PLAN OF MERGER BY AND AMONG NEW AGE BEVERAGES CORPORATION, NEW AGE HEALTH SCIENCES HOLDINGS, INC. AND MORINDA HOLDINGS, INC. Dated as of December 2, 2018 PLAN OF MERGER
Exhibit 2.1
BY AND AMONG
NEW AGE BEVERAGES CORPORATION,
NEW AGE HEALTH SCIENCES HOLDINGS, INC.
AND
MORINDA HOLDINGS, INC.
Dated
as of December 2, 2018
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THIS
PLAN OF MERGER (this “Agreement”) is made and
entered into as of December 2, 2018, by and among New Age Beverages Corporation, a
Washington corporation (“NBEV”), New Age Health
Sciences Holdings, Inc., a Utah corporation and a wholly-owned
subsidiary of NBEV (“Merger Sub”),
and Morinda Holdings, Inc.,
a Utah corporation (the “Company”). The
undersigned Stockholder Representative joins solely for purposes of
Section
1.10 and
Section
1.11. The
undersigned Stockholder Indemnifying Parties join solely for
purposes of Section
5.8(c).
A. Upon
the terms and subject to the conditions set forth in this Agreement
and in accordance with the Revised Business Corporation Act of the
State of Utah (the “Utah Law”), NBEV and the
Company intend to enter into a business combination
transaction.
B. The Board of
Directors of the Company (i) has determined that the Merger
(as defined in Section 1.1 hereof) is consistent with
and in furtherance of the long-term business strategy of the
Company, and fair to and in the best interests of, the Company and
its stockholders, (ii) has approved this Agreement, the
merger contemplated hereby and the other transactions contemplated
by this Agreement, and (iii) has determined to recommend that
the stockholders of the Company adopt and approve this Agreement
and approve the Merger.
C. Concurrently with
the execution of this Agreement, and as a condition and inducement
to NBEV’s willingness to enter into this Agreement, certain
stockholders of the Company are entering into Non-Competition and
Non-Solicitation Agreements, in the form attached hereto as
Exhibit B-1 (each,
a “Non-Competition
Agreement” and, collectively, the “Non-Competition
Agreements”), with NBEV, to be effective upon
Closing.
D. The parties hereto
intend for the Merger to qualify as a purchase for GAAP accounting
treatment purposes.
ARTICLE I
1.1 The Merger. At the
Effective Time (as defined in Section 1.2 hereof) and subject to and
upon the terms and conditions of this Agreement and the applicable
provisions of Utah Law, Merger Sub shall be merged with and into
the Company (the “Merger”), the separate
corporate existence of Merger Sub shall cease and the Company shall
continue as the surviving corporation. The Company, as the
surviving corporation after the Merger, is hereinafter sometimes
referred to as the “Surviving
Corporation.”
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1.2 Effective Time; Closing.
Subject to the provisions of this Agreement, the parties hereto
shall cause the Merger to be consummated by filing Articles of
Merger with the Utah Department of Commerce, Division of
Corporations and Commercial Code in accordance with the relevant
provisions of Utah Law (the “Articles of Merger”) (the
time of such filing (or such later time as may be agreed in writing
by the Company and NBEV and specified in the Articles of Merger)
being referred to herein as the “Effective Time”) as soon
as practicable on or after the Closing Date (as defined below). The
closing of the Merger and the other transactions contemplated
hereby (the “Closing”) shall take
place at the offices of Sichenzia Xxxx Xxxxxxx LLP, 1185 Avenue of
the Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, XX
00000, at a time and date to be specified by the parties hereto,
which time and date shall be no later than the second
(2nd)
business day after the satisfaction or waiver of the conditions set
forth in ARTICLE VI
hereof, or at such other location, time and date as the parties
hereto shall mutually agree in writing (the date upon which the
Closing actually occurs being referred to herein as the
“Closing
Date”).
1.3 Effect of the Merger. At
the Effective Time, the effect of the Merger shall be as provided
in this Agreement and the applicable provisions of Utah Law.
Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of the Company and Merger Sub
shall vest in the Surviving Corporation, and all debts, liabilities
and duties of the Company and Merger Sub shall become the debts,
liabilities and duties of the Surviving Corporation, all as
provided under the applicable provisions of Utah Law.
1.4 Articles of Incorporation;
Bylaws.
(a) Articles of Incorporation. At
the Effective Time, the Articles of Incorporation of the Company
shall be amended and restated in its entirety to be the same in
substance as the Articles of Incorporation of Merger Sub, as in
effect immediately prior to the Effective Time (except that the
name of the Company shall remain unchanged), and such Articles of
Incorporation of the Company, as so amended and restated, shall be
the Articles of Incorporation of the Surviving Corporation until
thereafter amended in accordance with Utah Law and such Articles of
Incorporation.
(b) Bylaws. The Bylaws of Merger
Sub, as in effect immediately prior to the Effective Time, shall
be, at the Effective Time, the Bylaws of the Surviving Corporation
until thereafter amended in accordance with Utah Law, the Articles
of Incorporation of the Surviving Corporation and such
Bylaws.
1.5 Directors and
Officers
(a) Directors. The initial
directors of the Surviving Corporation shall be the directors of
Merger Sub immediately prior to the Effective Time, until their
respective successors are duly elected or appointed and
qualified.
(b) Officers. The initial officers
of the Surviving Corporation shall be the officers of Merger Sub
immediately prior to the Effective Time, until their respective
successors are duly appointed.
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(c) Directors and Officers of Subsidiaries
of Surviving Corporation. The initial directors and officers
of the subsidiaries of the Surviving Corporation shall be the
directors and officers of such subsidiaries immediately prior to
the Effective Time, until their respective successors are duly
elected or appointed and qualified.
1.6 Effect on Capital Stock
Subject to the terms and conditions set forth in this Agreement, at
the Effective Time, by virtue of the Merger and without any action
on the part of Merger Sub, the Company or the holders of any of the
following securities, the following shall occur:
(i) Each share of no
par value Common Stock of the Company (“Company Common Stock”)
issued and outstanding immediately prior to the Effective Time and
each share of Phantom Stock (consisting of 587,001 shares of
phantom stock owned by a non-resident individual
(“Phantom
Stock”)), other than any shares of Company Common
Stock to be canceled pursuant to Section 1.6(b) hereof and other than
Dissenting Stock pursuant to Section 1.13, shall be canceled and
extinguished and automatically converted (subject to Section 1.6(e) and Section 1.6(f) hereof) into the right
to receive, upon surrender of the certificate representing such
share of Company Common Stock or upon release of the Phantom Stock
rights in the manner set forth in this Agreement, the consideration
equal to the Total Consideration less the Transaction Expenses (the
“Merger
Consideration”), divided by the sum of the total
number of shares of Company Common Stock plus the shares of Phantom
Stock outstanding immediately preceding the Effective Time;
provided however, that notwithstanding the foregoing or anything
else contained in this Agreement, if any portion of the Merger
Consideration that is otherwise payable to any Company stockholder
or Phantom Stock holder who is not an “accredited
investor” within the meaning of Regulation D promulgated by
the SEC under the Securities Act of 1933, as amended (the
“Securities
Act”) (any such stockholder or such Phantom Stock
holder, a “Non-Accredited
Stockholder”) such Merger Consideration shall be paid
to such Non-Accredited Stockholder in the form of cash only (and
not shares of NBEV Common Stock or NBEV Preferred Stock), and the
number of shares of NBEV Common Stock and NBEV Preferred Stock to
be issued to the stockholders and Phantom Stock holder that are
“accredited investors” under the Securities Act (the
“Accredited
Stockholders”) shall be correspondingly increased
(with a corresponding reduction in the Cash Consideration paid to
such Accredited Stockholders) on a pro rata basis.
(ii) For
purposes hereof:
(1) “Total Consideration”
means
a) Seventy-Five
Million Dollars ($75,000,000) (the “Cash Consideration”);
plus
b) shares of Common
Stock, par value $0.001 per share, of NBEV (the “NBEV Common Stock”) equal
to Ten Million Dollars ($10,000,000) divided by the weighted
average price of NBEV Common Stock for the forty (40) days
immediately preceding the Closing Date as reported by the Nasdaq
Stock Market LLC (“Nasdaq”); plus
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c) shares of Series D
Preferred Stock of NBEV, which shall have the rights set forth in
the Series D Certificate of Designations in the form attached
hereto as Exhibit A
(the “Certificate of
Designations” and such shares, the “NBEV Preferred Stock”
and, collectively with NBEV Common Stock, the “NBEV
Stock”);
a) the brokerage fee
equal to 1.5% of the value of the Total Consideration (i.e.
$1,500,000) (the “Broker
Fee”);
b) all legal fees and
expenses incurred by the Company in connection with the
negotiation, preparation and execution of this Agreement and the
other agreements referenced herein or entered into in connection
herewith and consummation of the transactions contemplated by such
agreements; and
c) all other fees and
expenses of the Company allocable to the transactions contemplated
by this Agreement and the other agreements referenced herein or
entered into in connection herewith.
An
amount equal to $225,000 of the Broker Fee shall be held in escrow
by the Exchange Agent and not delivered to the Company’s
broker unless and until the Company’s holders of Common Stock
and Phantom Stock who receive NBEV Preferred Stock under this
Agreement receive principal distributions from NBEV on account of
such NBEV Preferred Stock, and then the broker shall receive from
such escrowed portion of the Broker Fee an amount equal to 1.5% of
the distributions that are actually paid to the holders of such
NBEV Preferred Stock on account of their NBEV Preferred Stock at or
promptly after such distributions are made to such holders. If the
holders of the NBEV Preferred Stock do not receive all
distributions that may be made on account of the NBEV Preferred
Stock by the time specified in the Certificate of Designation, then
any portion of the Broker Fee held in escrow that is not paid to
the Company’s broker pursuant to the preceding sentence shall
be paid to the holders of shares of Company Common Stock and to the
holder of shares of Phantom Stock in the same proportion as the
Merger Consideration was originally disbursed, less any additional
Transaction Expenses.
(iii) If
any shares of Company Common Stock outstanding immediately prior to
the Effective Time are unvested or are subject to a repurchase
option, risk of forfeiture or other condition under any applicable
restricted stock purchase agreement or other agreement with the
Company, such shares of Company Common Stock shall be cancelled
immediately prior to the Effective Time and should not be counted
in the calculations described in Section 1.6(a).
(b) Cancellation of NBEV-Owned
Stock. Each share of Company Common Stock held by NBEV,
the Company or any direct or indirect wholly-owned subsidiary of
NBEV or the Company, immediately prior to the Effective Time shall
be canceled and extinguished without any conversion thereof or
consideration paid therefor.
(c) Stock Options and Convertible
Securities. At the Effective Time, all options, warrants,
convertible notes or other securities of the Company convertible
into Company Common Stock shall be converted, exercised or
redeemed, as applicable, such that, at the Effective Time, only
Company Common Stock and Phantom Stock of the Company shall be
issued and outstanding.
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(d) Capital Stock of Merger Sub.
Each share of Common Stock, par value $0.0001 per share, of Merger
Sub (the “Merger Sub
Common Stock”) issued and outstanding immediately
prior to the Effective Time shall be converted into one validly
issued, fully paid and nonassessable share of Common Stock, no par
value per share, of the Surviving Corporation. Each certificate
evidencing ownership of shares of Merger Sub Common Stock
immediately prior to the Effective Time shall, as of the Effective
Time, evidence ownership of an equivalent number of shares of
capital stock of the Surviving Corporation.
(e) Adjustments. All per share
amounts shall be adjusted to reflect appropriately the effect of
any forward or reverse stock split, stock dividend (including any
dividend or distribution of securities convertible into NBEV Common
Stock or Company Common Stock), extraordinary cash dividends,
reorganization, recapitalization, reclassification, combination,
exchange of shares or other like change with respect to NBEV Common
Stock or Company Common Stock occurring on or after the date hereof
and prior to the Effective Time.
(f) Fractional Shares. No fraction
of a share of NBEV Common Stock shall be issued by virtue of the
Merger, but in lieu thereof, each holder of shares of Company
Common Stock who would otherwise be entitled to a fraction of a
share of NBEV Common Stock (after aggregating all fractional shares
of NBEV Common Stock that otherwise would be received by such
holder) shall receive the next whole share of NBEV Common
Stock.
(a) Exchange Agent. NBEV shall
select a bank or trust company reasonably acceptable to the Company
to act as the exchange agent (the “Exchange Agent”) in the
Merger. NBEV shall enter into an exchange agent agreement (the
“Exchange Agent
Agreement”) reasonably acceptable to the Company
relating to the Exchange Agent’s responsibilities under this
Agreement. NBEV shall be responsible for paying all Exchange Agent
fees.
(b) NBEV to Provide Merger
Consideration. At or before the Effective Time, NBEV shall
make available to the Exchange Agent for exchange in accordance
with this ARTICLE
I, the Merger Consideration issuable pursuant to
Section 1.6
hereof in exchange for outstanding shares of Company Common Stock
and 587,001 shares of Phantom Stock, and any dividends or
distributions to which holders of shares of Company Common Stock
may be entitled pursuant to Section 1.7(d) hereof.
(c) Exchange Procedures. Promptly
(and no later than the fifth business day) following the Effective
Time, NBEV shall cause the Exchange Agent to mail to each holder of
record (as of the Effective Time) of a certificate or certificates
(each, a “Certificate” and,
collectively, the “Certificates”), which
immediately prior to the Effective Time represented outstanding
shares of Company Common Stock whose shares were converted into the
right to receive Merger Consideration pursuant to Section 1.6 hereof, and any dividends
or other distributions pursuant to Section 1.7(d) hereof, (i) a
letter of transmittal in a customary form and reasonably agreed to
by the Company (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange Agent
and shall contain such other provisions as NBEV may reasonably
specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger
Consideration, and any dividends or other distributions pursuant to
Section 1.7(d) hereof. Upon surrender
of Certificates for cancellation to the Exchange Agent or to such
other agent or agents as may be appointed by NBEV, together with
such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, the holders of such
Certificates shall be entitled to receive in exchange therefor the
Merger Consideration and the Certificates so surrendered shall
forthwith be canceled. The Exchange Agent shall perform similar
procedures with respect to the Phantom Stock and obtaining a
certificate of release of such Phantom Stock rights from the holder
thereof and also request that such holder complete and provide IRS
Form W-8BEN. Until so surrendered, outstanding Certificates and
Phantom Stock shall be deemed from and after the Effective Time,
for all corporate purposes, subject to Section 1.7(d) hereof, to evidence only
the ownership of the Merger Consideration into which such shares of
Company Common Stock shall have been so converted pursuant to
Section
1.6 hereof, and the
right to receive any dividends or other distributions payable
pursuant to Section 1.7(d) hereof.
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(d) Distributions With Respect to
Unexchanged Shares. No dividends or other distributions
declared or made after the date of this Agreement with respect to
NBEV Stock with a record date after the Effective Time will be paid
to the holders of any unsurrendered Certificates or Phantom Stock
with respect to the shares of NBEV Stock represented thereby until
the holders of record of such Certificates and Phantom Stock shall
surrender such Certificates or provide a certificate of release of
Phantom Stock rights. Subject to applicable law, following
surrender of any such Certificates or certificate of release of
Phantom Stock rights, the Exchange Agent shall deliver to the
record holders thereof, without interest, certificates representing
whole shares of NBEV Stock issued in exchange therefor and the
amount of any such dividends or other distributions with a record
date after the Effective Time payable with respect to such shares
of NBEV Stock.
(e) Transfers of Ownership. If
certificates representing shares of NBEV Stock are to be issued in
a name other than that in which the Certificates surrendered in
exchange therefor are registered, it will be a condition of the
issuance thereof that the Certificates so surrendered will be
properly endorsed and otherwise in proper form for transfer and
that the persons requesting such exchange will have paid to NBEV or
any agent designated by it any transfer or other taxes required by
reason of the issuance of certificates representing shares of NBEV
Stock in any name other than that of the registered holder of the
Certificates surrendered, or established to the satisfaction of
NBEV or any agent designated by it that such tax has been paid or
is not payable. Such provision shall apply equally with respect to
release of Phantom Stock rights in exchange for NBEV
Stock.
(f) Required Withholding. Each of
the Exchange Agent, NBEV and the Surviving Corporation shall be
entitled to deduct and withhold from any consideration payable or
otherwise deliverable pursuant to this Agreement to any holder or
former holder of Company Common Stock such amounts as may be
required to be deducted or withheld therefrom under the Internal
Revenue Code of 1986, as amended (the “Code”), or under any
provision of state, local or foreign tax law or under any other
applicable legal requirement. To the extent such amounts are so
deducted, withheld and timely remitted to the appropriate taxing
authority, such amounts shall be treated for all purposes under
this Agreement as having been paid to the person to whom such
amounts would otherwise have been paid.
(g) No Liability. Notwithstanding
anything to the contrary in this Section 1.7, neither the Exchange
Agent, NBEV, the Surviving Corporation nor any other party hereto
shall be liable to a holder of shares of NBEV Stock or Company
Common Stock for any amount properly paid to a public official
pursuant to any applicable abandoned property, escheat or similar
law.
1.8 No Further Ownership Rights in Company
Common Stock. The Merger Consideration issued in
accordance with the terms hereof (including any cash paid in
respect thereof pursuant to Section 1.6(f) or Section 1.7(d) hereof) shall be deemed
to have been issued in full satisfaction of all rights pertaining
to such shares of Company Common Stock and Phantom Stock, and there
shall be no further registration of transfers on the records of the
Surviving Corporation of shares of Company Common Stock which were
outstanding immediately prior to the Effective Time. If, at any
time following the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be canceled
and exchanged as provided in this ARTICLE I.
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1.9 Lost, Stolen or Destroyed
Certificates. In the event that any Certificates shall
have been lost, stolen or destroyed, the Exchange Agent shall issue
in exchange for such lost, stolen or destroyed Certificates, upon
the making of an affidavit of that fact by the holder thereof, the
Merger Consideration into which the shares of Company Common Stock
represented by such Certificates were converted pursuant to
Section
1.6 hereof, and any
dividends or distributions payable pursuant to Section 1.7(d) hereof; provided, however, that NBEV and the
Exchange Agent may, in their reasonable discretion and as a
condition precedent to the issuance of such Merger Consideration,
cash and other distributions, require the owner of such lost,
stolen or destroyed Certificates to deliver a bond in such sum as
it may reasonably direct as indemnity against any claim that may be
made against NBEV, the Surviving Corporation or the Exchange Agent
with respect to the Certificates alleged to have been lost, stolen
or destroyed.
1.10 Working Capital
Adjustment. Pursuant to Section 6.3(f), immediately following
the Closing, the Company (and its subsidiaries) are required to
have an aggregate minimum Working Capital balance equal to Twenty
Five Million Dollars ($25,000,000) (the “Working Capital
Minimum”). For purposes of this Agreement,
“Working
Capital” shall mean current assets minus current
liabilities based on the GAAP accounting consistently applied by
the Company’s independent auditors. Prior to Closing, the
Company will determine the amount of Working Capital reflected on
its most recent internal financial statement (for the month prior
to the month in which Closing will occur) (the “Estimated Working Capital
Amount”), and will distribute cash (or enter into an
obligation to distribute cash in the future) to its stockholders
and Phantom Stock holder, prior to or concurrently with Closing, an
amount (the “Pre-Closing
Distribution”) equal to the Estimated Working Capital
Amount, less (i) the Working Capital Minimum, less (ii) a holdback
of One Million Dollars ($1,000,000) (the “Working Capital
Holdback”); provided, however that any portion of such
Pre-Closing Distribution that exceeds $13,000,000 (the
”Pre-Closing Excess
Working Capital”) will not be distributed to the
Company’s stockholders or Phantom Stock holder prior to or
concurrently with Closing and will instead shall be paid as set
forth below. To the extent that the Company does not complete the
Pre-Closing Distribution by issuing cash, the Company will enter into payment obligation
agreements with each stockholder and Phantom Stock holder that will
set forth the payment owed in the future to each stockholder and
Phantom Stock holder based on the amounts payable to such
stockholders and Phantom Stock holder as contemplated herein and
set forth in such payment obligation agreements, which payment
obligation agreements shall be assumed by the Surviving Corporation
and paid as set forth herein. By no later than March 31,
2019, NBEV shall deliver to Xxxxx Xxxx Xxxx (the
“Stockholder
Representative”), a determination, and working papers
supporting such determination, of the actual Working Capital amount
immediately after Closing (the “Actual Working Capital
Amount”), and the Stockholder Representative shall
have thirty (30) days after receipt of the determination to accept
or object to such determination. In the event the Stockholder
Representative accepts the determination or fails to object within
thirty (30) days, then the NBEV determination shall be binding and
conclusive on the parties. In the event the Stockholder
Representative objects to the determination, then the parties shall
have ten (10) days to negotiate, in good faith, the Actual Working
Capital Amount. If the parties fail to agree upon the Actual
Working Capital Amount during such ten (10) day period, then they
shall select a nationally recognized independent certified public
accountant to determine the Actual Working Capital Amount, which
determination shall be conclusive and binding on the parties. The
fees and expenses of the independent accountant will be allocated
between NBEV and the Stockholder Representative in the same
proportion that the unsuccessfully disputed amount submitted by
each party bears to the total amount of disputed amount submitted
to the independent accountants. The amount by which the Actual
Working Capital Amount exceeds the Estimated Working Capital Amount
(the “Post-Closing
Excess Working Capital”) shall be added to the
Pre-Closing Excess Working Capital and shall be referred to in the
aggregate as the “Excess Working Capital”.
NBEV shall cause the Surviving Corporation to pay, subject to the
terms of the payment obligation agreements, the Excess Working
Capital and the Working Capital Holdback, to the Company’s
stockholders and the Phantom Stock holder in accordance with the
payment schedules set forth below. If, in the event that the Actual
Working Capital Amount is less than the Estimated Working Capital
Amount, then NBEV and/or Surviving Corporation shall be entitled to
deduct from the Working Capital Holdback an amount equal to such
shortfall; provided, however, that to the extent there is any
remaining money in the Working Capital Holdback after such
deduction, such remaining money shall be distributed to the
Company’s stockholders and Phantom Stock holder. Any payment
contemplated hereunder relating to the Working Capital Holdback
shall be made within ten (10) days after the Actual Working Capital
Amount becomes conclusive and binding upon the parties. Any payment
contemplated hereunder relating to Excess Working Capital shall be
made on or before July 31, 2020. Any payments to or by the
Company’s stockholders or Phantom Stock holder pursuant to
this Section
1.10 shall be made
in the same manner and in the same proportions as the Merger
Consideration that is distributed to the stockholders and Phantom
Stock holder pursuant to this Agreement. For purposes of calculating the Working Capital
Minimum, the Estimated Working Capital Amount and Actual Working
Capital Amount, any current liabilities associated with mortgages
on real property owned by the Company shall not be included in
current liabilities.
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1.11 Accounting
and Tax Consequences.
(a) Accounting. It is intended by
the parties hereto that the Merger shall be treated as a purchase
for GAAP accounting purposes.
(b) Tax Closing of Books. The
closing of the books method (specific date cut-off) shall be used
for the Company’s final U.S. and state S corporation tax
returns. Such tax returns shall be prepared consistent with past
practices by Company in-house tax personnel with assistance from
outside tax providers that prepare and sign the returns. Such tax
preparation expenses shall be borne by the Surviving Corporation.
