CONSENT AND AMENDMENT
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Exhibit 99.1
This Consent and Amendment is entered
into effective as of July 1, 2008 by and among Redhook Ale Brewery, Incorporated
(“Redhook”), Xxxxxx Brothers Brewing Company (“Xxxxxx”), Craft Brands Alliance
LLC (“CBA”) and Anheuser-Xxxxx, Incorporated (“ABI”).
WHEREAS, Redhook and ABI are parties to
the Exchange and Recapitalization Agreement dated as of June 30, 2004 (“Redhook
Exchange Agreement”), the Master Distributor Agreement dated as of July 1, 2004
(“Redhook Distribution Agreement”) and the Registration Rights Agreement dated
as of July 1, 2004 (“Redhook Registration Rights Agreement,” and together with
the Redhook Exchange Agreement and the Redhook Distribution Agreement, the
“Redhook Transaction Documents”).
WHEREAS, Xxxxxx and ABI are parties to
the Exchange and Recapitalization Agreement dated as of June 30, 2004 (“Xxxxxx
Exchange Agreement”), the Master Distributor Agreement dated as of July 1, 2004
(“Xxxxxx Distribution Agreement”), the Registration Rights Agreement dated as of
July 1, 2004 (“Xxxxxx Registration Rights Agreement”), a letter dated July 1,
2004 among Xxxxxx, XXX and Xxxx and Xxxxxx Xxxxxx (“Xxxxxx Side Letter,” and
together with the Xxxxxx Exchange Agreement, the Xxxxxx Distribution Agreement,
and the Xxxxxx Registration Rights Agreement, the “Xxxxxx Transaction
Documents”) and the Master Distributor Agreement dated June 6, 2006, as amended
by Amendment No. 1 dated June 30, 2006 and Amendment No. 2 dated September 29,
2006 (the “Goose Distribution Agreement”).
WHEREAS, ABI and CBA are parties to the
Master Distributor Agreement dated as of July 1, 2004 (“CBA Distribution
Agreement”).
WHEREAS, Redhook and Xxxxxx have
entered into the Agreement and Plan of Merger dated as of November 13, 2007, as
amended by Amendment No. 1 thereto dated April 30, 2008 (the “Merger
Agreement”).
NOW, THEREFORE, in consideration of the
premises and the covenants hereinafter contained and intending to be legally
bound hereby, it is agreed as follows:
1. Representations and
Warranties.
(i) In
order to induce ABI to provide the agreement set forth in Section 2, Redhook
hereby represents to ABI that (i) as of their date and as of the date
of the meeting of the shareholders of Redhook no part of the
Registration Statement (“Registration Statement”) on Form S-4 (Registration
Statement No. 333-149908) including the joint proxy statement (“Proxy
Statement”) of Redhook and Xxxxxx, contains an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; (ii) there are no
defaults, breaches or events of default on the part of Redhook or CBA under the
Redhook Transaction Documents, the Merger Agreement or the CBA Distribution
Agreement or any other agreement or instrument by or among ABI, Redhook and CBA
to which Redhook is a party; and (iii) each of the representations made by
Redhook in the Merger Agreement (as modified by the Buyer Disclosure
Schedule) is correct and complete in all material respects as of the date made
and will be correct and
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complete
in all material respects as of the day of the consummation of the transaction
described in the Merger Agreement.
(ii) In
order to induce ABI to provide the agreement set forth in Section 2, Xxxxxx
hereby represents to ABI that as of their date and as of the date of the meeting
of the shareholders of Xxxxxx (i) no part of the Proxy Statement, contains an
untrue statement of a material fact or omits to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; (ii) there are no defaults, breaches or events of default
on the part of Xxxxxx or CBA under the Xxxxxx Transaction Documents, the Merger
Agreement or the CBA Distribution Agreement or any other agreement or instrument
by or among ABI, Xxxxxx and CBA to which Xxxxxx is a party and (iii) each of the
representations made by Xxxxxx in the Merger Agreement (as modified by the
Target Disclosure Schedule) is correct and complete in all material
respects as of the date made and will be correct and complete in all material
respects as of the day of the consummation of the transaction described in the
Merger Agreement.
