TENDER AND SUPPORT AGREEMENT
TENDER AND SUPPORT AGREEMENT (this "Agreement") dated as of April 28,
2008 among by and among Magic Hat Brewing Company & Performing Arts Center, Inc.
("Magic Hat"), and the stockholders listed on the signature page hereof (each
such stockholder being referred to herein as a "Stockholder" and, collectively
with each other Stockholder, the "Stockholders").
WHEREAS, as of the date hereof, each Stockholder is the "beneficial
owner" (as defined in Rule 13d-3 under the Securities Exchange Act in 1934, as
amended (the "Exchange Act") of the number of shares (the "Shares") of common
stock, without par value (the "Common Stock") of Pyramid Breweries Inc., a
Washington corporation (the "Company"), set forth on Schedule A attached hereto
(together with any Shares acquired by a Stockholder after the date hereof, the
"Insider Shares");
WHEREAS, as incentive for and in reliance on the execution and delivery
of this Agreement, Magic Hat has entered into a Letter of Intent dated as of the
date hereof (the "LOI") with the Company, pursuant to which, among other things,
Magic Hat and the Company have agreed to pursue a merger transaction (the
"Merger");
WHEREAS, in order to induce Magic Hat to enter into the LOI and to
incur the obligations set forth therein, each Stockholder is granting an
irrevocable proxy to Magic Hat to vote his Insider Shares in favor of the
Definitive Agreement (as defined in the LOI) and is making certain agreements
with respect to his Insider Shares; and
WHEREAS, capitalized terms used but not otherwise defined herein shall
have the respective meanings ascribed to such terms in the LOI.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties hereto agree as follows:
ARTICLE 1
AGREEMENT TO TENDER
Section 1.01. Agreement to Tender. (a) The Stockholders shall duly
tender, or cause to be tendered, in the Offer, all of the Insider Shares
(excluding for purposes of this Section 1.01 Insider Shares that are the subject
of unexercised stock options) pursuant to and in accordance with the terms of
the Offer. No later than ten (10) business days after the commencement of the
Offer, the Stockholders shall (i) deliver to the depositary designated in the
Offer (the "Depositary") (A) a letter of transmittal with respect to such
Insider Shares complying with the terms of the Offer, (B) a certificate or
certificates representing such Insider Shares or an "agent's message" (or such
other evidence, if any, of transfer as the Depositary may reasonably request) in
the case of a book-entry transfer of any uncertificated Insider Shares and (C)
all other documents or instruments required to be delivered pursuant to the
terms of the Offer, and/or (ii) instruct its broker or such other person that is
the holder of record of any Insider Shares beneficially owned by the
Stockholders to tender such Insider Shares pursuant to and in accordance with
the terms of the Offer.
(b) The Stockholders agree that once their Insider Shares are tendered
by them, the Stockholders will not withdraw, nor permit the withdrawal of, any
tender of such Insider Shares, unless and until (i) the Offer shall have been
terminated by Magic Hat in accordance with the terms of the Definitive
Agreement, or (ii) this Agreement shall have been terminated in accordance with
Section 6.03. Notwithstanding the foregoing, prior to the closing of the Offer,
in the event of a Superior Tender Offer, the Stockholders shall be entitled to
tender to the maker of such Superior Tender Offer their Releasable Shares (as
set forth next to each Stockholder's name under the heading "Releasable Shares"
in Schedule A attached hereto) at their sole discretion and to withdraw from the
Offer any Releasable Shares previously tendered. For the purpose of this
Agreement, a "Superior Tender Offer" shall mean a tender offer for all of the
outstanding Shares and is (i) for an amount equal to at least $3.00 per Share in
cash, (ii) provides for payment in full of the Break-Up Fee and Reimbursement
Expense, and (iii) not contingent on any financing.
