EXHIBIT 2.1
EXECUTION COPY
AGREEMENT
OF
MERGER AND ACQUISITIONS
AMONG
GSRWB, INC.,
A DELAWARE CORPORATION,
THE ROARING WATER BAY SPIRITS GROUP LIMITED,
A COMPANY INCORPORATED UNDER THE LAWS OF IRELAND,
THE ROARING WATER BAY SPIRITS MARKETING AND SALES COMPANY LIMITED,
A COMPANY INCORPORATED UNDER THE LAWS OF IRELAND,
GREAT SPIRITS COMPANY, LLC,
A DELAWARE LIMITED LIABILITY COMPANY,
GREAT SPIRITS CORP.,
A DELAWARE CORPORATION,
XXXXXXX XXXXXX, XXXXX XXXXXX, XXXXXXX MILK PRODUCTS LIMITED
AND XXXXX INVESTMENTS LIMITED
JULY 31, 2003
TABLE OF CONTENTS
Page
----
ARTICLE I THE MERGER AND ACQUISITIONS.................................... 1
1.1 The Acquisitions and Merger........................................ 1
1.2 Effect of the Acquisitions and Merger.............................. 2
1.3 Acquisition and Merger Consideration; Adjustment; Termination...... 2
1.3.1 GS Shares................................................... 2
1.3.2 RW Stock.................................................... 3
1.3.3 RW-UK Stock................................................. 4
1.4 GSRW Stock......................................................... 4
1.5 Surrender and Cancellation of Certificates......................... 4
1.5.1 Surrender of Certificates................................... 4
1.5.2 Presentation; Certificates Not Delivered.................... 5
1.5.3 No Fractional Shares........................................ 5
1.5.4 Escheat..................................................... 5
1.5.5 Treasury Shares............................................. 6
1.6 Issuance Restrictions.............................................. 6
1.7 RW Note Substitution............................................... 6
1.8 Closing............................................................ 6
1.9 Subsequent Actions................................................. 6
1.10 Certificate of Incorporation, Bylaws, Directors and Officers
of the Merger Company.............................................. 7
ARTICLE II FURTHER AGREEMENTS............................................ 7
2.1 Certain Employee Matters........................................... 7
2.2 Benefit Plans...................................................... 7
ARTICLE III REPRESENTATIONS AND WARRANTIES............................... 8
3.1 Representations and Warranties of GS............................... 8
3.1.1 Organization and Status..................................... 9
3.1.2 Capitalization.............................................. 9
3.1.3 Corporate Authority......................................... 9
3.1.4 Subsidiaries and Joint Ventures............................. 9
3.1.5 Financial Statements........................................ 10
3.1.6 Governmental and Other Filings.............................. 10
3.1.7 No Adverse Consequences..................................... 10
3.1.8 Undisclosed Liabilities..................................... 11
3.1.9 Absence of Certain Changes or Events........................ 11
3.1.10 Litigation.................................................. 11
3.1.11 Employment Matters.......................................... 11
3.1.12 Intellectual Property....................................... 12
3.1.13 Real Property and Environmental............................. 13
3.1.14 Status of Contracts......................................... 15
3.1.15 Permits and Licenses........................................ 15
3.1.16 Taxes....................................................... 16
3.1.17 Related Party Interests..................................... 17
3.1.18 No Powers of Attorney or Restrictions....................... 17
3.1.19 Personnel................................................... 18
3.1.20 Brokers and Finders......................................... 18
3.1.21 No Other Agreements to Sell GS or Its Assets................ 18
3.1.22 Member Approval............................................. 18
3.1.23 Disclosure.................................................. 18
3.1.24 Board Recommendation........................................ 18
3.1.25 State Takeover Laws......................................... 18
3.1.26 Insurance................................................... 19
3.1.27 Books and Records........................................... 19
3.1.28 Disclaimer of other Representation and Warranties........... 19
3.1.29 Remedy...................................................... 19
3.2 Representations and Warranties of the Shareholders................. 19
3.2.1 Organization and Status..................................... 19
3.2.2 Capitalization.............................................. 20
3.2.3 Corporate Authority......................................... 21
3.2.4 Subsidiaries and Joint Ventures............................. 21
3.2.5 Financial Statements........................................ 21
3.2.6 Governmental and Other Filings.............................. 22
3.2.7 No Adverse Consequences..................................... 22
3.2.8 Undisclosed Liabilities..................................... 22
3.2.9 Absence of Certain Changes or Events........................ 23
3.2.10 Litigation.................................................. 23
3.2.11 Employment Matters.......................................... 23
3.2.12 Intellectual Property....................................... 24
3.2.13 Real Property and Environmental............................. 25
3.2.14 Status of Contracts......................................... 26
3.2.15 Permits and Licenses........................................ 27
3.2.16 Taxes....................................................... 28
3.2.17 Related Party Interests..................................... 33
3.2.18 No Powers of Attorney or Restrictions....................... 34
3.2.19 Personnel................................................... 34
3.2.20 Brokers and Finders......................................... 34
3.2.21 No Other Agreements to Sell RW or RW-UK or Their
Respective Assets........................................... 34
3.2.22 Title and Capacity.......................................... 34
3.2.23 No Disposal. The Shareholders shall not at any time
prior to the Closing:....................................... 35
3.2.24 Disclosure.................................................. 35
3.2.25 Insurance................................................... 36
3.2.26 Books and Records........................................... 36
3.2.27 Dormant Subsidiaries........................................ 36
3.2.28 Disclaimer of other Representations and Warranties.......... 36
3.2.29 Remedy...................................................... 36
3.3 Representations and Warranties of GSRW............................. 36
3.3.1 Organization and Status..................................... 37
3.3.2 Capitalization.............................................. 37
3.3.3 Corporate Authority......................................... 37
3.3.4 Governmental and Other Consents............................. 37
3.3.5 No Adverse Consequences..................................... 37
3.3.6 Absence of Certain Litigation............................... 38
3.3.7 Brokers and Finders......................................... 38
3.3.8 Disclosure.................................................. 38
3.4 Disclaimer of other Representations and Warranties................. 38
3.5 Representations and Warranties Relating to Merger Company.......... 38
3.5.1 Organization and Status..................................... 38
3.5.2 Capitalization.............................................. 39
3.5.3 Corporate Authority......................................... 39
3.5.4 Governmental Filings........................................ 39
3.5.5 Disclaimer of Other Representations and Warranties.......... 39
ARTICLE IV COVENANTS ................................................... 39
4.1 Mutual Covenants................................................... 39
4.1.1 Consents and Approvals...................................... 39
4.1.2 Best Efforts................................................ 39
4.1.3 Publicity................................................... 39
4.1.4 Confidentiality............................................. 40
4.1.5 Sales....................................................... 40
4.1.6 Financing................................................... 40
4.2 Covenants of GSRW, GS, RW, RW-UK and the Shareholders.............. 40
4.2.1 Conduct of Business......................................... 40
4.2.2 Acquisition Proposals....................................... 42
4.2.3 Investigations.............................................. 42
4.2.4 Notice and Cure............................................. 42
4.2.5 Consents.................................................... 43
4.2.6 Member Approval............................................. 43
4.2.7 Securities Matters.......................................... 43
4.2.8 BES Purchase................................................ 45
4.2.9 Shareholder Notes........................................... 46
4.2.10 Employment Agreements....................................... 46
4.2.11 Employee Releases........................................... 46
4.2.12 RW and RW-UK Stock.......................................... 46
4.2.13 Interim Board of Directors.................................. 47
4.2.14 Shareholders Agreement...................................... 47
4.2.15 Escrow Agreement............................................ 47
4.2.16 License Agreement........................................... 47
4.2.17 Exchange of Indebtedness.................................... 48
4.3 Covenants of GSRW.................................................. 48
4.3.1 Stock Options............................................... 48
4.3.2 Notice and Cure............................................. 48
4.3.3 Payment..................................................... 48
4.4 Covenants of Merger Company........................................ 48
ARTICLE V CONDITIONS .................................................... 49
5.1 Conditions to the Obligations of All Parties....................... 49
5.1.1 Regulatory Approvals........................................ 49
5.1.2 Litigation.................................................. 49
5.1.3 Funding..................................................... 49
5.1.4 Stock Option Plan........................................... 49
5.1.5 Shareholders Agreement...................................... 49
5.1.6 Escrow Agreement............................................ 49
5.2 Conditions to the Obligations of the Shareholders.................. 49
5.2.1 Representations, Warranties and Covenants................... 50
5.2.2 Consents.................................................... 50
5.2.3 No Material Adverse Change.................................. 50
5.2.4 Member Agreement............................................ 50
5.2.5 GSRW Stock.................................................. 50
5.2.6 Employment Agreement........................................ 50
5.2.7 Special Option.............................................. 50
5.3 Conditions to the Obligations of GS................................ 50
5.3.1 Representations, Warranties and Covenants................... 50
5.3.2 Consents.................................................... 51
5.3.3 No Material Adverse Change.................................. 51
5.3.4 RW Stock and RW-UK Stock.................................... 51
5.3.5 Shareholder Notes........................................... 51
5.3.6 BES Shares.................................................. 51
5.3.7 Employment Agreements....................................... 51
5.3.8 Extensions.................................................. 51
5.3.9 Life Insurance.............................................. 52
5.3.10 Grants...................................................... 52
5.3.11 Company Insurance........................................... 52
5.3.12 Release Letters............................................. 52
5.3.13 Contribution of Indebtedness................................ 52
ARTICLE VI TERMINATION ................................................. 52
6.1 Termination by Mutual Consent...................................... 52
6.2 Termination by Either GSRW or the Shareholders..................... 52
6.3 Effect of Termination and Abandonment.............................. 53
ARTICLE VII INDEMNIFICATION ............................................. 53
7.1 Survival of Representations and Warranties......................... 53
7.2 Indemnification.................................................... 53
7.3 Shareholder Representative; Indemnification Procedures............. 54
7.4 Limitations on Indemnity........................................... 56
7.5 Satisfaction of Obligations; Release from Escrow................... 57
ARTICLE VIII MISCELLANEOUS AND GENERAL.................................. 57
8.1 Payment of Expenses................................................ 57
8.2 Entire Agreement................................................... 58
8.3 Assignment......................................................... 58
8.4 Binding Effect; No Third Party Benefit............................. 58
8.5 Amendment and Modification......................................... 58
8.6 Waiver of Conditions............................................... 58
8.7 Counterparts....................................................... 58
8.8 Captions........................................................... 58
8.9 Notices............................................................ 58
8.10 Submission to Jurisdiction......................................... 60
8.11 Choice of Law...................................................... 61
8.12 Separability....................................................... 61
8.13 Guarantees......................................................... 62
8.14 Federal Alcohol Administration Act................................. 62
EXHIBITS
Exhibit A Form of 5% Convertible Subordinated Promissory Notes of GSRW
Exhibit B Form of Escrow Agreement
Exhibit C-1 Certificate of Incorporation of the Merger Company
Exhibit C-2 Bylaws of the Merger Company
Exhibit C-3 List of Directors of the Merger Company
Exhibit D Form of GSRW 2003 Stock Incentive Plan
Exhibit E Form of Shareholders Agreement
Exhibit F Form of Shareholder Note for Xxxxxxx Xxxxxx
Exhibit G Form of Shareholder Note for Xxxxx Xxxxxx
Exhibit H Form of Shareholder Note for Carbery Milk Products Limited
Exhibit I Form of Shareholder Note for Xxxxx Investments Limited
Exhibit J Form of Guarantee of Shareholder Note for Xxxxxxx Xxxxxx
Exhibit K Form of Guarantee of Shareholder Note for Xxxxx Xxxxxx
Exhibit L Form of Guarantee of Shareholder Note for Carbery Milk Products
Limited
Exhibit M Form of Guarantee of Shareholder Note for Xxxxx Investments Limited
Exhibit N Form of Share Purchase Agreement BES II Note and Guarantee
Exhibit O Form of Shareholder Power of Attorney
Exhibit P Shareholders' Holdings in RW and Consideration to be Received
Exhibit Q Shareholders' Holdings in RW-UK and Consideration to be Received
Annex A List of Members
Annex B List of Shareholdings
Annex C Terms of Employment Agreements and Non-Competition Deed for Xxxxx
Xxxxxx and Xxxxxxx Xxxxxx
Annex D Terms of Employment Agreement for Xxxx Xxxxxxx and T. Xxxxxx
Xxxxxxxx
SCHEDULES
Schedule 3.1.1 GS Organization and Status
Schedule 3.1.2 GS Capitalization
Schedule 3.1.4 GS Subsidiaries and Joint Ventures
Schedule 3.1.5.1 GS Financial Statements
Schedule 3.1.6 GS Governmental and Other Filings
Schedule 3.1.7 GS No Adverse Consequences
Schedule 3.1.8 GS Undisclosed Liabilities
Schedule 3.1.9 GS Absence of Certain Changes or Events
Schedule 3.1.10 GS Litigation
Schedule 3.1.11.2 GS Employee Benefits
Schedule 3.1.11.3 GS Employment Agreements
Schedule 3.1.12 GS Intellectual Property
Schedule 3.1.13.2 GS Leased Real Property
Schedule 3.1.13.3 GS Environmental Matters
Schedule 3.1.14 GS Status of Contracts
Schedule 3.1.16.1 GS Taxes
Schedule 3.1.17 GS Related Party Interests
Schedule 3.1.18 GS Power of Attorney
Schedule 3.1.19 GS Personnel
Schedules 3.1.20 GS and GSRW Broker and Finder Fees
and 3.3.7
Schedule 3.1.25 GS Insurance
Schedule 3.2.1 RW & RW-UK Organization and Status
Schedule 3.2.2 RW & RW-UK Capitalization
Schedule 3.2.4 RW & RW-UK Subsidiaries and Joint Ventures
Schedule 3.2.5.1 RW & RW-UK Financial Statements
Schedule 3.2.6 RW & RW-UK Governmental and Other Filing
Schedule 3.2.7 RW & RW-UK No Adverse Consequences
Schedule 3.2.8 RW & RW-UK Undisclosed Liabilities
Schedule 3.2.9 RW & RW-UK Absence of Certain Changes or Events
Schedule 3.2.10 RW & RW-UK Litigation
Schedule 3.2.11.2 RW & RW-UK Employee Benefits
Schedule 3.2.11.3 RW & RW-UK Employment Agreements
Schedule 3.2.12 RW & RW-UK Intellectual Property
Schedule 3.2.13.2 RW & RW-UK Leased Real Property
Schedule 3.2.13.3 RW & RW-UK Environmental Matters
Schedule 3.2.14 RW & RW-UK Status of Contracts
Schedule 3.2.16 RW & RW-UK Taxes
Schedule 3.2.17 RW & RW-UK Related Party Interests
Schedule 3.2.19 RW & RW-UK Personnel
Schedule 3.2.25 RW & RW-UK Insurance
Schedule 4.2.1(i) Disclosure of Claims, Etc.
INDEX OF TERMS
Term Location of Definition
---- ----------------------
2001 Financial Statements.............................. Section 3.1.5.1
2001 RW & RW-UK Financial Statements................... Section 3.2.5.1
2002 Financial Statements.............................. Section 3.1.5.1
2002 RW & RW-UK Financial Statements................... Section 3.2.5.1
2003 Financial Statements.............................. Section 3.1.5.1
2003 RW & RW-UK Financial Statements................... Section 3.2.5.1
Accounts............................................... Section 3.2.16.1
Accounts Date.......................................... Section 3.2.16.1
Acquisition Transaction................................ Section 4.2.2(a)
Acquisitions........................................... Section 1.1(b)
ACT.................................................... Section 3.2.16.1
Agent.................................................. Section 8.10
Agreement.............................................. Preamble
Benefit Plans.......................................... Section 3.1.11.2
BES II Note............................................ Section 4.2.8
BES II Shares.......................................... Section 4.2.8
BES Offering........................................... Section 5.3.6
Bonus.................................................. Section 2.1
BES Guarantee.......................................... Section 4.2.8
BES Purchase Agreement................................. Section 4.2.8
CAA.................................................... Section 3.1.13.3
Carbery................................................ Preamble
Cash-In-Lieu Amount.................................... Section 1.5.3.
CERCLA................................................. Section 3.1.13.3
Closing................................................ Section 1.8
Closing Date........................................... Section 1.8
Company Agreement...................................... Section 1.1(c)
Condition Completion Date.............................. Section 1.8
CWA.................................................... Section 3.1.13.3
Damages................................................ Section 7.2
Term Location of Definition
---- ----------------------
Damages Threshold...................................... Section 7.4
Distribution........................................... Section 3.2.16.1
DGCL................................................... Section 1.2
DLLCA.................................................. Section 1.2
Dormant Subsidiaries................................... Section 3.2.27
DP..................................................... Preamble
Effective Time......................................... Section 1.1(c)
Encumbrance............................................ Section 3.1.7
Environmental Laws..................................... Section 3.1.13.3
ERISA.................................................. Section 3.1.11.2
Escrow Accounts........................................ Section 1.3.3.3
Escrow Agreement....................................... Section 1.3.1.4
Escrowed Shares........................................ Section 1.3.3.3
Event.................................................. Article III
FAA Act................................................ Section 8.15
Financing.............................................. Section 5.1.3
First Valuation........................................ Article III
GCK.................................................... Section 3.1.5.1
Governmental Entity.................................... Section 3.1.6
Group.................................................. Section 3.2.16.1
GS..................................................... Preamble
GS Contracts........................................... Section 3.1.14(a)
GS Disclosure Schedule................................. Section 3.1
GS Escrow Account...................................... Section 1.3.1.4
GS Escrowed Shares..................................... Section 1.3.1.4
GS Financial Statements................................ Section 3.1.5.2
GS Leased Real Property................................ Section 3.1.13.2
GS Leases.............................................. Section 3.1.13.2
GS Series A Stock...................................... Section 1.1(c)
GS Series B Stock...................................... Section 1.1(c)
GS Shares.............................................. Section 1.1(c)
Term Location of Definition
---- ----------------------
GS Subsidiary.......................................... Section 3.1.4
GSRW................................................... Preamble
GSRW Articles.......................................... Section 3.3.1
GSRW Guarantee......................................... Section 4.2.9
GSRW Series A Stock.................................... Section 1.1(c)
GSRW Series B Stock.................................... Section 1.1(c)
GSRW Series C Stock.................................... Section 3.3.2
GSRW Stock............................................. Sections 1.1(a)
Hazardous Materials.................................... Section 3.1.13.3
Indemnified Persons.................................... Section 7.2
Information............................................ Section 4.1.4
Intellectual Property.................................. Sections 3.1.12
Irish Acquisition...................................... Section 1.1(a)
Material Adverse Change................................ Article III
Material Adverse Effect................................ Article III
Member(s).............................................. Section 3.1.2
Memorandum of GS....................................... Section 3.1.2
Merger................................................. Section 1.1(c)
Merger Company......................................... Preamble
Pension Scheme......................................... Section 3.2.11.1
Permits................................................ Section 3.1.15
Plan................................................... Section 4.3.1
PR..................................................... Preamble
Profits................................................ Section 3.2.16.1
RCRA................................................... Section 3.1.13.3
Release Letter......................................... Section 4.2.11
Relief................................................. Section 3.2.16.1
Reorganization......................................... Section 1.1(c)
Representative......................................... Section 4.2.2(a)
Revenue Authority...................................... Section 3.1.16.4
Returns................................................ Section 3.1.16.1
Term Location of Definition
---- ----------------------
RW..................................................... Preamble
RW & RW-UK Contracts................................... Section 3.2.14
RW & RW-UK Disclosure Schedule......................... Section 3.2
RW & RW-UK Financial Statements........................ Section 3.2.5.2
RW & RW-UK Leased Real Property........................ Section 3.2.13.2
RW & RW-UK Lease(s).................................... Section 3.2.13.2
RW Companies........................................... Section 3.2.1
RW Escrow Account...................................... Section 1.3.2.3
RW Escrowed Shares..................................... Section 1.3.2.3
RW Notes............................................... Section 1.1(a)
RW Stock............................................... Section 1.1(a)
RW-UK.................................................. Preamble
RW-UK Escrowed Shares.................................. Section 1.3.3.3
RW-UK Stock............................................ Section 1.1(b)
XXXX................................................... Section 3.1.13.3
SDCA................................................... Section 3.2.16.6
Second Valuation....................................... Article III
Securities Act......................................... Section 4.2.7(v)
Shareholder Guarantee.................................. Section 5.3.7
Shareholder Note....................................... Section 4.2.9
Shareholder Representatives............................ Section 7.3
Shareholder(s)......................................... Preamble
Shareholders Agreement................................. Section 4.2.14
Subsidiary(ies)........................................ Section 2.1
Xxxxx.................................................. Preamble
Taxation............................................... Section 3.1.16.3
Taxes.................................................. Section 3.1.16.3
Tax Liability.......................................... Section 3.2.16.1
Third Party Claim...................................... Section 7.3(c)
Transaction............................................ Section 3.2.16.1
Transfer Agent......................................... Section 1.5.1(a)
Term Location of Definition
---- ----------------------
Trustee................................................ Section 5.3.7
TSCA................................................... Section 3.1.13.3(f)
UK Acquisition......................................... Section 1.1(b)
Valuer................................................. Article III
Agreement
of
Merger and Acquisitions
THIS AGREEMENT OF MERGER AND ACQUISITIONS (this "Agreement") is entered into as
of July 31, 2003, among GSRWB, Inc., a Delaware corporation ("GSRW"), The
Roaring Water Bay Spirits Group Limited, a company incorporated under the laws
of Ireland with its principal place of business at 0 Xxxxxxx Xxxxx, Xxxxxx 0,
Xxxxxxx ("RW"), The Roaring Water Bay Spirits Marketing and Sales Company
Limited, a company incorporated under the laws of Ireland with its principal
place of business at 0 Xxxxxxx Xxxxx, Xxxxxx 0, Xxxxxxx ("RW-UK"), Xxxxxxx
Xxxxxx, an Irish citizen whose residence is 0 Xxxxxxxxx Xxxxx, Xxxxxxxxx, Xx.
Xxxxxx, Xxxxxxx ("PR"), Xxxxx Xxxxxx, an Irish citizen whose residence is 00
Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxx 0X, Xxxxxxx ("DP"), Carbery Milk Products
Limited, a company incorporated under the laws of Ireland with its principal
place of business at Xxxxxxxxx, Xx. Xxxx, Xxxxxxx ("Carbery") and Xxxxx
Investments Limited, a company incorporated under the laws of Ireland with its
principal place of business at Xxxxxxxxx Xxxx, Xxxxxxxxxx, Xx. Xxxxx, Xxxxxxx
("Xxxxx" and together with PR, DP and Carbery, collectively the "Shareholders"
and individually a "Shareholder"), Great Spirits Company, LLC, a Delaware
limited liability company ("GS") and Great Spirits Corp., a Delaware corporation
("Merger Company").
AGREEMENT
In consideration of the mutual representations, warranties, covenants,
agreements and conditions contained herein, the parties hereto agree as follows:
ARTICLE I
THE MERGER AND ACQUISITIONS
1.1 The Acquisitions and Merger.
(a) Subject to and in accordance with the terms and conditions of this
Agreement, on the Closing Date, as hereinafter defined, each of the Shareholders
shall, as a beneficial owner, sell or procure the sale of, and GSRW (relying on
the representations, warranties undertakings and indemnities in this Agreement)
shall purchase, all of the issued share capital of RW ("RW Stock") free from all
encumbrances and third party rights and claims and with all attached or accrued
rights as the Closing Date, each Shareholder of RW being entitled to receive (i)
cash, (ii) 5% Convertible Subordinated Promissory Notes ("RW Notes") of GSRW,
substantially in the form attached as Exhibit A and (iii) shares of common
stock, par value $.01 per share ("GSRW Stock"), of GSRW (the "Irish
Acquisition"), as set forth on Exhibit P. Each Shareholder waives any rights of
pre-emption conferred upon it by the Articles of Association of RW, by
agreement, by statute or otherwise in respect of the RW Stock.
(b) Subject to and in accordance with the terms and conditions of this
Agreement, on the Closing Date each of the Shareholders shall, as a beneficial
owner, sell or
procure the sale of, and GSRW (relying on the representations, warranties
undertakings and indemnities in this Agreement) shall purchase, all of the
issued share capital of RW-UK ("RW-UK Stock") free from all encumbrances and
third party rights and claims and with all attached or accrued rights as of the
Closing Date, each Shareholder of RW-UK being entitled to receive (i) cash, (ii)
RW Notes and (iii) shares of GSRW Stock (the "UK Acquisition" and together with
the Irish Acquisition, the "Acquisitions"), as set forth on Exhibit Q. Each
Shareholder waives any rights of pre-emption conferred upon it by the Articles
and Memorandum of Association of RW-UK, by agreement, by statute or otherwise in
respect of the RW-UK Stock.
(c) Pursuant to the laws of the State of Delaware, and subject to and
in accordance with the terms and conditions of this Agreement, Merger Company
shall be merged with and into GS, and each outstanding share of membership
interest in GS ("GS Shares") shall be converted in accordance with Section 1.3.1
of this Agreement into the right to receive (i) in the case of Common Shares (as
defined in the Amended and Restated Limited Liability Company Agreement, dated
as of June 4, 2003 and, as amended through the date of the Closing pursuant to
Section 3.1.2 (the "Company Agreement"), of GS), five shares of GSRW Stock, (ii)
in the case of Series A Convertible Preferred Shares (as defined in the Company
Agreement) ("GS Series A Stock"), five shares of Series A Convertible Preferred
Stock, par value $1.00 per share ("GSRW Series A Stock"), of GSRW and (iii) in
the case of Series B Convertible Preferred Shares (as defined in the Company
Agreement) ("GS Series B Stock"), five shares of Series B Convertible Preferred
Stock, par value $1.00 per share ("GSRW Series B Stock"), of GSRW. GS and Merger
Company shall execute a Certificate of Merger, to be filed with the Secretary of
State of Delaware on or before the Closing Date (as hereafter defined). The
merger of Merger Company with and into GS (the "Merger" and together with the
Irish Acquisition and UK Acquisition, the "Reorganization") shall take effect at
the time when the Certificate of Merger is duly filed with the Secretary of
State of Delaware or at such other time as the parties hereto may agree upon in
writing pursuant to applicable law, together with the closing of the
Acquisitions (the "Effective Time").
1.2 Effect of the Acquisitions and Merger. At the Effective Time, (i) GSRW
shall be the sole beneficial owner of all of the issued and outstanding RW
Stock, (ii) GSRW shall be the sole beneficial owner of all of the issued and
outstanding RW-UK Stock, and (iii) Merger Company shall be merged with and into
GS in the manner and with the effect provided by Delaware General Corporation
Law (the "DGCL") and the Delaware Limited Liability Company Act ("DLLCA") and
the separate limited liability company existence of GS shall cease and Merger
Company shall be the surviving corporation. The outstanding shares of GS shall
be converted into the right to receive the consideration set forth in Section
1.3.1, all on the basis, terms and conditions described in Section 1.3.