2. Defaults Under Transaction
Documents. ABI hereby agrees that the execution by Redhook or
Xxxxxx of the Merger Agreement, the election of Xxxxx Xxxxxxxxxx and Xxxxx
Xxxxxxxxx as co-chief executive officers of Redhook and the consummation of the
transaction described in the Merger Agreement do not constitute a default, an
event of default or breach of the Redhook Transaction Documents, the Xxxxxx
Transaction Documents, the CBA Distribution Agreement or the Goose Distribution
Agreement or a Termination Date as such term may be used in the Redhook
Transaction Documents, the Xxxxxx Transaction Documents, the CBA Distribution
Agreement or the Goose Distribution Agreement. If the Merger
Agreement is further amended or modified in any respect without ABI’s written
approval, the agreement by ABI described herein shall be revoked and of no
further force and effect. The parties acknowledge that ABI retains
discretion in the voting of the shares of Common Stock of Redhook and of Xxxxxx
held by it or its designees and nothing herein or in the Redhook Transaction
Documents or the Xxxxxx Transaction Documents shall ever be construed as
obligating ABI to vote shares of Common Stock of either Redhook or Xxxxxx held
by it or its designees for or against approval of the transaction described in
the Merger Agreement or any other item presented to the shareholders of Redhook
or Xxxxxx at any time, whether before or after the consummation of the
transaction described in the Merger Agreement.
3. Xxxxxx Transaction
Documents. The parties agree that upon the consummation of the
transaction described in the Merger Agreement (the date on which such
consummation occurs to be hereinafter referred to as the “Effective Date”), the
Xxxxxx Transaction Documents shall be of no further force and
effect. Notwithstanding the foregoing, all liabilities existing under
such agreements accrued or arising prior to the Effective Date shall survive the
Effective Date. No payments or repayments of Incremental Margin shall
be made under the Xxxxxx Distribution Agreement with respect to the third
quarter of 2008 or thereafter and neither party shall be obligated to make any
additional payments or repayments as a result of the calculation of payments of
Incremental Margin for the any portion of 2008 prior to the Effective
Date.
4. CBA Distribution
Agreement. The parties agree that upon the Effective Date the
CBA Distribution Agreement shall be terminated and of no further force and
effect. Notwithstanding the foregoing, all liabilities existing under
such agreement accrued or arising prior to the Effective Date shall survive the
Effective Date. No payments or repayments of Incremental Margin shall
be made under the CBA Distribution Agreement with respect to the third quarter
of 2008 or thereafter and neither party shall be obligated to make any
additional payments or repayments as a result of the calculation of payments of
Incremental Margin for any portion of 2008 prior to the Effective
Date.
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5. Amendments to Redhook
Distribution Agreement. From and after the Effective Date, the
Redhook Distribution Agreement shall continue to be in full force and effect,
but shall be amended as follows:
(i) for
purposes of the Redhook Distribution Agreement, (a) “Brewpub” shall mean any
restaurant operated by Redhook, Kona, or other Redhook Affiliate serving Product
brewed on the premises; (b) “Inventory Manager Fee” shall mean $205,200 for
2008. For each subsequent year, such amount shall be the amount
effective for the preceding calendar year, increased by GDP as defined and
calculated pursuant to the methodology set forth on Attachment
C; (c) “Kona” shall mean Kona Brewery LLC; (d) “Products” shall
mean all malt beverage products marketed by Redhook for which ABI has agreed to
act as master distributor either prior to the Effective Date or thereafter
pursuant to Section 11.03 (but shall not include any malt beverage products the
marketing of which Redhook discontinues or the distribution of which is
terminated pursuant to this Agreement), including products brewed by Kona or
bearing the trademarks of Kona, but excluding products brewed by Goose Island
Beer Co. or bearing the trademarks of Goose Island Beer Co; and
(e) “Territory” shall mean the United States of America, the District of
Columbia and all states, territories and possessions of the United States of
America.
(ii) The
third sentence of Article II shall be amended and replaced with the
following:
“Redhook
agrees not to sell any Product to any other Person in the Territory other than
ABI, Affiliated Wholesalers and Non-Affiliated
Wholesalers. Additionally, Redhook may sell at Brewpubs draught
Product brewed on the premises; may sell to consumers packaged Product brewed on
the premises at retail sites associated with Brewpubs in accordance with its
current practices; may sell to consumers draught Product brewed on the premises
in so-called dock sales in accordance with its current practices not to exceed
50,000 cases in any calendar year; and may make such other sales as are
authorized under the Goose Distribution
Agreement. Nothing herein shall obligate Redhook with
respect to sales by Kona to the extent Redhook does not, on the Effective Date,
have the ability to restrict such sales and nothing herein shall be deemed to
waive or modify any agreements relating to the Kona products with the
Anheuser-Xxxxx Hawaiian wholesaler operation.
