Exhibit 1
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of this 27th day of September, 1999, by and among LIQUID HOLDINGS INC.,
a Delaware corporation ("Parent"), LIQUID ACQUISITION CORP., a Massachusetts
corporation and a direct or indirect wholly-owned subsidiary of Parent
("Purchaser"), and XXXXXXXXX & XXXX, INC., a Massachusetts corporation (the
"Company").
RECITALS
The Boards of Directors of Parent, Purchaser and the Company each deem
it advisable and in the best interests of Parent, Purchaser and the Company and
their respective stockholders that Purchaser be merged with and into the
Company (the "Merger") upon the terms and subject to the conditions set forth
herein and in accordance with the Massachusetts Business Corporation Law (the
"MBCL"). The Boards of Directors of Parent and Purchaser and the Parent as the
sole stockholder of Purchaser have adopted this Agreement. The Board of
Directors of the Company has approved this Agreement and has resolved to
recommend to the stockholders of the Company to vote in favor of this
Agreement.
Substantially concurrently herewith and as a condition and inducement
to Parent's willingness to enter into this Agreement, certain stockholders of
the Company, who include certain of the directors of the Company and its
Subsidiaries (as defined below) and who hold, in the aggregate, more than 33%
of the outstanding shares of Common Stock, par value $.01, of the Company, are
entering into a Stockholder Agreement in the form of Exhibit A hereto (the
"Stockholder Agreement").
Substantially concurrent herewith and as a condition and inducement to
Parent's and Purchaser's willingness to enter into this Agreement, the Company
has entered into an Option Agreement in the form of Exhibit B hereto (the
"Company Option Agreement").
Certain defined terms used in this Agreement are defined in Article VII
hereof.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Parent, Purchaser and
Company hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.3
hereof), in accordance with this Agreement and the MBCL, Purchaser shall be
merged with and into the Company, the separate existence of the Purchaser
(except as may be continued by operation of law) shall cease, and the Company
shall continue as the surviving corporation under the corporate name it
possesses immediately prior to the Effective Time. The Company after the Merger
sometimes is referred to hereinafter as the "Surviving Corporation."
1.2 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in the applicable provisions of this Agreement and
the MBCL. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the rights and property of the Company and
the Purchaser (the "Constituent Corporations") shall vest in the Surviving
Corporation, and all debts and liabilities of the Company and the Purchaser
shall become the debts and liabilities of the Surviving Corporation.
1.3 Consummation of the Merger. In the event of, and as soon as is
practicable after, the satisfaction or waiver of the conditions set forth in
Article V hereof, but in no event prior to December 6, 1999, the parties hereto
will cause the Merger to be consummated by filing with the Secretary of the
Commonwealth of Massachusetts Articles of Merger in the form of Exhibit C (the
time of confirmation of such filing or such later time as is specified in such
Articles of Merger being the "Effective Time"). Contemporaneous with the filing
referred to in this Section 1.3, a closing (the "Closing") will be held at the
offices of Xxxxxxx Xxxx LLP, 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 or
at such other location as the parties may establish for the purpose of
confirming all the foregoing. The date and the time of such Closing are
referred to as the "Closing Date."
1.4 Charter; Bylaws; Directors and Officers. Unless otherwise
determined by Purchaser prior to the Effective Time, the Articles of
Organization and Bylaws of the Surviving Corporation shall be the Articles of
Organization and Bylaws of Company, as in effect immediately prior to the
Effective Time, until thereafter amended as provided therein and under the
MBCL. The directors of Purchaser immediately prior to the Effective Time will
be the initial directors of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time will be the initial officers of
the Surviving Corporation, in each case until their successors are elected and
qualified.
1.5 Conversion of Securities. At the Effective Time, by virtue of the
Merger and without any action on the part of the Purchaser, the Company, the
Surviving Corporation or the holder of any of the following securities:
(a) Each share of Common Stock, $.01 par value per share, of the
Company (the "Shares"), issued and outstanding immediately prior to the
Effective Time (other than Shares to be cancelled pursuant to Section 1.5(b)
hereof and any Dissenting Shares (as hereinafter defined)), shall be cancelled
and extinguished and be automatically converted into and become a right to
receive $10.00 per share in cash (the "Per Share Merger Consideration") upon
surrender in the manner provided in Section 1.8 of the certificate that
evidenced the Shares (the "Certificate").
(b) Each Share which is issued and held in the treasury of the
Company immediately prior to the Effective Time or issued and outstanding and
owned by the Parent or any direct or indirect Subsidiary (as defined in Article
VII) of the Parent or the Company, shall be cancelled and retired, and no
payment shall be made with respect thereto.
(c) Each share of Common Stock, par value $.01 per share, of the
Purchaser issued and outstanding immediately prior to the Effective Time shall
be converted into and become one validly issued, fully paid and nonassessable
share of Common Stock, par value $.01 per share, of the Surviving Corporation.
(d) The holders of Dissenting Shares, if any, shall be entitled
to payment for such Shares only to the extent permitted by and in accordance
with the provisions of the MBCL; provided, however, that if, in accordance with
the applicable provisions of the MBCL, any holder of Dissenting Shares shall
forfeit such right to payment of the fair cash value of such Shares, such
Shares shall thereupon be deemed to have been converted into and to have become
exchangeable for, as of the Effective Time, the right to receive the Per Share
Merger Consideration provided in Section 1.5(a).
1.6 Company Stock Options and Related Matters.
(a) Immediately prior to the Effective Time, each outstanding
option (an "Option") to purchase Shares heretofore granted under the Company's
Stock Option Plan, Non-Employee Director Stock Option Plan or any other
employee or director stock option or compensation plan or arrangement of the
Company, excluding the Company's Employee Stock Purchase Plan (the "ESPP")
(collectively, the "Plans"), whether or not exercisable, shall be cancelled by
the Company and each holder of a cancelled Option shall receive from the
Surviving Corporation promptly after the Effective Time, in cancellation and
settlement of such Option, a cash payment in an amount equal to the excess of
the Per Share Merger Consideration over the per Share exercise price of such
Option, if any, multiplied by the number of Shares covered by such Option (the
"Option Settlement Amount"), subject to income tax withholding as required by
applicable law. Prior to the Closing, Company will provide Parent with a
listing of Options held by each optionee (including the date of grant, the
number of shares issuable upon exercise of the Option, and the Option
Settlement Amount to which the Optionee is entitled) certified by an executive
officer of Company. The Board of Directors of the Company or an appropriate
committee thereof will provide for the full and immediate vesting of any and
all options as of the Effective Time. Except as provided in the immediately
preceding sentence, the Company shall not grant or amend any Option after the
date hereof.
(b) In the event the Closing occurs on or before December 31,
1999, the Board of Directors of Company (the "Board") shall take all actions
necessary pursuant to the terms of the ESPP in order to shorten the Purchase
Periods (as defined in the ESPP) then in progress such that the Purchase Date
(as defined in the ESPP) shall occur immediately prior to the Effective Time.
The Board will not permit any Purchase Period to commence after December 31,
1999 and will not permit any individuals not listed in Section 2.3 of the
Company Disclosure Letter to participate in the current Purchase Period and
will not permit any of the participating individuals listed in Section 2.3 of
the Company Disclosure Letter to increase their level of participation for the
Current Purchase Period.
1.7 Dissenting Shares.
(a) Notwithstanding any provision of this Agreement to the
contrary, holders of Shares which are entitled to dissenter's rights in
connection with the Merger under the MBCL (collectively, the "Dissenting
Shares") shall not be converted into or represent the right to receive the Per
Share Merger Consideration. Such stockholders shall be entitled to receive
payment of the fair market value of such Shares held by them in accordance with
the provisions of the MBCL, except that all Dissenting Shares held by
stockholders who shall have failed to perfect or who effectively shall have
withdrawn or lost their rights to the payment of fair market value for such
shares under the MBCL shall thereupon be deemed to have been converted into and
to have become exchangeable for, as of the Effective Time, the right to receive
the Per Share Merger Consideration, without any interest thereon, upon
surrender, in the manner provided in Section 1.8, of the certificate or
certificates that formerly evidenced such Shares.
(b) The Company shall give the Purchaser (i) prompt notice of
any demand for payment of fair market value received by the Company, the
withdrawals of any such demand, and any other instrument served pursuant to the
MBCL and received by the Company and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for payment of fair market
value under the MBCL. The Company shall not, except with the prior written
consent of the Purchaser, make any payment with respect to any demands for
payment of fair market value or offer to settle or settle any such demands.
1.8 Exchange of Certificates.
(a) From and after the Effective Time, a bank or trust company
to be designated by the Purchaser (the "Exchange Agent") shall act as exchange
agent in effecting the exchange of the Per Share Merger Consideration for
Certificates which, prior to the Effective Time, represented Shares entitled to
payment pursuant to Section 1.5 hereof. At or immediately prior to the
Effective Time, the Parent or the Purchaser shall deposit with the Exchange
Agent the aggregate Per Share Merger Consideration necessary to make the
payments contemplated hereby on a timely basis (the "Deposit Amount") in trust
for the benefit of the holders of Certificates. Pending distribution pursuant
to this Section 1.8(a) of the Deposit Amount deposited with the Exchange Agent,
the Surviving Corporation may direct the Exchange Agent to invest such Deposit
Amount, provided that such investments (i) shall be obligations of or
guaranteed by the United States of America, in commercial paper obligations
receiving the highest rating from either Xxxxx'x Investors Services, Inc. or
Standard & Poor's Ratings Services, a division of The McGraw Hill Companies,
Inc., or in certificates of deposit, bank repurchase agreements or bankers
acceptances of commercial banks with capital exceeding $500,000,000
(collectively "Permitted Investments") or in money market funds which are
invested solely in Permitted Investments and (ii) shall have maturities that
will not prevent or delay payments to be made pursuant to this Section 1.8(a).
Upon the surrender of each such Certificate and the issuance and delivery by
the Exchange Agent of the Per Share Merger Consideration in exchange therefor,
such Certificate shall forthwith be cancelled. Until so surrendered and
exchanged, each such Certificate (other than Certificates representing Shares
held by the Parent or the Company or any direct or indirect Subsidiary of the
Parent or the Company and Dissenting Shares) shall represent solely the right
to receive the Per Share Merger Consideration, without interest, multiplied by
the number of Shares represented by such Certificate. Promptly after the
Effective Time, the Exchange Agent shall mail to each record holder of
Certificates which immediately prior to the Effective Time represented Shares a
form of letter of transmittal and instructions for use in surrendering such
Certificates and receiving the Per Share Merger Consideration therefor. Upon
the surrender to the Exchange Agent of such an outstanding Certificate together
with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, and such other documents as may be
required pursuant to such instructions, the holder shall receive the Per Share
Merger Consideration, without any interest thereon and such Certificate shall
be cancelled. If any Per Share Merger Consideration is to be paid to a name
other than the name in which the Certificate representing Shares surrendered in
exchange therefor is registered, it shall be a condition to such payment or
exchange that the Person requesting such payment or exchange shall pay to the
Exchange Agent any transfer or other taxes required by reason of the payment of
such Per Share Merger Consideration to a name other than that of the registered
holder of the Certificate surrendered, or such Person shall establish to the
satisfaction of the Exchange Agent that such tax has been paid or is not
applicable. Notwithstanding the foregoing, neither the Exchange Agent nor any
party hereto shall be liable to a holder of Shares for any Per Share Merger
Consideration delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
(b) The Surviving Corporation shall not be entitled to the
return of any of the Deposit Amount in the possession of the Exchange Agent
relating to the transactions described in this Agreement until the date which
is 180 days after the Effective Time. Thereafter, each holder of a Certificate
representing a Share may surrender such Certificate to the Surviving
Corporation and (subject to applicable abandoned property, escheat and similar
laws) receive in exchange therefor the Per Share Merger Consideration, without
any interest thereon, but shall have no greater rights against the Surviving
Corporation than may be accorded to general creditors of the Surviving
Corporation.
(c) At and after the Effective Time, the holders of Certificates
to be exchanged for the Per Share Merger Consideration pursuant to this
Agreement shall cease to have any rights as stockholders of the Company except
for the right to surrender such holder's Certificates in exchange for payment
of the Per Share Merger Consideration, and after the Effective Time there shall
be no transfers on the stock transfer books of the Surviving Corporation of the
Shares which were outstanding immediately prior to the Effective Time. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation or the Exchange Agent, they shall be cancelled and exchanged for
the Per Share Merger Consideration, as provided in this Article I, subject to
applicable law in the case of Dissenting Shares.
(d) The provisions of this Section 1.8 shall also apply to
Dissenting Shares that lose their status as such, except that the obligations
of the Exchange Agent under this Section 1.8 shall commence on the date of loss
of such status.
