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EXHIBIT 99.1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
PBC HOLDINGS, INC.
PBC ACQUISITION CORP.
THE GAMBRINUS COMPANY
AND
PETE'S BREWING COMPANY
DATED AS OF MAY 22, 1998
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TABLE OF CONTENTS
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ARTICLE I -- DEFINITIONS............................................... 2
1.1 Certain Defined Terms....................................... 2
1.2 Interpretation.............................................. 3
ARTICLE II -- THE MERGER............................................... 3
2.1 The Merger.................................................. 3
2.2 Company Actions and Fairness Opinion........................ 4
2.3 Effective Time.............................................. 4
2.4 Closing..................................................... 4
2.5 Effects of the Merger....................................... 4
2.6 Articles of Incorporation................................... 4
2.7 Bylaws...................................................... 4
2.8 Directors................................................... 4
2.9 Officers.................................................... 5
2.10 Conversion of Shares........................................ 5
2.11 Dissenting Shares........................................... 5
2.12 Payment For Shares.......................................... 5
2.13 No Further Rights or Transfers.............................. 6
2.14 Supplementary Action........................................ 7
2.15 Lost, Stolen or Destroyed Certificates...................... 7
2.16 Company Stock Options....................................... 7
2.17 Company Warrants............................................ 8
ARTICLE III -- REPRESENTATIONS AND WARRANTIES OF THE COMPANY........... 8
3.1 Organization, Standing and Corporate Power.................. 8
3.2 Subsidiaries................................................ 8
3.3 Capital Structure........................................... 8
3.4 Authority; Noncontravention................................. 9
3.5 SEC Documents; Financial Statements......................... 10
3.6 Absence of Certain Changes or Events........................ 10
3.7 No Undisclosed Liabilities.................................. 11
3.8 Litigation.................................................. 11
3.9 Compliance with Laws........................................ 11
3.10 Absence of Changes in Benefit Plans; Labor Relations........ 11
3.11 ERISA Compliance............................................ 11
3.12 Taxes....................................................... 12
3.13 Parachute Payments.......................................... 13
3.14 Information in Proxy Statement.............................. 13
3.15 State Takeover Statutes..................................... 13
3.16 Rights Agreement............................................ 13
3.17 Brokers..................................................... 13
3.18 Title to Assets............................................. 14
3.19 Product Liability........................................... 14
3.20 Material Contracts.......................................... 14
3.21 Title to Intellectual Property.............................. 14
3.22 Distributors and Distributorship Agreements................. 15
3.23 Real Property............................................... 15
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Insurance................................................... 15
3.24
Customers, Suppliers........................................ 16
3.25
ARTICLE IV -- REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER...
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4.1 Organization, Standing and Corporate Power.................. 16
4.2 Authority: Noncontravention................................. 16
4.3 Information in Proxy Statement.............................. 17
4.4 Interim Operations of Purchaser............................. 17
4.5 Brokers..................................................... 17
4.6 Financing................................................... 17
4.7 Share Ownership............................................. 17
ARTICLE V -- CONDUCT OF BUSINESS PENDING THE MERGER.................... 17
5.1 Interim Operations of the Company........................... 17
5.2 No Solicitation............................................. 19
ARTICLE VI -- ADDITIONAL AGREEMENTS.................................... 20
6.1 Shareholder Approval; Preparation of Proxy Statement........ 20
6.2 Access to Information; Confidentiality...................... 21
6.3 Commercially Reasonable Efforts............................. 21
6.4 Notification of Certain Matters............................. 21
6.5 Fees and Expenses........................................... 22
6.6 Indemnification and Directors' and Officers' Insurance...... 23
6.7 Certain Litigation.......................................... 23
6.8 Purchaser Compliance........................................ 23
6.9 Shareholder Agreement....................................... 23
Interim Financial Statements................................ 24
6.10
Stop Transfer Instruction................................... 24
6.11
ARTICLE VII -- CONDITIONS.............................................. 24
7.1 Conditions to Parent and Purchaser's Obligation to Effect
the Merger.................................................. 24
7.2 Conditions to Company's Obligation to Effect the Merger..... 26
ARTICLE VIII -- TERMINATION AND AMENDMENT.............................. 27
8.1 Termination................................................. 27
8.2 Effect of Termination....................................... 28
8.3 Amendment................................................... 28
8.4 Extension; Waiver........................................... 28
ARTICLE IX -- MISCELLANEOUS............................................ 28
9.1 Nonsurvival of Representations, Warranties and Agreements... 28
9.2 Notices..................................................... 28
9.3 Counterparts................................................ 29
9.4 Entire Agreement; No Third Party Beneficiaries.............. 29
9.5 Governing Law............................................... 29
9.6 Publicity................................................... 29
9.7 Assignment.................................................. 29
9.8 Enforcement................................................. 30
9.9 Severability................................................ 30
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is made and entered
into as of this 22nd day of May, 1998, by and among PBC Holdings, Inc., a Texas
corporation ("Parent"), PBC Acquisition Corp., a Texas corporation and a
wholly-owned subsidiary of Parent ("Purchaser"), Pete's Brewing Company, a
California corporation (the "Company"), and, for the limited purposes set forth
herein, The Gambrinus Company, a Texas corporation ("Gambrinus").