ARTICLE 2
COVENANTS OF THE STOCKHOLDERS
The Stockholders hereby covenant and agree that:
Section 2.01. Voting Of Insider Shares. At every meeting of the
stockholders of the Company called for such purpose, and at every adjournment or
postponement thereof, the Stockholders shall (if such Insider Shares are not
voted by Magic Hat or its designee pursuant to Section 2.05 hereof), or shall
cause the holder of record on any applicable record date to, vote their Insider
Shares (to the extent that any of the Stockholders' Insider Shares are not
purchased in the Offer), excluding any Releasable Shares in the event that a
Superior Proposal has been made, (i) in favor of the adoption of the Definitive
Agreement and the transactions contemplated thereby, (ii) against (A) any
agreement or arrangement related to any Alternative Transaction, or (B) any
liquidation, dissolution, recapitalization, extraordinary dividend or other
significant corporate reorganization of the Company or any of its subsidiaries,
and (iii) in favor of any other matter necessary for consummation of the
transactions contemplated by the Definitive Agreement which is considered at any
such meeting of stockholders, and in connection therewith to execute any
documents which are necessary or appropriate in order to effectuate the
foregoing. In the event that any meeting of the stockholders of the Company is
held, the Stockholders shall, or shall cause the holder of record on any
applicable record date to, appear at such meeting or otherwise cause their
Insider Shares (to the extent that any of the Stockholders' Insider Shares are
not purchased in the Offer) to be counted as present thereat for purposes of
establishing a quorum.
Section 2.02. No Transfers; No Inconsistent Arrangements. (a) Except as
provided hereunder or under the Definitive Agreement, the Stockholders shall
not, directly or indirectly, (i) transfer (which term shall include any sale,
assignment, gift, pledge, hypothecation or other disposition), or consent to or
permit any such transfer of, any or all of their Insider Shares or any interest
therein, or create or permit to exist any lien or other encumbrance, other than
any restrictions imposed by legal requirements or pursuant to this Agreement, on
any such Insider Shares, (ii) enter into any agreements or commitments (written
or oral) with respect to any transfer of such Insider Shares or any interest
therein, (iii) grant or permit the grant of any proxy, power of attorney or
other authorization in or with respect to such Insider Shares, (iv) deposit or
permit the deposit of such Insider Shares into a voting trust or enter into a
voting agreement or arrangement with respect to such Insider Shares, or (v) take
or permit any other action that would in any way restrict, limit or interfere
with the performance of its obligations hereunder or the transactions
contemplated hereby or otherwise make any representation or warranty of the
Stockholder herein untrue or incorrect.
(b) Any attempted transfer of Insider Shares or any interest therein in
violation of this Section 2.02 shall be null and void. In furtherance of this
Agreement, the Stockholders shall and hereby do authorize the Company and Magic
Hat's counsel to notify the Company's transfer agent that there is a stop
transfer restriction with respect to all of their Insider Shares (and that this
Agreement places limits on the voting and transfer of its Insider Shares);
provided, that any such stop transfer restriction shall terminate upon the
termination of this Agreement in accordance with its terms and, upon such event,
Magic Hat shall notify Company's transfer agent of such termination.
Section 2.03. Dissenter's Rights. The Stockholders agree not to
exercise any dissenter's rights in respect of its Insider Shares which may arise
with respect to the Definitive Agreement.
Section 2.04. Documentation and Information. To the extent required by
law, as advised by Magic Hat's legal counsel, the Stockholders consent to and
authorize the publication and disclosure by Magic Hat of the Stockholders'
identity and holding of Insider Shares, and the nature of its commitments,
arrangements and understandings under this Agreement.
Section 2.05. Irrevocable Proxies. (a) Each Stockholder hereby
irrevocably appoints and constitutes Magic Hat or any designee of Magic Hat,
with full power of substitution, the lawful agent, attorney and proxy of the
Stockholder (each an "Irrevocable Proxy") during the term of this Agreement to
vote in its sole discretion all of the Insider Shares of which such Stockholder
is or becomes the beneficial owner with voting power for the following purposes:
(i) to call one or more meetings of the stockholders of Company
in accordance with the by-laws of Company and applicable law for the
purpose of considering a proposal to approve the Definitive Agreement
and the transactions contemplated thereby;
(ii) to vote for approval of the Definitive Agreement at any
stockholders' meetings of the Company held to consider the Merger
(whether annual or special and whether or not an adjourned meeting);
(iii) to vote against any other proposal for any
recapitalization, merger, sale of assets or other business combination
between Company and any other person or entity other than Magic Hat,
or the taking of any action which would result in any of the
conditions to the obligations of Magic Hat or Company under the
Definitive Agreement not being fulfilled; and
(iv) to vote as otherwise necessary or appropriate to enable
Magic Hat to consummate the transactions contemplated by the
Definitive Agreement and, in connection with such purposes, to
otherwise act with respect to the Insider Shares which the Stockholder
is entitled to vote.
