet (whether or not due and whether or not shown on any Target
Return but excluding any provision for deferred income Taxes) are adequate under
GAAP to cover Taxes accruing through the date thereof.
(iv) There is no action or audit now pending or threatened in
writing against or in respect of any Tax or "tax asset" of Target. For purposes
of this Section 5(o)(iv), the term "tax asset" shall include any net operating
loss, net capital loss, investment tax credit, foreign tax credit, charitable
deduction or any other credit or tax attribute which could reduce Taxes.
(v) Target is not party to any tax sharing agreement.
(p) Real Property. Section 5(p) of the Target Disclosure Schedule
contains a list of any real property owned by Target (the "Owned Real Property")
or otherwise occupied by Target, and all leases and agreements for the rental of
16
real property to which Target is a party (as lessor or lessee) or by which such
real property may be bound (the "Leased Real Property"). Neither the execution
or delivery of this Agreement or any Document, nor the performance by Target of
its obligations hereunder or thereunder and consummation of the Transactions
will accelerate, modify, or terminate any of the arrangements with respect to
the Leased Real Property, except as otherwise provided herein. Target has good
and marketable fee simple title to the Owned Real Property, and has valid and
existing leasehold interests in all of the real property that it possesses,
operates or occupies (or has similar rights to possess, operate or occupy). All
Owned Real Property is free and clear of all Encumbrances. No part of the Owned
Real Property is subject to any assignment, lease, license or other similar
agreement for the enjoyment of such Owned Real Property. Target has provided to
Buyer copies of all existing title policies held in its files relating to Owned
Real Property, and to the Knowledge of Target, no exceptions, reservations, or
encumbrances have arisen or been created since the date of issuance of those
policies (other than Liens for taxes not yet delinquent). A true, correct and
complete copy of each lease relating to Leased Real Property (each, a "Lease")
has heretofore been made available to Buyer. Each Lease is valid, binding and
enforceable in accordance with its terms and is in full force and effect. There
are no existing defaults by Target under any of the Leases. No event has
occurred that (whether with or without notice, lapse of time or the happening or
occurrence of any other event) would constitute a default by Target under any
Lease. To the Knowledge of Target, there is no material default by the landlord
under any Lease. No condemnation, eminent domain, or similar proceeding exists,
is pending or, to the Knowledge of Target, is threatened, with respect to or
that could affect, any Real Property. The Owned Real Property and Leased Real
Property and the business conducted thereon comply in all material respects with
the terms of the applicable Leases and applicable laws.
(q) Intellectual Property. Target owns, or is licensed or
otherwise has the right to use, all Intellectual Property Rights which are
material to the Business, financial condition or results of operations of Target
taken as a whole. No claims are pending or, to the Knowledge of Target,
threatened that Target is infringing or otherwise adversely affecting the rights
of any Person with regard to any Intellectual Property Rights. To the Knowledge
of Target, no person is infringing the rights of Target with respect to any
Intellectual Property Rights. There are no Claims pending which challenge the
legality, validity, enforceability, use or ownership of any of Target's
Intellectual Property Rights. Section 5(q) of the Target Disclosure Schedule
lists all of Target's Intellectual Property Rights.
(r) Contracts.
(i) Section 5(r)(i) of the Target Disclosure Schedule sets
forth a complete and accurate list and (in the case of oral contracts)
description of each contract, whether written or oral, (i) with Persons to whom
Target is required to make aggregate payments in any twelve-month period in
excess of $100,000 other than with respect to Leases; (ii) with Persons to whom
Target received revenues in excess of $100,000 during the year ended December
31, 2006 or for which the lump sum or fixed price thereunder is in excess of
$100,000; (iii) that relates to Indebtedness of Target; (iv) for capital
expenditures in excess of $100,000; (v) for consulting services to Target with
Persons to whom Target has made (or is likely to make) aggregate payments in any
twelve-month period in excess of $50,000; (vi) providing for the purchase of all
17
or substantially all of its requirements of a particular product or service from
a supplier; or (vii) with suppliers providing for aggregate payments in any
twelve-month period in excess of $100,000 (each of the contracts listed in
clauses (i) through (vii), together with the Leases, the License Agreements, the
A-B Agreements and the CBA Agreements, and the contracts disclosed under Section
5(s), a "Material Contract"). Each Material Contract is in full force and effect
and is enforceable in accordance with its terms. Upon the consummation of the
Transactions, each such contract will remain in full force and effect. With
respect to each Material Contract, there is not any default or event that, with
notice or lapse of time or both, would constitute a default on the part of
Target (nor, to the Knowledge of Target, on the part of any other party
thereto).
(ii) Target has made available to Buyer a complete and
accurate copy of each written Material Contract.
(iii) Target has not received any notice, and Target has no
Knowledge, that any party to a Material Contract intends to cancel or otherwise
materially modify its relationship with Target (or Buyer following the Closing)
as a result of the Transactions.
(iv) Target does not have any outstanding contracts with
shareholders, directors, officers or employees that are not cancelable by Target
on notice of not longer than thirty (30) days and without Liability, penalty or
premium.
(v) Target is not party to any employment agreement,
separation agreement, retention agreement, change in control agreement,
collective bargaining agreement or any other agreement that contains any
severance or termination pay Liabilities or obligations.
(vi) There are no outstanding loans from Target to any
Person. Target is not party to any agreement requiring it to acquire or
guarantee any debt obligations of, or make any loan or capital contribution to,
any Person.
(vii) Target is not restricted by agreement from carrying on
its Business anywhere in the world.
(viii) Section 5(r)(viii) of the Target Disclosure Schedule
sets forth a complete list of all powers of attorney granted by or to Target.
(ix) Target does not have any Liabilities, as guarantor,
surety, co-signer, endorser, co-maker, indemnitor or otherwise, in respect of
the obligation of any Person (including pursuant to any indemnification
agreements) other than indemnification obligations under Material Contracts.
(s) Customers and Suppliers.
(i) Section 5(s)(i) of the Target Disclosure Schedule sets
forth (x) a list of each customer from whom Target received aggregate revenues
in excess of $500,000 during the twelve months ended December 31, 2006. No
Person listed in Section 5(s)(i) of Target Disclosure Schedule has suspended,
canceled or otherwise terminated its relationship with Target or to the
Knowledge of Target materially decreased its usage or purchase of the services
or products of Target. To Target's Knowledge, no Person listed in Section
5(s)(i) of the Target Disclosure Schedule has any intention to suspend,
terminate or cancel its relationship with Target.
18
(ii) Section 5(s)(ii) of the Target Disclosure Schedule sets
forth a list of each supplier from whom Target received aggregate products or
services in excess of $250,000 during the twelve months ended December 31, 2006
(the "Material Suppliers"). Target's relationship with each of the Material
Suppliers is a good commercial working relationship, and since the Balance Sheet
Date, no Material Supplier has canceled, suspended, materially modified, or
otherwise terminated its relationship with Target, or to the Knowledge of Target
materially decreased availability of its services, supplies or materials to
Target. To Target's Knowledge, no Material Supplier has any intention to do any
of the foregoing.
(t) Accounts Receivable. All accounts receivable reflected in the
Financial Statements represent valid obligations arising from sales actually
made or services actually performed in the ordinary course of business, and are
properly reflected in the Financial Statements in accordance with GAAP and the
accounts receivables reserves are reasonable and calculated consistent with past
practice. Since the Balance Sheet Date, Target has collected its accounts
receivable in the ordinary course of business and in a manner which is
consistent with past practices and has not accelerated any such collections.
(u) Disputed Accounts Payable. There are no material (individually
or in the aggregate) unpaid invoices or bills, representing amounts alleged to
be owed by Target, or other alleged obligations of Target, which Target has
disputed or determined to dispute or refuse to pay. All accounts payable and
notes payable of Target arose in bona fide arm's length transactions in the
ordinary course of business and no material account payable or note payable is
delinquent in its payment. Since the Balance Sheet Date, Target has paid its
accounts payable in the ordinary course of its business and in a manner which is
consistent with its past practices.
(v) Affiliate Transactions. Target has not entered into and is not
subject or a party to any Affiliate Transaction.
(w) Litigation. There is no action, suit, proceeding, dispute
resolution proceeding, charge, grievance or investigation (each, a
"Proceeding"), by or before any Governmental Authority or other regulatory or
administrative agency or commission or arbitration panel or dispute resolution
board or other adjudicative entity pending, or, to the Knowledge of Target,
threatened against or involving Target, or which questions or challenges or
could reasonably be expected to have the effect of preventing, delaying, making
illegal or otherwise interfering with, any of the Transactions. Target is not
subject to any judgment, order or decree.
(x) Employee Benefits.
(i) Section 5(x) of the Target Disclosure Schedule contains
a true and complete list of each Employee Benefit Plan.
19
(ii) With respect to each Employee Benefit Plan, Target has
heretofore made available to Buyer true and complete copies of each of the
following documents, as applicable:
(1) a copy of the Employee Benefit Plan documents
(including all amendments thereto) for each written Employee Benefit Plan or a
written description of any Employee Benefit Plan that is not otherwise in
writing;
(2) a copy of the annual report or Internal Revenue
Service Form 5500 Series, if required under ERISA, with respect to each Employee
Benefit Plan for the last three plan years ending prior to the date of this
Agreement for which such a report was filed;
(3) a copy of the actuarial report, if required under
ERISA, with respect to each Employee Benefit Plan for the last three plan years
ending prior to the date of this Agreement;
(4) a copy of the most recent Summary Plan Description
("SPD"), together with all Summaries of Material Modification issued with
respect to such SPD, if required under ERISA, with respect to each Employee
Benefit Plan, and all other material employee communications relating to each
Employee Benefit Plan;
(5) if the Employee Benefit Plan is funded through a
trust or any other funding vehicle, a copy of the trust or other funding
agreement (including all amendments thereto) and the latest financial statements
thereof, if any;
(6) all contracts relating to the Employee Benefit
Plan with respect to which Target or any ERISA Affiliate may have any liability,
including insurance contracts, investment management agreements, subscription
and participation agreements and record keeping agreements; and
(7) the most recent determination letter received from
the IRS with respect to each Employee Benefit Plan that is intended to be
qualified under Section 401(a) of the Code.
(iii) No liability under Title IV of ERISA has been incurred
by Target or any ERISA Affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to Target or any ERISA Affiliate
of incurring any liability under such Title, other than liability for premiums
due the Pension Benefit Guaranty Corporation ("PBGC"), which payments have been
or will be made when due. To the extent this representation applies to Sections
4064, 4069 or 4204 of Title IV of ERISA, it is made not only with respect to the
Employee Benefit Plans but also with respect to any employee benefit plan,
program, agreement or arrangement subject to Title IV of ERISA to which Target
or any ERISA Affiliate made, or was required to make, contributions during the
past six years.
(iv) The PBGC has not instituted proceedings pursuant to
Section 4042 of ERISA to terminate any of the Employee Benefit Plans subject to
Title IV of ERISA, and no condition exists that presents a material risk that
such proceedings will be instituted by the PBGC.
20
(v) With respect to each Employee Benefit Plan that is
subject to Title IV of ERISA, the present value of accumulated benefit
obligations under such plan, as determined by the plan's actuary based upon the
actuarial assumptions used for funding purposes in the most recent actuarial
report prepared by such plan's actuary with respect to such plan, did not, as of
its latest valuation date, exceed the then current value of the assets of such
plan allocable to such accumulated benefit obligations.