RECITALS
WHEREAS, the Board of Directors of each of Gambrinus, Parent, Purchaser and
the Company has approved, and deems it advisable and in the best interests of
its respective shareholders to consummate, the acquisition of the Company by
Parent upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance thereof, it is proposed that Purchaser acquire all
shares (the "Shares") of the issued and outstanding common stock, no par value,
of the Company (the "Company Common Stock"), for $6.375 per share, net to the
seller in cash (such price per Share as may be paid in the Merger (as defined in
Section 2.1), being referred to herein as the "Merger Consideration") through a
reverse subsidiary merger of the Purchaser with and into the Company;
WHEREAS, also in furtherance of such acquisition, the Board of Directors of
each of Gambrinus, Parent, Purchaser and the Company has approved the Merger in
accordance with the General Corporation Law of the State of California (the
"GCL") and upon the terms and subject to the conditions set forth herein,
whereby each issued and outstanding Share will be converted into the right to
receive an amount equal to the Merger Consideration in cash;
WHEREAS, the Board of Directors of the Company (the "Company Board of
Directors") has determined that the consideration to be paid for each Share in
the Merger is fair to the holders of such Shares and has resolved to recommend
that the holders of such Shares approve this Agreement and each of the
transactions contemplated hereby upon the terms and subject to the conditions
set forth herein;
WHEREAS, the Company, Parent, Purchaser and Gambrinus desire to make
certain representations, warranties, covenants and agreements in connection with
the Merger and also to prescribe certain various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements set forth herein, the
parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. As used in the Agreement, each of the following
initially capitalized terms still have the respective meaning set forth below:
"Affiliate" means, with respect to any Person, any other person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person. "Control" or
"controls" for purposes hereof means that a Person has the power, direct or
indirect, to conduct or govern the policies of another Person.
"Business" means the business conducted by the Company as of the date of
the Agreement and including, without limitation, the manufacture, distribution,
marketing and sale of various craft brewed beer products.
"Business Day" refers to a day other than a Saturday, Sunday or a holiday
on which commercial banks are required or authorized to close in San Antonio,
Texas.
"Contracts" refers to, collectively, all oral or written contracts,
agreements, leases, subleases, licenses, sublicenses, commitments, instruments,
guaranties, bids and proposals to which the Company is a party as of the date
specified, all unfilled orders outstanding as of the Closing Date for the
purchase of raw materials, goods or services, and all unfilled orders
outstanding as of the Closing Date for the sale of raw materials, goods or
services.
"GAAP" refers to generally accepted accounting principles in the United
States of America as in effect as of the date hereof.
"Indebtedness" means any liability, whether or not contingent, (i) in
respect of borrowed money or evidenced by bonds, notes, debentures, or similar
instruments, (ii) representing the balance deferred and unpaid of the purchase
price of any property (including pursuant to capital leases) but excluding trade
payables, if and to the extent any of the foregoing indebtedness would appear as
a liability upon a balance sheet prepared on a consolidated basis in accordance
with GAAP, (iii) guaranties, direct or indirect, in any manner, of all or any
part of any Indebtedness of any Person.
"Intellectual Property" means all intellectual property used in the
Business or otherwise necessary for the ownership and use of the assets and the
conduct of the Business of the Company, including without limitation, all (1)
trademarks, trade names, trade dress, service marks, and Internet domain names
together with all of the goodwill of the foregoing items; (2) copyrights
(including without limitation in and to the Company's Internet website(s)) and
all related and equivalent rights, including moral rights; (3) licenses,
registrations, applications for, and applications to register, any of the
foregoing; and (4) trade secrets, patents, processes, recipes and formulae.
"Knowledge" as applied to either the Company, a Subsidiary, Parent or
Purchaser, refers to the actual knowledge, of its respective executive officers,
its human resources officer or its directors.
"Material Adverse Change" or "Material Adverse Effect" means, when used in
connection with the Company, any one or more changes or effects that are
materially adverse to the Business, properties, assets, liabilities, financial
condition, results of operations or value of the Company and its Subsidiaries,
taken as a whole; but other than changes or effects which are or result from (i)
occurrences relating to the economy in general or the Company's industry in
general and not specifically relating to such entity, (ii) the delay or
cancellation of orders for the Company's products attributable to the
announcement of this Agreement, (iii) the delay or cancellation of production or
shipment of the Company's products by the Company's contract manufacturer
attributable to the execution or announcement of this Agreement, or (iv)
shareholder litigation brought or threatened against the Company or any member
of the Company Board of Directors attributable to the announcement of this
Agreement or the Merger, including all costs and expenses in connection
therewith and other fees and expenses incurred by the Company in connection with
the transactions contemplated hereby.