The Stockholder Representative shall have a right, at its cost, to
review and approve the final U.S. and state S corporation tax
returns prior to filing, such approval to not be unreasonably
withheld. The taxes associated with all foreign and composite state
returns shall be paid by the Surviving Corporation. All taxes
associated with U.S. or state S corporation pass-through income to
the Company’s stockholders’ individual tax returns
shall be their responsibility.
(c) Future Tax Audits Impacting S
Corporation Years. The Stockholder Representative shall have
the right to jointly participate with its own tax and legal counsel
in any tax audit of the Company’s tax returns (both U.S.,
state and foreign) for any pre-acquisition or post-acquisition year
that could result in additional taxes or loss of credits to the
Company’s stockholders. The parties agree to cooperate in any
such audits to achieve a fair and equitable result for the parties,
including entering into any statute extensions and settlement
agreements. The Company’s
stockholders shall be solely responsible for any individual U.S. or
state income taxes arising from tax audit adjustments of pre-merger
U.S. or state S corporation returns. If as a result of any
future tax audit, the S corporation pass-through income or credits
are adjusted favorably for the Company’s stockholders, any
resulting tax refunds or credits shall remain with such
stockholders and shall not be owed to NBEV or Surviving
Corporation.
(d) Future Elections and Actions.
NBEV and Surviving Corporation shall not make any future elections
or accounting method changes or make and file any amended returns
that would adversely impact the tax liability or credit
carryforwards of any Company stockholder for any pre-acquisition or
post-acquisition year.
1.12 Taking
of Necessary Action; Further Action. If, at any time
following the Effective Time, any further action is necessary or
desirable to carry out the purposes and intent of this Agreement
and to vest the Surviving Corporation with full right, title and
possession to all assets, property, rights, privileges, powers and
franchises of the Company and Merger Sub, the officers and
directors of the Company and Merger Sub shall take all such lawful
and necessary action as is reasonably required.
1.13 Dissenting
Shares. If, in connection with the Merger, holders of
Company Common Stock shall have demanded and perfected
dissenters’ rights pursuant to Part 13 of the Utah Law
(“Dissenting
Stock”), none of such Dissenting Stock shall be
converted into a right to receive a portion of the Merger
Consideration or any other amount deliverable with respect to such
Company Common Stock in accordance with this ARTICLE I, but shall be
converted into the right to receive such consideration as may be
determined to be due with respect to such Dissenting Stock pursuant
to the Utah Law. Each holder of Dissenting Stock who, pursuant to
the provisions of the Utah Law, becomes entitled to payment of the
fair value of such shares, to the extent the fair value is
determined to be in excess of what such holder would otherwise
receive pursuant to this Merger Agreement, shall receive payment
from the Stockholder Indemnifying Parties (as defined below) of
such excess therefor as set forth in Section 5.8(c). In the event
that any holder of Dissenting Stock fails to make an effective
demand for payment or fails to perfect its dissenters’ rights
as to its Company Common Stock or any Dissenting Stock shall
otherwise lose their status as Dissenting Stock, then any such
shares shall immediately be converted into the right to receive the
Merger Consideration issuable pursuant to this ARTICLE I in respect of such
shares as if such shares had never been Dissenting Stock, and NBEV
shall issue and deliver to the holder thereof, at (or as promptly
as reasonably practicable after) the Effective Time, following the
satisfaction of the applicable conditions set forth in Section 1.7, the amount of the Merger
Consideration and any other amounts, to which such holders of
Company Common Stock would have been entitled under Section 1.6(a) with respect to such
shares. The Company shall give NBEV (i) prompt notice of any demand
received by the Company for appraisal of Company Common Stock or
notice of intent to exercise a holder of Company Common
Stock’s dissenters’ rights in accordance with the Utah
Law, as the case may be, and (ii) the opportunity to direct all
negotiations and proceedings that take place after the Closing,
with respect to demands for dissenters’ rights under such
law.
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ARTICLE II
The Company hereby represents and warrants
to NBEV and Merger Sub, as of the date hereof and as of the Closing
Date as though made at the Closing Date, as follows:
2.1 Organization and Qualification;
Subsidiaries.
(a) Each of the Company
and its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of
its incorporation and has the requisite corporate power and
authority to own, lease and operate its assets and properties and
to carry on its business as it is now being conducted. Each of the
Company and its subsidiaries is in possession of all franchises,
grants, authorizations, licenses, permits, easements, consents,
certificates, approvals and orders (“Approvals”) necessary to
own, lease and operate the properties it purports to own, operate
or lease and to carry on its business as it is now being conducted,
except where the failure to have such Approvals would not,
individually or in the aggregate, be material to the Company. Each
of the Company and its subsidiaries is duly qualified or licensed
as a foreign corporation to do business, and is in good standing,
where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that would not, either
individually or in the aggregate, have a Material Adverse Effect on
the Company.
(b) The Company has
previously furnished to NBEV a complete and correct copy of its
organization chart showing its U.S. and foreign subsidiaries, LCs
and branches. All of the Company’s U.S. subsidiaries are
Subchapter S subsidiaries and all of the Company’s foreign
subsidiaries, except Morinda International Tahiti, are disregarded
entities for U.S. Federal income tax purposes. Except for ownership
interests held by the Company, no subsidiary has any shares of
common stock, preferred stock, membership interests or security
convertible into common stock, preferred stock, or membership
interests outstanding. Neither the Company nor any of its
subsidiaries has agreed, is obligated to make, or is bound by, any
written, oral or other agreement, contract, sub-contract, lease,
binding understanding, instrument, note, option, warranty, purchase
order, license, sub-license, insurance policy, benefit plan,
commitment, or undertaking of any nature, as of the date hereof or
as may hereafter be in effect under which it may become obligated
to make, any future investment in or capital contribution to any
other entity. Neither the Company nor any of its subsidiaries
directly or indirectly owns any equity or similar interest in or
any interest convertible, exchangeable or exercisable for, any
equity or similar interest in, any corporation, partnership, joint
venture or other business, association or entity.
2.2 Articles of Incorporation and
Bylaws. The Company has previously furnished to NBEV a
complete and correct copy of its Articles of Incorporation and
Bylaws as amended to date and the articles of incorporation and
bylaws or equivalent organization documents of each of its
subsidiaries. Such Articles of Incorporation, Bylaws and equivalent
organizational documents of each of its subsidiaries are in full
force and effect. Neither the Company nor any of its subsidiaries
is in violation of any of the provisions of its Articles of
Incorporation or Bylaws or equivalent organizational
documents.
-10-
2.3 Capitalization.
(a) The authorized
capital stock of the Company consists of one hundred million
(100,000,000) shares of no par value Company Common Stock. As of
the close of business on the date hereof, (i) 43,216,216
shares of Company Common Stock were issued and outstanding, all of
which are validly issued, fully paid and nonassessable,
(ii) no shares of Company Common Stock were held in treasury
by the Company or by any subsidiaries of the Company and
(iii) no shares of Company Common Stock were reserved for
issuance upon the exercise of outstanding options to purchase
Company Common Stock under any stock option plan. Company has made
available to NBEV accurate and complete copies of the Phantom Stock
plan (the 587,001 shares of Phantom Stock held by a non-resident),
and all other phantom stock plans and agreements pursuant to which
the Company has granted Phantom Stock or other phantom stock rights
that are currently outstanding, including commitments and
agreements to which the Company is bound obligating the Company to
accelerate the vesting of phantom stock rights as a result of the
Merger and related current and continuing obligations of the
Surviving Corporation. All outstanding shares of Company Common
Stock and all outstanding shares of capital stock of each
subsidiary of the Company have been issued and granted in
compliance with (i) all applicable securities laws and other
applicable federal, state, local, municipal, foreign or other law,
statute, constitution, principle of common law, resolution,
ordinance, code, edict, decree, rule, regulation, ruling or
requirement issues, enacted, adopted, promulgated, implemented or
otherwise put into effect by or under the authority of any
Governmental Entity (as defined below) and (ii) all
requirements set forth in applicable contracts, agreements, and
instruments.
(b) Except for
securities the Company owns free and clear of all liens, pledges,
hypothecations, charges, mortgages, security interests,
encumbrances, claims, infringements, interferences, options, right
of first refusals, preemptive rights, community property interests
or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any
security or other asset, any restriction on the possession,
exercise or transfer of any other attribute of ownership of any
asset) directly or indirectly through one or more subsidiaries, and
except for shares of capital stock or other similar ownership
interests of subsidiaries of the Company that are owned by certain
nominee equity holders as required by the applicable law of the
jurisdiction of organization of such subsidiaries (which shares or
other interests do not materially affect the Company’s
control of such subsidiaries), as of the date of this Agreement,
there are no equity securities, partnership interests or similar
ownership interests of any class of equity security of any
subsidiary of the Company, or any security exchangeable or
convertible into or exercisable for such equity securities,
partnership interests or similar ownership interests, issued,
reserved for issuance or outstanding. There are no subscriptions,
options, warrants, equity securities, partnership interests or
similar ownership interests (except the Phantom Stock and other
phantom stock rights set forth in Section 2.3(a)), calls, rights
(including preemptive rights), commitments or agreements of any
character to which the Company or any of its subsidiaries is a
party or by which it is bound obligating the Company or any of its
subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, or repurchase, redeem or otherwise acquire, or
cause the repurchase, redemption or acquisition of, any shares of
capital stock, partnership interests or similar ownership interests
of the Company or any of its subsidiaries or obligating the Company
or any of its subsidiaries to grant, extend, accelerate the vesting
of or enter into any such subscription, option, warrant, equity
security, call, right, commitment or agreement. As of the date of
this Agreement, except as contemplated by this Agreement, there are
no registration rights and there is no voting trust, proxy, rights
plan, antitakeover plan or other agreement or understanding to
which the Company or any of its subsidiaries is a party or by which
they are bound with respect to any equity security of any class of
the Company or with respect to any equity security, partnership
interest or similar ownership interest of any class of any of its
subsidiaries.
-11-
2.4 Authority Relative to this
Agreement. The Company has all necessary corporate
power and authority to execute and deliver this Agreement and to
perform its obligations hereunder and thereunder and, subject to
obtaining the approval of the stockholders of the Company of the
Merger, to consummate the transactions contemplated hereby and
thereby. The execution and delivery of this Agreement by the
Company and the consummation by the Company of the transactions
contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of the
Company and no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement or to consummate
the transactions so contemplated (other than, with respect to the
Merger, the approval and adoption of this Agreement and the
approval of the Merger by holders of a majority of the outstanding
shares of Company Common Stock in accordance with Utah Law and the
Company’s Articles of Incorporation and Bylaws). This
Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery
by NBEV and Merger Sub, constitute legal and binding obligations of
the Company, enforceable against the Company in accordance with
their respective terms.
2.5 No Conflict; Required Filings and
Consents.
(a) The execution and
delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not,
(i) conflict with or violate the Articles of Incorporation or
Bylaws or equivalent organizational documents of the Company or any
of its subsidiaries, (ii) subject to obtaining the approval of
the Company’s stockholders in favor of approval and adoption
of this Agreement and approval of the Merger, and obtaining the
consents, approvals, authorizations and permits and making
registrations, filings and notifications set forth in Section 2.5(b) hereof, conflict with or
violate any law, rule, regulation, order, judgment or decree
applicable to the Company or any of its subsidiaries or by which
its or any of their respective properties is bound or affected,
except for such conflicts or violations as would not, individually
or in the aggregate, reasonably be expected to have a Material
Adverse Effect or (iii) result in any breach of or constitute
a default (or an event that with notice or lapse of time or both
would become a default) under, or impair the Company’s or any
of its subsidiaries’ rights or alter the rights or
obligations of any third party under, or give to others any rights
of termination, amendment, acceleration or cancellation of, or
result in the creation of a lien or encumbrance on any of the
properties or assets of the Company or any of its subsidiaries
pursuant to, any material note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries or its or any of their respective properties are bound
or affected, except for such breaches, defaults, impairments,
alterations, grants, liens or encumbrances as would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(b) The execution
and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or registration,
filing with or notification to, any court, administrative agency,
commission, governmental or regulatory authority, domestic or
foreign (each, a “Governmental Entity” and,
collectively, “Governmental Entities”),
except for (i) the pre-merger notification requirements (the
“HSR
Approval”) of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the “HSR Act”), and foreign
Governmental Entities and the rules and regulations promulgated
thereunder, (ii) the filing and recordation of the Articles of
Merger as required by the Utah Law, and (iii) where the
failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not be
material to the Company or NBEV or have a Material Adverse Effect
(as defined in Section 8.3(c) hereof) on the parties
hereto, prevent or materially delay consummation of the Merger or
otherwise prevent the parties hereto from performing their
obligations under this Agreement.
-12-
2.6 Compliance;
Permits.
(a) Neither the Company
nor any of its subsidiaries is in conflict with, or in default or
violation of, (i) any law, rule, regulation, order, judgment
or decree applicable to the Company or any of its subsidiaries or
by which its or any of their respective properties is bound or
affected, or (ii) any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise
or other instrument or obligation to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries or its or any of their respective properties is bound
or affected, except for any conflicts, defaults or violations that
(individually or in the aggregate) would not reasonably be expected
to have a Material Adverse Effect. No investigation or review by
any governmental or regulatory body or authority is pending or, to
the knowledge of the Company, threatened against the Company or its
subsidiaries, nor has any governmental or regulatory body or
authority indicated an intention to conduct the same, other than,
in each such case, those the outcome of which could not,
individually or in the aggregate, reasonably be expected to have
the effect of prohibiting or materially impairing any business
practice of the Company or any of its subsidiaries, any acquisition
of material property by the Company or any of its subsidiaries or
the conduct of business by the Company or any of its
subsidiaries.
(b) The Company and its
subsidiaries hold all permits, licenses, variances, exemptions,
orders and approvals from Governmental Entities which are material
to operation of the business of the Company and its subsidiaries
taken as a whole (collectively, the “Company Permits”) except
for any Company Permits for which the failure to hold would not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. The Company and its subsidiaries are in
compliance in all material respects with the terms of the Company
Permits, except where the failure to be in compliance would not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
2.7 Financial Statements. The
Company has provided to NBEV consolidated financial statements
(including, in each case, any related notes thereto) for the fiscal
years ended 2016, 2017 and the interim period ended September 30,
2018 (the “Company
Financial Statements”). The Company Financial
Statements were prepared in accordance with generally accepted
accounting principles (“GAAP”) applied on a
consistent basis throughout the periods involved and each fairly
presents the consolidated financial position of the Company and its
subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows for the
periods indicated in accordance with GAAP, except that the
unaudited interim financial statements were or are subject to
adjustments to amortize the cost of distributor events, incentives
and marketing over the course of the calendar year, which were not
or are not expected to be materially different in amount versus
GAAP on a December year-to-date basis.
2.8 No Undisclosed
Liabilities. Neither the Company nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent or
otherwise) of a nature required to be disclosed on a balance sheet
or in the related notes to the consolidated financial statements
prepared in accordance with GAAP, which are, individually or in the
aggregate, material to the business, results of operations or
financial condition of the Company and its subsidiaries taken as a
whole except (i) liabilities provided for in the
Company’s balance sheet as of September 30, 2018; (ii)
liabilities arising in connection with the transactions
contemplated by this Agreement; (iii) liabilities incurred
since September 30, 2018 in the ordinary course of business,
including liabilities related to future scheduled distributor events; (iv) liabilities
(and assets) related to deferred U.S. Federal and state income
taxes on accumulated book versus tax temporary differences that
will arise in connection with the termination of the
Company’s S corporation election as a result of the Merger;
(v) liabilities associated with the other phantom stock plans as
set forth in Section
2.3(a);
or (vi) liabilities that would not be expected to have,
individually or in the aggregate, a Material Adverse
Effect.
-13-
2.9 Absence of Certain Changes or
Events. Since September 30, 2018, there has not been:
(i) any Material Adverse Effect on the Company, (ii) any
declaration, setting aside or payment of any dividend on, or other
distribution (whether in cash, stock or property) in respect of,
any of the Company’s or any of its subsidiaries’
capital stock, or any purchase, redemption or other acquisition by
the Company of any of the Company’s capital stock or any
other securities of the Company or its subsidiaries or any options,
warrants, calls or rights to acquire any such shares or other
securities, except as has been contemplated by and agreed to by the
parties, (iii) any split, combination or reclassification of any of
the Company’s or any of its subsidiaries’ capital
stock, (iv) any granting by the Company or any of its subsidiaries
of any increase in compensation or fringe benefits, except for
normal increases of cash compensation in the ordinary course of
business consistent with past practice, or any payment by the
Company or any of its subsidiaries of any bonus, except for bonuses
made in the ordinary course of business consistent with past
practice, or any granting by the Company or any of its subsidiaries
of any increase in severance or termination pay or any entry by the
Company or any of its subsidiaries into any currently effective
employment, severance, termination or indemnification agreement or
any agreement the benefits of which are contingent or the terms of
which are materially altered upon the occurrence of a transaction
involving the Company of the nature contemplated hereby, (v) entry
by the Company or any of its subsidiaries into any licensing or
other agreement with regard to the acquisition or disposition of
any Intellectual Property (as defined in Section 2.18(a)(i) hereof) other than
licenses in the ordinary course of business consistent with past
practice, (vi) any material change by the Company in its
accounting methods, principles or practices, except as allowed or
required by concurrent changes in GAAP, (vii) any revaluation by
the Company of any of its assets, including, without limitation,
writing down the value of capitalized inventory or writing off
notes or accounts receivable other than in the ordinary course of
business, or (viii) except as has been contemplated by and agreed
to by the parties, any sale of assets of the Company other than in
the ordinary course of business.
2.10 Absence of Litigation.
Except as disclosed on Schedule 2.10, there are no claims, actions,
suits or proceedings pending or, to the knowledge of the Company,
threatened (or any legal, governmental or regulatory investigation
pending or, to the Company’s knowledge, threatened) against
the Company or any of its subsidiaries or any properties or rights
of the Company or any of its subsidiaries. Neither the Company nor
any subsidiary is a party or subject to the provisions of any
order, writ, injunction, judgment or decree of any court or
government agency or instrumentality which would materially
adversely affect the business, property, financial condition or
operations of the Company and its subsidiaries taken as a whole.
Except as disclosed on Schedule 2.10, there is no action, suit,
proceeding or investigation by the Company or any subsidiary
currently pending in any court or before any arbitrator or that the
Company or any subsidiary intends to initiate. Neither the Company
nor any subsidiary, nor to the knowledge of the Company, any
director or officer thereof, is or has been the subject of any
action involving a claim of violation of or liability under federal
or state securities laws or a claim of breach of fiduciary duty.
There has not been, and to the Company’s knowledge, there is
not pending or contemplated, any investigation by the United States
Securities and Exchange Commission involving the Company or any
current or former director or officer of the Company or any of its
subsidiaries.
-14-
2.11 Employee
Benefit Plans.
(a) The Company has
previously disclosed to NBEV all employee compensation, incentive,
fringe or benefit plans, programs, policies, commitments or other
arrangements (whether or not set forth in a written document and
including, without limitation, all “employee benefit
plans” (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended
(“ERISA”)) (the
“Plans”) covering (i) any
active or former employee, director or consultant of the Company,
(ii) any subsidiary of Company, or (iii) any trade or business
(whether or not incorporated) which is a member of a controlled
group or which is under common control with the Company within the
meaning of Section 414 of the Code (an “Affiliate”), or with
respect to which the Company has or may in the future have
liability. With respect to U.S. based plans, the Company has
provided to NBEV: (i) correct and complete copies of all documents
embodying each Plan including (without limitation) all amendments
thereto, all related trust documents, and all material written
agreements and contracts relating to each such Plan; (ii) the three
(3) most recent annual reports (Form Series 5500 and all schedules
and financial statements attached thereto), if any, required under
ERISA or the Code in connection with each Plan; (iii) the most
recent summary plan description together with the summary(ies) of
material modifications thereto, if any, required under ERISA with
respect to each Plan; (iv) all IRS determination, opinion,
notification and advisory letters, and all applications and
correspondence to or from the IRS or the DOL with respect to such
application or letter; (v) all material correspondence to or from
any governmental agency relating to any Plan; (vi) all COBRA
forms and related notices; (vii) all discrimination tests for
each Plan for the most recent three (3) plan years; (viii) the
most recent annual actuarial valuations, if any, prepared for each
Plan; (xi) if the Plan is funded, the most recent annual and
periodic accounting of Plan assets; (x) all material written
agreements and contracts relating to each Plan, including, but not
limited to, administrative service agreements, group annuity
contracts and group insurance contracts; (xi) all material
communications to employees or former employees regarding in each
case, relating to any amendments, terminations, establishments,
increases or decreases in benefits, acceleration of payments or
vesting schedules or other events which would result in any
material liability under any Plan or proposed Plan; (xii) all
policies pertaining to fiduciary liability insurance covering the
fiduciaries for each Plan; and (xiii) all registration
statements, annual reports (Form 11-K and all attachments thereto)
and any prospectuses prepared in connection with any Plan. The
Company has provided NBEV with information regarding foreign plan
liabilities and approximate annual contributions.
-15-
(b) Each Plan has been
maintained and administered in all material respects in compliance
with its terms and with the requirements prescribed by any and all
statutes, orders, rules and regulations (foreign or domestic),
including but not limited to ERISA or the Code, which are
applicable to such Plans. No suit, action or other litigation
(excluding claims for benefits incurred in the ordinary course of
Plan activities) has been brought, or to the knowledge of the
Company is threatened, against or with respect to any such Plan.
There are no audits, inquiries or proceedings pending or, to the
knowledge of the Company, threatened by the Internal Revenue
Service or Department of Labor with respect to any Plans. All
contributions, reserves or premium payments required to be made or
accrued as of the date hereof to the Plans have been timely made or
accrued. The Company’s accrued vacation liability as of
September 30, 2018 is reflected in the Company’s unaudited
financial statements and has been provided to NBEV. The
Company’s U.S. vacation plan does not permit rollovers of
vacation or payment of vacation upon termination, and consequently,
there is no U.S. accrued liability for vacation pay. The
Company’s accrued vacation liability is for vacation pay owed
in foreign locations that are not permitted by local law to utilize
the U.S. vacation pay policy. Any U.S. Plan intended to be
qualified under Section 401(a) of the Code and each trust
intended to qualify under Section 501(a) of the Code (i) has
either obtained a favorable determination, notification, advisory
and/or opinion letter, as applicable, as to its qualified status
from the Internal Revenue Service or still has a remaining period
of time under applicable Treasury Regulations or Internal Revenue
Service pronouncements in which to apply for such letter and to
make any amendments necessary to obtain a favorable determination,
and (ii) incorporates or has been amended to incorporate all
provisions required to comply with the Tax Reform Act of 1986 and
subsequent legislation. The Company does not have any plan or
commitment to establish any new Plan, to modify any Plan (except to
the extent required by law or to conform any such Plan to the
requirements of any applicable law, in each case as previously
disclosed to NBEV in writing, or as required by this Agreement), or
to enter into any new Plan. Each U.S. Plan can be amended,
terminated or otherwise discontinued after the Effective Time in
accordance with its terms, without liability to NBEV, the Company
or any of its Affiliates (other than ordinary administration
expenses).