(b) THIS IRREVOCABLE PROXY HAS BEEN GIVEN IN CONSIDERATION OF THE
UNDERTAKINGS OF MAGIC HAT IN THE LOI AND SHALL BE IRREVOCABLE AND COUPLED WITH
AN INTEREST UNTIL THE TERMINATION DATE AS DEFINED IN SECTION 6.03 HEREOF. This
Agreement shall revoke all other proxies granted by the Stockholders with
respect to their Insider Shares.
(c) Notwithstanding the foregoing, in the event a Superior Proposal is
presented to the Company, the Stockholders shall be entitled to vote at their
sole discretion their Releasable Shares. For the purpose of this Agreement, a
"Superior Proposal" contemplates an unsolicited offer for the Company to enter
into a binding merger agreement and is (i) for consideration equal to at least
$3.00 per Share, (ii) provides for payment in full of the Break-Up Fee and
Reimbursement Expense, (iii) cash only and for all of the outstanding Shares,
and (iv) not contingent on any financing or satisfaction of any other material
condition (e.g., due diligence).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each of the Stockholders severally represents and warrants to Magic Hat
as follows (it being understood that, except where expressly stated to be given
or made as of the date hereof only, the representations and warranties contained
in this Agreement shall be made as of the date hereof and as of the date of each
meeting of the stockholders of the Company and of the date of the Definitive
Agreement):
Section 3.01. Authorization. Each Stockholder has full legal capacity,
right and authority to execute and deliver this Agreement and to perform his
obligations hereunder. The execution and delivery by each Stockholder of this
Agreement and the consummation by such Stockholder of the transactions
contemplated hereby have been duly authorized by all necessary action on the
part of such Stockholder. This Agreement has been duly executed and delivered by
each Stockholder and constitutes a valid and legally binding obligation of each
Stockholder, enforceable against each Stockholder in accordance with its terms.
Section 3.02. No Violation. (a) The execution and delivery of this
Agreement by the Stockholder does not, and the performance by each Stockholder
of such Stockholder's obligations hereunder will not, conflict with, or result
in any violation of, or constitute a default (with or without notice or lapse of
time, or both) under, or give rise to a right of, or result by its terms in the,
termination, amendment, cancellation or acceleration of any obligation or the
loss of a material benefit under, or to increased, additional, accelerated or
guaranteed rights or entitlements of any person under, or create any obligation
to make a payment to any other person under, or result in the creation of a lien
or encumbrance on, or the loss of, any of the properties or assets of each
Stockholder (including such Stockholder's Insider Shares) pursuant to any
contract to which each Stockholder is a party or by which any of its properties
or assets is bound or any order or law applicable to such Stockholder or its
properties or assets.
(b) No consent, approval, order, authorization or permit of, or
registration, declaration or filing with or notification to, any governmental
authority or any other person is required by or with respect to each Stockholder
in connection with the execution and delivery of this Agreement by the
Stockholder or the performance by the Stockholder of the Stockholder's
obligations hereunder, except for the filing with the Securities and Exchange
Commission of any schedules of beneficial ownership or amendments under Section
13 and Section 16 of the Exchange Act as may be required in connection with this
Agreement and the transactions contemplated hereby.
Section 3.03. Ownership of Insider Shares. As of the date hereof, each
Stockholder is, and will be (except with respect to any Shares transferred in
accordance with Section 2.02(a) hereof), at all times during the period
beginning on the date of this Agreement and ending on the date of termination of
this Agreement, a beneficial owner of such Insider Shares listed on Schedule A
attached hereto. Each Stockholder's Insider Shares are free and clear of all
liens, claims, pledges, charges, proxies, restrictions, encumbrances, proxies
and voting agreements or any nature whatsoever (each, an "Encumbrance") other
than as provided by this Agreement, and has good and valid title to his Insider
Shares, free and clear of any Encumbrance (other than Encumbrances that will not
prohibit such Stockholder from complying with the terms of this Agreement).