1.9 Supplementary Action. If at any time after the Effective Time,
any further assignments or assurances in law or any other things are necessary
or desirable to vest or to perfect or confirm of record in the Surviving
Corporation the title to any property or rights of either the Company or
Purchaser, or otherwise to carry out the provisions of this Agreement, the
officers and directors of the Surviving Corporation are hereby authorized and
empowered, in the name of and on behalf of the Company and Purchaser, to
execute and deliver any and all things necessary or proper to vest or to
perfect or confirm title to such property or rights in the Surviving
Corporation, and otherwise to carry out the purposes and provisions of this
Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Parent and the Purchaser
that, except as described in the applicable section of the Company Disclosure
Letter furnished by the Company to the Parent prior to the execution of this
Agreement (the "Company Disclosure Letter") corresponding to the Sections set
forth below:
2.1 Organization and Qualification. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts. Each Subsidiary of the Company is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, except where failure to be in good standing
individually and in the aggregate would not be reasonably expected to have a
Material Adverse Effect (as defined in Article VII). The Company and its
Subsidiaries have all requisite corporate power and authority to own, operate
and lease its properties and to carry on its business as it is now being
conducted. Each of the Company and its Subsidiaries is duly qualified as a
foreign corporation, and is in good standing, in each jurisdiction where the
character of its properties owned or held under lease or the nature of its
activities makes such qualification necessary, other than in jurisdictions
where the failure to be so qualified, individually and in the aggregate, has
not had and would not reasonably be expected to have a Material Adverse Effect.
Other than the Company's ownership interest in its Subsidiaries, the Company
has no direct or indirect equity interest in any partnership, corporation,
limited liability company, joint venture, business association or other entity,
except for any such equity interests that individually and in the aggregate are
not material to the Company and its Subsidiaries taken as a whole and would not
reasonably be expected to have a Material Adverse Effect.
2.2 Articles of Organization; Bylaws; and Stock Transfer Records.
The Company has made available to the Parent prior to the date of this
Agreement complete and correct copies of (i) the Articles of Organization (or
other charter document) and Bylaws of the Company and each of its Subsidiaries,
(ii) shareholder list of each of the Company's Subsidiaries and (iii) all stock
certificates representing any of the issued and outstanding capital stock of
each of the Company's Subsidiaries, and in each case such copies are accurate
and complete as of the date of this Agreement.
2.3 Capitalization of the Company.
(a) On the date of this Agreement, the authorized capital stock
of the Company consists of (i) 1,000,000 shares of Preferred Stock, par value
$.01 per share, of which none are issued and outstanding, and (ii) 10,000,000
shares of Common Stock, par value $.01 per share, of which 3,848,405 Shares are
issued and outstanding. Except for (i) rights created pursuant to the Company's
Stock Option Plan, Non-Employee Director Stock Option Plan and ESPP (the
"Identified Equity Plans"), (ii) the rights created pursuant to this Agreement
and the Company Option Agreement, (iii) the Company's right to repurchase any
unvested shares under the Identified Equity Plans, and (iv) as set forth in
Section 2.3 of the Company Disclosure Letter, there are no other options,
warrants, calls, rights, commitments or agreements of any character to which
the Company is a party or by which it is bound obligating the Company to issue,
sell, deliver, repurchase or redeem or cause to be issued, sold, delivered,
repurchased or redeemed any shares of capital stock of, or equity interests in,
the Company. Section 2.3 of the Company Disclosure Letter identifies the
participants in the ESPP for the current Purchase Period and their level of
participation. All outstanding Shares are, and all Shares subject to issuance
as aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, will be, duly authorized,
validly issued, fully paid and nonassessable and free of preemptive rights or
rights of first refusal. None of the Company or any of its Subsidiaries is
required to redeem, repurchase or otherwise acquire shares of capital stock of
the Company or any of its Subsidiaries, respectively, as a result of the
transactions contemplated by this Agreement. The Company has no stockholder
rights plan or agreement in force providing for the issuance to holders of
Shares of rights to purchase or receive stock, cash or other assets upon the
acquisition or proposed acquisition of Shares by a Person (a "Rights Plan"),
nor has the Company's Board of Directors or stockholders ever adopted a Rights
Plan.
(b) All of the Company's Subsidiaries are listed in Exhibit 21
to the Company's Annual Report on Form 10K for the fiscal year ended December
31, 1998 (the "1998 10K"). Except as set forth in the 1998 10K, the Company
owns all of the outstanding capital stock of its Subsidiaries free and clear of
any liens, security interests, pledges, agreements, claims, charges or
encumbrances of any nature whatsoever ("Encumbrances"), except for any
Encumbrances securing the Company's obligations to BankBoston, N.A. under its
line of credit (or any successor line of credit) and any other Encumbrances
that are not material to the Company and the Subsidiaries taken as a whole.
Except as set forth in Section 2.3 of the Company Disclosure Letter there are
no voting trusts or other agreements or understandings to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries may be bound with respect to the voting of the capital stock of
the Company or any of the Company's Subsidiaries. Except as set forth in
Section 2.3 of the Company Disclosure Letter, there are no options, warrants,
calls, rights, commitments, or agreements of any character to which any of the
Company's Subsidiaries is a party or by which any of the Company's Subsidiaries
is bound obligating such Subsidiary to issue, sell, deliver, repurchase or
redeem, or caused to be issued, sold, delivered, repurchased or redeemed, any
shares of capital stock of, or equity interests in, such Subsidiary. All of the
outstanding capital stock of each of the Company's Subsidiaries is duly
authorized, validly issued, fully paid and nonassessable and issued free of
preemptive rights or rights of first refusal.
2.4 Corporate Power, Authorization and Enforceability. The Company
has all requisite corporate power and authority to enter into this Agreement
and to perform its obligations hereunder and to consummate all the transactions
contemplated hereby. The execution and delivery of this Agreement by the
Company, the performance by the Company of its obligations hereunder and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by the Company's Board of Directors and no other
corporate action on the part of the Company is necessary to authorize this
Agreement or to consummate the transactions contemplated hereby (other than,
with respect to the Merger, the approval and adoption of this Agreement by
stockholders holding two-thirds of the outstanding Shares entitled to vote
thereon). This Agreement has been duly executed and delivered by the Company
and is a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms.
2.5 No Conflict; Required Filings and Consents.
(a) Assuming satisfaction of any applicable requirements
referred to in Section 2.5(b) below, the execution and delivery by the Company
of this Agreement, the compliance by the Company with the provisions hereof and
the consummation by the Company of the transactions contemplated hereby:
(A) will not conflict with or violate any statute, law,
ordinance, rule, regulation, order, writ, judgment, award, injunction,
decree or ruling applicable to the Company or any of its Subsidiaries
or any of their properties, or conflict with, violate or result in any
breach of or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others
any rights of termination, amendment, cancellation or acceleration of,
or the loss of a benefit under, or result in the creation of a lien,
security interest, charge or encumbrance on any of the properties or
assets of the Company or any of its Subsidiaries pursuant to (i) the
Articles of Organization (or other charter document) or Bylaws of the
Company or any of its Subsidiaries, or (ii) any contract, lease,
agreement, note, bond, mortgage, indenture, deed of trust, or other
instrument or obligation, or any license, authorization, permit,
certificate or other franchise, other than such conflicts, violations,
breaches, defaults, losses, rights of termination, amendment,
cancellation or acceleration, liens, security interests, charges or
encumbrances as to which requisite waivers have been obtained or which
individually and in the aggregate have not had and would not reasonably
be expected to have a Material Adverse Effect; and
(B) do not and will not result in any grant of rights to any
other party under the Articles of Organization (or other charter
document) or Bylaws of the Company or any of its Subsidiaries or
restrict or impair the ability of the Parent or any of its Subsidiaries
to vote, or otherwise exercise the rights of a stockholder with respect
to shares of the Company or any of its Subsidiaries that may be
directly or indirectly acquired or controlled by them.
(b) Other than in connection with or in compliance with the
provisions of the MBCL, the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the "blue sky" laws of various states, approvals,
registrations, permits, licenses, authorizations, waivers or consents required
to be obtained under applicable state or local alcoholic beverage control laws
("Regulatory Consents") and the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), (i) the Company is not required to submit any
notice, report, registration, declaration or other filing with any federal,
state or local government, court, administrative agency or commission or other
governmental authority or instrumentality, domestic or foreign (collectively,
"Governmental Entities"), in connection with the execution or delivery of this
Agreement by the Company or the performance by the Company of its obligations
hereunder or the consummation by the Company of the transactions contemplated
by this Agreement and (ii) no waiver, consent, approval, order or authorization
of any Governmental Entity is required to be obtained in connection with the
execution or delivery of this Agreement by the Company or the performance by
the Company of its obligations hereunder or the consummation by the Company of
the transactions contemplated by this Agreement, other than such notices,
reports, registrations, declarations, filings, waivers, consents, approvals,
orders, or authorizations, the absence of which would not, individually and in
the aggregate, subject the Company or its Subsidiaries to any criminal
penalties or otherwise reasonably be expected to have a Material Adverse
Effect.
2.6 SEC Reports; Financial Statements. The Company has filed all
required reports, schedules, forms, statements and other documents with the
Securities and Exchange Commission (the "SEC") from June 24, 1994 through the
date hereof (collectively, the "SEC Reports"). The financial statements
contained in the SEC Reports (or incorporated therein by reference) and the
consolidated financial statements of the Company and its Subsidiaries for the
fiscal year ended December 31, 1998 included in the 1998 10K and for the
quarter ended March 31, 1999 included in the Company's Quarterly Report on Form
10Q for the quarter ended March 31, 1999 ("March 1999 10Q") and for the quarter
ended June 30, 1999 included in the Company's Quarterly Report on Form 10-Q for
the quarter ended June 30, 1999 (the "June 1999 10Q") (collectively, the
"Financial Statements"), were prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved ("GAAP") (except as may be indicated in the notes or schedules thereto
and except, in the case of the unaudited interim statements, as may be
permitted under Form 10-Q of the Exchange Act) and present fairly in all
material respects the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of their operations and cash flows as of the dates and for the fiscal periods
indicated therein (subject, in the case of unaudited interim financial
statements, to normal year-end adjustments). On the date of filing thereof each
SEC Report filed with the SEC complied in all material respects with the then
applicable requirements of the Exchange Act and the Securities Act of 1933, as
amended (the "Securities Act"), and the rules and regulations of the SEC
promulgated thereunder and did not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. None of the Company's Subsidiaries is
required to file any statements or reports with the SEC.
2.7 No Default. Neither the Company nor any of its Subsidiaries is
in default or violation (and no event has occurred which with or without
notice, the lapse of time or the happening or occurrence of any other event
would constitute a default or violation) of any term, condition or provision of
(i) its Articles of Organization (or other charter document) or Bylaws, or (ii)
any contract, lease, agreement, license, note, bond, mortgage, indenture, deed
of trust or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which the Company or its Subsidiaries or any of
their properties or assets may be bound (nor to the knowledge of the Company is
any other party thereto in breach thereof or default thereunder), except in the
case of this clause (ii) for any defaults or violations that individually and
in the aggregate would not have a Material Adverse Effect.
2.8 Compliance with Law. Except as set forth in Section 2.8 of the
Company Disclosure Letter, each of the Company and its Subsidiaries is in
compliance, and has conducted its respective businesses so as to comply with,
all statutes, laws, ordinances, rules, regulations, permits and approvals
applicable to its operations, except for violations which, individually and in
the aggregate, do not and insofar as reasonably can be foreseen in the future
would not have a Material Adverse Effect. Except as disclosed in the SEC
Reports, as of the date hereof no investigation or review by any Governmental
Entity with respect to the Company, any of its Subsidiaries or any property
owned or leased by the Company or any of its Subsidiaries is pending or, to the
knowledge of the Company, threatened, except for any investigation or review
that would not individually and in the aggregate have a Material Adverse
Effect.
2.9 Permits. The Company and its Subsidiaries have all permits,
authorizations, licenses and franchises from Governmental Entities required to
conduct their business as now being conducted, and all such authorizations,
licenses and franchises are valid and in effect, except for such permits,
authorizations, licenses and franchises the absence of which would not,
individually and in the aggregate, have a Material Adverse Effect. Section 2.9
of the Company Disclosure Letter lists as of the date of this Agreement all of
the Company's licenses and permits relating to the purchase, transportation,
storage or sale of alcoholic beverages (the "Alcoholic Beverage Licenses"). To
the knowledge of the Company the Alcoholic Beverage Licenses are the only
permits and licenses relating to the purchase, transportation, storage, or sale
of alcoholic beverages required by the Company to operate such business as
currently conducted, except for such permits and licenses the absence of which
would not, individually and in the aggregate, have a Material Adverse Effect.
The Company is not in default with respect to any of the Alcoholic Beverage
Licenses, except for any defaults that individually and in the aggregate have
not had and would not reasonably be expected to have a Material Adverse Effect
and would not reasonably be expected to prevent or delay in any material
respect obtaining the Regulatory Consents referred to in Section 4.14.
2.10 Absence of Certain Changes. As of the date of this Agreement,
except as disclosed in the 1998 10-K, March 1999 10-Q or June 1999 10-Q, since
December 31, 1998, the Company and its Subsidiaries have conducted their
business in the ordinary course consistent with past practice and have not
taken any of the actions set forth in paragraphs (a)(i) through (iv) or (vi)
through (ix) of Section 4.1, and there has not been any occurrence, including
the commencement or threat of any action, suit, investigation or proceeding
against the Company or its Subsidiaries, that has had or would reasonably be
expected to have a Material Adverse Effect, other than changes relating to or
arising out of the economy in general or the industries of the Company and its
Subsidiaries in general and not specifically relating to the Company or any of
its Subsidiaries.