1.3 Acquisition and Merger Consideration; Adjustment; Termination.
1.3.1 GS Shares.
1.3.1.1 Stock Consideration. Each GS Share held by a Member (as
defined in the Company Agreement), by virtue of the Merger and, without any
action on the part of the holder thereof, will cease to exist and will be
converted into the right to receive (a) in the case of Common Shares, five
shares of GSRW Stock, (b) in the case of GS Series A Stock, five
2
shares of GSRW Series A Stock, and (c) in the case of GS Series B Stock, five
shares of GSRW Series B Stock.
1.3.1.2 Merger Company Stock. After the Effective Time, GSRW, the
sole holder of shares of Merger Company common stock outstanding immediately
prior to the Effective Time shall continue to be the sole holder of shares of
the Merger Company.
1.3.1.3 Stock Splits, Etc. If, between the date of this Agreement
and the Effective Time, the outstanding GS Shares or the outstanding shares of
GSRW Stock shall have been changed into a different number of shares or a
different class of shares by reason of any reclassification, combination,
recapitalization, stock split, stock dividend, subdivision, exchange of shares,
or other extraordinary transaction, the conversion ratio provided in Section
1.1(c) shall be adjusted proportionately.
1.3.1.4 GS Escrow Account. Notwithstanding anything in this
Section 1.3 to the contrary, GSRW shall deliver 8.5% of the number of shares of
each of the GSRW Stock, GSRW Series A Stock and GSRW Series B Stock otherwise
deliverable to the Members in the Merger in accordance with Section 1.3.1.1 (the
"GS Escrowed Shares") into an escrow account (the "GS Escrow Account")
established and maintained in accordance with the terms of an escrow agreement
in substantially the form attached as Exhibit B hereto (the "Escrow Agreement").
The GS Escrow Account shall be for the purpose, inter alia, of securing the
payment of the indemnification obligations of GS pursuant to Article VII hereto,
in accordance with the terms and conditions contained herein and in the Escrow
Agreement.
1.3.2 RW Stock.
1.3.2.1 Stock and Cash Consideration. In consideration of each
Shareholder's sale of the RW Stock set forth below such Shareholder's name on
Exhibit P, such Shareholder shall receive the amount of cash (as adjusted if
necessary under the terms of Exhibit P), the principal amount of RW Notes and
number of shares of GSRW Stock set forth below such Shareholder's name on such
exhibit.
1.3.2.2 Stock Splits, Etc. If, between the date of this Agreement
and the Effective Time, the outstanding shares of either RW Stock or GSRW Stock
shall have been changed into a different number of shares or a different class
of shares by reason of any reclassification, combination, recapitalization,
stock split, stock dividend, subdivision, exchange of shares, or other
extraordinary transaction, the RW conversion ratio provided in Section 1.1(a)
shall be adjusted proportionately.
1.3.2.3 RW Escrow Account. Notwithstanding anything in this
Section 1.3 to the contrary, GSRW shall deliver 221,361 shares of GSRW Stock,
otherwise deliverable to the Shareholders of RW in the Irish Acquisition in
accordance with Section 1.3.2 (the "RW Escrowed Shares") into a separate escrow
account (the "RW Escrow Account") established and maintained in accordance with
the terms of the Escrow Agreement. The RW Escrow Account shall be for the
purpose, inter alia, of securing the payment of the indemnification obligations
of the Shareholders pursuant to Article VII hereto, in accordance with the terms
and conditions contained herein and in the Escrow Agreement.
3
1.3.3 RW-UK Stock.
1.3.3.1 Stock and Cash Consideration. In consideration of each
Shareholder's sale of the RW-UK Stock set forth below such Shareholder's name on
Exhibit Q, such Shareholder shall receive the amount of cash (as adjusted if
necessary under the terms of Exhibit Q), the principal amount of RW Notes and
number of shares of GSRW Stock set forth below its name on such exhibit.
1.3.3.2 Stock Splits, Etc. If, between the date of this Agreement
and the Effective Time, the outstanding shares of either RW-UK Stock or GSRW
Stock shall have been changed into a different number of shares or a different
class of shares by reason of any reclassification, combination,
recapitalization, stock split, stock dividend, subdivision, exchange of shares,
or other extraordinary transaction, the RW-UK conversion ratio provided in
Section 1.1(b) shall be adjusted proportionately.
1.3.3.3 RW-UK Escrow Account. Notwithstanding anything in this
Section 1.3 to the contrary, GSRW shall deliver 24,596 of shares of GSRW Stock
deliverable to the Shareholders of RW-UK in the UK Acquisition in accordance
with Section 1.3.3.1 (the "RW-UK Escrowed Shares", together with the GS Escrowed
Shares and the RW Escrowed Shares, the "Escrowed Shares") into the RW Escrow
Account, together with the GS Escrow Account, the "Escrow Accounts") established
and maintained in accordance with the terms of the Escrow Agreement. The RW
Escrow Account shall be for the purpose, inter alia, of securing the payment of
the indemnification obligations of the Shareholders pursuant to Article VII
hereto, in accordance with the terms and conditions contained herein and in the
Escrow Agreement.
1.4 GSRW Stock. Each share of GSRW Stock issued and outstanding immediately
prior to the Effective Date shall, by virtue of the Reorganization and without
any action on the part of the holders thereof, cease to exist.
1.5 Surrender and Cancellation of Certificates.
1.5.1 Surrender of Certificates.
(a) Promptly after the Effective Time, GSRW will cause an agent in the
United States of America (the "Transfer Agent") to send a letter to each holder
of GS Shares, converted into the right to receive GSRW Stock, GSRW Series A
Stock, and/or GSRW Series B Stock advising such holder that upon surrender to
the Transfer Agent of a certificate or certificates representing such shares,
along with a properly completed and duly executed letter of transmittal in the
customary form. Each Member, on the Closing Date, shall be entitled to receive
the number of shares of GSRW Stock, GSRW Series A Stock, and GSRW Series B Stock
into which such GS Shares shall have been converted pursuant to the provisions
of Section 1.3.1.
(b) At the Closing, each Shareholder of RW and RW-UK shall be entitled
to receive the number of shares of GSRW Stock, RW Notes, and cash to which the
holder of such shares of RW Stock shall be entitled pursuant to the provisions
of Sections 1.3.2 and 1.3.3 against delivery free and clear of all liens and
encumbrances of all of the issued and outstanding shares of RW Stock and RW-UK
Stock. GSRW and the Shareholders shall cooperate to file all
4
necessary certificates and other documents with the relevant Irish authorities,
and, pursuant thereto, GSRW shall tender within the relevant time from the
Closing the amount of tax stamp duty due on the transfer of the RW Stock and
RW-UK Stock; provided the Shareholders shall have no liability in respect
thereof.
1.5.2 Presentation; Certificates Not Delivered. If any shares of GSRW
Stock, GSRW Series A Stock, or GSRW Series B Stock (as applicable) are to be
delivered to or for the benefit of a person other than the person in whose name
the certificate for GS Shares, RW Stock or RW-UK Stock surrendered in exchange
therefor is registered (other than the escrow agent named in the Escrow
Agreement), it shall be a condition of the issuance thereof that the certificate
so surrendered shall be properly endorsed, accompanied with proper transfer
documents and otherwise in proper form for transfer and GSRW shall pay all
transfer taxes required in connection with such transfer. If any holder of GS
Shares canceled and retired in accordance with this Agreement is unable to
deliver a certificate or certificates representing such shares of the holder,
GSRW, in the absence of actual notice that any shares theretofore represented by
any such certificate have been acquired by a bona fide purchaser, shall deliver
to or for the benefit of such holder the number of shares of GSRW Stock, GSRW
Series A Stock, or GSRW Series B Stock (as applicable), to which such holder is
entitled in accordance with the provisions of this Agreement upon the
presentation of the following: (i) evidence reasonably satisfactory to GSRW (x)
that such person is the owner of such shares, and (y) that he, she or it is the
person who would be entitled to present such shares for conversion pursuant to
this Agreement; and (ii) such indemnity as is customary in the United States and
as may be reasonably requested by GSRW to indemnify and hold GSRW and the
Transfer Agent harmless.
1.5.3 No Fractional Shares. No certificates or scrip evidencing
fractional shares of GSRW Stock, GSRW Series A Stock, and/or GSRW Series B Stock
shall be issued in the Merger. In lieu of a fractional share, GSRW will pay at
the Closing any Members and any Shareholders who would otherwise have been
entitled to a fraction of a share of GSRW Stock, GSRW Series A Stock, and/or
GSRW Series B Stock upon surrender of the certificates therefor an amount of
cash (without interest) (the "Cash-In-Lieu Amount") determined by multiplying
(a) the Market Value by (b) the fractional share interest in GSRW Stock, GSRW
Series A Stock, and/or GSRW Series B Stock (as applicable) to which such Member
or Shareholder would otherwise be entitled. The provisions of this Section 1.5.3
will apply to the aggregate number of: (i) GS Shares, shares of GS Series A
Stock, and/or shares of GS Series B Stock held by each Member; (ii) RW Stock
held by each Shareholder of RW; and (iii) RW-UK Stock held by each Shareholder
of RW-UK and each such Member and Shareholder will be required to simultaneously
surrender all certificates relating to GS Shares, shares of GS Series A Stock,
and/or shares of GS Series B Stock or shares of RW Stock or shares of RW-UK
Stock (as applicable) held by such Member or Shareholder in accordance with the
provisions of Section 1.5.1 in order to receive the applicable Cash-In-Lieu
Amount. For purposes of this Agreement and the Escrow Agreement, the Market
Value shall be $6.00 in the case of GSRW Stock and GSRW Series B Stock and $7.00
in the case of GSRW Series A Stock.
1.5.4 Escheat. Neither the Merger Company nor GSRW shall be liable to
any Member or Shareholder for any such shares of GSRW Stock, GSRW Series A
Stock, or GSRW Series B Stock (or dividends or distributions with respect
thereto), or RW Notes or cash
5
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
1.5.5 Treasury Shares. At the Effective Time, each GS Share, share of
RW Stock or share of RW-UK Stock held in the treasury of GS, RW or RW-UK,
respectively, immediately before the Effective Time will be canceled and
extinguished without any conversion thereof, and no payment will be made with
respect thereto.
1.6 Issuance Restrictions. Each of the Shareholders covenant and agree with
GSRW not to transfer or encumber any of the RW Stock or RW-UK Stock held by it
after the date of this Agreement or so far as they are able allow the issuance
of and securities in the RW Companies. GS covenants and agrees with GSRW and the
Shareholders that GS shall not issue any additional shares except as
contemplated by the Financing, as hereinafter defined, and Section 3.1.2.
1.7 RW Note Substitution. The parties agree that each of the Shareholders
may by written notice to GSRW elect prior to the Closing to substitute the
securities to be offered in the Financing for the RW Note to which it would be
entitled to receive pursuant to Sections 1.3.2.1 and 1.3.3.1; provided that at
least two of the Shareholders shall have so elected in respect to the entire
principal amounts of their RW Notes. The number of the securities to be received
upon such substitution shall equal the principal amount of such RW Note (using
an exchange rate of E1:$1.15) divided by the offering price per share of the
securities to be offered in the Financing.
1.8 Closing. The closing of the Merger (the "Closing") shall take place at
the offices of Patterson, Belknap, Xxxx & Xxxxx LLP, 1133 Avenue of the
Americas, New York, New York, at 5:00 p.m. local time on the Condition
Completion Date (as hereinafter defined), or on such other date and/or at such
other place and time as GS, RW and RW-UK may agree (the "Closing Date"). The
"Condition Completion Date" shall be the business day on which the last of the
conditions set forth in Article V shall have been fulfilled or waived (other
than those conditions which, by their terms, are to occur on or prior to
Closing).
1.9 Subsequent Actions. If, at any time after the Effective Time, GSRW or
the Merger Company shall consider or be advised that any deeds, bills of sale,
assignments, assurances, or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in GSRW or the
Merger Company their rights, titles or interests in, to, or under any of the
rights, properties or assets of GS, acquired or to be acquired by the Merger
Company as a result of, or in connection with, the Merger or otherwise to carry
out this Agreement, the officers and directors of the respective surviving
company are authorized to execute and deliver, in the name and on behalf of GS
or otherwise, all such deeds, bills of sale, assignments and assurances, and to
take and do, in the name and on behalf of GS or otherwise, all such other
actions and things as may be necessary or desirable to vest, perfect or confirm
any and all right, title and interest in, to and under such rights, properties
or assets in the Merger Company and in GSRW or otherwise to carry out the
purposes of this Agreement.
6
1.10 Certificate of Incorporation, Bylaws, Directors and Officers of the
Merger Company.
1.10.1 At and after the Effective Time, the Merger Company's
Certificate of Incorporation, a copy of which is attached to this Agreement as
Exhibit C-1, shall remain the certificate of incorporation of the Merger Company
(until amended as provided by law and by that certificate of incorporation).
1.10.2 At and after the Effective Time, the Merger Company's bylaws, a
copy of which is attached to this Agreement as Exhibit C-2, shall remain the
bylaws of the Merger Company (until amended as provided by law, the certificate
of incorporation of the Merger Company and the bylaws of the Merger Company, as
applicable).
1.10.3 The individuals listed on Exhibit C-3 shall be the directors of
the Merger Company from and after the Effective Time (until their successors are
elected or appointed and qualified or until their resignation or removal).
1.10.4 The officers of GS immediately prior to the Effective Time
shall be the officers of the Merger Company from and after the Effective Time
(until their successors are elected or appointed and qualified or until their
resignation or removal).
ARTICLE II
FURTHER AGREEMENTS
2.1 Certain Employee Matters. To the extent not superseded by the
agreements contemplated by Sections 5.2.7 and 5.3.8, those employees of GS, RW
and RW-UK who are eligible to receive an annual bonus and other benefits
pursuant to their existing employment agreements or contractual entitlements
with GS, RW and RW-UK or pursuant to GS, RW or RW-UK's historical practice shall
continue to be eligible to receive such bonuses or contractual entitlements
(each, a "Bonus"), in accordance with the terms of such employment agreements
and historical practice (it being understood that this Section 2.1 is not
intended to and does not create any continued right of employment for any
employee or any right of any employee to compel the payment of such an amount)
provided such bonus amounts and other benefits are set forth in Schedules
3.1.11.2, 3.1.11.3 and 3.1.19 of the GS Disclosure Schedule or Schedules
3.2.11.2 and 3.2.19 of the RW and RW-UK Disclosure Schedule. A copy of each
existing employment agreement or offer letter given to the employees that set
forth the terms and conditions of such employees' Bonus has heretofore been
delivered to GSRW, and all such employment agreements and offer letters are set
forth in Schedules 3.1.11.3 and 3.2.11.3. Each employee of GS, RW and RW-UK and
their respective subsidiaries (each a "Subsidiary", and collectively, the
"Subsidiaries") who is not a party to such an employment agreement or offer
letter but is nonetheless eligible to receive a Bonus based on the historical
practices of GS, RW or RW-UK (as applicable) shall continue to be eligible to
receive a Bonus provided it is disclosed on Annex 1 to Schedule 3.1.19 of the GS
Disclosure Schedule or Annex 1 to Schedule 3.2.19 of the RW & RW-UK Disclosure
Schedule.
2.2 Benefit Plans. The Merger Company and RW and RW-UK will maintain
through 2004 health insurance employee benefit plans not less favorable in the
aggregate than those of
7
GS, RW, and RW-UK existing prior to the Effective Time (each in the form listed
on Schedules 3.1.11.2 and 3.2.11.2).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
For purposes of this Agreement, "Material Adverse Effect" or "Material
Adverse Change" means any effect, change, event, circumstance or condition or a
series or combination thereof (an "Event") that could reasonably be expected to
affect materially and adversely the business, assets (including intangibles),
results of operations, condition (financial or otherwise), or prospects of a
party, in each case, including its Subsidiaries together with it taken as a
whole. In the event of a dispute as to whether an Event or series of Events
constitutes or amounts to a Material Adverse Effect or Material Adverse Change,
an independent investment banker or corporate finance institution ("Valuer")
shall be appointed or instructed by agreement between the Shareholder
Representatives, as hereinafter defined, (and in the event of a dispute between
the Shareholder Representatives over the identity of the Valuer, by BDO Xxxxxxx
Xxxxxx and Xxxxxxx, Xxxxxxxxx and Xxxxxxx, PC, acting together, on the
application of either Shareholder Representative) to prepare on expedited basis
a valuation of RW and RW-UK (on a consolidated basis) or GS (on a consolidated
basis), as appropriate, (i) on the basis that the Event has never occurred or
existed (the "First Valuation") and (ii) after taking into account the effect of
the Event or Events on GS and on RW and RW-UK as appropriate ("Second
Valuation"). The Valuer shall use identical valuation principles in respect of
both the First Valuation and the Second Valuation. Any Event or Events which
results in the differential between the First Valuation and the Second Valuation
being less than 20% shall not constitute a Material Adverse Effect or Material
Adverse Change. The Valuer shall act as an expert and not as arbitrator. Each of
the parties hereto covenants to each other that they shall make available to the
Valuer all necessary and desirable information requested by it. In the event
that the Valuer determines that a Material Adverse Effect or Material Adverse
Change has occurred, the costs and expenses of the Valuer shall be discharged by
whichever of GS or the Shareholders was claiming that the Event did not
constitute a Material Adverse Effect or Material Adverse Change and vice versa.
In no event shall any of the following constitute a Material Adverse Effect or a
Material Adverse Change: (i) effects, changes, events, circumstances or
conditions generally affecting the industry in which either GSRW, GS, RW or
RW-UK operates or arising from changes in general business or economic
conditions (including, without limitation, foreign exchange rates); and (ii) any
effect resulting from compliance by GSRW, GS, RW or RW-UK with the terms of this
Agreement.
3.1 Representations and Warranties of GS. Subject to the limitations set
out in Article VII, GS hereby represents and warrants to GSRW and the
Shareholders that, except as specifically set forth in the Schedules and Annexes
to the GS Disclosure Schedule (collectively, the "GS Disclosure Schedule") in a
numbered Schedule that corresponds to the Section for which disclosure is made,
unless expressly specified otherwise in certain representations and warranties
(references herein to Schedules and Annexes are to the relevant Schedules and
Annexes of the GS Disclosure Schedule), the following representations and
warranties are true and correct as of the date of this Agreement and shall be
true and correct in all material respects at the Closing Date (except for
representations and warranties made as of a specific date, which representations
and warranties need only be true and correct as of such date):
8
3.1.1 Organization and Status. GS is a limited liability company duly
organized, validly existing and in good standing under the laws of its
jurisdiction of formation, and is duly qualified and in good standing as a
foreign corporation or limited liability company in each jurisdiction where its
properties (whether leased or operated) or its business conducted require such
qualification, except where failure to be so qualified would not have a Material
Adverse Effect on GS. GS has all requisite limited liability company power and
authority to operate and lease its property and to carry on its businesses as
they are now being conducted. Schedule 3.1.1 sets forth all states and foreign
jurisdictions in which GS is qualified to do business. GS has delivered to GSRW
and the Shareholders complete and accurate copies of the Company Agreement, as
amended to date.
3.1.2 Capitalization. As of the date hereof, Annex A sets forth a
complete and correct list of all holders of Common Shares, as well as holders of
GS Series A Stock and GS Series B Stock, as of June 4, 2003 (each, together with
other purchasers pursuant to this Section 3.1.2, a "Member", and collectively,
the "Members"). As of the date hereof, GS has capital stock consisting of
360,000 Common Shares, 58,607 shares of GS Series A Stock, and 40,000 shares of
GS Series B Stock which are outstanding and all of which issued and outstanding
shares are held of record by the Members in the amounts shown on Annex A. GS
reserves the right to sell the maximum number of shares of GS Series A Stock
provided for in the Confidential Private Offering Memorandum, dated January 15,
2003, as amended and supplemented through the Closing Date (the "Memorandum of
GS"). All of the outstanding Common Shares, GS Series A Stock and GS Series B
Stock have been duly authorized and are validly issued, fully paid and
nonassessable, and no shares were issued, and no options or warrants were
granted, in violation of preemptive or similar rights. Except as set forth
above, provided for above or on Schedule 3.1.2, there are no Common Shares, GS
Series A Stock or GS Series B Stock authorized, issued or outstanding, and there
are no preemptive rights or any outstanding subscriptions, options, warrants,
rights, convertible securities or other agreements or commitments of GS of any
character relating to the issued or unissued Common Shares, GS Series A Stock,
GS Series B Stock or other securities of GS. Except as disclosed on Schedule
3.1.2, there are no outstanding obligations of GS to repurchase, redeem or
otherwise acquire any outstanding Common Shares, GS Series A Stock or GS Series
B Stock.
3.1.3 Corporate Authority. GS has the limited liability company power
and authority and has taken all action necessary to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. This Agreement
has been duly and validly authorized by the Board of Managers of GS, validly
executed and delivered by GS and, on the Closing Date, will have been duly and
validly approved by the Members of each class and series of GS Shares. This
Agreement constitutes the valid and binding obligation of GS, enforceable
against GS in accordance with its terms.
3.1.4 Subsidiaries and Joint Ventures. Schedule 3.1.4 contains a
complete and correct list of all subsidiaries of GS ("GS Subsidiary"). Except as
disclosed on Schedule 3.1.4, GS has no subsidiaries and owns no stock or other
interest in any other corporation or in any partnership or limited liability
company, or other venture or entity.
9
3.1.5 Financial Statements.
3.1.5.1 Annex 1 to Schedule 3.1.5.1 contains the following
financial statements:
(i) A consolidated balance sheet of GS as of December 31, 2001, and
related consolidated income statement, cash flow statement and statement of
Members' equity of GS for the year ended December 31, 2001, with notes
thereto, audited by Xxxxxxx, Xxxxxxxxx and Xxxxxxx, PC ("GCK") (the "2001
Financial Statements");
(ii) A consolidated balance sheet of GS as of December 31, 2002, and
related consolidated income statement, cash flow statement and statement of
Members' equity of GS and its Subsidiaries for the year ended December 31,
2002, with notes thereto, audited by GCK (the "2002 Financial Statements");
and
(iii) An unaudited balance sheet of GS as of March 31, 2003, and
related consolidated income statement for the three months ended March 31,
2003 (the "2003 Financial Statements").
3.1.5.2 (a) The 2001 Financial Statements and the 2002 Financial
Statements, including related schedules and notes (sometimes referred to
collectively as the "GS Financial Statements"), (i) have been prepared in
accordance with generally accepted accounting principles in the United States,
consistently applied throughout the periods indicated, (ii) present fairly the
consolidated financial position of GS as at the dates thereof, (iii) present
fairly the results of operations and changes in financial position of GS for the
respective periods thereof, and (iv) in the case of the 2001 Financial
Statements and the 2002 Financial Statements, reflect all adjustments
(consisting only of normal recurring adjustments) that are necessary for a fair
presentation of the consolidated financial condition of GS and the results of
the operations of GS as of the dates thereof or for the periods covered thereby.
(b) The 2003 Financial Statements present reasonably the consolidated
financial positions of GS as at the date thereof and present reasonably the
results of operations and changes in financial position for the respective
period thereof.
3.1.6 Governmental and Other Filings. Other than (a) the filing of the
Certificate of Merger contemplated by Article I and (b) except as disclosed on
Schedule 3.1.6, no material notices, reports or other filings are required to be
made by GS with, nor are any material consents, registrations, approvals,
permits or authorizations required to be obtained by GS from, any domestic or
foreign governmental or regulatory authority, agency, court, commission or other
entity ("Governmental Entity") or any other entity or person not a party to this
Agreement in connection with the execution and delivery of this Agreement by GS
and the consummation by GS of the transactions contemplated hereby.
3.1.7 No Adverse Consequences. Except as set forth on Schedule 3.1.7,
neither the execution and delivery of this Agreement by GS nor the consummation
of the transactions contemplated by this Agreement will (a) result in the
creation or imposition of any lien, mortgage, pledge, lease, charge,
encumbrance, claim or restriction of any nature whatsoever (each, an
"Encumbrance") on any of the assets or, properties of GS, (b) violate any
provision of
10
the Company Agreement of GS, (c) violate any statute, judgment, order,
injunction, decree, rule, regulation or ruling of any Governmental Entity
applicable to GS, or (d) either alone or with the giving of notice or the
passage of time or both, conflict with, constitute grounds for termination of,
accelerate the performance required by, accelerate the maturity of any
indebtedness or obligation under, result in the breach of the terms, conditions
or provisions of or constitute a default under any mortgage, deed of trust,
indenture, note, bond, lease, license, permit or other agreement (other than
immaterial client contracts), instrument or obligation to which GS is a party or
by which any of them is bound, and which would have a Material Adverse Effect on
GS.
3.1.8 Undisclosed Liabilities. Except for liabilities or obligations
that (i) were incurred after December 31, 2002 in the ordinary course of
business and of a type and in an amount consistent with past practices, (ii) are
set forth in Schedule 3.1.8, or (iii) liabilities that are immaterial, GS has no
material liability (whether absolute, accrued, contingent or otherwise, and
whether due or to become due) that is not accrued or reserved against in the
2003 Financial Statements.
3.1.9 Absence of Certain Changes or Events. Except as set forth on
Schedule 3.1.9 and except as reflected in the 2003 Financial Statements, since
March 31, 2003, there has not been (i) any Material Adverse Change in GS or
discovery by GS of a condition or occurrence of an event that has resulted or
can reasonably be expected to result in a Material Adverse Change in GS, (ii)
any change by GS in its accounting methods, principles or practices, or (iii)
any material revaluation by GS of any of its assets, including writing down the
value of capitalized inventory or writing off notes or accounts receivable other
than in the ordinary course of business.
3.1.10 Litigation. Except as listed on Schedule 3.1.10, no material
litigation, suit, proceeding, claim, arbitration or governmental investigation
is pending or, to GS's knowledge, threatened against or relating to GS, its
respective officers or directors in their capacities as such, any of their
respective properties or businesses or employee benefit plans or arrangements.
3.1.11 Employment Matters.
3.1.11.1 Labor Matters. GS is not a party or otherwise subject to
any collective bargaining or other agreement governing the wages, hours or terms
of employment of employees. GS is and has been in compliance in all material
respects with all applicable laws regarding employment and employment practices,
terms and conditions of employment, wages and hours with respect to GS's
employees and is not and has not been engaged in any unfair labor practice.