(iii)
Article IV shall be amended and replaced with the Annex A hereto (Schedule E to
the Redhook Distribution Agreement being unchanged);
(iv)
Section 7.01 shall be amended and replaced with the following: “The
term of this Agreement (the “Term”) shall become effective at the Commencement
Date and, unless sooner terminated pursuant to the provisions of this Agreement,
shall continue in effect until December 31, 2018 (the “Initial
Term”). Following the Initial Term, this Agreement shall renew
automatically for an additional 10 year period, unless ABI provides written
notice to Redhook on or prior to June 30, 2018 that the Agreement shall not be
renewed.
(v)
Section 7.03(iii) shall be amended and replaced with the
following: “(iii) Either of the current co-chief executive
officers of Redhook (Xxxxx Xxxxxxxxxx and Xxxxx Xxxxxxxxx) ceases to function as
chief executive officer and within six months of such cessation an individual
serving as chief executive officer satisfactory in the sole, good faith
discretion of ABI is not serving as chief executive officer of
Redhook.”
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(vi) The
first sentence of Article VIII shall be amended and replaced with the
following:
If either party commits a breach or a
default of this Agreement, no remedy herein conferred upon or reserved to either
party is exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given under this Agreement or now or hereafter existing at law or in equity or
by statute; provided, however, that in the event that Redhook is in
default under this Agreement and the breach is directly or indirectly caused by
a breach by Kona under any distribution agreement between Redhook and Kona,
Redhook shall be given an additional 90 days to cure such default in
accordance with Section 7.02.
(vii) The
second sentence of Section 11.03 shall be amended and replaced with the
following:
Except as
set forth to the contrary herein, during the Term of this Agreement, ABI will be
the exclusive distributor of Product in the Territory, with the exception of (i)
the rights of the Brewpubs to sell Products brewed at such Brewpubs for
on-site consumption; (ii) sale or distribution of the
Product for use in beer competitions or festivals (excluding sale or
distribution of Product that is sold or re-sold to consumers at any such
competition or festival), not to exceed 25,000 case-equivalents per calendar
year; (iii) sales by Redhook to Affiliated Wholesalers and Non-Affiliated
Wholesalers as permitted by this Agreement; and (iv) such other sales as may be
authorized under the Goose Distribution Agreement. Nothing herein
shall obligate Redhook with respect to sales by Kona to the extent Redhook does
not, on the Effective Date, have the ability to restrict such sales and nothing
herein shall be deemed to waive or modify any agreement relating to the Kona
products with the Anheuser-Xxxxx Hawaiian wholesaler operation.
(viii)
The last sentence of Section 11.03(a) shall be amended and replaced with the
following:
“Notwithstanding
the above, Redhook may test market New Products without ABI’s prior approval;
provided that: (i) the duration of all such test marketing on any and all New
Products in any single calendar year shall not exceed six months; (ii) the
aggregate volume of all such test marketing on any single New Product in any
single calendar year shall not exceed one percent of the sales volume for all
Products for the preceding 12 months; (iii) all such New Products otherwise
comply with the quality standards set forth in this Agreement; and (iv) all
such test marketing be done at Brewpubs or through Alliance
Wholesalers.”
(ix)
Section 11.09 of the Master Distribution Agreement shall be amended and replaced
with the following:
11.09
Redhook agrees to ship product samples to ABI for sensory analyses and AB agrees
to perform periodical technical analyses for Redhook. AB will make
available to Redhook the results of these tests, but shall be subject to no
liability to Redhook on account of such tests.
(a) At
Redhook's request, A-B agrees to perform periodic technical analysis on Redhook
Products not to exceed four (4) Products per quarter. Redhook should
ship, at Redhook's expense, twelve (12) bottles of each Product to ABI at (or to
such other address or location as may be specified from time to time in writing
by ABI):
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Anheuser-Xxxxx,
Inc
Attn: Craft
Partner Analytical Analysis/Xxxx Xxxxxx
0000
Xxxxxxx Xx
Xx.