(c) Neither the
Company, any of its subsidiaries, nor any of their Affiliates has
at any time ever maintained, established, sponsored, participated
in, or contributed to any plan subject to Title IV of ERISA or
Section 412 of the Code and at no time has the Company or any
of its subsidiaries contributed to or been requested to contribute
to any “multiemployer plan,” as such term is defined in
ERISA or to any plan described in Section 413(c) of the Code.
Neither the Company, any of its subsidiaries, nor any officer or
director of the Company or any of its subsidiaries is subject to
any liability or penalty under Section 4975 through 4980B of
the Code or Title I of ERISA. There are no audits, inquiries
or proceedings pending or, to the knowledge of the Company,
threatened by the IRS or DOL with respect to any Company Employee
Plan. No “prohibited transaction,” within the meaning
of Section 4975 of the Code or Sections 406 and 407 of
ERISA, and not otherwise exempt under Section 408 of ERISA, has
occurred with respect to any Company Employee Plan.
-16-
(d) Neither the
Company, any of its subsidiaries, nor any of their Affiliates has,
prior to the Effective Time and in any material respect, violated
any of the health continuation requirements of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended
(“COBRA”), the requirements
of Family Medical Leave Act of 1993, as amended, the requirements
of the Women’s Health and Cancer Rights Act, as amended, the
requirements of the Newborns’ and Mothers’ Health
Protection Act of 1996, as amended, or any similar provisions of
state law applicable to employees of the Company or any of its
subsidiaries except for such violations as would not reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect. None of the Plans promises or provides retiree
medical or other retiree welfare benefits to any person except as
required by applicable law and neither the Company nor any of its
subsidiaries has represented, promised or contracted (whether in
oral or written form) to provide such retiree benefits to any
employee, former employee, director, consultant or other person,
except to the extent required by statute.
(e) Except with respect
to the holders of the other phantom stock rights referenced in
Section
2.3(a) and
disclosed to NBEV, neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment (including severance,
unemployment compensation, golden parachute, bonus or otherwise)
becoming due to any stockholder, director or employee of the
Company or any of its subsidiaries under any Plan or otherwise,
(ii) materially increase any benefits otherwise payable under
any Plan, or (iii) result in the acceleration of the time of
payment or vesting of any such benefits.
(f) No payment or
benefit that will or may be made by the Company or its Affiliates
with respect to any Employee will be characterized as a
“parachute payment” within the meaning of Section 280G
of the Code.
(g) Each International
Employee Plan (as defined below) has been established, maintained
and administered in compliance with its terms and conditions and
with the requirements prescribed by any and all statutory or
regulatory laws that are applicable to such International Employee
Plan. Furthermore, no International Employee Plan has unfunded
liabilities, that as of the Effective Time, will not be offset by
insurance or has not been fully accrued in all material respects on
the Company’s financial statements. Except as required by
law, no condition exists that would prevent the Company or NBEV
from terminating or amending any International Employee Plan at any
time for any reason. For purposes of this Section
“International
Employee Plan” shall mean each Plan that has been
adopted or maintained by the Company or any of its subsidiaries,
whether informally or formally, for the benefit of current or
former employees of the Company or any of its subsidiaries outside
the United States.
(h) No Company Employee
Plan provides, reflects or represents any liability to provide
retiree health to any person for any reason, except as may be
required by COBRA or other applicable statute, and the Company has
never represented, promised or contracted (whether in oral or
written form) to any Employee (either individually or to Employees
as a group) or any other person that such Employee(s) or other
person would be provided with retiree health, except to the extent
required by statute.
-17-
2.12 Labor
Matters.
(a) (i) The Company has
provided NBEV with a complete and accurate list of all officers and
employees worldwide for the Company and each of the Company’s
subsidiaries, by country and department, along with current
compensation arrangements, title and job responsibilities;
(ii) there are no actions pending or, to the knowledge of each
of the Company and its respective subsidiaries, threatened, between
the Company or any of its subsidiaries and any of their respective
employees; (iii) as of the date of this Agreement, neither the
Company nor any of its subsidiaries is a party to any collective
bargaining agreement or other labor union contract applicable to
persons employed by Company or its subsidiaries nor does the
Company or its subsidiaries know of any activities or proceedings
of any labor union to organize any such employees, except that
certain foreign countries may require or allow employee councils to
take certain actions; and (iv) as of the date of this
Agreement, neither the Company nor any of its subsidiaries has any
knowledge of any strikes, slowdowns, work stoppages or lockouts, or
threats thereof, by or with respect to any employees of the Company
or any of its subsidiaries.
(b) The Company and its
subsidiaries are in compliance in all material respects with all
applicable foreign, federal, state and local laws, rules and
regulations regarding employment, employment practices, terms and
conditions of employment and wages and hours except where the
failure to be in such compliance would not reasonably be expected
to have a Material Adverse Effect
2.13 Restrictions
on Business Activities. There is no agreement,
commitment, judgment, injunction, order or decree binding upon the
Company or any of its subsidiaries or to which the Company or any
of its subsidiaries is a party or any of its subsidiaries which has
or could reasonably be expected to have the effect of prohibiting
or impairing any business practice of the Company or any of its
subsidiaries, any acquisition of property by the Company or any of
its subsidiaries or the conduct of business by the Company or any
of its subsidiaries as currently conducted.
2.14 Title
to Property. The Company has provided NBEV with a
complete and accurate summary of the Company’s fixed assets,
including real property ownership and real property leases,
together with the long-term lease arrangement associated with the
Tahiti manufacturing plant land. The Company and each of its
subsidiaries have good and defensible title to all of their
material properties and assets, free and clear of all liens,
charges and encumbrances except liens for taxes not yet due and
payable and such liens or other imperfections of title, if any, as
do not materially detract from the value of or interfere with the
present use of the property affected thereby; and all leases
pursuant to which Company or any of its subsidiaries lease from
others material amounts of personal property are in good standing,
valid and effective in accordance with their respective terms, and
there is not, under any of such leases, any existing material
default or event of default (or any event which with notice or
lapse of time, or both, would constitute a material default and in
respect of which Company or subsidiary has not taken adequate steps
to prevent such default from occurring). All the plants, structures
and equipment of Company and its subsidiaries, except such as may
be under construction, are in good operating condition and repair,
in all material respects.
-18-
2.15 Taxes.
(a) Definition of Taxes. For all
purposes of and under this Agreement, “Tax” or
“Taxes”
refers to any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and
liabilities relating to taxes, including taxes based upon or
measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, franchise,
withholding, payroll, recapture, employment, excise and property
taxes, together with all interest, penalties and additions imposed
with respect to such amounts and any obligations under any
agreements or arrangements with any other person with respect to
such amounts and including any liability for taxes of a predecessor
entity.
(b) Tax Returns and
Audits.
(i) The Company and
each of its subsidiaries have timely filed all federal, state,
local and foreign returns, estimates, information statements and
reports (“Returns”) relating to
Taxes required to be filed by the Company and each of its
subsidiaries with any Tax authority, except such Returns which are
not material to the Company. The Company and each of its
subsidiaries have paid all Taxes shown to be due on such
Returns.
(ii) The
Company and each of its subsidiaries as of the Effective Time will
have withheld with respect to its employees all federal and state
income taxes, Taxes pursuant to the Federal Insurance Contribution
Act (“FICA”), Taxes pursuant to
the Federal Unemployment Tax Act (“FUTA”) and other Taxes
required to be withheld, except such Taxes which are not material
to the Company.
(iii) Neither
the Company nor any of its subsidiaries has been delinquent in the
payment of any material Tax nor is there any material Tax
deficiency outstanding, proposed or assessed against the Company or
any of its subsidiaries, nor has the Company or any of its
subsidiaries executed any unexpired waiver of any statute of
limitations on or extending the period for the assessment or
collection of any Tax.
(iv) Except
as has been disclosed in writing to NBEV, no audit or other
examination of any Return of the Company or any of its subsidiaries
by any Tax authority is presently in progress, nor has the Company
or any of its subsidiaries been notified of any request for such an
audit or other examination.
(v) No adjustment
relating to any Returns filed by the Company or any of its
subsidiaries has been proposed in writing formally or informally by
any Tax authority to the Company or any of its subsidiaries or any
representative thereof.
(vi) Neither
the Company nor any of its subsidiaries has any liability for any
material unpaid Taxes which has not been accrued for or reserved on
the Company Balance Sheet in accordance with GAAP, whether asserted
or unasserted, contingent or otherwise, which is material to the
Company, other than (a) any liability for unpaid Taxes that may
have accrued since the date of the Company Balance Sheet in
connection with the operation of the business of the Company and
its subsidiaries in the ordinary course and (b) deferred U.S.
federal and state income taxes on accumulated book versus tax
temporary differences that will arise in connection with the
termination of the Company’s S corporation election as a
result of the Merger.
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(vii) There
is no contract, agreement, plan or arrangement to which the Company
or any of its subsidiaries is a party as of the date of this
Agreement, including but not limited to the provisions of this
Agreement, covering any employee or former employee of the Company
or any of its subsidiaries that, individually or collectively,
would reasonably be expected to give rise to the payment of any
amount that would not be deductible pursuant to Sections 280G,
404 or 162(m) of the Code. There is no contract, agreement, plan or
arrangement to which the Company is a party or by which it is bound
to compensate any individual for excise taxes paid pursuant to
Section 4999 of the Code.
(viii) Neither
the Company nor any of its subsidiaries has filed any consent
agreement under Section 341(f) of the Code or agreed to have
Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as defined in Section 341(f)(4) of the
Code) owned by the Company or any of its subsidiaries.
(ix) Neither
the Company nor any of its subsidiaries is party to or has any
obligation under any tax-sharing, tax indemnity or tax allocation
agreement or arrangement, except for the Advanced Pricing Agreement
with the U.S. and Japan governments that is currently being
renewed.
(x) None of the
Company’s or its subsidiaries’ assets are tax exempt
use property within the meaning of Section 168(h) of the
Code.
(xi) Neither
the Company nor any subsidiary of the Company has participated as
either a “distributing corporation” or a
“controlled corporation” in a distribution of stock
qualifying for tax-free treatment under Section 355 of the
Code.
2.16 Environmental
Matters.
(a) Definitions. For all purposes
of and under this Agreement, the following terms shall have the
following respective meanings:
(i) “Hazardous Material” means
any material or substance that is prohibited or regulated by any
Environmental Law or that has been designated by any Governmental
Entity to be radioactive, toxic, hazardous or otherwise a danger to
health, reproduction or the environment.
(ii) “Business
Facility” means any property including the land, the
improvements thereon, the groundwater thereunder and the surface
water thereon, that is or at any time has been owned, operated,
occupied, controlled or leased by the Company or any of its
subsidiaries in connection with the operation of its
business.
(iii) “Disposal
Site” means a landfill, disposal site, disposal agent,
waste hauler or recycler of Hazardous Materials, or any real site
other than a Business Facility receiving Hazardous Materials used
or generated by a Business Facility.
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(iv) “Environmental
Laws” means all applicable laws, rules, regulations,
orders, treaties, statutes, and codes promulgated by any
Governmental Entity which prohibit, regulate or control any
Hazardous Material or any Hazardous Material Activity, including,
without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, the Resource Recovery and
Conservation Act of 1976, the Federal Water Pollution Control Act,
the Clean Air Act, the Hazardous Materials Transportation Act, the
Clean Water Act, comparable laws, rules, regulations, ordinances,
orders, treaties, statutes, and codes of other Governmental
Entities the regulations promulgated pursuant to any of the
foregoing, and all amendments and modifications of any of the
foregoing, all as amended to date.
(v) “Hazardous Materials
Activity” means the transportation, transfer,
recycling, storage, use, treatment, manufacture, removal,
remediation, release, exposure of others to, sale, or distribution
of any Hazardous Material or any product or waste containing a
Hazardous Material, or product manufactured with Ozone depleting
substances.
(vi) “Environmental
Permit” means any approval, permit, registration,
certification, license, clearance or consent required to be
obtained from any private person or any Governmental Entity with
respect to a Hazardous Materials Activity which is or was conducted
by the Company.
(b) Condition of Property. As of
the Closing, except in compliance with Environmental Laws in a
manner that could not reasonably be expected to subject the Company
or any of its subsidiaries to liability, to the best of the
Company’s knowledge, no Hazardous Materials are present on
any Business Facility or were present on any other Business
Facility at the time it ceased to be owned, operated, occupied,
controlled or leased by the Company or any of its subsidiaries. To
the best of the Company’s knowledge, there are no underground
storage tanks, asbestos which is friable or likely to become
friable or PCBs present on any Business Facility currently owned,
operated, occupied, controlled or leased by the Company or any
subsidiaries or as a consequence of the acts of the Company or its
subsidiaries or agents.
(c) Hazardous Materials Activities.
The Company and its subsidiaries have conducted all Hazardous
Material Activities relating to their business in compliance in all
material respects with all applicable Environmental Laws. To the
best of the Company’s knowledge, the Hazardous Materials
Activities of the Company and its subsidiaries prior to the Closing
have not resulted in the exposure of any person to a Hazardous
Material in a manner which has caused or could reasonably be
expected to cause an adverse health effect to any such
person.
(d) Permits. To the best of the
Company’s knowledge, the Company has obtained all necessary
permits for the continued conduct of any Hazardous Material
Activity of the Company or any of its subsidiaries relating to
their business as such activities are currently being conducted.
All such Environmental Permits are valid and in full force and
effect. The Company and its subsidiaries have complied in all
material respects with all covenants and conditions of any
Environmental Permit which is or has been in force with respect to
its Hazardous Materials Activities. No circumstances exist which
could cause any Environmental Permit to be revoked, modified, or
rendered non-renewable upon payment of the permit fee.
-21-
(e) Environmental Litigation. No
action, proceeding, revocation proceeding, amendment procedure,
writ, injunction or claim is pending, or to the best of the
Company's knowledge, threatened, concerning or relating to any
Environmental Permit or any Hazardous Materials Activity of the
Company or any of its subsidiaries relating to their business, or
any Business Facility.
(f) Offsite Hazardous Material
Disposal. The Company and its subsidiaries have transferred
or released Hazardous Materials only to authorized and appropriate
Disposal Sites, and no action, proceeding, liability or claim
exists or is threatened against any Disposal Site or against the
Company or any of its subsidiaries with respect to any transfer or
release of Hazardous Materials relating to the Business to a
Disposal Site which could reasonably be expected to subject the
Company or any of its subsidiaries to liability.
(g) Environmental Liabilities. The
Company is not aware of any fact or circumstance, which could
result in any environmental liability which could reasonably be
expected to result in a material adverse effect on the business or
financial status of the Company or its subsidiaries.
(h) Reports and Records. The
Company has delivered to NBEV or made available for inspection by
NBEV and its agents, representatives and employees all records in
the Company's possession or control concerning the Hazardous
Materials Activities of the Company and its subsidiaries relating
to their business and all environmental audits and environmental
assessments of any Business Facility conducted at the request of,
or otherwise in the possession or control of the Company. The
Company has complied with all environmental disclosure obligations
imposed by applicable law with respect to this
transaction.
2.17 Brokers. Except for such
fees as are included in Transaction Expenses, the Company has not
incurred, nor will it incur, directly or indirectly, any liability
for brokerage or finders fees or agent’s commissions or any
similar charges in connection with this Agreement or any
transaction contemplated hereby. The Company’s stockholders
and Phantom Stock holder are responsible for brokerage fees,
attorney fees and other costs related to or arising from the Merger
and related agreements, as set forth in Section 1.6(a)(ii)(2).
2.18 Intellectual
Property.
(a) For the purposes of
this Agreement, the following terms have the following
definitions:
(i)
“Intellectual Property”
shall mean any or all of the following and all rights in, arising
out of, or associated therewith: (i) all United States,
international and foreign patents and applications therefor and all
reissues, divisions, renewals, extensions, provisionals,
continuations and continuations-in-part thereof; (ii) all
inventions (whether patentable or not), invention disclosures,
improvements, trade secrets, proprietary information, know how,
technology, technical data and customer lists, and all
documentation relating to any of the foregoing; (iii) all
copyrights, copyrights registrations and applications therefor, and
all other rights corresponding thereto throughout the world; (iv)
all mask works, mask work registrations and applications therefor,
and any equivalent or similar rights in semiconductor masks,
layouts, architectures or topology; (v) domain names, uniform
resource locators (“URLs”) and other names
and locators associated with the Internet (collectively,
“Domain
Names”), (vi) all computer software, including all
source code, object code, firmware, development tools, files,
records and data, and all media on which any of the foregoing is
recorded; (vii) all industrial designs and any registrations and
applications therefor throughout the world; (viii) all trade names,
logos, common law trademarks and service marks, trademark and
service xxxx registrations and applications therefor throughout the
world; (ix) all databases and data collections and all rights
therein throughout the world; (x) all moral and economic rights of
authors and inventors, however denominated, throughout the world,
and (xi) any similar or equivalent rights to any of the foregoing
anywhere in the world.
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(ii) “Company
Intellectual Property” shall mean any Intellectual
Property that is owned by, or exclusively licensed to, the Company
or any of its subsidiaries.
(iii) “Registered
Intellectual Property” means all United States,
international and foreign: (i) patents and patent applications
(including provisional applications); (ii) registered trademarks,
applications to register trademarks, intent-to-use applications, or
other registrations or applications related to trademarks; (iii)
registered copyrights and applications for copyright registration;
and (iv) any other Intellectual Property that is the subject of an
application, certificate, filing, registration or other document
issued, filed with, or recorded by any state, government or other
public legal authority.
(iv) “Company
Registered Intellectual Property” means all of the
Registered Intellectual Property owned by, or filed in the name of,
the Company or any of its subsidiaries.
(b) The Company has
previously provided NBEV with a complete and accurate list of (i)
all Company Registered Intellectual Property which specifies, where
applicable, the jurisdictions in which each such item of Company
Registered Intellectual Property has been issued or registered,
(ii) all proceedings or actions before any court or tribunal
(including the United States Patent and Trademark Office (the
“PTO”)
or equivalent authority anywhere else in the world) related to any
of the Company Registered Intellectual Property, and (iii) a
listing of the Company inventory that reflects all products
currently being sold and distributed by the Company and its
subsidiaries.
(c) No Company
Intellectual Property or products, software or service offerings of
the Company or any of its subsidiaries (collectively,
“Company
Products”) is subject to any proceeding or outstanding
decree, order, judgment, contract, license, agreement, or
stipulation restricting in any manner the use, transfer, or
licensing thereof by Company or any of its subsidiaries, or which
may affect the validity, use or enforceability of such Company
Intellectual Property or Company Product.
(d) Each item of
Company Registered Intellectual Property is valid and subsisting,
all necessary registration, maintenance and renewal fees currently
due in connection with such Company Registered Intellectual
Property have been made and all necessary documents, recordations
and certificates in connection with such Company Registered
Intellectual Property have been filed with the relevant patent,
copyright, trademark or other authorities in the United States or
foreign jurisdictions, as the case may be, for the purposes of
prosecuting, maintaining or perfecting such Company Registered
Intellectual Property.
(e) No extraordinary
actions need to be taken outside the normal course of business by
the Company within ninety (90) days of the date hereof with respect
to any of the Company Registered Intellectual
Property.
(f) The Company owns
and has good and exclusive title to each item of Company
Intellectual Property owned by it, free and clear of any lien or
encumbrance (excluding non-exclusive licenses and related
restrictions granted in the ordinary course). Without limiting the
generality of the foregoing, (i) the Company is the exclusive owner
of all trademarks and trade names used in connection with the
operation or conduct of the business of the Company and its
subsidiaries, including the sale, distribution or provision of any
Company Products by the Company or any of its subsidiaries, (ii)
the Company owns, and has good title to, or has the right to use
all copyrighted works that are included or incorporated into
Company Products or which the Company or any of its subsidiaries
otherwise purports to own, and (iii) to the extent that any
patents would be infringed by any Company Products, the Company is
the exclusive owner of such patents.
-23-
(g) To the extent that
any technology, software or Intellectual Property has been
developed or created independently or jointly by a third party for
the Company or any of its subsidiaries, or is incorporated into any
of the Company Products, the Company and its subsidiaries have a
written agreement with such third party with respect thereto and
the Company and its subsidiaries thereby either (i) have obtained
ownership of, and is the exclusive owner of, or (ii) have obtained
perpetual, irrevocable, worldwide non-terminable licenses
(sufficient for the conduct of its business as currently conducted
and as proposed to be conducted) to all such third party’s
Intellectual Property in such work, material or invention by
operation of law or by valid assignment, to the fullest extent it
is legally possible to do so.
(h) Neither the Company
nor any of its subsidiaries has transferred ownership of, or
granted any exclusive license with respect to, any Intellectual
Property that is or was Company Intellectual Property, to any third
party, or knowingly permitted the Company’s rights in such
Company Intellectual Property to lapse or enter the public
domain.
(i) The Company has
previously provided NBEV with a complete and accurate list of all
material contracts, licenses and agreements to which the Company or
any of its subsidiaries is a party (i) with respect to Company
Intellectual Property licensed or transferred to any third party,
or (ii) pursuant to which a third party has licensed or transferred
any Intellectual Property to the Company or any of its
subsidiaries.
(j) All contracts,
licenses and agreements relating to either (i) Company Intellectual
Property or (ii) Intellectual Property of a third party licensed to
the Company or any of its subsidiaries, are in full force and
effect. The consummation of the transactions contemplated by this
Agreement will neither violate nor result in the breach,
modification, cancellation, termination, suspension of, or
acceleration of any payments with respect to, such contracts,
licenses and agreements. Each of the Company and its subsidiaries
is in material compliance with, and has not materially breached any
term of any such contracts, licenses and agreements and, to the
knowledge of the Company, all other parties to such contracts,
licenses and agreements are in compliance with, and have not
materially breached any term of, such contracts, licenses and
agreements. Following the Closing Date, the Surviving Corporation
will be permitted to exercise all of the Company’s and its
subsidiaries’ rights under such contracts, licenses and
agreements to the same extent the Company and its subsidiaries
would have been able to had the transactions contemplated by this
Agreement not occurred and without the payment of any additional
amounts or consideration other than ongoing fees, royalties or
payments which the Company or any of its subsidiaries would
otherwise be required to pay. Neither this Agreement nor the
transactions contemplated by this Agreement, including the
assignment to NBEV or Merger Sub by operation of law or otherwise
of any contracts or agreements to which the Company or any of its
subsidiaries is a party, will result in (i) either NBEV’s or
the Merger Sub’s granting to any third party any right to or
with respect to any material Intellectual Property right owned by,
or licensed to, either of them, (ii) either NBEV’s or the
Merger Sub’s being bound by, or subject to, any non-compete
or other material restriction on the operation or scope or their
respective businesses, or (iii) either NBEV’s or the Merger
Sub’s being obligated to pay any royalties or other material
amounts to any third party in excess of those payable by NBEV or
Merger Sub, respectively, prior to the Closing.