(vi) None of Target, any ERISA Affiliate, any Employee
Benefit Plan, any trust created thereunder, nor to Target's Knowledge, any
trustee or administrator thereof has engaged in a transaction or has taken or
failed to take any action in connection with which Target or any ERISA Affiliate
could be subject to any material liability for either a civil penalty assessed
pursuant to Section 409 or 502(i) of ERISA or a tax imposed pursuant to Section
4975(a) or (b), 4976 or 4980B of the Code.
(vii) All contributions and premiums which Target or any ERISA
Affiliate is required to pay under the terms of each Employee Benefit Plan and
Section 412 of the Code, have, to the extent due, been paid in full or properly
recorded on the financial statements or records of Target or any ERISA
Affiliate, and none of the Employee Benefit Plans subject to Section 302 of
ERISA or Section 412 of the Code or any trust established thereunder has
incurred any "accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Code), whether or not waived, as of the last day of
the most recent fiscal year of each of the Employee Benefit Plans ended prior to
the date of this Agreement. No lien has been imposed under Section 412(n) of the
Code or Section 302(f) of ERISA on the assets of Target or any ERISA Affiliate,
and no event or circumstance has occurred that is reasonably likely to result in
the imposition of any such lien on any such assets on account of any Employee
Benefit Plan.
(viii) Target has no Multiemployer Plans.
(ix) Each of the Employee Benefit Plans has been operated and
administered in all material respects in accordance with applicable laws,
including but not limited to ERISA and the Code.
(x) Each of the Employee Benefit Plans that is intended to
be "qualified" within the meaning of Section 401(a) of the Code is so qualified
in all material respects. Target has applied for and received a currently
effective determination letter from the IRS stating that it is so qualified, and
no event has occurred which would affect such qualified status. Any fund
established under an Employee Benefit Plan that is intended to satisfy the
requirements of Section 501(c)(9) of the Code has so satisfied such
requirements.
(xi) No amounts payable under any of the Employee Benefit
Plans or any other contract, agreement or arrangement with respect to which
Target may have any liability could fail to be deductible for federal income tax
purposes by virtue of Section 280G of the Code.
21
(xii) No Employee Benefit Plan provides benefits, including
without limitation death or medical benefits (whether or not insured), with
respect to current or former employees, officers, directors or consultants of
Target or any ERISA Affiliate after retirement or other termination of service
(other than (i) coverage mandated by applicable laws, (ii) death benefits or
retirement benefits under any "employee pension plan," as that term is defined
in Section 3(2) of ERISA, (iii) deferred compensation benefits accrued as
liabilities on the books of Target or any ERISA Affiliate, (iv) benefits, the
full direct cost of which is borne by the current or former employee, officer,
director or consultant (or beneficiary thereof), or (v) benefits provided under
the Xxxxxx Brothers Brewing Company Severance Pay Plan).
(xiii) The consummation of the transactions contemplated by
this Agreement will not, either alone or in combination with any other event,
(i) entitle any current or former employee, officer, director or consultant of
Target or any ERISA Affiliate to severance pay (other than severance pay under
the Xxxxxx Brothers Brewing Company Severance Pay Plan), unemployment
compensation or any other similar termination payment unless required by
applicable law, or (ii) accelerate the time of payment or vesting, or increase
the amount of or otherwise enhance any benefit due any such employee, officer,
director or consultant unless required by applicable law.
(xiv) There are no pending or, to the Knowledge of Target,
threatened or anticipated claims by or on behalf of any Employee Benefit Plan,
by any current or former employee, officer, director or consultant (or
beneficiary thereof) against any Employee Benefit Plan or otherwise involving
any such plan (other than claims for benefits made to an Employee Benefit Plan).
(y) Employees. Section 5(y) of the Target Disclosure Schedule sets
forth for the current employees of Target a list of the names, job titles or
classifications, work locations, current pay rates and total compensation paid
during the fiscal year ended December 31, 2006. Except as specifically detailed
in Section 5(y) of the Target Disclosure Schedule, after Closing Target will not
have any material bonus, stock option, management incentive, or similar
incentive compensation plans (collectively, the "Bonus Plans") in effect, nor
will it have any amounts outstanding and owing under any such Bonus Plans.
Target is not a party to or bound by any collective bargaining agreement, nor
has it experienced any strike or material grievance, claim of unfair labor
practices, labor dispute, lockout, work slowdown or work stoppage or any other
collective bargaining dispute within the past five years. Target has no
Knowledge of any organizational effort presently being made or threatened by or
on behalf of any labor union with respect to Target or its employees. Target has
complied in all material respects with all applicable federal, state and local
laws, ordinances, rules and regulations and requirements relating to the
employment of labor, including, but not limited to, laws governing wages and
hours, payment of overtime, classification of independent contractors, workplace
safety, collective bargaining, immigration, payment of Social Security, plant
closures and layoffs, unemployment and withholding taxes, and equal employment
opportunity, affirmative action, employee leave, and workplace discrimination or
harassment.
22
(z) Environmental, Health, and Safety Matters.
(i) Target is in material compliance with the Environmental
Laws, which compliance includes, but is not limited to, the possession by Target
of all Permits and other governmental authorizations required under the
Environmental Laws, and compliance with the terms and conditions thereof.
(ii) There is no Environmental Claim pending or, to the
Knowledge of Target, threatened against Target or against any Person whose
liability for any Environmental Claim Target has retained or assumed
contractually or for which Target may be liable by operation of law.
(iii) There are no past or present actions, inactions,
omissions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge, presence or
disposal of any Material of Environmental Concern, that constitute a material
violation of Environmental Laws or for which Target has retained or assumed
either contractually or by operation of law any material costs or liabilities
under Environmental Law.
(iv) Target has made available to Buyer all assessments,
reports, and results of investigations or audits conducted by or at the
direction of Target in connection with the Real Property, including any of the
foregoing regarding any violation of Environmental Laws by Target, or the
noncompliance by Target with any Environmental Laws.
(v) Target is not required by virtue of the Transactions, or
as a condition to the effectiveness of the Transactions, (i) to perform a site
assessment for Materials of Environmental Concern, (ii) to remove or remediate
Materials of Environmental Concern, (iii) to give notice to or receive approval
from any Governmental Authority, or (iv) to record or deliver to any Person any
disclosure document or statement pursuant to any Environmental Law.
(aa) Insurance. Section 5(aa) of the Target Disclosure Schedule
sets forth (a) a true and complete list of all of Target's insurance policies
currently in force and (b) a description of such risks that Target has
designated as being self-insured. All such policies are in full force and effect
and shall continue to be in full force and effect through the Closing Date, all
premiums due thereon have been paid by Target, and Target is in compliance in
all material respects with the terms and provisions of such policies. Target has
not received (i) any notice of cancellation of any such policies or refusal of
coverage thereunder, (ii) any notice that any issuer of any of such policies has
filed for protection under applicable bankruptcy laws or is otherwise in the
process of liquidating or has been liquidated, (iii) any notice that such
policies are no longer in full force and effect or that the issuer of any of
such policies is no longer willing or able to perform its obligations thereunder
or (iv) any notice that any issuer of any such policies intends to substantially
increase rates or that substantial capital improvements or other expenditures
will have to be made in order to continue such insurance at present rates.
Section 5(aa) of the Target Disclosure Schedule sets forth any and all Claims
made by Target for insurance policy coverage in excess of $100,000 for any
single event during the prior two (2) years from the date of this Agreement.
23
(bb) Bank Accounts. Section 5(bb) of the Target Disclosure Schedule
sets forth the names and locations of all banks and other financial institutions
at which Target maintains accounts or safe deposit boxes of any nature and the
names of all persons authorized to have access thereto, draw thereon or make
withdrawals therefrom.
(cc) Product Liability. To the Knowledge of Target, Target has no
material Liability arising out of any injury to individuals or property as a
result of any product produced, manufactured, supplied, marketed, distributed or
sold by Target.
(dd) Outstanding Indebtedness. Section 5(dd) of the Target
Disclosure Schedule sets forth the approximate amount of outstanding
Indebtedness of Target as of the effective date of this Agreement.
(ee) Keg Deposits. Section 5(ee) of the Target Disclosure Schedule
sets forth the number of kegs owned by Target as of the Interim Balance Sheet
Date and the amount of keg deposits reflected on the Interim Balance Sheet.
(ff) Product Quality. With respect to any product currently (or
within the past seven years) produced, manufactured, supplied, marketed
distributed or sold by Target: Such products (i) are not, and have not been,
adulterated or misbranded within the meaning of those terms under the Federal
Food, Drug and Cosmetic Act, as amended, or any applicable federal or state law
or regulation, and (ii) in all material respects, do comply, and have complied,
with all federal, state or local laws and regulations relating to the product's
manufacture, quality, labeling, identity, quantity, packaging or any other
matter applicable to the products.
(gg) Correctness of Representations and Warranties. To the
Knowledge of Target, this Section 5, together with the Target Disclosure
Schedule, does not contain any untrue statement of material fact or omit to
state any material fact necessary to make the statements and information
contained herein or therein, under the circumstances under which they were made,
not misleading.
6. Representations and Warranties of Buyer. The Buyer represents and
warrants to Target that the statements contained in this Section 6 are (x)
correct and complete as of the date of this Agreement and (y) will be correct
and complete as of the Closing Date (as though made then and as though the
Closing Date were substituted for the date of this Agreement throughout this
Section 6) except as set forth in Buyer's disclosure schedule accompanying this
Agreement (the "Buyer Disclosure Schedule"). The Buyer Disclosure Schedule is
arranged in paragraphs and subparagraphs corresponding to the lettered and
numbered paragraphs and subparagraphs contained in this Section 6, as
applicable, and any fact or item disclosed on any disclosure schedule shall be
deemed disclosed on all other disclosure schedules to which such disclosure is
appropriately cross-referenced and otherwise full, fair, and in sufficient
detail to enable a reasonable person to identify the other article, section, or
subsection of this Agreement to which the disclosure is responsive.
(a) Organization. Buyer is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation. Buyer is duly authorized to conduct business and is in good
24
standing and holds all material licenses and registrations required to conduct
its business in the jurisdictions set forth in Section 6(a) of the Buyer
Disclosure Schedule, which are all of the jurisdictions in which the character
of the property owned or leased by it or the conduct of its business makes such
qualification necessary, except where the failure to be so duly qualified and in
good standing would not materially and adversely affect the ongoing business of
Buyer. Buyer has not received notice from any jurisdiction in which it is not
duly qualified of a requirement to register in such jurisdiction. Buyer has full
corporate power and authority to carry on the businesses in which it is engaged
as such are being conducted and to own and use the properties owned and used by
it. Buyer has made available to Target complete and correct copies of the
Articles of Incorporation and Bylaws of Buyer as presently in effect.
(b) Authorization of Transaction. Buyer has the requisite
corporate power and authority to execute and deliver each of this Agreement and
the Documents, to perform its obligations hereunder and thereunder and to
consummate the Transactions. Upon execution and delivery by Buyer, each of this
Agreement and the Documents to which Buyer is a party will constitute the legal,
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general principles of equity
(regardless of whether enforcement is sought in a proceeding in equity or at
law). The Board of Directors of Buyer has adopted resolutions approving this
Agreement and the Transactions.