There is no (a) unfair labor practice complaint against GS pending before the
National Labor Relations Board or any other Governmental Entity, (b) labor
strike, slowdown or work stoppage actually occurring or, to the knowledge of GS,
threatened against GS, (c) representation petition respecting the employees of
GS pending before the National Labor Relations Board or similar agency, or (d)
grievance or any arbitration proceeding pending arising out of or under
collective bargaining agreements applicable to GS. GS is not aware of any labor
strike, slowdown, or work stoppage occurring or threatened against any of the
principal suppliers of GS or any GS Subsidiary that might reasonably be expected
to have a Material Adverse Effect on GS. GS has fully completed and retained a
Form I-9 for each of their employees in accordance with applicable law, and GS
is not subject to examination in connection with such
11
forms or to any fines or other penalties under laws relating to employees who
are not authorized to work in the United States.
No employment agreement exists between GS and a Manager employee violating
Delaware or New York law. Except as disclosed on Schedule 3.1.11.3, no officer
or employee of GS is entitled to any remuneration, loan, commission or other
payment calculated by reference to the whole or part of the sales, revenues, or
profits of GS and GS is not a party to or bound by any share option, profit
sharing, bonus or commission scheme (whether discretionary or otherwise) in
respect of any of its officers or employees.
3.1.11.2 Employee Benefits. Schedule 3.1.11.2 lists all pensions,
retirement, profit sharing, deferred compensation, bonus, commission, incentive
compensation (including cash, stock and option plans or arrangements), life
insurance, health and disability insurance, hospitalization and all other
employee benefit plans or arrangements (the "Benefit Plans") (including, without
limitation, any contracts or agreements with trustees or insurance companies
relating to any such employee benefit plans or arrangements) established or
maintained by GS, and complete and accurate copies of all those plans or
arrangements (as well as, with respect to each Benefit Plan (as applicable),
copies of any documentation with respect to any related trust) have been made
available to GSRW and the Shareholders. GS does not have any plans subject to
Title IV of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). The Benefit Plans comply in all material respects with applicable
law.
3.1.11.3 Employment Agreements. Schedule 3.1.11.3 lists each
employment agreement and offer letter to which GS is a party that provides for
an annual base salary of at least $50,000, copies of which have been made
available to GSRW and the Shareholders.
3.1.12 Intellectual Property.
(a) Except as set forth on Schedule 3.1.12, GS owns, or has valid
licenses to use, all patents, trademarks, service marks, trade names, brands,
copyrights, trade secrets, technology, know-how, formulas and other intellectual
property (the "Intellectual Property") necessary to, or used in the conduct of,
the business of GS as now conducted and as proposed to be conducted, including,
but not limited to, the trademarks and trade names and the registrations thereof
as set forth on Annex 1 to Schedule 3.1.12. Except as set forth in Schedule
3.1.12, all Intellectual Property owned by GS is owned by it free and clear of
any Encumbrances. Except as set forth in Schedule 3.1.12, to the best of GS's
knowledge, the conduct of the business of GS does not conflict with or infringe
upon any Intellectual Property rights of any other person and no claims of
conflict or infringement are pending or threatened against GS. GS has made all
necessary filings and recordations and has paid all required fees and Taxes (as
hereinafter defined) to maintain ownership of the Intellectual Property.
(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not (i) constitute a
breach of any instrument or agreement governing any Intellectual Property, (ii)
cause the forfeiture or termination or give rise to a right of forfeiture or
termination of any Intellectual Property or (iii)
12
prevent GS from using, selling or licensing any Intellectual Property, except as
set forth on Schedule 3.1.12.
3.1.13 Real Property and Environmental.
3.1.13.1 Owned Real Property. GS does not own in fee any real
property.
3.1.13.2 GS Leased Real Property. Schedule 3.1.13.2 sets forth a
complete and accurate list and description of all real property leased,
subleased or otherwise occupied by GS (the "GS Leased Real Property"), such
description including, for each GS Leased Real Property, an identification of
the lease or sublease agreement therefor and any and all amendments,
modifications, side letters and other agreements relating thereto, and sets
forth the names of the lessor and lessee (or sublessor or sublessee) hereunder,
the title and date thereof, the address and approximate size of the premises
leased thereunder, and the use of such premises. All of the leases or subleases
of the GS Leased Real Property (the "GS Leases") are valid, binding and in full
force and effect (assuming the due authorization, execution and delivery by the
lessor). Except as set forth on Schedule 3.1.13.2, no lease is subject to any
Encumbrance, license or other agreement granting to any third party any interest
in such GS Lease or any right to the use or occupancy of any GS Leased Real
Property. True and complete copies of the GS Leases have previously been
delivered to GSRW and the Shareholders, including, without limitation, all
amendments or modifications thereof and all side letters or other instruments
affecting the obligations of any party thereunder. Except as set forth on
Schedule 3.1.13.2, the lessee or an affiliate under each GS Lease is now in
possession of the applicable GS Leased Real Property. There is no pending or
threatened proceeding that might interfere with the quiet enjoyment of each
tenant. Except as set forth on Schedule 3.1.13.2, GS has not assigned,
mortgaged, pledged or otherwise encumbered its interest if any, under any GS
Lease. GS has exercised within the time prescribed in each GS Lease any option
provided therein to extend or renew the term thereof. As used herein, the term
"GS Lease" shall also include subleases, the term "lessor" shall also include
any sublessor, and the term "lessee" shall also include any sublessee.
3.1.13.3 Environmental Matters. Except as disclosed in Schedule
0.0.00.0:
(a) To the best of its knowledge, GS has complied and is in compliance
with, and the GS Leased Real Property and all improvements thereon are in
compliance with, all Environmental Laws (as hereinafter defined) in all material
respects; provided, however, that this clause shall not be deemed to include any
representation as to the building in which any GS Leased Real Property is
located, the land on which such building sits or any improvement made or
fixtures installed by any person other than GS.
(b) To the best of its knowledge, no Hazardous Material (as
hereinafter defined) (i) has been released, placed, stored, generated, used,
manufactured, treated, deposited, spilled, discharged, or disposed of by GS on
or under any GS Leased Real Property, except in each such instance in compliance
with Environmental Laws, (ii) is presently maintained, used, generated or
permitted to remain in place at any GS Leased Real Property by GS in violation
of
13
any Environmental Law, (iii) is required by any Environmental Law to be
eliminated, removed, treated or mitigated by GS, given the nature of its present
condition, location, nature, material or maintenance, or (iv) is of a type,
location, material, nature or condition that requires special notification to
third parties by GS under any Environmental Law.
(c) GS has disposed of all wastes, including those wastes which
contain Hazardous Materials, in compliance with all applicable Environmental
Laws.
(d) No notice, citation, summons or order has been received by GS or
any of its Subsidiaries, no notice has been given by GS, and no complaint has
been filed, no penalty has been assessed and no investigation or review is
pending or to the knowledge of GS threatened by any Governmental Entity, with
respect to (i) any alleged violation by GS of any Environmental Law, (ii) any
alleged failure by GS to have any environmental permit, certificate, license,
approval, registration or authorization required under any Environmental Law in
connection with its business or properties, (iii) any use, possession,
generation, treatment, storage, recycling, transportation, release or disposal
by or on behalf of GS of any Hazardous Material, or (iv) the listing or proposed
listing pursuant to any Environmental Law of the Real Property, or to GS's best
knowledge, any property adjoining any Real Property on any federal or state list
of sites requiring investigation and or cleanup.
(e) For purposes of this Agreement:
"Environmental Laws" means, collectively, the Comprehensive
Environmental Response, Compensation and Liability Act of 1930 ("CERCLA"),
as amended by the Superfund Amendments and Reauthorization Act of 1986
("XXXX"), 42 U.S.C. Section 9601 et seq., the Toxic Substances Control Act
("TSCA"), 15 U.S.C. Section 2601 et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1802 et seq., the Resource
Conservation and Recovery Act ("RCRA"), 42 U.S.C. Section 6901 et seq., the
Clean Water Act ("CWA"), 33 U.S.C. Section 1251 et seq., the Safe Drinking
Water Act, 42 U.S.C. Section 300f et seq., the Clean Air Act ("CAA"), 42
U.S.C. Section 7401 et seq. or any other applicable federal, state, or
local laws, including any rules, regulations, orders, or ordinances adopted
or promulgated pursuant to the preceding laws or other similar laws,
regulations, rules, orders, or ordinances now in effect relating to
Hazardous Materials generation, production, use, storage, treatment,
transportation or disposal, or noise control or the protection of human
health or the environment from Hazardous Materials.
(f) For purposes of this Agreement:
"Hazardous Materials" means any wastes, substances, or materials
(whether solids, liquids or gases) that are deemed hazardous, toxic
pollutants, or hazardous contaminants, including substances defined as
"hazardous wastes," "hazardous substances," "toxic substances,"
"radioactive materials," or other similar designations in, or otherwise
subject to regulation under, any environmental laws. "Hazardous Materials"
includes polychlorinated biphenyls (PCBs), asbestos, lead-based paints and
petroleum and petroleum products (including crude oil or any fraction
thereof).
14
3.1.14 Status of Contracts.
(a) Except as disclosed in Schedule 3.1.14, there is no existing
material default or violation by GS under any material contracts, agreements,
leases, subleases, license agreements, or instruments to which GS is a party or
by which it is bound (collectively, the "GS Contracts") and no event has
occurred that (whether with or without notice, lapse of time or both) would
constitute a default of GS under any material GS Contract. GS is not aware of
any default by any other party to any material GS Contract or of any event that
(whether with or without notice, lapse of time or both) would constitute a
default by any other party with respect to obligations of that party under any
GS Contract, and, except as described in Schedule 3.1.14, to the knowledge of
GS. GS is not a party to, or bound by, any GS Contract that is expected to
result in any material loss to GS upon the performance thereof (including any
liability for penalties or damages, whether liquidated, direct, indirect,
incidental or consequential).
(b) Schedule 3.1.14 contains a complete and correct list of the
following agreements to which GS is a party to or by which it is bound, copies
of which have been previously made available to GSRW and the Shareholders:
(i) any employment, consulting, severance or termination agreement
under which GS is required to pay more than $50,000 in any 12-month period;
(ii) any agreement or plan, including 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;
(iii) any material agreement, contract or commitment containing any
provision limiting the freedom of GS to engage in any line of business
anywhere in the world or compete with any person, or granting any exclusive
distribution rights;
(iv) any agreement, contract or commitment currently in force relating
to the disposition or acquisition of assets not in the ordinary course of
business or any ownership interest in any corporation, partnership, joint
venture or other business enterprise;
(v) any credit agreement, notes, indentures, security agreements or
similar agreements by GS relating to indebtedness for borrowed money (for
avoidance of doubt, excluding indebtedness incurred in the ordinary course
of trade);
(vi) any purchase contract that continues for more than 12 months and
requires the payment by GS of more than $100,000 in any 12-month period; or
(vii) any other contract or agreement that is material to business or
operations of GS taken as a whole and is not in the ordinary course of
business.
3.1.15 Permits and Licenses. Each of GS, or its agents, holds all
governmental licenses, permits, franchises, easements and authorizations
(collectively, "Permits") necessary for
15
the lawful conduct of its business pursuant to all applicable statutes, laws,
ordinances, rules and regulations (having the force of law) of all Governmental
Entities having jurisdiction over it or any part of its operations, except for
Permits the absence of which, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect. GS is in
compliance in all material respects with each of the terms of the applicable
Permits, and there are no claims of violation by GS of any of such Permits.
3.1.16 Taxes.
3.1.16.1 Returns. Except as set forth on Schedule 3.1.16.1, GS
has filed on a timely basis all federal, state, local, foreign and other
returns, reports, forms, declarations and information returns required to be
filed by it with respect to Taxes which relate to its business, results of
operations, financial condition, properties or assets for all periods
(collectively, the "Returns"). All Returns filed are complete and accurate in
all material respects. Except as set forth on Schedule 3.1.16.1, GS has paid on
a timely basis all Taxes due with respect to the taxable periods covered by such
Returns. GS has given GSRW and the Shareholders the opportunity to review
complete and accurate copies of all Returns. Except as set forth on Schedule
3.1.16.1, GS has not been a member of an affiliated group filing consolidated
returns (other than a group the common parent of which was GS) or has any
liability for Taxes of any person (other than GS), whether arising under
federal, state, local or foreign law, as a transferee or successor, by contract,
pursuant to Treas. Reg. Section 1.1502-6 or otherwise. Except as set forth on
Schedule 3.1.16.1, GS is not currently the beneficiary of any extension of time
within which to file any Return. Except as set forth on Schedule 3.1.16.1, in
the past three years, no Returns have been examined by the applicable Taxing
Authority(ies) (as hereinafter defined) for any period and, except as set forth
on Schedule 3.1.16.1, GS has no knowledge of any planned audit or review, and
there are no outstanding agreements or waivers extending the applicable
statutory periods of limitation for Taxes for any period. Except as set forth on
Schedule 3.1.16.1, no deficiencies for any material amount of Taxes have been
assessed or are currently proposed or asserted in writing, in each case by any
Taxing Authority, against GS. No successful claim has ever been made by an
authority in a jurisdiction where GS does not file Returns that it is or may be
subject to taxation by that jurisdiction. There are no liens with respect to
Taxes upon any of the assets of GS, except for liens imposed by statute or
regulation without failure to pay Tax. All Taxes that are or have been required
to be withheld or collected by GS, its predecessors have been duly withheld and
collected and, to the extent required, have been properly paid or deposited as
required by applicable laws. GS is not an obligor on, and none of its assets
have been financed directly or indirectly by, any tax exempt bonds. GS is not
now nor during the applicable period specified in Section 897(c)(1)(A)(ii) of
the Code has ever not been a United States real property holding corporation as
defined in Section 897(c)(2) of the Code.
3.1.16.2 Taxes Paid or Reserved. The unpaid Taxes of GS (a) did
not as of March 31, 2003 exceed the reserve for tax liability (other than any
reserve for deferred Taxes established to reflect timing differences between
book and Tax income) reflected in the 2003 Financial Statements (or reflected in
any notes thereto) and (b) do not exceed that reserve as adjusted for the
passage of time through the Closing Date in accordance with the past custom and
practice of GS in filing its Returns.
16
3.1.16.3 Definitions. The term "Taxes" or "Taxation" means within
Ireland, income tax, corporation tax, advance corporation tax, capital gains
tax, capital acquisitions tax, inheritance tax, capital transfer tax, deposit
interest retention tax, gift tax, value added tax, dividend withholding tax,
probate tax, sales tax, customs and other import and export duties, excise tax,
wealth tax, property tax, residential property tax, vehicle registration tax,
rates, pay-related social insurance, pay as you earn tax, withholding tax
(whether in respect of any payments or otherwise), and any other taxes, levies,
duties, charges, surcharges, imposts or withholdings corresponding to, similar
to, replaced by or replacing any of them, together with all and any penalties,
interest, fines and charges relating to any of them or to any failure to file
any return required for the purposes of any of them; and outside Ireland, all
taxes, levies, duties, charges, surcharges, imposts, and withholdings of any
nature whatsoever, including (without limitation) taxes on gross or net Profits
and taxes on receipts, sales, use, occupation, franchise, value added and
personal property, together with all and any penalties, interest, fines and
charges relating to any of them or to any failure to file any return required
for the purposes of any of them, regardless (in either case) of whether any such
taxes, levies, duties, charges, surcharges, imposts, withholdings, penalties,
fines and interest are chargeable directly or primarily against or attributable
directly or primarily to GS or the RW Companies, as appropriate, or any other
person and of whether any amount in respect of any of them is recoverable from
any other person.
3.1.16.4 The term "Revenue Authority" means any tax, revenue or
fiscal authority (including the Revenue Commissioners or the UK Revenue
Authorities) and any other statutory, governmental, state, provincial or local
governmental authority, body, court, tribunal or official whatsoever (whether of
Ireland or elsewhere in the world) competent to impose, administer or collect
any Taxation or make any decision or ruling on any matter relating to Taxation.
3.1.17 Related Party Interests. Except as listed in Schedule 3.1.17,
no Member, officer, employee or director of GS (or any entity owned or
controlled by one or more of such parties) (a) has any interest in any property,
real or personal, tangible or intangible, used in or pertaining to the business
of GS, (b) is indebted to GS, or (c) has any material financial interest, direct
or indirect, in any supplier or customer of, or other outside business that has
significant transactions with GS. Except for undocumented arrangements
identified as such on Schedule 3.1.17, true and complete copies of all
agreements listed on Schedule 3.1.17 have been provided to GSRW and the
Shareholders. Except as set forth on Schedule 3.1.17 or contemplated by the
Agreement, GS is not indebted to any of its Members, directors or officers (or
any entity owned or controlled by one or more of such parties) except for
amounts due under normal salary and bonus arrangements and for reimbursement of
ordinary business expenses. Except as set forth in Schedule 3.1.17, the
consummation of the transactions contemplated by this Agreement will not (either
alone or upon the occurrence of any act or event, or with the lapse of time, or
both) result in any payment (severance or other) becoming due from GS to any of
their respective Members, officers, directors or employees (or any entity owned
or controlled by one or more of such parties).
3.1.18 No Powers of Attorney or Restrictions. Except as set forth in
Schedules 3.1.16.1 and 3.1.18, no power of attorney or similar authorization
given by GS presently is in effect or outstanding. To the knowledge of GS, none
of the employees of GS is obligated under
17
any contract (including licenses, covenants or commitments of any nature), or
subject to any judgment, decree or order of any court or administrative agency,
that would interfere with the use of his or her best efforts to promote the
interests of GS or that would conflict with the business of GS as now conducted
or proposed to be conducted.
3.1.19 Personnel. Annex 1 to Schedule 3.1.19 contains a complete and
accurate list of all employees of GS, setting forth their respective names,
current positions, salaries and other remuneration. All written employment and
consulting agreements and all offer letters with employees and consultants
earning $50,000 or more in base salary per annum, to which GS is a party are
listed on Schedules 3.1.19.
3.1.20 Brokers and Finders. Except as set forth in Schedule 3.1.20, GS
has not incurred any liability for any brokerage or investment banking fees,
commissions or finders' fees in connection with the Merger.
3.1.21 No Other Agreements to Sell GS or Its Assets. GS has no legal
obligation, absolute or contingent, to any other person to sell any material
portion of its assets (other than inventory in the ordinary course or business),
to sell its capital stock or other ownership interests, or to effect any merger,
consolidation or other reorganization or to enter into any agreement with
respect thereto. As of the date hereof, GS is not engaged, directly or
indirectly, in any discussions or negotiations with any other person with
respect to an Acquisition Transaction (as hereinafter defined).
3.1.22 Member Approval. The approval by a majority of each class and
series of the voting shares of GS are the only votes of the holders of any class
or series of GS membership interests necessary to approve the transactions
contemplated by this Agreement.
3.1.23 Disclosure. No representation or warranty made by GS in this
Agreement and no statement contained in this Agreement, the Exhibits hereto and
all other ancillary documents executed and delivered in connection herewith
(including the GS Disclosure Schedules to this Agreement) or any certificate
furnished or to be furnished by GS to GSRW or any of its representatives
pursuant to the provisions hereof or in connection with the transactions
contemplated hereby, contains any untrue statement of a material fact or omits
to state a material fact necessary in order to make such representation,
warranty or statement, in light of the circumstances under which it was made,
not misleading.
3.1.24 Board Recommendation. The Board of Managers of GS has
unanimously (i) determined that this Agreement and the transactions contemplated
hereby, including the Merger, are in the best interests of the Members, and (ii)
recommended that the Members of each class or series of GS Shares approve this
Agreement and the transactions contemplated hereby, including the Merger.
3.1.25 State Takeover Laws. Prior to the date hereof, the Board of
Managers of GS has taken all actions, if any, necessary to exempt under or make
not subject to any state takeover law or other state law that purports to limit
or restrict business combinations or the ability to acquire or vote shares: (i)
the execution of this Agreement, (ii) the Merger and (iii) the other
transactions contemplated hereby.
18
3.1.26 Insurance. Annex 1 to Schedule 3.1.26 contains a true and
complete list and description by type of all policies of fire, liability,
workmen's compensation and other forms of insurance, including all group
insurance programs in effect for GS's employees, owned or held by GS. All such
policies are in full force and effect, all premiums with respect thereto
covering all periods up to and including the date hereof have been paid, and no
written notice of cancellation or termination has been received with respect to
any such policy.
3.1.27 Books and Records. To the best of knowledge of GS and its
Managers, all accounts, books and ledgers related to the business of GS have
been properly and accurately kept and completed in all material respects, and
there are no material inaccuracies or discrepancies of any kind contained or
reflected therein.
3.1.28 Disclaimer of other Representation and Warranties. Except as
expressly set forth in Sections 3.1.1 through 3.1.27, GS makes no representation
or warranty, express or implied, at law or in equity in respect of GS or any of
its respective assets, liabilities or operations including with respect to
merchantability or fitness for any particular purpose, and any such other
representations or warranties are hereby expressly disclaimed.
3.1.29 Remedy. The sole remedy for breach of warranties or
representations hereunder shall be pursuant to Article 7 and the Escrow
Agreement.
3.2 Representations and Warranties of the Shareholders. Subject to the
limitations set out in Article VII, each of the Shareholders hereby represents
and warrants to GSRW and GS that, except as specifically set forth in the
Schedules and Annexes to the RW & RW-UK Disclosure Schedule (collectively, the
"RW & RW-UK Disclosure Schedule") in a numbered Schedule that corresponds to the
Section for which disclosure is made, unless expressly specified otherwise in
certain representations and warranties (references herein to Schedules and
Annexes are to the relevant Schedules and Annexes of the RW & RW-UK Disclosure
Schedule) the following representations and warranties are true and correct as
of the date of this Agreement and shall be true and correct in all material
respects as of the Closing Date (except for representations and warranties made
as of specific date which representations and warranties need only be true and
correct as of such date):
3.2.1 Organization and Status. Each of RW, RW-UK and the Subsidiaries
(the "RW Companies") is a company duly organized, and validly existing under the
laws of its jurisdiction of incorporation or formation, and are duly qualified
as a foreign company in each jurisdiction where their properties (whether leased
or operated) or their business conducted require such qualification, except
where failure to be so qualified would not have a Material Adverse Effect on RW,
RW-UK or the Subsidiaries. Each of RW, RW-UK and the Subsidiaries have all
requisite company power and authority to operate and lease their property and to
carry on its businesses as they are now being conducted. Schedule 3.2.1 sets
forth all states and foreign jurisdictions in which each of RW, RW-UK and the
Subsidiaries are qualified to do business. Each of RW, RW-UK and the
Subsidiaries has delivered to GSRW complete and accurate copies of its
Certificate of Incorporation, Articles of Association and Memoranda of
Association, as detailed in such Schedule 3.2.1, each as amended to the date
hereof. All returns, particulars and other documents required to be delivered
under the Irish Companies Acts 1963-
19
2001 or the UK Companies Xxx 0000 to the Irish or UK Registrar of Companies have
been duly delivered.
3.2.2 Capitalization. Annex B sets forth a complete and correct list
of all holders of shares of RW Stock and RW-UK Stock and their respective
Subsidiaries, together with each shareholder's holdings. RW has authorized share
capital of E256,000 divided into 1,000 Ordinary Shares of E1.00 nominal value
and 255,000 "B" Ordinary Shares of E1.00 nominal value, of which 100 Ordinary
Shares have been issued and all of which Ordinary Shares are held of record as
shown on Annex B, it being agreed that the 255,000 "B" Ordinary Shares shall be
purchased by GSRW at the Closing pursuant to Section 4.2.8 of this Agreement.
RW-UK has authorized share capital of E132.052752 divided into 104 Ordinary
Shares of E1.269738 nominal value, of which 104 Ordinary Shares have been issued
and all of which issued and outstanding shares are held of record as shown on
Annex B, which share amounts reflect the exchange of all indebtedness of RW-UK
held by the Shareholders aggregating E507,895 for the issuance of one Ordinary
Share to each of the Shareholders pursuant to Section 4.2.17. The Roaring Water
Bay Spirits Company Limited has authorized share capital of E1,250,200 divided
into 796,000 Ordinary Shares of E1.25 nominal value, 2,550,000 "B" Ordinary
Shares of E.10 nominal value, 20,000 "A" Ordinary Shares of E.01 nominal value,
of which 27,777 Ordinary Shares, 2,550,000 "B" Ordinary Shares and 9,000 "A"
Ordinary Shares have been issued and all of which issued shares are held of
record as shown on Annex B. The Roaring Water Bay Whiskey Company Limited has
authorized share capital of E126.9738 divided into 100 Ordinary Shares of
E1.269738 nominal value, of which 2 Ordinary Shares have been issued and all of
which issued and outstanding shares are held of record as shown on Annex B. The
Clontarf Irish Whiskey Company has authorized share capital of E126.9738 divided
into 100 Ordinary Shares of E1.269738 nominal value, of which 2 Ordinary Shares
have been issued and all of which issued and outstanding shares are held of
record as shown on Annex B. The Xxxx Vodka Company has authorized share capital
of E1,269,738 divided into 1,000,000 Ordinary Shares of E1.269738 nominal value,
of which 2 Ordinary Shares have been issued and all of which issued and
outstanding shares are held of record as shown on Annex B. The Roaring Water Bay
Spirits Company (GB) Limited has authorized share capital of UK L100 divided
into 100 Ordinary Shares of UK L1.00 nominal value, of which 2 Ordinary Shares
have been issued and all of which issued and outstanding shares are held of
record as shown on Annex B. Neat Spirits Company Limited has authorized share
capital of UK L80,000 divided into 40,000 A Shares and 40,000 B Shares of
UK L1.00 nominal value, of which 200 A Shares have been issued and all of
which issued shares are held of record as shown on Annex B. The Roaring Water
Bay Spirits Company (NI) Limited has authorized share capital of UK
L100,000 divided into 100,000 Ordinary Shares of UK L1.00 nominal
value, of which 100 Ordinary Shares have been issued and all of which issued and
outstanding shares are held of record as shown on Annex B. The Roaring Water Bay
(Research and Development) Company Limited has authorized share capital of
E1,269.738 divided into 1000 Ordinary Shares of E1.269738 nominal value, of
which 100 Ordinary Shares have been issued and all of which issued and
outstanding shares are held of record by the Shareholders in the amounts shown
on Annex B. All of the outstanding shares of capital stock of RW and RW-UK and
their respective subsidiaries have been duly authorized and are validly issued,
fully paid and nonassessable, and no shares were issued, and no options or
warrants were granted, in violation of preemptive or similar rights. Except as
set forth above, there are no shares of RW Stock or RW-UK Stock authorized,
issued or outstanding, and there are no preemptive rights or any outstanding
subscriptions, options, warrants, rights, convertible
20
securities or other agreements or commitments of RW or RW-UK of any character
relating to the issued or unissued capital stock or other securities of RW or
RW-UK. Except as disclosed on Schedule 3.2.2, there are no outstanding
obligations of RW or RW-UK to repurchase, redeem or otherwise acquire any of the
outstanding shares of RW Stock or RW-UK Stock.