-24-
(k) The operation of
the business of the Company and its subsidiaries as such business
currently is conducted and reasonably contemplated to be conducted,
including (i) the Company’s and its subsidiaries’
design, development, manufacture, distribution, reproduction,
marketing or sale of the products, software or services of the
Company and its subsidiaries (including Company Products), and (ii)
the Company Intellectual Property owned by the Company does not
infringe or misappropriate the Intellectual Property of any third
party or, to its knowledge, constitute unfair competition or trade
practices under the laws of any jurisdiction.
(l) The Company
Intellectual Property constitutes all the Intellectual Property
used in and/or necessary to the conduct of the business of the
Company and its subsidiaries as it currently is conducted, and as
it is currently planned or contemplated to be conducted by the
Company and its subsidiaries, including, without limitation, the
design, development, manufacture, use, import and sale of products,
technology and performance of services (including the Company
Products), except for third-party provided ingredients that the
Company utilizes in its products, third-party manufactured products
that the Company sells under a Company brand name, and third-party
services and processes utilized in connection with providing
third-party ingredients or products.
(m) Neither the Company
nor any of its subsidiaries has received notice from any third
party that the operation of the business of the Company or any of
its subsidiaries or any act, product or service of the Company or
any of its subsidiaries, infringes or misappropriates the
Intellectual Property of any third party or constitutes unfair
competition or trade practices under the laws of any
jurisdiction.
(n) To the knowledge of
the Company, no person has or is infringing or misappropriating any
Company Intellectual Property.
(o) The Company and
each of its subsidiaries has taken reasonable steps to protect the
Company’s and its subsidiaries’ rights in the
Company’s confidential information and trade secrets that it
wishes to protect or any trade secrets or confidential information
of third parties provided to the Company or any of its
subsidiaries, and, without limiting the foregoing, each of the
Company and its subsidiaries has and enforces a policy requiring
each employee and contractor to execute a proprietary
information/confidentiality agreement substantially in the form
provided to NBEV and all current and former employees and
contractors of the Company and any of its subsidiaries have
executed such an agreement, except where the failure to do so is
not reasonably expected to result in a Material Adverse
Effect.
2.19 Agreements,
Contracts and Commitments.
(a) Neither the Company
nor any of its subsidiaries is a party to or is bound
by:
(i) any employment or
consulting agreement, contract or commitment with any officer or
director, employee or member of the Company’s Board of
Directors (excluding standard employee contracts in foreign
countries that are governed by local law and which contain only
standard, ordinary course of business provisions), except for the
phantom stock plans described in Section 2.3(a);
-25-
(ii) any
agreement or plan, including, without limitation, any stock option
plan, stock appreciation right plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits
of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of
the benefits of which will be calculated on the basis of any of the
transactions contemplated by this Agreement, except as set forth in
Section
2.3(a);
(iii) any
agreement of indemnification, except for standard business
indemnification provisions in third-party vendor, customer and
service provider contracts, and indemnification agreements with
employees and former employees (the standard form of which was
previously provided to NBEV) serving as officers and directors of
the Company and its foreign subsidiaries, or any guaranty other
than any agreement of indemnification entered into in connection
with the sale or license of software products in the ordinary
course of business;
(iv) any
agreement, contract or commitment containing any covenant limiting
in any respect the right of the Company or any of its subsidiaries
to engage in any line of business or to compete with any person or
granting any exclusive distribution rights, except for a commitment
in connection with a settlement of a lawsuit not to manufacture or
sell any mangosteen-based product;
(v) any agreement,
contract or commitment currently in force relating to the
disposition or acquisition by the Company or any of its
subsidiaries after the date of this Agreement of a material amount
of assets not in the ordinary course of business or pursuant to
which the Company or any of its subsidiaries has any material
ownership interest in any corporation, partnership, joint venture
or other business enterprise other than the Company’s
subsidiaries;
(vi) any
dealer, distributor, joint marketing or development agreement
currently in force under which the Company or any of its
subsidiaries have continuing material obligations to jointly market
any product, technology or service and which may not be canceled
without penalty upon notice of sixty (60) days or less, or any
material agreement pursuant to which Company or any of its
subsidiaries have continuing material obligations to jointly
develop any intellectual property that will not be owned, in whole
or in part, by Company or any of its subsidiaries and which may not
be canceled without penalty upon notice of sixty (60) days or
less;
(vii) any
agreement, contract or commitment currently in force to provide
source code to any third party for any product or technology that
is material to Company and its subsidiaries taken as a
whole;
(viii) any
agreement, contract or commitment currently in force to license any
third party to manufacture or reproduce any Company Product,
service or technology (except for the Tombo and Xxxxx contract
manufacturing arrangements and other material vendors previously
disclosed to NBEV) or any agreement, contract or commitment
currently in force to sell or distribute any Company Products,
services or technology, except agreements with distributors or
sales representative in the normal course of business cancelable
based on their terms without penalty upon notice of sixty (60) days
or less and substantially in the form previously provided to
NBEV;
-26-
(ix) any
mortgages, indentures, guarantees, loans or credit agreements,
security agreements or other agreements or instruments relating to
the borrowing of money or extension of credit, except for the
indebtedness that was previously disclosed to NBEV;
(x) any material
settlement agreement entered into within three (3) years prior to
the date of this Agreement, except for a confidential settlement
agreement with two former executives as previously disclosed to
NBEV; or
(xi) any
other agreement, contract or commitment that has a value of
$100,000 or more in any individual case outside the ordinary course
of business.
(b) Other than such
breaches, violations or defaults as would not, individually or in
the aggregate, reasonably be expected to result in a Material
Adverse Effect, neither the Company nor any of its subsidiaries,
nor to the Company’s knowledge any other party to a Company
Contract (as defined below), is in breach, violation or default
under, and neither the Company nor any of its subsidiaries has
received written notice that it has breached, violated or defaulted
under, any of the material terms or conditions of any of the
agreements, contracts or commitments to which the Company or any of
its subsidiaries is a party or by which it is bound (any such
agreement, contract or commitment, a “Company Contract”) in
such a manner as would permit any other party to cancel or
terminate any such Company Contract, or would permit any other
party to seek material damages or other remedies (for any or all of
such breaches, violations or defaults, in the
aggregate).
2.20 Insurance.
The Company maintains insurance policies and deposits covering the
assets, business, equipment, properties, operations, employees,
officers and directors of the Company and its subsidiaries
(collectively, the “Insurance Policies”)
which are of the type and in amounts customarily carried by persons
conducting businesses similar to those of the Company and its
subsidiaries. There is no material claim by the Company or any of
its subsidiaries pending under any of the material Insurance
Policies as to which coverage has been questioned, denied or
disputed by the underwriters of such policies or deposits. The
Company is not aware of, and has not received notice under any
Insurance Policies of, (i) an insurer’s intention or threat
to cancel or terminate any of the Insurance Policies, (ii) an
insurer’s intention or threat to increase the premiums due
under any of the Insurance Policies.
2.21 Board
Approval. The Board of Directors of the Company has,
as of the date of this Agreement, (i) approved this Agreement
and the transactions contemplated hereby, subject to stockholder
approval, (ii) determined that the Merger is in the best
interests of the stockholders of the Company and is on terms that
are fair to such stockholders, and (iii) recommended that the
stockholders of Company approve and adopt this Agreement and
approve the Merger.
2.22 Vote
Required. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock is the
only vote of the holders of any class or series of the
Company’s capital stock necessary to approve and adopt this
Agreement and approve the Merger.
-27-
2.23 State
Takeover Statutes. The Board of Directors of the
Company has approved the Merger and this Agreement, and such
approval renders inapplicable any provisions of Utah Law that would
otherwise be applicable to the Merger, this Agreement and the
transactions contemplated by this Agreement. To the knowledge of
the Company, no other state takeover statute or similar statute or
regulation applies to or purports to apply to the Merger or the
transactions contemplated by this Agreement.
2.24 Illegal
Payments. Neither the Company, nor any director, officer, or
to the knowledge of the Company, any agent, employee or other
person acting on behalf of the Company has, in the course of his
actions for, or on behalf of, the Company: (i) used any corporate
funds for any unlawful contribution, gift, entertainment or other
unlawful expenses relating to political activity; (ii) made any
direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii)
violated or is in violation of any provision of the U.S. Foreign
Corrupt Practices Act of 1977, as amended; or (iv) made any bribe,
rebate, payoff, influence payment, kickback or other unlawful
payment to any foreign or domestic government official or
employee.
2.25 Related
Party Transaction. Except for arm’s length
transactions pursuant to which the Company makes payments in the
ordinary course of business upon terms no less favorable than the
Company could obtain from third parties, and none of the officers,
directors or employees of the Company, nor any stockholders who
own, legally or beneficially, ten percent (10%) or more of the
issued and outstanding shares of any class of the Company’s
capital stock (each a “Material
Shareholder”), is presently a party to any
transaction with the Company (other than for services as employees,
officers and directors), including any Company Contract providing
for the furnishing of services to or by, providing for rental of
real or personal property to or from, or otherwise requiring
payments to or from, any officer, director or such employee or
Material Shareholder or, to the best knowledge of the Company, any
other person in which any officer, director, or any such employee
or Material Shareholder has a substantial or material interest in
or of which any officer, director or employee of the Company or
Material Shareholder is an officer, director, trustee or partner.
There are no claims or disputes of any nature or kind between the
Company and any officer, director or employee of the Company or any
Material Shareholder, or between any of them, relating to the
Company and its business except such claims or disputes as would
not be reasonably be expected to result in a Material Adverse
Effect.
2.26 Management.
During the past ten-year period, to the knowledge of the Company,
no current officer or director and no current five percent (5%) or
greater stockholder of the Company has been the subject
of:
(i) a
petition under bankruptcy laws or any other insolvency or
moratorium law or the appointment by a court of a receiver, fiscal
agent or similar officer for such Person, or any partnership in
which such person was a general partner at or within two years
before the filing of such petition or such appointment, or any
corporation or business association of which such person was an
executive officer at or within two years before the time of the
filing of such petition or such appointment;
(ii) a
conviction in a criminal proceeding or a named subject of a pending
criminal proceeding (excluding traffic violations that do not
relate to driving while intoxicated or driving under the
influence);
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(iii) any
order, judgment or decree, not subsequently reversed, suspended or
vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining any such person from, or otherwise limiting,
the following activities:
(1) Acting as a futures
commission merchant, introducing broker, commodity trading advisor,
commodity pool operator, floor broker, leverage transaction
merchant, any other person regulated by the United States Commodity
Futures Trading Commission or an associated person of any of the
foregoing, or as an investment adviser, underwriter, broker or
dealer in securities, or as an affiliated person, director or
employee of any investment company, bank, savings and loan
association or insurance company, or engaging in or continuing any
conduct or practice in connection with such activity;
(2) Engaging in any
particular type of business practice; or
(3) Engaging in any
activity in connection with the purchase or sale of any security or
commodity or in connection with any violation of securities laws or
commodities laws;
(iv) any
order, judgment or decree, not subsequently reversed, suspended or
vacated, of any authority barring, suspending or otherwise limiting
for more than sixty (60) days the right of any such person to
engage in any activity described in the preceding sub paragraph, or
to be associated with persons engaged in any such
activity;
(v) a finding by a
court of competent jurisdiction in a civil action or by the SEC or
other authority to have violated any securities law, regulation or
decree and the judgment in such civil action or finding by the
Securities and Exchange Commission or any other authority has not
been subsequently reversed, suspended or vacated; or
(vi) a
finding by a court of competent jurisdiction in a civil action or
by the Commodity Futures Trading Commission to have violated any
federal commodities law, and the judgment in such civil action or
finding has not been subsequently reversed, suspended or
vacated.
2.27 No
Other Representations and Warranties. Except for the
representations and warranties contained in this ARTICLE II and elsewhere in
this Agreement, none of the Company, its directors, officers and
employees, the holders of Company Common Stock, Phantom Stock or
any other person has made or makes any other express or implied
representation or warranty, either written or oral, on behalf of
the Company or the holders of Company Common Stock or Phantom Stock
including any representation or warranty as to the accuracy or
completeness of any information regarding the Company furnished or
made available to NBEV in management presentations or in any other
form in expectation of the transactions contemplated hereby, or as
to the future revenue, profitability or success of the
Company.
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ARTICLE III
ARTICLE
IV REPRESENTATIONS AND WARRANTIES OF NBEV AND MERGER
SUB
NBEV
and Merger Sub jointly and severally represent and warrant to the
Company, as of the date hereof and as of the Closing Date as though
made at the Closing Date, as follows:
4.1 Organization and Qualification;
Subsidiaries. Each of NBEV and its subsidiaries is a
corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to own, lease and operate
its assets and properties and to carry on its business as it is now
being conducted. Each of NBEV and its subsidiaries is in possession
of all Approvals necessary to own, lease and operate the properties
it purports to own, operate or lease and to carry on its business
as it is now being conducted, except where the failure to have such
Approvals would not, individually or in the aggregate, have a
Material Adverse Effect on NBEV. Each of NBEV and its subsidiaries
is duly qualified or licensed as a foreign corporation to do
business, and is in good standing, in each jurisdiction where the
character of the properties owned, leased or operated by it or the
nature of its activities makes such qualification or licensing
necessary, except for such failures to be so duly qualified or
licensed and in good standing that would not, either individually
or in the aggregate, have a Material Adverse Effect on
NBEV.
4.2 Certificate of Incorporation and
Bylaws. NBEV has previously furnished to the Company a
complete and correct copy of its Certificate of Incorporation and
Bylaws as amended to date. Such Certificate of Incorporation,
Bylaws and equivalent organizational documents of each of its
subsidiaries are in full force and effect. Neither NBEV nor any of
its subsidiaries is in violation of any of the provisions of its
Certificate of Incorporation or Bylaws or equivalent organizational
documents.
4.3 Capitalization. The
authorized capital stock of NBEV consists of (i) One Hundred
Million (100,000,000) shares of NBEV Common Stock and
(ii) Fifty Thousand (50,000) shares of Preferred Stock, par
value $0.001 per share (“NBEV Preferred Stock”).
At the close of business November 29, 2018 (i) 72,835,862
shares of NBEV Common Stock were issued and outstanding, all of
which are validly issued, fully paid and nonassessable, (ii)
no shares of NBEV Common Stock were held in treasury by NBEV or by
subsidiaries of NBEV, (iii) no shares of Preferred Stock were
issued and outstanding (iv) no shares of NBEV Common Stock were
reserved for issuance upon exercise of outstanding warrants; and
(v) 1,112,314 shares of NBEV Common Stock were reserved for
future issuance pursuant to NBEV’s 2016-2017 Long-term
Incentive Plan, (iv) 1,382,450 shares of NBEV Common Stock
were reserved for issuance upon the exercise of outstanding options
(“NBEV
Options”) to purchase NBEV Common Stock. The
authorized capital stock of Merger Sub consists of 1,000 shares of
common stock, par value $0.0001 per share, all of which, as of the
date hereof, are issued and outstanding. All of the outstanding
shares of NBEV’s and Merger Sub’s respective capital
stock have been duly authorized and validly issued and are fully
paid and nonassessable. All shares of NBEV Common Stock to be
issued pursuant to the Merger will be, duly authorized, validly
issued, fully paid and nonassessable. All outstanding shares of
NBEV Common Stock have been issued and granted in compliance with
(i) all applicable securities laws and other applicable federal,
state, local, municipal, foreign or other law, statute,
constitution, principle of common law, resolution, ordinance, code,
edict, decree, rule, regulation, ruling or requirement issued,
enacted, adopted, promulgated, implemented or otherwise put into
effect by or under the authority of any Governmental Entity (as
defined below) and (ii) all requirements set forth in
applicable contracts, agreements, and instruments.
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4.4 Authority Relative to this
Agreement. Each of NBEV and Merger Sub has all
necessary corporate power and authority to execute and deliver this
Agreement, and to perform its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement by NBEV and Merger Sub
and the consummation by NBEV and Merger Sub of the transactions
contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of NBEV
and Merger Sub and no other corporate proceedings on the part of
NBEV or Merger Sub are necessary to authorize this Agreement, or to
consummate the transactions so contemplated. This Agreement have
been duly and validly executed and delivered by NBEV and Merger Sub
and, assuming the due authorization, execution and delivery by
Company, constitute legal and binding obligations of NBEV and
Merger Sub, enforceable against NBEV and Merger Sub in accordance
with their respective terms.
4.5 No Conflict; Required Filings and
Consents.
(a) The execution and
delivery of this Agreement by NBEV and Merger Sub do not, and the
performance of this Agreement by NBEV and Merger Sub shall not
(i) conflict with or violate the Certificate of Incorporation,
Bylaws or equivalent organizational documents of NBEV or any of its
subsidiaries, (ii) subject to obtaining the consents,
approvals, authorizations and permits and making the registrations,
filings and notifications, set forth in Section 3.5(b) hereof, conflict with or
violate any law, rule, regulation, order, judgment or decree
applicable to NBEV or any of its subsidiaries or by which it or
their respective properties are bound or affected, or
(iii) result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a
default) under, or impair NBEV’s or any such
subsidiary’s rights or alter the rights or obligations of any
third party under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or
assets of NBEV or any of its subsidiaries pursuant to, any material
note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to
which NBEV or any of its subsidiaries is a party or by which NBEV
or any of its subsidiaries or its or any of their respective
properties are bound or affected, except to the extent such
conflict, violation, breach, default, impairment or other effect
could not in the case of clauses (ii) or (iii) individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect on NBEV.
(b) The execution
and delivery of this Agreement by NBEV and Merger Sub do not, and
the performance of this Agreement by NBEV and Merger Sub shall not,
require any consent, approval, authorization or permit of, or
registration, filing with or notification to, any Governmental
Entity, except for (i) applicable requirements, if any, of
the Securities Act, the Securities Exchange Act of 1934, as amended
(the “Exchange
Act”), state securities laws (“Blue Sky Laws”), the
pre-merger notification requirements of the HSR Act and of foreign
governmental entities and the rules and regulations promulgated
thereunder, (ii) the rules and regulations of Nasdaq, (iii) the
filing and recordation of the Articles of Merger as required by the
Utah Law and (iv) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not prevent consummation of the Merger or
otherwise prevent NBEV or Sub from performing their respective
obligations under this Agreement or (B) could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse
Effect on NBEV.
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4.6 SEC Filings. NBEV has
made available to the Company a correct and complete copy of each
report, schedule, registration statement and definitive proxy
statement filed by NBEV with the SEC on or after January 1, 2017
and prior to the date of this Agreement (the “NBEV SEC Reports”), which
are all the forms, reports and documents required to be filed by
NBEV with the SEC since such date. NBEV SEC Reports (i) were
prepared in accordance with the requirements of the Securities Act
or the Exchange Act, as the case may be, and (ii) did not at
the time they were filed (or if amended or superseded by a filing
prior to the date of this Agreement then on the date of such
filing) contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they were made, not misleading. None of NBEV’s
subsidiaries is required to file any reports or other documents
with the SEC.
4.7 Sufficient Funds. NBEV
has available and will have available at the Closing the funds
necessary to consummate the Merger and the other transactions
described herein.
4.8 Litigation. As of the date
hereof, there is no action seeking to prohibit or materially delay
the transactions contemplated by this Agreement, including the
Merger, that is pending or, to the knowledge of NBEV, threatened
against NBEV or Merger Sub (and neither NBEV nor Merger Sub has
received notice of any such action).
4.9 No Reliance. Any other
provision of this Agreement notwithstanding, NBEV and Merger Sub
each acknowledge and agree that (a) neither the Company nor any
person on behalf of the Company is making any representations or
warranties whatsoever, express or implied, beyond those expressly
made by the Company in this Agreement and (b) NBEV and Merger Sub
have not been induced by, or relied upon, any representations,
warranties or statements (written or oral), whether express or
implied, made by any person, that are not expressly set forth in
this Agreement. Without limiting the generality of the foregoing,
NBEV and Merger Sub each acknowledge that no representations or
warranties are made with respect to any projections, forecasts,
estimates or budgets with respect to the Company and its
subsidiaries that may have been made available to NBEV, Merger Sub
or any of their representatives. NBEV acknowledges that it has
conducted and completed its own investigation, analysis and
evaluation of the Company and its subsidiaries, that it has made
all such reviews and inspections of the financial condition,
business, results of operations, properties, assets and prospects
of the Company and the subsidiaries of the Company as it has deemed
appropriate, that it has had the opportunity to request all
information it has deemed relevant to the foregoing from the
Company and has received responses it deems adequate and sufficient
to all such requests for information, and that, without limiting
the representations, covenants and other terms and conditions in
this Agreement, in making its decision to enter into this Agreement
and to consummate the transactions contemplated hereby and thereby
it has relied solely on its own investigation, analysis and
evaluation of the Company. NBEV acknowledges that, as of the
date hereof, it and its representatives (a) have received
access to (i) books and records, facilities, equipment,
contracts and other assets of the Company that NBEV and its
representatives have requested to review and (ii) the
electronic data room hosted by or on behalf of the Company in
connection with the transactions contemplated hereby, and
(b) have had opportunity to meet with the management of the
Company and to discuss the business and assets of the
Company.
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ARTICLE V
CONDUCT PRIOR TO THE EFFECTIVE TIME
5.1 Conduct of Business by the
Company.
(a) Except as permitted
or required by the terms of this Agreement or as would not
reasonably be expected, individually or in the aggregate, to result
in a Material Adverse Effect, during the period commencing with the
execution and delivery of this Agreement and continuing until the
earlier to occur of the termination of this Agreement pursuant to
its terms or the Effective Time, the Company and each of its
subsidiaries shall, except to the extent that NBEV shall otherwise
consent in writing (which consent shall not be unreasonably
withheld, delayed or conditioned), carry on its business, in the
usual, regular and ordinary course, in substantially the same
manner as heretofore conducted and in material compliance with all
applicable laws and regulations, pay its debts and taxes when due
subject to good faith disputes over such debts or taxes, pay or
perform other material obligations when due, and use its
commercially reasonable efforts consistent with past practices and
policies to (i) preserve intact its present business organization,
(ii) keep available the services of its present officers and
employees and (iii) preserve its relationships with customers,
suppliers, distributors, licensors, licensees, and others with
which it has business dealings. In addition, Company will promptly
notify NBEV of any material event involving its business or
operations that is outside of the ordinary course of
business.