(c) Noncontravention. Neither the execution and delivery of this
Agreement or any Document, nor the performance by Buyer of its obligations
hereunder or thereunder and consummation of the Transactions will: (i) violate
any constitution, statute, law, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any government or Governmental
Authority to which Buyer is subject or any provision of the Restated Articles of
Incorporation or Amended and Restated Bylaws of Buyer; or (ii) contravene,
conflict with, or result in a violation of any of the terms or requirements of,
or give any Governmental Authority the right to revoke, withdraw, suspend,
cancel, terminate, or modify, any Permit that is held by Buyer or that otherwise
relates to the business of, or any of the assets owned or used by, Buyer, except
such as would not constitute a Buyer Material Adverse Effect; or (iii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
materially modify, or cancel, or require any notice under any agreement,
contract, lease, license, instrument, or other arrangement to which Buyer is a
party or by which Buyer is bound or to which any of its assets is subject,
except such as would not result in a Buyer Material Adverse Effect. Section 6(c)
of the Buyer Disclosure Schedule lists all notices, filings, authorizations,
consents and approvals required to be given by Buyer to, made by Buyer with or
obtained by Buyer from any Governmental Authority or third party in order for
the Parties to consummate the Transactions, except such as relate to the
regulation of alcoholic beverages or would not result in a Buyer Material
Adverse Effect.
(d) Capitalization. The entire authorized capital stock of Buyer
consists of 50,000,000 shares of common stock, par value $.005 per share, of
which 8,354,239 shares were issued and outstanding as of November 9, 2007, and
7,467,271 shares of preferred stock, par value $.005 per share, of which no
25
shares are outstanding. All of the issued and outstanding Buyer Common Stock has
been duly authorized and is validly issued, fully paid, and nonassessable. Buyer
is not obligated to purchase, and does not own, directly or indirectly, any
equity securities or securities convertible into or exchangeable or exercisable
for equity securities of any Person nor does it have any direct or indirect
equity or ownership interest in any Person other than a Subsidiary and equity
securities of CBA. All securities of Buyer have been issued in compliance with
applicable laws. There are no voting trusts or other agreements or
understandings in respect of the voting of the securities of Buyer. Except for
the outstanding stock options disclosed in Buyer's annual report on Form 10-K
for the fiscal year ended December 31, 2006, there are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights, or other securities, contracts or commitments that
could require Buyer to (i) issue, sell, or otherwise cause to become outstanding
any of its securities (equity, debt, convertible or otherwise), (ii) acquire any
of its securities (equity, debt, convertible or otherwise), (iii) pay any
dividends on any of its securities (equity, debt, convertible or otherwise), or
(iv) purchase, redeem or retire any outstanding shares of any of its securities
(equity, debt, convertible or otherwise).
(e) Brokers' Fees. Buyer has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
Transactions.
(f) No Buyer Material Adverse Effect. Since the Balance Sheet
Date, there has not occurred any event or circumstance constituting or giving
rise to a Buyer Material Adverse Effect and Buyer is not aware of any events or
circumstances which could, upon the passage of time or otherwise, give rise to a
Buyer Material Adverse Effect. Buyer has not received any notice, and Buyer has
no Knowledge, that any material customer, supplier, licensor or employee intends
to cancel or otherwise materially modify its relationship with Buyer as a result
of the Transactions.
(g) Tax Matters. All Taxes due and owing by Buyer have been paid.
No Claim has ever been made by an authority in a jurisdiction where Buyer does
not file Tax Returns that it may be subject to taxation by that jurisdiction.
Buyer has filed all required Tax Returns, and all such Tax Returns are true,
complete and correct in all material respects. Buyer has never been a party to
any agreement allocating or sharing the payment of (or Liability for) any Taxes.
(h) Tax Treatment. Buyer has not taken or agreed to take any
action and is not aware of any fact or circumstance that would prevent or
impede, or would be reasonably likely to prevent or impede, the Merger from
qualifying as a reorganization under Section 368(a) of the Code.
(i) Licenses and Permits. All Permits required by applicable law
to be held or secured by Buyer are listed on Section 6(i) of the Buyer
Disclosure Schedule. Buyer is and at all times has been, in material compliance
with all of the terms and requirements of such Permits. Each Permit is in full
force and effect, and will continue to be so upon consummation of the
Transaction, and all necessary renewals have been, and upon consummation of the
Transaction will be, duly filed.
26
(j) Product Quality. With respect to any product currently (or
within the past seven years) produced, manufactured, supplied, marketed,
distributed or sold by Buyer: Such products (i) are not, and have not been,
adulterated or misbranded within the meaning of those terms under the Federal
Food, Drug and Cosmetic Act, as amended, or any applicable federal or state law
or regulation, and (ii) in all material respects, do comply, and have complied,
with all federal, state or local laws and regulations relating to the product's
manufacture, quality, labeling, identity, quantity, packaging or any other
matter applicable to the products.
(k) Correctness of Representations and Warranties. To the
Knowledge of Buyer, this Section 6, together with the Buyer Disclosure Schedule,
does not contain any untrue statement of material fact or omit to state any
material fact necessary to make the statements and information contained herein
or therein, in light of the circumstances under which they were made, not
misleading.
(l) SEC Filings; Buyer Financial Statements.
(i) Buyer has filed each report and definitive proxy
statement (together with all amendments thereof and supplements thereto)
required to be filed by it with the SEC since January 1, 2004 (as such documents
have since the time of their filing been amended or supplemented, the "Buyer SEC
Reports"). As of the respective dates they were filed, after giving effect to
any amendments or supplements thereto filed prior to the date hereof, (i) each
Buyer SEC Report complied as to form in all material respects with the
requirements of the Exchange Act, and (ii) none of the Buyer SEC Reports
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading.
(ii) Each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the Buyer SEC Reports
(the "Buyer Financial Statements") was prepared in accordance with GAAP applied
on a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto or, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) and each presents fairly, in all material
respects, the consolidated financial position, results of operations and cash
flows of Buyer and its consolidated Subsidiaries as at the respective dates
thereof and for the respective periods indicated therein, except as otherwise
noted therein (subject, in the case of unaudited statements, to normal year-end
adjustments and the absence of complete footnotes).
(iii) Buyer has furnished to Target a complete and correct
copy of any amendments or modifications, which have not yet been filed with the
SEC but which are required to be filed, to agreements, documents or other
instruments that previously had been filed by Buyer with the SEC pursuant to the
Securities Act or the Exchange Act.
(iv) Buyer is in compliance with the applicable listing and
corporate governance rules and regulations of The Nasdaq Stock Market.
27
7. Covenants. The Parties shall comply with the following covenants:
(a) From Execution through Closing. From the date of execution of
this Agreement through the Closing Date:
(i) General. Upon the terms and subject to the conditions of
this Agreement, each of the Parties will use its commercially reasonable efforts
to take all actions and to do all things necessary, proper or advisable in order
to consummate and make effective the Merger in accordance with the terms of this
Agreement (including satisfaction, but not waiver, of the closing conditions set
forth in Section 8 below).
(ii) Notices and Consents. Each of Target and Buyer will give
the notices to third parties and Governmental Authorities, and will use its
commercially reasonable efforts to obtain or make the filings, authorizations,
consents and approvals listed in Section 5(d) of the Target Disclosure Schedule
and Section 6(c) of the Buyer Disclosure Schedule, respectively; provided that
neither Party shall make any agreements or understandings adversely affecting it
or its business or assets in any material respect as a condition to obtaining
any such authorizations, consents or approvals, except with the prior written
consent of the other Party (which consent shall not be unreasonably withheld or
delayed).
(iii) Regulatory Matters and Approvals. Each of the Parties
will give any notices to, make any filings with, and use its commercially
reasonable efforts to obtain requisite authorizations, consents, and approvals
of governments and Governmental Authorities. Without limiting the generality of
the foregoing:
(1) Registration Statement on Form S-4.
(A) Buyer agrees to prepare a registration
statement on Form S-4 or other applicable form (the "Registration Statement"),
to be filed by Buyer with the SEC in connection with the issuance of Buyer
Common Stock in the Merger (including the joint proxy statement of Buyer and
Target (the "Proxy Statement"), which also constitutes the prospectus of Buyer,
and all other documents filed therewith or incorporated therein. Target shall
furnish all information concerning itself as Buyer may reasonably request in
connection with such actions and the preparation of the Proxy Statement. Target
shall prepare and furnish such information relating to it and its directors,
officers and shareholders as may be reasonably required or requested in
connection with the Registration Statement and the Proxy Statement, and Target
and its counsel will cooperate with and assist Buyer and its counsel in the
preparation of the Proxy Statement. Target agrees to cooperate with Buyer and
Buyer's counsel, financial advisor and accountants in requesting and obtaining
appropriate opinions, consents and letters from its independent auditors in
connection with the Registration Statement and the Proxy Statement. Provided
that Target has cooperated as described above, Buyer agrees to file, or cause to
be filed, the Registration Statement and the Proxy Statement with the SEC as
promptly as reasonably practicable but in no event later than 60 days after the
date hereof. Buyer agrees to use all reasonable efforts to cause the
Registration Statement to be declared effective under the Securities Act as
promptly as reasonably practicable after the filing thereof. After the
Registration Statement is declared effective under the Securities Act, Buyer and
Target will each, at their own expense, promptly mail the Proxy Statement to
their respective shareholders.
28
(B) Each of Target and Buyer agrees that none of
the information supplied or to be supplied by it for inclusion or incorporation
by reference in the Registration Statement shall, at the time the Registration
Statement and each amendment or supplement thereto, if any, becomes effective
under the Securities Act, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, and the Proxy Statement and any
amendment or supplement thereto shall not, at the date of mailing to
shareholders of Target and Buyer and at the time of their respective
shareholders' meetings, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statements therein not misleading. Each of Target and Buyer further agrees
that if such party shall become aware prior to the Effective Time of any
information furnished by such party that would cause any of the statements in
the Registration Statement or the Proxy Statement to be false or misleading with
respect to any material fact, or to omit to state any material fact necessary to
make the statements therein not false or misleading, it shall promptly inform
the other party thereof and to take the necessary steps to correct the
Registration Statement or the Proxy Statement.
(2) Alcoholic Beverage Regulation. Each of the Parties
shall give all notices, make all filings and use its commercially reasonable
efforts to obtain all authorizations, consents, and approvals that relate to the
regulation of alcoholic beverages and are required to be given by the Party to,
made by the Party with or obtained by the Party from any Governmental Authority
in order for the Parties to consummate the Transactions.
(3) Other Regulatory Matters. Each of Buyer and Target
shall cooperate and use its reasonable best efforts to prepare all
documentation, to effect all filings and to obtain all permits, consents,
approvals and authorizations of all third parties and Governmental Authorities
necessary to consummate the Transactions, and each of Buyer and Target shall
promptly provide to the other all information necessary or otherwise reasonably
requested in connection with such filings. Each of Buyer and Target shall have
the right to review in advance, and to the extent practicable each shall consult
with the other, in each case subject to applicable laws relating to the exchange
of information, with respect to all material written information submitted to
any third party or any Governmental Authority in connection with the
transactions contemplated by this Agreement. In exercising the foregoing right,
each of the Parties agrees to act reasonably and as promptly as practicable.