Section 3.04. Opportunity to Review; Reliance. Each Stockholder has had
the opportunity to review this Agreement and the LOI with counsel of its own
choosing. Each Stockholder understands and acknowledges that Magic Hat is
entering into the LOI in reliance upon the Stockholder's execution, delivery and
performance of this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF MAGIC HAT
Magic Hat represents and warrants to the Stockholders, as of the date
hereof and as of the date of each meeting of the stockholders of the Company and
the date of the Definitive Agreement, that it has full corporate or other power
and authority to execute and deliver this Agreement and perform its obligations
hereunder. The execution and delivery by Magic Hat of this Agreement and the
consummation by Magic Hat of the transactions contemplated hereby have been duly
authorized by all necessary action on the part of Magic Hat. This Agreement has
been duly executed and delivered by Magic Hat and constitutes a valid and
legally binding obligation of Magic Hat, enforceable against Magic Hat in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law).
ARTICLE 5
ADDITIONAL COVENANTS
Section 5.01. Each Stockholder covenants and agrees for the benefit of
Magic Hat that, until the Termination Date, such Stockholder:
(a) covenants and agrees for the benefit of Magic Hat that until the
Termination Date, it shall use all commercially reasonable efforts to take, or
cause to be taken, all action, and do, or cause to be done, all things necessary
or advisable in order to consummate and make effective the transactions
contemplated by this Agreement and the Definitive Agreement;
(b) shall not other than as expressly contemplated by this Agreement,
grant any powers of attorney or proxies or consents in respect of any Insider
Shares, deposit any of such Insider Shares into a voting trust, enter into a
voting agreement with respect to any of such shares or otherwise restrict or
take any action adversely affecting the ability of such Stockholder freely to
exercise all voting rights with respect thereto; and
(c) shall not except as expressly permitted by the Definitive
Agreement, directly or indirectly through his agents and representatives,
initiate, solicit or encourage, any inquiries or the making or implementation of
any Alternative Transaction (as defined in the LOI), or engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any person relating to an Alternative Transaction, or
otherwise facilitate any effort or attempt to make or implementation Alternative
Transaction; and, except as expressly permitted by the Definitive Agreement,
such Stockholder shall (i) immediately cease and cause to be terminated any
existing activities, including discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing and will take the
necessary steps to inform his or her agents and representatives of the
obligations undertaken in this Section 5.01(b), and (ii) notify Magic Hat
promptly if any such inquiries or proposals are received by him, any such
information is requested from him, or any such negotiations or discussions are
sought to be initiated or continued with him.
Section 5.02. Magic Hat covenants and agrees for the benefit of the
Stockholders that, subject only to the provisions of Sections 1.01(b) and
2.05(c), until the Termination Date, it shall use all commercially reasonable
efforts to take, or cause to be taken, all action, and do, or cause to be done,
all things necessary or advisable in order to consummate and make effective the
transactions contemplated by this Agreement and the Definitive Agreement;
provided, however, that nothing in this Section 5.02 or any other provision of
this Agreement is intended, nor shall it be construed, to limit or in any way
restrict Magic Hat's right or ability to exercise any of its rights under this
Agreement, the Definitive Agreement or otherwise in an Alternative Transaction.
ARTICLE 6
MISCELLANEOUS
Section 6.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmission)
and shall be given,
if to Magic Hat or Acquisition Sub, to:
Magic Hat Brewing Company & Performing Arts Center, Inc.
000 Xxxx Xxxxxx, Xxxxx X-00
Xxxxxxxxxx, XX 00000
Attention: R. Xxxxxx Xxxxx
Telecopier No.: 000-000-0000
with a copy to:
Xxxxxx & Xxxxxx LLP
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx
Xxxx X. Xxxxxxx
Telecopier No.: 000-000-0000
If to a Stockholder:
At the Stockholder's address listed on the signature page hereof
with a copy to:
Xxxxxx & Xxxx PC
Pier 70
0000 Xxxxxxx Xxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxxx and Xxxxxxx X. Xxxxx
Telecopier No.: 000-000-0000
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt.