Xxxxx, XX 00000
(b)
Redhook is required to ship Product to AB for the purposes of conducting sensory
analyses on a schedule defined by AB, but not to exceed more than twelve bottles
of each Product per month and from time to time upon request by AB, one keg of
the draught Product. Product will be shipped at AB's expense to (or
to such other address or location as may be specified from time to time in
writing by ABI):
Anheuser-Xxxxx,
Inc
Attn: Craft
Partner Taste Samples/Xxxx Xxxxxx
0000
Xxxxxxx Xx
Xx.
Xxxxx, XX 00000
(x)
Section 11.10 shall be amended and replaced with the following:
ABI shall
maintain in its employ two full time equivalent corporate inventory management
employees, a substantial portion of the responsibilities of whom shall be to
coordinate and administer logistics of Product distribution to Alliance
Wholesalers. Within fifteen (15) days of the end of each calendar
quarter during the Term, beginning with the third calendar quarter of 2008,
Redhook shall pay to ABI 25% of the annual Inventory Manager Fee.
(xi)
Section 12.07(b) shall be amended and replaced with the following:
(b) shall be produced
exclusively in the breweries of Redhook, Kona or in other breweries approved by
ABI;
(xii) The
first paragraph of Article XV shall be amended and replaced with the
following:
“Redhook
shall procure and maintain from qualified and licensed insurers with Best’s
Ratings of at least A-: (i) a comprehensive or commercial general liability
insurance policy with at least $10,000,000 in coverage for each occurrence,
including liquor and product liability; (ii) a worker’s compensation policy with
at least $2,000,000 in coverage for each occurrence; and (iii) a property
insurance policy covering damage to the Products owned by
Redhook. Coverage shall be on an occurrence rather than a claims made
basis. The policy shall name ABI as an additional insured and shall include
coverage for Redhook’s indemnification obligations under this
Agreement. The policy shall provide that ABI will be notified of the
cancellation or any restrictive amendment of the policy at least 15 days prior
to the effective date of such cancellation or amendment. Redhook
shall not violate, or permit to be violated, any conditions of such insurance
policies, and Redhook shall at all times satisfy the requirements of the
insurance carrier writing said policy.”
(xiii)
The Incremental Margin payable under the Redhook Distribution Agreement with
respect to the third calendar quarter of 2008 and for the period from the
Effective Date to December 31, 2008 and all periods thereafter shall
reflect and include the sales of all Products, including Kona and Xxxxxx
products.
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(xiv) All
representations, covenants and other provisions contained in the Redhook
Distribution Agreement relating to CBA shall be of no further force and
effect. Notwithstanding the foregoing, all liabilities existing with
respect to such representations and covenants accrued prior to the Effective
Date shall survive the Effective Date.
6. Amendment to Redhook
Registration Rights Agreement. From and after the Effective
Date, the Redhook Registration Rights Agreement shall continue to be in full
force and effect and for purposes of the Redhook Registration Rights Agreement,
“Registrable Securities” shall mean all shares of Common Stock and other
securities issued by Redhook or any Subsidiary of Redhook held by ABI from time
to time, including all shares issued to ABI pursuant to the Merger
Agreement.
7. Redhook Exchange
Agreement. From and after the Effective Date, the Redhook
Exchange Agreement shall continue to be in full force and effect, but shall be
amended as follows:
(i) The
definition of “ABI Competitor” shall be amended and replaced with the
following:
“ABI
Competitor” shall mean any Person that, together with its Affiliates, has
revenues of $500,000,000 or more from the sale of alcohol beverage products in
the calendar year immediately preceding the date on which the provision of this
Agreement using this term is to be applied.”
(ii) The
definition of “Qualified Takeover Defense Plan” shall be deleted.
(iii)
The definition of “Termination Date” shall be amended and replaced with
the following:
“Termination Date” means the date on
which the Distribution Agreement is duly terminated or expires pursuant to its
terms.”
(iv) The
definition of “Transaction Documents” shall be amended and replaced with the
following:
“Transaction Documents” means this
Agreement, the Distribution Agreement, the Registration Rights Agreement, and
the Purchasing Contract.”