Each of Buyer and Target agrees that it shall consult with the other with
respect to the obtaining of all material permits, consents, approvals and
authorizations of all third parties and Governmental Authorities necessary or
advisable to consummate the Transactions and shall keep the other apprised of
the status of material matters relating to completion of the Transactions.
(iv) Operation of Business. Each Party covenants and agrees
that, after the date hereof and prior to the Closing Date, except as expressly
contemplated by this Agreement, the Target Disclosure Schedule or the Buyer
Disclosure Schedule or as agreed to in writing by the other Party, it will
conduct its business in the same manner as heretofore conducted and only in the
29
ordinary course consistent with past practice, and it will use its commercially
reasonable efforts to preserve its business organization and keep available the
services of its current officers and employees, to the end that its goodwill and
ongoing business shall not be impaired at the Closing Date in any material
respect; provided, however, that the following changes will not constitute a
breach of this covenant: changes resulting from developments or occurrences
relating to or affecting the United States economy in general or the craft
brewing industry in general; and changes resulting from actions taken by the
Parties prior to the Closing that are in furtherance of the Transactions but
that have an effect on the business of a Party, including but not limited to any
disruptions to the business of a Party as a result of the execution of this
Agreement, the announcement by the Parties of the proposed Merger, or the
consummation of the Transactions. Without limiting the generality of the
foregoing, each Party covenants and agrees that, after the date hereof and prior
to the Closing Date, except as expressly contemplated by this Agreement, the
Target Disclosure Schedule or the Buyer Disclosure Schedule or as agreed to in
writing by the other Party, it will not:
(1) institute any new methods of operation, purchase,
sale, lease, management, or accounting (except as may be required under GAAP),
or engage in any transaction or activity other than in the ordinary course of
business consistent with past practice;
(2) (A) amend its Articles of Incorporation or Bylaws;
(B) purchase, issue, sell, transfer, pledge, dispose of, grant any option in or
encumber any shares of its capital stock or other securities (equity, debt,
convertible or otherwise), other than up to 8,120 shares of Target Common Stock
that may be issued to Xxxxx Xxxxxxxxxx; (C) declare, set aside or pay any
dividend or other distribution payable in cash, stock or property with respect
to any shares of its capital stock or other securities; (D) split, combine or
reclassify any shares of its capital stock or other securities; (E) redeem,
purchase or otherwise acquire directly or indirectly any shares of its capital
stock or other securities; or (F) purchase or otherwise invest in any securities
issued by any Person;
(3) organize any subsidiary or acquire any capital
stock or other equity securities, or equity or ownership interest in (or any
right or option to receive any of the foregoing) the business, of any other
Person;
(4) modify, amend or terminate any of its material
contracts, waive, release or assign any material rights or claims thereunder, or
fail to continue to perform its obligations thereunder;
(5) other than in the ordinary course of business
consistent with past practice (A) incur or assume any Indebtedness ; (B) modify
the terms of any Indebtedness or other liability; (C) assume, guarantee, endorse
or otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other Person; (D) make any loans, advances
or capital contributions to, or investments in, any other Person; (E) enter into
any material contract; or (F) dispose of any material Intellectual Property or
fail to perform any acts which permit to lapse any rights to any material
Intellectual Property;
30
(6) (A) sell, lease, license, assign, convey,
transfer, mortgage, pledge, encumber or otherwise dispose of any assets (other
than inventory) with a value in excess of $100,000 in the aggregate; (B) incur
or create any Encumbrance on any assets which, collectively, have a value in
excess of $100,000 in the aggregate; or (C) fail to maintain its assets in good
working order in the ordinary course of business;
(7) purchase or lease assets other than in the
ordinary course of business consistent with past practice and for fair
consideration;
(8) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization;
(9) take any action that would or is reasonably likely
to result in any of the conditions to the Closing set forth in Section 8 not
being satisfied, that would make any representation or warranty of the Party
contained herein inaccurate in any material respect at the Closing Date, that
would result in a breach of this Agreement in any material respect, or that
would materially impair the Party's ability to consummate the Transactions or
materially delay such consummation;
(10) adopt or amend any Employee Benefit Plan, or enter
into or make any change in the compensation payable or to become payable to any
of its officers or directors, or any other employees of the Party except in the
ordinary course of business consistent with past practice or as required by
applicable law;
(11) enter into or amend any contract with any of its
officers or directors;
(12) enter into or make any loans to any of its
officers, directors, employees, affiliates, agents or consultants or make any
change in its existing borrowing or lending arrangements for or on behalf of any
of such persons;
(13) enter into any settlement, conciliation or similar
agreement, the performance of which will involve payment or receipt of
consideration in excess of $25,000 or place restrictions on the conduct of its
business;
(14) fail to maintain or permit to lapse or expire any
professional license or registration required for the conduct of its business or
its performance of any material contract;
(15) change, modify or make any new Tax elections; or
(16) enter into any agreement, contract or arrangement
to do any action specified in clauses (1) through (15) above, or authorize,
recommend, propose or announce an intention to do, any of the foregoing.
31
(v) Full Access.
(1) Each Party (as applicable, for purposes of this
section, the "Disclosing Party") will permit representatives of the other Party
(as applicable, for purposes of this section, the "Recipient") to have full
access, at all reasonable times and in a manner so as not to unreasonably
interfere with the normal business operations of the Disclosing Party, to all
premises, properties, books, records (including tax records), contracts, and
documents of or pertaining to the Disclosing Party, including access to the
Disclosing Party's independent accountants, and will authorize its accountants
to release any and all information reasonably requested by the Recipient in
connection with its review of the Disclosing Party, provided, however, that the
Recipient will not be permitted to contact the Disclosing Party's customers,
employees or suppliers in relation to this Agreement, except by prior approval
of the Disclosing Party, which approval will not be unreasonably withheld,
conditioned or delayed. The Disclosing Party will provide to Recipient copies of
its monthly financial statements beginning with the month of October 2007 within
30 days following the end of each month through the Closing Date. The Disclosing
Party is not required to provide access to or to disclose information where such
access or disclosure would violate or prejudice the rights of the Disclosing
Party's customers, jeopardize the attorney-client privilege or contravene any
law, rule, regulation, order, judgment, decree, fiduciary duty or binding
agreement entered into prior to the date of this Agreement; provided, however,
that the Disclosing Party will use all commercially reasonable efforts to obtain
any necessary authorizations or consents from its customers to provide Recipient
full access to such information.
(2) Subject to the terms and conditions of the Buyer
Nondisclosure Agreement and the Target Nondisclosure Agreement, as applicable,
the Recipient will treat and hold as confidential any information it receives
from the Disclosing Party pursuant to this Section.
(vi) Notice of Developments. Each of Target and Buyer shall
give prompt written notice to the other of any material breach of any of its
covenants contained herein or in the Documents. No disclosure by any Party
pursuant to this Section 7(a)(vi), however, shall be deemed to amend or
supplement the Target Disclosure Schedule or the Buyer Disclosure Schedule, as
applicable, or to cure any misrepresentation, breach of representation or
warranty, or breach of covenant.
(vii) Shareholder Approval.
(1) Buyer agrees to take, in accordance with
applicable law and Buyer's Restated Articles of Incorporation and Amended and
Restated Bylaws, all action necessary to convene as soon as practicable a
meeting of its shareholders (including any adjournment or postponement, the
"Buyer Shareholders' Meeting") to consider and vote upon the approval of the
issuance of Buyer Common Stock pursuant to the Merger, and any other matters
required to be approved by Buyer's shareholders for consummation of the
Transactions. Subject to fiduciary obligations under applicable law, Buyer's
Board of Directors shall at all times prior to and during such meeting recommend
such approval and shall take all reasonable lawful action to solicit such
approval by its shareholders.
32
(2) Target agrees to take, in accordance with
applicable law and Target's Articles of Incorporation and Bylaws, all action
necessary to convene as soon as practicable a meeting of its shareholders
(including any adjournment or postponement, the "Target Shareholders' Meeting")
to consider and vote upon the approval of this Agreement and the Merger, and any
other matters required to be approved by Target Shareholders for consummation of
the Transactions. Subject to fiduciary obligations under applicable law,
Target's Board of Directors shall at all times prior to and during such meeting
recommend such approval and Target shall take all reasonable lawful action to
solicit such approval by Target Shareholders.
(viii) Title Insurance. To the extent Buyer deems it to be
appropriate, Buyer will obtain title insurance commitments (to include complete
copies of all recorded exception documents listed on such title commitments),
policies, endorsements and riders (including in preparation for the Closing)
with respect to the Owned Real Property and the Leased Real Property, each such
policy to be an ALTA (Owner's or Leasehold, as the case may be) Policy of Title
Insurance in a form acceptable to Buyer, issued by a title insurer reasonably
satisfactory to Buyer, and in such amount as Buyer reasonably may determine to
be the fair market value of such real property (including all facilities located
thereon) or such other appropriate value as determined by Buyer in the case of
leaseholds, insuring title to such real property to be held by Target as of the
Closing (subject only to Permitted Encumbrances) (the "Title Policies"). If this
Agreement is terminated prior to Closing, the costs associated with obtaining
the Title Policies will be shared equally by Buyer and Target.
(ix) Nasdaq Listing. Buyer agrees to use its reasonable best
efforts to list, prior to the Effective Time, on Nasdaq, subject to official
notice of issuance, the shares of Buyer Common Stock to be issued to the Target
Shareholders in the Merger.
(x) Officers and Directors of Buyer; Corporate Name. Buyer
will exercise its commercially reasonable efforts to cause, immediately
following the Effective Time, the following individuals to be appointed to the
following indicated positions: (a) Xxxx Xxxxxx, Chairman of the Board; (b) Xxxx
Xxxxxxx, Chairman Emeritus and Consultant to the Board; (c) Xxxxx Xxxxxxxxxx,
Co-Chief Executive Officer, (d) Xxxxx Xxxxxxxxx, Co-Chief Executive Officer; (e)
Xxx Xxxxxxxx, Chief Financial Officer; (f) Xxxxxxx XxXxxx, Vice President of
Marketing; (g) Xxxxxxxxx Xxxxxxx, Vice President of Brewing Operations and
Technology; (h) Xxxxxx Xxxxx, Vice President of Business Development; (i)
Xxxxxxx Xxxxxx, Vice President of Finance; (j) Xxxxxx Xxxx, Vice President of
Sales; and (k) Xxxxxx Xxxxxx, Vice President of Corporate Quality Assurance and
Industry Relations. Buyer and Target will cooperate to select and engage a Chief
Financial Officer with substantial public company experience in accounting and
finance to commence work on May 1, 2008 or as soon thereafter as practicable.
(b) From and After the Date of Closing.
(i) D&O Insurance. For a period of three years after the
Closing, Buyer will maintain director and officer insurance coverage insuring
the directors and officers of Target currently insured by Target's existing
director and officer policies, with the same scope of coverage and subject to
the same deductibles and limits.