3.2.3 Corporate Authority. Each of RW and RW-UK has the corporate
power and authority and has taken all corporate action necessary to execute and
deliver this Agreement. This Agreement has been duly and validly authorized by
the Board of Directors of each of RW and RW-UK, validly executed and delivered
by each of RW and RW-UK and has been duly and validly executed by their
respective Shareholders. This Agreement constitutes the valid and binding
obligation of each of RW, RW-UK and the Shareholders, enforceable against each
of RW, RW-UK and the Shareholders in accordance with its terms.
3.2.4 Subsidiaries and Joint Ventures. Except as set forth on Schedule
3.2.4, none of RW and RW-UK has any subsidiaries and owns no stock or other
interest in any other corporation or in any partnership or limited liability
company, or other venture or entity.
3.2.5 Financial Statements.
3.2.5.1 Annex 1 to Schedule 3.2.5.1 of the RW & RW-UK Disclosure
Schedule contains the following financial statements:
(i) Audited Accounts of RW-UK, The Roaring Water Bay Spirits Company
Limited and The Roaring Water Bay Spirits Company (GB) Limited, and related
consolidated income statements, cash flow statements and statements of
Shareholders' equity of each for the year ended December 31, 2001, with
notes thereto, audited by Ernst & Young (the "2001 RW & RW-UK Financial
Statements");
(ii) Audited Accounts of each of RW-UK, The Roaring Water Bay Spirits
Company Limited and The Roaring Water Bay Spirits Company (GB) Limited,
together with the Management Account of RW, as of December 31, 2002, and
related consolidated income statements, cash flow statements and statements
of Shareholders' equity of each for the year ended December 31, 2002, with
notes thereto, audited by BDO Xxxxxxx Xxxxxx (the "2002 RW & RW-UK
Financial Statements"); and
(iii) Management Accounts of each of The Roaring Water Bay Spirits
Company Limited, The Roaring Water Bay Spirits Company (GB) Limited, RW and
RW-UK as of March 31, 2003, and related consolidated income statements,
cash flow statements and statements of Shareholders' equity of each for the
three months ended March 31, 2003 (the "2003 RW & RW-UK Financial
Statements").
3.2.5.2 (a) The 2001 RW & RW-UK Financial Statements and the 2002
RW & RW-UK Financial Statements, including related schedules and notes
(sometimes referred to collectively as the "RW & RW-UK Financial Statements"),
(i) have been prepared in accordance with generally accepted accounting
principles, in Ireland, and in England and Wales, consistently applied
throughout the periods indicated, (ii) present fairly the consolidated financial
positions of each of The Roaring Water Bay Spirits Company Limited, The Roaring
Water Bay Spirits Company (GB) Limited, RW and RW-UK as at the dates thereof,
(iii) present fairly the
21
results of operations and changes in financial position of each of The Roaring
Water Bay Spirits Company Limited, The Roaring Water Bay Spirits Company (GB)
Limited, RW and RW-UK for the respective periods thereof, and (iv) in the case
of the 2001 RW & RW-UK Financial Statements and the 2002 RW & RW-UK Financial
Statements, reflect all adjustments (consisting only of normal recurring
adjustments) that are necessary for a fair presentation of the consolidated
financial condition of each of The Roaring Water Bay Spirits Company Limited,
The Roaring Water Bay Spirits Company (GB) Limited, RW and RW-UK and the results
of the operations of each of The Roaring Water Bay Spirits Company Limited, The
Roaring Water Bay Spirits Company (GB) Limited, RW and RW-UK as of the dates
thereof or for the periods covered thereby.
(b) The 2003 Financial Statements present reasonably the consolidated
financial positions of each of The Roaring Water Bay Spirits Company Limited,
The Roaring Water Bay Spirits Company (GB) Limited, RW and RW-UK as at the dates
thereof and present reasonably the results of operations and changes in
financial position of each of The Roaring Water Bay Spirits Company Limited, The
Roaring Water Bay Spirits Company (GB) Limited, RW and RW-UK for the respective
periods thereof.
3.2.6 Governmental and Other Filings. Except as disclosed on Schedule
3.2.6, no material notices, reports or other filings are required to be made by
the Shareholders, RW or RW-UK with, nor are any material consents,
registrations, approvals, permits or authorizations required to be obtained by
any of the Shareholders, RW and RW-UK from, any Governmental Entity or any other
entity or person not a party to this Agreement as a result of the execution and
delivery of this Agreement by the Shareholders, RW or RW-UK and the consummation
by the Shareholders, RW or RW-UK of the transactions contemplated hereby.
3.2.7 No Adverse Consequences. Except as set forth on Schedule 3.2.7,
neither the execution and delivery of this Agreement by RW, RW-UK or the
Shareholders nor the consummation of the transactions contemplated by this
Agreement will (a) result in the creation or imposition of any Encumbrance on
any of the assets or, properties of RW or RW-UK or the RW Stock or the RW-UK
Stock, (b) violate any provision of the Certificate of Incorporation and
Memorandum and Articles of Association of RW or RW-UK, (c) violate any statute,
judgment, order, injunction, decree, rule, regulation or ruling of any
Governmental Entity applicable to the Shareholders, RW or RW-UK, or (d) either
alone or with the giving of notice or the passage of time or both, conflict
with, constitute grounds for termination of, accelerate the performance required
by, accelerate the maturity of any indebtedness or obligation under, result in
the breach of the terms, conditions or provisions of or constitute a default
under any mortgage, deed of trust, indenture, note, bond, lease, license, permit
or other agreement (other than immaterial client contracts), instrument or
obligation to which the Shareholders, RW or RW-UK is a party or by which any of
them is bound and which would have a Material Adverse Effect on RW, RW-UK or the
Shareholders.
3.2.8 Undisclosed Liabilities. Except for liabilities or obligations
that (i) were incurred after December 31, 2002 in the ordinary course of
business and of a type and in an amount consistent with past practices, (ii) as
set forth in Schedule 3.2.8, or (iii) liabilities that are immaterial, none of
RW, RW-UK, The Roaring Water Bay Spirits Company Limited and The Roaring Water
Bay Spirits Company (GB) Limited and their subsidiaries has any material
22
liability (whether absolute, accrued, contingent or otherwise, and whether due
or to become due) that is not accrued or reserved against in the 2003 RW & RW-UK
Financial Statements.
3.2.9 Absence of Certain Changes or Events. Except as set forth on
Schedule 3.2.9 and except as reflected in the 2003 RW & RW-UK Financial
Statement since March 31, 2003, there has not been (i) any Material Adverse
Change in the RW Companies or discovery by the RW Companies or the Shareholders
of a condition or occurrence of an event that has resulted or can reasonably be
expected to result in a Material Adverse Change in the RW Companies, (ii) any
change by the RW Companies in the accounting methods, principles or practices,
or (iii) any material revaluation by the RW Companies of any of their respective
assets, including writing down the value of capitalized inventory or writing off
notes or accounts receivable other than in the ordinary course of business.
3.2.10 Litigation. Except as set forth on Schedule 3.2.10, no material
litigation, suit, proceeding, claim, arbitration or governmental investigation
is pending or, to the RW Companies, their Subsidiaries or the Shareholders'
knowledge, threatened against or relating to the Shareholders, the RW Companies,
their Subsidiaries, or their respective officers or directors in their
capacities as such, any of their respective properties or businesses or employee
benefit plans or arrangements.
3.2.11 Employment Matters.
3.2.11.1 Labor Matters.
(a) Each of the RW Companies is and has been in compliance in all
material respects with all applicable laws regarding employment and employment
practices, terms and conditions of employment, wages and hours with respect to
the employees.
(b) "Pension Scheme" means The Roaring Water Bay Spirits Company
Limited Pension Scheme, a copy of the explanatory memorandum which has been
delivered to GSRW which completely and accurately reflects the Pension Scheme.
With the exception of the Pension Scheme, there are not in existence nor has any
proposal been announced or commitment given or promise made to establish any
retirement, death or disability scheme for officers or employees (or any
dependent of any of them) of any of the RW Companies, nor are the RW Companies
under any obligation (whether or not legally binding, established by custom or
approved) to or in respect of employee (or any dependent of any of them) of any
of the RW Companies with regard to retirement, death or disability benefits
pursuant to which any of the RW Companies is or may become liable to make
payments and no pension or retirement or sickness gratuity is currently being
paid or has been paid or has been promised by any of the RW Companies or in
respect of any present or former officer or employee (or any dependent of any of
them) any of them.
The Pension Scheme has at all times complied and been duly
administered in accordance with all applicable legislation, regulation and
requirements including (without limitation) the provisions of the Irish Pensions
Act, 1990 (and any regulations made thereunder) and the documentation by which
it is constituted and governed.
23
The RW Companies have duly complied with all its obligation under the
Pension Scheme.
No contract of service exists between the RW Companies and a director
employee in relation to which any of the relevant requirements of Section 28 of
the Irish Companies Act, 1990 or equivalent provisions of English law have not
been fulfilled. No officer or employee of any of the RW Companies is entitled to
any remuneration, loan, commission or other emoluments of whatever nature
calculated by reference to the whole or part of the turnover, the profits or
sales of any of the RW Companies and none of the RW Companies is party to or
bound by any share option, profit sharing, bonus or commission scheme (whether
discretionary or otherwise) in respect of any of its officer or employees. None
of the RW Companies has entered into any recognition agreement with a trade
union nor has it done any act which might be construed as recognition. None of
the RW Companies, and none of their respective employees, is involved in any
industrial dispute. There are no claims pending so far as the Shareholders are
aware threatened against any of the RW Companies, by an employee or xxxxxxx or
third party, in respect of any accident or injury, which are not fully covered
by insurance. None of the RW Companies is liable to make any payment to any
person under the Irish Redundancy Payments Acts, 1967 to 1991 of the Irish
Protection of Employment Act, 1977. Save to the extent (if any) to which
provision or allowance has been made in the Financial Statements no liability
has been incurred by any of the RW Companies for redundancy payments, protective
awards or for compensation for wrongful dismissal, unfair dismissal or a
discriminatory dismissal or for failure to comply with any order for the
reinstatement or re-engagement of any employee or for any other liability
accruing from the termination of any contract of employment or for services; and
no claims have been made for equal pay, discrimination, sexual or other
harassment. Each of the RW Companies has in relation to each of their employees
(and, so far as relevant, to each of its former employees) complied with all
material obligations imposed on it by, and all orders and awards made under all
statutes and mandatory regulations and codes of conduct.
3.2.11.2 Employee Benefits. Schedule 3.2.11.2 lists all Benefit
Plans and contractual arrangements (including, without limitation, any contracts
or agreements with trustees or insurance companies relating to any such employee
benefit plans or arrangements) (but not including the Pension Scheme)
established or maintained by the RW Companies and the Subsidiaries, and complete
and accurate copies of all those plans or arrangements and copies of any
documentation with respect thereto) have been made available to GSRW. The
Benefit Plans comply in all material respects with applicable law. None of the
RW Companies and their Subsidiaries has undertaken to make any amendment to any
Benefit Plan, nor, except as disclosed on Schedule 3.2.11.2, has any amendment
to any Benefit Plan been adopted. The Benefit Plans established and maintained
by each of the RW Companies and the Subsidiaries, are listed separately as
Benefit Plans on Schedule 3.2.11.2.
3.2.11.3 Employment Agreements. Schedule 3.2.11.3 lists each
employment agreement and offer letter to which any RW Companies is a party that
provides for an annual base salary of at least $50,000, copies of which have
been made available to GSRW.
3.2.12 Intellectual Property. (a) Each of RW and RW-UK own, or has
valid licenses to use, all the Intellectual Property necessary to, or used in
the conduct of, the business of the RW Companies as now conducted and as
proposed to be conducted, including, but not
24
limited to, the trademarks and tradenames and registrations thereof as set forth
on Annex 1 to Schedule 3.2.12. All Intellectual Property owned by the RW
Companies is owned by it free and clear of any Encumbrances. Except as set forth
in Schedule 3.2.12, as far as the RW Companies or the Shareholders are aware,
the conduct of the business of each of RW and RW-UK does not conflict with or
infringe upon any Intellectual Property rights of any other person and no claims
of conflict or infringement are pending or threatened against RW or RW-UK. Each
of RW and RW-UK has made all necessary filings and recordations and has paid all
required fees and Taxes to maintain ownership of the Intellectual Property.
(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby will not (i) constitute a
breach of any instrument or agreement governing any Intellectual Property, (ii)
cause the forfeiture or termination or give rise to a right of forfeiture or
termination of any Intellectual Property owned by RW or RW-UK or (iii) prevent
of RW or RW-UK from using, selling or licensing any of its Intellectual Property
or any portion thereof.
3.2.13 Real Property and Environmental.
3.2.13.1 Owned Real Property. None of the RW Companies owns any
real property by way of freehold.
3.2.13.2 RW & RW-UK Leased Real Property. Schedule 3.2.13.2 sets
forth a complete and accurate list and description of all real property leased,
subleased, licensed or otherwise occupied by an RW Company (the "RW & RW-UK
Leased Real Property"), such description including, for each item of RW & RW-UK
Leased Real Property, an identification of the lease, sublease or license
agreement therefor and any and all amendments, modifications, side letters and
other agreements relating thereto, and sets forth the names of the lessor and
lessee (or sublessor or sublessee) thereunder, the title and date thereof, the
address and approximate size of the premises leased thereunder, and the use of
such premises. All of the leases, subleases of the RW & RW-UK Leased Real
Property (the "RW & RW-UK Leases") are valid, binding and in full force and
effect (assuming the due authorization, execution and delivery by the lessor).
Except as set forth on Schedule 3.2.13.2, no lease is subject to any
Encumbrance, license or other agreement granting to any third party any interest
in such RW & RW-UK Lease or any right to the use or occupancy of any RW & RW-UK
Leased Real Property. True and complete copies of the Leases have previously
been delivered to GSRW, including, without limitation, all amendments or
modifications thereof and all side letters or other instruments affecting the
obligations of any party thereunder. Except as set forth on Schedule 3.2.13.2,
the lessee or an affiliate under each RW & RW-UK Lease is now in possession of
the applicable RW & RW-UK Leased Real Property. There is no pending or
threatened proceeding that might interfere with the quiet enjoyment of each
tenant or licensee. Except as set forth on Schedule 3.2.13.2, neither RW nor
RW-UK has assigned, mortgaged, pledged or otherwise encumbered its interest if
any, under any RW & RW-UK Lease. Each of RW or RW-UK has exercised within the
time prescribed in each RW & RW-UK Lease any option provided therein to extend
or renew the term thereof. As used herein, the term "RW & RW-UK Lease" shall
also include subleases and licenses, the term "lessor" shall also include any
sublessor or licensor, and the term "lessee" shall also include any sublessee or
licensee.
25
3.2.13.3 Environmental Matters. Except as disclosed in Schedule
0.0.00.0:
(a) To the best of the Shareholders' and RW and RW-UK's knowledge, the
RW Companies have complied and are in compliance with, and the RW Leased Real
Property and all improvements thereon are in compliance with, all environmental
laws having application in all material respects; provided, however, that this
clause shall not be deemed to include any representation as to the building in
which any RW Leased Real Property is located, the land on which such building
sits or any improvement made or fixtures installed by any person other than RW
or RW-UK.
(b) To the best of the Shareholders' and RW and RW-UK's knowledge, no
Hazardous Material (i) has been released, placed, stored, generated, used,
manufactured, treated, deposited, spilled, discharged, or disposed of by the RW
Companies on or under any RW & RW-UK Leased Real Property, except in each such
instance in compliance with environmental laws having application, (ii) is
presently maintained, used, generated or permitted to remain in place at any RW
& RW-UK Leased Real Property by RW, RW-UK or the Subsidiaries in violation of
any environmental laws having application, (iii) is required by any
environmental laws having application to be eliminated, removed, treated or
mitigated by RW, RW-UK or the Subsidiaries, given the nature of its present
condition, location, nature, material or maintenance, or (iv) is of a type,
location, material, nature or condition that requires special notification to
third parties by RW, RW-UK or the Subsidiaries under environmental laws having
application.
(c) Each of the RW Companies has disposed of all wastes, including
those wastes which contain Hazardous Materials, in compliance with all
applicable environmental laws having application.
(d) No notice, citation, summons or order has been received by the RW
Companies, no notice has been given by RW, RW-UK or the Subsidiaries, and no
complaint has been filed, no penalty has been assessed and no investigation or
review is pending or to the knowledge of RW, RW-UK or the Subsidiaries
threatened by any governmental authority, with respect to (i) any alleged
violation by the RW Companies of any environmental law having application, (ii)
any alleged failure by RW, RW-UK or the Subsidiaries to have any environmental
permit, certificate, license, approval, registration or authorization required
under any environmental law in application in connection with its business or
properties, or (iii) any use, possession, generation, treatment, storage,
recycling, transportation, release or disposal by or on behalf of the RW
Companies of any Hazardous Material.
3.2.14 Status of Contracts.
(a) There is no existing material default or violation by the RW
Companies under any material contracts, agreements, leases, subleases, license
agreements, or instruments to which any of the RW Companies is a party or by
which it or any of them is bound (collectively, the "RW & RW-UK Contracts") and,
except as described in Schedule 3.2.14, no event has occurred that (whether with
or without notice, lapse of time or both) would constitute a default of any of
the RW Companies under any material RW & RW-UK Contract. Neither RW nor RW-UK is
aware of any default by any other party to any material RW Contract or of any
event that
26
(whether with or without notice, lapse of time or both) would constitute a
default by any other party with respect to obligations of that party under any
RW & RW-UK Contract. None of the RW Companies is a party to, or bound by, any RW
& RW-UK Contract that is expected to result in any material loss to RW or RW-UK
upon the performance thereof (including any liability for penalties or damages,
whether liquidated, direct, indirect, incidental or consequential).
(b) Schedule 3.2.14 contains a complete and correct list of the
following agreements to which each of the RW Companies is a party to or by which
it is bound, copies of which have been previously made available to GSRW:
(i) any employment, consulting, severance or termination agreement
under which RW or RW-UK or a Subsidiary is required to pay more than
$50,000 in any 12-month period;
(ii) any agreement or plan, including 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;
(iii) any material agreement, contract or commitment containing any
provision limiting the freedom of RW or RW-UK or a Subsidiary to engage in
any line of business anywhere in the world or compete with any person, or
granting any exclusive distribution rights;
(iv) any agreement, contract or commitment currently in force relating
to the disposition or acquisition of assets not in the ordinary course of
business or any ownership interest in any corporation, partnership, joint
venture or other business enterprise;
(v) any credit agreement, notes, indentures, security agreements or
similar agreements by RW or RW-UK or a Subsidiary relating to indebtedness
for borrowed money (for the avoidance of doubt excluding indebtedness
incurred in the ordinary course of trade);
(vi) any purchase contract that continues for more than 12 months and
requires the payment by RW or RW-UK or a Subsidiary of more than $100,000
in any 12-month period; or
(vii) any other contract or agreement that is material to business or
operations of RW or RW-UK or a Subsidiary taken as a whole and is not in
the ordinary course of business.
3.2.15 Permits and Licenses. Each of RW, RW-UK and the Subsidiaries
holds all Permits necessary for the lawful conduct of its business pursuant to
all applicable statutes, laws, ordinances, rules and regulations (having the
force of law) of all Governmental Entities having jurisdiction over it or any
part of its operations, except for Permits the absence of which, individually or
in the aggregate, could not reasonably be expected to result in a Material
Adverse
27
Effect. In addition, the raw material sourcing, manufacturing process, product
composition, manufacturing premises, all raw material and final product storage
and transport facilities, labelling, marketing, sale and packaging of the RW
Companies' products materially complies with all EU, UK and Irish legislation
applicable to RW Companies' business and operations and in particular the Food
Hygiene Regulations 1950 - 1989, European Communities (Hygiene of Foodstuffs)
Regulations, 2000 (S.I. No. 165 of 2000), European Communities (Labelling,
Presentation and Advertising of Foodstuffs) Regulations, 2002 (S.I. No. 483 of
2002), Xxxxxxxxxxx Xxxxx Xxx, 0000 (S.I. No. 10 of 1970) as amended and
extended, Irish Whiskey Act, 1980 (S.I. No. 33 of 1980), European Communities
(Definition, Description and Presentation of Spirit Drinks) Regulations, 1995
(S.I. No. 300 of 1995) as amended and extended, except for noncompliance which,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect. Each of RW, RW-UK and the Subsidiaries is in
compliance in all material respects with each of the terms of the applicable
Permits, and there are no claims of violation by RW, RW-UK or any Subsidiary of
any of such Permits.
3.2.16 Taxes.
3.2.16.1 Definitions. The following words are defined below for
the purposes of this Section 3.2.16.
"Group" means the RW Companies.
"Accounts" means RW & RW-UK Financial Statements.
"Accounts Date" means March 31, 2003.
"ACT" means Advance Corporation Tax.
"Distribution" includes anything that is, or is deemed to be, a
dividend or distribution for Tax purposes.
"Profits" includes any income, profits or gains (including capital
gains) of any description or from any source and includes any such
income, profits or gains that are deemed to be earned, accrued or
received for Taxation purposes.
"Relief" means any relief, allowance, exemption, set-off, deduction or
credit of whatsoever nature in computing any Profits for Taxation
purposes or any credit, relief or allowance in respect of Taxation
granted by or pursuant to any law (whether statute, regulation or case
law, accepted practices, concessions or otherwise available for
taxation purposes).
"Tax Liability" means liabilities of the RW Companies to make actual
payments of Tax (or amounts in respect of Tax) and also:
(a) the loss, cancellation or non-availability of or the reduction in
amount of a right to repayment of Tax which has been treated as
an asset of the RW Companies in preparing the Accounts or the
setting off of any such right
28
to repayment of Tax against any actual Tax Liability in respect
of which indemnity could be sought, but for that setting off,
against the RW Companies under Article VII of this Agreement; and
(b) the setting off against Profits that were earned, accrued or
received on or prior to the Closing Date or in respect of a
period ended on or prior to the Closing Date or against any Tax
otherwise chargeable in respect of a Transaction occurring (or
deemed to occur) on or before the Closing Date or in respect of a
period ended on or before the Closing Date of any Relief;
(c) the payment for losses or ACT, or payments in relation to Tax
pursuant to any warranties or indemnities; or
(d) the loss, disallowance, nullification, cancellation, or
reduction, or the like of any Relief (whether arising before or
after the date hereof).
"Transaction" includes (without limitation) any act, failure to act,
omission, transaction (including the Closing), event, death, change of
residence, any distribution or dividend, failure to distribute, any
loan or advance or transfer made by or to the Group, any benefit or
advantage (or deemed benefit or advantage) given or provided by any
person, the waiving or foregoing of any advantage, any payment made or
the giving of any consideration by or to any person, any transaction
in securities and any acquisition or disposal of any asset made or
treated as having been made by any person and any occurrence
whatsoever whether or not the RW Companies are a party thereto, and
includes the coming into effect of and completion of this Agreement
and all documents executed pursuant thereto.
3.2.16.2 General Provision.
(a) No member of the Group has any Tax Liability (whether actual or
contingent) payable by reference to income, profits or gains earned or received
before the Accounts Date or referable to Transactions occurring before the
Accounts Date that is not fully disclosed or noted or provided for in the
Accounts.
(b) The amount of the deferred tax provision contained in the Accounts
was adequate as at the Accounts Date, the making and calculation of such
provision was fully in accordance with relevant generally accepted accountancy
practices as at the Accounts Date and no member of the Group has subsequently
become aware of any reason why the deferred tax provision contained in the
Accounts may not be sufficient.
(c) Subject to (a) and (b) above, all taxation of any nature
whatsoever or other sums imposed, charged, assessed, levied or payable under the
provisions of applicable legislation relating to taxation for which any Group
member is liable as a result of any act or omission by a member of the Group
prior to the Accounts Date will if, and in so far as, such taxation or other
sums ought to be paid prior to or on the Accounts Date, have been paid at or
before the Accounts Date and in particular, but without prejudice to the
generality of the foregoing, at the Accounts
29
Date, all amounts due for payment to the Revenue Commissioners in respect of
excise duty and of Value Added Tax in respect of goods or services supplied
prior to the Accounts Date or goods imported prior to the Accounts Date, and of
income tax deductible prior to the Accounts Date by virtue of the PAYE
regulations from time to time in force will have been paid so that no member of
the Group will have any liability in respect thereof and at the Accounts Date
all Social Welfare and Pay Related Social Insurance contributions (both
employers' and employees') and any other levies and impositions due for payment
in respect of the employees of any member of the Group will have been duly paid.
(d) The provisions of the Waiver of Certain Tax, Interest and
Xxxxxxxxx Xxx, 0000 do not have any application to any member of the Group or
any of its officers.
(e) No Notice of Attachment has been served on any member of the Group
or in relation to any funds or assets of any member or the Group under Section
1002 TCA.
(f) No member of the Group shall be liable to bear a Tax Liability on
deemed (as opposed to actual) income, profits or gains which results in a member
of the Group becoming liable to pay or bear a Tax Liability by reference to any
Transaction occurring on or prior to the Closing Date.
(g) No member of the Group shall be liable to bear a Tax Liability as
a result of any of the RW Companies ceasing for tax purposes to be a member of
any group, or associated with any other company at or at any time prior to or as
a result of Closing; and for the avoidance of doubt, including any charge
arising under Sections 623 or 625 of the Taxes Consolidation Act, 1997, as a
result of the Acquisitions.
3.2.16.3 Post-Accounts Date Tax Events.
Since the Accounts Date:
(a) The members of the Group in the aggregate have no Tax Liability
(whether actual or contingent) payable by reference to income, profits or gains
earned or received before the Closing Date or referable to Transactions
occurring between the Accounts Date and the Closing Date in excess of E50,000.
(b) The amount of the deferred tax provision of the Group will be
adequate as at the Closing Date and the making and calculation of such provision
thereof in the financial statements of the Group referred to in (d) below, will
be fully in accordance with relevant generally accepted accountancy practices as
at the Closing Date and, together with the Tax Liability referred to in (a)
above, shall not exceed E50,000.