(v) The
following shall amend and replace Section 5.1(a):
“(a) Permitted Acquisitions or
Investments. Redhook shall not, and shall not permit any of its
Subsidiaries to, without ABI’s written permission, directly or indirectly in any
transaction or related series of transactions, acquire or invest in, whether for
cash, debt, Stock, or other property or assets or by guaranty of any obligation,
(i) any assets or business related to the production or distribution of malt
beverage products the aggregate purchase price of which in any such transaction
or related series of transactions exceeds $15,000,000, or (ii) any assets
or business not related to the production or distribution of malt beverage
products the aggregate purchase price of which in any such transactions or
related series of transactions exceeds $2,000,000. Redhook shall not
acquire any brand or the assets or Stock of any producer of any beverage unless
it delivers to ABI a written plan providing a schedule by which ABI would become
the exclusive distributor for such malt beverages by ABI, such schedule to be
satisfactory to ABI.”
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(vi) The
following shall amend and replace Section 5.1(b):
“(b) Sales of
Assets.
(i) Redhook shall not, and shall not
permit any Subsidiary of Redhook to, sell, lease, transfer, convey or otherwise
dispose of assets in any transaction or related series of transactions, which
assets have an aggregate book value exceeding $15,000,000; provided, however, that the
foregoing shall not prohibit any bona fide sale-leaseback transaction in which
the leases entered into by Redhook or any Subsidiary of Redhook in connection
with such transaction are capital leases as determined in accordance with
GAAP.
(ii) Redhook and its Subsidiaries
shall not sell, transfer, convey, license, pledge or otherwise dispose of any
trademark or trade name acquired or owned by any of them after the date hereof
if 5% or more of the revenues of Redhook and its consolidated Subsidiaries for
the preceding Fiscal Year were attributable to sales of products using such
trademark or trade name.”
(vii) Section 5.1(d) (i) shall be
amended and replaced with the following:
“(d) Financial and Business
Information.
(i) Projections. Redhook
will deliver to ABI, together with appropriate supporting details, within 30
days prior to the beginning of each Fiscal Year and 45 days after each calendar
quarter of each Fiscal Year (and Redhook, at its option, may deliver such
information to its other security holders contemporaneously
therewith):
(A) a projected consolidated balance
sheet of Redhook and its Subsidiaries, for each month of the Fiscal
Year;
(B) projected consolidated and
consolidating cash flow statements of Redhook and its Subsidiaries, including
summary details of cash disbursements (including for capital expenditures), for
each month of the Fiscal Year; and
(C) projected consolidated and
consolidating income statements of Redhook and its Subsidiaries for each quarter
of the Fiscal Year;”
(viii)
The following shall amend and replace Section 5.1(g) (i):
“(i) Notwithstanding any other
provision of this Section 5.1(g), Redhook shall not issue, sell or transfer or
agree to issue, sell or transfer any of its authorized but not outstanding
shares of Stock, except (A) issuances of Common Stock pursuant to any stock
split, reverse stock split or stock dividend or pursuant to the exercise of any
option or warrant or the conversion of any convertible security either now
outstanding or otherwise permitted by this Section, (B) prior to January 1, 2011
issuances of Common Stock not exceeding 10% of the Common Stock on the Effective
Date (giving effect to the consummation of the transaction described in the
Merger Agreement) and for each successive three year period thereafter issuances
of Common Stock not exceeding 10% of the outstanding Common Stock on the first
day of such period, and (C) issuances of Stock by Redhook to employees,
consultants or directors for compensatory purposes, pursuant to any employee or
director stock option or other stock incentive plan approved in accordance with
the requirements set forth in Section 5.1(h).”
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(ix) The
following shall replace Section 5.1(j):
“(j) Distribution of Redhook
Products. Redhook shall not distribute products in the
Territory (as defined in the Redhook Distribution Agreement) other than through
ABI or other wholesalers to the extent permitted by the Distribution Agreement
or the Master Distribution Agreement between ABI and Xxxxxx Brothers Brewing
Company dated June 6, 2006, as amended. If Redhook desires to
investigate the production, sale, distribution or licensing the production of
any malt beverage product in any country outside the Territory, Redhook shall
notify ABI and shall provide ABI with all information reasonably requested by
ABI in connection with such arrangement. Redhook shall give ABI a
period of at least 90 days to make a proposal to Redhook pursuant to which ABI
would serve as a master distributor or brew the products in such country, and
Redhook shall not conduct negotiations or discussions with any other party
during such 90 day period. Upon the end of such 90 day period,
Redhook shall be permitted to select any entity to brew or distribute the
products of Redhook in any such country, except that Redhook shall not be
permitted to select an ABI Competitor or any Affiliate thereof for such
purpose. If ABI has made a proposal to brew or distribute the product
of Redhook in any country, Redhook shall not select any other entity without the
approval of the Board of Directors.”