2.11 No Undisclosed Liabilities. Except for liabilities and
obligations incurred since December 31, 1998 in the ordinary course of
business, liabilities and obligations incurred under this Agreement or any of
the agreements to be entered into pursuant to this Agreement and liabilities
and obligations identified in Section 2.11 of the Company Disclosure Letter,
neither the Company nor any of its Subsidiaries has any liabilities or
obligations of any nature whatsoever (whether absolute, accrued, fixed,
contingent, liquidated, unliquidated or otherwise), required by generally
accepted accounting principles to be recognized or disclosed on a consolidated
balance sheet of the Company and its Subsidiaries or in the notes thereto,
other than (i) recognized or disclosed in the Financial Statements or disclosed
in the 1998 10K or March 1999 10-Q or June 1999 10Q, and (ii) liabilities which
would not individually and in the aggregate have a Material Adverse Effect.
2.12 Litigation. Section 2.12 of the Company Disclosure Letter
includes a list of all litigation pending against the Company as of September
23, 1999 and to the knowledge of the Company all material threatened litigation
as of September 23, 1999. The Company has made available to Parent correct and
complete copies of all audit inquiry response letters prepared by its counsel
for the Company's auditors in connection with the last completed audit of the
Company's financial statements and any such correspondence since the date of
the last such audit. As of the date of this Agreement, there are no actions,
suits or proceedings pending or, to the knowledge of the Company, threatened
against the Company arising out of or in any way related to this Agreement, the
Merger or any of the transactions contemplated hereby or thereby.
2.13. ERISA.
(a) Section 2.13 of the Company Disclosure Letter lists each
"employee benefit plan," as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and all other written or
oral plans or agreements involving direct or indirect compensation (including
any employment agreements entered into between the Company or any of its
Subsidiaries and any employee or former employee of the Company or any of its
Subsidiaries, but excluding worker's compensation, unemployment compensation
and other government-mandated programs) currently or previously maintained,
contributed to or entered into by the Company or any of its Subsidiaries or any
ERISA Affiliate thereof for the benefit of any employee or former employee of
or current or former service provider to the Company or any of its Subsidiaries
under which the Company or any of its Subsidiaries or any ERISA Affiliate
thereof has or may have any present or future obligation or liability
(collectively, the "Company Employee Plans"). For purposes of this Section
2.13, "ERISA Affiliate" shall mean any entity which is a member of (i) a
"controlled group of corporations," as defined in Section 414(b) of the
Internal Revenue Code of 1986, as amended (the "Code"), (ii) a group of
entities under "common control," as defined in Section 414(c) of the Code or
(iii) an "affiliated service group," as defined in Section 414(m) of the Code
or treasury regulations promulgated under Section 414(o) of the Code, any of
which includes the Company or any of its Subsidiaries. Section 2.13 of the
Company Disclosure Letter identifies the only Company Employee Plans which
individually or collectively would constitute an "employee pension benefit
plan," as defined in Section 3(2) of ERISA (collectively, the "Company Pension
Plans").
(b) No Company Pension Plan is subject to Title IV of ERISA,
Part 3 of Title I of ERISA or Section 412 of the Code. No Company Pension Plan
constitutes or has since the enactment of ERISA constituted a "multiemployer
plan," as defined in Section 3(37) of ERISA. Nothing done or omitted to be done
and no transaction or holding of any asset under or in connection with any
Company Employee Plan has or is likely to make the Company or any of its
Subsidiaries or any officer or director thereof subject to any material
liability as a result of a violation of Title I of ERISA or liable for any
material tax pursuant to Section 4975 of the Code.
(c) Each Company Pension Plan which is intended to be qualified
under Section 401(a) of the Code is so qualified and has been so qualified
during the period from its adoption to date, except to the extent that the
requirements for qualification may be satisfied by adopting retroactive
amendments under Section 401(b) of the Code and the regulations thereunder or
under Section 1140 of the Tax Reform Act of 1986. Each trust forming a part of
a Company Pension Plan is exempt from tax pursuant to Section 501(a) of the
Code. Each Company Employee Plan has been maintained in compliance with its
terms and with the applicable requirements of ERISA and the Code except where
failure to be in compliance individually and in the aggregate has not had and
would not reasonably be expected to have a Material Adverse Effect.
(d) Each employment, severance or other similar contract,
arrangement or policy and each plan or arrangement (written or oral) providing
for insurance coverage (including any self-insured arrangements), vacation
benefits, severance or severance-type benefits, disability benefits, death
benefits, hospitalization benefits, retirement benefits, deferred compensation,
profit-sharing, bonuses, stock options, stock purchase, phantom stock, stock
appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits which (i) is not a Company Employee Plan,
(ii) is entered into, maintained or contributed to, as the case may be, by the
Company or any of its Subsidiaries, and (iii) covers any employee or former
employee of or other current or former service provider to the Company or any
of its Subsidiaries, is herein referred to as a "Company Benefit Arrangement"
and collectively as the "Company Benefit Arrangements." All material Company
Benefit Arrangements are listed in Section 2.13 of the Company Disclosure
Letter. Each Company Benefit Arrangement has been maintained in compliance with
its terms and with the requirements prescribed by any and all statutes
(including but not limited to the Code), orders, rules and regulations which
are applicable to such Company Benefit Arrangements except where failure to be
in compliance individually and in the aggregate has not had and would not
reasonably be expected to have a Material Adverse Effect.
(e) There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or any of its Subsidiaries
relating to, or change in employee participation or coverage under, any Company
Employee Plan or Company Benefit Arrangement which would increase materially
the expense of maintaining such Company Employee Plan or Company Benefit
Arrangement above the level of the expense incurred in respect thereof for the
fiscal year ended December 31, 1998.
(f) The Company has complied with the requirements of Section
4980B of the Code with respect to any "qualifying event" (as defined in Section
4980B(f)(3) of the Code) occurring prior to and including the Closing Date,
except where failure to be in compliance individually and in the aggregate has
not had and would not reasonably be expected to have a Material Adverse Effect
and, to the Company's knowledge, no tax payable on account of Section 4980B of
the Code has been incurred with respect to any current or former employees of
the Company or any of its Subsidiaries.
(g) Except as may be contained in any of the agreements listed
as exhibits to the 1998 10K, there is no term of any Company Employee Plan or
Company Benefit Arrangement covering a "disqualified individual" (as defined in
Section 280G(c) of the Code), or of any contract, instrument, agreement or
arrangement with any such disqualified individual, that individually or
collectively could result in a disallowance of the deduction for any "excess
parachute payment" (as defined in Section 280G(b)(i) of the Code) or the
imposition of the excise tax provided in Section 4999 of the Code. The
consummation of the transactions contemplated by this Agreement will not result
in any "excess parachute payment" or the imposition of any such excise tax.
(h) The Company has heretofore delivered or made available to
Parent copies of all of the Company Employee Plans, Company Pension Plans and
Company Benefit Arrangements listed in Section 2.13 of the Company Disclosure
Letter.
(i) There is no pending or, to the Company's knowledge,
threatened legal action, proceeding or investigation, other than routine claims
for benefits, concerning any Company Employee Plan, Company Pension Plan or
Company Benefit Arrangement or, to the knowledge of the Company, any fiduciary
or service provider thereof and, to the knowledge of the Company, there is no
basis for any such legal action or proceeding.
(j) No Company Employee Plan or Company Benefit Arrangement
provides health, life or other similar welfare coverages after termination of
employment except to the extent required by applicable state insurance laws and
Title I, Part 6 of ERISA.
(k) With respect to each Company Employee Plan, Company Pension
Plan or Company Benefit Arrangement for which a separate fund of assets is or
is required to be maintained, full payment has been made of all amounts
required of the Company and its Subsidiaries and ERISA Affiliates under the
terms of each such Company Employee Plan, Company Pension Plan or Company
Benefit Arrangement or applicable law, through the Closing Date.
(l) Except as described in the 1998 10-K or the Company's Proxy
Statement for its 1999 Annual Meeting of Stockholders, neither the Company nor
any of its Subsidiaries has any plan or policy obligating the Company or any
Subsidiary to pay severance to any employee.
2.14 Tax Returns and Reports.
(a) The Company and its Subsidiaries have timely filed with the
appropriate taxing authorities all federal, state, county, local and foreign
returns, estimates, information statements, reports and other documents in
respect of Taxes (as defined in Article VII) required to be filed by the
Company and its Subsidiaries, except where the failure to file such Tax return
would not individually and in the aggregate have a Material Adverse Effect. All
amounts shown due on such returns have been timely paid as required by law,
except where the failure to timely pay individually and in the aggregate has
not had and would not reasonably be expected to have a Material Adverse Effect.
(b) To the Company's knowledge, as of the date of this
Agreement, none of the federal, state, local or foreign Tax returns of the
Company or its Subsidiaries is presently being examined, audited or contested
by the relevant taxing authorities. The Company has not received any notice at
any time prior to the date of this Agreement from any taxing authority
indicating that any of the federal, state, local or foreign Tax returns of the
Company or its Subsidiaries will be audited, except for any audits that have
been completed and for which the Company has paid any outstanding Taxes.
Neither the Company nor any of its Subsidiaries has executed, or been asked in
writing to execute, an agreement or waiver extending the statutory period of
limitation applicable to any Tax return for any period with respect to which
the applicable statute of limitations has not expired, except for any of the
foregoing that individually or in the aggregate has not had and would not
reasonably be expected to have a Material Adverse Effect.
(c) As of the date of this Agreement, the Company has no ruling
requests currently pending with the Internal Revenue Service.
(d) Neither the Company nor any of its past or present
Subsidiaries has ever been a member of an "affiliated group", as defined in
Section 1504 of the Code (or any analogous combined, consolidated or unitary
group defined under state, foreign or local Tax law), other than any affiliated
group of which the Company is the parent corporation.
(e) The Company and its Subsidiaries have withheld and paid all
Taxes required to have been withheld and paid in connection with amounts paid
or owing to any employee, consultant, independent contractor, creditor,
stockholder or other party, except where the failure to so withhold and pay
individually and in the aggregate has not had and would not reasonably be
expected to have a Material Adverse Effect.
2.15 Trademarks, Patents and Copyrights.
(a) The Company or its Subsidiaries own or possess adequate
licenses or other valid rights to use all patents, patent rights, trademarks,
trademark rights, service marks, trade names, trade name rights, copyrights,
know-how and other proprietary information used or held for use in connection
with the business of the Company or any of its Subsidiaries as currently being,
or proposed to be, conducted (except where the failure to own or possess such
licenses or rights would not individually and in the aggregate have a Material
Adverse Effect) and is unaware of any material assertions or claims challenging
the validity of any of the foregoing; and to the knowledge of the Company, the
conduct of the business of the Company and its Subsidiaries as now conducted or
proposed to be conducted does not and will not conflict with any patents,
patent rights, licenses, service marks, trademarks, trademark rights, trade
names, trade name rights or copyrights of others in any material way. No
material infringement of any proprietary right owned by or licensed by or to
the Company or any of its Subsidiaries is known to the Company.
(b) The Company owns or has the right to use pursuant to valid
license agreements and software maintenance agreements all computer software
used in its business as presently conducted (the "Software Licenses"), except
where the failure to own or have adequate rights to use any such software
individually and in the aggregate has not had and would not reasonably be
expected to have a Material Adverse Effect. The Company is in compliance with
all of its Software Licenses, except for any non-compliance that individually
and in the aggregate has not had and would not reasonably be expected to have a
Material Adverse Effect. The consummation of the transactions contemplated by
this Agreement will not cause any of the Software Licenses to terminate or
become cancellable or trigger a third party consent requirement or fee or
penalty, except for any of the foregoing that individually and in the aggregate
has not had and would not reasonably be expected to have a Material Adverse
Effect.
2.16 Proxy Statement. The proxy statement to be sent to the
stockholders of the Company in connection with the Special Meeting (as defined
in Section 4.4) (such proxy statement, as amended or supplemented, being
referred to herein as the "Proxy Statement"), shall not, at the date the Proxy
Statement (or any amendment or supplement thereto) is first mailed to
stockholders of the Company, at the time of the Special Meeting or at the
Effective Time, be false or misleading with respect to any material fact, or
omit to state any 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 are made, not misleading or necessary to correct any statement
in any earlier communication with respect to the solicitation of proxies for
the Special Meeting which shall have become false or misleading, except that no
representation or warranty is made by the Company with respect to information
furnished by the Parent or Purchaser specifically for inclusion in the Proxy
Statement. The Proxy Statement shall comply in all material respects as to form
with the requirements of the Exchange Act and the rules and regulations
thereunder.