Section 6.02. Further Assurances. The Stockholders will, from time to
time, execute and deliver, or cause to be executed and delivered, such
additional or further transfers, assignments, endorsements, consents and other
instruments as Magic Hat may reasonably request for the purpose of effectively
carrying out the transactions contemplated by this Agreement and to vest the
power to vote its Insider Shares as contemplated by Section 2.01.
Section 6.03. Termination. This Agreement shall terminate upon the
earlier of (i) the termination of the Definitive Agreement in accordance with
its terms, or (ii) July 31, 2008 if the Break-Up Fee and Expense Reimbursement
payable to Magic Hat under Section 6 of the LOI shall first have been paid.
Section 6.04. Amendments and Waivers. (a) Any provision of this
Agreement may be amended or waived if such amendment or waiver is in writing and
is signed, in the case of an amendment, by each party to this Agreement or, in
the case of a waiver, by each party against whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
Section 6.05. Governing Law and Jurisdiction. This Agreement, the
rights and obligations of the parties hereto, and any claims or disputes
relating thereto, shall be governed by and construed in accordance with the laws
of the State of New York. The parties consent to the jurisdiction of the state
and federal courts located in New York County, New York.
Section 6.06. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING ARISING
OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 6.07. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
a counterpart hereof signed by all of the other parties hereto. Until and unless
each party has received a counterpart hereof signed by each other party hereto,
this Agreement shall have no effect and no party shall have any right or
obligation hereunder (whether by virtue of any other oral or written agreement
or other communication).
Section 6.08. Entire Agreement. This Agreement and the LOI constitutes
the entire agreement between the parties with respect to the subject matter of
this Agreement and supersedes all prior agreements and understandings, both oral
and written, between the parties with respect to its subject matter.
Section 6.09. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other governmental authority to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions of this Agreement shall
remain in full force and effect and shall in no way be affected, impaired or
invalidated so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such a determination, the parties 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 in order that the transactions
contemplated hereby be consummated as originally contemplated to the fullest
extent possible.
Section 6.10. Specific Performance. The parties hereto agree that the Insider
Shares are unique and that money damages are an inadequate remedy for breach of
this Agreement because of the difficulty of ascertaining the amount of damage
that will be suffered by Magic Hat in the event that this Agreement is breached.
Therefore, each of the Stockholders agrees that in addition to and not in lieu
of any other remedies available to Magic Hat at law or in equity, Magic Hat may
obtain specific performance of this Agreement.
Section 6.11. Stockholder Capacity. Notwithstanding any provision of
this Agreement to the contrary, nothing in this Agreement shall (or shall
require the Stockholder to attempt to) limit or restrict the Stockholders who
are directors or officers of the Company from acting in such capacity (it being
understood that this Agreement shall apply to such Stockholder solely in his
capacity as a stockholder of the Company).
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Magic Hat and each of the Stockholders have duly
executed this Agreement as of the date and year first above written.
MAGIC HAT BREWING COMPANY & PERFORMING
ARTS CENTER, INC.
By /s/ R. Xxxxxx Xxxxx
-------------------
Name: R. Xxxxxx Xxxxx
Title: Chief Executive Officer
STOCKHOLDERS
Xxxx Xxxxxxxx
c/o Pyramid Breweries Inc.
00 Xxxxx Xxxxx Xxxxxxxx Xxx
Xxxxxxx, XX 00000
Xxxxxx Xxxxxxx
c/o Pyramid Breweries Inc.
00 Xxxxx Xxxxx Xxxxxxxx Xxx
Xxxxxxx, XX 00000
SCHEDULE A
Stockholder Releasable Shares Shares Beneficially Owned
----------- ----------------- as of April __, 2008
--------------------
Xxxx Xxxxxxxx 481,090 1,539,620
Xxxxxx Xxxxxxx 350,607 1,122,178
SK 25318 0006 875424 v4