(x) The
following shall replace Section 5.1(q):
“(q) Representation of ABI on the
Board of Directors. ABI shall be entitled to designate two
individuals as directors of Redhook, and except as provided in this section,
Redhook shall cause the number of members on the Board of Directors not to
exceed seven. The Board of Directors shall recommend to the
shareholders of Redhook the election of such individuals. If the
shareholders do not elect such individuals, within 30 days after the meeting of
the shareholders the Board of Directors of Redhook shall amend the Bylaws of
Redhook to increase the number of members on the Board of Directors to nine and
appoint such individuals to the Board of Directors to fill these
vacancies. ABI shall be entitled to designate an individual to be a
member of each committee of the Board of Directors, except (i) with respect to a
committee on which the individual is not permitted to be a member under
applicable law or the requirements of any exchange or market on which the
securities of Redhook are listed or quoted or (ii) with respect to a committee
formed to review or determine transactions or proposed transactions between ABI
and Redhook. ”
(xi) The
following Section 5.1(t) shall be made a part of the Agreement:
“(t) ABI Stock
Ownership. Redhook shall take no action that would cause the
shares of Common Stock registered in the name of ABI and its designees on the
Effective Date to equal or exceed 50% of the outstanding Common Stock, as
calculated pursuant to Section 5051(a) (2) (B) the Internal Revenue Code of 1986
and the "controlled group" rules of Section 156 of the Internal Revenue Code of
1986.”
(xii) all
representations and covenants and other provisions contained in the Redhook
Exchange Agreement relating to CBA shall be of no further force and
effect. Notwithstanding the foregoing, all liabilities existing with
respect to such representations and covenants accrued prior to the Effective
Date shall survive the Effective Date.
8. Other Provisions of Redhook
Transaction Documents. Except as provided herein, all
provisions of the Redhook Transaction Documents shall remain in full force and
effect, from and after the Effective Date, notwithstanding the transactions
described in the Merger Agreement.
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9. Other Ancillary
Agreements. The Contract Brewing Agreement between ABI and
Xxxxxx dated as of April 26, 2007, the separate contracts between ABI and Xxxxxx
and ABI and Redhook relating to purchase of packaging materials, the Goose
Distribution Agreement and each other instrument or agreement between ABI and
Redhook and ABI and Xxxxxx not explicitly addressed herein shall survive the
Effective Date.
10. Indemnification. Redhook
shall indemnify and hold harmless ABI, its corporate affiliates and their
officers, directors and employees from and against any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, attorneys’
fees, expenses and disbursements of any kind that may be imposed upon, incurred
by or asserted against them, such officers, directors and employees in any
manner relating to or arising out of (i) any untrue representation,
breach of warranty or failure to perform any covenant by Redhook or Xxxxxx
contained herein, (ii) any third party claims arising out of any
alleged untrue statement of material fact or omission to state a material fact
in the Registration Statement or the Proxy Statement; or (iii) any third party
claims arising out of the approval, consider or disclosure by Redhook or Xxxxxx
of the transactions described in the Merger Agreement.
11. Name
Change. Upon the consummation of the transaction described in
the Merger Agreement, Redhook’s name shall be changed to Craft Brewers Alliance,
Inc. Such change shall have no effect upon the rights and obligations
of Redhook or ABI or the terms and conditions hereof.
12. Miscellaneous
Provisions.
(i)
Except as otherwise provided herein, this Consent and Amendment shall be binding
upon and inure to the benefits of the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express
or implied, is intended or shall be construed to give any person other than the
parties to this Agreement or their respective successors and permitted assigns
any legal or equitable right, remedy or claim under or in respect of any
agreement or any provision contained herein.