(b) Except as permitted
or required by the terms of this Agreement, during the period
commencing with the execution and delivery of this Agreement and
continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, the Company shall not
do any of the following, and shall not permit any of its
subsidiaries to do any of the following, except to the extent that
NBEV shall otherwise consent in writing:
(i) waive any stock
repurchase rights, accelerate, amend or change the period of
exercisability of options or restricted stock, or reprice options
granted under any employee, consultant, director or other stock
plans or authorize cash payments in exchange for any options
granted under any of such plans;
(ii) grant
any severance or termination pay to any officer or employee except
as required by law or pursuant to written agreements outstanding,
or policies existing, on the date hereof and as previously
disclosed in writing or made available to NBEV, or adopt any new
severance plan, or amend or modify or alter in any respect any
severance plan, agreement or arrangement existing on the date
hereof, or grant any equity-based compensation, whether payable in
cash or stock;
(iii) transfer
or license to any person or entity, or otherwise extend, amend or
modify any rights to the Company Intellectual Property, or enter
into any agreements or make other commitments or arrangements to
grant, transfer or license to any person future patent rights other
than non-exclusive licenses granted to end-users in the ordinary
course of business and consistent with past practice;
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(iv) except
for S corporation distributions contemplated by and previously
agreed to in this Agreement or in writing by the parties to be made
to the Company’s stockholders and phantom stock holders,
declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock, equity securities or
property) in respect of, any capital stock of the Company or any of
its subsidiaries, or split, combine or reclassify any such capital
stock, or issue or authorize the issuance of any other securities
in respect of, in lieu of or in substitution for any such capital
stock;
(v) except as otherwise
contemplated or required hereby, purchase, redeem or otherwise
acquire, directly or indirectly, any shares of capital stock of the
Company or any of its subsidiaries, except repurchases of unvested
shares at cost in connection with the termination of the employment
relationship with any employee pursuant to stock option or purchase
agreements in effect on the date hereof;
(vi) issue,
deliver, sell, authorize, pledge or otherwise encumber (or propose
any of the foregoing with respect to) any shares of capital stock
of the Company or of any subsidiaries of the Company or any
securities convertible into, or exercisable or exchangeable for,
shares of such capital stock, or any subscriptions, rights,
warrants or options to acquire any shares of such capital stock, or
enter into other agreements or commitments of any kind or character
obligating the Company or any of its subsidiaries to issue any
shares of such capital stock or securities convertible, or
exercisable or exchangeable for, shares of such capital
stock;
(vii) cause,
permit or propose any amendments to its Articles of Incorporation,
Bylaws or other charter documents (or similar governing instruments
of any of its subsidiaries);
(viii) acquire
or agree to acquire by merging or consolidating with, or by
purchasing any equity interest in or a portion of the assets
of, or by any other manner, any business or any corporation,
limited liability company, general or limited partnership, business
trust, unincorporated association or other business organization,
entity or division thereof, or otherwise acquire or agree to
acquire all or substantially all of the assets of any of the
foregoing, or enter into any joint ventures, strategic partnerships
or similar alliances;
(ix) except
as otherwise contemplated by this Agreement or as previously agreed
to by the parties to occur prior to or concurrent with the Closing,
sell, lease, license, encumber or otherwise dispose of any
properties or assets, except sales of inventory in the ordinary
course of business consistent with past practice, and except for
the sale, lease or disposition (other than through licensing) of
property or assets which are not material, individually or in the
aggregate, to the business of Company and its
subsidiaries;
(x) incur any
indebtedness for borrowed money or guarantee any such indebtedness
of another person, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of
the Company, enter into any “keep well” or other
agreement to maintain any financial statement condition or enter
into any arrangement having the economic effect of any of the
foregoing, other than in the ordinary course of business and
consistent with past practice;
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(xi) adopt
or amend any employee benefit plan, policy or arrangement, or
employee stock purchase or stock option plan, or enter into any
employment contract or collective bargaining agreement (other than
offer letters and letter agreements entered into, in the ordinary
course of business and consistent with past practice, with newly
hired employees who are terminable “at will” and who
are not officers of the Company), pay any new special bonus (other
than bonuses previously agreed to by the Company or for which
payment amounts have been accrued) or special remuneration to any
director or employee, or materially increase the salaries or wage
rates or fringe benefits (including rights to severance or
indemnification) of its directors, officers, employees or
consultants;
(xii) (A)
pay, discharge, settle or satisfy any claims, liabilities or
obligations (whether absolute or contingent, asserted or
unasserted, accrued or unaccrued, or otherwise) or litigation
(whether or not commenced prior to the date of this Agreement),
other than the payment, discharge, settlement or satisfaction, in
the ordinary course of business consistent with past practice or in
accordance with their terms as in existence as of the date hereof
or (B) waive the benefits of, agree to modify in any manner,
terminate, release any person from or knowingly fail to enforce any
confidentiality or similar agreement to which the Company or any of
its subsidiaries is a party or of which the Company or any of its
subsidiaries is a beneficiary;
(xiii) make
any individual or series of related payments outside of the
ordinary course of business in excess of $100,000 other than in
connection with this Agreement; and, make any individual or series
of related payments outside of the ordinary course of business
other than in connection with this Agreement (including payments to
legal, accounting or other professional service advisors) in excess
of $500,000 in the aggregate.
(xiv) except
in the ordinary course of business, modify, amend or terminate any
material contract or agreement to which the Company or any of its
subsidiaries is a party, or waive, delay the exercise of, release
or assign any material rights or claims thereunder;
(xv) except
in the ordinary course of business, enter into, renew or modify any
contracts, agreements or obligations relating to the distribution,
sale, license or marketing by third parties of the products of the
Company or any of its subsidiaries, or products licensed by the
Company or any of its subsidiaries;
(xvi) except
as permitted or required by GAAP, revalue any assets of the Company
or any of its subsidiaries, or make any change in accounting
methods, principles or practices;
(xvii) incur
or enter into any agreement, contract or other commitment or
arrangement requiring the Company or any of its subsidiaries to
make payments in excess of $500,000 in any individual case, or
$2,000,000 in the aggregate, except purchases of inventory and
funding of future scheduled distributor events, incentives and
commissions in the ordinary course of business;
(xviii) engage
in any action with the intent to, directly or indirectly, adversely
impact or materially delay the consummation of the Merger or any of
the other transactions contemplated by this Agreement;
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(xix) make any Tax election that is
reasonably likely to adversely affect in any material respect the
Tax liabilities or Tax attributes of the Company or any of its
subsidiaries, or settle or compromise any material income Tax
liability, or consent to any extension or waiver of any limitations
period with respect to Taxes, except as necessary in the ordinary
course of business; or
(xx) agree
in writing or otherwise to take any of the actions described in
Section
4.1(b)(i) through
Section
4.1(b)(xix),
inclusive.
(c) Nothing in this
Agreement shall give NBEV, directly or indirectly, the right to
control or direct the Company’s or its subsidiaries’
operations prior to the Effective Time. Prior to the Effective
Time, each of NBEV and the Company shall exercise, consistent with
the terms and conditions of this Agreement, complete control and
supervision over its and its subsidiaries respective businesses,
assets and operations and continue to conduct its operations
consistent with past practices.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Consent or Meeting of Company
Stockholders.
(a) Promptly after
the date hereof, the Company shall take all action necessary in
accordance with Utah Law and its Articles of Incorporation and
Bylaws to convene a meeting of the stockholders of the Company (the
“Company
Stockholders’ Meeting”) to be held as promptly
as practicable, and in any event (to the extent permissible under
Utah Law and the Articles of Incorporation and Bylaws of the
Company) within twenty (20) calendar days following the date
hereof, for the purpose of voting upon this Agreement and the
Merger. The Company shall use its reasonable best efforts to
solicit from its stockholders proxies in favor of the adoption and
approval of this Agreement and the approval of the Merger, and
shall take all other action necessary or advisable to secure the
vote or consent of its stockholders required by Utah Law to obtain
such approvals. The Company may adjourn or postpone the Company
Stockholders’ Meeting (i) if and to the extent necessary to
ensure that any necessary supplement or amendment to its proxy
statement is provided to the Company’s stockholders in
advance of a vote on this Agreement and the Merger, or (ii) if, as
of the time for which the Company Stockholders’ Meeting is
originally scheduled (as set forth in the Company’s proxy
statement), there are insufficient shares of Company Common Stock
represented (either in person or by proxy) to constitute a quorum
necessary to conduct the business of the Company
Stockholders’ Meeting. The Company shall ensure that the
Company Stockholders’ Meeting is called, noticed, convened,
held and conducted, and that all proxies solicited by the Company
in connection with the Company Stockholders’ Meeting are
solicited, in compliance with Utah Law, and the Articles of
Incorporation and Bylaws of the Company, and all other applicable
legal requirements. Notwithstanding anything to the contrary
contained in this Agreement, the Company’s obligation to
call, give notice of, convene and hold the Company
Stockholders’ Meeting in accordance with this Section 5.1(a) shall not be limited to
or otherwise affected by the commencement, disclosure, announcement
or submission to the Company of any Acquisition Proposal (as
defined below), or by any withholding, withdrawal, amendment,
modification or change of the recommendation of the Board of
Directors of the Company with respect to this Agreement and/or the
Merger. Notwithstanding anything to the contrary in the foregoing,
the Company may, in its sole discretion, seek to obtain a written
consent of the Company’s stockholders to approve this
Agreement in lieu of holding the Company Stockholders’
Meeting.
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(b) (i) Subject to its
obligations under applicable law, the Board of Directors of the
Company shall recommend that the Company’s stockholders vote
in favor of and adopt and approve this Agreement and approve the
Merger at the Company Stockholders’ Meeting; (ii) the
proxy statement shall include a statement to the effect that the
Board of Directors of the Company has recommended that the
Company’s stockholders vote in favor of and adopt and approve
this Agreement and approve the Merger at the Company
Stockholders’ Meeting; and (iii) neither the Board of
Directors of the Company nor any committee thereof shall withhold,
withdraw, amend, modify, change or propose or resolve to withhold,
withdraw, amend, modify or change in a manner adverse to NBEV, the
recommendation of the Board of Directors of the Company that the
Company’s stockholders vote in favor of and adopt and approve
this Agreement and approve the Merger.
6.2 Access to Information.
During the period commencing with the execution and delivery of
this Agreement until the earlier to occur of the termination of
this Agreement pursuant to its terms or the Effective Time, the
Company shall afford NBEV and its accountants, counsel and other
representatives reasonable access during normal business hours upon
reasonable advance notice to the Company to the properties, books,
records and personnel of the Company to obtain all information
concerning the business of the Company, including, without
limitation, the status of the Company’s product development
efforts, properties, results of operations and personnel, as NBEV
may reasonably request. Notwithstanding anything to the contrary
contained in this Section 5.2, any document,
correspondence or information or other access provided pursuant to
this Section
5.2 may be redacted
or otherwise limited to prevent disclosure of information
concerning the valuation of the Company or the Merger or other
confidential, privileged or competitively sensitive information;
provided that the Company
and NBEV shall reasonably cooperate to minimize such restrictions
and permit such access and the furnishing of such documents,
correspondence or information in a manner to remove the basis for
the objection, including by compliance with the procedures set
forth in the Confidentiality Agreement between NBEV and the
Company, dated June 7, 2018 (the “Confidentiality
Agreement”). All access pursuant to this Section 5.2 shall be (i) conducted in
such a manner as not to interfere unreasonably with the normal
operations of the Company or any of its subsidiaries and (ii)
coordinated through the general counsel of the Company or a
designee thereof. NBEV and its representatives shall not otherwise
initiate communications with any employees of the Company or its
Affiliates regarding this Agreement or the transactions
contemplated hereby without the prior written consent of the
Company, which shall not be unreasonably withheld, conditioned or
delayed. No direct or indirect contact shall be made by NBEV with
any of the Company distributors without the advance written consent
of the Company. No information or knowledge obtained by NBEV during
the course of any investigation conducted pursuant to this
Section 5.2 shall affect, or be deemed
to modify in any respect any representation or warranty contained
herein or the conditions to the obligations of the parties to
consummate the Merger contained herein.
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6.3 No
Solicitation.
(a) During the
period commencing with the execution and delivery of this Agreement
until the earlier to occur of the termination of this Agreement
pursuant to its terms and the Effective Time, the Company and its
subsidiaries shall not, nor will they authorize or permit any of
their respective officers, directors, Affiliates or employees or
any investment banker, attorney or other advisor or representative
retained by any of them to, directly or indirectly,
(i) solicit, initiate, encourage or induce the making,
submission or announcement of any Acquisition Proposal (as defined
in Section
5.3(b) hereof),
(ii) participate in any discussions or negotiations regarding,
or furnish to any person any non-public information with respect
to, or knowingly take any other action to facilitate any inquiries
or the making of any proposal that constitutes or may reasonably be
expected to lead to, any Acquisition Proposal, (iii) engage in
discussions or negotiations with any person with respect to any
Acquisition Proposal, except as to the existence of these
provisions, (iv) approve, endorse or recommend any Acquisition
Proposal, or (v) enter into any letter of intent or similar
document or any contract agreement or commitment contemplating or
otherwise relating to any Acquisition Transaction.
(b) For all
purposes of and under this Agreement, the term “Acquisition Proposal”
shall mean any offer or proposal (other than an offer or proposal
by NBEV) relating to any Acquisition Transaction. For all purposes
of and under this Agreement, the term “Acquisition Transaction”
shall mean any transaction or series of related transactions, other
than the transactions contemplated by this Agreement, involving (i)
any acquisition or purchase from the Company by any person or
“group” (as defined under Section 13(d) of the Exchange
Act and the rules and regulations promulgated thereunder) of more
than a five percent (5%) interest in the total outstanding voting
securities of the Company or any of its subsidiaries, or any tender
offer or exchange offer that if consummated would result in any
person or “group” (as defined under Section 13(d) of
the Exchange Act and the rules and regulations thereunder)
beneficially owning twenty percent (20%) or more of the total
outstanding voting securities of the Company or any of its
subsidiaries, or any merger, consolidation, business combination or
similar transaction involving the Company pursuant to which the
stockholders of the Company immediately preceding such transaction
would hold less than ninety five percent (95%) of the equity
interests in the surviving or resulting entity of such transaction;
(ii) except as previously agreed to in writing by the parties to
this Agreement, any sale, lease (other than in the ordinary course
of business), exchange, transfer, license (other than in the
ordinary course of business), acquisition or disposition of more
than five percent (5%) of the assets of the Company; or (iii) any
liquidation or dissolution of the Company.
(c) In addition to the
obligations of the Company set forth in Section 5.3(a) hereof, the Company
shall advise NBEV, as promptly as practicable, and in any event
within twenty-four (24) hours, orally and in writing, of (i) any
request for information which the Company reasonably believes could
lead to an Acquisition Proposal or, (ii) any Acquisition Proposal,
or (iii) any inquiry with respect to or which the Company
reasonably should believe could lead to any Acquisition Proposal,
and (iv) material terms and conditions of any such request,
Acquisition Proposal or inquiry, including the identity of the
person or group making such request. The Company shall keep NBEV
informed in all material respects of the status and details
(including material amendments or proposed amendments) of any such
request, Acquisition Proposal or inquiry.
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6.4 Public Disclosure. NBEV
and the Company shall consult with each other and agree, before
issuing any press release or otherwise making any public statement
with respect to this Agreement, the Merger or an Acquisition
Proposal, and shall not issue any such press release or make any
such public statement prior to such consultation and agreement,
except as may be required by applicable law or any listing
agreement with a national securities exchange or Nasdaq in which
case NBEV will notify the Company in advance and work with the
Company in determining related press releases and public
statements. The parties hereto have agreed to the text of the joint
press release announcing the signing of this
Agreement.
6.5 Reasonable Efforts;
Notification.
(a) Upon the terms and
subject to the conditions set forth in this Agreement, each of the
parties hereto shall use its commercially reasonable best efforts
to take, or cause to be taken, all actions, and to do, or cause to
be done, and to assist and cooperate with the other parties hereto
in doing, all things necessary, proper or advisable to consummate
and make effective, in the most expeditious manner reasonably
practicable, the Merger and the other transactions contemplated by
this Agreement, including, without limitation, using reasonable
efforts to accomplish the following: (i) the taking of all
reasonable actions necessary to cause the conditions precedent set
forth in ARTICLE VI
hereof to be satisfied, (ii) the obtaining of all necessary
actions or nonactions, waivers, consents, approvals, orders and
authorizations from Governmental Entities, and the making of all
necessary registrations, declarations and filings (including
registrations, declarations and filings with Governmental Entities,
if any), and the taking of all reasonable steps as may be necessary
to avoid any suit, claim, action, investigation or proceeding by
any Governmental Entity, (iii) the obtaining of all necessary
consents, approvals or waivers from third parties which may be
required or desirable as a result of, or in connection with, the
transactions contemplated by this Agreement, (iv) the defending of
any suits, claims, actions, investigations or proceedings, whether
judicial or administrative, challenging this Agreement or the
consummation of the transactions contemplated hereby, including,
without limitation, seeking to have any stay or temporary
restraining order entered by any court or other Governmental Entity
vacated or reversed, and (v) the execution or delivery of any
additional certificates, instruments and other documents necessary
to consummate the transactions contemplated by, and to fully carry
out the purposes of, this Agreement. In connection with and without
limiting the foregoing, the Company and its Board of Directors
shall, if any state takeover statute or similar statute or
regulation is or becomes applicable to the Merger, this Agreement
or any of the transactions contemplated by this Agreement, use all
commercially reasonable efforts to ensure that the Merger and the
other transactions contemplated by this Agreement may be
consummated as promptly as practicable on the terms contemplated by
this Agreement and otherwise to minimize the effect of such statute
or regulation on the Merger, this Agreement and the transactions
contemplated hereby. Notwithstanding anything to the contrary in
this Agreement, nothing in this Agreement shall be deemed to
require NBEV or the Company or any subsidiary or Affiliate thereof
to agree to any divestiture by itself or any of its Affiliates of
shares of capital stock or of any business, assets or property, or
the imposition of any material limitation on the ability of any of
them to conduct their businesses or to own or exercise control of
such assets, properties and stock.
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(b) The Company shall
give prompt notice to NBEV upon becoming aware that any
representation or warranty made by the Company in this Agreement
has become materially untrue or inaccurate (unless such
representation or warranty is already qualified by materiality,
then if such represent or warranty has become untrue or inaccurate
in all respects), or that the Company has failed to comply with or
satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this
Agreement, in each case, such that the conditions set forth in
Section
6.3(a) or
Section
6.3(b) hereof would
not be satisfied, provided,
however, that no such notification shall affect the
representations, warranties, covenants or agreements of the
Company, or the conditions to the obligations of the parties under
this Agreement.
(c) NBEV shall give
prompt notice to the Company upon becoming aware that any
representation or warranty made by NBEV or Merger Sub in this
Agreement has become materially untrue or inaccurate (unless such
representation or warranty is already qualified by materiality,
then if such represent or warranty has become untrue or inaccurate
in all respects), or that NBEV or Merger Sub has failed to comply
with or satisfy in any material respect any covenant, condition or
agreement to be complied with or satisfied by it under this
Agreement, in each case, such that the conditions set forth in
Section
6.2(a) or
Section
6.2(b) hereof would
not be satisfied, provided,
however, that no such notification shall affect the
representations, warranties, covenants or agreements of NBEV or
Merger Sub, or the conditions to the obligations of the parties
under this Agreement.
6.6 Third Party Consents. As
soon as practicable following the date hereof, NBEV and the Company
shall each use its respective commercially reasonable efforts to
obtain any consents, waivers and approvals under any of its or its
subsidiaries’ respective agreements, contracts, licenses or
leases required to be obtained in connection with the consummation
of the transactions contemplated hereby.
6.7 Company Stock Options.
The Company does not have any stock option plans or vested or
unvested stock options outstanding to purchase shares of Company
Common Stock and will not adopt any new plan or issue any options
between the date of this Agreement and Closing.
(a) From and for a
period of not less than six (6) years after the Effective Time,
NBEV shall cause the Surviving Corporation to fulfill and honor in
all respects the obligations of the Company under any
indemnification agreements between the Company and any of its
directors, officers and employees as in effect on the date hereof
(the “Indemnified
Parties”) and any indemnification provisions under the
Company’s Articles of Incorporation or Bylaws as in effect on
the date hereof. The Articles of Incorporation and Bylaws of the
Surviving Corporation shall contain provisions with respect to
exculpation and indemnification that are at least as favorable to
the Indemnified Parties as those contained in the Articles of
Incorporation and Bylaws of the Company as in effect on the date
hereof, which provisions shall not be amended, repealed or
otherwise modified for a period of six (6) years following the
Effective Time in any manner that would adversely affect the rights
thereunder of individuals who, immediately prior to the Effective
Time, were directors, officers, employees or agents of the Company,
unless such modification is required by applicable
law.
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(b) NBEV shall provide
or cause the Surviving Company to provide, for a period of not less
than six years after the Effective Time, the Indemnified Parties
who are insured under the Company’s directors’ and
officers’ insurance and indemnification policy with an
insurance and indemnification policy that provides coverage for
events occurring at or prior to the Effective Time (the
“D&O
Insurance”) that is no less favorable than the policy
of the Company in effect as of immediately prior to the Effective
Time; provided that NBEV and the Surviving Company shall not be
required to pay an annual premium for the D&O Insurance in
excess of 300% of the last annual premium paid prior to the date
hereof by the Company for such insurance; provided, further, that
if the annual premiums of such insurance coverage at any time
exceed such amount, NBEV or the Surviving Company shall obtain a
policy which, in its good faith determination, provides the
greatest coverage available for a cost not exceeding such amount.
Notwithstanding anything in this Agreement to the contrary, the
Company may purchase a “tail” directors’ and
officers’ insurance and indemnification policy; provided,
that the Company shall not pay an amount in excess of 300% of the
last annual premium paid prior to the date hereof by the Company
for such “tail” policy. Any such “tail”
directors’ and officers’ insurance policy will satisfy
NBEV’s obligations to provide D&O Insurance. The
Indemnified Parties to whom Section 5.8(a) and Section 5.8(b) apply shall be
third-party beneficiaries of Section 5.8(a) and Section 5.8(b). The provisions of
Section
5.8(a) and
Section
5.8(b) are intended
to be for the benefit of each Indemnified Party and his or her
successors, heirs and representatives. Section 5.8(a) and Section 5.8(b) shall survive the
consummation of the Merger and shall be binding, jointly and
severally, on all successors and permitted assigns of NBEV, the
Surviving Company and its Subsidiaries, and shall be enforceable by
the Indemnified Parties and their successors, heirs or
representatives. In the event that NBEV, the Surviving Company or
any of their respective 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 or
transfers or conveys all or a majority of its properties and assets
to any person, then, and in each such case, proper provision shall
be made so that such other person or the successors and assigns of
NBEV or the Surviving Company, as the case may be, shall succeed to
its obligations set forth in this Section 5.8.
(c) Xxxxx Xxxx Xxxx and Xxxxxxx X.
Story, severally and not jointly in proportion to their Deemed
Indemnification Obligation (collectively, the “Stockholder Indemnifying
Parties”), agree to indemnify and hold harmless NBEV
and its officers, directors, agents, representatives, stockholders
and employees, and each person, if any, who controls or may control
NBEV within the meaning of the Securities Act or the Exchange Act
(each hereinafter referred to individually as an
“NBEV Indemnified
Person” and collectively as the “NBEV Indemnified
Persons”) from and against any and all losses, costs,
damages, liabilities, interest and expenses (including reasonable
attorneys’ fees, other professionals’ and
experts’ fees, costs of investigation and court costs
(hereinafter collectively referred to as “Damages”), directly or
indirectly arising out of, resulting from or in connection
with:
(i) ANY
FAILURE OF ANY REPRESENTATION OR WARRANTY MADE BY THE COMPANY IN
SECTION 2.3 OF THIS AGREEMENT, TO BE TRUE AND CORRECT AS OF THE
DATE OF THIS AGREEMENT OR AS OF THE CLOSING DATE (AS THOUGH SUCH
REPRESENTATION OR WARRANTY WERE MADE AS OF THE CLOSING DATE RATHER
THAN THE DATE OF THIS AGREEMENT). FOR THE AVOIDANCE OF DOUBT AND
EXCEPT AS SET FORTH IN THIS SECTION 5.8(C), NBEV SHALL NOT HAVE ANY
RECOURSE AGAINST THE COMPANY, ITS STOCKHOLDERS OR PHANTOM STOCK
HOLDER, OR DIRECTORS, OFFICERS OR EMPLOYEES WITH RESPECT TO ANY
LOSSES PURSUANT TO THIS AGREEMENT, UNLESS SUCH LOSSES ARE A DIRECT
RESULT OF FRAUD, AND SECTION 5.8(C) IS THE SOLE AND
EXCLUSIVE REMEDY AVAILABLE TO NBEV FOR THE BREACH OF ANY
REPRESENTATIONS OR WARRANTIES OF THE COMPANY; AND
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(ii) ANY
PAYMENTS PAID WITH RESPECT TO DISSENTING STOCK THAT ARE IN EXCESS OF WHAT SUCH HOLDERS WOULD
HAVE RECEIVED HEREUNDER HAD SUCH HOLDERS NOT BEEN HOLDERS OF
DISSENTING STOCK.