33
(ii) Comparability of Employee Benefits. Redhook intends that
its personnel policies will apply to each employee of Xxxxxx or CBA who is
retained in the service of Redhook after the Closing. Such retained employees
will be eligible to participate in all of the benefit plans of Redhook that are
generally available to similarly situated employees of Redhook in accordance
with and subject to the terms of such plans; provided, however, that if any
Xxxxxx Plan or CBA employee compensation or benefit plan is maintained after the
Closing Date, such retained employees may not participate in any duplicative
Redhook benefit plans until their participation in the Xxxxxx Plan or CBA plan,
as applicable, ceases.
(iii) Treatment of Past Service. For purposes of participation
in Redhook's benefit plans, current employees' prior service with Xxxxxx and/or
CBA will constitute prior service with Redhook for purposes of determining
eligibility and vesting (including but not limited to vacation time).
(iv) No Contract Created. Except as may be provided in any
Employment Agreement executed and delivered at the Closing, nothing in this
Agreement will give any employee of Xxxxxx or CBA a right to continuing
employment.
8. Conditions to Obligation to Close.
(a) Conditions to Obligation of Buyer. The obligation of Buyer to
consummate the Transactions is subject to satisfaction at or prior to the
Closing Date of the following conditions:
(i) Target has given all notices, made all filings and
obtained all authorizations, consents, and approvals listed in Section 5(d) of
the Target Disclosure Schedule;
(ii) Target has given all notices, made all filings and
obtained all authorizations, consents, and approvals that relate to the
regulation of alcoholic beverages and are required to be given by Target to,
made by Target with or obtained by Target from any Governmental Authority in
order for the Parties to consummate the Transactions;
(iii) the representations and warranties set forth in Section
5 above are true and correct in all material respects at and as of the date of
this Agreement and at and as of the Closing Date as if made thereon, except to
the extent such representations and warranties are expressly made only as of an
earlier date, in which case as of such earlier date; provided, however, that
representations and warranties in Section 5 above that contain an express
materiality qualification shall be true and correct in all respects at and as of
the date of this Agreement and at and as of the Closing Date as if made thereon
(other than for failures to be true and correct that are de minimis in effect);
(iv) Target has performed and complied in all material
respects with its covenants and obligations under this Agreement;
(v) less than 5% of the outstanding Target Shares are
Dissenting Shares;
34
(vi) the Merger and this Agreement have been duly approved by
Target's Board of Directors, which approval remains in full force and effect as
of the Closing Date, the Merger and this Agreement has received the Requisite
Shareholder Approval, and Target has provided Buyer with certified copies of
resolutions of Target's Board of Directors and Shareholders authorizing the
execution and delivery of this Agreement and consummation of the Transactions;
(vii) no statute, rule or regulation has been enacted or
promulgated and no action, suit, or proceeding is pending or threatened before
any court or quasi judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, stipulation, ruling, or charge would: (A)
prevent consummation of any of the Transactions; (B) cause any of the
Transactions to be rescinded following consummation; or (C) affect adversely the
right of Buyer to own its assets and to operate its businesses (and no such
injunction, judgment, order, decree, stipulation, ruling, or charge shall be in
effect);
(viii) Target has delivered to Buyer a certificate executed by
Target's Chief Executive Officer and Secretary on behalf of Target to the effect
that each of the conditions specified in Sections 8(a)(i)-(vii) above is
satisfied in all respects;
(ix) the Registration Statement is effective under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement has been issued and not withdrawn and no proceedings for
that purpose are threatened by the SEC or initiated by the SEC and not
withdrawn;
(x) the issuance of shares of Buyer Common Stock as provided
in this Agreement has been duly approved by the affirmative vote of a majority
of the outstanding shares of Buyer Common Stock entitled to vote;
(xi) the shares of Buyer Common Stock to be issued in the
Merger have been approved for listing on The Nasdaq Stock Market, effective upon
notice of issuance.
(xii) Buyer has received confirmation that the Title Policies
will be issued;
(xiii) the Employment Agreements have been duly executed and
delivered by the parties thereto other than Buyer;
(xiv) the Non-Competition and Non-Solicitation Agreements have
been duly executed and delivered by Xxxx Xxxxxx and Xxxxxx Xxxxxx;
(xv) the Shareholder Lock-Up Agreements have been duly
executed and delivered by Xxxx Xxxxxx, Xxxxxx Xxxxxx, Xxx Xxxxxx, and Xxxxxxx
Xxxxx-Xxxx;
(xvi) A-B has provided evidence satisfactory to Buyer of its
waiver of its rights under the Master Distributor Agreement between A-B and
Target dated June 6, 2006, and the Master Distributor Agreement between A-B and
Target dated July 1, 2004, to terminate such agreements as a result of
consummation of the Transactions;
35
(xvii) Target has entered into long-term leases for the
parcels described in Schedule 5(p) (II)(2), (3) and (6);
(xviii) Target has provided evidence satisfactory to Buyer
that Goose Holdings, Inc., and Xxxxxx Street Brewery LLC, have each consented to
the Merger and have agreed to enter into an amendment to the Amended and
Restated Operating Agreement of Xxxxxx Street Brewery LLC after the Closing Date
in a form satisfactory to Buyer;
(xix) Buyer has received from counsel for Target an opinion
dated the Closing Date and addressed to Buyer in the form of Exhibit D hereto;
and
(xx) Target has delivered to Buyer: (i) a certificate of
existence of Target issued by the Oregon Secretary of State dated within five
days of the Closing Date; (ii) a certified copy of Target's Articles of
Incorporation and Bylaws as in effect on the Closing Date; and (iii) a
certification in accordance with Treasury Regulation Section 1.1445-2(c), and
otherwise in form and substance reasonably satisfactory to Buyer, certifying
that an interest in Target is not a United States real property interest because
Target is not and has not been a United States real property holding corporation
(as defined in Section 897(c)(2) of the Code) during the five-year period ending
with the Closing Date.
All actions to be taken by Target in connection with consummation of
the Transactions and all certificates, opinions, instruments, and other
documents required to effect the Transactions will be reasonably satisfactory in
form and substance to Buyer. Buyer may waive any condition specified in this
Section 8(a) if it executes a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of Target. The obligation of Target
to consummate the Transactions is subject to satisfaction at or prior to the
Closing Date of the following conditions:
(i) Buyer has given all notices, made all filings and
obtained all authorizations, consents, and approvals listed in Section 6(c) of
the Buyer Disclosure Schedule;
(ii) Buyer has given all notices, made all filings and
obtained all authorizations, consents, and approvals that relate to the
regulation of alcoholic beverages and are required to be given by Buyer to, made
by Buyer with or obtained by Buyer from any Governmental Authority in order for
the Parties to consummate the Transactions;
(iii) Buyer and Xxxx Xxxxxxx have entered into the Consulting
Agreement;
(iv) Xxxx Xxxxxxx has tendered his resignation from all
officer positions with Buyer as of the Effective Date;
36
(v) Xxxx Xxxxxxx and two of Buyer's independent directors
have tendered their resignations as directors of Buyer as of the Effective Date;
(vi) the representations and warranties set forth in Section
6 above are true and correct in all material respects at and as of the date of
this Agreement and at and as of the Closing Date as if made thereon, except to
the extent such representations and warranties are expressly made only as of an
earlier date, in which case as of such earlier date; provided, however, that
representations and warranties in Section 6 above that contain an express
materiality qualification shall be true and correct in all respects at and as of
the date of this Agreement and at and as of the Closing Date as if made thereon
(other than for failures to be true and correct that are de minimis in effect);
(vii) Buyer has performed and complied in all material
respects with its covenants and obligations under this Agreement;
(viii) no statute, rule or regulation has been enacted or
promulgated and no action, suit, or proceeding shall be pending or threatened
before any court or quasi judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator wherein an
unfavorable injunction, judgment, order, decree, stipulation, ruling, or charge
would: (A) prevent consummation of any of the Transactions; (B) cause any of the
Transactions to be rescinded following consummation (and no such judgment,
order, decree, stipulation, injunction, ruling or charge shall be in effect);
(ix) the issuance of shares of Buyer Common Stock as provided
in this Agreement has been duly approved by the affirmative vote of the holders
of a majority of the outstanding shares of Buyer Common Stock entitled to vote;
(x) the Merger and this Agreement have been duly approved by
Buyer's Board of Directors, which approval remains in full force and effect as
of the Closing Date;
(xi) the Registration Statement is effective under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement has been issued and not withdrawn and no proceedings for
that purpose are threatened by the SEC or initiated by the SEC and not
withdrawn;
(xii) the shares of Buyer Common Stock to be issued in the
Merger have been approved for listing on The Nasdaq Stock Market, effective upon
notice of issuance;
(xiii) Buyer has executed and delivered such of the Employment
Agreements as have been duly executed and delivered by the other parties
thereto;
(xiv) Buyer has delivered to Target a certificate executed by
Buyer's Chief Executive Officer and Secretary on behalf of Buyer to the effect
that each of the conditions specified above in Section 8(b)(i)-(xiii) is
satisfied in all respects;
37
(xv) the Merger and this Agreement have received the
Requisite Shareholder Approval;
(xvi) Target has received from counsel to Buyer an opinion
dated the Closing Date and addressed to Target in the form of Exhibit E hereto;
and
(xvii) Buyer has delivered to Target a certificate of
existence of Buyer from the Secretary of State of the State of Washington, dated
within five days of the Closing Date.
All actions to be taken by Buyer in connection with consummation of
the Transactions and all certificates, opinions, instruments, and other
documents required to effect the Transactions will be reasonably satisfactory in
form and substance to Target. Target may waive any condition specified in this
Section 8(b) if it executes a writing so stating at or prior to the Closing.
9. Specific Performance. The Parties agree that irreparable damage
would occur 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 the Parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled pursuant to this Agreement.
10. Termination.
(a) Termination of Agreement. Either Party may terminate this
Agreement with the prior authorization of its board of directors (whether before
or after shareholder approval) as provided below:
(i) the Parties may terminate this Agreement by mutual
written consent at any time prior to the Closing Date;
(ii) Buyer may terminate this Agreement by giving written
notice to Target at any time prior to the Closing Date: (A) in the event Target
has breached any covenant contained in this Agreement in any material respect,
Buyer has notified Target of the breach, and the breach has continued without
cure for a period of 10 days after the notice of breach, (B) in the event that
there shall be any applicable law that makes consummation of the Transactions
illegal or otherwise prohibited, or any judgment, injunction, order or decree
permanently enjoining any of the Parties hereto from consummating the
Transactions is entered and such judgment, injunction, order or decree shall
become final and non-appealable, or (C) if the Closing shall not have occurred
on or before March 31, 2008, and Buyer is not in default of any of its
obligations hereunder;
(iii) Target may terminate this Agreement by giving written
notice to Buyer at any time prior to the Closing Date: (A) in the event Buyer
has breached any covenant contained in this Agreement in any material respect,
Target has notified Buyer of the breach, and the breach has continued without
cure for a period of 10 days after the notice of breach, (B) in the event that
there shall be any applicable law that makes consummation of the Transactions
illegal or otherwise prohibited, or any judgment, injunction, order or decree
permanently enjoining any of the Parties hereto from consummating the
Transactions is entered and such judgment, injunction, order or decree shall
become final and non-appealable; or (C) if the Closing shall not have occurred
on or before March 31, 2008, and Target is not in default of any of its
obligations hereunder;
38
(iv) Either party may terminate this Agreement if it is
notified by A-B that it will not consent to the Transactions.