(ii) Any
amendment or waiver of any provision of this Consent and Amendment or any
consent to any departure therefrom shall not be effective unless the same shall
be in writing and signed by the parties hereto and shall specifically refer to
this Consent and Amendment. Except as provided in the preceding sentence, no
action taken pursuant to this Consent and Amendment, including, without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representations, warranties, covenants or agreements contained
herein. The waiver by any party hereto of a breach of any provision
of this Consent and Amendment shall not operate or be construed as a waiver of
any preceding or succeeding breach, and no failure by either party to exercise
any right or privilege hereunder shall be deemed a waiver of such party's rights
or privileges hereunder or shall be deemed a waiver of such party's rights to
exercise the same at any subsequent time or times hereunder.
(iii) This Consent and Amendment shall
be governed by and construed in accordance with the law of the State of
Washington, without regard to the principles thereof regarding conflict of
laws.
(iv) In the event that any one or more
of the provisions contained in this Consent and Amendment shall be determined to
be invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision or provisions in
every other respect and the remaining provisions of this Consent and Amendment
shall not be in any way impaired.
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(v) This Consent and Amendment may be
executed in any number of counterparts, each of which shall be deemed to be an
original and all of which together shall be deemed to be one and the same
instrument.
(vi) This Consent and Amendment
constitutes the entire agreement among the parties hereto and supersedes any
prior understandings, agreements or representations by or among the parties
hereto, written or oral, to the extent they are related in any way to the
subject matter hereof.
(vii) Each of the parties hereto
shall bear its own costs and expenses (including legal fees and expenses)
incurred in connection with this Consent and Amendment and the transactions
contemplated hereby.
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IN
WITNESS WHEREOF, Redhook, Xxxxxx, CBA and ABI have executed this Consent and
Amendment as of the day and year first above written.
REDHOOK ALE BREWERY,
INCORPORATED
By:
_________________________________________
Title:
XXXXXX BROTHERS BREWING
COMPANY
By:
______________________________________
Title:
CRAFT BRANDS ALLIANCE,
LLC
By: __________________________________
Title:
ANHEUSER-XXXXX,
INCORPORATED
By__________________________________________
|
|
Title:
Vice President-Business and Wholesaler
Development
|
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ANNEX
A
ARTICLE
IV
PRICING OF
PRODUCTS
4.01 ABI shall pay to Redhook the
Scheduled Price for each Product purchased by ABI hereunder. At the
option of Redhook, Redhook may change the Scheduled Price at any time upon at
least 30 days written notice to ABI (or, in connection with the sale of Products
in a state requiring advance posting of prices, any longer period of time
reasonably requested by ABI in order to satisfy such price posting
obligations).
4.02 Redhook may, from time to time,
suggest Product resale prices to ABI, and ABI shall consider such
suggestions. However, ABI shall have the right to resell the Product
to Alliance Wholesalers at such prices and on such terms and conditions as ABI
may, in its sole discretion, determine from time to time. Any and all
price promotions to be offered to Alliance Wholesalers by Redhook shall be
implemented in strict accordance with the procedures set forth in Attachment E attached
hereto. Within 30 days after the end of each calendar quarter during
the Term, ABI shall pay to Redhook any Additional Price Component that is due
Redhook with respect to sales of Product by ABI to Alliance Wholesalers during
such calendar quarter.
4.03 Promptly after receipt of funds
from the Alliance Wholesalers with respect to any delivery of Product (but not
later than 15 days thereafter), ABI shall pay the Scheduled Price thereof to
Redhook. ABI shall ensure that its wholly owned Alliance Wholesalers
promptly remit payment for Product to ABI. If any non-AB owned
Alliance Wholesaler does not pay to ABI the purchase price with respect to any
Products purchased by such Alliance Wholesaler within 60 days after delivery
thereof, at the option of Redhook, ABI shall assign all of its rights to Redhook
against such Alliance Wholesaler relating to the purchase price for such
Products.
4.04 ABI shall reduce the payment
required by Section 4.03 by the Margin for such Products; the Invoicing Costs;
and Taxes. Additionally, ABI shall be entitled to setoff against such
payment any amounts owed to ABI for defective Products (including without
limitation, any costs of disposing such defective Product), or which are due ABI
from Redhook pursuant to the terms of this Agreement or otherwise.