2.17 Material Agreements. Except as set forth in the 1998 10-K, the
March 1999 10-Q and the June 1999 10-Q and except for this Agreement and the
agreements specifically referred to herein, neither the Company nor any of its
Subsidiaries is a party to or bound by any of the following agreements (with
the following agreements, and the agreements included as exhibits to the SEC
Reports, collectively referred to as the "Material Agreements"):
(a) any contract or agreement or amendment thereto that would be
required to be filed as an exhibit to a registration statement on Form S-1
filed by the Company as of the date hereof;
(b) any confidentiality agreement, non-competition agreement or
other contract or agreement that contains covenants limiting in any material
respect the Company's or any of its Subsidiaries' freedom to compete in any
line of business or in any location or with any Person; and
(c) any loan agreement, indenture, note, bond, debenture or any
other document or agreement evidencing a capitalized lease obligation or other
Indebtedness (as defined in Article VII) to any Person, other than any
Indebtedness in a principal amount less than $25,000 individually or $100,000
in the aggregate.
The Company has made available to the Parent true, correct and complete
copies of all Material Agreements together with all modifications and
supplements thereto.
2.18 Environmental Matters.
(a) Neither the Company nor any of its Subsidiaries nor to the
knowledge of the Company as of the date of this Agreement any operator or owner
of their respective past or present properties is in violation, or alleged
violation, of any judgment, decree, order, law, license, rule or regulation
pertaining to environmental matters, including without limitation, those
arising under the Resource Conservation and Recovery Act ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986
("XXXX"), the Federal Water Pollution Control Act, the Solid Waste Disposal
Act, as amended, the Federal Clean Water Act, the Federal Clean Air Act, the
Toxic Substances Control Act, the Occupational Safety and Health Act of 1970,
as amended, or any state or local statute, regulation, ordinance, order or
decree relating to health, safety or the environment (hereinafter
"Environmental Laws"), except where any such violations individually and in the
aggregate have not had and would not reasonably be expected to have a Material
Adverse Effect.
(b) To the knowledge of the Company or any of its Subsidiaries
there have been no releases (i.e., any past or present releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, disposing or dumping) or threatened releases of any hazardous waste
as defined by 42 U.S.C. ss.6903(5), any hazardous substances as defined by 42
U.S.C. ss.9601(33) or any toxic substance, oil or hazardous materials or other
chemicals or substances regulated by any Environmental Laws ("Hazardous
Substances") on, upon, into or from any properties of the Company or its
Subsidiaries, which releases would individually or in the aggregate have a
Material Adverse Effect.
(c) To the Company's knowledge, as of the date of this
Agreement, no Hazardous Substance has been discharged, generated, treated,
manufactured, handled, stored, transported, emitted, released or is present at
any property now or previously owned, leased or operated by the Company except
in compliance with all applicable Environmental Laws, except for any
non-compliances that individually and in the aggregate have not had and would
not reasonably be expected to have a Material Adverse Effect.
2.19 Insurance. (a) The Company has previously provided to the Parent
true and correct copies of all insurance policies, in effect as of the date of
this Agreement, for the Company or any of its Subsidiaries. The Company has
previously furnished or made available to the Parent all material
correspondence, including any notices of cancellation, relating to these
insurance policies which was received by the Company prior to the date of this
Agreement. As of the date of this Agreement, all such insurance is in full
force and effect and no notice of cancellation or termination, or reduction of
coverage or intention to cancel, terminate or reduce coverage, has been
received by the Company with respect to any policy for such insurance.
(b) With respect to the medical and dental insurance provided
pursuant to the Company's Group Health Plan, the Company has previously
provided to the Parent a true and correct summary of incurred and paid claims
for the 1998-1999 policy year and for the 1999-2000 policy year through August
25, 1999. These policies have been in full force and effect at all times since
January 1, 1998.
2.20 Absence of Certain Business Practices. No employee, consultant,
agent or other representative of the Company or any of its Subsidiaries has
directly or indirectly within the past five years given or agreed to give any
gift or similar benefit to any customer, supplier, governmental employee or
other Person who is or may be in a position to help or hinder the business of
the Company or any of its Subsidiaries in connection with any actual or
proposed transaction which (a) would reasonably be expected to subject the
Company or any of its Subsidiaries to any material damage or penalty in any
civil, criminal or governmental litigation or proceeding, (b) if not given in
the past, would reasonably be expected to have had a Material Adverse Effect,
or (c) if not continued in the future, would reasonably be expected to have a
Material Adverse Effect. Without limiting the generality of the foregoing, the
Company has not committed, been charged with or to the knowledge of the Company
been under investigation with respect to, nor does there exist, any violation
by the Company of the Foreign Corrupt Practices Act, as amended.
2.21 Takeover Laws. The provisions of Chapters 110C-110F of the MBCL
either do not apply to the execution, delivery and performance of this
Agreement, the Stockholder Agreement or the Company Option Agreement and the
consummation of the Merger or have been rendered inapplicable because of a vote
of the Board of Directors of the Company approving the consummation of the
Merger and the transactions contemplated by this Agreement, the Stockholder
Agreement and the Option Agreement. To the Company's knowledge, no "fair
price," "moratorium," "control share acquisition" or other similar
anti-takeover statute or regulation enacted in any jurisdiction other than
Massachusetts is applicable to the execution, delivery and performance of this
Agreement, the Stockholder Agreement or the Company Option Agreement or the
consummation of the Merger.
2.22 Vote Required. The provisions of Section 6.13 of the Company's
Restated Articles of Organization have been rendered inapplicable to the
consummation of the Merger and the transactions contemplated by this Agreement,
the Stockholder Agreement and the Company Option Agreement as a result of a
vote of the Board of Directors of the Company meeting the requirements of
Section 6.13(D) of the Company's Restated Articles of Organization.
2.23 Opinion of Financial Advisor. The Board of Directors of the
Company has received the opinion of the Company's Financial Advisor, as of the
date of this Agreement, to the effect that the Per Share Merger Consideration
is fair, from a financial point of view, to the Company and the Company's
stockholders.
2.24 Board Recommendation. The Board of Directors of the Company, at
a meeting duly called and held, has by a unanimous vote of those directors
present (i) approved the Merger and declared it advisable, (ii) determined that
this Agreement and the transactions contemplated hereby, including the Merger,
are in the best interests of the stockholders of the Company, and (iii)
resolved subject to its fiduciary duties under applicable law to recommend that
the stockholders of the Company adopt this Agreement.
2.25 Disclosure. To the Company's knowledge, as of the date of this
Agreement, no representation or warranty by the Company in this Agreement
contains any untrue statement of a material fact.
2.26 Brokers and Finders. The Company has furnished to Parent or its
counsel a true and complete copy of that certain letter agreement (the "Xxxxxx
Engagement Letter") between the Company and Xxxxxx Brothers Inc. (the
"Company's Financial Advisor"), such letter agreement being the only agreement
pursuant to which such firm would be entitled to any payment relating to the
transactions contemplated hereunder. No broker, finder or investment banker
other than the Company's Financial Advisor is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Company or any of its Subsidiaries.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser, jointly and severally, represent and warrant to
the Company that:
3.1 Organization and Qualification. Each of Parent and Purchaser is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, and has all requisite corporate
power and authority to own, operate and lease its properties and to carry on
its business as it is now being conducted. Purchaser and Parent are new
corporations that were formed for the purpose of consummating the transactions
contemplated by this Agreement. As of the date of this Agreement the Purchaser
is a wholly-owned Subsidiary of the Parent and will remain a direct or indirect
wholly-owned Subsidiary of the Parent. Neither the Parent nor the Purchaser has
conducted any business or engaged in any activities unrelated to the
transactions contemplated by this Agreement. Neither the Parent nor the
Purchaser has any material liabilities other than in connection with the
transactions contemplated by this Agreement and the Financing Agreements (as
defined in Section 3.7).
3.2 Corporate Power, Authorization and Enforceability. Each of Parent
and Purchaser has full corporate power and authority to enter into this
Agreement and to perform its obligations hereunder and to consummate all the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and Purchaser, the performance by each of Parent and Purchaser of
their respective obligations hereunder and the consummation by Parent and
Purchaser of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of Purchaser and the Parent, and the
Parent as the sole stockholder of the Purchaser, and no other corporate action
on the part of Parent or Purchaser is necessary to authorize this Agreement or
to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by each of Parent and Purchaser and is a legal,
valid and binding obligation of each of Parent and Purchaser, enforceable
against Parent and Purchaser in accordance with its terms.
3.3 No Conflict; Required Filings and Consents.
(a) Assuming satisfaction of all applicable requirements
referred to in Section 3.3(b) below, the execution and delivery of this
Agreement by the Parent and the Purchaser, the compliance by the Parent and the
Purchaser with the provisions hereof and the consummation by the Parent and the
Purchaser of the transactions contemplated hereby will not conflict with or
violate any statute, law, ordinance, rule, regulation, order, writ, judgment,
award, injunction, decree or ruling applicable to the Parent or any of its
Subsidiaries or any of their properties, or conflict with, violate or result in
any breach of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give to others any rights of
termination, amendment, cancellation or acceleration of, or the loss of a
benefit under, or result in the creation of a lien, security interest, charge
or encumbrance on any of the properties or assets of the Parent or any of its
Subsidiaries pursuant to (i) the organizational documents of the Parent or any
of its Subsidiaries or (ii) any contract, lease, agreement, note, bond,
mortgage, indenture, deed of trust, or other instrument or obligation, or any
license, authorization, permit, certificate or other franchise, other than such
conflicts, violations, breaches, defaults, losses, rights of termination,
amendment, cancellation or acceleration, liens, security interests, charges or
encumbrances as to which requisite waivers have been obtained or which
individually and in the aggregate would not have a material adverse effect on
the ability of the Parent and Purchaser to perform their obligations under this
Agreement.
(b) Other than in connection with or in compliance with the
provisions of the MBCL, the Exchange Act, the "blue sky" laws of various states
and the HSR Act and the approvals and consents contemplated by Section 4.14,
(i) neither Parent nor Purchaser is required to submit any notice, report,
registration, declaration or other filing with any Governmental Entity in
connection with the execution or delivery of this Agreement by Parent and
Purchaser or the performance by Parent and Purchaser of their obligations
hereunder or the consummation by Parent and Purchaser of the transactions
contemplated by this Agreement and (ii) no waiver, consent, approval, order or
authorization of any Governmental Entity is required to be obtained by the
Parent or the Purchaser in connection with the execution or delivery of this
Agreement by Parent and Purchaser or the performance by the Parent and the
Purchaser of their obligations hereunder or the consummation by the Parent and
the Purchaser of the transactions contemplated by this Agreement. None of the
information supplied by Parent or Purchaser for inclusion in the Proxy
Statement shall, at the date the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to stockholders, at the time of the Special
Meeting or at the Effective Time, contain any untrue statement of a material
fact required to be stated therein or necessary in order to make the statements
made therein in light of the circumstances under which they were made, not
misleading.
3.4 Board Approval. The Board of Directors of the Parent, at a
meeting duly called and held, has by at least a majority vote of those
directors present (i) approved the Merger and (ii) authorized the proper
officers to execute and deliver this Agreement.
3.5 Brokers and Finders. No broker, finder or investment banker,
other than any whose fees and expenses will be paid by the Parent, is entitled
to any brokerage, finder's or other fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Parent or any of its Subsidiaries.
3.6 Capitalization. The Parent has received $10,000,000 in cash
proceeds (the "Initial Equity Proceeds") from the sale of shares of the
Parent's capital stock to Liquid Experience II, LLC, a Delaware limited
liability company ("Liquid Experience"). The Purchaser and the Parent have
previously provided to the Company true and complete copies of their
certificate of incorporation and by-laws.
3.7 Financing. (a) The Parent and Purchaser have provided to the
Company true and correct copies of: (i) a Subscription Agreement with Liquid
Experience and Xxxxxx X. Xxxx ("RSH") (the "LE Agreement"), pursuant to which
Liquid Experience has provided the Initial Equity Proceeds and has agreed to
provide up to an additional $5,000,000 of financing on the terms and conditions
set forth in the LE Agreement, and RSH has guaranteed Liquid Experience's
obligation to provide this additional $5,000,000; and (ii) a commitment letter
(the "Institutional Investor Agreement") with an institutional investor (the
"Institutional Investor"), pursuant to which the Institutional Investor has
agreed to provide up to $35,000,000 of financing on the terms and conditions of
the Institutional Investor Agreement. There are no other agreements with Liquid
Experience or the Institutional Investor or any other Persons regarding the
financing contemplated by the LE Agreement and the Institutional Investor
Agreement (the "Financing Agreements").
(b) The Initial Equity Proceeds together with the additional amounts to
be provided pursuant to the Financing Agreements constitute all of the
financing that Parent and Purchaser would require to consummate the
transactions contemplated hereby (including payment of amounts payable under
Article I and transaction costs to be borne by the Surviving Corporation
hereunder) and to fund working capital requirements. The commitment fee
referred to in the Institutional Investor Agreement has been paid. As of the
date of this Agreement, the Financing Agreements are in full force and effect
and have not been terminated and there are no facts or circumstances which
would permit the termination thereof by Liquid Experience or the Institutional
Investor or otherwise excuse the obligor(s) thereunder from funding their
commitments thereunder other than any fact or circumstance that would under
Article V hereof excuse the Parent and Purchaser from consummating the Merger.
(c) The Parent has duly and validly authorized, executed and delivered
the Financing Agreements.