(b) Effect of Termination. If either Party terminates this
Agreement pursuant to Section 10(a) above, all rights and obligations of the
Parties hereunder shall terminate without any liability of either Party to the
other Party (except as otherwise provided herein and except for any liability of
any Party then in breach); provided, however, that the confidentiality
provisions contained in this Agreement and the Target Nondisclosure Agreement
and Buyer Nondisclosure Agreement and the fee and expenses provisions in Section
11(m) below shall survive any such termination and provided, further, that if
this Agreement is terminated by a Party because of a breach of this Agreement by
the other Party, the terminating Party's right to pursue all legal remedies
shall survive such termination unimpaired.
11. Miscellaneous.
(a) Nonsurvival of Representations, Warranties, and Agreements.
None of the representations, warranties, covenants, and agreements in this
Agreement, including any rights arising out of any breach of the
representations, warranties, covenants, and agreements, survive the Effective
Time, except for covenants and agreements that by their express terms apply
after the Effective Time. This Section 11(a) shall not affect any rights or
liabilities of any Person under the Securities Act, the Exchange Act or any
applicable state securities laws.
(b) Press Releases and Public Announcements. No Party shall issue
any press release or make any public announcement relating to the subject matter
of this Agreement without the prior written approval of the other Party;
provided, however, that any Party may make any public disclosure it believes in
good faith is required by applicable law or any listing or trading agreement
concerning its publicly traded securities (in which case the disclosing Party
will use its reasonable best efforts to advise the other Party and give it an
opportunity to comment prior to making the disclosure).
(c) No Third-Party Beneficiaries. This Agreement shall not confer
any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns; provided, however, that the
provisions in Section 7(b) above are intended for the benefit of the individuals
specified therein.
(d) Entire Agreement. This Agreement (including the Documents
referred to herein) constitutes the entire agreement between the Parties and
supersedes any prior understandings, agreements, or representations by or
between the Parties, written or oral, to the extent they relate in any way to
the subject matter hereof.
39
(e) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. A Party may not assign this Agreement or any
of its rights, interests, or obligations hereunder without the prior written
approval of the other Party.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then three
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Target: Copy to:
------------ -------
Xxxxxx Brothers Brewing Company Xxxx Xxx Xxxxxx
929 N. Xxxxxxx Xxxxxx Xxxx LLP
Xxxxxxxx, Xxxxxx 00000 000 X.X. Xxxxx Xxxxxx, Xxxxx 0000
Attn: Xxxxx Xxxxxxxxxx Xxxxxxxx, Xxxxxx 00000
Phone: 000-000-0000 Phone: 000-000-0000
Fax: 000-000-0000 Fax: 000-000-0000
If to Buyer: Copy to:
----------- -------
Redhook Ale Brewery, Incorporated Xxxxxxxx X. Xxxx
00000 XX 000xx Xxxxxx, Xxxxx 210 Xxxxxxx Xxxxxxxx X.X.
Xxxxxxxxxxx, XX 00000 0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxx: CEO Xxxxxxx, XX 00000
Phone: 000-000-0000 Phone: 000-000-0000
Fax: 000-000-0000 Fax: 000-000-0000
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
(i) Governing Law and Disputes. This Agreement shall be governed
by and construed in accordance with the domestic laws of the State of Washington
without giving effect to any choice or conflict of law provision or rule
(whether of the State of Washington or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Washington.
40
(j) Consent to Jurisdiction; Waivers of Trial by Jury. Each Party
irrevocably submits to the non-exclusive jurisdiction of the United States
District Court for the Western District of Washington for the purposes of any
disputes arising in connection with this Agreement. Each Party agrees to
commence any action, suit or proceeding relating to any such dispute either in
such court, or, if such suit, action or other proceeding may not be brought in
such court for jurisdictional reasons, in the state courts of Washington. By
execution and delivery of this Agreement, each Party (for itself, its Affiliates
and its designees) irrevocably and unconditionally consents and submits to the
exclusive jurisdiction of such courts and the appellate courts therefrom, and
waives any right it may have to assert the doctrine of forum non conveniens or
similar doctrine or to object to venue with respect to any proceeding. The
Parties irrevocably consent to the service of process in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
first class postage prepaid to the addresses set forth above. EACH PARTY HERETO
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY ACTION, SUIT OR
PROCEEDING RELATING TO A DISPUTE AND FOR ANY COUNTERCLAIM WITH RESPECT THERETO.
(k) Amendments and Waivers. The Parties may mutually amend any
provision of this Agreement at any time prior to the Closing Date; provided,
however, that any amendment effected subsequent to shareholder approval will be
subject to the restrictions contained in the Washington Business Corporation
Act. No amendment of any provision of this Agreement shall be valid unless the
same shall be in writing and signed by all of the Parties. No waiver by any
Party of any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to any prior or
subsequent default, misrepresentation, or breach of warranty or covenant
hereunder or affect in any way any rights arising by virtue of any prior or
subsequent such occurrence.
(l) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall not affect
the validity or enforceability of the remaining terms and provisions hereof or
the validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(m) Fees and Expenses. Except as otherwise expressly provided in
this Agreement, Buyer and Target (including its shareholders) will each be
solely responsible for paying their own costs and expenses (including their
respective advisors, accountants and attorneys' fees and expenses) incurred in
connection with this Agreement and the Transactions, whether or not the Closing
occurs.
(n) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context otherwise requires. The
word "including" shall mean including without limitation.
41
(o) Further Assurances. The Parties agree (a) to furnish upon
request to each other such other information, (b) to execute and deliver to each
other such other documents, and (c) to do such other acts and things, all as the
other Party may reasonably request for the purpose of carrying out the intent of
this Agreement.
Signature Page Follows
42
The duly authorized representatives of the undersigned have executed this
Agreement as of the date first above written.
REDHOOK ALE BREWERY, INCORPORATED
BY: /s/ Xxxx X. Xxxxxxx
----------------------------------------
Xxxx X. Xxxxxxx, Chief Executive Officer
XXXXXX BROTHERS BREWING COMPANY
BY: /s/ Xxxx Xxxxxx
------------------------------
Xxxx Xxxxxx, President
43
EXHIBIT A
FORM OF ARTICLES OF MERGER
ARTICLES OF MERGER
OF
XXXXXX BROTHERS BREWING COMPANY, an Oregon corporation
AND
REDHOOK ALE BREWERY, INCORPORATED, a Washington corporation
Pursuant to the Washington Business Corporation Act, RCW ss.23B.11.090,
and the Oregon Business Corporation Act, ORS ss.60.501, the undersigned hereby
submit the following Articles of Merger for filing:
1. The names of the entities involved in the merger are Xxxxxx
Brothers Brewing Company, an Oregon corporation (the "Disappearing
Corporation"), and Redhook Ale Brewery, Incorporated, a Washington corporation
(the "Surviving Corporation").
2. The Plan of Merger between the Disappearing Corporation and the
Surviving Corporation is attached as Exhibit A.
3. The Plan of Merger was duly approved by the shareholders of the
Disappearing Corporation pursuant to ORS ss.60.487. There were 3,793,603 shares
of common stock entitled to vote on the Plan of Merger. The total number of
votes cast for and against the Plan of Merger was _______ votes for, and
_________ votes against.
4. The merger was duly approved by the shareholders of the Surviving
Corporation pursuant to RCW ss.23B.11.030. There were [8,354,239] shares of
common stock entitled to vote on the Plan of Merger. The total number of votes
cast for and against the Plan of Merger was _______ votes for, and _________
votes against.
5. The effective date and time of the merger shall be ___________, 200_
at 11:59 p.m. PST.
DATED this ____ day of ____________, 200_
REDHOOK ALE BREWERY, INCORPORATED,
a Washington corporation
By ________________________________
Its________________________________
XXXXXX BROTHERS BREWING COMPANY
an Oregon corporation
By ________________________________
Its________________________________
PLAN OF MERGER
OF
XXXXXX BROTHERS BREWING COMPANY, an Oregon corporation
AND
REDHOOK ALE BREWERY, INCORPORATED, a Washington corporation
This Plan of Merger ("Agreement") is made as of the ____ day of _________,
200_, by and between Xxxxxx Brothers Brewing Company, an Oregon corporation
("Disappearing Corporation"), and Redhook Ale Brewery, Incorporated, a
Washington corporation ("Surviving Corporation"). Disappearing Corporation and
Surviving Corporation are sometimes collectively referred to in this Agreement
as the "Constituent Entities."
RECITALS
A. Disappearing Corporation is a corporation organized and existing
under the laws of the State of Oregon.
B. Surviving Corporation is a corporation organized and existing under
the laws of the State of Washington.
C. Disappearing Corporation and Surviving Corporation entered into an
Agreement and Plan of Merger dated November 13, 2007 (the "Merger Agreement"),
and have deemed it advisable and in the best interests of the Constituent
Entities and their respective shareholders that Disappearing Corporation be
merged with and into Surviving Corporation as authorized by the laws of the
State of Washington and the State of Oregon and pursuant to the terms and
conditions of the Merger Agreement.
NOW THEREFORE, in consideration of the foregoing recitals, the covenants
and conditions set forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Parties. The name of the Disappearing Corporation is Xxxxxx Brothers
Brewing Company, an Oregon corporation. The name of the Surviving Corporation is
Redhook Ale Brewery, Incorporated, a Washington corporation.
2. Merger.
(a) Effectiveness. The Disappearing Corporation shall be merged with and
into the Surviving Corporation pursuant to the applicable provisions of the
Washington Business Corporation Act (the "Washington Act") and the Oregon
Business Corporation Act (the "Oregon Act"), and in accordance with the terms
and conditions of this Agreement and the Merger Agreement (the "Merger"). The
Merger shall become effective on ______________ at 11:59 p.m. PST (the
"Effective Time").
A-1
(b) Articles of Incorporation. At and as of the Effective Time, Article
I (Name and Duration) of the Articles of Incorporation of the Surviving
Corporation shall be amended to read as follows, and such Articles of
Incorporation as so amended, shall continue in full force and effect until
altered, amended or changed in the manner prescribed by the provisions of the
Washington Act:
"The name of this corporation shall be CRAFT BREWERS ALLIANCE, INC., and
its existence shall be perpetual."
(c) Bylaws. The Bylaws of the Surviving Corporation, as in force and
effect immediately prior to the Effective Time, shall be the bylaws of the
Surviving Corporation, and shall continue in full force and effect until
altered, amended or changed as therein provided or in the manner prescribed by
the provisions of the Washington Act.