4.05 (a) Within 15 days after receipt
of invoice, Redhook shall pay the following amounts to ABI:
(i) the Cooperage Handling Charge for
all Products sold to ABI hereunder during such calendar quarter;
(ii) all fees paid or payable by ABI to
WSCs or ABI distribution centers resulting from sales of Products to ABI during
the respective calendar quarter; and
(iii) the Staging Costs for such
Products during the respective calendar quarter (to the extent the Products were
shipped to ABI breweries).
(b)
ABI shall compute the amounts to be paid by Redhook pursuant to Section
4.05(a)(i), (ii) and (iii) above and shall be required to inform Redhook of such
amounts no later than 30
Page 23
of 24
days
after the end of the respective calendar quarter and shall provide Redhook with
such additional detail or verification as Redhook may reasonably
request.
4.06 Within 45 days after the end of
each calendar quarter, Redhook shall pay to ABI the product of (x) the
Incremental Margin and (y) the amount, if any, by which the aggregate volume, in
case equivalents of Products sold by Redhook [Xxxxxx, and
CBA—applicable only if merger does not occur on the first day of a calendar
quarter] to ABI or any wholesaler in such calendar quarter in the Territory
exceeds the amount of Product sold by Redhook and Xxxxxx in the Territory in the
respective calendar quarter in 2003. For purposes of determining the
Incremental Margin, the parties agree that Schedule 4.06 sets forth the quantity
of Product sold by Redhook and Xxxxxx in each calendar quarter of 2003 and
Redhook represents that such quantities do not include sales by any Brewpub or
at any beer festival. If during any calendar year, the product of the
(i) Incremental Margin and (ii) the amount by which the aggregate volume, in
case-equivalents, of Product sold in the Territory exceeded the aggregate volume
of Product sold by Redhook and Xxxxxx in the Territory during 2003 does not
equal the amounts paid by Redhook for such calendar year pursuant to this
section, then, within 45 days after the end of such calendar year ABI shall pay
to Redhook any amount by which the payments previously made by Redhook for such
calendar year exceed such product or Redhook shall pay to ABI any amount by
which the payments previously made by Redhook for such calendar year are less
than such product. For the 2008 calendar year, this section shall not
apply to any sales made by Redhook, CBA or Xxxxxx in the period prior to the
effective date of merger between Redhook and Xxxxxx and such sales shall be
given no effect in the application of the provision.
4.07 (a)
Notwithstanding the foregoing provisions, Redhook and ABI acknowledge that the
laws of certain states and/or U.S. federal laws may preclude the parties from
implementing the pricing mechanisms and costs, taxes and other fees described
above. Under such circumstances, it is the intention of the parties
to comply with the requirements of such laws, without such compliance being a
breach of this Agreement. Under such circumstances, Redhook and ABI
shall in good faith negotiate a periodic adjustment to the purchase price, other
affected provisions hereof and the procedures set forth herein where it is
permissible to do so, in an amount necessary to restore the same economic
benefits Redhook and ABI would have received had the above pricing mechanisms
been in effect. In particular, the parties agree that notwithstanding
the other provisions in this Agreement, in the State of Washington, ABI shall
acquire no title or possession to any Product to be sold and Redhook shall sell
Product directly to wholesalers pursuant to agreements between such wholesalers
and Redhook at prices and on terms determined by Redhook and such wholesalers,
and sales by Redhook in the State of Washington shall not be included for
purposes of computing amounts due under Section 4.04 or 4.05.
(b) Within 15 days after the end of
each month, Redhook shall pay to ABI the Margin for all Products sold by Redhook
in the State of Washington to any Affiliated Wholesaler or to any Non-Alliance
Wholesaler in the State of Washington during the preceding
month. Contemporaneously with such payment, Redhook shall deliver to
ABI a report describing such sales and providing such other information
concerning such sales as ABI may from time to time reasonably
request.
Page 24
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Schedule
4.06
Sales by
Redhook and Xxxxxx of Product in 2003
(Expressed
in Case Equivalents)
|
First
calendar quarter:
|
1,142,630
|
|
Second
calendar quarter:
|
1,543,729
|
|
Third
calendar quarter:
|
1,484,118
|
|
Fourth
calendar quarter:
|
1,322,578
|
|
Total
sales:
|
5,493,055
|