FOR
PURPOSES OF THIS AGREEMENT, “FRAUD” SHALL MEAN AS TO
ANY PERSON, A CLAIM FOR FRAUD BASED ON A REPRESENTATION OR WARRANTY
CONTAINED IN THIS AGREEMENT MADE BY SUCH PERSON WITH THE INTENT TO
INDUCE ANOTHER PERSON TO ACT OR REFRAIN FROM ACTION, AND WHERE (A)
SUCH REPRESENTATION OR WARRANTY WAS INACCURATE, (B) SUCH FIRST
PERSON HAD KNOWLEDGE OF THE INACCURACY OF SUCH REPRESENTATION OR
WARRANTY OR MADE SUCH REPRESENTATION OR WARRANTY WITH RECKLESS
DISREGARD OR INDIFFERENCE AS TO THE ACCURACY OF SUCH
REPRESENTATION, AND (C) THE OTHER PERSON ACTED OR FAILED TO ACT IN
RELIANCE ON SUCH INACCURATE REPRESENTATION OR WARRANTY AND SUFFERED
LOSSES AS A RESULT OF SUCH RELIANCE.
FOR
PURPOSES OF THIS AGREEMENT, “DEEMED INDEMNIFICATION
OBLIGATION” SHALL MEAN WITH RESPECT TO XXXXX XXXX
XXXX, 78.5% OF ANY INDEMNIFIED DAMAGES, AND WITH RESPECT TO XXXXXXX
X. STORY, 11.5% OF ANY INDEMNIFIED DAMAGES.
6.9 Nasdaq
Listing And Securities Restrictions. NBEV shall take
all action necessary to cause the shares of NBEV Common Stock
issuable, and those required to be reserved for issuance, in
connection with the Merger, to be authorized for listing on Nasdaq,
at or prior to the Closing Date, upon official notice of issuance,
and shall take all action necessary to cause the NBEV Stock issued
in the Merger to be freely tradeable pursuant to Rule 144 of the
Securities Act of 1933, as amended, upon the six-month anniversary
of the Effective Time, provided the Sellers have delivered all
documents required for them to sell pursuant to Rule 144. In
furtherance of the foregoing, NBEV will take all reasonable actions
to be current in its reporting obligations with the Securities and
Exchange Commission.
6.10 Financing.
NBEV shall take, or cause to be taken, all actions and do, or cause
to be done, all things necessary, advisable or proper, in each
case, to maintain funds sufficient to fund the Merger Consideration
on the Closing Date and to cover any payments required to be paid
as set forth in the NBEV Preferred Stock.
6.11 Regulatory
Filings; Reasonable Efforts. As soon as may be
reasonably practicable, the Company and NBEV each shall file with
the United States Federal Trade Commission (the “FTC”) and the Antitrust
Division of the United States Department of Justice
(“DOJ”)
Notification and Report Forms relating to the transactions
contemplated hereby as required by the HSR Act, as well as
comparable pre-merger notification forms required by the merger
notification or control laws and regulations of any applicable
jurisdiction, as agreed to by the parties hereto. The Company and
NBEV each shall promptly (i) supply the other with any information
which may be required in order to effectuate such filings, and (ii)
supply any additional information which reasonably may be required
by the FTC, the DOJ or the competition or merger control
authorities of any other jurisdiction and which the parties hereto
may reasonably deem appropriate; provided, however, that NBEV shall not
be required to agree to any divestiture by NBEV or the Company or
any of NBEV’s subsidiaries or affiliates of shares of capital
stock or of any business, assets or property of NBEV, the Company
or any NBEV’s subsidiaries or affiliates, or the imposition
of any material limitations on the ability of any of the foregoing
to conduct their respective businesses or to own or exercise
control of such assets, properties and capital stock. All HSR
filing fees shall be borne by NBEV.
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ARTICLE VII
7.1 Conditions to Obligations of Each
Party to Effect the Merger. The respective obligations
of each party to this Agreement to effect the Merger shall be
subject to the satisfaction or fulfillment, at or prior to the
Closing Date, of the following conditions:
(a) Company Stockholder Approval.
This Agreement shall have been duly approved and adopted, and the
Merger shall have been duly approved, by the requisite vote under
Utah Law, by the stockholders of the Company.
(b) No Order; HSR Act. No
Governmental Entity shall have enacted, issued, promulgated,
enforced or entered any statute, rule, regulation, executive order,
decree, injunction or other order (whether temporary, preliminary
or permanent) which is in effect and which has the effect of making
the Merger illegal or otherwise prohibiting consummation of the
Merger. All waiting periods, if any, under the HSR Act relating to
the transactions contemplated hereby will have expired or
terminated early and all material foreign antitrust approvals
required to be obtained prior to the Merger in connection with the
transactions contemplated hereby shall have been
obtained.
7.2 Additional Conditions to Obligations
of the Company. The obligation of the Company to
consummate and effect the Merger shall be subject to the
satisfaction or fulfillment, at or prior to the Closing Date, of
each of the following conditions, any of which may be waived, in
writing, exclusively by the Company:
(a) Representations and Warranties.
Each representation and warranty of NBEV and Merger Sub contained
in this Agreement shall be true and correct in all respects
(without giving effect to any qualifications as to materiality or
Material Adverse Effect) on and as of the Closing Date with the
same force and effect as if made on the Closing Date, except
(A) in each case, or in the aggregate, as does not constitute
a Material Adverse Effect on NBEV and Merger Sub, (B) for
changes contemplated by this Agreement, and (C) for those
representations and warranties which address matters only as of a
particular date (which representations shall have been true and
correct (subject to the Material Adverse Effect qualifications as
set forth in the preceding clause (A)) as of such particular date).
The Company shall have received a certificate with respect to the
foregoing signed on behalf of NBEV by duly authorized officer
thereof.
(b) Agreements and Covenants. NBEV
and Merger Sub shall have performed or complied in all material
respects with all agreements and covenants required by this
Agreement to be performed or complied with by them on or prior to
the Closing Date, and the Company shall have received a certificate
to such effect signed on behalf of NBEV by a duly authorized
officer thereof.
(c) Nasdaq Listing. The shares of
NBEV Common Stock issuable to the stockholders of the Company in
connection with the Merger pursuant to this Agreement, and such
other shares required to be reserved for issuance in connection
with the Merger, shall have been authorized for listing on the
Nasdaq, upon official notice of issuance
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(d) Retirement and Transition Services
Agreement. NBEV shall have delivered an executed Retirement
and Transition Services Agreement with Xxxxx X. Xxxx and Xxxxxxx X.
Story, in a form substantially similar to the form delivered to
NBEV.
7.3 Additional Conditions to the
Obligations of NBEV and Merger Sub. The obligations of
NBEV and Merger Sub to consummate and effect the Merger shall be
subject to the satisfaction or fulfillment, at or prior to the
Closing Date, of each of the following conditions, any of which may
be waived, in writing, exclusively by NBEV:
(a) Representations and Warranties.
Each representation and warranty of the Company contained in this
Agreement shall be true and correct in all respects (without giving
effect to any qualifications as to materiality or Material Adverse
Effect) on and as of the Closing Date with the same force and
effect as if made on and as of the Closing Date, except (A) in
each case, or in the aggregate, as does not constitute a Material
Adverse Effect on the Company; (B) for changes contemplated by
this Agreement, and (C) for those representations and
warranties that address matters only as of a particular date (which
representations shall have been true and correct (subject to the
Material Adverse Effect qualifications and limitations set forth in
the preceding clause (A)) as of such particular date). NBEV shall
have received a certificate with respect to the foregoing signed on
behalf of Company by a duly authorized officer
thereof.
(b) Agreements and Covenants. The
Company shall have performed or complied in all material respects
with all agreements and covenants required by this Agreement to be
performed or complied with by it at or prior to the Closing Date,
and NBEV shall have received a certificate to such effect signed on
behalf of Company by a duly authorized officer
thereof.
(c) Material Adverse Effect. No
Material Adverse Effect with respect to the Company and its
subsidiaries shall have occurred since the date of this
Agreement.
(d) Non-Competition Agreements. The
persons set forth on Exhibit B-2 hereto shall have
entered into a Non-Competition Agreement with NBEV, in the form
attached hereto as Exhibit
B-1, and each such agreement shall be in full force and
effect.
(e) Consents. The Company shall
have obtained the consents, waivers and approvals required to be
obtained in connection with the consummation of the transactions
contemplated hereby.
(f) Working Capital. As of the
Closing Date, the Company shall have a minimum Working Capital
balance no less than the Working Capital Minimum as set forth in
Section
1.10 and the
Company shall have delivered evidence of compliance with
Section
1.10 certified by
the Company’s Chief Financial Officer.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination. This
Agreement may be terminated at any time prior to the Effective
Time, whether before or after the requisite approval of the
stockholders of the Company has been obtained in respect of this
Agreement and the Merger:
(a) by mutual written
consent of NBEV and the Company, duly authorized by the respective
Boards of Directors of NBEV and the Company;
(b) by either NBEV
or the Company if the Merger shall not have been consummated by the
later of (i) February 28, 2019, and (ii) the date on which the
parties have either received HSR Approval permitting the
transactions contemplated hereby or their filing under the HSR Act
has been denied (the “Drop Dead Date”);
provided, however, that the
right to terminate this Agreement under this Section 7.1(b) shall not be available
to any party whose action or failure to act has been a principal
cause of or resulted in the failure of the Merger to occur on or
before such date, and such action or failure to act constitutes a
breach of this Agreement; provided
further that this Section 7.1(b) shall be subject to the
provisions set forth in Section 8.7.
(c) by either NBEV or
the Company if a Governmental Entity shall have issued an
order, decree or ruling or taken any other action, in any case
having the effect of permanently restraining, enjoining or
otherwise prohibiting the Merger, which order, decree, ruling or
other action is final and nonappealable;
(d) by either NBEV
or the Company if the requisite approval of the stockholders of the
Company contemplated by this Agreement shall not have been obtained
by reason of the failure to obtain the requisite vote at a meeting
of the stockholders of the Company, duly convened therefor or at
any adjournment or postponement thereof; provided, however, that the right to
terminate this Agreement under this Section 7.1(d) shall not be available
to the Company in the event that the failure to obtain the
requisite approval of the stockholders of the Company shall have
been caused by the action or failure to act of the Company, and
such action or failure to act constitutes a breach of this
Agreement;
(e) by NBEV if a
Triggering Event (as defined below) shall have
occurred;
(f) by the Company,
upon a breach of any representation, warranty, covenant or
agreement on the part of NBEV set forth in this Agreement, or if
any representation or warranty of NBEV shall have become untrue, in
either case such that the conditions set forth in Section 6.2(a) or Section 6.2(b) hereof would not be
satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue; provided, however, that if such
inaccuracy in NBEV’s representations and warranties or breach
by NBEV is curable by NBEV through the exercise of its commercially
reasonable efforts, then the Company may not terminate this
Agreement under this Section 7.1(f) following the delivery
of written notice from the Company to NBEV of such breach, provided
NBEV continues to exercise commercially reasonable efforts to cure
such breach (it being understood that the Company may not terminate
this Agreement pursuant to this Section 7.1(f) if such breach by NBEV
is cured prior to the Drop Dead Date);
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(g) by NBEV, upon a
breach of any representation, warranty, covenant or agreement on
the part of the Company set forth in this Agreement, or if any
representation or warranty of Company shall have become untrue, in
either case such that the conditions set forth in Section 6.3(a) or Section 6.3(b) hereof would not be
satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue; provided, however, that if such
inaccuracy in the Company’s representations and warranties or
breach by the Company is curable by the Company through the
exercise of its commercially reasonable efforts, then NBEV may not
terminate this Agreement under this Section 7.1(g) following the delivery
of written notice from NBEV to the Company of such breach, provided
the Company continues to exercise commercially reasonable efforts
to cure such breach (it being understood that NBEV may not
terminate this Agreement pursuant to this Section 7.1(g) if such breach by the
Company is cured prior to the Drop Dead Date); or
(h) by NBEV if a
Material Adverse Effect with respect to the Company or its
subsidiaries shall have occurred since the date of this Agreement;
provided, however, that if
such Material Adverse Effect with respect to the Company or its
subsidiaries is curable by the Company through the exercise of its
commercially reasonable efforts, then NBEV may not terminate this
Agreement under this Section 7.1(h) following the occurrence
of such Material Adverse Effect, provided the Company continues to
exercise commercially reasonable efforts to cure such Material
Adverse Effect (it being understood that NBEV may not terminate
this Agreement pursuant to this Section 7.1(h) if such Material Adverse
Effect is cured prior to the Drop Dead Date).
For the
purposes of this Agreement, a “Triggering Event” shall
be deemed to have occurred if (i) the Board of Directors of
the Company or any committee thereof shall for any reason have
withdrawn or shall have amended or modified in a manner adverse to
NBEV its recommendation in favor of the adoption and approval of
the Agreement or the approval of the Merger; (ii) the Company
shall have failed to include in its proxy statement the
recommendation of the Board of Directors of the Company in favor of
the adoption and approval of the Agreement and the approval of the
Merger; (iii) the Board of Directors of the Company shall have
failed to reaffirm its recommendation in favor of the adoption and
approval of the Agreement and the approval of the Merger within
five (5) business days after NBEV requests in writing that such
recommendation be reaffirmed at any time following the announcement
of an Acquisition Proposal; (iv) the Board of Directors of the
Company or any committee thereof shall have approved or recommended
any Acquisition Proposal; (v) the Company shall have entered
into any letter of intent or similar document or any agreement,
contract or commitment accepting any Acquisition Proposal; or (vi)
the Company shall have breached any of the terms of Section 5.3 hereof.
8.2 Notice of Termination; Effect of
Termination. Any termination of this Agreement
pursuant to Section 7.1 hereof shall be effective
immediately upon the delivery of written notice of the terminating
party to the other party or parties hereto. In the event of the
termination of this Agreement pursuant to Section 7.1 hereof, this Agreement
shall be of no further force or effect, except (i) as set
forth in this Section 7.2, and as set forth in
Section 7.3 and ARTICLE VIII (General
Provisions) hereof, each of which shall survive the termination of
this Agreement, and (ii) nothing herein shall relieve any party
hereto from any liability for any willful breach of this Agreement.
No termination of this Agreement shall affect the obligations of
the parties hereto contained in the Confidentiality Agreement, all
of which obligations shall survive termination of this Agreement in
accordance with their terms.
8.3 Fees and Expenses. All
fees and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party
incurring such fees and expenses, whether or not the Merger is
consummated.
8.4 Amendment. Subject to
applicable law, this Agreement may be amended by the parties hereto
at any time by execution of an instrument in writing, signed on
behalf of each of the parties hereto by a duly authorized officer
thereof.
8.5 Extension; Waiver. At any
time prior to the Effective Time, any party hereto may, to the
extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the
representations and warranties made to such party contained herein
or in any document delivered pursuant hereto, and (iii) waive
compliance with any of the agreements or conditions for the benefit
of such party contained herein. 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. Any delay in exercising any right under this Agreement shall
not constitute a waiver of such right.
ARTICLE IX
9.1 Non-Survival of Representations and
Warranties. The representations and warranties of the
Company, NBEV and Merger Sub contained in this Agreement shall
terminate at the Effective Time, and only the covenants that by
their terms survive the Effective Time shall survive the Effective
Time; provided that the
representations and warranties of the Company in Section 2.3 shall survive for the
applicable statute of limitations. For the avoidance of doubt,
after Closing neither party shall be entitled to initiate or
continue any action, claim or litigation relating to any
representation, warranty or covenant that did not survive the
Closing and each party waives all rights in respect thereof, it
being understood that this limitation constitutes the expression of
the parties’ desire to reduce the statute of limitations with
respect to any such claim or litigation, provided the foregoing
shall in no way limit NBEV’s rights under Section 5.8(c)
hereof.
9.2 Notices. All notices and
other communications hereunder shall be in writing and shall be
deemed given if delivered personally or by commercial delivery
service, or sent via telecopy (receipt confirmed) to the parties at
the following addresses or telecopy numbers (or at such other
address or telecopy numbers for a party as shall be specified by
like notice):
(a) if to NBEV, Merger
Sub or the Company (following the Effective Time), to:
New Age
Beverages Corporation
0000 X.
00xx
Xxxxxx
Xxxxxx,
XX 00000
Attention: Chief
Executive Officer
Telephone No.:
(000) 000-0000
Telecopy
No.:
-46-
with a
copy to:
Sichenzia Xxxx
Xxxxxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx
Xxxx, XX 00000
Attention: Xxxxxxx
Xxxxxxxxx
Telephone No.:
(000) 000-0000
Telecopy No.: (000)
000-0000
and
to:
(b) if to the Company
(prior to the Effective Time), to:
Morinda
Holdings, Inc.
Attention: Xxxxxxx
Xxxx and Xxxx Xxxxx
000
Xxxx 0000 Xxxxx
Xxxxxxxx Xxxx, XX
00000
Telephone No.:
(000) 000-0000
Telecopy No.: (000)
000-0000
with a
copy to:
Xxxxxx
& Whitney LLP
000 X.
Xxxx Xxxxxx, Xxxxx 0000
Xxxx
Xxxx Xxxx, Xxxx 00000
Attention: Xxxxx
Xxxxxx and Xxxxx Xxxx
Telephone No.:
(000) 000-0000
Telecopy No.: (000)
000-0000
9.3 Interpretation;
Knowledge.
(a) When a reference is
made in this Agreement to Exhibits, such reference shall be to an
Exhibit to this Agreement unless otherwise indicated. When a
reference is made in this Agreement to Sections, such reference
shall be to a Section of this Agreement. Unless otherwise indicated
the words “include,” “includes” and
“including” when used herein shall be deemed in each
case to be followed by the words “without limitation.”
The table of contents and headings contained in this Agreement are
for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. When reference is made
herein to “the business of” an entity, such reference
shall be deemed to include the business of all direct and indirect
subsidiaries of such entity. Reference to the subsidiaries of an
entity shall be deemed to include all direct and indirect
subsidiaries of such entity. When reference is made to “as
contemplated by and previously agreed to by the parties” or
any similar reference, such reference refers to preparatory and
transitional restructuring of Company operations that will take
place immediately prior to or concurrent with Closing, as discussed
and agreed to between the CEOs of NBEV and the
Company.
(b) For purposes of
this Agreement the term “knowledge” means with
respect to a party hereto, with respect to any matter in question,
that any of the executive officers of such party has actual
knowledge of such matter.
-47-
(c) For purposes of
this Agreement, the term “Material Adverse Effect”
when used in connection with an entity means any change, event,
occurrence, development, circumstance or effect that is materially
adverse to the business, assets (including intangible assets),
capitalization, financial condition or results of operations of
such entity and its subsidiaries taken as a whole, provided, that no such change, event,
occurrence, development circumstance or effect resulting or arising
from or in connection with any of the following matters shall be
deemed by itself or by themselves, either alone or in combination,
to constitute or contribute to a Material Adverse Effect: (i) any
changes or developments in domestic or any foreign or global market
or domestic, foreign or global economic conditions generally or in
the geographic markets in which the Company or any of its
subsidiaries operate or its products or services are sold,
including (A) any changes or developments in or affecting the
domestic or any foreign securities, equity, credit, commodities or
financial markets or (B) any changes or developments in or
affecting domestic or any foreign interest or exchange rates, (ii)
changes in GAAP or any official interpretation or enforcement
thereof by a Governmental Entity after the date of this Agreement,
(iii) changes in law or any changes or developments in the
interpretation or enforcement thereof by governmental entities (in
each case after the date of this Agreement), (iv) changes in
domestic, foreign or global political conditions (including the
outbreak or escalation of war, military actions, or acts of actual
or purported terrorism), including any worsening of such conditions
threatened or existing on the date of this Agreement, (v) changes
or developments in the business or regulatory conditions or trends
affecting the industries, markets or geographies in which the
Company or any of its subsidiaries operate, (vi) the announcement
or the existence of, compliance with or performance under, this
Agreement or the transactions contemplated hereby, (vii) weather
conditions or other acts of God (including storms, earthquakes,
tornados, floods or other natural disasters), outbreaks of disease,
health epidemics or similar events, (viii) the failure to meet any
projections, guidance, budgets, forecasts or estimates (provided
that the underlying causes thereof, to the extent not otherwise
excluded by this definition, may be deemed to contribute to a
Material Adverse Effect), and (ix) any action taken or omitted to
be taken by the Company or any of its subsidiaries at the written
request of NBEV or that is required by this Agreement; except, with
respect to clauses (i), (ii), (iii), (iv), (v) and (vii), to the
extent that such impact is materially and disproportionately
adverse to the Company and its subsidiaries, taken as a whole,
relative to others in the industries, markets or geographies in
which the Company and its subsidiaries operate.
(d) For purposes of
this Agreement, the term “person” shall mean any
individual, corporation (including any non-profit corporation),
general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any
limited liability company or joint stock company), firm or other
enterprise, association, organization, entity or Governmental
Entity.
9.4 Counterparts. This
Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood
that all parties need not sign the same counterpart.
-48-
9.5 Entire Agreement; Third Party
Beneficiaries. This Agreement and the documents
and instruments and other agreements among the parties hereto
as contemplated by or referred to herein, including any agreements
by the parties made in connection herewith and any agreements by
the parties that are preparatory and transitional actions
(i) constitute the entire agreements among the parties with
respect to the subject matter hereof and supersede all prior
agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof, it being
understood that the Confidentiality Agreement shall continue in
full force and effect until the Closing and shall survive any
termination of this Agreement; and (ii) are not intended to
confer upon any other person any rights or remedies hereunder,
except as specifically provided in Section 5.8 hereof.
9.6 Severability. In the
event that any provision of this Agreement or the application
thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the
application of such provision to other persons or circumstances
will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible,
the economic, business and other purposes of such void or
unenforceable provision.
9.7 Other Remedies; Specific
Performance. Except as otherwise provided herein, any
and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy
conferred hereby, or by law or equity upon such party, and the
exercise by a party of any one remedy will not preclude the
exercise of any other remedy. The parties hereto agree that
irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly
agreed that the parties shall be entitled to seek an injunction or
injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the
United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or
in equity. Notwithstanding anything to the contrary in this
Agreement, if prior to the Termination Date any party initiates a
legal action to prevent breaches or threatened breaches of this
Agreement and to enforce specifically the terms and provisions of
this Agreement, then the Drop Dead Date will be automatically
extended by (i) the amount of time during which such legal action
is pending, plus twenty (20) business days, or (ii) such other time
period established by the court presiding over such legal
action.