(d) Directors and Officers. Upon the Effective Time, the directors and
officers of the Surviving Corporation shall be as follows:
DIRECTORS:
----------
Xxxx Xxxxxx, Chair
Xxxx Xxxxx
Xxxxxxx X. Short
[two independent directors selected by the Board of Directors of the
Disappearing Corporation]
[two independent directors selected by the Board of Directors of the
Surviving Corporation]
OFFICERS:
---------
Chairman of the Board Xxxx Xxxxxx
Chairman Emeritus and Consultant to the Board Xxxx Xxxxxxx
Co-Chief Executive Officer Xxxxx Xxxxxxxxxx
Co-Chief Executive Officer Xxxxx Xxxxxxxxx
Chief Financial Officer and Treasurer Xxx Xxxxxxxx
Vice President of Marketing Xxxxxxx XxXxxx
Vice President of Brewing Operations and Technology Xxxxxxxxx Xxxxxxx
Vice President of Business Development Xxxxxx Xxxxx
Vice President of Finance Xxxxxxx Xxxxxx
Vice President of Sales Xxxxxx Xxxx
Vice President of Corporate Quality Assurance and
Industry Relations Xxxxxx Xxxxxx
Secretary Xxxx Xxx Xxxxxx
(e) Conversion of Shares. At and as of the Effective Time, by virtue of
the Merger and without any action on the part of the holders thereof:
(i) Each outstanding share of Common Stock of the Disappearing
Corporation (the "Common Stock") that has not exercised dissenters rights
pursuant to Sections 60.551 to 60.594 of the Oregon Act shall be canceled and
converted into, and represent the right to receive, the consideration set forth
in the Merger Agreement;
A-2
(ii) Each outstanding share of Series D Preferred Stock of the
Disappearing Corporation (the "Series D Preferred") shall be canceled and
converted into, and represent the right to receive, the consideration set forth
in the Merger Agreement; and
(iii) Each share of Common Stock that has exercised dissenters
rights pursuant to Sections 60.551 to 60.594 of the Oregon Act shall be
converted into the right to receive payment from the Surviving Corporation in
accordance with the provisions of the Oregon Act.
(f) Effect of Merger. At the Effective Time, the separate existence of
the Disappearing Corporation shall cease, and the Disappearing Corporation shall
be merged, in accordance with the provisions of this Agreement and the Merger
Agreement, with and into the Surviving Corporation, and the Surviving
Corporation shall continue its corporate existence under the laws of the State
of Washington, and thereupon and thereafter all the rights, privileges,
properties and franchises of each of the Constituent Entities shall vest in the
Surviving Corporation. The Surviving Corporation shall be responsible and liable
for all liabilities and obligations of the Constituent Entities, all other
property, rights, privileges, powers and franchises of the Constituent Entities
shall be vested in the Surviving Corporation, and all other effects of the
Merger specified in the Washington Act shall result therefrom.
3. Miscellaneous.
(a) Further Assurances. Each of the Constituent Entities hereby agrees
that, at any time or from time to time as and when requested by the Surviving
Corporation, or by its successors or assigns, it will so far as it is legally
able, execute and deliver, or cause to be executed and delivered in its name all
such conveyances, assignments, transfers, deeds or other instruments, and will
take or cause to be taken such further or other actions as the Surviving
Corporation, its successors or assigns, may deem necessary or desirable in order
to evidence the transfer, vesting and devolution of any property, right,
privilege, power, immunity or franchise to vest its successors or assigns, with
title to and possession of all the property, rights, privileges, powers,
immunities, franchises and interests referred to in this Agreement and otherwise
to carry out the intent and purposes hereof.
(b) Compliance with Applicable Laws. Each of the Constituent Entities
shall take, or cause to be taken, all action or do, or cause to be done, all
things necessary, proper or advisable under the laws of the State of Washington
and the State of Oregon to consummate and make effective the Merger.
(c) Termination. This Agreement may be terminated for any reason at any
time before the filing of Articles of Merger with the Secretary of State of the
State of Washington by action taken by the Constituent Entities for any reason
deemed appropriate by them.
(d) Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Washington.
Signature Page Follows
A-3
Dated as of the date first written above.
REDHOOK ALE BREWERY, INCORPORATED
By:
-------------------------------------------
Xxxx X. Xxxxxxx, Chief Executive Officer
XXXXXX BROTHERS BREWING COMPANY
By:
-------------------------------------------
A-4
EXHIBIT B
FORM OF SHAREHOLDER LOCK-UP AGREEMENTS
LOCK-UP AGREEMENT
-----------------
____________, 200_
Redhook Ale Brewery, Incorporated
00000 XX 000xx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, XX 00000
Ladies and Gentlemen:
Pursuant to the Agreement and Plan of Merger (the "Merger Agreement") dated
November 13, 2007 between Xxxxxx Brothers Brewing Company ("Xxxxxx") and Redhook
Ale Brewery, Incorporated (the "Company"), Xxxxxx and the Company have agreed,
subject to the terms and conditions of the Merger Agreement, that Xxxxxx will
merge with and into the Company at the Effective Time (capitalized terms used
but not defined in this Lock-up Agreement will have the meanings given those
terms in the Merger Agreement). Entry into this Lock-up Agreement by the
undersigned is a condition under the Merger Agreement to the obligation of the
Company to consummate the Merger.
In order to induce the Company to consummate the Merger and in consideration of
the benefits to be received by the undersigned if the Merger occurs, the
undersigned hereby agrees that the undersigned will not, without the prior
approval of the Board of Directors of the Company (which approval may be
withheld in the sole discretion of the Board of Directors), directly or
indirectly, sell, offer, contract to sell, sell any option to contract to
purchase (including without limitation any short sale), purchase any option or
contract to sell, pledge, transfer, grant any option, right or warrant for the
sale of, establish or increase an open "put equivalent position" within the
meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder (collectively, the
"Exchange Act"), liquidate or decrease a call equivalent position within the
meaning of Rule 16a-1(b) under the Exchange Act, or otherwise dispose of any
shares (collectively, a "Disposition") of common stock of the Company ("Common
Stock") currently or hereafter owned either of record or beneficially (as
defined in Rule 13d-3 under the Exchange Act) by the undersigned, or publicly
announce the undersigned's intention to do any of the foregoing, or file or
cause to be filed or participate in the filing of, any registration statement
under the Securities Act of 1933, as amended, relating to the Common Stock, for
a period commencing on the date hereof and continuing through the close of
trading on the first anniversary of the Effective Time (the "Lock-up Period").
The undersigned also agrees and consents to the entry of stop transfer
instructions with the Company's transfer agent and registrar against the
transfer of shares of Common Stock held by the undersigned except in compliance
with the foregoing restrictions.
The foregoing restriction has been expressly agreed to preclude the undersigned
from engaging in any hedging or other transaction which is designed to or
reasonably expected to lead to or result in a Disposition of Common Stock during
the Lock-up Period, even if such Common Stock would be disposed of by someone
other than such holder. Such prohibited hedging or other transactions would
include, without limitation, any short sale (whether or not against the box) or
any purchase, sale, or grant of any right (including, without limitation, any
put or call option) with respect to any Common Stock or with respect to any
security (other than a broad-based market basket or index) that included,
relates to, or derives any significant part of its value from Common Stock. The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company's transfer agent and registrar against the transfer of shares
of Common Stock or other securities held by the undersigned except in compliance
with the foregoing restrictions.
[Add to Lock-up Agreement for Xxxxxxx Xxxxx-Xxxx: Notwithstanding the foregoing,
it is understood that the undersigned may sell during the Lock-up Period up to
291,018 shares of Common Stock received by the undersigned pursuant to the
Merger.
This Lock-up Agreement is irrevocable from the execution date and will be
binding on the undersigned and the respective successors, heirs, personal
representatives, and assigns of the undersigned; provided, however, in the event
the Merger has not been completed as of March 31, 2008, this Lock-up Agreement
shall automatically terminate absent written instructions to the contrary from
the undersigned. Nothing in this Lock-up Agreement shall constitute an
obligation to purchase shares of Common Stock or other securities of the
Company.
-----------------------------------
[Signature of Shareholder]
B-2
EXHIBIT C
FORM OF NON-COMPETITION AND NON-SOLICITATION AGREEMENTS
NON-COMPETITION/NON-SOLICITATION AGREEMENT
THIS NON-COMPETITION/NON-SOLICITATION AGREEMENT ("Agreement") is made and
entered into as of this _____ day of __________, 200_, by and between Redhook
Ale Brewery, Incorporated ("Redhook") and ________________ ("Target Principal").
Redhook and Target Principal are referred to herein separately as a "Party" and
collectively as the "Parties".
WHEREAS, on November 13, 2007, Redhook and Xxxxxx Brothers Brewing Company
("Target") entered into a Agreement and Plan of Merger providing for the merger
of Target with and into Redhook (the "Merger Agreement"). Capitalized terms not
defined herein shall have the meaning given those terms in the Merger Agreement.
WHEREAS, Target Principal is a founder and major shareholder of Target,
and has knowledge of and access to confidential and proprietary information
about Target which, if used in competition with Redhook, could cause serious and
irreparable harm to Redhook.
NOW, THEREFORE, for purposes of inducing Redhook to consummate the
transactions contemplated by the Merger Agreement, and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Parties, each intending to be legally bound, hereby agree as follows:
1. Covenant Not to Compete. For a period ending on the third (3d) anniversary
of the date of termination of Target Principal's employment by Redhook (the
"Restricted Period"), Target Principal shall not, and shall not permit or cause
any of his Affiliates to, directly or indirectly, engage in the manufacturing,
advertising, marketing, sale or distribution, whether for himself or for others,
of any malt beverage, soda beverage or alcoholic beverage product, in North
America (collectively, the "Restricted Business").
2. Covenant Not to Solicit. The Target Principal agrees that during the
Restricted Period, the Target Principal shall not, and shall not permit or cause
any of his Affiliates to, directly or indirectly, except on behalf of Redhook or
with the prior written consent of Redhook (which consent may be withheld,
delayed or conditioned at Redhook's sole discretion):
2.1 solicit or encourage any employees of Redhook to (1) leave
employment with Redhook or (2) enter into an employment or a service arrangement
related to a competitive business;
2.2 hire, engage or enter into any service arrangement with any
employees of Redhook; or
2.3 with respect to the Restricted Business, solicit or encourage any
customer or potential customer of Redhook to limit, restrict or cease use of
Redhook's services or products.
3. Consideration. Target Principal acknowledges receiving adequate
consideration for entering into this Agreement, including but not limited to the
portion of the Merger Consideration received by Target Principal pursuant to the
Merger Agreement, Target Principal's employment with Redhook, and the salary
and/or compensation for Target Principal's employment with Redhook.
4. Judicial Determinations. Whenever possible, each term or provision of this
Agreement will be interpreted in a manner to be valid and enforceable, but if
any term or provision of this Agreement is held to be invalid or unenforceable,
then such term or provision will be ineffective only to the extent of such
invalidity or unenforceability, without invalidating or affecting in any manner
whatsoever the remainder of such term or provision or the remaining terms or
provisions of this Agreement. If the final judgment of a court of competent
jurisdiction declares that any term or provision of this Agreement is invalid or
unenforceable, the Parties agree that the court making the determination of
invalidity or unenforceability shall have the power to reduce the scope,
duration, or area of the term or provision, to delete specific words or phrases,
or to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified.
5. Relief. Target Principal expressly acknowledges and agrees that Redhook's
remedy at law for a breach or threatened breach of any of the provisions of
sections 1 or 2 would be inadequate. In recognition of that fact, in the event
of a breach or threatened breach by Target Principal of the provisions of
section 1 or 2, it is agreed that, in addition to its remedy at law and without
posting any bond, Redhook shall be entitled to, and Target Principal agrees, if
Redhook establishes that a breach or threatened breach has occurred, not to
oppose Redhook's request for equitable relief in the form of specific
performance, a temporary restraining order, a temporary or permanent injunction,
or any other equitable remedy that may then be available. Nothing herein
contained shall be construed as prohibiting Redhook from pursuing any other
remedies available to it for such breach or threatened breach.