(c) Subject to (a) and (b) above, all taxation of any nature
whatsoever or other sums imposed, charged, assessed, levied or payable under the
provisions of applicable legislation relating to taxation for which any Group
member is liable as a result of any act or omission by a member of the Group
prior to the Closing Date will if, and in so far as, such taxation or other sums
ought to be paid prior to or on the Closing Date, have been paid at or before
the Closing Date and in particular, but without prejudice to the generality of
the foregoing, at the Closing Date, all amounts due for payment to the Revenue
Commissioners in respect of excise duty and
30
of Value Added Tax in respect of goods or services supplied prior to the Closing
Date or goods imported prior to the Closing Date, and of income tax deductible
prior to the Closing Date by virtue of the PAYE regulations from time to time in
force will have been paid so that no member of the Group will have any liability
in respect thereof and at the Closing Date all Social Welfare and Pay Related
Social Insurance contributions (both employers' and employees') and any other
levies and impositions for payment due in respect of the employees of any member
of the Group will have been duly paid.
(d) Financial statements as at the Closing Date for the RW Companies
will be prepared and delivered to GSRW within thirty (30) days of the Closing.
3.2.16.4 Tax Returns and Tax Disputes.
(a) Each member of the Group has made or caused to be made in a timely
and proper manner all proper returns, declaration and payments required to be
made, and has supplied or caused to be supplied in a timely and proper manner
all information required to be supplied, to any tax, revenue or fiscal
authority, and has properly maintained all books and record required to be
maintained by any tax or fiscal or other authority.
(b) Each member of the Group has duly and properly submitted all
claims, elections, amendments to claims, withdrawals of claims and disclaimers
which have been assumed to have been made for the purposes of the Accounts, and
all previous accounts.
(c) There is no dispute or disagreement outstanding with any tax,
revenue or fiscal authority and no such dispute or disagreement is expected or
contemplated or likely to commence regarding any liability or potential
liability to any tax recoverable from any member of the Group or regarding the
availability of any relief from tax to any member of the Group.
3.2.16.5 Tax Records and Concessions.
(a) Each member of the Group has sufficient and proper records
relating to past events, including any claims or elections made to calculate the
tax liability or relief which should arise on any disposal or on the realization
of any asset owned by such member at the Accounts Date or acquired by such
member since the Accounts Date but before Closing.
(b) The amount of any tax liability of any member of the Group has
not, to any material extent, depended on any arrangement or concession (in
either case whether formal or informal) with any tax, revenue or fiscal
authority.
3.2.16.6 Capital Duty and Stamp Duty.
(a) Every document in the possession of or under the control of any
member of the Group and which affords any right or rights to any member of the
Group has been duly and properly stamped and no member of the Group has any
outstanding liability for stamp duty or capital duty or interest or penalties
relating to stamp duty or capital duty.
(b) In the six years prior to the date of this agreement no member of
the Group has been involved in any transaction involving a statement which is
deliverable to the
31
registrar of companies (as defined in the Irish Companies Act 1963) which
statement has, in accordance with Part 8 of the Stamp Duties Consolidation Xxx
0000 ("SDCA") attracted a reduced rate of stamp duty.
(c) No member of the Group has been involved in any transaction
involving any instrument in relation to which a claim for exemption from stamp
duty was made, or ought to have been made, in accordance with Section 79 and 80
of SDCA.
3.2.16.7 Tax Residence.
(a) Each of the RW Companies (other than The Roaring Water Bay Spirits
Company (GB) Limited) and the Shareholders, are resident in Ireland for tax
purposes and the RW Companies (other than The Roaring Water Bay Spirits Company
(GB) Limited) have not been at any time resident in any jurisdiction other than
or in addition to Ireland for tax purposes. Each of the RW Companies (other than
The Roaring Water Bay Spirits Company (GB) Limited) have never carried on any
trade in any other country (whether through a branch, agency, permanent
establishment or otherwise) and they have not at any time paid tax on income,
profits or gains to any tax, revenue or fiscal authority in any other country
except Ireland.
(b) The Roaring Water Spirits Company (GB) Limited is resident in the
United Kingdom for tax purposes and has not been at any time resident in any
jurisdiction other than or in addition to the United Kingdom for tax purposes.
The Roaring Water Spirits Company (GB) Limited has never carried on any trade in
any other country (whether through a branch, agency, permanent establishment or
otherwise) and The Roaring Water Spirits Company (GB) Limited has not at any
time paid tax on income, profits or gains to any tax, revenue or fiscal
authority in any other country except the United Kingdom.
3.2.16.8 Value Added Tax.
(a) All members of the Group are (where applicable) registered for the
purposes of VATA 1972 and have made, given, obtained and kept complete, correct
and up-to-date returns, records, invoices and other documents appropriate or
required for VAT purposes and are not in arrears with any payments or returns
due and have not been required by the Revenue Commissioners to give security or
further security under Section 23A VATA 1972.
(b) No member of the Group has ever been treated as a member of a VAT
group under Section 8(8) VATA 1972 and no application has at any time been made
for any member of the Group to be treated as a member of a VAT group.
(c) No member of the Group has been in default in respect of any
taxable period for the purposes of VAT.
(d) No member of the Group has applied to waive exemption in relation
to any immovable goods in accordance with Section 7 VATA 1972 and regulation 4
of the Value Added Tax Regulations 1979.
(e) No member of the Group is engaged in the letting of immovable
goods for periods of less than ten years.
32
(f) No member of the Group has acted as an agent of any person not
established in Ireland within the meaning of Section 37 VATA 1972.
(g) No member of the Group is authorized to receive supplies of
qualifying goods and services at the zero rate of VAT in accordance with Section
13A VATA 1972.
(h) No member of the Group has supplied any goods falling within the
meaning of Section 3(1)(e) or Section 3(1)(f) VATA 1972 or supplied any services
falling within the meaning of Section 5(3) VATA 1972.
3.2.16.9 Capital Acquisitions Tax. There is no unsatisfied
liability to capital acquisitions tax attached or attributable to the shares of
the RW Stock or RW-UK Stock or any of the assets of any Group member and the
shares of the RW Stock or RW-UK Stock and the said assets are not subject to a
charge in favor of the Revenue Commissioners within Section 00 Xxxxxxx
Xxxxxxxxxxxx Xxx 0000 or Section 60 Capital Acquisition Tax Consolidation Act.
3.2.16.10 Replacement of Business Assets. Particulars of each
claim under Section 597 TCA 1997 which affect any asset which is owned by a
Group member at Closing have been disclosed on Schedule 3.2.16.
3.2.16.11 PAYE. No Group member is registered for the purposes of
regulations made under Section 986 of the TCA, and has complied in all respects
with such regulations and has maintained full, complete, correct and up to date
records appropriate or requisite for the purposes thereof.
3.2.16.12 Share Schemes. No Group member has ever operated any
share schemes.
3.2.16.13 Reliefs. The entering into and completion of this
Agreement will not trigger a clawback of any relief previously claimed.
3.2.17 Related Party Interests. Except as listed in Schedule 3.2.17,
no Shareholder, officer, employee or director of the RW Companies (or any entity
owned or controlled by one or more of such parties) (a) has any interest in any
property, real or personal, tangible or intangible, used in or pertaining to the
business of RW or RW-UK or any Subsidiary, (b) is indebted to the RW Companies,
or (c) has any material financial interest, direct or indirect, in any supplier
or customer of, or other outside business that has significant transactions with
the RW Companies. Except for undocumented arrangements identified as such on
Schedule 3.2.17, true and complete copies of all agreements listed on Schedule
3.2.17 have been provided to GSRW. Except as set forth in Schedule 3.2.17 or as
contemplated by this Agreement, none of the RW Companies or any Subsidiary is
indebted to any of its respective shareholders, directors or officers (or any
entity owned or controlled by one or more of such parties) except for amounts
due under normal salary and bonus arrangements and for reimbursement of ordinary
business expenses. Except as set forth in Schedule 3.2.17, the consummation of
the transactions contemplated by this Agreement will not (either alone or upon
the occurrence of any act or event, or with the lapse of time, or both) result
in any payment (severance or other) becoming due from RW or RW-UK to any of
their respective shareholders, officers, directors or employees (or any entity
owned or controlled by one or more of such parties).
33
3.2.18 No Powers of Attorney or Restrictions. No power of attorney or
similar authorization given by RW, RW-UK or any Subsidiary presently is in
effect or outstanding. To the knowledge of each of RW, RW-UK and the
Subsidiaries, none of the employees of RW, RW-UK or any Subsidiary are obligated
under any contract (including licenses, covenants or commitments of any nature),
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with the use of his or her best efforts to promote
the interests of RW, RW-UK or any Subsidiary or that would conflict with the
business of RW, RW-UK and the Subsidiaries as now conducted or proposed to be
conducted.
3.2.19 Personnel. Annex 1 to Schedule 3.2.19 contains a complete and
accurate list of all employees of each of the RW Companies, setting forth their
respective names, current positions, salaries and other remuneration. All
written employment and consulting agreements and all offer letters with
employees and consultants earning $50,000 or more in base salary per annum, to
which RW or RW-UK or a Subsidiary is a party are listed on Schedule 3.2.19.
3.2.20 Brokers and Finders. None of RW, RW-UK, any Subsidiary or any
Shareholder has incurred any liability for any brokerage or investment banking
fees, commissions or finders' fees in connection with the UK or Irish
Acquisitions.
3.2.21 No Other Agreements to Sell RW or RW-UK or Their Respective
Assets. None of RW, RW-UK or any Subsidiary has any legal obligation, absolute
or contingent, to any other person to sell any material portion of its assets
(other than inventory in the ordinary course of business), to sell its share
capital or other ownership interests, or to effect any merger, consolidation or
other reorganization or to enter into any agreement with respect thereto. As of
the date hereof, none of RW, RW-UK or any Subsidiary is engaged, directly or
indirectly, in any discussions or negotiations with any other person with
respect to an Acquisition Transaction.
3.2.22 Title and Capacity
3.2.22.1 The RW Stock and RW-UK Stock held by the Shareholders
immediately prior to Closing (including shares of RW-UK Stock issued pursuant to
Section 4.2.9(b)):
(a) constitutes the whole of the issued and allotted share capital of
RW and RW-UK other than the BES II Shares to be acquired pursuant to Section
4.2.8; and
(b) is legally and beneficially owned by the Shareholders free of all
encumbrances or interests in favour of, or claims made by, or which could be
made by, and other person;
(c) all of the issued and outstanding capital shares of each of the
Subsidiaries of RW and RW-UK are beneficially owned by either RW or RW-UK,
directly or indirectly, except 27,777 Ordinary Shares owned by the parties
listed on Annex B under BES I.
3.2.22.2 Each of the Shareholders is entitled to sell or procure
the sale of its full legal and beneficial interest in the RW Stock and RW-UK
Stock to GSRW on the terms set out in this Agreement;
34
(a) each of the Shareholders and RW and RW-UK:
(b) has taken all corporate (if relevant) and other actions necessary
to enable it to enter into and perform this Agreement; and
(c) has secured all approvals and consents (governmental and
otherwise) required for the performance of the transactions contemplated by this
Agreement;
3.2.22.3 Neither the execution or delivery of this Agreement by
any of the Shareholders nor the transactions contemplated by this Agreement is
prohibited by, or violates any provision of and will not result in a breach of:
(a) any applicable law; or
(b) the Memorandum or Articles of Association (or equivalent
constitutional documents) of any of the RW Companies.
3.2.22.4 This Agreement constitutes and imposes valid, legal and
binding obligations of each Shareholder fully enforceable in accordance with its
terms.
3.2.22.5 Completion of the transactions contemplated by this
Agreement by the Shareholders will not:
(a) conflict with, result in the breach of, constitute a default
under, or accelerate performance under the terms of any contract, agreement or
deed to which any of the Shareholders may be bound or affected; or
(b) constitute a default or an event which, with the lapse of time or
action by a third party, could result in the creation of any Encumbrance,
equity, claim or restriction on any of the RW Stock or RW-UK Stock.
3.2.23 No Disposal. The Shareholders shall not at any time prior to
the Closing:
3.2.23.1 dispose or attempt to dispose of any interest in the RW
Stock or RW-UK Stock or grant any Encumbrance over, or otherwise encumber or
dispose of such shares or exercise or vary any of the rights attaching to such
shares; or
3.2.23.2 permit RW, RW-UK or any Subsidiary to pass any
resolution in general meeting, except as approved in writing by GSRW.
3.2.24 Disclosure. No representation or warranty made by any
Shareholder in this Agreement and no statement contained in this Agreement, the
Exhibits hereto and all other ancillary documents executed and delivered in
connection herewith (including the RW & RW-UK Disclosure Schedules to this
Agreement) or any certificate furnished or to be furnished by any Shareholder,
RW or RW-UK to GSRW or any of its representatives pursuant to the provisions
hereof or in connection with the transactions contemplated hereby, contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make
35
such representation, warranty or statement, in light of the circumstances under
which it was made, not misleading.
3.2.25 Insurance. Annex 1 to Schedule 3.2.25 contains a true and
complete list and description by type of all policies of fire, liability,
workmen's compensation and other forms of insurance, including all group
insurance programs in effect for each of RW's and RW-UK's employees, owned or
held by RW, RW-UK or any Subsidiaries, respectively. All such policies are in
full force and effect, all premiums with respect thereto covering all periods up
to and including the date hereof have been paid, and no written notice of
cancellation or termination has been received with respect to any such policy.
3.2.26 Books and Records. To the best of RW's, RW-UK's or
Shareholders' knowledge, all accounts, books and ledgers, including statutory
registers, related to the businesses of each of RW, RW-UK and the Subsidiaries
have been properly and accurately kept and completed in all material respects,
and there are no material inaccuracies or discrepancies of any kind contained or
reflected therein.
3.2.27 Dormant Subsidiaries. Each of The Roaring Water Bay Whiskey
Company Limited, The Clontarf Irish Whiskey Company Limited, The Xxxx Vodka
Company Limited, Neat Spirits Company Limited, and The Roaring Water Bay Spirits
Company (NI) Limited (collectively, the "Dormant Subsidiaries") are not
currently trading and have no liability contingent or otherwise. RW and RW-UK
have no other subsidiaries other than The Roaring Water Bay Spirits Company
Limited, The Roaring Water Bay Spirits Company (GB) Limited and the Dormant
Subsidiaries.
3.2.28 Disclaimer of other Representations and Warranties. Except as
expressly set forth in Sections 3.2.1 through 3.2.27, the Shareholders make no
representation or warranty, express or implied, at law or in equity in respect
of RW, RW-UK or any of their respective assets, liabilities or operations
including with respect to merchantability or fitness for any particular purpose,
and any such other representations or warranties are hereby expressly
disclaimed.
3.2.29 Remedy. The sole remedy for breach of warranties or
representations hereunder shall be pursuant to Article 7 and the Escrow
Agreement.
3.3 Representations and Warranties of GSRW. Subject to the limitations set
out in Article VII, GSRW hereby represents and warrants to the Members and the
Shareholders that, except as specifically set forth in the Schedules and Annexes
to the GS Disclosure Schedule in a numbered paragraph that corresponds to the
Section for which disclosure is made, unless expressly specified otherwise in
certain representations and warranties (references herein to Schedules and
Annexes are to the relevant Schedules and Annexes of the GS Disclosure
Schedule), the following representations and warranties are true and correct as
of the date of this Agreement and shall be true and correct in all material
respects at the Closing Date (except for representations and warranties made as
of a specific date, which representations and warranties need only be true and
correct as of such date):
36
3.3.1 Organization and Status. GSRW is a corporation duly organized
and validly existing under the laws of its jurisdiction of incorporation and at
the Closing will be duly qualified and in good standing as a foreign corporation
in each jurisdiction where the properties owned, leased or operated, or the
business conducted, by it require such qualification, except where the failure
to so qualify or be in good standing, when taken together with all such
failures, would not have a Material Adverse Effect on GSRW. GSRW has delivered
to GS, RW and RW-UK complete and accurate copies of its Certificate of
Incorporation and Bylaws (the "GSRW Articles").
3.3.2 Capitalization. GSRW has authorized 16,500,000 shares of GSRW
Stock and 3,500,000 shares of Preferred Stock. Knappogue Corp. is the owner of
1,000 shares of GSRW Stock, which shares shall be cancelled upon the closing of
the Reorganization. The parties agree that (i) up to 3,106,667 shares of GSRW
Stock (excluding shares issuable upon conversion of RW Notes, warrants and
preferred stock of GSRW), 750,000 shares of GSRW Series A Stock, 200,000 shares
of GSRW Series B Stock and 2,000,000 shares of Series C Convertible Preferred
Stock, par value $1.00 per share (the "GSRW Series C Stock"), of GSRW (excluding
shares of GSRW Series C Stock issuable pursuant to Section 1.7), may be issued
in conjunction with the Reorganization and (ii) except for (a) the addition of
the "Drag-Along" and "Tag-Along" rights, (b) adjustment of the threshold for
pre-emptive rights, (c) provision for the required vote of the holders of the
Preferred Stock for creation of a senior class or series of Preferred Stock and
(d) the provision of a required number of Directors' votes for certain actions,
the shares of GSRW Series A Stock and GSRW Series B Stock shall have
substantively similar terms as the GS Series A Stock and the GS Series B Stock,
including the provisions of the applicable Investor Agreements, unless otherwise
approved by the Board of Directors.
3.3.3 Corporate Authority. GSRW has the corporate power and authority
and has taken all corporate and shareholder action necessary to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by GSRW. This
Agreement constitutes the valid and binding obligation of GSRW, enforceable
against GSRW in accordance with its terms.
3.3.4 Governmental and Other Consents. Other than the filing of the
Certificate of Merger contemplated by Section 1.1(c) and as provided in Schedule
3.1.6, no material notices, reports or other filings are required to be made by
GSRW with, nor are any material consents, registrations, approvals, permits or
authorizations required to be obtained by GSRW from, any Governmental Entity or
any entity or person not a party to this Agreement in connection with the
execution and delivery of this Agreement by GSRW and the consummation by GSRW of
the transactions contemplated hereby.
3.3.5 No Adverse Consequences. Neither the execution and delivery of
this Agreement by GSRW nor the consummation of the transactions contemplated by
this Agreement will (a) result in the creation or imposition of any Encumbrance
on any of the assets or properties of GSRW or any of its material subsidiaries,
(b) violate any provision of the Certificate of Incorporation or Bylaws of GSRW
or any organizational documents of its material subsidiaries, (c) violate any
statute, judgment, order, injunction decree, rule, regulation or ruling of any
Governmental Entity applicable to GSRW or any of its material subsidiaries, or
(d) either alone or with the giving of notice or the passage of time or both,
conflict with, constitute grounds for
37
termination of, accelerate the performance required by, accelerate the maturity
of any indebtedness or obligation under, result in the breach of the terms,
conditions or provisions of or constitute a default under any mortgage, deed of
trust, indenture, note, bond, lease, license, permit or other agreement,
instrument or obligation to which either GSRW or any of its material
subsidiaries is a party or by which any of them is bound and which would have a
Material Adverse Effect on GSRW and its subsidiaries.
3.3.6 Absence of Certain Litigation. There has not been commenced any
litigation against GSRW or any of its properties, business or subsidiaries that
could result in a Material Adverse Change in GSRW.
3.3.7 Brokers and Finders. Except as set forth in Schedule 3.3.7,
neither GSRW nor any of its subsidiaries has incurred any liability for any
brokerage or investment banking fees, commissions or finders' fees in connection
with the Acquisitions or the Merger.
3.3.8 Disclosure. No representation or warranty made by GSRW in this
Agreement and no statement contained in this Agreement, the Exhibits hereto and
all other ancillary documents executed and delivered in connection herewith
(including the GS Disclosure Schedules) or any notice to be furnished by GSRW to
GS, RW and RW-UK pursuant to the provisions hereof or in connection with the
transactions contemplated hereby, contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make such
representation, warranty or statement, in light of the circumstances under which
it was made, not misleading.
3.4 Disclaimer of other Representations and Warranties. GSRW makes no
representation or warranty, express or implied, at law or in equity in respect
of its assets, liabilities or operations including with respect to
merchantability or fitness for any particular purpose, and any such other
representations or warranties are hereby expressly disclaimed.
3.5 Representations and Warranties Relating to Merger Company. Subject to
the limitations set out in Article VII, Merger Company hereby represents and
warrants to the Members and the Shareholders that, except as specifically set
forth in the Schedules and Annexes to the GS Disclosure Schedule in a numbered
paragraph that corresponds to the Section for which disclosure is made, unless
expressly specified otherwise in certain representations and warranties
(references herein to Schedules and Annexes are to the relevant Schedules and
Annexes of the GS Disclosure Schedule), the following representations and
warranties are true and correct as of the date of this Agreement and shall be
true and correct in all material respects at the Closing Date (except for
representations and warranties made as of a specific date, which representations
and warranties need only be true and correct as of such date):
3.5.1 Organization and Status. Merger Company is a corporation duly
organized and validly existing under the laws of the State of Delaware. Merger
Company does not own any properties (other than the initial cash subscription
for shares) nor has it commenced any business or operations.
38
3.5.2 Capitalization. Merger Company has an authorized capital stock
consisting of 1,000 shares of common stock, par value $.01 per share. All of the
issued and outstanding shares of capital stock of Merger Company are owned by
GSRW.
3.5.3 Corporate Authority. Merger Company has the corporate power and
authority and has taken all corporate action necessary to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. The
Agreement has been duly and validly authorized by the Board of Directors and
sole shareholder of Merger Company, duly and validly executed and delivered by
Merger Company, and constitutes the valid and binding obligation of Merger
Company, enforceable against Merger Company in accordance with its terms.
3.5.4 Governmental Filings. Other than the filing of the Certificate
of Merger contemplated by Section 1.1(c) and as provided in Schedule 3.1.6, no
notices, reports or other filings are required to be made by Merger Company
with, nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by Merger Company from, any Governmental Entity in
connection with the execution and delivery of this Agreement by Merger Company
and the consummation by Merger Company of the transactions contemplated hereby.
3.5.5 Disclaimer of Other Representations and Warranties. The Merger
Company makes no representation or warranty, express or implied, at law or in
equity in respect of its assets, liabilities or operations including with
respect to merchantability or fitness for any particular purpose, and any such
other representations or warranties are hereby expressly disclaimed.
ARTICLE IV
COVENANTS
4.1 Mutual Covenants. GSRW, GS and the Shareholders and, insofar as they
are lawfully permitted to do so, RW and RW-UK, mutually covenant and agree as
follows:
4.1.1 Consents and Approvals. GSRW, GS, RW, RW-UK and the Shareholders
each will use reasonable best efforts to secure, and GSRW will cause Merger
Company, to use its reasonable best efforts to secure, all consents, approvals,
licenses or permits which may be required in connection with the Acquisitions
and the Merger, and each will cooperate with the other to secure all such
consents, approvals, licenses or permits in a form mutually reasonably
satisfactory to GSRW.
4.1.2 Best Efforts. Subject to the terms of this Agreement, GSRW, GS,
RW, RW-UK and the Shareholders will use reasonable best efforts, and GSRW will
cause Merger Company to use its reasonable best efforts, to effectuate the
transactions contemplated hereby and to fulfill the conditions of their
respective obligations under this Agreement.
4.1.3 Publicity. Except as required by law, no party hereto will issue
any press releases or otherwise make any public statements with respect to the
transactions contemplated hereby without the prior written consent of GS and RW,
in each case, not to be unreasonably withheld.
39
4.1.4 Confidentiality. The provisions of the letter agreement, dated
April 16, 2003 between GS, RW and RW-UK, shall apply to all "Information" (as
defined in the Confidentiality Agreement) obtained by any party pursuant to this
Agreement, except that GS, RW, RW-UK and the Shareholders shall be permitted to
disclose the Information in connection with (i) soliciting the approval of the
Merger and this Agreement from the Members required to be obtained in connection
with the Merger, (ii) the Financing (as defined in Section 5.1.3), (iii)
obtaining any waivers or consents from third parties pursuant to this Agreement
and (iv) any disclosure permitted under Section 6011 of the Code.
4.1.5 Sales. Except for sales by GS of up to 150,000 shares of GS
Series A Stock pursuant to the Memorandum of GS and the Financing as
contemplated by Section 5.1.3, none of GS, the RW Companies or the GS Subsidiary
will issue additional shares of their capital stock.
4.1.6 Financing. GSRW shall use its reasonable best efforts to
promptly initiate, and diligently pursue, the Financing. In addition, with the
assistance of PR and DP, GSRW shall use its reasonable best efforts to complete
the Financing on or before October 31, 2003.
4.2 Covenants of GSRW, GS, RW, RW-UK and the Shareholders. Each of GSRW,
GS, RW, RW-UK (insofar as RW and RW-UK are lawfully able to do so) and the
Shareholders covenant and agree as follows:
4.2.1 Conduct of Business. Prior to the Effective Time, each of GS, RW
and RW-UK and the Subsidiaries will carry on its business in the ordinary and
usual manner consistent with past practices and maintain its existing
relationships with suppliers, customers, employees and business associates, and
will not, without the prior written consent of GSRW and the Shareholders, which
consent will not be unreasonably delayed or withheld:
(a) other than arm's length agreements arrived at in the ordinary
course of business and consistent with past practice, enter into any new
employment or consulting arrangements, or agreements or modify existing
arrangements or agreements respecting an increase in compensation or benefits
payable to its officers or employees including with respect to increases in
compensation and benefits payable other than normal year-to-year adjustments
consistent with past practices;
(b) split, combine, reclassify any of the outstanding shares of its
capital stock or otherwise change its authorized capitalization;
(c) declare, set aside or pay any dividends payable in cash, stock or
property with respect to shares of its capital stock;
(d) except as contemplated by the Memorandum of GS, issue, sell,
pledge, dispose of or encumber any additional shares of, or securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire, any shares of its capital stock of any class
or release any holder of GS Shares, or shares of RW Stock, or shares of RW-UK
Stock from any provision restricting the sale or other transfer of such shares;
40
(e) redeem, purchase or otherwise acquire any shares of its capital
stock, merge into or consolidate with any other entity or permit any other
entity to merge into or consolidate with it, liquidate, sell or dispose of,
lease, pledge, or encumber any amount of its assets other than in the ordinary
course of business consistent with past practices, or close any plant or
business operation other than pursuant to agreements currently in effect set
forth on Schedules 3.1.2 and 3.2.2;
(f) except for short-term indebtedness and indebtedness incurred
pursuant to GS's revolving credit agreement or pursuant to RW's existing credit
facilities with Ulster Bank, incur, assume or guarantee any indebtedness, or
modify or prepay any existing indebtedness except in the ordinary course of
business;
(g) authorize capital expenditures other than in the ordinary course
of business, form any subsidiary, or make any acquisition of, or investment in,
assets or stock of any other person or entity;
(h) change its method of accounting as in effect at the date of the
2003 GS Financial Statement and 2003 RW & RW-UK Financial Statement (as
applicable) except as required by changes in generally accepted accounting
principles as concurred with by GS's or RW's or RW-UK's independent auditors, or
change its fiscal year; or
(i) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
any payment, discharge or satisfaction (i) in the ordinary course of business
consistent with past practice, or (ii) in connection with the Merger, or (iii)
pursuant to obligations in effect as of the date of this Agreement listed on
Schedule 4.2.1(i);
(j) except as required by law or as contemplated by this Agreement,
(i) enter into, adopt, amend or terminate any Benefit Plan, (ii) enter into,
adopt, amend or terminate any agreement, arrangement, plan or policy between GS
or RW or RW-UK and one or more of their directors or officers, or (iii) except
for normal increases in the ordinary course of business consistent with past
practice, increase in any manner the compensation or fringe benefits of any
director, officer or employee or pay any benefit not required by any Benefit
Plan or arrangement as in effect as of the date hereof;
(k) adopt any amendments to the Company Agreement (except as
contemplated by Section 3.1.2), Certificates of Incorporation of the RW
Companies or their respective Memoranda and Articles of Association, except as
expressly permitted or contemplated by the terms of this Agreement;
(l) settle or compromise any litigation (whether or not commenced
prior to the date of this Agreement) other than settlements or compromises of
litigation where the amount to be paid (after giving effect to insurance
proceeds actually received) by GS, RW, RW-UK or the Subsidiaries in settlement
or compromise does not exceed $50,000;
(m) other than in the ordinary course of business consistent with past
practice or as required pursuant to this Agreement, modify, release, amend,
terminate, supplement or otherwise change any of its material contracts;
41
(n) take any action reasonably expected to render any representation
and warranty of GS or the Shareholders contained herein false or incorrect in
any material respect;
(o) take or omit to take any action that can reasonably be expected to
result in a Material Adverse Change in GS, RW or RW-UK; or
(p) authorize or enter into an agreement to do any of the actions
referred to in clauses (a) through (o) above.