3.8 Solvency. Immediately after the Effective Time, and after giving
effect to any change in the Surviving Corporation's assets and liabilities as a
result of the Merger and the financing effected by Purchaser and assuming the
continued accuracy of the Company's representations and warranties in Section
2.11, the Surviving Corporation will not (i) be insolvent (either because its
financial condition is such that the sum of its debts is greater than the fair
value of its assets or because the fair saleable value of its assets is less
than the amount required to pay its probable liability on its existing debts as
they mature), (ii) have unreasonably small capital with which to engage in its
business or (iii) have incurred debts beyond its ability to pay as they become
due.
3.9 Alcoholic Beverage Licenses. As of the date of this Agreement the
Parent and Purchaser have no knowledge of any fact or circumstance relating to
them or the Financing Agreements which would reasonably be expected to prevent
the parties from obtaining any of the Pre-Closing Licensing Approvals referred
to in Section 4.14, except (i) for any facts or circumstances that could lead
to a Special Regulatory Event (as defined in Article VII) and (ii) except for
those matters set forth in Section 2.8 of the Company Disclosure Letter.
ARTICLE IV
COVENANTS
4.1 Conduct of Business by the Company. (a) Except as required or
permitted by this Agreement or as disclosed in Section 4.1 of the Company
Disclosure Letter, during the period from the date of this Agreement until the
Effective Time, the Company agrees as to itself and its Subsidiaries that
(except to the extent that Purchaser shall otherwise consent in writing) the
Company and its Subsidiaries shall conduct their respective operations in the
ordinary course of business consistent with past practice, and each of the
Company and its Subsidiaries will use its reasonable efforts to preserve intact
its present business organization, to keep available the services of its
present officers and employees and to maintain satisfactory relationships with
licensors, licensees, suppliers, contractors, distributors, customers and
others having business relationships with it and to maintain insurance on the
same terms as are in effect on the date of this Agreement. Without limiting the
generality of the foregoing, during the period from the date of this Agreement
to the Effective Time, neither the Company nor any of its Subsidiaries shall,
without the prior written consent of Purchaser (which consent will be given or
denied within a reasonable time after any request for such consent and will not
be unreasonably withheld with respect to the matters described in paragraph
(v), (vi), (x) or (xii) below):
(i) amend its Articles of Organization or other charter
document or Bylaws;
(ii) authorize for issuance, issue, sell, deliver, pledge or
agree or commit to issue, sell, deliver or pledge (whether through the issuance
or granting of options, warrants, commitments, subscriptions, rights to
purchase or otherwise) any capital stock of any class or any debt or other
securities convertible into capital stock or equivalents (including, without
limitation, stock appreciation rights), or amend any of the terms of any of the
foregoing, other than the issuance of shares of capital stock upon the exercise
of outstanding options or rights under the Identified Equity Plans;
(iii) (A) split, combine or reclassify any shares of its capital
stock, or authorize or propose the issuance or authorization of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, or declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock, adopt or approve any Rights Plan, or repurchase, redeem or
otherwise acquire any of its securities or any securities of its Subsidiaries,
or (B) make any payment of cash or other property to terminate, cancel or
otherwise settle any outstanding Options or any rights under the ESPP, other
than in the case of clauses (A) or (B) above for the issuance of Shares in
connection with the exercise of options or rights under the Identified Equity
Plans or the repurchase of Shares to the extent contractually required pursuant
to the terms of existing employee stock repurchase agreements;
(iv) (A) incur or assume any short-term or long-term
Indebtedness, other than up to $1,000,000 under the Company's existing credit
line with BankBoston, N.A. (or any successor line of credit) or grant, extend
or increase the amount of a mortgage lien on any leasehold or fee simple
interest of the Company or its Subsidiaries; or, except in the ordinary course
of business consistent with past practice in the case of clauses (B) through
(E) below, (B) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations
of any other Person, except for obligations of the Company or any Subsidiary of
the Company; (C) make any loans, advances or capital contributions to, or
investments in, any other Person; (D) pledge or otherwise encumber shares of
capital stock of the Company or any of its Subsidiaries; or (E) mortgage or
pledge any of its assets, tangible or intangible, or create or suffer to exist
any lien thereon except as existing on the date of this Agreement or as may be
required under agreements outstanding on the date of this Agreement to which
the Company or any of its Subsidiaries are parties;
(v) except as expressly provided in this Agreement, enter into,
adopt or amend in any manner or terminate any bonus, profit sharing,
compensation, severance, termination, stock option, stock appreciation right,
restricted stock, performance unit, stock equivalent, stock purchase agreement,
pension, retirement, deferred compensation, employment, severance,
change-in-control or other employee benefit agreement, trust, plan, fund or
other arrangement for the benefit or welfare of any director, officer or
employee, or increase in any manner the compensation (including bonuses) or
fringe benefits of any director, officer or employee or pay any benefit not
required by any plan or arrangement as in effect as of the date of this
Agreement or enter into any contract, agreement, commitment or arrangement to
do any of the foregoing;
(vi) sell, lease, license, pledge or otherwise dispose of or
encumber any material assets except in the ordinary course of business
consistent with past practice (including without limitation any indebtedness
owed to it or any claims held by it);
(vii) except as otherwise permitted pursuant to Section 4.5,
acquire or agree to acquire any business or any corporation, partnership,
limited liability company, association or other business organization or
division thereof, whether by merger or consolidation or by purchasing capital
stock or assets, or by any other manner;
(viii) change any of the accounting principles or practices used
by it affecting its assets, liabilities or business, except for such changes
required by a change in generally accepted accounting principles;
(ix) pay, discharge or satisfy any claims, liabilities or
obligations (whether absolute, accrued, fixed, contingent, liquidated,
unliquidated or otherwise), other than the payment, discharge or satisfaction
of liabilities (A) in the ordinary course of business consistent with past
practices, (B) with notice to Purchaser, in an amount which does not exceed
$50,000 in the aggregate, (C) incurred pursuant to the terms of the Xxxxxx
Engagement Letter up to but not exceeding $400,000 (including any payments made
prior to the date of this Agreement) plus reimbursement of outofpocket
expenses, and (D) incurred in connection with the transactions contemplated
hereby, including any costs for legal and accounting professionals, but only if
they are calculated on a time and disbursements basis at standard rates and
itemized in reasonable detail;
(x) without prior consultation with the Parent (in addition to
the consent requirement described above) commence any litigation or arbitration
other than in accordance with past practice or settle any litigation or
arbitration for money damages or other relief in excess of $50,000 or if as
part of such settlement the Company or any Subsidiary would agree to any
restrictions on its operations;
(xi) grant any license with respect to or otherwise convey any
intellectual property rights, other than in the ordinary course of business
consistent with past practice;
(xii) elect or appoint any new directors or officers of the
Company or any Subsidiary;
(xiii) waive, release or amend its rights under any
confidentiality, "standstill" or similar agreement that the Company entered
into in connection with its consideration of a potential strategic transaction;
provided, however, that the Company may waive, release or amend its rights
under any such confidentiality, "standstill" or similar agreement if the
Company's Board determines, based on the advice of independent legal counsel,
that failure to do so would be reasonably likely to constitute a breach of its
fiduciary duties to the Company's stockholders under applicable law; or
(xiv) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.1(i) through 4.1(xiii).
(b) In the event that the Company wishes to negotiate potential
strategic alliances or e-commerce partnering arrangements ("Strategic
Relationships"), the Company will notify the Parent prior to furnishing any
non-public information to any Person in connection with any potential Strategic
Relationship and prior to any negotiations regarding a Strategic Relationship,
and will permit the Parent and its representatives to participate in any such
negotiations. Subject to compliance with the preceding sentence the Company
will be permitted to discuss in these negotiations the possibility of
partner(s) in Strategic Relationships making investments in the Company in an
amount not to exceed $2,000,000. Before the Company enters into, or makes any
binding agreement to enter into, any Strategic Relationship it will obtain the
prior written consent of the Parent if such Strategic Relationship would
include the issuance of shares of capital stock or options, warrants or other
rights to acquire capital stock, would impose any noncompetition, exclusive
dealing or other restrictions on the operation of the Company's business or
would otherwise be outside the ordinary course of business consistent with past
practice.
4.2 Access to Information; Confidentiality.
(a) From the date of this Agreement to the Effective Time, the
Company shall, and shall cause its Subsidiaries, officers, directors, employees
and agents to, afford the officers, employees and agents of Parent, Purchaser
and their Affiliates and the attorneys, accountants, banks, other financial
institutions and investment banks working with Parent or Purchaser, and their
respective officers, employees and agents, reasonable access, at all reasonable
times upon reasonable notice and in such manner as will not unreasonably
interfere with the conduct of the Company's business, to its officers,
employees, agents, properties, books, records and contracts, and shall furnish
Parent, Purchaser and their Affiliates and the attorneys, banks, other
financial institutions and investment banks working with Parent or Purchaser,
all financial, operating and other data and information as they reasonably
request.
(b) Any information heretofore or hereafter furnished by the
Company which is non-public, confidential or proprietary in nature is referred
to in this Agreement as "Confidential Information". The Parent and the
Purchaser agree that the Confidential Information will be used solely for the
purpose of consummating the transactions contemplated by this Agreement, and
until the Effective Time, such information will be kept confidential by the
Parent and the Purchaser and their Representatives (as defined below), except
that the Confidential Information or portions thereof may be disclosed to those
Representatives of the Parent and the Purchaser who need to know such
information solely for the purpose of evaluating the transactions contemplated
by this Agreement. Before disclosing any Confidential Information to any
Representatives, the Parent and the Purchaser will inform them of the
confidential nature of the Confidential Information. As used herein
"Representatives" means directors, officers, employees, advisors and
prospective investors and representatives of such advisors and investors. The
Parent and the Purchaser agree that any disclosure of Confidential Information
to prospective investors shall be subject to the following procedures: (i) if
any Confidential Information is to be included in an offering memorandum to be
sent to prospective investors, the Company must consent to the type and form of
Confidential Information to be included, such consent not to be unreasonably
withheld or delayed, and the Parent must enter into a confidentiality agreement
with such prospective investor, in a form reasonably satisfactory to the
Company, providing that the Company is a third party beneficiary of such
confidentiality agreement and (ii) any other disclosure of Confidential
Information to any prospective investor shall be subject to the prior consent
of the Company, both as to the Confidential Information to be disclosed and the
identity of the intended recipient, such consent not to be unreasonably
withheld or delayed. The Parent and the Purchaser will be responsible for any
breach of this Section 4.2 by their Representatives.
(c) In the event that the Parent or the Purchaser or any of
their Representatives become legally compelled (by deposition, interrogatory,
request for documents, subpoena, civil investigative demand or similar process)
to disclose any of the Confidential Information, the Parent or the Purchaser
shall provide the Company with prompt prior written notice of such requirement
so that the Company may seek a protective order or other appropriate remedy
and/or waive compliance with the terms of this Section 4.2. In the event that
such protective order or other remedy is not obtained, or that the Company
waives compliance with the provisions hereof, the Parent or the Purchaser agree
to furnish only that portion of the Confidential Information which the Parent
or the Purchaser are advised by counsel is legally required and to exercise
commercially reasonable efforts to obtain assurance that confidential treatment
will be accorded such Confidential Information.
(d) The term "Confidential Information" does not include any
information that the Parent or the Purchaser can demonstrate that (i) at the
time of disclosure or thereafter is generally available to the public (other
than as a result of its disclosure directly or indirectly by the Parent or the
Purchaser or their Representatives), or (ii) was available to the Parent or the
Purchaser on a non-confidential basis from a source other than the Company or
its advisors, provided that such source confirms to the Parent or the Purchaser
in writing that such source is not and was not bound by a confidentiality
agreement regarding the Company.
(e) If this Agreement is terminated pursuant to Article VI, the
Parent and the Purchaser will promptly return to the Company any and all copies
of the Confidential Information in their possession or in the possession of
their Representatives, and the Parent or the Purchaser and their
Representatives will promptly destroy all copies of any analyses, compilations,
studies or other documents prepared by or for the Parent or the Purchaser which
reflect or contain any Confidential Information, except for any of the
foregoing which Parent or its counsel deems advisable to retain in connection
with pending or future litigation, provided that such Confidential Information
is retained by the Parent's counsel and only for so long as considered
advisable in light of any pending or future litigation.
(f) The provisions of paragraphs (a)-(e) above supersede the
provisions of paragraphs 1, 3, 4 and 5 of the July Agreement (as defined in
Section 6.2).
(g) No investigation pursuant to this Section 4.2 shall affect
any representations or warranties of the parties herein or the conditions to
the obligations of the parties hereto.
4.3 Proxy Statement.
(a) Promptly after execution and delivery of this Agreement, the
Company shall prepare and shall file with the SEC as soon as is reasonably
practicable a preliminary Proxy Statement, together with a form of proxy, with
respect to the meeting of the Company's stockholders at which the stockholders
of the Company will be asked to vote upon and approve this Agreement and the
Merger and shall use all reasonable efforts to have the Proxy Statement and
form of proxy cleared by the SEC as promptly as practicable, and promptly
thereafter shall mail the definitive Proxy Statement and form of proxy to
stockholders of the Company. Subject to its fiduciary duties under applicable
law, the Proxy Statement shall contain the recommendation of the Board of
Directors that the stockholders of the Company vote to adopt and approve the
Merger and this Agreement. The term "Proxy Statement" shall mean such proxy or
information statement at the time it initially is mailed to the Company's
stockholders and all amendments or supplements thereto, if any, similarly filed
and mailed.