9.8 Governing Law. Except to
the extent mandatorily governed by Utah Law, this Agreement shall
be governed by and construed in accordance with the laws of the
State of Colorado irrespective of any conflict of laws principles.
The parties hereby agree that any action or proceeding with respect
to this Agreement (and any action or proceeding with respect to any
amendments or replacements hereof or transactions relating hereto)
may be brought only in a federal or state court located in Denver,
State of Colorado and having jurisdiction with respect to such
action or proceeding. Each of the parties hereto irrevocably
consents and submits to the jurisdiction of such
courts.
9.9 Rules of Construction.
The parties hereto agree that they have been represented by counsel
during the negotiation and execution of this Agreement and,
therefore, waive the application of any law, regulation, holding or
rule of construction providing that ambiguities in an agreement or
other document will be construed against the party drafting such
agreement or document.
-49-
9.10 Assignment.
No party may assign either this Agreement or any of its rights,
interests, or obligations hereunder without the prior written
approval of the other parties. Subject to the preceding sentence,
this Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and permitted
assigns.
9.11 WAIVER
OF JURY TRIAL. EACH OF NBEV, THE COMPANY AND MERGER
SUB HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT
OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
ACTIONS OF NBEV, THE COMPANY OR MERGER SUB IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
[Remainder
of Page Intentionally Left Blank]
-50-
NEW
AGE BEVERAGES CORPORATION
By:
Name:
Xxxxx Xxxxxx
Title:
Chief Executive Officer
NEW
AGE HEALTH SCIENCES HOLDINGS, INC.
By:
Name:
Xxxxx Xxxxxx
Title:
Chief Executive Officer
MORINDA
HOLDINGS, INC.
By:
Name:Xxxxx X.
Xxxx
Title:
Chief Executive Officer and President
The
undersigned Stockholder Representative joins solely for purposes of
Section
1.10 and
Section
1.11.
STOCKHOLDER
REPRESENTATIVE
By:
Name:
Xxxxx X. Xxxx
Title:
Stockholder Representative
The
undersigned Stockholder Indemnifying Parties join solely for
purposes of Section
5.8(c).
STOCKHOLDER
INDEMNIFYING PARTIES
Xxxxx
X. Xxxx
Xxxxxxx
X. Story
EXHIBIT A
CERTIFICATE OF DESIGNATIONS
ARTICLES
OF AMENDMENT
OF
NEW
AGE BEVERAGES CORPORATION
Pursuant
to RCW 23B.06.020, the undersigned corporation adopts the following
Articles of Amendment to its Articles of Incorporation, as
amended:
FIRST:
The name of the Corporation is New Age Beverages Corporation (the
“Corporation”)
SECOND:
Article IV of the Articles of Incorporation, as amended, of the
Corporation is amended to add the following section G creating a
class of Series D Convertible Preferred Stock, the text of which is
attached hereto as Exhibit A.
THIRD:
The foregoing amendment was duly adopted by the Board of Directors
of the Corporation on November 30, 2018, in accordance with the
provisions of RCW 23B.06.020. Shareholder approval was not
required.
Dated
[___], 2018
|
|
NEW AGE
BEVERAGES CORPORATION
By: /s/
Xxxxx
Xxxxxx
Xxxxx
Xxxxxx
Chief
Executive Officer
|
-53-
Exhibit A
Section 1. Designation, Amount and Par
Value. The series of preferred stock shall be designated as
its Series D Convertible Preferred Stock (the “Preferred Stock”) and the
number of shares so designated shall be [___] (which shall not be
subject to increase without the written consent of holders of a
majority in interest of the Preferred Stock then outstanding (each,
a “Holder” and collectively,
the “Holders”)). Each share of
Preferred Stock shall have a par value of $0.001 per share and a
stated value equal to $0.001 (the “Stated
Value”).
Section 2. Definitions. For the purposes
hereof, the following terms shall have the following meanings.
Capitalized terms not otherwise defined herein shall have the
meanings ascribed to them in the Merger Agreement.
"Adjusted
EBITDA" means the net income before interest, income
taxes, depreciation and amortization of the Surviving Corporation
for the Calculation Period, determined in accordance with GAAP but
applied and calculated in a manner consistent with the EBITDA
calculation derived from the 2017 Audited Financial Statements for
the Surviving Corporation, adjusted to exclude non-cash share based
compensation, other income and other expenses,
“Affiliate” means any
Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed
under Rule 405 of the Securities Act.
“Business
Day” means any day except any Saturday, any Sunday,
any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are
authorized or required by law or other governmental action to
close.
"Calculation
Period" means January 1, 2019 to December 31,
2019.
“Common Stock” means the
Corporation’s common stock, par value $0.001 per share, and
stock of any other class of securities into which such securities
may hereafter be reclassified or changed.
“Dividend Payment”
means the dividend payable on the Dividend Payment
Date.
"Dividend
Multiple" means Five (5).
“Dividend
Payment Date” shall mean April 15, 2020.
"EBITDA
Threshold" means Twenty Million Dollars
($20,000,000).
“Holder” shall have the
meaning given such term in Section 1.
“Liquidation”
shall have the meaning set forth in Section 5.
“Maximum Milestone Dividend
Payment” means Fifteen Million ($15,000,000)
Dollars.
“Merger Agreement” shall
mean that Agreement and Plan of Merger dated as of December 2, 2018
by and between the Corporation, New Age Health Sciences Holdings,
Inc. and Morinda Holdings, Inc.
“Milestone Calculation
Date” shall mean March 31, 2020.
“Morinda Representative”
shall mean Xxxxx Xxxx Xxxx.
-54-
“Per Share Milestone Dividend
Payment” shall mean the quotient of (x) Fifteen
Million Dollars ($15,000,000) divided by (y) the number of shares
of Preferred Stock outstanding on the Dividend Payment
Date.
“Person” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.
“Preferred Stock” shall
have the meaning set forth in Section 1.
“Securities Act” means the
Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
“Stated Value” shall have
the meaning set forth in Section 1.
“Trading Day” means a day
on which the principal Trading Market is open for
business.
“Trading Market” means
the New York Stock
Exchange, the NYSE American, the Nasdaq Global Select Market, the
Nasdaq Global Market, the Nasdaq Capital Market or the OTCQB of the OTC Markets marketplace
(or any successors to any of the foregoing).
“Transfer Agent” means
ClearWater Trust, LLC, the current transfer agent of the
Corporation, with a mailing address of 0000 Xxxxxx Xxxxxxx Xx.,
Xxxxx 000, Xxxx, XX 00000, and any successor transfer agent of the
Corporation.
“VWAP” means, for any
security as of any date, the dollar volume-weighted average price
for such security on the Trading Market during the period beginning
at 9:30:01 a.m., New York time, and ending at 4:00:00 p.m., New
York time, as reported by Bloomberg through its “HP”
function set to “weighted average” or, if the foregoing
does not apply, the dollar volume-weighted average price of such
security in the .over-the-counter market on the electronic bulletin
board for such security during the period beginning at 9:30:01
a.m., New York time, and ending at 4:00:00 p.m., New York time, as
reported by Bloomberg, or, if no dollar volume-weighted average
price is reported for such security by Bloomberg for such hours,
the average of the highest closing bid price and the lowest closing
ask price of any of the market makers for such security as reported
in the “pink sheets” by OTC Markets Group Inc.
(formerly Pink Sheets LLC). If the VWAP cannot be calculated for
such security on such date on any of the foregoing bases, the VWAP
of such security on such date shall be the fair market value as
mutually determined by the Corporation and such Holder. All such
determinations shall be appropriately adjusted for any stock
dividend, stock split, stock combination or other similar
transaction during such period.
Section 3. Dividends. (a) Annual Dividend. For as long as
any Preferred Stock remains outstanding, the Preferred Stock shall
receive an aggregate annual dividend (the “Annual Dividend”) equal
to 1.5% of the Maximum Milestone Dividend Payment on a pro rata
basis on the outstanding shares of Preferred Stock, payable
quarterly on March 31, June 30, September 30 and December 31 of
each year (the “Annual Dividend Date”),
with the first dividend payable for the period commencing on the
Closing Date.
(b) Milestone
Dividend. The holders of shares of the Preferred Stock shall
be entitled to receive a dividend (the “Milestone Dividend”)
equal to the Per Share Milestone Dividend Payment, as adjusted
pursuant to the terms herein, for each share of Preferred Stock
held on the Dividend Payment Date, payable on the Dividend Payment
Date, subject and pursuant to the terms below.
-55-
(c)
Within ten (10) days of the Milestone Calculation Date, the Chief
Financial Officer shall prepare and deliver to the Morinda
Representative a statement setting forth the Adjusted EBITDA of the
Surviving Corporation, on a stand-alone basis (the
“Dividend
Calculation Statement”), setting forth in reasonable
detail its determination of Adjusted EBITDA for the Calculation
Period and its calculation of the resulting Dividend Payment (the
“Dividend
Calculation”). The Morinda Representative shall have
ten (10) days after receipt of the Dividend Calculation Statement
(the "Review
Period") to review the Dividend Calculation Statement and
the Dividend Calculation set forth therein. During the Review
Period, the Morinda Representative shall have the right to inspect
the Corporation's books and records during normal business hours at
the Corporation's offices, upon reasonable prior notice and solely
for purposes reasonably related to the determinations of Adjusted
EBITDA and the resulting Dividend Payment. Prior to the expiration
of the Review Period, the Morinda Representative may object to the
Dividend Calculation set forth in the Dividend Calculation
Statement for the applicable Calculation Period by delivering a
written notice of objection (a "Dividend
Calculation Objection Notice") to the Corporation. Any
Dividend Calculation Objection Notice shall specify the items in
the applicable Dividend Calculation disputed by the Morinda
Representative and shall describe in reasonable detail the basis
for such objection, as well as the amount in dispute. If the
Morinda Representative fails to deliver a Dividend Calculation
Objection Notice to the Corporation prior to the expiration of the
Review Period, then the Dividend Calculation set forth in the
Dividend Calculation Statement shall be final and binding on the
parties hereto. If the Morinda Representative timely delivers a
Dividend Calculation Objection Notice, Corporation and the Morinda
Representative shall negotiate in good faith to resolve the
disputed items and agree upon the resulting amount of the Adjusted
EBITDA and the Dividend Payment for the Calculation Period. If the
Corporation and the Morinda Representative are unable to reach
agreement within ten (10) days after such an Dividend Calculation
Objection Notice has been given, all unresolved disputed items
shall be promptly referred to an impartial nationally recognized
firm of independent certified public accountants, other than the
Morinda Representative's Accountants or Corporation's Accountants,
appointed by mutual agreement of the Corporation and the Morinda
Representative (the "Independent
Accountant"). The Independent Accountant shall be directed
to render a written report on the unresolved disputed items with
respect to the applicable Dividend Calculation as promptly as
practicable, but in no event greater than fifteen (15) days after
such submission to the Independent Accountant, and to resolve only
those unresolved disputed items set forth in the Dividend
Calculation Objection Notice. If unresolved disputed items are
submitted to the Independent Accountant, the Corporation and the
Morinda Representative shall each furnish to the Independent
Accountant such work papers, schedules and other documents and
information relating to the unresolved disputed items as the
Independent Accountant may reasonably request. The Independent
Accountant shall resolve the disputed items based solely on the
applicable definitions and other terms in this Agreement and the
presentations by the Corporation and the Morinda Representative,
and not by independent review. The resolution of the dispute and
the calculation of Adjusted EBITDA that is the subject of the
applicable Dividend Calculation Objection Notice by the Independent
Accountant shall be final and binding on the parties hereto. The
fees and expenses of the Independent Accountant shall be borne by
the Morinda Representative and Corporation in proportion to the
amounts by which their respective calculations of Adjusted EBITDA
differ from Adjusted EBITDA as finally determined by the
Independent Accountant.
(d) If
the Adjusted EBITDA for the Calculation Period of the Surviving
Corporation is at least the EBITDA Threshold then the Corporation
shall pay each Holder, on the Dividend Payment Date, an amount
equal to the Per Share Milestone Dividend Payment multiplied by the
number of shares owned by the Holder. If the Adjusted EBITDA of the
Surviving Corporation is less than the EBITDA Threshold, then the
Corporation shall pay each Holder on the Dividend Payment Date, an
adjusted Per Share Milestone Dividend Payment equal
to:
E - [(B-A) x (C)]
D
A=Actual Adjusted
EBITDA for the Calculation Period
B=EBITDA
Threshold
-56-
C=Dividend
Multiple
D=Total
number of shares of Preferred Stock outstanding on the Dividend
Payment Date
E=Maximum Milestone
Dividend Payment
Notwithstanding
anything to the foregoing, in no event shall the Corporation be
required to pay more than the Maximum Milestone Dividend Payment to
the holders of Preferred Stock, in the aggregate. If the Adjusted
EBITDA is less than the threshold and the calculation above equals
a negative number, then the Corporation will have no obligation to
pay any Dividend to any of the Holders.
(a) (e)
Post-closing Operation of
the Surviving Corporation. Subject to the terms of this
Certificate of Designations and the Merger Agreement, subsequent to
the Closing, the Corporation shall have sole discretion with regard
to all matters relating to the operation of the Surviving
Corporation; provided, that (1) the
Corporation shall use commercially reasonable efforts to market and
sell the Surviving Corporation’s products and to maximize the
Adjusted EBITDA, and (2) not, directly or indirectly, take, or fail
to take, in bad faith, any actions that would have the purpose of
avoiding or reducing Adjusted EBITDA. In addition, in the event of
a change in control of the Surviving Corporation or the Corporation
prior to the Dividend Payment Date, the Corporation will pay the
Holders the Maximum Milestone Dividend Payment upon the closing of
such change in control. For purposes of this section, a change in
control will be deemed to occur upon the consummation of a merger
or consolidation of the Corporation or the Surviving Corporation
with or into another entity, the sale of a majority of shares of
the Corporation or Surviving Corporation, or the sale, transfer or
other disposition of all or substantially all of the assets of the
Corporation or the Surviving Corporation.
(f) No
Security. The parties
hereto understand and agree that (i) the contingent rights to
receive any Dividend Payment shall not be represented by any form
of certificate or other instrument (other than the Preferred Stock
certificate), are transferable, and do not constitute an equity or
ownership interest in Corporation or the Surviving Corporation
(except for equity rights associated with the Preferred Stock),
(ii) no Holder shall have any rights as a securityholder of
Corporation or the Surviving Corporation as a result of its
contingent right to receive any Dividend Payment hereunder (except
for equity rights associated with the Preferred Stock), and (iii)
no interest is payable with respect to any Dividend Payment, except
interest at the rate of 3% shall be paid on any unpaid Dividend not
paid within 15 days after the due date.
(g) Payment
of Dividends. At the option of the Corporation, the
Corporation may pay all or any portion of any Milestone Dividends
and Annual Dividends on the Preferred Stock in shares of Common
Stock, with each share of Common Stock being valued for this
purpose as the VWAP of the Common Stock for the five trading days
immediately prior to the Dividend Payment Date or the Annual
Dividend Date, as applicable. In order to pay the dividends in
Common Stock, the Corporation must provide the Holders of the
Preferred Stock with at least 10 days’ notice, prior to the
Dividend Payment Date or the Annual Dividend Date, as applicable,
of its election to pay any dividend in shares of Common Stock (the
Corporation may indicate in such notice that the election contained
in such notice shall continue for later periods until revised by a
subsequent notice).If the Corporation elects to pay all or any
portion of any Milestone Dividends or Annual Dividends on the
Preferred Stock in shares of Common Stock, it will, prior to
issuance of such shares of Common Stock, cause a registration
statement on Form S-1 or Form S-3 under the Securities Act of 1933,
as amended, to be declared effective (and remain effective) by the
Securities and Exchange Commission covering the issuance or resale
of such shares of Common Stock such that upon receipt of such
shares of Common Stock, each Holder can sell such shares of Common
Stock without reliance upon Rule 144 or other exemption until such
time as such shares of Common Stock can be sold pursuant to Rule
144 without regard to volume limitations. In the event such
registration statement is not declared effective by the time of the
issuance of such shares of Common Stock, the Corporation will not
have the option to pay such portion of any Milestone Dividends or
Annual Dividends on the Preferred Stock in shares of Common Stock
and instead will pay such portion of any Milestone Dividends or
Annual Dividends in cash.
-57-
(h) Issuance
Restrictions. If the Corporation has not obtained the
approval of its shareholders in accordance with NASDAQ Listing Rule
5635(d), then the Corporation may not elect to issue as payment for
dividends pursuant to Section 3(g) herein, a number of shares of
Common Stock, which, when aggregated with any shares of Common
Stock issued or issuable pursuant to the Merger Agreement, would
exceed 19.99% of the shares of Common Stock issued and outstanding
as of the Closing Date, subject to adjustment for reverse and
forward stock splits, stock dividends, stock combinations and other
similar transactions of the Common Stock that occur after the date
of the Merger Agreement. In the event that the Corporation cannot
issue shares of Common Stock due to the limitations contained in
this Section 3(h), it will instead make such payments in
cash.
Section 4. Voting Rights. Except as
required by the laws of the State of Washington, Holders of
Preferred Stock shall not possess any voting rights.
Section 5. Liquidation. Subject to Section
3(e), upon the complete liquidation,
dissolution or winding-up of the Corporation pursuant to the
federal bankruptcy laws, whether voluntary or involuntary (a
“Liquidation”),
the Holders shall be entitled to receive out of the assets, whether
capital or surplus, an amount per share equal to the Stated Value,
which shall be paid before payment to all holders of Common Stock
but after payment to any other outstanding shares of any other
series of preferred stock. The Corporation shall mail written
notice of any such Liquidation, not less than 45 days prior to the
payment date stated therein, to each Holder.
Section
6. Termination.
At the close of business on the Dividend Payment Date, all shares
of Preferred Stock shall automatically terminate and return to the
authorized but unissued capital stock of the Corporation,
regardless of whether all or any portion of the Dividend Payment is
paid. Notwithstanding the foregoing, it is understood that a
Dividend Payment may be received by a Holder after the Dividend
Payment Date and the termination of the Preferred Stock shall not
terminate the Corporation’s obligations to pay the Dividend
Payment, if required pursuant to the terms
hereunder.
Section 7. Miscellaneous.
a)
Notices.
Any and all notices or other
communications or deliveries to be provided by the Holders
hereunder, shall be in writing and delivered personally, by
facsimile or email, or sent by a nationally recognized overnight
courier service, addressed to the Corporation, at its principal
offices Attention: Chief Financial Officer. Any and all notices or
other communications or deliveries to be provided by the
Corporation hereunder shall be in writing and delivered personally,
by facsimile or email, or sent by a nationally recognized overnight
courier service addressed to each Holder at the facsimile number,
email address or address of such Holder appearing on the books of
the Corporation. Any notice or other communication or deliveries
hereunder shall be deemed given and effective on the earliest of
(i) the date of transmission, if such notice or communication
is delivered via facsimile at the facsimile number or via email at
the email address set forth in this Section prior to 5:30
p.m. (New York City time) on any date, (ii) the next
Trading Day after the date of transmission, if such notice or
communication is delivered via facsimile at the facsimile number or
via email at the email address set forth in this Section on a
day that is not a Trading Day or later than 5:30 p.m. (New
York City time) on any Trading Day, (iii) the second Trading
Day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be
given.
b)
Absolute
Obligation. Except as expressly provided herein, no
provision of this Certificate of Designation shall alter or impair
the obligation of the Corporation, which is absolute and
unconditional, to pay liquidated damages and accrued dividends, as
applicable, on the shares of Preferred Stock at the time, place,
and rate, and in the coin or currency, herein
prescribed.
c)
Lost or Mutilated
Preferred Stock Certificate. If a Holder’s Preferred
Stock certificate shall be mutilated, lost, stolen or destroyed,
the Corporation shall execute and deliver, in exchange and
substitution for and upon cancellation of a mutilated certificate,
or in lieu of or in substitution for a lost, stolen or destroyed
certificate, a new certificate for the shares of Preferred Stock so
mutilated, lost, stolen or destroyed, but only upon receipt of
evidence of such loss, theft or destruction of such certificate,
and of the ownership hereof reasonably satisfactory to the
Corporation.
-58-
d)
Governing Law.
All questions concerning the
construction, validity, enforcement and interpretation of this
Certificate of Designation shall be governed by and construed and
enforced in accordance with the internal laws of the State of
Washington, without regard to the principles of conflict of laws
thereof. Each party agrees that all legal proceedings concerning
the interpretation, enforcement and defense of the transactions
contemplated hereby (whether brought against a party hereto or its
respective Affiliates, directors, officers, shareholders, employees
or agents) shall be commenced in the courts of the State of
Washington (the “Courts”).
The Corporation and each Holder hereby irrevocably submits to the
exclusive jurisdiction of the Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding,
any claim that it is not personally subject to the jurisdiction of
such Courts, or such Courts are improper or inconvenient venue for
such proceeding. The Corporation and each Holder hereby irrevocably
waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery
(with evidence of delivery) to such party at the address in effect
for notices to it under this Certificate of Designation and agrees
that such service shall constitute good and sufficient service of
process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any other
manner permitted by applicable law. The Corporation and each Holder
hereby irrevocably waives, to the fullest extent permitted by
applicable law, any and all right to trial by jury in any legal
proceeding arising out of or relating to this Certificate of
Designation or the transactions contemplated hereby. If any party
shall commence an action or proceeding to enforce any provisions of
this Certificate of Designation, then the prevailing party in such
action or proceeding shall be reimbursed by the other party for its
attorneys’ fees and other costs and expenses incurred in the
investigation, preparation and prosecution of such action or
proceeding.
e)
Waiver. Any waiver
by the Corporation or a Holder of a breach of any provision of this
Certificate of Designation shall not operate as or be construed to
be a waiver of any other breach of such provision or of any breach
of any other provision of this Certificate of Designation or a
waiver by any other Holders. The failure of the Corporation or a
Holder to insist upon strict adherence to any term of this
Certificate of Designation on one or more occasions shall not be
considered a waiver or deprive that party (or any other Holder) of
the right thereafter to insist upon strict adherence to that term
or any other term of this Certificate of Designation on any other
occasion. Any waiver by the Corporation or a Holder must be in
writing.
f)
Severability. If
any provision of this Certificate of Designation is invalid,
illegal or unenforceable, the balance of this Certificate of
Designation shall remain in effect, and if any provision is
inapplicable to any Person or circumstance, it shall nevertheless
remain applicable to all other Persons and circumstances. If it
shall be found that any interest or other amount deemed interest
due hereunder violates the applicable law governing usury, the
applicable rate of interest due hereunder shall automatically be
lowered to equal the maximum rate of interest permitted under
applicable law.
g)
Next Business Day.
Whenever any payment or other obligation hereunder shall be due on
a day other than a Business Day, such payment shall be made on the
next succeeding Business Day.
h)
Headings. The
headings contained herein are for convenience only, do not
constitute a part of this Certificate of Designation and shall not
be deemed to limit or affect any of the provisions
hereof.
i)
Status of Redeemed or
Reacquired Preferred Stock. If any shares of Preferred Stock
shall be redeemed or reacquired by the Corporation, such shares
shall resume the status of authorized but unissued shares of
preferred stock and shall no longer be designated as Series D
Convertible Preferred Stock.