4.2.2 Acquisition Proposals.
(a) Unless and until this Agreement shall have been terminated
pursuant to Section 6.1 or Section 6.2, none of GS, RW, RW-UK, the Shareholders
or other affiliates, shall, directly or indirectly, and it shall cause their
respective agents or representatives (each, a "Representative") not to, (i)
encourage, initiate or solicit, on or after the date hereof, any inquiries or
the submission of any proposals or offers from any person relating to any
merger, consolidation, sale of a material amount of its assets or similar
business transaction involving GS, RW or RW-UK (each, an "Acquisition
Transaction"); (ii) participate in any negotiations regarding, furnish to any
other person any information with respect to, or otherwise assist or participate
in, any attempt by any third party to propose or offer any Acquisition
Transaction; (iii) enter into or execute any agreement relating to an
Acquisition Transaction; or (iv) make or authorize any public statement,
recommendation or solicitation in support of any Acquisition Transaction or any
proposal or offer relating to an Acquisition Transaction, in each case, other
than with respect to the Reorganization.
(b) Each of GS, RW, RW-UK and the Shareholders will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any persons conducted heretofore with respect to any of the foregoing. Each
of GS, RW, RW-UK and the Shareholders agree it will take the necessary steps to
inform promptly its Representatives of the obligations undertaken in this
Section 4.2.2 and in the Confidentiality Agreement. Each of GS, RW, RW-UK and
the Shareholders will promptly notify GSRW if any such inquiries, proposals or
offers are received by, and such information is requested from, or any such
discussions or negotiations are sought to be initiated or continued with, GS, RW
or RW-UK relating to an Acquisition Transaction proposal, indicating, in
connection with such notice, the name of such person and the material terms and
conditions of any proposals or offers.
4.2.3 Investigations. Each of GS, RW, RW-UK and the Shareholders agree
to give GSRW and each other and their representatives and agents reasonable
access to all the officers, key employees, premises, books and records and
agreements and files and to cause their respective officers to furnish each
other with such financial and operating data and other information with respect
to its business and properties as the other shall from time to time reasonably
request. Any such investigations (a) shall be conducted in such manner as not to
interfere unreasonably with the operation of the respective businesses, and (b)
shall not diminish any of the representations and warranties hereunder.
4.2.4 Notice and Cure. Each of GS, RW, RW-UK and the Shareholders will
notify GSRW and the Shareholders in writing of, and will use all commercially
reasonable
42
efforts to cure before the Closing, any event, transaction or circumstance, as
soon as practical after it becomes known to GS, RW, RW-UK or the Shareholders,
that causes or will cause any covenant or agreement of GS, RW, RW-UK or the
Shareholders under this Agreement to be breached or that renders or will render
untrue in any material respect any representation or warranty of GS or the
Shareholders contained in this Agreement. Each of GS, RW, RW-UK and the
Shareholders also will notify GSRW in writing of, and will use all commercially
reasonable efforts to cure, before the Closing, any violation or breach, as soon
as practical after it becomes known to GS, RW, RW-UK or the Shareholders, of any
representation, warranty, covenant or agreement made by GS, RW, RW-UK or the
Shareholders. No notice given pursuant to this Section 4.2.4 shall have any
effect on the representations, warranties, covenants or agreements contained in
this Agreement for purposes of determining satisfaction of any condition
contained herein.
4.2.5 Consents. Each of GS and the Shareholders will use reasonable
efforts to obtain the waivers and consents set forth on Schedules 3.1.6 and
3.2.6 required to be obtained in connection with the transactions contemplated
thereby; provided the Shareholders shall be deemed hereby to have consented to,
and approved, the Acquisitions and the transfers of the RW Stock and RW-UK Stock
for all purposes, including, but not limited to, Section 15(1) of the Articles
of Association of RW.
4.2.6 Member Approval. GS shall use its reasonable best efforts to
obtain the approval of the transactions contemplated hereby from the holders of
at least a majority of the Members holding a majority of the shares of each of
the Common Shares, GS Series A Stock and GS Series B Stock and any other
approvals required of the Members.
4.2.7 Securities Matters. (a) Each Shareholder represents and agrees
that he or it:
(i) is acquiring the GSRW Stock and RW Notes for his own account and
not for the account or benefit of any other person;
(ii) has knowledge and experience in financial and business matters
such that he or it is capable of evaluating the merits and risks of an
investment in the GSRW Stock and RW Notes;
(iii) has been furnished with all such information as he or it has
deemed necessary to make an informed investment decision with respect to
the GSRW Stock and RW Notes;
(iv) had the opportunity to obtain such independent legal and tax
advice and financial planning services as he or it has deemed appropriate
prior to making a decision to invest in the GSRW and RW Notes;
(v) confirms that the GSRW Stock is being acquired solely for
investment, and is not being purchased with a view to a distribution or
resale thereof otherwise than in compliance with the Securities Act of
1933, as amended (the "Securities Act"), Regulation S thereunder and other
applicable Irish or UK law;
43
(vi) certifies that he or it is not a U.S. person (as such term is
defined in Rule 902(k) of Regulation S) and is not acquiring the GSRW Stock
and RW Notes on behalf of any U.S. person, is located outside of the United
States (within the meaning of Regulation S) and will acquire such
securities outside of the United States (within the meaning of Regulation
S);
(vii) understands that the GSRW Stock, GSRW Series A Stock, GSRW
Series B Stock, and RW Notes have not been registered under the Securities
Act, or any state securities laws, in reliance upon exemptions from
registration for non-public offerings. Such Shareholder understands that
neither such security nor any interest therein may be, and agrees that
neither such security nor any interest therein will be, resold or otherwise
disposed of by such Shareholder unless such security is subsequently
registered under the Securities Act and under appropriate state securities
laws or unless an exemption from registration is applicable;
(viii) will not offer, sell, pledge or otherwise transfer its RW Notes
or GSRW Stock except (a) to a person whom GSRW reasonably believes (or he
or it and anyone acting on his or its behalf reasonably believes) is a
Qualified Institutional Buyer within the meaning of Rule 144A under the
Securities Act in a transaction meeting the requirements of Rule 144A, (b)
outside the United States to a person other than a U.S. Person (as defined
in Regulation S) in accordance with Regulation S under the Securities Act,
or (c) under an exemption from registration requirements of the Securities
Act provided by Rule 144 under the Securities Act (if applicable) or
pursuant to an effective registration statement under the Securities Act,
in any case in accordance with any applicable securities laws of any state
of the United States and each Shareholder acknowledges that GSRW shall
refuse to register any transfer made in violation of this section.
(ix) will not conduct any hedging transactions involving these
securities unless in compliance with the Securities Act;
(x) acknowledges that the GSRW Stock, GSRW Series A Stock, GSRW Series
B Stock and RW Notes are deemed to be restricted securities under Rule 144,
and subject to the restrictions of Rule 144 of the Rules and Regulation of
the Securities Act, and that these securities will continue to be deemed
restricted securities subject to Rule 144 notwithstanding that they are
resold in a resale transaction pursuant to Rule 901 or Rule 904 of
Regulation S; and
(xi) acknowledges and agrees that each certificate representing the
GSRW Stock shall contain, and RW Notes shall contain, a legend
substantially similar to, the following restrictive legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR WITH ANY
SECURITIES REGULATORY AUTHORITY OF ANY STATE OR OTHER JURISDICTION OF THE UNITED
STATES, AND MAY ONLY BE SOLD, RESOLD, PLEDGED, ASSIGNED, TRANSFERRED OR
OTHERWISE DISPOSED
44
OF IN COMPLIANCE WITH THE SECURITIES ACT AND APPLICABLE LAWS OF THE STATES,
TERRITORIES AND POSSESSIONS OF THE UNITED STATES GOVERNING THE OFFER AND SALE OF
SECURITIES AND ONLY (1) OUTSIDE THE UNITED STATES TO A PERSON OTHER THAN A U.S.
PERSON (AS SUCH TERMS ARE DEFINED IN REGULATION S UNDER THE SECURITIES ACT) IN
ACCORDANCE WITH RULES 901 THROUGH 905 AND THE PRELIMINARY NOTES OF REGULATION S
UNDER THE SECURITIES ACT, (2) TO A PERSON WHOM THE HOLDER OF THE SECURITIES
REPRESENTED HEREBY REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
THE MEANING OF RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF ANOTHER QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (3) PURSUANT TO AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE), OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT. THE HOLDER, BY ITS ACCEPTANCE OF THIS
CERTIFICATE OR THE SECURITIES REPRESENTED HEREBY, AS THE CASE MAY BE, REPRESENTS
THAT IT UNDERSTANDS AND AGREES TO THE FOREGOING RESTRICTIONS. HEDGING
TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREIN MAY NOT BE CONDUCTED
UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.
THE SECURITIES EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE TRANSFER
RESTRICTIONS AND OTHER PROVISIONS OF THE SHAREHOLDERS AGREEMENT, DATED AS OF
[___________], 2003 (THE "SHAREHOLDERS AGREEMENT"), BY AND AMONG GSRWB, INC.
(THE "COMPANY"), CERTAIN OF THE SERIES A CONVERTIBLE PREFERRED STOCKHOLDERS OF
THE COMPANY, CERTAIN OF THE SERIES B CONVERTIBLE PREFERRED STOCKHOLDERS OF THE
COMPANY, CERTAIN OF THE SERIES C CONVERTIBLE PREFERRED STOCKHOLDERS OF THE
COMPANY AND CERTAIN OF THE COMMON STOCKHOLDERS OF THE COMPANY AND MAY NOT BE
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
EXCEPT AS PROVIDED THEREIN."
(b) GSRW agrees that it will refuse to register the transfer of securities
not made in accordance with the provisions of Regulation S (Rules 901 through
905, and Preliminary Notes), pursuant to registration under the Securities Act
or pursuant to an available exemption from registration under the Securities
Act.
4.2.8 BES Purchase. The Shareholders shall use their reasonable best
efforts to procure and cause the sale to GSRW of the shares of RW Stock not
currently owned by the Shareholders, the B Ordinary Shares (the "BES II Shares")
issued pursuant to the Subscription Agreement, dated July __, 2002, among RW,
BES Management Limited, The Roaring Water Bay Spirits Company Limited and the
persons named therein as Covenantors, pursuant to the Share Purchase Agreement
substantially in the form set forth in Exhibit N attached hereto ("BES Purchase
Agreement"), for a total consideration of E107,000 and a promissory note in
principal amount of E255,000 substantially in the form set forth in Exhibit N
attached hereto (the "BES II Note") bearing interest at 5% per annum accrued
until maturity and up to a maximum amount of
45
interest at maturity of E51,000, the principal of which shall be due not earlier
than February ______, 2007 and guaranteed by the Shareholders pursuant to the
form of guarantee substantially in the form set forth in Exhibit N attached
hereto (the "BES Guarantee") or on such other terms as shall be approved in
writing by GSRW and obtain release of all claims against RW and its officers,
directors and shareholders, including GSRW, in form and substance satisfactory
to GSRW. The Shareholders hereby irrevocably consent to, and approve, the
transfer of the BES II Shares for all purposes, including, but not limited to,
Section 15(1) of the Articles of Association of RW. Each of GSRW, RW and the
Shareholders covenants and agrees to execute and deliver on or before the
Closing the BES Purchase Agreement, the BES II Note and the BES Guarantee.
4.2.9 Shareholder Notes. Each of the Shareholders covenants and
agrees, on or prior to the Closing Date, to surrender to GSRW for cancellation
all outstanding indebtedness of RW to such Shareholders, respectively, as well
as all offers to loan and all instruments evidencing any loan obligations issued
to such Shareholders by RW, or any of its Subsidiaries, totaling E444,389, in
exchange for issuance of the Shareholder Notes substantially in the form of
Exhibits F, G, H and I attached hereto (each a "Shareholder Note"), payable to
such Shareholders and guaranteed by GSRW, substantially in the form of Exhibits
J, K, L and M attached hereto (each a "GSRW Guarantee"). RW and GSRW covenant
and agree to execute and deliver the Shareholder Notes and the GSRW Guarantee on
the Closing against surrender of all evidence of indebtedness referenced in the
prior sentence.
4.2.10 Employment Agreements. (a) RW, DP and PR each covenants and
agrees to execute and deliver employment agreements, and GSRW and each of DP and
PR each covenants and agrees to execute and deliver Non-Competition Deeds with
GSRW, substantially upon the terms and in the form set forth on Annex C.
(b) GSRW covenants and agrees to execute and deliver employment
agreements with each of Xxxx Xxxxxxx and T. Xxxxxx Xxxxxxxx substantially upon
the terms set forth on Annex D.
4.2.11 Employee Releases. RW and GS shall obtain letters, in form and
substance reasonably satisfactory to GSRW, from all employees and others having
rights to options to purchase shares of any of the RW Companies or GS Shares
(the "Release Letter") releasing such rights.
4.2.12 RW and RW-UK Stock. On Closing, completion of the sale and
purchase of RW Stock and RW-UK Stock shall take place and at Closing each of the
Shareholders shall:
4.2.12.1 deliver to GSRW duly executed share transfers in favor
of GSRW or its nominee(s) in respect of all of the issued and outstanding shares
of RW Stock and the RW-UK Stock, together with the relevant certificates (or, in
the case of any share certificates found to be missing, an indemnity, in a form
satisfactory to GSRW);
4.2.12.2 deliver to GSRW duly executed share transfers in respect
of all shares in the Subsidiaries which are not registered in the name of RW or
RW-UK together with the relevant share certificates;
46
4.2.12.3 deliver to GSRW in relation to each of RW, RW-UK and
their Subsidiaries, the statutory books, records and registers (complete and
duly written up-to-date), the common seal, the certificate of incorporation, any
certificates of incorporation on change of name;
4.2.12.4 procure that all of the Directors (other than PR, DP and
Xx. Xxxxxxx) resign from their directorships in each of the RW Companies and
their Subsidiaries;
4.2.12.5 deliver to GSRW copies of all bank mandates of the RW
Companies and the Subsidiaries;
4.2.12.6 deliver to GSRW appropriate forms to amend any mandates
given by RW, RW-UK and the Subsidiaries to their bankers or other financial
institutions to effect the delivery to GSRW of the share transfers referred to
in Section 4.2.12.1 (as appropriate) that are approved (subject only to
stamping);
4.2.12.7 a duly executed power of attorney in favor of GSRW or
its nominee(s) generally in respect of the RW Stock and RW-UK Stock and in
particular to enable GSRW or its nominee(s) to attend and vote at general
meetings of the RW Companies, substantially in the form of the power of attorney
set forth in Exhibit O attached hereto;
4.2.12.8 deliver to GSRW such waivers or consents as GSRW may
required to vest GSRW with full beneficial ownership of the RW Stock and the
RW-UK Stock and to enable GSRW and/or its nominees to be registered as the
holders of the shares; and
4.2.12.9 deliver to GSRW a Tax Clearance Certificate pursuant to
Section 980 TCA, or letter from auditors confirming none is required.
4.2.13 Interim Board of Directors. Until the Closing, the Board of
Directors of GSRW shall consist of PR, DP and Messrs. Xxxx Xxxxxxx, T. Xxxxxx
Xxxxxxxx and Xxxx X. Xxxxxxxxxx, III. The Board of Directors of GSRW shall meet
regularly prior to the Closing and shall be kept fully informed with respect to
the Financing. The Board of Directors of GSRW shall have the authority to
approve the terms and conditions of the Financing. Xx. Xxxx Xxxx shall receive
all information provided to the Board of Directors of GSRW and shall be entitled
to notice of, and to attend, all of the meetings thereof as an observer.
4.2.14 Shareholders Agreement. The Shareholders and GSRW shall execute
and deliver the Shareholders Agreement substantially in the form attached hereto
as Exhibit E (the "Shareholders Agreement") and GS shall use its reasonable best
efforts to obtain execution of the Shareholders Agreement by the holders of a
majority of the shares of GS.
4.2.15 Escrow Agreement. Each of RW, RW-UK and Merger Company shall
execute and deliver the Escrow Agreement.
4.2.16 License Agreement. The Shareholders shall cause The Roaring
Water Bay (Research and Development) Company Limited to enter into a new
exclusive license agreement with respect to the Patent for the "Trinity" with
GSRW, providing for a limitation on
47
annual license fees of not more than E30,000 and the right to acquire patents
held by it for not more than E90,000, in form and substance satisfactory to
GSRW, in lieu of the existing license agreement.
4.2.17 Exchange of Indebtedness. Each of the Shareholders covenants
and agrees, prior to or on the Closing Date, to exchange the indebtedness due
them from RW-UK in the aggregate amount of E507,895 for issuance of one
additional Ordinary Share, nominal value EUR1.269738, of RW-UK to each
Shareholder, in a manner and form satisfactory to GSRW; provided there shall be
no adjustment of the purchase price to be paid by GSRW pursuant to Sections
1.1(b) and 1.3.3 for all outstanding shares of RW-UK and provided further that
such exchange or contribution shall have no adverse effect upon RW-UK or GSRW or
result in any tax liability to either, other than payment of capital duty at the
rate of one percent.
4.3 Covenants of GSRW. GSRW covenants and agrees as follows:
4.3.1 Stock Options. GSRW agrees to promptly adopt an incentive stock
option plan substantially in the form attached as Exhibit D and in connection
with the Reorganization seek shareholder approval thereof as required in Section
422 of the Code (as so approved, the "Plan"). The Shareholders hereby approve
and consent to the Plan and agree to vote for approval, if requested. Following
the Closing, subject to the limitations of Rule 701 promulgated under the
Securities Act of 1933, as amended, GSRW agrees to make available options (i) to
purchase up to 450,000 shares of GSRW Stock under the Plan to employees of GSRW
and its subsidiaries, designated by PR for up to 200,000 shares and designated
by Mr. Xxxx Xxxxxxx for up to 250,000 shares.
4.3.2 Notice and Cure. GSRW will notify GS, RW, RW-UK and the
Shareholders in writing of, and will use all commercially reasonable efforts to
cure before the Closing, any event, transaction or circumstance, as soon as
practical after it becomes known to GSRW, that causes or will cause any covenant
or agreement of GSRW under this Agreement to be breached or that renders or will
render untrue in any material respect any representation or warranty of GSRW
contained in this Agreement. GSRW also will notify GS, RW and RW-UK in writing
of, and will use all commercially reasonable efforts to cure, prior to the
Closing, any violation or breach, as soon as practical after it becomes known to
GSRW, of any representation, warranty, covenant or agreement made by GSRW. No
notice given pursuant to this Section 4.3.2 shall have any effect on the
representations, warranties, covenants or agreements contained in this Agreement
for purposes of determining satisfaction of any condition contained herein.
4.3.3 Payment. Subject to the satisfaction of the Shareholders'
obligations and the accuracy of their representations and warranties hereunder
or waiver thereof by GSRW, GSRW will tender the cash, RW Notes and GSRW Stock
payable to the Shareholders pursuant to Sections 1.3.2 and 1.3.3 against
delivery of the RW Stock and RW-UK Stock.
4.4 Covenants of Merger Company. The Merger Company covenants and agrees
that, except as is contemplated by this Agreement, prior to the Effective Time,
the Merger Company will not engage in any business activities or liquidate,
merge into or consolidate with any other corporation or permit any other
corporation to merge into or consolidate with it;
48
increase its authorized capital stock; or issue options, rights or warrants to
purchase any of its capital stock.
ARTICLE V
CONDITIONS
5.1 Conditions to the Obligations of All Parties. The obligations of GSRW,
GS and the Shareholders and the Merger Company to consummate the transactions
contemplated by this Agreement are subject to the fulfillment at or before the
Closing of each of the following conditions, any one of which may be waived;
provided that any such waiver, if so granted, must be given by GSRW and each of
the Shareholders:
5.1.1 Regulatory Approvals. The parties hereto shall have made all
filings and received all approvals of any Governmental Entity of competent
jurisdiction necessary in order to consummate the Acquisitions and the Merger,
and each of such approvals shall be in full force and effect at the Closing and
not subject to any condition which requires the taking or refraining from taking
of any action that would have a Material Adverse Effect on GSRW, GS, RW or
RW-UK.
5.1.2 Litigation. There shall not be in effect any order, decree or
injunction of a federal or state court of competent jurisdiction restraining,
enjoining or prohibiting the consummation of the transactions contemplated by
this Agreement (each party hereto agreeing to use its reasonable best efforts,
including appeals to higher courts, to have any such non-final, appealable
order, decree or injunction set aside or lifted), and no action shall have been
taken, and no statute, rule or regulation shall have been enacted, by any state
or federal government or governmental agency in the United States which would
prevent the consummation of the Merger.
5.1.3 Funding. GSRW shall have received financing for the
Reorganization (the "Financing") in a private placement of its securities, of
not less than $7,500,000 before costs and expenses. The preliminary proposed
terms of the Financing are a private placement of GSRW Series C Stock. The
Financing is currently planned to be for a minimum of $7,500,000 and a maximum
of $12,500,000 (prior to costs and expenses). Due to changes in market
conditions and the particular preferences of potential investors, with the
approval of the Board of Directors of GSRW, the pricing and terms of the
Financing may change from the terms proposed, including, without limitation, an
increase in the maximum amount of the Financing.
5.1.4 Stock Option Plan. GSRW shall have adopted and established the
Plan.
5.1.5 Shareholders Agreement. The Shareholders and GSRW shall have
executed the Shareholders Agreement and GS shall have used its reasonable best
efforts to obtain execution of the Shareholders Agreement by the holders of a
majority of shares of GS.
5.1.6 Escrow Agreement. Each of RW, RW-UK, GSRW, Merger Company,
Escrow Agent and the Shareholder Representatives shall have executed and
delivered the Escrow Agreement.
5.2 Conditions to the Obligations of the Shareholders. The obligations of
the Shareholders to consummate the transactions contemplated by this Agreement
are subject to the
49
fulfillment at or before the Closing of each of the following conditions, any of
which may be waived by the Shareholders:
5.2.1 Representations, Warranties and Covenants. No breach of
representations or warranties of GSRW, GS or the Merger Company shall have
occurred after the date of this Agreement but prior to the Closing Date which
would have a Material Adverse Effect on, or cause a Material Adverse Change in
respect of, GSRW, GS or the Merger Company, and each of GS and the Merger
Company shall have performed in all material respects all of their respective
covenants and obligations hereunder to be performed as of the Closing. Each of
GS and the Shareholders shall have received at the Closing certificates to the
foregoing effect, dated the Closing Date, and executed on behalf of GSRW, GS and
the Merger Company by an executive officer of GSRW, GS and the Merger Company.
5.2.2 Consents. GS and GSRW shall have received all consents, waivers
or approvals set forth in Section 4.2.5 and 4.2.6 to be obtained by them in
connection with the transactions contemplated hereby.
5.2.3 No Material Adverse Change. Since March 31, 2003, there shall
have been no Material Adverse Change in GS or the discovery of a condition or
occurrence of an event that has resulted or reasonably can be expected to result
in a Material Adverse Change in GS or GSRW.
5.2.4 Member Agreement. GS shall have obtained the approval by the
Members as required under Section 3.1.22.
5.2.5 GSRW Stock. GSRW shall have tendered the cash, RW Notes and GSRW
Stock payable to the Shareholders pursuant to Sections 1.3.2 and 1.3.3, together
with the GSRW Guarantee.
5.2.6 Employment Agreement. Xxxx Xxxxxxx and T. Xxxxxx Xxxxxxxx shall
each have entered into employment and non-compete agreements with Merger Company
substantially upon the terms of employment agreement set forth in Annex D.
5.2.7 Special Option. GSRW shall have granted to Xxx. Xxxx X'Xxxxxx an
option to purchase up to 10,000 shares of GSRW Stock at a purchase price per
share of $6.00, which option shall be exercisable, in whole or in part, up to
ten (10) years after the Closing.
5.3 Conditions to the Obligations of GS. The obligations of GS to
consummate the transactions contemplated by this Agreement are subject to the
fulfillment at or before the Closing of each of the following conditions, any of
which may be waived by GS.
5.3.1 Representations, Warranties and Covenants. No breach of
representations or warranties of the Shareholders shall have occurred after the
date of this Agreement but prior to the Closing Date which would have a Material
Adverse Effect on, or cause a Material Adverse Change in respect of, the RW
Companies or the Shareholders, and each of the RW Companies and the Shareholders
shall have performed in all material respects all of their respective covenants
and obligations hereunder to be performed as of the Closing. GS shall have
received
50
at the Closing certificates to the foregoing effect, dated the Closing Date, and
executed on behalf of RW and RW-UK by an executive officer thereof and by the
Shareholders.
5.3.2 Consents. The Shareholders, RW and RW-UK shall have received all
consents, waivers or approvals set forth in Section 4.2.5 to be obtained by them
in connection with the transactions contemplated below.
5.3.3 No Material Adverse Change. Since March 31, 2003, there shall
have been no Material Adverse Change in RW or RW-UK or the discovery of a
condition or occurrence of an event that has resulted or reasonably can be
expected to result in a Material Adverse Change in RW or RW-UK.