(b) The Parent and Purchaser will provide the Company with all
information concerning Parent and Purchaser (or their Affiliates) required to
be included in, or otherwise reasonably requested by the Company in connection
with the preparation of, the Proxy Statement. The information provided and to
be provided by Parent, Purchaser and the Company, respectively, for use in the
Proxy Statement shall, on the date the Proxy Statement is first mailed to the
Company's stockholders and on the date of the Special Meeting (as hereinafter
defined), not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make such information, in light of the
circumstances under which it was provided, not misleading, and the Company,
Parent and Purchaser each agree to correct any information provided by it for
use in the Proxy Statement which shall have become false or misleading in any
material respect. The Proxy Statement shall comply as to form in all material
respects with all applicable requirements of federal securities laws.
4.4 Meeting of Stockholders of the Company. Promptly after execution
and delivery of this Agreement, the Company shall take all action necessary, in
accordance with the MBCL and its Articles of Organization and Bylaws, to
convene a meeting of its stockholders (the "Special Meeting") as promptly as
practicable to consider and vote upon this Agreement and the Merger. The
Company shall use reasonable efforts to solicit from stockholders of the
Company proxies in favor of such adoption and approval and to take all other
action necessary to secure the vote or consent of stockholders required by the
MBCL to effect the Merger. At the Special Meeting, Parent and its direct and
indirect Subsidiaries shall vote, or cause to be voted, all of the Shares then
owned by Parent and its direct and indirect Subsidiaries in favor of the
Merger.
4.5. No Solicitation by the Company.
(a) Except as provided in Section 4.5(b), the Company agrees
that, from the date of this Agreement until the earlier of the Effective Time
or the termination of this Agreement pursuant to Section 6.1, the Company shall
not, nor shall it permit any of its Subsidiaries to, nor shall it authorize or
permit any of its directors, officers or employees or any representative
retained by it (including the Company's Financial Advisor) or any of its
Subsidiaries to, directly or indirectly through another Person, (i) solicit,
initiate, request or take any other action to facilitate (including by way of
furnishing non-public information) any inquiries or the making of any proposal
or offer from any third party other than the Parent or its Affiliates regarding
any merger, sale of substantial assets, sale or purchase of (or right to sell
or purchase) shares of capital stock (other than pursuant to the exercise of
stock options outstanding on the date of this Agreement) or similar
transactions involving the Company or any of its Subsidiaries (an "Acquisition
Proposal") or (ii) participate in any discussions or negotiations regarding any
Acquisition Proposal; provided, however, that if, at any time, the Board of
Directors of the Company determines in good faith, after consultation with and
receipt of advice from outside counsel, that it is necessary to do so in order
to act in a manner consistent with its fiduciary duties to the Company's
stockholders under applicable law, the Company may, in response to what the
Board of Directors determines, in good faith after consultation with and
receipt of advice from outside counsel, is reasonably likely to lead to a
Superior Proposal (as defined below) and subject to delivering a Company Notice
(as defined in paragraph (c) below) and compliance with the other provisions of
paragraph (c) below, following delivery of the Company Notice (x) furnish
information with respect to the Company and its Subsidiaries to any Person
making such Acquisition Proposal pursuant to a confidentiality agreement
entered into between such Person and the Company with terms no less favorable
to the Company than those contained in Section 4.2 of this Agreement and (y)
participate in discussions or negotiations regarding such Acquisition Proposal.
Immediately following the execution and delivery of this Agreement by the
parties hereto, the Company will cease and cause to be terminated any existing
activities, discussions or negotiations with any parties conducted with respect
to the foregoing. Promptly following the execution of this Agreement by the
parties hereto, the Company will request each Person that has, prior to the
date of this Agreement, executed a confidentiality agreement in connection with
its consideration of an Acquisition Proposal to return or destroy all
confidential information heretofore furnished to such Person by or on behalf of
the Company or any of its Subsidiaries.
(b) Except as expressly permitted by this Section 4.5, neither
the Board of Directors of the Company nor any committee thereof shall (i)
withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to the Parent, the approval or recommendation by such Board of
Directors or such committee of the Merger or this Agreement, (ii) approve or
recommend, or propose publicly to approve or recommend, any Acquisition
Proposal, or (iii) cause the Company to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement (each,
a "Company Acquisition Agreement") related to any Acquisition Proposal.
Notwithstanding the foregoing, if at any time the Board of Directors of the
Company determines in good faith, after consultation with and receipt of advice
from outside counsel, that it is necessary to do so in order to act in a manner
consistent with its fiduciary duties to the Company's stockholders under
applicable law, subject to compliance with paragraph (c) below, the Board of
Directors of the Company (x) may withdraw or modify, or propose publicly to
withdraw or modify, any approval or recommendation by such Board of Directors
or such committee of the Merger or this Agreement and (y) may approve or
recommend, or propose publicly to approve or recommend, a Superior Proposal and
(z) may cause the Company to enter into a Company Acquisition Agreement related
to a Superior Proposal and may terminate this Agreement pursuant to Section
6.1(d) and accept such Superior Proposal. For purposes of this Agreement, a
"Superior Proposal" means any Acquisition Proposal providing for the merger of
the Company or the acquisition of all or substantially all of the capital stock
or assets of the Company which (i) the Board of Directors of the Company
determines in good faith is reasonably likely to be consummated, taking into
account the Person making the proposal and all legal, financial and regulatory
aspects of the proposal, including any break-up fees, expense reimbursement
provisions and conditions to consummation, and (ii) the Board of Directors
determines in good faith (after consultation with and based upon the advice of
its outside financial advisors) would, if consummated, result in a more
favorable transaction to the Company's stockholders than the transaction
contemplated by this Agreement. Notwithstanding the existence of one or more
Superior Proposals or anything in this Section 4.5 to the contrary, the
Stockholder Agreement and Company Option Agreement shall remain in full force
and effect in accordance with their terms.
(c) In addition to the obligations of the Company as set forth
in paragraphs (a) and (b) of this Section 4.5, the Company shall advise the
Purchaser orally and in writing of any request for non-public information, any
Acquisition Proposal, including all of the material proposed terms of such
Acquisition Proposal, the identity of the third party, or any decision by the
Company to take any of the actions permitted in clauses (x) or (y) of paragraph
(a) above (with any such notice referred to as a "Company Notice"). Any such
Company Notice will be delivered promptly after (and in no event later than 48
hours after) receipt of any request for non-public information or of any
Acquisition Proposal and prior to the Company taking any of the actions
permitted in clauses (x) or (y) of paragraph (a) above. In addition, in the
event the Company intends to enter into a Company Acquisition Agreement
relating to a Superior Proposal, the Company will deliver a Company Notice at
least 48 hours prior to entering into such Company Acquisition Agreement, which
Company Notice will identify the third party and the material proposed terms of
such Superior Proposal. Subject to confidentiality agreement requirements
imposed by any such third party and which the Board of Directors determines in
good faith, after consultation with and receipt of advice from outside counsel,
are necessary to enter into in order to act in a manner consistent with its
fiduciary duties to the Company's stockholders under applicable law, the
Company will keep the Purchaser reasonably informed of the status of any such
request or Acquisition Proposal and will update the information required to be
provided in the Company Notice upon the request of the Purchaser.
(d) Nothing in this Section 4.5 is intended or shall be
construed to prevent (i) the Board of Directors of the Company from taking, and
disclosing to the Company's stockholders, a position contemplated by Rules
14d-9 and 14e-2 promulgated under the Exchange Act with respect to any tender
offer and (ii) from pursuing or negotiating any Strategic Relationship, subject
to compliance with Section 4.1(b).
4.6 Public Announcements. Parent and Purchaser on the one hand and
the Company on the other hand will consult with each other before, and obtain
the other party's consent with respect to, issuing any press release, any
filing with the SEC on Form 8-K or otherwise making any public statements with
respect to this Agreement or the Merger or the other transactions contemplated
hereby, and shall not issue any such press release, SEC Form 8-K filing or make
any such public statement prior to such consultation and consent, except to the
extent that compliance with legal requirements requires a party to issue a
press release or public announcement or make an 8K filing without such
consultation and consent. Any consent required pursuant to the preceding
sentence shall not be unreasonably withheld or delayed. This Section 4.6 shall
supersede any conflicting provisions in the July Agreement.
4.7 Notification of Certain Matters.
(a) The Company shall give prompt notice (which notice shall
state that it is delivered pursuant to Section 4.7 of this Agreement) in
writing to Purchaser, and Parent and Purchaser shall give prompt notice in
writing to the Company, of (i) the occurrence, or failure to occur, of any
event which occurrence or failure would be likely to cause any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect as of the time such representation or warranty is made and
(ii) any material failure of the Company, Parent or Purchaser, as the case may
be, or of any officer, director, employee or agent thereof, to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by it under this Agreement; provided, however, no such notification shall
affect the representations or warranties of the parties or the conditions to
the obligations of the parties hereunder.
(b) The Company shall give prompt notice in writing (which
notice shall state that it is delivered pursuant to Section 4.7 of this
Agreement) to Purchaser of any occurrence that has had or may reasonably be
expected to have a Material Adverse Effect, other than changes relating to or
arising out of the economy in general or the industries of the Company and its
Subsidiaries in general and not specifically relating to the Company or any of
its Subsidiaries.
(c) No failure of the Company to provide notice as required
under this Section 4.7 shall be deemed a breach of covenant for purposes of
Section 5.2(c) unless such failure results in a material prejudice to Parent
and Purchaser. No failure of the Parent and the Purchaser to provide notice as
required under this Section 4.7 shall be deemed a breach of covenant for
purposes of Section 5.3(b) unless such failure results in a material prejudice
to the Company.
4.8 Officers' and Directors' Indemnification; Insurance.
(a) The Purchaser agrees that for a period ending on the sixth
anniversary of the Effective Time, the Surviving Corporation will maintain all
rights to indemnification (including with respect to the advancement of
expenses incurred in the defense of any action or suit) existing on the date of
this Agreement in favor of the present and former directors, officers,
employees and agents of the Company as provided in the Company's Articles of
Organization and Bylaws, in each case as in effect on the date of this
Agreement, and that during such period, neither the Articles of Organization
nor the Bylaws of the Surviving Corporation shall be amended to reduce or limit
the rights of indemnity afforded to the present and former directors, officers,
employees and agents of the Company, or the ability of the Surviving
Corporation to indemnify them, nor to hinder, delay or make more difficult the
exercise of such rights or indemnity or the ability to indemnify.
(b) The Purchaser agrees to indemnify and to cause the Surviving
Corporation to indemnify to the fullest extent permitted under its Articles of
Organization, its Bylaws and applicable law the present and former directors,
officers, employees and agents of the Company against all losses, damages,
liabilities or claims made against them arising from their service in such
capacities prior to and including the Effective Time, to at least the same
extent as such persons are currently permitted to be indemnified pursuant to
the Company's Articles of Organization and Bylaws, for a period ending on the
sixth anniversary of the Effective Time.
(c) Should any claim or claims be made against any present or
former director, officer, employee or agent of the Company, on or prior to the
sixth anniversary of the Effective Time, arising from such person's service as
such at any time prior to the Effective Time, the provisions of this Section
4.8 respecting the Articles of Organization and Bylaws and the obligation of
indemnity of the Surviving Corporation shall continue in effect until the final
disposition of all such claims.
(d) The Purchaser agrees that in the event that the Surviving
Corporation or any of its successors or assigns consolidates with or merges
into any other Person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger, then and in each such case, proper
provisions shall be made so that the successors and assigns of the Surviving
Corporation shall assume the obligations of the Surviving Corporation, set
forth in this Section 4.8.
(e) The provisions of this Section 4.8 are intended to be for
the benefit of, and shall be enforceable by, each indemnified party and such
party's heirs and representatives.
(f) The Purchaser will cause to be maintained for a period of
six years from the Effective Time the Company's current directors' and
officers' insurance and indemnification policy to the extent that it provides
coverage for events occurring prior to the Effective Time (the "D&O Insurance")
for all persons who are directors and officers of the Company on the date of
this Agreement, so long as such insurance is available on commercially
reasonable terms and the annual premium therefor would not be in excess of 200%
of the last annual premium paid prior to the date of this Agreement (the
"Maximum Premium"). If the existing D&O Insurance expires, is terminated or
cancelled during such six-year period, the Purchaser will use all reasonable
efforts to cause to be obtained as much D&O Insurance as can be obtained for
the remainder of such period for an annualized premium not in excess of the
Maximum Premium, on terms and conditions no less advantageous than the existing
D&O Insurance.
4.9 Additional Agreements.
(a) Subject to the terms and conditions hereof, each of the
parties to this Agreement agrees to take, or cause to be taken, all actions,
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate and make effective as promptly as
practicable the transactions contemplated by this Agreement (including
consummation of the Merger) and to cooperate with each other in connection with
the foregoing.