-59-
EXHIBIT B-1
FORM OF NON-COMPETITION AGREEMENT
THIS
NON-COMPETITION AGREEMENT (this “Agreement”) is
being executed and delivered as of [●], 2018 by [●], an
individual residing in [●] (the “Subject
Party”), in favor of and for the benefit of
New Age Beverages
Corporation, a Washington corporation (“Parent”),
Morinda Holdings, Inc., a Utah corporation (the “Company”), and
each of Parent’s and the Company’s respective present
and future successors and direct and indirect Subsidiaries
(collectively with Parent and the Company, the “Covered
Parties”). Any capitalized term used, but not defined,
in this Agreement will have the meaning ascribed to such term in
the Merger Agreement (as defined below).
WHEREAS, on
December 2, 2018, Parent, the Company, and New Age Health Sciences
Holdings, Inc., a Utah corporation and wholly-owned subsidiary of
Parent (“Merger Sub”),
entered into a Plan of Merger (as amended from time to time in
accordance with the terms thereof, the “Merger
Agreement”), pursuant to which, among other things, on
the terms and subject to the conditions set forth therein, Merger
Sub will merge with and into the Company, with the Company
continuing as the surviving entity as a wholly-owned subsidiary of
Parent (the “Merger”), and
as a result of which all of the issued and outstanding capital
stock of the Company immediately prior to the consummation of the
Merger (the “Closing”) will
no longer be outstanding and will automatically be cancelled and
will cease to exist, in exchange for the Merger
Consideration;
-60-
1.
Restriction on Competition.
(a)
Restriction. The
Subject Party hereby agrees that during the period from the Closing
until the later of (i) the three year anniversary of the Closing
Date and (ii) the date on which the Subject Party is no longer a
director, officer, manager, employee or independent contractor of
any Covered Party (the “Termination
Date”, and such period from the Closing until the
later of clauses (i) and (ii), the “Restricted
Period”), the Subject Party will not, and will cause
any entity in which Subject Party has a controlling ownership
interest or management-level discretionary authority (each an
“Affiliate”) not to,
without the prior written consent of Parent (which may be withheld
in its sole discretion), anywhere in the United States of America,
People’s Republic of China, Japan, Tahiti or in any other
markets in which the Company is engaged in the Business as of the
Closing Date (the “Territory”),
directly or indirectly engage in the Business (other than through a
Covered Party) or own, manage, finance or control, or participate
in the ownership, management, financing or control of, or become
engaged or serve as an officer, director, member, partner,
employee, agent, consultant, advisor or representative of, a
business or entity (other than a Covered Party) that engages in the
Business (a “Competitor”).
Notwithstanding the foregoing, the Subject Party and his or her
Affiliates may own (i) passive investments of no more than five
percent (5%) of any class of outstanding equity interests in a
Competitor, so long as the Subject Party and his or her Affiliates
and immediate family members are not involved in the management or
control of such Competitor and (ii) businesses in which the Subject
Party currently has an interest (“Permitted
Ownership”).
(b)
Acknowledgment. The
Subject Party acknowledges and agrees, based upon the advice of
legal counsel and/or the Subject Party’s own education,
experience and training, that (i) the Subject Party possesses
knowledge of confidential information of the Company and the
Business, (ii) the Subject Party’s execution of this
Agreement is a material inducement to Parent to consummate the
Transactions and to realize the goodwill of the Company and its
Subsidiaries, for which the Subject Party and/or his or her
Affiliates will receive a substantial direct or indirect financial
benefit, and that Parent would not have entered into the Merger
Agreement or consummated the Transactions but for the Subject
Party’s agreements set forth in this Agreement; (iii) it
would impair the goodwill of the Company and its Subsidiaries and
reduce the value of the assets of the Company and its Subsidiaries
and cause serious and irreparable injury if the Subject Party were
to use his or her ability and knowledge by engaging in the Business
in competition with a Covered Party, and/or to otherwise breach the
obligations contained herein and that the Covered Parties would not
have an adequate remedy at law because of the unique nature of the
Business, (iv) the Subject Party and his or her controlled
Affiliates have no intention of engaging in the Business during the
Restricted Period other than through Permitted Ownership, (v) the
relevant public policy aspects of restrictive covenants, covenants
not to compete and non-solicitation provisions have been discussed,
and every effort has been made to limit the restrictions placed
upon the Subject Party to those that are reasonable and necessary
to protect the Covered Parties’ legitimate interests, (vi)
the Covered Parties conduct and intend to conduct the Business
everywhere in the Territory and compete with other businesses that
are or could be located in any part of the Territory, (vii) the
foregoing restrictions on competition are fair and reasonable in
type of prohibited activity, geographic area covered, scope and
duration, (viii) the consideration provided to the Subject Party
under this Agreement and the Merger Agreement is not illusory, and
(ix) such provisions do not impose a greater restraint than is
necessary to protect the goodwill or other business interests of
the Covered Parties.
-61-
2.
No Solicitation; No Disparagement.
(a)
No Solicitation of
Employees and Consultants. The Subject Party agrees that,
during the Restricted Period, the Subject Party and his or her
controlled Affiliates will not, without the prior written consent
of Parent (which may be withheld in its sole discretion), either on
its own behalf or on behalf of any other Person (other than, if
applicable, a Covered Party in the performance of the Subject
Party’s duties on behalf of the Covered Parties), directly or
indirectly: (i) hire or engage as an employee, independent
contractor, consultant or otherwise any Covered Personnel (as
defined below); (ii) solicit, induce, knowingly encourage or
otherwise knowingly cause (or attempt to do any of the foregoing)
any Covered Personnel to leave the service (whether as an employee,
consultant or independent contractor) of any Covered Party; or
(iii) in any way knowingly interfere with or knowingly attempt to
interfere with the relationship between any Covered Personnel and
any Covered Party; provided, however, the Subject Party will
not be deemed to have violated this Section 2(a) if (A) any Covered
Personnel voluntarily and independently solicits an offer of
employment from the Subject Party or his or her controlled
Affiliate (or other Person whom any of them is acting on behalf of)
without direct or indirect solicitation, inducement or
encouragement by the Subject Party or his or her controlled
Affiliates, or (B) the Subject Party or his or her controlled
Affiliates solicits (or employs as a result of such solicitation)
any Covered Personnel through general advertisements or
solicitation programs conducted by or on behalf of the Subject
Party or his or her controlled Affiliate (or such other Person whom
any of them is acting on behalf of) that are not specifically
targeted at such Covered Personnel or Covered Personnel generally.
For purposes of this Agreement, “Covered
Personnel” shall mean any Person who is or was an
employee of the Covered Parties as of the Closing Date or during
the period from the Closing Date to the Termination
Date.
(b)
Non-Solicitation of
Customers and Suppliers. The Subject Party agrees that,
during the Restricted Period, the Subject Party and his or her
controlled Affiliates will not, without the prior written consent
of Parent (which may be withheld in its sole discretion),
individually or on behalf of any other Person (other than, if
applicable, a Covered Party in the performance of the Subject
Party’s duties on behalf of the Covered Parties), directly or
indirectly: (i) solicit, induce, knowingly encourage or otherwise
knowingly cause (or attempt to do any of the foregoing) any Covered
Customer (as defined below) to (A) cease being, or not become, a
client or customer of any Covered Party with respect to the
Business or (B) reduce the amount of business of such Covered
Customer with any Covered Party, or otherwise alter such business
relationship in a manner adverse to any Covered Party, in either
case, with respect to or relating to the Business; (ii) knowingly
interfere with or disrupt (or knowingly attempt to interfere with
or disrupt) the contractual relationship between any Covered Party
and any Covered Customer; (iii) solicit for business, provide
services to, engage in or do business with, any Covered Customer
for products or services that are part of the Business; or (iv)
knowingly interfere with or disrupt (or knowingly attempt to
interfere with or disrupt), the contractual relationship between
any Covered Party and any Person that was a vendor, supplier,
distributor, agent or other service provider of the Company as of
the Closing, for a purpose competitive with a Covered Party as it
relates to the Business. For purposes of this Agreement, a
“Covered
Customer” shall mean any Person who is or was an
actual customer or client (or prospective customer or client with
whom the Company actively marketed or made or taken specific action
to make a proposal) of the Company as of the Closing Date or during
the period from the Closing Date to the Termination
Date.
-62-
(c)
Non-Disparagement.
The Subject Party agrees that from and after the Closing Date until
the end of the Restricted Period, the Subject Party and its
controlled Affiliates will not, directly or indirectly, publish
(including through electronic mail distribution or online social
media) any written or oral statements or remarks (including the
distribution of derogatory rumors, allegations, negative reports or
comments) that are disparaging, deleterious and damaging to the
integrity, reputation or good will of one or more Covered Parties
or their respective management, officers, employees, independent
contractors or consultants. Notwithstanding the foregoing, subject
to Section 3 below,
the provisions of this Section 2(c) shall not restrict
the Subject Party from providing truthful testimony or information
as required by Law, in any filing made with a Governmental
Authority or in response to a subpoena or investigation by a
Governmental Authority or in connection with any legal action
involving the Subject Party and any Covered Party.
3. Confidentiality. During the
Restricted Period, the Subject Party will, and will direct its
Representatives to, keep confidential and not (except, if
applicable, in the performance of the Subject Party’s duties
on behalf of the Covered Parties) directly or indirectly use,
disclose, reveal, publish, transfer or provide access to, any and
all Covered Party Information without the prior written consent of
Parent (which may be withheld in its sole discretion). As used in
this Agreement, “Covered Party
Information” means all proprietary material and
information relating to the business, affairs and assets of any
Covered Party, including material and information that concerns or
relates to such Covered Party’s bidding and proposal,
technical, computer hardware or software, administrative,
management, operational, data processing, financial, marketing,
sales, human resources, business development, planning and/or other
business activities, regardless of whether such material and
information is maintained in physical, electronic, or other form,
that is: (A) gathered, compiled, generated, produced or maintained
by such Covered Party through its Representatives, or provided to
such Covered Party by its suppliers, service providers or
customers; and (B) intended and maintained by such Covered Party or
its Representatives, suppliers, service providers or customers to
be kept in confidence. The obligations set forth in this
Section 3 will not
apply to any Covered Party Information that: (i) is known or
available through other lawful sources not known by the Subject
Party to be bound by a confidentiality agreement with, or other
confidentiality obligation to, any Covered Party; (ii) is or
becomes publicly known through no violation of this Agreement or
other non-disclosure obligation of the Subject Party or any of its
Representatives; (iii) is already in the possession of the Subject
Party at the time of disclosure, provided that such information is
not known to the Subject Party to be subject to another
confidentiality agreement or other confidentiality obligation; (iv)
is independently developed by or for the Subject Party or any of
its Representatives without derivation from, reference to or
reliance upon, or using in any manner, Covered Party Information or
his affiliation with Parent or the Company and without violating
any of the confidentiality obligations under this Agreement or (v)
is required to be disclosed by applicable law, regulation, stock
exchange rule or other market or reporting system, pursuant to an
order of any administrative body or court of competent
jurisdiction, or by other legal, judicial, regulatory or
administrative process (by oral questions, interrogatories,
requests for information or documents in legal proceedings,
subpoena, civil investigative demand or other similar process)
(provided that, with respect to this clause (v), (A) if reasonably
practical and permitted by applicable law and regulation, the
applicable Covered Party is given reasonable prior written notice,
(B) the Subject Party cooperates (and directs its Representatives
to cooperate), at the Covered Party’s sole cost and expense,
with any reasonable request of any Covered Party to seek to prevent
or narrow such disclosure and (C) if after compliance with clauses
(A) and (B) such disclosure is still required, the Subject Party
and its Representatives only disclose such portion of the Covered
Party Information that is expressly required by such order, as it
may be subsequently narrowed). Nothing in this Section 3 shall restrict the
Subject Party from disclosing any information required by law to
any tax authority, without the need to give notice to the Covered
Party. Notwithstanding any provision herein to the contrary,
Subject Party shall not be required to give notice to the Covered
Parties, and shall not be prohibited from disclosing Covered Party
Information, to the extent such requests or requirements originate
from a bank examiner or regulatory authority and occur in the
course of an examination or inspection of the business or
operations of Subject Party, and further provided that such request
or requirement is not specifically targeted at the
Company.
-63-
4. Representations and Warranties. The
Subject Party hereby represents and warrants, to and for the
benefit of the Covered Parties as of the date of this Agreement and
as of the Closing Date, that: (a) the Subject Party has full power
and capacity to execute and deliver, and to perform all of the
Subject Party’s obligations under, this Agreement; and (b)
neither the execution and delivery of this Agreement nor the
performance of the Subject Party’s obligations hereunder will
result directly or indirectly in a violation or breach of any
agreement or obligation by which the Subject Party is a party or
otherwise bound. By entering into this Agreement, the Subject Party
certifies and acknowledges that the Subject Party has carefully
read all of the provisions of this Agreement, and that the Subject
Party voluntarily and knowingly enters into this
Agreement.
5. Remedies. The covenants and
undertakings of the Subject Party contained in this Agreement
relate to matters which are of a special, unique and extraordinary
character and a violation of any of the terms of this Agreement may
cause irreparable injury to the Covered Parties, the amount of
which may be impossible to estimate or determine and which cannot
be adequately compensated. The Subject Party agrees that, in the
event of any breach or threatened breach by the Subject Party of
any covenant or obligation contained in this Agreement, each
applicable Covered Party will be entitled to seek (in addition to,
and not in lieu of, any other remedy at law or in equity or
pursuant to the Merger Agreement or the documents and agreements
contemplated thereby that may be available to the Covered Parties,
including monetary damages), an injunction, restraining order or
other equitable relief restraining or preventing such breach or
threatened breach, without the necessity of proving actual damages,
which the Subject Party expressly waives. The Subject Party hereby
acknowledges and agrees that in the event of any breach of this
Agreement, any value attributed or allocated to this Agreement (or
any other non-competition agreement with the Subject Party) under
or in connection with the Merger Agreement shall not be considered
a measure of, or a limit on, the damages of the Covered
Parties.
6. Survival of Obligations. The
expiration of the Restricted Period will not relieve the Subject
Party of any obligation or liability arising from any breach by the
Subject Party of this Agreement during the Restricted Period. Each
Subject Party further agrees that the time period during which the
covenants contained in Section 1 and Section 2 of this Agreement
will be effective will be computed by excluding from such
computation any time during which the Subject Party is in violation
of any provision of such Sections.
7. Miscellaneous.
(a)
Notices. Except to
the extent expressly set forth herein, all notices and
communications hereunder shall be in writing and shall be deemed to
be given if (a) delivered personally, (b) sent by facsimile or
email (with affirmative confirmation of receipt), (c) sent by
recognized overnight courier that issues a receipt or other
confirmation of delivery or (d) sent by registered or certified
mail, return receipt requested, postage prepaid to the parties as
follows:
-64-
New Age
Beverages Corporation
0000 X.
00xx Xxxxxx
Xxxxxx,
XX 00000
Attention: Chief
Executive Officer
Telephone No.:
(000) 000-0000
Telecopy
No.:
with a
copy to:
Sichenzia Xxxx
Xxxxxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx
Xxxx, XX 00000
Attention: Xxxxxxx
Xxxxxxxxx
Telephone No.:
(000) 000-0000
Telecopy No.: (000)
000-0000
Notices to the Subject Party,
the address below the Subject Party’s name on the signature
page to this Agreement.
(b)
Integration and
Non-Exclusivity. This Agreement, the Merger Agreement and
the other documents and agreements contemplated hereby and thereby
contain the entire agreement between the Subject Party and the
Covered Parties concerning the subject matter hereof.
Notwithstanding the foregoing, the rights and remedies of the
Covered Parties under this Agreement are not exclusive of or
limited by any other rights or remedies which they may have,
whether at law, in equity, by contract or otherwise, all of which
will be cumulative (and not alternative). Without limiting the
generality of the foregoing, the rights and remedies of the Covered
Parties, and the obligations and liabilities of the Subject Party,
under this Agreement, are in addition to their respective rights,
remedies, obligations and liabilities (i) under the laws of unfair
competition, misappropriation of trade secrets, or other
requirements of statutory or common law, or any applicable rules
and regulations and (ii) otherwise conferred by contract, including
the Merger Agreement and any other written agreement between the
Subject Party and any of the Covered Parties. Nothing in the Merger
Agreement will limit any of the obligations, liabilities, rights or
remedies of the Subject Party or the Covered Parties under this
Agreement. If any term or condition of any other agreement between
the Subject Party and any of the Covered Parties conflicts or is
inconsistent with the terms and conditions of this Agreement, the
more restrictive terms will control as to the Subject
Party.
(c)
Severability;
Reformation. Each provision of this Agreement is separable
from every other provision of this Agreement. If any provision of
this Agreement is found or held to be invalid, illegal or
unenforceable, in whole or in part, by a court of competent
jurisdiction, then (i) such provision will be deemed amended to
conform to applicable laws so as to be valid, legal and enforceable
to the fullest possible extent, (ii) the invalidity, illegality or
unenforceability of such provision will not affect the validity,
legality or enforceability of such provision under any other
circumstances or in any other jurisdiction, and (iii) the
invalidity, illegality or unenforceability of such provision will
not affect the validity, legality or enforceability of the
remainder of such provision or the validity, legality or
enforceability of any other provision of this Agreement. The
Subject Party and the Covered Parties will substitute for any
invalid, illegal or unenforceable provision a suitable and
equitable provision that carries out, so far as may be valid, legal
and enforceable, the intent and purpose of such invalid, illegal or
unenforceable provision. Without limiting the foregoing, if any
court of competent jurisdiction determines that any part hereof is
unenforceable because of the duration, geographic area covered,
scope of such provision, or otherwise, such court will have the
power to reduce the duration, geographic area covered or scope of
such provision, as the case may be, and, in its reduced form, such
provision will then be enforceable. The Subject Party will, at a
Covered Party’s request, join such Covered Party in
requesting that such court take such action.
-65-
(d)
Amendment; Waiver.
This Agreement may not be amended or modified in any respect,
except by a written agreement executed by the Subject Party and
Parent (or their respective permitted successors or assigns). No
waiver will be effective unless it is expressly set forth in a
written instrument executed by the waiving party and any such
waiver will have no effect except in the specific instance in which
it is given. Any delay or omission by a party in exercising its
rights under this Agreement, or failure to insist upon strict
compliance with any term, covenant, or condition of this Agreement
will not be deemed a waiver of such term, covenant, condition or
right, nor will any waiver or relinquishment of any right or power
under this Agreement at any time or times be deemed a waiver or
relinquishment of such right or power at any other time or
times.
(e)
Governing Law;
Jurisdiction. Except to the extent mandatorily governed by
Utah Law, this Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado irrespective of
any conflict of laws principles. The parties hereby agree that any
action or proceeding with respect to this Agreement (and any action
or proceeding with respect to any amendments or replacements hereof
or transactions relating hereto) may be brought only in a federal
or state court located in Denver, State of Colorado and having
jurisdiction with respect to such action or proceeding. Each of the
parties hereto irrevocably consents and submits to the jurisdiction
of such courts.
(f)
WAIVER OF JURY
TRIAL. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY
OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER
THIS AGREEMENT OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO IN RESPECT OF THIS
AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT,
TORT, EQUITY OR OTHERWISE. EACH OF THE PARTIES TO THIS AGREEMENT
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION WILL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND
THAT THE PARTIES TO THIS AGREEMENT MAY FILE A COPY OF THIS
AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.
(g)
Successors and Assigns;
Third Party Beneficiaries. This Agreement will be binding
upon the Subject Party and the Subject Party’s estate,
successors and assigns, and will inure to the benefit of the
Covered Parties, and their respective successors and assigns. Each
Covered Party may freely assign any or all of its rights under this
Agreement, at any time, in whole or in part, to any Person which
acquires, in one or more transactions, a majority of the equity
securities (whether by equity sale, merger or otherwise) of such
Covered Party or all or substantially all of the assets of such
Covered Party and its Subsidiaries, taken as a whole, without
obtaining the consent or approval of the Subject Party. The Subject
Party agrees that the obligations of the Subject Party under this
Agreement are personal and will not be assigned by the Subject
Party. Each of the Covered Parties are express third party
beneficiaries of this Agreement and will be considered parties
under and for purposes of this Agreement.
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(h)
Construction. The
Subject Party acknowledges that the Subject Party has been
represented by counsel, or had the opportunity to be represented by
counsel of the Subject Party’s choice. Any rule of
construction to the effect that ambiguities are to be resolved
against the drafting party will not be applied in the construction
or interpretation of this Agreement. The headings and subheadings
contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement. In this Agreement: (i) the words “include,”
“includes” and “including” when used herein
shall be deemed in each case to be followed by the words
“without limitation”; (ii) the definitions contained
herein are applicable to the singular as well as the plural forms
of such terms; (iii) whenever required by the context, any pronoun
shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns, pronouns and verbs shall
include the plural and vice versa; (iv) the words
“herein,” “hereto,” and
“hereby” and other words of similar import shall be
deemed in each case to refer to this Agreement as a whole and not
to any particular Section or other subdivision of this Agreement;
(v) the word “if” and other words of similar import
when used herein shall be deemed in each case to be followed by the
phrase “and only if”; (vi) the term “or”
means “and/or”; and (vii) any agreement or instrument
defined or referred to herein or in any agreement or instrument
that is referred to herein means such agreement or instrument as
from time to time amended, modified or supplemented, including by
waiver or consent and references to all attachments thereto and
instruments incorporated therein.
(i)
Counterparts. This
Agreement may be executed in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which
when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement. A
photocopy, faxed, scanned and/or emailed copy of this Agreement or
any signature page to this Agreement, shall have the same validity
and enforceability as an originally signed copy.
(j)
Effectiveness. This
Agreement shall be binding upon the parties hereto upon the
execution and delivery of this Agreement by the parties hereto, but
this Agreement shall only become effective upon the consummation of
the Transactions. In the event that the Merger Agreement is validly
terminated in accordance with its terms prior to the consummation
of the Transactions, this Agreement shall automatically terminate
and become null and void, and the parties shall have no obligations
hereunder.
[Remainder of Page Intentionally Left Blank]
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Subject Party:
Signature:
_________________
Print
Name:
Address
for Notice:
Address:
Facsimile
Number: ___________
Telephone
Number: __________
Email:
_____________________
[Signature Page to Non-Competition Agreement]
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Acknowledged and accepted as of the date first written
above:
Parent:
NEW
AGE BEVERAGES CORPORATION
|
By:
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Name:
|
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|
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Title:
|
|
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Company:
MORINDA
HOLDINGS, INC.
|
By:
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Name:
|
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|
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Title:
|
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[Signature Page to Non-Competition Agreement]
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EXHIBIT B-2
SCHEDULE OF PERSONS TO SIGN NON-COMPETITION AGREEMENT
Xxxxx
X. Xxxx
Xxxxxx
X. Xxxxx
Xxxxxxx
X. Story
Xxxxxxx
X. Xxxxx
Xxxxxxx
X. Xxxx
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