6. Miscellaneous.
6.1 Assignment. This Agreement shall inure to the benefit of and shall
be binding upon Target Principal and Redhook, and their respective affiliates,
subsidiaries, successors and assigns. Redhook may assign this Agreement without
the prior written consent of Target Principal to any entity which owns, operates
or manages the Restricted Business. Target Principal may not assign his
obligations hereunder.
6.2 Amendment. This Agreement may not be amended except by the mutual
agreement of the Parties evidenced by a writing signed by each Party.
6.3 Notices. All notices, requests and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered by hand or overnight courier against a receipt therefor, or by
registered or certified mail, return receipt requested, postage prepaid,
addressed to the Parties at the following addresses (or at such other addresses
as shall be specified by like notice):
C-2
If to Redhook: Redhook Ale Brewery, Incorporated
00000 XX 000xx Xxxxxx, Xxxxx 000
Xxxxxxxxxxx, XX 00000
Attn: CEO
Phone: 000-000-0000
Fax: 000-000-0000
If to Target Principal:
Any notice or communication so given shall be deemed to have been delivered on
the date of receipt of such delivery at the address set forth above (or such
other address designated pursuant hereto).
6.4 Choice of Law. This Agreement and the Parties' rights and
obligations hereunder shall be governed by and construed in accordance with the
internal laws of the State of Washington without giving effect to the choice of
law principles thereunder.
6.5 Entire Agreement. This Agreement sets forth the entire agreement and
understanding of the Parties relating to the subject matter hereof, and
supersedes all prior oral and written agreements, arrangements and
understandings relating to the subject matter hereof.
IN WITNESS WHEREOF, each Party has executed this Agreement effective as of
the day and year first written above.
REDHOOK TARGET PRINCIPAL
Redhook Ale Brewery, Incorporated
----------------------------
By:
---------------------------
Name:
-------------------------
Title:
------------------------
C-3
EXHIBIT D
FORM OF OPINION OF TARGET'S COUNSEL
[Opinion may be subject to customary assumptions, limitations and
qualifications, including but not limited to qualifications on enforceability
and exclusion of alcoholic beverage laws, rules and regulations from coverage of
opinion.]
1. Target is a corporation duly organized and validly existing under
the laws of the State of Oregon. Target is duly qualified to conduct business
and is in good standing in the jurisdictions set forth in Section 5(a) of the
Target Disclosure Schedule. Target has full corporate power and authority to
carry on the businesses in which it is engaged as such are being conducted and
to own and use the properties owned and used by it.
2. Target has the requisite corporate power and authority to execute
and deliver each of the Agreement, the Articles of Merger and the Plan of Merger
attached to the Articles of Merger (collectively, the "Transaction Documents"),
to perform its obligations thereunder and to consummate the transactions
contemplated thereby.
3. The execution, delivery and performance by Target of the Transaction
Documents has been duly authorized by all necessary corporate and shareholder
action on the part of Target.
4. Each of the Transaction Documents has been duly executed and
delivered by Target and constitutes the legal, valid and binding obligation of
Target, enforceable against Target in accordance with its terms.
5. None of the execution and delivery by Target of the Transaction
Documents, the performance by Target of its obligations thereunder, and the
consummation by Target of the transactions contemplated thereby will:
a. violate any provision of the Articles of Incorporation or
Bylaws of Target;
b. violate any Applicable Law (as defined below) or, to our
knowledge, any injunction, judgment, order, decree, ruling, charge or other
restriction of any Governmental Authority to which Target or CBA is subject; or
c. to our knowledge, conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, materially modify or cancel, or require any
notice under any agreement, contract, lease, license, instrument or other
arrangement to which Target or CBA is a party or by which Target or CBA is bound
or to which any of the assets of Target or CBA is subject, except such as are
set forth in the Target Disclosure Schedule or would not result in a Target
Material Adverse Effect.
As used herein, the term "Applicable Law" means the federal law of the United
States and those laws, rules and regulations of the State of Oregon which, in
our experience, are normally applicable to transactions of the type contemplated
by the Transaction Documents.
6. No notices, filings, authorizations, consents or approvals are
required to be made or obtained by Target or CBA from any Governmental Authority
in order for the Parties to consummate the transactions contemplated by the
Transaction Documents, except such as have been made or obtained and except for
the filing of the Articles of Merger by the Secretary of State of the State of
Oregon and the Secretary of State of the State of Washington.
7. To our knowledge, no action, suit or proceeding is pending or
threatened before any court or quasi judicial or administrative agency of any
federal, state, local or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, stipulation, ruling or
charge would (a) prevent consummation of any of the transactions contemplated by
the Transaction Documents, or (b) cause any of the transactions contemplated by
the Transaction Documents to be rescinded following consummation.
8. The entire authorized capital stock of Target consists of 25,000,000
shares of common stock, $.01 par value, with 3,793,603 shares outstanding, and
2,000,000 shares of preferred stock, $.01 par value, of which 120,000 shares
have been designated as Series A Preferred Stock, with zero shares issued and
outstanding, 1,404,398 shares have been designated as Series B Preferred Stock,
with zero shares issued and outstanding, 42,730.6 shares have been designated as
Series C Preferred Stock, with zero shares issued and outstanding and 78,155
shares have been designated as Series D Preferred Stock, with 78,155 shares
issued and outstanding. All of the issued and outstanding Target Shares have
been duly authorized and are validly issued. To our knowledge, except as
described in the Agreement (including the Target Disclosure Schedule), there are
no outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights or other securities, contracts or
commitments that could require Target to (a) issue, sell or otherwise cause to
become outstanding any of its securities (equity, debt, convertible or
otherwise), (b) acquire any of its securities (equity, debt, convertible or
otherwise), (c) pay any dividends on any of its securities (equity, debt,
convertible or otherwise), or (d) purchase, redeem or retire any outstanding
shares of any of its securities (equity, debt, convertible or otherwise).
9. Upon filing of the Articles of Merger by the Secretary of State of
the State of Oregon and the Secretary of State of the State of Washington, the
Merger will become effective in the State of Oregon at the time and in
accordance with the terms set forth therein.
D-2
EXHIBIT E
FORM OF OPINION OF BUYER'S COUNSEL
[Opinion may be subject to customary assumptions, limitations and
qualifications, including but not limited to qualifications on enforceability
and exclusion of alcoholic beverage laws, rules and regulations from coverage of
opinion.]
10. Buyer is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Washington. Buyer is duly qualified
to conduct business and is in good standing in the jurisdictions set forth in
Section 6(a) of the Target Disclosure Schedule. Buyer has full corporate power
and authority to carry on the businesses in which it is engaged as such are
being conducted and to own and use the properties owned and used by it.
11. Buyer has the requisite corporate power and authority to execute and
deliver each of the Agreement, the Articles of Merger and the Plan of Merger
attached to the Articles of Merger (collectively, the "Transaction Documents"),
to perform its obligations thereunder and to consummate the transactions
contemplated thereby.
12. The execution, delivery and performance by Buyer of the Transaction
Documents has been duly authorized by all necessary corporate and shareholder
action on the part of Buyer.
13. Each of the Transaction Documents has been duly executed and
delivered by Buyer and constitutes the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms.
14. None of the execution and delivery by Buyer of the Transaction
Documents, the performance by Buyer of its obligations thereunder, and the
consummation by Buyer of the transactions contemplated by the Transaction
Documents will:
a. violate any provision of the Restated Articles of
Incorporation or Amended and Restated Bylaws of Buyer;
b. violate any Applicable Law (as defined below) or, to our
knowledge, any injunction, judgment, order, decree, ruling, charge or other
restriction of any Governmental Authority to which Buyer is subject; or
c. to our knowledge, conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, materially modify or cancel, or require any
notice under any agreement, contract, lease, license, instrument or other
arrangement to which Buyer is a party or by which Buyer is bound or to which any
of its assets is subject, except such as are set forth in the Buyer Disclosure
Schedule or would not result in a Buyer Material Adverse Effect.
As used herein, the term "Applicable Law" means the federal law of the United
States and those laws, rules and regulations of the State of Washington which,
in our experience, are normally applicable to transactions of the type
contemplated by the Transaction Documents.
15. No notices, filings, authorizations, consents or approvals are
required to be made or obtained by Buyer from any Governmental Authority in
order for the Parties to consummate the transactions contemplated by the
Transaction Documents, except such as have been made or obtained and except for
the filing of the Articles of Merger by the Secretary of State of the State of
Oregon and the Secretary of State of the State of Washington and the filing by
Buyer with the SEC of a current report on Form 8-K as required by the Exchange
Act.
16. To our knowledge, no action, suit or proceeding is pending or
threatened before any court or quasi judicial or administrative agency of any
federal, state, local or foreign jurisdiction or before any arbitrator wherein
an unfavorable injunction, judgment, order, decree, stipulation, ruling or
charge would (a) prevent consummation of any of the transactions contemplated by
the Transaction Documents, or (b) cause any of the transactions contemplated by
the Transaction Documents to be rescinded following consummation.
17. The entire authorized capital stock of Buyer consists of 50,000,000
shares of common stock, par value $.005 per share, of which [8,354,239] shares
were issued and outstanding as of [within five days prior to Closing Date], and
7,467,271 shares of preferred stock, par value $.005 per share, of which no
shares are outstanding. To our knowledge, except as described in the Agreement
(including the Buyer Disclosure Schedule), there are no outstanding or
authorized options, warrants, purchase rights, subscription rights, conversion
rights, exchange rights or other securities, contracts or commitments that could
require Buyer to (a) issue, sell or otherwise cause to become outstanding any of
its securities (equity, debt, convertible or otherwise), (b) acquire any of its
securities (equity, debt, convertible or otherwise), (c) pay any dividends on
any of its securities (equity, debt, convertible or otherwise), or (d) purchase,
redeem or retire any outstanding shares of any of its securities (equity, debt,
convertible or otherwise).
18. The Registration Statement has become effective under the Securities
Act. To our knowledge, no stop order suspending the effectiveness of the
Registration Statement has been issued under the Securities Act and no
proceedings for such purpose have been instituted or are pending or are
contemplated or threatened by the SEC. Any required filing of the final
prospectus forming part of the Registration Statement and any supplement thereto
pursuant to Rule 424(b) under the Securities Act has been made in the manner and
within the time period required by such Rule 424(b).
19. The shares of common stock of Buyer issuable to the Target
Shareholders pursuant to the Merger have been duly authorized for issuance by
all necessary corporate action on the part of Buyer and its shareholders and,
when issued and delivered by Buyer in the manner contemplated by the Merger
Agreement, will be validly issued, fully paid and non-assessable.
E-2
20. The shares of common stock of Buyer issuable to the Target
Shareholders pursuant to the Merger have been approved for listing on The Nasdaq
Stock Market, subject to official notice of issuance thereof.
21. Upon filing of the Articles of Merger by the Secretary of State of
the State of Oregon and the Secretary of State of the State of Washington, the
Merger will become effective in the State of Washington at the time and in
accordance with the terms set forth therein.
E-3