5.3.4 RW Stock and RW-UK Stock. The Shareholders shall have delivered
to GSRW all of the RW Stock and RW-UK Stock, together with all endorsements,
share transfer documents and powers of attorney, as shall be reasonably
requested by GSRW, and otherwise complied with Section 4.2.12.
5.3.5 Shareholder Notes. Pursuant to Section 4.2.9, each of the
Shareholders shall have surrendered to GSRW for cancellation all of the
outstanding notes previously issued to such Shareholders by RW, respectively, as
well as all instruments evidencing any loan obligations issued to such
Shareholders by RW, or any of its Subsidiaries, totaling E444,389, in exchange
for issuance of the Shareholder Notes and the GSRW Guarantees.
5.3.6 BES Shares. FBD International Financial Services Limited (the
"Trustee"), as trustee of the Business Expansion Scheme Offering, dated [DATE]
(the "BES Offering") and on behalf of BES Management Limited, the manager of the
BES Offering, shall have entered into the BES Purchase Agreement and surrendered
to RW for cancellation all of the BES II Shares, in exchange for payment of
E107,000 and issuance of the BES II Note and the BES Guarantee.
5.3.7 Employment Agreements. DP and PR shall each have entered into
employment and non-compete agreements with RW substantially upon the terms of
employment agreement set forth in Annex C. In addition, DP and PR shall each
have entered into a separate Non-Competition Deed with GSRW substantially in the
form set forth in Annex C attached hereto.
5.3.8 Extensions. (a) The Supply Agreement, dated January 19, 1998, by
and between Carbery and The Roaring Water Bay Spirits Company Limited shall have
been extended not less than three (3) years from the Closing Date on terms at
least as favorable as the agreement set forth above. Such amendment and/or
extension shall be in a form reasonably satisfactory to GSRW.
(b) The Roaring Water Bay (Research and Development) Company Limited
shall have entered into a new license agreement with GSRW providing for a
limitation on annual license fees of not more than E30,000 and the right to
acquire patents held by it for not more than E90,000, in form and substance
satisfactory to GSRW.
51
5.3.9 Life Insurance. GSRW shall have obtained key man insurance
policies on the lives of each of PR and DP in form and substance satisfactory to
GSRW.
5.3.10 Grants. RW and RW-UK shall have obtained consent to the
Acquisitions by Enterprise Ireland and the agreement by Enterprise Ireland that
the grants made by Enterprise Ireland to The Roaring Water Bay Spirits Company
Limited shall not be called or returnable by virtue of the Acquisitions.
5.3.11 Company Insurance. The insurance policies of the RW Companies
listed on Schedule 3.2.25 of the RW & RW-UK Disclosure Schedule shall have been
renewed on substantially the same terms.
5.3.12 Release Letters. GSRW shall have received all of the duly
executed Release Letters.
5.3.13 Contribution of Indebtedness. The Shareholders shall have
exchanged the indebtedness due them from RW-UK in the aggregate amount of
E507,895 for issuance of one additional Ordinary Share, nominal value
EUR1.269738, of RW-UK to each Shareholder, in a manner and form satisfactory to
GSRW.
ARTICLE VI
TERMINATION
6.1 Termination by Mutual Consent. This Agreement may be terminated and the
Reorganization may be abandoned at any time prior to the Effective Time by the
mutual consent of GSRW and the Shareholders.
6.2 Termination by Either GSRW or the Shareholders. This Agreement may be
terminated and the Reorganization may be abandoned at any time prior to the
Effective Time:
(a) by GSRW or the Shareholders if Acquisitions and the Merger shall
not have become effective on or prior to October 31, 2003; provided, however,
that the right to terminate this Agreement pursuant to this Section 6.2(a) shall
not be available to any party whose intentional breach of any covenant of this
Agreement has been the cause of, or resulted in, the failure of the
Reorganization to occur on or before such date;
(b) by GSRW or the Shareholders if any court of competent jurisdiction
in the United States, Ireland or any state or any foreign jurisdiction shall
have issued an order, judgment or decree (other than a temporary restraining
order) restraining, enjoining or otherwise prohibiting the Merger, and such
order, judgment or decree shall have become final and non-appealable;
(c) by GSRW, if there has been a material breach by RW, RW-UK or the
Shareholders of any representation or warranty which would have a Material
Adverse Effect on, or constitute a Material Adverse Change with respect to, the
RW Companies, or any covenant or agreement contained in this Agreement, that is
not curable or, if curable, is not cured within a reasonable time (but in no
event more than 30 days) after written notice of such breach is given by GSRW to
GS, RW, and RW-UK; provided if the parties proceed to consummate the
52
Reorganization, nothing in this Section shall prevent recourse to the RW Escrow
Account for indemnity; or
(d) by the Shareholders, if there has been a material breach by GS of
any representation or warranty which would have a Material Adverse Effect on, or
constitute a Material Adverse Change with respect to, GS, or any covenant or
agreement contained in this Agreement, that is not curable or, if curable, is
not cured within a reasonable time (but in no event more than 30 days) after
written notice of such breach is given by GSRW; provided if the parties proceed
to consummate the Reorganization, nothing in this Section shall prevent recourse
to the GS Escrow Account for indemnity.
6.3 Effect of Termination and Abandonment. In the event of termination of
this Agreement and abandonment of the Acquisitions and Merger pursuant to this
Article VI, (i) this Agreement immediately will become void and of no effect,
except that Section 4.1.4 will survive the event of termination; and (ii) no
party hereto (or any of its directors or officers) shall have any liability or
further obligation to any other party to this Agreement, except that nothing
herein shall relieve any party for any willful breach of this Agreement.
ARTICLE VII
INDEMNIFICATION
7.1 Survival of Representations and Warranties. All representations and
warranties of GS and the Shareholders contained in this Agreement shall survive
until March 31, 2005, all other representations and warranties shall terminate
at the Closing.
7.2 Indemnification. (a) From and after the date hereof subject to the
other provisions of this Agreement, GSRW and its subsidiaries and affiliates,
each of their respective officers, directors, employees, agents and
representatives, and each of the heirs, executors, successors and assigns or any
of the foregoing, and either the Members or Shareholders, as the case may be, on
the one hand (the "Indemnified Persons"), shall be entitled to be indemnified
and held harmless against and in respect of any payments, demands, claims,
suits, judgments, liabilities, losses, costs, damages or expenses (including,
but not limited to, expenses of investigations and attorneys' or consultants'
fees) ("Damages") incurred or sustained by any of them as a result of any breach
by GS or the Shareholders, as the case may be, of (i) their respective
representations and warranties contained herein, and (ii) any covenant and
agreement to be performed by the other party contained herein. Such
indemnification, subject to Section 7.4, shall be effected by surrender of
shares of GSRW Stock, GSRW Series A Stock and GSRW Series B Stock under the
Escrow Agreement. To avoid confusion, a breach of a representation or warranty
with respect to Taxes shall be deemed Damages for purposes of this Article VII.
(b) None of the Indemnified Persons shall be entitled to make any
claim for indemnification under this Article VII on account of any breach of any
representation or warranty after the date on which the same ceases to survive
pursuant to Section 7.1 hereof; provided, however, that if prior to such date
any if the Indemnified Persons shall have delivered to the indemnifying party
(or, if the Members or the Shareholders are the indemnifying party, the
Shareholder Representatives) a written notice of a claim for indemnity
specifying in reasonable
53
detail the facts and circumstances which form the basis for such claim, then
such claim, if diligently pursued, shall continue as a basis for indemnity until
it is finally resolved.
7.3 Shareholder Representative; Indemnification Procedures. (a) Each Member
and Shareholder shall, by virtue of the occurrence of the Merger or execution of
this Agreement, be deemed to constitute and appoint, effective from and after
the date of the Reorganization, Mr. Xxxx Xxxxxxx, in the case of the Members, or
Xx. Xxxx Xxxx, in the case of the Shareholders, to be their respective
representative and attorney-in-fact with power to act for and bind all of the
Members and Shareholders for all purposes under this Article VII of this
Agreement and the Escrow Agreement (the "Shareholder Representatives") (such
appointment to survive the death or incompetence of each such Shareholder),
including, without limitation, payment and satisfaction of indemnification
obligations hereunder and under the Escrow Agreement, provided the Shareholder
Representatives shall have no personal liability hereunder and shall be
indemnified by the shareholders of GS for all acts other than for gross
negligence or willful misconduct. All fees and expenses incurred by the
Shareholder Representatives under Article VII hereof shall be deemed Damages for
which the Members and Shareholders are obligated to provide indemnification
hereunder and shall be paid from the Escrowed Shares and the Escrowed Cash. If
at any time during the period in which any representations or warranties of GS,
RW, RW-UK and the Shareholders, survive pursuant to Section 7.1, or during the
period in which any claim for indemnification hereunder is still pending, if any
person has ceased for any reason to be a Shareholder Representative, the Members
and Shareholders by instruments executed by the Members and Shareholders who
received a majority of the consideration in the Reorganization shall promptly
(but in any event within five business days) act to appoint a successor
Shareholder Representatives (and shall deliver to GSRW a written copy of such
action). During any such vacancy in the office of a Shareholder Representative,
GSRW and the GSRW's Indemnified Persons may for all purposes under this
Agreement treat the Member or Shareholder with the largest ownership percentage
(or such Member's and Shareholder's successors, permitted assigns or legal
representatives, as the case may be) as a Shareholder Representative.
(b) Any of the Indemnified Persons suffering any Damages for which
indemnification is available under this Article VII shall give prompt written
notice through GSRW to the indemnifying party (or, if the Member or Shareholders
are the indemnifying party, the Shareholder Representatives) of such Damages,
but any delay or failure so to notify the indemnifying party (or, if the
Shareholders are the indemnifying party, the Shareholder Representatives) shall
not prejudice any of the Indemnified Persons' rights hereunder of such delay or
failure; provided such failure shall not have prejudiced or limited the rights
of the indemnifying party.
(c) If a third party asserts a claim against any of the Indemnified
Persons for Damages (a "Third Party Claim") for which indemnification is
available under this Article VII, the indemnifying party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
the Indemnified Persons and the payment of all expenses. The Indemnified Person
shall have the right to employ separate counsel in such Third Party Claim and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the Indemnified Person unless there are actual or
potential conflicts of interest between the Indemnified Person and the
indemnifying party or if there are defenses available to
54
the Indemnified Person which are not available to the indemnifying party, in
which case the reasonable fees and expenses of such counsel shall be paid by the
indemnifying party; provided, however, that the indemnifying party shall be
responsible for the fees and expenses of only one such counsel in respect of a
Third Party Claim for all Indemnified Persons. In the event that the
indemnifying party fails to assume the defense of a Third Party Claim within a
reasonable time under the circumstances after notice of such Third Party Claim,
the Indemnified Person shall have the right to undertake the defense, compromise
or settlement of such Third Party Claim for the account of the indemnifying
party, subject to the right of the Shareholder Representatives to assume the
defense of such Third Party Claim with counsel reasonably satisfactory to the
Indemnified Person at any time prior to the settlement, compromise or final
determination thereof. Anything in this Section 7.3(c) to the contrary
notwithstanding, the indemnifying party shall not, without the Indemnified
Person's prior written consent, such consent not to be unreasonably withheld,
settle or compromise any Third Party Claim or consent to the entry of any
judgment with respect to any Third Party Claim except that the indemnifying
party may, without the Indemnified Person's prior written consent, settle or
compromise any such Third Party Claim or consent to entry of any judgment with
respect to any Third Party Claim which requires solely that monetary damages be
paid by the indemnifying party and which includes as an unconditional term
thereof the release by the claimant or the plaintiff of all Indemnified Persons
from all liability in respect of such Third Party Claim. In the event that the
indemnifying party shall have assumed the defense of any Third Party Claim, the
Indemnified Person shall not, without the indemnifying party's prior written
consent, such consent not to be unreasonably withheld, settle or compromise any
such Third Party Claim. For the avoidance of doubt, the above provisions of this
Section 7.3(c) shall not apply to Third Party Claims involving Taxes, which
claims shall be governed by the provisions of Section 7.4.
(d) With respect to any claim for Damages for which indemnification is
available under this Article VII other than a Third Party Claim, the claims
procedures set forth in the Escrow Agreement will apply. If the indemnifying
party's Representative notifies the Escrow Agent pursuant to the Escrow
Agreement that the indemnifying party's Representative rejects such claim in
whole or in part, the Indemnified Person shall be free to pursue such remedies
as may be available to it under this Agreement or under applicable law.
(e) The Indemnified Persons shall, upon receipt of a written request
therefor from the indemnifying party, provide the indemnifying party with
reasonable access to books and records within the control of the Indemnified
Persons as the indemnifying party shall reasonably request (i) in order to
defend a Third Party Claim as to which indemnification is being sought and as to
which the indemnifying party has assumed the defense, or (ii) with respect to
any claim by an Indemnified Person as to which indemnification is sought.
(f) In connection with any Third Party Claim or otherwise, the parties
agree to work together reasonably and in good faith to preserve in full the
confidentiality of all confidential business records and any attorney-client
privilege or attorney work-product immunity that may apply to any documents,
information or other materials. In connection therewith, each party hereto
agrees that (i) it will use all reasonable efforts, in any action, suit or
proceeding which it has assumed or in the defense of which it has participated,
to avoid production of confidential business records, and (ii) all
communications between any party hereto and counsel responsible for, or
participating in, the defense of any action, suit or
55
proceeding shall, to the extent possible, be made so as to preserve any
applicable attorney-client privilege or work-product immunity.
7.4 Limitations on Indemnity.
(a) The Members or the Shareholders shall be liable in indemnity under
Sections 7.2 and 7.3 of this Agreement to the extent that the aggregate amount
of all Damages for which the Members or the Shareholders would have been liable
thereunder exceeds an amount equal to $250,000 (the "Damages Threshold"), except
that if cumulative Damages a party is responsible for shall exceed the Damages
Threshold the party shall be liable for all Damages, subject to Section 7.4(b).
(b) Notwithstanding any other provision of this Agreement, none of the
Shareholders or the Members shall, in the aggregate, be liable in indemnity
under Section 7.2 of this Agreement for aggregate Damages in excess of
$1,300,000.
(c) Any obligation of the Members or the Shareholders in indemnity
pursuant to Section 7.2 hereof shall be reduced by the amount of any insurance
proceeds actually received by the Indemnified Persons in connection with the
Damages for which indemnification is sought.
(d) After the Closing, the indemnification provided herein shall be
the sole contractual remedy of the parties for breaches of representations,
warranties and covenants contained herein.
(e) If Damages are incurred in Euros, for purposes of the application
of the Market Value under the Escrow Agreement, Euros will be translated to U.S.
Dollars at the exchange rate of E1:US$1.15.
(f) Notwithstanding anything contained herein to the contrary, none of
GS or the Shareholders shall have any liability (or such liability shall be
reduced) in respect of any claim for indemnification under Section 7.2:
(i) if and to the extent that allowance, provision or reserve for or
in respect of the liability or other matter giving rise to such claim has
been made in the financial statements delivered pursuant to Section 3.1.5
or 3.2.5 of the party against whom indemnification is sought or such
liability or matter was specifically referred to in the notes to such
Financial Statements;
(ii) if and to the extent that any liability of the RW Companies or GS
included in the financial statements thereof has been discharged or
satisfied below the amount attributed to it or included in respect of it in
such financial statements;
(iii) if and to the extent that such claim for indemnification has
arisen in respect of any act or omission stipulated to be carried out or
omitted pursuant to or which is contemplated by the terms of this
Agreement;
(iv) if and to the extent that any contingency provided against in the
financial statements delivered pursuant to Sections 3.1.5 or 3.2.5 of the
party against whom
56
indemnification is sought has been over-provided for (but only to the
extent of such over-provision);
(v) to the extent that a tax liability arises or is increased as a
consequence only of any change in law or published practice or the
withdrawal of any published concession by a Revenue Authority or a change
in generally accepted accounting practice or principles entering into force
after the Closing Date with retrospective effect;
(vi) to the extent that a tax liability arises or is increased as a
consequence only of any increase in any rate of taxation entering into
force after the Closing Date with retrospective effect;
(vii) to the extent that a tax liability would not have arisen but for
a cessation of, or any major change in the nature or conduct of, any trade
carried on by the Group, a member of the Group or GS, being a cessation or
change occurring on or after the Closing Date; and
(viii) if and to the extent the liability is specifically set forth in
the Schedules and Annexes to the GS Disclosure Schedule or the RW & RW-UK
Disclosure Schedule, as appropriate.
(g) Nothing in this Agreement shall derogate from GS's or the
Shareholders' obligation to mitigate any loss which it suffers in consequence of
a breach of the representation set forth in Article III.
7.5 Satisfaction of Obligations; Release from Escrow. GSRW's sole remedy
for Damages on behalf of the Shareholders or the Members, as applicable, shall
be either (i) a claim against the Escrowed Shares held pursuant to the terms and
conditions of the Escrow Agreement or, (ii) at the Members' or Shareholders'
election in the case of the Escrowed Shares, cash substituted for Escrowed
Shares in accordance with the terms of the Escrow Agreement. For purposes of
determining the number of Escrowed Shares which shall be necessary to satisfy an
Indemnifiable Claim against the Members or Shareholders, each Escrowed Share (as
defined in the Escrow Agreement) shall be deemed to have a value equal to Market
Value as set forth in Section 1.5.3 (subject to equitable adjustment for stock
splits, reclassifications, combinations, reorganizations or other similar
changes).
ARTICLE VIII
MISCELLANEOUS AND GENERAL
8.1 Payment of Expenses. Subject to Section 6.3, if the Acquisitions and
the Merger are not consummated, each party shall pay its own out-of-pocket
legal, accounting, investment banking and other expenses incidental to this
Agreement and the transactions contemplated by this Agreement. In the event that
the Acquisitions and the Merger are consummated, GSRW shall promptly reimburse
GS and the Shareholders for all of the reasonable out-of-pocket legal,
accounting, investment banking and other expenses incurred in connection with
this Agreement and the transactions contemplated hereby. Nothing in this
Agreement is meant to limit the right of a non-breaching party to obtain
reimbursement of expenses and other damages, including attorneys' fees, incurred
as a result of a breach of this Agreement by the other party.
57
8.2 Entire Agreement. This Agreement, including the Disclosure Schedules,
the Annexes hereto and thereto and the Exhibits hereto, constitutes the entire
agreement between the parties hereto and supersedes all prior agreements and
understandings, oral and written, among the parties hereto with respect to the
subject matter hereof.
8.3 Assignment. This Agreement shall not be assignable by any of the
parties hereto without the prior written consent of each of GSRW, GS and the
Shareholders.
8.4 Binding Effect; No Third Party Benefit. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successors, heirs, personal representatives and assigns, subject to the
restrictions on assignment contained in Section 8.3. Nothing express or implied
in this Agreement is intended or shall be construed to confer upon or give to a
person, other than the parties hereto, any rights or remedies under or by reason
of this Agreement or any transaction contemplated hereby.
8.5 Amendment and Modification. Subject to applicable law, this Agreement
may be amended, modified and supplemented by GSRW at any time prior to or at the
Closing, by written agreement executed and delivered by the Shareholders.
8.6 Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law; provided, however, that any waiver by a party hereto must be in
writing.
8.7 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties to this Agreement in separate
counterparts, each of which counterparts when so executed will be deemed to be
an original and all of which taken together will constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement via telephone facsimile transmission will be effective as delivery of
a manually executed counterpart of this Agreement.
8.8 Captions. The Article, Section and paragraph captions herein are for
convenience of reference only, do not constitute a part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
8.9 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
or mailed, certified or registered mail with postage prepaid, or sent by
internationally recognized courier service with proof of delivery or facsimile
(in each case with evidence of confirmed transmission) as follows:
58
If to RW, RW-UK or the Shareholders, to it at:
Messrs. Xxxxxxx Xxxxxx
or
Xxxxx Xxxxxx
or
Carbery Milk Products Limited
or
Xxxxx Investments Limited
or
The Roaring Water Bay Spirits Group Limited
or
The Roaring Water Bay Spirits Marketing and Sales Company
Xxxxxxx Xxxxx
0 Xxxxxxx Xxxxx
Xxxxxx 0, Xxxxxxx
with copies (which shall not constitute notice) to:
Xxxxxx Xxxxx
Partner
Xxxxxxxx Xxxxxx Xxxxxxxx, Solicitors
00 Xxxxxxx Xxxxxx
Xxxxxx 0
Xxxxxxx
Telephone: 011 x000 0 000 0000
Direct: x000 0 000 0000
Facsimile: x000 0 000 0000
If to the Shareholder Representatives at:
Mr. Xxxx Xxxxxxx
00-00 Xxxxx Xxxxxx, Xxxxx X
Xxxx Xxxx, Xxx Xxxx 00000
or
Xx. Xxxx Xxxx
00 Xxxxxxxxxx,
Xxxxxx,
Xxxxxxx,
Xx. Xxxx
with a copy (which shall not constitute notice) to:
Patterson, Belknap, Xxxx & Tyler LLP
0000 Xxxxxx xx xxx Xxxxxxxx
00
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxx, III, Esq.
and
Xxxxxx Xxxxx
Partner
Xxxxxxxx Xxxxxx Xxxxxxxx, Solicitors
00 Xxxxxxx Xxxxxx
Xxxxxx 0
Xxxxxxx
Telephone: 011 x000 0 000 0000
Direct: x000 0 000 0000
Facsimile: x000 0 000 0000
If to GS, GSRW or the Merger Company, to it at:
Great Spirits Company LLC
or GSRWB
or Great Spirits Corp.
00-00 Xxxxx Xxxxxx, Xxxxx X
Xxxx Xxxx, Xxx Xxxx 00000
with copies (which shall not constitute notice) to:
Patterson, Belknap, Xxxx & Tyler LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxxx, III, Esq.
or to such other person or address as any party hereto shall specify by notice
in writing. All such notices, requests, demands, waivers and communications
shall be deemed to have been received on the date of delivery or on the fifth
business day after the mailing thereof.
8.10 Submission to Jurisdiction. Except as set forth in the following
paragraph of this Xxxxxxx 0.00, XXXX, XX, XX, RW-UK, the Shareholders and the
Merger Company agree that the federal or state courts in the City of New York,
Borough of Manhattan, shall have jurisdiction to hear and determine any suit,
action or proceeding and to settle any dispute between them, or between RW and
RW-UK and any of their Shareholders or between GS and any of its Members, that
may arise out of or in connection with this Agreement and, for such purposes,
each irrevocably submits to the jurisdiction of such courts. Each of RW, RW-UK
and
60
the Shareholders hereby irrevocably designates, appoints and empowers National
Registered Agents, Inc. (the "Agent") now at 000 Xxxxx Xxxxxx, 0xx Xxxxx, Xxx
Xxxx, XX 00000 as its authorized agent to receive and accept for and on its
behalf, and on behalf of its properties, assets and revenues, service by mail of
any and all legal process, summons, notices and documents that may be served in
any suit, action or proceeding brought against RW, RW-UK or the Shareholders in
any federal or state court as described in the preceding sentence or in the next
paragraph of this Section 8.10. If for any reason the Agent shall cease to be
available to act as such, each of RW and RW-UK agrees to designate a new agent
in New York. Each of RW and RW-UK further hereby irrevocably consents and agrees
to the service of any and all legal process, summons, notices and documents in
any suit, action or proceeding against each of RW and RW-UK, by service by mail
of a copy thereof (except where more expeditious service is necessary) upon the
Agent (whether or not the appointment of such Agent shall for any reason prove
to be ineffective or such Agent shall fail to accept or acknowledge such
service), with a copy mailed to each of RW and RW-UK by registered or certified
air mail, postage prepaid, to its address provided in Section 8.9. RW and RW-UK
agree that the failure of the Agent to give any notice of such service to it
shall not impair or affect in any way the validity of such service or any
judgment rendered in any action or proceeding based thereon.
Each of RW, RW-UK and the Shareholders agrees that service of process upon
the Agent in the manner set forth in the preceding paragraph shall be effective
service upon it for any suit, action or proceeding brought against it as
described in the preceding paragraph.
Each of RW, RW-UK and the Shareholders irrevocably and unconditionally
waives, to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of venue of any actions, suits or proceedings
brought in any court as provided in the preceding paragraph of this Section
8.10, and hereby further irrevocably and unconditionally waives and agrees not
to plead or claim in any such court that any such action, suit or proceeding
brought in any such court has been brought in an inconvenient forum.
The provisions of this Section 8.10 shall survive any termination of this
Agreement, in whole or in part.
8.11 Choice of Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, exclusive of choice of law or
conflicts of law rules, provisions, or principles, except that the provisions of
this Agreement relating to the Merger shall be governed by the merger provisions
of the DGCL, relating to the transfer of title to the RW Stock and the RW-UK
Stock shall be governed by the provisions of the laws of Ireland.
8.12 Separability. Any term or provision of this Agreement that is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, such provision shall be
interpreted to be only so broad as is enforceable.
61
8.13 Guarantees. GS, RW and RW-UK shall use their reasonable best efforts
(including provision of security from RW's, RW-UK's and GS's and their
respective Subsidiary's assets) to relieve PR, DP and Mr. Xxxx Xxxxxxx from, or
cause the cancellation of, their respective guarantees of the respective
borrowings by the RW Companies and GS from financial institutions; provided this
covenant does not oblige RW, RW-UK or GS to repay or reduce such borrowings or
finance or refinance at materially less favorable terms. In the event such
guarantees shall not have been released by December 31, 2003, each of GSRW, GS,
RW and RW-UK shall use its best reasonable efforts to seek proposals from, and,
if appropriate, meet with alternate financial institutions willing to offer RW,
RW-UK and GS financial facilities on substantially similar terms, but without
personal guarantees. The foregoing covenant shall not be deemed a covenant for
purposes of satisfying the conditions to the Closing.
8.14 Federal Alcohol Administration Act. The Shareholders acknowledge and
agree that upon acquisition of the GSRW Stock and RW Notes, they will be subject
to the Federal Alcohol Administration Act, 27 USC Section 201 et seq. and
related statutes (the "FAA Act"), which will require, among other things, that
the Merger Company, as successor, to GS amend its license filing with the United
States Treasury to disclose certain data regarding the holders of the GSRW Stock
and RW Notes. In addition, the FAA and other state and federal laws may preclude
the owners of GSRW Stock and RW Notes from owning certain interests in retailers
of alcoholic beverages and impose other limitations and requirements. In the
event a Shareholder or a Member shall acquire a prohibited interest or otherwise
be in violation of an applicable law, rule or regulation, the GSRW Stock and RW
Notes must be resold to GSRW at the lower of the original cost thereof or the
net book value per share, based on generally accepted accounting principles in
effect in the United States of America on the date of this Agreement.
62
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of the parties hereto as of the date first herein
above written.
GSRWB, Inc.