(b) Subject to the terms and conditions hereof, each of the
parties to this Agreement agrees to use commercially reasonable efforts to: (i)
obtain all necessary waivers, consents and approvals from other parties to loan
agreements, leases, licenses and other contracts, (ii) obtain all necessary
consents, approvals and authorizations as required to be obtained under any
federal, state or foreign law or regulations, including, but not limited to,
those required under the HSR Act and those referred to in Section 4.14, (iii)
defend all lawsuits or other legal proceedings challenging this Agreement or
the consummation of the transactions contemplated hereby, (iv) lift or rescind
any injunction or restraining order or other order adversely affecting the
ability of the parties to consummate the transactions contemplated hereby, (v)
effect all necessary registrations and filings, including, but not limited to,
filings under the HSR Act and submissions of information requested by
Governmental Entities, and (vi) fulfill all conditions to this Agreement.
4.10 Company Indebtedness. Prior to the Effective Time, the Company
shall cooperate with Purchaser in taking such actions requested by the
Purchaser as are reasonably appropriate or necessary in connection with the
redemption, prepayment, modification, satisfaction or elimination at or
promptly after the Effective Time of any outstanding Indebtedness of the
Company or any of its Subsidiaries, including contacting lenders for pay-off
letters and lien discharges.
4.11 Other Actions by the Company. If any "fair price," "moratorium,"
"control share acquisition," "shareholder protection" or other form of
anti-takeover statute, regulation or charter provision or contract is or shall
become applicable to the Merger or the transactions contemplated hereby, the
Company and the Board of Directors of the Company shall, promptly upon the
request of the Purchaser, grant such approvals and take such actions as are
necessary under such laws and provisions so that the transactions contemplated
hereby may be consummated as promptly as practicable on the terms contemplated
hereby and otherwise act to eliminate or minimize the effects of such statute,
regulation, provision or contract on the transactions contemplated hereby.
4.12 Litigation Cooperation. Promptly upon execution of this Agreement
and until the Effective Time, each of the Company, Parent and Purchaser shall
cooperate with each other in connection with any litigation by a third party
arising out of or in connection with this Agreement or any of the transactions
contemplated by this Agreement.
4.13 Future Filings. The Company will deliver to the Purchaser as soon
as they become available true and complete copies of any report or statement
mailed by it to its stockholders generally or filed by it with the SEC
subsequent to the date of this Agreement and prior to the Effective Time. As of
their respective dates, such reports and statements (excluding any information
therein provided by the Parent or the Purchaser, as to which the Company makes
no representation) will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they are
made, not misleading and will comply as to form in all material respects with
all applicable requirements of law. The consolidated financial statements of
the Company to be included in such reports and statements (excluding any
information therein provided by the Parent or the Purchaser, as to which the
Company makes no representation) will be prepared in accordance with generally
accepted accounting principles applied on a consistent basis throughout the
periods involved (except (i) as otherwise indicated in such financial
statements and the notes thereto or (ii) in the case of unaudited interim
statements, to the extent permitted under Form 10-Q under the Exchange Act) and
will present fairly the consolidated financial position, results of operations
and cash flows of the Company as of the dates thereof and for the periods
indicated therein (subject, in the case of any unaudited interim financial
statements, to normal year-end audit adjustments). The Parent shall deliver to
the Company as soon as they become available, true and complete copies of any
report or statement mailed by it to the Company's stockholders generally or
filed by it with the SEC subsequent to the date of this Agreement and prior to
the Effective Time.
4.14 Alcoholic Beverage Licenses. (a) Each party agrees to cooperate
and use commercially reasonable efforts to obtain the Regulatory Consents
required from Governmental Entities in order for the Alcoholic Beverage
Licenses to remain in full force and effect upon consummation of the Merger.
(b) Without limiting the generality of paragraph (a) above, the Parent
and the Purchaser will as promptly as practicable prepare the filings and
requests for approvals set forth in Exhibit D hereto, at the direction of the
Parent and Purchaser the Company will sign such filings and requests (subject
to the Company's approval, not to be unreasonably withheld or delayed), the
Parent and Purchaser will file such filings and requests and the Parent,
Purchaser and the Company will proceed diligently to obtain the Regulatory
Consents that are required to be obtained prior to consummation of the Merger
as indicated on Exhibit D (the "Pre-Closing License Approvals"). The Parent,
Purchaser and the Company acknowledge that Exhibit D does not purport to list
all of the Producer Approvals (as defined in Article VII).
(c) The Parent will give the Company written notice promptly after
becoming aware of the occurrence of any Special Regulatory Event. No failure of
the Parent to provide notice as required under this Section 4.14(c) shall be
deemed a breach of covenant for purposes of Section 5.3(b) unless such notice
was delivered more than ten (10) business days after the Parent became aware of
such Special Regulatory Event.
4.15 Company Actions Relating to Tax Matters. Without the prior
consent of Purchaser (which shall not be unreasonably withheld or delayed and
which shall be deemed given if there is no response within five business days
of a request for consent), neither the Company nor any Subsidiary shall make or
change any election, request permission of any Tax authority to change any
accounting method, file any amended Tax return, enter into any closing
agreement, settle any Tax claim or assessment relating to the Company or its
Subsidiaries, surrender any right to claim a refund of Taxes, or consent to any
extension or waiver of the limitation period applicable to any Tax claim or
assessment relating to the Company or its Subsidiaries, if any such election,
adoption, change, amendment, agreement, settlement, surrender or consent would
have the effect of materially increasing the Tax liability of the Company, any
Subsidiary, or the Surviving Corporation (or Parent).
4.16 Financing. The Parent will not waive or amend the Financing
Agreements in any material respect without the prior written consent of the
Company. The Parent will perform in all material respects its obligations under
the Financing Agreements. The Parent will enforce its rights under the
Financing Agreements and will contribute to Purchaser the proceeds thereof to
the extent required by Purchaser to fulfill its obligations under this
Agreement.
4.17 Up Front Payment. Simultaneously with the execution and delivery
of this Agreement, the Parent has paid the Company $1,250,000 (the "Payment").
The Parent and the Purchaser acknowledge that the Company will use the Payment
for its general corporate expenses, subject to compliance with the other
provisions of this Article IV. The Parent and Purchaser further acknowledge
that the Payment is not refundable except as provided in Section 6.3(c). The
Company acknowledges and agrees that it will refund the Payment under the
circumstances and at the time set forth in Section 6.3(c).
4.18 Institutional Investor Agreement. The Company hereby agrees to
comply with the provisions of Section 12.02 of the Institutional Investor
Agreement.
ARTICLE V
CONDITIONS OF MERGER
5.1 Conditions to the Obligations of Each Party to Effect the Merger.
The respective obligations of each party to effect the Merger shall be subject
to the fulfillment at or prior to the Effective Time of each of the following
conditions:
(a) This Agreement and the Merger shall have been approved and
adopted by the requisite vote of the stockholders of the Company.
(b) Any waiting period (and any extension thereof) applicable to
the consummation of the Merger under the HSR Act shall have expired or been
terminated.
(c) No temporary restraining order, preliminary or permanent
injunction, judgment or other order, decree or ruling nor any statute, rule,
regulation or order shall be in effect which would make the acquisition or
holding by Parent or its Affiliates of Shares or shares of Common Stock of the
Surviving Corporation illegal or otherwise prevent the consummation of the
Merger.
5.2. Conditions Precedent to Parent's and Purchaser's Obligations.
Parent and Purchaser shall be obligated to perform the acts contemplated for
performance by them under Article I only if each of the following conditions is
satisfied at or prior to the Closing Date, unless any such condition is waived
in writing by Parent and Purchaser:
(a) The representations and warranties of the Company set forth
in Article 2 (other than Section 2.3(a)) shall be true and correct in all
material respects (without giving duplicative effect to any materiality
qualification contained in the applicable representation or warranty) as of the
Closing Date with the same force and effect as though made again at and as of
the Closing Date, except for any representations and warranties that address
matters only as of a particular date (which shall remain true and correct in
all material respects (without giving duplicative effect to any materiality
qualification contained in the applicable representation or warranty) as of
such date).
(b) The representations and warranties of the Company set forth
in Section 2.3(a) shall be true and correct in all respects as of the Closing
Date with the same force and effect as though made again at and as of the
Closing Date, except for any representations and warranties that address
matters only as of a particular date (which shall remain true and correct in
all respects as of such date).
(c) The Company shall have performed and complied (i) in all
respects with its covenants under Sections 4.1(a)(ii) and 4.1(a)(iii) and (ii)
in all material respects (without giving duplicative effect to any materiality
qualification contained in the applicable obligation) with all other covenants
and agreements contained in this Agreement required to be performed or complied
with by it on or before the Closing Date.
(d) Since the date of this Agreement, there shall not have been
the occurrence of any event or condition that has had or would reasonably be
expected to have a Material Adverse Effect other than changes relating to or
arising out of the economy in general or the industries of the Company and its
Subsidiaries in general and not specifically relating to the Company or any of
its Subsidiaries.
(e) The Company shall have executed and delivered to Purchaser
and Parent at and as of the Closing a certificate, duly executed by the
Company's President and Chief Financial Officer, in form and substance
reasonably satisfactory to Parent and Parent's counsel, certifying that to such
officers' knowledge, the conditions specified in (a), (b), (c) and (d) have
been satisfied.
(f) The Company and the Purchaser shall have obtained the
Pre-Closing License Approvals referred to in Section 4.14.
(g) There shall not have occurred a Special Regulatory Event.
(h) The Company shall have obtained the third party consents
listed in Section 5.2(h) of the Company Disclosure Letter.
(i) The Company shall have resolved certain outstanding
regulatory issues as provided in Section 5.2(i) of the Company Disclosure
Letter.
5.3. Conditions to Obligations of the Company. The Company shall be
obligated to perform the acts contemplated for performance by it under Article
I only if each of the following conditions is satisfied at or prior to the
Closing Date, unless any such condition is waived in writing by the Company:
(a) The representations and warranties of the Parent and
Purchaser set forth in Article 3 shall be true and correct in all material
respects (without giving duplicative effect to any materiality qualification
contained in the applicable representation or warranty) as of the Closing Date
with the same force and effect as though made again at and as of the Closing
Date, except for any representations and warranties that address matters only
as of a particular date (which shall remain true and correct in all material
respects (without giving duplicative effect to any materiality qualification
contained in the applicable representation or warranty) as of such date).
(b) The Parent and Purchaser shall have performed and complied
in all material respects (without giving duplicative effect to any materiality
qualification contained in the applicable obligation) with all covenants and
agreements contained in this Agreement required to be performed or complied
with by them on or before the Closing Date.
(c) The Parent and Purchaser shall have executed and delivered
to the Company at and as of the Closing a certificate, duly executed by the
Parent's and Purchaser's Presidents and Chief Financial Officers, in form and
substance reasonably satisfactory to the Company and the Company's counsel,
certifying that to such officers' knowledge, the conditions specified in (a)
and (b) have been satisfied.
ARTICLE VI
TERMINATION, AMENDMENT AND WAIVER
6.1 Termination. This Agreement may be terminated, at any time prior
to the Effective Time, whether before or after approval by the stockholders of
the Company:
(a) by mutual written agreement of the Boards of Directors of
Purchaser and the Company; or
(b) by either Purchaser or Company:
(i) if any court of competent jurisdiction in the United
States or other United States governmental body shall have issued an order,
decree or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the Merger and such order, decree, ruling or other action shall
have become final and nonappealable; or
(ii) if there has been a material breach by the other
party of any representation, warranty, covenant or agreement set forth in this
Agreement unless such breach is capable of being cured and is cured prior to
the Closing Date, except with respect to any breach of Section 4.5, which must
be cured within five (5) days after written notice from the Purchaser
specifying such breach;
(c) by Purchaser, if the Board of Directors of the Company or
any committee thereof shall have approved or recommended an Acquisition
Proposal by a third party, or withdrawn or modified in a manner adverse to
Parent or Purchaser its approval or recommendation of this Agreement or the
transactions contemplated hereby, or failed to include in the Proxy Statement
to its stockholders such recommendation (including the recommendation that the
stockholders of the Company vote in favor of the Merger); or publicly resolved
to do any of the foregoing;
(d) by the Company, pursuant to Section 4.5, in the event the
Company has complied with all the provisions of Section 4.5 and has determined
to accept a Superior Proposal; provided that (A) at the time of terminating
this Agreement pursuant to this Section 6.1(d), the Company pay the Break-Up
Fee referred to in Section 6.3(b) and refund the Payment as provided in Section
6.3(c), (B) the Company shall have provided Purchaser with forty-eight (48)
hours' prior written notice of the Company's decision to so terminate (the
"Company Termination Notice"); and (C) the Stockholder Agreement and the
Company Option Agreement shall remain in full force and effect in accordance
with their terms. The Company Termination Notice shall indicate in reasonable
detail the terms and conditions of such Superior Proposal, including, without
limitation, the amount and form of the proposed consideration and whether such
Superior Proposal is subject to any material conditions;
(e) by either the Company or the Purchaser in the event the Effective
Time has not occurred by January 31, 2000; provided that in the event by
January 31, 2000 at least 662/3 % of the Pre-Closing License Approvals have
been obtained by the Parent and the Parent, after consultation with its
regulatory counsel, reasonably believes that the remaining Pre-Closing License
Approvals will be obtained by February 29, 2000, then at the request of the
Parent this January 31, 2000 outside date will be extended to February 29,
2000; provided that as a condition to such extension the Parent and the
Purchaser waive the conditions set forth in Section 5.2(a), Section 5.2(d) and
Section 5.2(e) (as it relates to Sections 5.2(a) and (d)), and confirm in
writing that, except as otherwise noted, as of the date of such extension they
are not aware of (x) any fact or circumstances that would then permit them to
terminate this Agreement pursuant to any provision of this Section 6.1 or (y)
any fact or circumstance, other than the receipt of such pending Pre-Closing
License Approvals, that would cause the conditions set forth in Section 5.2 to
not be fulfilled.
(f) by the Company if the Financing Agreements have been
terminated unless, on or before December 28, 1999, the Parent and Purchaser
have obtained binding equity commitments in at least the same amount and in a
form and from financing sources reasonably satisfactory to the Company (the
"New Commitments") and the Parent and the Purchaser have waived the condition
set forth in Section 5.2(g) and their termination right pursuant to Section
6.1(g);
(g) by the Purchaser, in the event a Special Regulatory Event
occurs; and
(h) by the Company, in the event a Special Regulatory Event
occurs unless on or before December 28, 1999 the Parent and Purchaser have
provided New Commitments and have waived the condition set forth in Section
5.2(g) and their termination right pursuant to Section 6.1(g).
6.2 Procedure and Effect of Termination. In the event of the
termination of this Agreement by the Company or Purchaser or both of them
pursuant to Section 6.1, the terminating party shall provide written notice of
such termination to the other party and this Agreement shall forthwith become
void and there shall be no liability on the part of Parent, Purchaser or the
Company, except as set forth in this Section 6.2 and in Sections 4.2(b)(f) and
6.3 of this Agreement. The foregoing shall not relieve any party for liability
for damages actually incurred as a result of any breach of this Agreement.
Sections 4.2(b)-(f), 6.2, 6.3, 6.4 and Article VIII of this Agreement shall
survive the termination of this Agreement. In addition, the provisions of
paragraph 9 of the letter agreement, dated July 12, 1999, among Liquid
Experience LLC, Combined Properties, Inc. and the Company (as amended to date,
the "July Agreement") shall survive the termination of this Agreement and the
Parent and Purchaser agree to be bound by such provisions.
6.3 Fees and Expenses. (a) Except as otherwise provided in this
Agreement and whether or not the transactions contemplated by this Agreement
are consummated, all costs and expenses incurred in connection with the
transactions contemplated by this Agreement shall be paid by the party
incurring such expenses. The Parent and the Purchaser understand and agree
that, subject to compliance by the Company with the provisions of Section 4.1,
the Company will pay at or before the Closing its financial advisory, legal and
accounting expenses, including without limitation all amounts owed to the
Company's Financial Advisor pursuant to the Xxxxxx Engagement Letter (subject
to the limits set out in Section 4.1).
(b) In the event that the Purchaser terminates this Agreement
pursuant to Section 6.1(c) or the Company terminates this Agreement pursuant to
Section 6.1(d), then the Company shall pay to the Purchaser the amount of
$1,250,000 as reimbursement of the Purchaser's and Parent's expenses and as
liquidated damages (the "Break-Up Fee"). Any such payment shall be made within
three (3) business days after a termination pursuant to Section 6.1(c) or at
the time of any termination pursuant to Section 6.1(d).
(c) In the event that the Purchaser terminates this Agreement
pursuant to Section 6.1(g) or the Company terminates this Agreement pursuant to
Section 6.1(h), the Company's retention of the Payment will be considered
liquidated damages and the Company will have no further recourse with respect
to such termination. In the event that the Company terminates this Agreement
pursuant to Section 6.1(d), then in addition to the Break-Up Fee the Company
will refund the entire Payment to the Purchaser at the time of any termination
pursuant to Section 6.1(d).
6.4 Initial Equity Proceeds. The Purchaser agrees that in the event
of any termination of this Agreement pursuant to Section 6.1(b), (e) or (f),
the Purchaser will retain the Initial Equity Proceeds for a period of thirty
days after the effective date of the termination of this Agreement (the
"Release Date") and if prior to the Release Date the Company has asserted in
writing any claim of any breach of this Agreement by the Parent or the
Purchaser, specifying the amount of damages caused by such breach, the Parent
will retain or cause the Purchaser to retain the Initial Equity Proceeds in an
amount equal to 125% of the amount of such alleged damages, but in no event
more than the remaining Initial Equity Proceeds (the "Required Amount"), unless
RSH, in exchange for the transfer of the remaining Initial Equity Proceeds to
him or an Affiliate, (i) agrees to guarantee the obligations of the Parent and
Purchaser under this Agreement, up to the amount of the Initial Equity Proceeds
distributed to such Person, and (ii) at the time of such guarantee, RSH
delivers to the Company personal financial statements evidencing a net worth of
at least three (3) times the Required Amount.
6.5 Amendment. This Agreement may be amended by each of the parties
by action taken by or on behalf of their respective Boards of Directors at any
time prior to the Effective Time; provided, however, that (i) such amendment
shall be in writing signed by all of the parties, and (ii) after adoption of
this Agreement and the Merger by the stockholders of the Company, no amendment
may be made without the further approval of the stockholders of the Company to
the extent such approval is required by applicable law.
6.6 Waiver. Subject to the requirements of applicable law, at any
time prior to the Effective Time, whether before or after the Special Meeting,
any party hereto, by action taken by its Board of Directors, may (i) extend the
time for the performance of any of the obligations or other acts of any other
party hereto or (ii) waive compliance with any of the agreements of any other
party or with any conditions to its own obligations. Any agreement on the part
of a party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party by a duly
authorized officer of such party. Notwithstanding the above, any waiver given
shall not apply to any subsequent failure of compliance with agreements of the
other party or conditions to its own obligations.
ARTICLE VII
DEFINITIONS
As used herein the following terms not otherwise defined have the
following respective meanings:
"Affiliate" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, such specified
Person. As used in this definition the term "control" (including the terms
"controlled by" and "under common control with") means, with respect to the
relationship between or among two or more Persons, the possession, directly or
indirectly or as trustee or executor, of the power to direct or cause the
direction of the affairs or management of a Person, whether through the
ownership of voting securities, as trustee or executor, by contract or
otherwise, including, without limitation, the ownership, directly or
indirectly, of securities having the power to elect a majority of the board of
directors or similar body governing the affairs of such Person.
"Indebtedness" means (i) all indebtedness of the Company or any of its
Subsidiaries for borrowed money, whether current or funded, or secured or
unsecured, (ii) all indebtedness of the Company or any of its Subsidiaries for
the deferred purchase price of property or services represented by a note or
other security, (iii) all indebtedness of the Company created or arising under
any conditional sale or other title retention agreement with respect to
property acquired by the Company or any of its Subsidiaries (even though the
rights and remedies of the seller or lender under such agreement in the event
of default are limited to repossession or sale of such property), (iv) all
indebtedness of the Company or any of its Subsidiaries secured by a purchase
money mortgage or other lien to secure all or part of the purchase price of
property subject to such mortgage or lien, (v) all obligations under leases
which shall have been or must be, in accordance with generally accepted
accounting principles, recorded as capital leases in respect of which the
Company or any of its Subsidiaries is liable as lessee, (vi) any liability of
the Company or any of its Subsidiaries in respect of banker's acceptances or
letters of credit, and (vii) all indebtedness referred to in clause (i), (ii),
(iii), (iv), (v) or (vi) above which is directly or indirectly guaranteed by
the Company or any of its Subsidiaries or which the Company or any of its
Subsidiaries has agreed (contingently or otherwise) to purchase or otherwise
acquire or in respect of which it has otherwise assured a creditor against
loss.
"Material Adverse Effect" means any material adverse effect on the
business, properties, assets, results of operations or financial condition of
the Company and its Subsidiaries taken as a whole.
"Person" means any corporation, association, partnership, limited
liability company, organization, business, individual, government or political
subdivision thereof or governmental agency.
"Producer Approvals" means the regulatory approvals, registrations,
permits, licenses, authorizations, waivers or consents required under state and
local alcoholic beverage control laws for the Institutional Investor to be
permitted to consummate both its financing for the Purchaser as contemplated by
the Institutional Investor Agreement and its financing for the Producer (as
defined below in "Special Regulatory Event") as contemplated by the
Institutional Investor Agreement.
"Special Regulatory Event" means (i) the failure to obtain one or more
of the Pre-Closing License Approvals because of the proposed investment by the
Institutional Investor in a manufacturer of alcoholic beverages (the
"Producer") on the terms set forth on Exhibit A to the Institutional Investor
Agreement or (ii) the determination by the Institutional Investor that, even if
it has made or would make commercially reasonable efforts to do so, it will not
be able to obtain all of the Producer Approvals.
"Subsidiary" means, with respect to any Person, any corporation a
majority (by number of votes) of the outstanding shares of any class or classes
of which shall at the time be owned by such Person or by a Subsidiary of such
Person, if the holders of the shares of such class or classes (a) are
ordinarily, in the absence of contingencies, entitled to vote for the election
of a majority of the directors (or persons performing similar functions) of the
issuer thereof, even though the right so to vote has been suspended by the
happening of such a contingency, or (b) are at the time entitled, as such
holders, to vote for the election of a majority of the directors (or persons
performing similar functions) of the issuer thereof, whether or not the right
so to vote exists by reason of the happening of a contingency.
"Tax" or "Taxes" means any federal, state, local, or foreign income,
gross receipts, franchise, estimated, alternative minimum, add-on minimum,
sales, use, transfer, registration, value added, excise, natural resources,
severance, stamp, occupation, premium, windfall profit, environmental, customs,
duties, real property, personal property, capital stock, intangibles, social
security, unemployment, disability, payroll, license, employee, or other tax or
levy, of any kind whatsoever, including any interest, penalties, or additions
to tax in respect of the foregoing.
ARTICLE VIII
MISCELLANEOUS
8.1 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by rule of law or public
policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
8.2 Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered if sent via telecopier or delivered personally
(including, without limitation, delivery by commercial carrier warranting
next-day delivery) to the parties at the following addresses (or at such other
address for a party as shall be specified by similar notice, except that
notices of changes of address shall be effective upon receipt):
(a) If to Company:
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: President
Telecopier No.: 000-000-0000
With copies to:
Ropes & Xxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: Xxxxxxx Xxxx and
Xxxx Xxxxxx
Telecopier No.: (000) 000-0000
(b) If to Parent or Purchaser:
c/o Combined Properties, Inc.
0000 X Xxxxxx, X.X.
Xxxxx Xxxxx
Xxxxxxxxxx, X.X. 00000
Attention: Xxxxx X. Xxxxxxxx
Telecopier No.: (000) 000-0000
With copies to:
Xxxxxxx Xxxx LLP
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxxxxx
Telecopier No.: (000) 000-0000
8.3 Headings. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.4 Representations and Warranties, etc. The respective
representations and warranties of the Company, Parent and Purchaser contained
herein shall survive until, and shall expire with, and be terminated and
extinguished upon the earlier to occur of (a) the termination of this Agreement
pursuant to Section 6.1 and (b) the Closing Date. This Section 8.4 shall have
no effect upon any other obligation of the parties hereto, whether to be
performed before or after the consummation of the Merger.
8.5 Miscellaneous. This Agreement, the documents delivered pursuant
hereto or in connection herewith and the July Agreement (i) constitute the
entire agreement and supersede all other prior agreements and undertakings,
both written and oral (including, without limitation, any agreement or proposed
agreement relating to the timing of execution of this Agreement and the payment
of any amount in connection therewith), among the parties, or any of them, with
respect to the subject matter hereof, (ii) are not intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder, other
than Section 4.8 (which is intended for the benefit of the present and former
directors, officers, employees and agents of the Company and may be enforced by
any such indemnified persons), (iii) the Purchaser and the Parent may assign
this Agreement to their lenders as collateral security; provided, however, that
no such assignment shall relieve the assignor of its obligations hereunder, and
(iv) shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts (without reference to choice of law rules). This
Agreement may be executed in one or more counterparts which together shall
constitute a single agreement.
8.6 Nature of Obligation. All obligations of the Parent and
Purchaser in this Agreement are joint and several, whether or not so expressed.
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
LIQUID HOLDINGS INC.
By: /s/ Xxxxxx X. Xxxx
------------------------------
Name: Xxxxxx X. Xxxx
Title: President
LIQUID ACQUISITION CORP.
By: /s/ Xxxxxx X. Xxxx
------------------------------
Name: Xxxxxx X. Xxxx
Title: President
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Executive Vice President
and Treasurer
XXXXXXXXX & XXXX, INC.
By: /s/ Xxx X. Xxxx
------------------------------
Name: Xxx X. Xxxx
Title: President
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President and Treasurer