By: /s/ Xxxx Xxxxxxx
------------------------------------
Name: Xxxx Xxxxxxx
Title. President
The Roaring Water Bay Spirits Group
Limited
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Joint Managing Director
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
Title: Joint Managing Director
The Roaring Water Bay Spirits Marketing
and Sales Company Limited
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Joint Managing Director
Great Spirits Company, LLC
By: /s/ Xxxx Xxxxxxx
------------------------------------
Name: Xxxx Xxxxxxx
Title: President
Great Spirits Corp.
By: /s/ Xxxx Xxxxxxx
------------------------------------
Name: Xxxx Xxxxxxx
Title: President
Carbery Milk Products Limited
/s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxx Xxxx
------------------------------------- ------------------------------------
Xxxxxxx Xxxxxx Name: Xxxx Xxxx
Title: Director
Xxxxx Investments Limited
/s/ Xxxxx Xxxxxx By: /s/ Xxxxx XxXxxxxx
------------------------------------- ------------------------------------
Xxxxx Xxxxxx Name: Xxxxx XxXxxxxx
Title: Director
2
Exhibit A
Form of 5% Convertible Subordinated Promissory Notes of RW
A-1
Exhibit B
Form of Escrow Agreement
B-1
Exhibit C-1
Certificate of Incorporation of the Merger Company
C-1-1
Exhibit C-2
Bylaws of the Merger Company
C-2-1
Exhibit C-3
List of Directors of the Merger Company
Xxxx Xxxxxxx
X. Xxxxxx Xxxxxxxx
Xxxx X. Xxxxxxxxxx, III
C-3-1
Exhibit D
Form of GSRW 2003 Stock Incentive Plan
D-1
Exhibit E
Form of Shareholders Agreement
E-1
Exhibit F
Form of Shareholder Note for Xxxxxxx Xxxxxx
F-1
Exhibit G
Form of Shareholder Note for Xxxxx Xxxxxx
G-1
Exhibit H
Form of Shareholder Note for Carbery Milk Products Limited
H-1
Exhibit I
Form of Shareholder Note for Xxxxx Investments Limited
I-1
Exhibit J
Form of Guarantee of Shareholder Note for Xxxxxxx Xxxxxx
J-1
Exhibit K
Form of Guarantee of Shareholder Note for Xxxxx Xxxxxx
K-1
Exhibit L
Form of Guarantee of Shareholder Note for Carbery Milk Products Limited
L-1
Exhibit M
Form of Guarantee of Shareholder Note for Xxxxx Investments Limited
M-1
Exhibit N
Form of Share Purchase Agreement, BES II Note and Guarantee
N-1
Exhibit O
Form of Shareholder Power of Attorney
POWER OF ATTORNEY
[Name] (the "Member") of [Address] being the registered holder of [Description
of shares sold by shareholder] (the "Sale Shares") in [Name of company] (the
"Company"), having by an agreement (the "Agreement") dated [__] between [List
Parties] sold the Sale Shares to [PURCHASER] (the "Attorney"), together with all
rights now and hereafter attaching hereto, hereby as the Deed of the Member:-
1. irrevocably appoints the Attorney as the Member's Attorney to exercise in
the absolute discretion of the Attorney all rights attaching to the Sale
Shares or exercisable by the Member in its capacity as a member of the
Company, as if the Attorney were the legal and beneficial owner of the Sale
Shares and without prejudice to the generality of the foregoing the powers
exercisable by the Attorney shall include the power to exercise rights of
attending at, voting at, consenting to short notice of; or requisitioning
or joining in the requisition of any general, class or other meeting and
the power to execute, deliver and do all deeds, instruments and acts in the
Member's name and on his behalf in pursuant of the foregoing, and shall
include the power to sub-delegate this power;
2. undertakes and agrees not, save upon the written request of the Attorney,
to exercise any rights attaching to the Sale Shares or exercisable by the
Member in its capacity as a member of the Company or to appoint any other
person to exercise such rights;
3. undertakes and agrees, save as may be provided to the contrary in the
Agreement, that any monies, securities or other benefits, or notices,
documents or other communications which may be received after the date
hereof by the Member (including any officer, employee, banker or other
agent thereof) from the Company or any third party in respect of the Sale
Shares or in the Member's capacity as a member of the Company shall be
received by the Member (including as aforesaid) and held in trust for the
Attorney and, without prejudice to the generality of the obligations
imposed by the foregoing, promptly to procure the forwarding to the
Attorney for the attention of the Secretary all such benefits or
communications and to account to the Attorney for all benefits arising
therefrom;
4. agrees and undertakes upon written request by the Attorney to ratify all
deeds, instruments and acts exercised by the Attorney in pursuance of this
power;
5. agrees that in acting hereunder the Attorney may act by its secretary or
any director or person acting pursuant to authority conferred by its board
of directors or any director; and
6. declares that such power, undertaking and agreement shall cease and
determine upon the Member ceasing to be a member of the Company by
registration in the register of member of the Company of the Attorney or
its nominee as owner of the Sale Shares, but
O-1
without prejudice to any power exercised prior to such date and shall not,
save as may be required by law, terminate on the commencement of any
winding up of the Member or appointment of any administrator or receiver
and shall, save as aforesaid, in connection with the Sale Shares be
accordingly binding upon any liquidator, administrator or receiver.
This Power of Attorney may be signed in any number of counterparts, all of which
taken together and when executed and delivered shall constitute one and the same
instrument. Any party may enter into this Power of Attorney by signing any such
counterpart.
This Deed shall be governed by and construed in accordance with the laws of
Ireland.
Dated __ 2003
[EXECUTION BY INDIVIDUAL]
[SIGNED, SEALED AND DELIVERED )
By [__] )
In the presence of:- )
Name:
Address:
Occupation:]
OR
[EXECUTION BY IRISH CORPORATION]
[PRESENT when the common seal of )
[__] LIMITED )
as affixed hereto:- )
----------------------------------------
Director
----------------------------------------
Director/Secretary]
O-2
Exhibit P
Shareholders' Holdings in RW and Consideration to be Received
XXXXXXX XXXXXX:
Shares of RW: 28 Ordinary Shares Consideration to be received:
E1,395,000 cash
E418,995 principal amount of RW Notes
275,520 shares of GSRW Stock
Escrowed Shares - 62,320 GSRW Shares
XXXXX XXXXXX:
Shares of RW: 28 Ordinary Shares Consideration to be received:
E1,372,830 cash
E418,995 principal amount of RW Notes
275,520 shares of GSRW Stock
Escrowed Shares - 61,895 GSRW Shares
CARBERY MILK PRODUCTS LIMITED:
Shares of RW: 30 Ordinary Shares Consideration to be received:
E958,500 cash
E273,960 principal amount of RW Notes
426,048 shares of GSRW Stock
Escrowed Shares - 66,227 GSRW Shares
XXXXX INVESTMENTS LIMITED:
Shares of RW: 14 Ordinary Shares Consideration to be received:
E450,000 cash
E125,325 principal amount of RW Notes
198,912 shares of GSRW Stock
Escrowed Shares - 30,918 GSRW Shares
The cash amount due each Shareholder set forth above, payable in
Euros, is subject to adjustment pursuant to the following formula:
The applicable exchange rate ("Closing Exchange Rate") shall be
determined two (2) business days before the Closing and shall be the
average of the reported US Dollar/E exchange rates for the five (5)
business days preceding the determination date as reported in The Wall
Street Journal. If the Closing Exchange Rate is between $1.10 to $1.20
per E, there will be no adjustment to the cash payment set forth
above. If the Closing Exchange Rate is above $1.20 per E, the cash
payment in Euros will be adjusted by multiplying the cash payment by a
factor of $1.20 divided by the Closing Exchange Rate. If the Closing
Exchange Rate is below $1.10 per E, the cash payment in Euros will be
adjusted by multiplying the cash payment in Euros by a factor of the
Closing Exchange Rate divided by $1.10.
P-1
Exhibit Q
Shareholders' Holdings in RW-UK and Consideration to be Received
XXXXXXX XXXXXX
Shares of RW-UK: 30 Ordinary Shares Consideration to be received:
E155,000 cash
E46,555 principal amount of RW Notes
30,613 shares of GSRW Stock
Escrowed Shares - 6,924
XXXXX XXXXXX:
Shares of RW-UK: 30 Ordinary Shares Consideration to be received:
E152,537 cash
E46,555 principal amount of RW Notes
30,613 shares of GSRW Stock
Escrowed Shares - 6,877
CARBERY MILK PRODUCTS LIMITED:
Shares of RW-UK: 25 Ordinary Shares Consideration to be received:
E106,500 cash
E30,440 principal amount of RW Notes
47,339 shares of GSRW Stock
Escrowed Shares - 7,359
XXXXX INVESTMENTS LIMITED:
Shares of RW-UK: 15 Ordinary Shares Consideration to be received:
E50,000 cash
E13,925 principal amount of RW Notes
22,101 shares of GSRW Stock
Escrowed Shares - 3,435
The cash amount due each Shareholder set forth above, payable in
Euros, is subject to adjustment pursuant to the following formula:
The applicable exchange rate ("Closing Exchange Rate") shall be
determined two (2) business days before the Closing and shall be the
average of the reported US Dollar/E exchange rates for the five (5)
business days preceding the determination date as reported in The Wall
Street Journal. If the Closing Exchange Rate is between $1.10 to $1.20
per E, there will be no adjustment to the cash payment set forth
above. If the Closing Exchange Rate is above $1.20 per E, the cash
payment in Euros will be adjusted by multiplying the cash payment by a
factor of $1.20 divided by the Closing Exchange Rate. If the Closing
Exchange Rate is below $1.10 per E, the cash payment in Euros will be
adjusted by multiplying the cash payment in Euros by a factor of the
Closing Exchange Rate divided by $1.10.
Q-1
Annex A
List of Members
SERIES OF PREFERRED
MEMBER COMMON SHARES PREFERRED SHARES SHARES
------ ------------- ---------------- -------------------
KNAPPOGUE CORP 219,248 7,143 (A)
CNF INVESTMENTS LLC -- 40,000 (B)
CNF INVESTMENTS LLC -- 2,860 (A)
XXXXXXX XXXXX, MD 38,834 4,286 (A)
ELMSBURY INVESTMENTS LIMITED 25,334 --
XXXXXXXX LIMITED 8,334 8,573 (A)
XXXXX X X'XXXXXX 4,500 5,716 (A)
X. X. XXXXXXXX 7,000 2,858 (A)
XXXX XXXXXXXX 5,000 4,287 (A)
XXXX X XXXXXXXXXX, III 9,117 50 (A)
XXXXXXX X XXXXXXX 6,000 --
XXXXXXXX XXXXXXXXX III 4,500 --
XXXXXXX X XXXXXXXX 3,000 1,429 (A)
XXXXX X XXXXX 2,500 1,429 (A)
XXXXXX XXXXXX XXXXXXXX 3,500 --
XXXX XXXXXXX 1,700
XXXX X XXXXXXXXXX -- 2,858 (A)
XXXXXXXXX X X XXXXX -- 2,858 (A)
XXXXXXX X XXXXXX III -- 2,858 (A)
XXXXX X XXXX -- 2,858 (A)
XXXXXX W HOUSE 2,000 --
XXXXXX XXXXXXX III 2,000 --
XXXXXXX XXXXX 1,500 --
XXXXXXX X XXXXXXXX -- 1,429 (A)
XXX XXXXXX XXXXXXXX -- 1,429 (A)
XXXXXX XXXXXXXX & XXXXX XXXXXXXX 1,334 --
XXXXX X XXXXXXX, III 1,000 --
BPW HOLDING LLC 1,000 --
XXXXX ASSOCIATES, LLC 1,000 --
XXXX H & XXXX X XXXXX 1,000 --
XXXXXX XXXXX XXXXXX 1,000 --
TOMMAR, LLC 1,000 --
XXXXX X XXXXX 1,000 --
XXXXXXX X XXXXX 1,000 --
XXXXXX X XXXXXXX 1,000 --
STEVES & SONS, INC 1,000 --
XXXXXX X XXXX CORPORATION 500 500 (A)
XXXXX X. XXXXXX XX. 500 500 (A)
XXXX X XXXXXX, XX. MD -- 700 (A)
XXXXXXXXX XXXXX -- 700 (A)
XXXX X XXXX -- 700 (A)
Annex A-1
XXXX X XXXXXX XX -- 700 (A)
XXXX X XXXXXX 667 --
XXX & XXXXXXXX XXXXXXXX 666 --
S XXXX XXXXX -- 600 (A)
XXXXXX EXEMPTION EQUIVALENT TRUST -- 600 (A)
JFB I LTD 500 --
XXXXX X XXXXXXXX 500 --
XXXXX XXXXXXX 400 --
XXXXX XXXXXXX-XXXXXX -- 400 (A)
XXX X XXXX 333 --
XXXXXXX X X'XXXXXXX 333 --
XXX fbo XXXXX XXXXX XXXXXXX -- 286 (A)
XXXXX XXXXXXXXX 200 --
------- ------
TOTAL 360,000 98,607
Annex A-2
Annex B
List of Shareholdings
RW STOCK(1)
XXXXXXX XXXXXX 28 Ordinary Shares of EUR1.00 each
XXXXX XXXXXX 28 Ordinary Shares of EUR1.00 each
CARBERY MILK PRODUCTS LIMITED 30 Ordinary Shares of EUR1.00 each
XXXXX INVESTMENTS LIMITED 14 Ordinary Shares of EUR1.00 each
RW-UK STOCK
XXXXXXX XXXXXX 31 Ordinary Shares of EUR1.269738 each
XXXXX XXXXXX 31 Ordinary Shares of EUR1.269738 each
CARBERY MILK PRODUCTS LIMITED 26 Ordinary Shares of EUR1.269738 each
XXXXX INVESTMENTS LIMITED 16 Ordinary Shares of EUR1.269738 each
THE ROARING WATER BAY SPIRITS COMPANY LIMITED
XXXXXXX XXXXX 2,770 Ordinary Shares of EUR1.25 each
XXXXXXX XXXXXX 2,770 Ordinary Shares of EUR1.25 each
XXX XXXXXX 2,770 Ordinary Shares of EUR1.25 each
XXXXX XXXXXXX 1,200 Ordinary Shares of EUR1.25 each
XXXXXXXX XXXXX 2,770 Ordinary Shares of EUR1.25 each
XXXXXXX X XXXXXX 1,120 Ordinary Shares of EUR1.25 each
XXXXX XXXXXX 1,100 Ordinary Shares of EUR1.25 each
XXXXXX XXXXXXXX 555 Ordinary Shares of EUR1.25 each
XXXX XXXXXXX 500 Ordinary Shares of EUR1.25 each
XXXXX XXXXXXXXX 1,100 Ordinary Shares of EUR1.25 each
XXX X'XXXXXXXX 2,250 Ordinary Shares of EUR1.25 each
XXXX XXXXXXXX 2,770 Ordinary Shares of EUR1.25 each
XXXXX XXXXXXX XXXXXX 2,770 Ordinary Shares of EUR1.25 each
XXXX XXXX 62 Ordinary Shares of EUR1.25 each
XXXXXXX XXXXXXX 500 Ordinary Shares of EUR1.25 each
XXXXX XXXXX 1,385 Ordinary Shares of EUR1.25 each
XXXXX XXXXX 1,385 Ordinary Shares of EUR1.25 each
THE ROARING WATER BAY SPIRITS GROUP LIMITED 2,550,000 'B' Ordinary Shares of EUR0.10 each
THE BENEFICIAL AND LEGAL SHAREHOLDINGS OF XXXXXXX XXXXXX, XXXXX XXXXXX, XXXXX
INVESTMENTS LIMITED AND CARBERY MILK PRODUCTS LIMITED (TOTALLING 385,170
ORDINARY SHARES, 2,550,000 'B' ORDINARY SHARES AND 9,000 'A' ORDINARY SHARES)
HAVE BEEN TRANSFERRED TO THE ROARING WATER BAY SPIRITS GROUP LIMITED. THESE
TRANSFER FORMS ARE BEING STAMPED BY THE REVENUE COMMISSIONERS AND THE SHARE
REGISTER WILL BE UPDATED ONCE THE STAMPING IS COMPLETE.
THE CLONTARF IRISH WHISKEY COMPANY LIMITED
----------
(1) 255,000 "B" Ordinary Shares to be repurchased pursuant to Section 4.2.8
prior to Closing.
Annex B-1
THE ROARING WATER BAY SPIRITS COMPANY 2 Ordinary Shares of EUR1.269738 each*
LIMITED
* THE BENEFICIAL AND LEGAL SHAREHOLDINGS OF XXXXX XXXXXX AND XXXXXXX XXXXXX
(TOTALLING 2 ORDINARY SHARES) HAVE BEEN TRANSFERRED TO THE ROARING WATER
BAY SPIRITS COMPANY LIMITED. THESE TRANSFER FORMS ARE BEING STAMPED BY THE
REVENUE COMMISSIONERS AND THE SHARE REGISTER WILL BE UPDATED ONCE THE
STAMPING IS COMPLETE.
THE XXXX VODKA COMPANY LIMITED
THE ROARING WATER BAY SPIRITS COMPANY 2 Ordinary Shares of EUR1.269738 each*
LIMITED
* THE BENEFICIAL AND LEGAL SHAREHOLDINGS OF XXXXX XXXXXX AND XXXXXXX XXXXXX
(TOTALLING 2 ORDINARY SHARES) HAVE BEEN TRANSFERRED TO THE ROARING WATER
BAY SPIRITS COMPANY LIMITED. THESE TRANSFER FORMS ARE BEING STAMPED BY THE
REVENUE COMMISSIONERS AND THE SHARE REGISTER WILL BE UPDATED ONCE THE
STAMPING IS COMPLETE.
THE ROARING WATER BAY WHISKEY COMPANY
LIMITED
THE ROARING WATER BAY SPIRITS COMPANY 2 Ordinary Shares of EUR1.269738 each*
LIMITED
* THE BENEFICIAL AND LEGAL SHAREHOLDINGS OF XXXXX XXXXXX AND XXXXXXX XXXXXX
(TOTALLING 2 ORDINARY SHARES) HAVE BEEN TRANSFERRED TO THE ROARING WATER
BAY SPIRITS COMPANY LIMITED. THESE TRANSFER FORMS ARE BEING STAMPED BY THE
REVENUE COMMISSIONERS AND THE SHARE REGISTER WILL BE UPDATED ONCE THE
STAMPING IS COMPLETE.
THE ROARING WATER BAY SPIRITS COMPANY (GB)
LIMITED
THE ROARING WATER BAY SPIRITS MARKETING 2 Ordinary Shares of L1.00 each
AND SALES COMPANY LIMITED
NEAT SPIRITS COMPANY LIMITED
THE ROARING WATER BAY SPIRITS COMPANY 200 A Shares
(GB) LIMITED
THE ROARING WATER BAY SPIRITS COMPANY
(NI) LIMITED
THE ROARING WATER BAY SPIRITS MARKETING 100 Ordinary Shares of L1.00 each
AND SALES COMPANY LIMITED
THE ROARING WATER BAY (RESEARCH &
DEVELOPMENT) COMPANY LIMITED
Annex B-2
XXXXX XXXXXX 30 Ordinary Shares of EUR1.269738 each
XXXXXXX XXXXXX 30 Ordinary Shares of EUR1.269738 each
CARBERY MILK PRODUCTS LIMITED 25 Ordinary Shares of EUR1.269738 each
XXXXX INVESTMENTS LIMITED 15 Ordinary Shares of EUR1.269738 each
Annex B-3
Annex C
Terms of Employment Agreements and Non-Competition Deed
for Xxxxx Xxxxxx and Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx:
Term: Five years from Closing.
Base Salary: E125,000 per annum.
Bonus: Performance based, determined by the Compensation
Committee of the GSRW Board (offset by royalty payments);
provided "Patent Co." shall receive at least E12,000 annually in
license fees.
Stock Options: 40,000 shares of GSRW Stock at $6.00 per share
vesting at 20% per year.
Vacation: 25 days.
Non-competition and confidentiality for term of employment plus
one year.
Pension Scheme Contribution: 10% of Base Salary
Termination For Cause or Voluntary: $0.
Termination Without Cause or Constructive Dismissal: Twelve
months of Base Salary.
Change of Control (involving termination or diminution of
position): Twenty-four months of Base Salary.
Car Lease: One vehicle with Xxxx insignia.
Health Insurance: VHI cover paid
Xxxxx Xxxxxx:
Term: Five years from Closing.
Base Salary: E125,000 per annum.
Bonus: Performance based, determined by the Compensation
Committee of the GSRW Board (offset by royalty payments);
Annex C-1
provided "Patent Co." shall receive at least E12,000 annually in
license fees.
Stock Options: 40,000 shares of GSRW Stock at $6.00 per share
vesting at 20% per year.
Vacation: 25 days.
Non-competition and confidentiality for term of employment plus
one year.
Pension Scheme Contribution: 10% of Base Salary
Termination For Cause or Voluntary: $0.
Termination Without Cause or Constructive Dismissal: Twelve
months of Base Salary.
Change of Control (involving termination or diminution of
position): Twenty-four months of Base Salary.
Car Lease: One vehicle with Xxxx insignia.
Health Insurance: VHI cover paid
Annex C-2
NON-COMPETITION DEED
This Non-Competition Deed is made as of the [__] day of July, 2003,
BETWEEN
1. ______________
AND
2. ______________
WHEREAS:
A. Pursuant to a Merger and Acquisitions Agreement dated [__] July 2003
between The Roaring Water Bay Spirits Group Limited, The Roaring Water Bay
Marketing and Sales Company Limited, Xxxxxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxxxx
Milk Products Limited, Xxxxx Investments Limited, Great Spirits Company,
LLC, Great Spirits Corp (the "Merger Agreement") inter alia Mr
______________ transferred his Shares in Roaring Water Bay Spirits Group
Limited and Roaring Water Bay Marketing and Sales Company Limited to
______________.
B. Defined terms herein shall the meaning set out in the Merger Agreement,
unless otherwise defined in this Deed. Mr ______________ has entered into
this Deed in connection with the Merger Agreement.
1 COVENANT NOT TO COMPETE OR SOLICIT
1.1 For a period of 2 years after the date of the Merger Agreement (the
"Non-Competition Period"), Mr ______________ shall not, without the prior
written consent of ______________, such consent not to be unreasonably
withheld, directly or indirectly, as a consultant to, officer, director,
independent contractor, shareholder or other owner or participant in any
entity engage in the business of [the sale and marketing of alcohol
products competing directly with the products sold or marketed by GSRW or
any subsidiary as at the date of this Deed] in Ireland and the United
Kingdom.
1.2 During the Non-Competition Period, Mr ______________ shall not directly or
indirectly, solicit, encourage or take any other action which is intended
to induce or encourage, or has the effect of inducing or encouraging any
employee of GSRW or any subsidiary to terminate his or her employment with
GSRW or any subsidiary.
1.3 Mr ______________ acknowledges that it would be difficult to fully
compensate ______________ for damages for any breach of this Agreement.
Accordingly, Mr ______________ specifically agrees that ______________
shall be entitled to temporary and injunctive relief to enforce the
provisions of this Section and that such relief may be granted without the
necessity to prove actual damages.
Annex C-3
2 MISCELLANEOUS
2.1 All notices or communication required or permitted under this Deed shall be
made in writing and delivered personally to the other party or sent by
certified or registered post, return receipt requested and postage prepaid
or express courier with confirmation of delivery to the following addresses
(or such other address for a party as shall have been specified by like
notice):
(a) if to ______________, to:
________________
Fax No: ____________________________
(b) if to Mr ______________, to:
[name, address, phone, fax]
2.2 This Deed shall be construed under and governed by the laws of Ireland and
the Courts of Ireland shall have exclusive jurisdiction to deal with all
disputes arising from or touching upon this Agreement.
2.3 If any provision of this Deed is unenforceable or illegal, the remainder of
this Deed shall remain in full force and effect. If any one or more
provisions contained in this Deed shall for any reason be held to be
excessively broad as to duration, geographical scope, activity or subject,
such provisions shall be construed by limiting and reducing it so as to be
enforceable to the extent compatible with existing law.
2.4 This Deed will not be assignable. Subject to the previous sentence, this
Deed shall inure to the benefit of ______________ and its successors and
assigns.
2.5 This Deed contains the entire agreement and understanding of the parties
and supersedes all prior discussions, agreements and understandings
relating to the subject matter hereof. This Deed may not be changed or
modified, except by an agreement in writing executed by ______________ and
Mr ______________.
2.6 The waiver of a breach of any term or provision of this Deed, which must be
in writing, shall not operate as or be construed to be a waiver of any
other previous or subsequent breach of this Deed.
2.7 This Deed may be executed in counterparts, and each counterpart shall have
the same force and effect as an original and shall constitute an effective,
binding agreement on the part of each of the undersigned.
IN WITNESS WHEREOF, the parties have duly executed this Deed as of the date and
year first above written.
Annex C-4
EXECUTED AS A DEED by and
Behalf of ______________ by:
Name:
-------------------------------
Title:
------------------------------
Signed, Sealed and Delivered
by MR
-------------------------------
----------------------------------------
Signature
----------------------------------------
Print Name
-------------------------------------
Witness
-------------------------------------
Witness
-------------------------------------
Witness
Annex C-5
Annex D
Terms of Employment Agreements for Xxxx Xxxxxxx and T. Xxxxxx Xxxxxxxx
Xxxx Xxxxxxx:
Term: Five years from Closing.
Base Salary: $170,000 per annum.
Bonus: Performance based, determined by the Compensation
Committee of the GSRW Board.
Stock Options: 60,000 shares of GSRW Stock at $6.00 per
share vesting 20% per year.
Non-competition and confidentiality for term plus one year.
Termination For Cause or Voluntary: $0.
Termination Without Cause or Constructive Dismissal: Twelve
months of Base Salary plus Bonus.
Change of Control (involving termination or diminution of
position): Twenty-four months of Base Salary.
401(k) Contribution: 10% of Base Salary.
Vacation: 15 days plus standard Company holidays.
Health Insurance: Premium paid
T. Xxxxxx Xxxxxxxx:
Term: Five years from Closing.
Base Salary: $150,000 per annum.
Bonus: Performance based, determined by the Compensation
Committee of the GSRW Board.
Stock Options: 60,000 shares of GSRW Stock at $6.00 per
share vesting 25% per year.
Non-competition and confidentiality for term plus one year.
Termination For Cause or Voluntary: $0.
Annex D-1
Termination Without Cause or Constructive Dismissal: Twelve
months of Base Salary plus Bonus.
Change of Control (involving termination or diminution of
position): Twenty-four months of Base Salary.
401(k) Contribution: 10% of Base Salary.
Vacation: 15 days plus standard Company holidays.
Health Insurance: Premium paid
Annex D-2