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"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Person" refers to any individual, partnership, corporation, trust,
association, limited liability company, Government Entity or any department or
agency thereof, or any other entity.
"SEC" means the Securities and Exchange Commission.
"Xxxxx Agreement" means the Second Amendment and Restatement of
Manufacturing Services Agreement, dated as of October 1, 1995, by and between
The Xxxxx Brewing Company, an Arizona corporation, and the Company, as amended.
"Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership, association, trust, or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association, trust, or other business entity a
majority of the partnership or other similar ownership or beneficial interest
thereof is at the time owned or controlled, directly or indirectly, by any
Person or one or more Subsidiaries of that Person or a combination thereof. For
purposes hereof, a Person or Persons shall be deemed to have a majority
ownership interest in a limited liability company, partnership, association,
trust or other business entity if such Person or Persons shall be allocated a
majority of limited liability company, partnership, association, trust or other
business entity gains or losses, distributions or other economic interests or
shall be or control any managing director, manager, general partner or trustee
of such limited liability company, partnership, association trust or other
business entity.
"Tax" refers to all federal, state, local and foreign taxes, charges, fees,
levies, penalties, duties or other assessments, including, without limitation,
income, gross receipts, excise, employment, sales, use, transfer, payroll,
franchise, severance, stamp, occupation, windfall profits, withholding, social
security, disability, real property, personal property, ad valorem or other tax
or governmental fee of any kind whatsoever imposed or required to be withheld by
any Governmental Entity, whether disputed or not.
"Tax Return" means any tax return, declaration, report, claim for refund or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
1.2 Interpretation. When a reference is made in this Agreement to an
Article or a Section, such reference shall be to an Article or a Section of this
Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". The phrase "made
available" in this Agreement shall mean that the information referred to has
been made available if requested by the party to whom such information is to be
made available.
ARTICLE II
THE MERGER
2.1 The Merger. Upon the terms and subject to the satisfaction or waiver
of the conditions hereof and in accordance with the applicable provisions of
this Agreement and the GCL, the Company and Purchaser shall consummate a merger
(the "Merger") pursuant to which Purchaser shall be merged with and into the
Company at the Effective Time (as defined in Section 2.3). Following the
Effective Time, (i) the Company shall continue as the surviving corporation (the
"Surviving Corporation") in the Merger and shall continue to be governed by the
laws of the State of California, (ii) the separate corporate existence of the
Company with all of its rights, privileges, immunities, powers and franchises
shall continue unaffected by the Merger, except as set forth in this Article II,
and (iii) the separate corporate existence of Purchaser shall cease. At the
election of Parent, to the extent that any such action would not cause a failure
of a condition to the Merger,
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any direct or indirect wholly-owned subsidiary of Parent may be substituted for
and assume all of the rights and obligations of Purchaser as a constituent
corporation in the Merger. In such event, the parties agree to execute an
appropriate amendment to this Agreement in order to reflect the foregoing.
2.2 Company Actions and Fairness Opinion. The Company hereby represents
and warrants that (i) the Company Board of Directors has adopted resolutions (A)
determining that, as of the date of such resolutions, the terms of the Merger
are fair to, and in the best interests of, the holders of the Shares, (B)
approving and adopting this Agreement and the transactions contemplated hereby,
(C) approving the Merger, and (D) recommending that the shareholders of the
Company approve the Merger, this Agreement and the transactions contemplated
hereby (provided, however, that subject to the provisions of Section 5.2 such
recommendation may be withdrawn, modified or amended in connection with a
Superior Proposal (as defined in Section 5.2)) and (ii) Xxxxxx Xxxxxxx & Co.
Incorporated ("Xxxxxx Xxxxxxx") has rendered to the Company Board of Directors
its written opinion, to the effect that the consideration to be received by the
holders of Shares pursuant to the Merger is fair to the holders of Shares. The
Company has obtained the consent of Xxxxxx Xxxxxxx to the inclusion in the Proxy
Statement of a copy of the written opinion referred to in clause (ii) above.
2.3 Effective Time. As soon as practicable after the satisfaction or
waiver of the conditions set forth in Article VII hereof, Parent, Purchaser and
the Company shall cause to be executed and filed on the Closing Date (as
hereinafter defined) (or on such other date as Parent and the Company may agree)
with the Secretary of State of the State of California (the "Secretary of
State") in the manner required by the GCL an agreement of merger together with
an officer's certificate of the Company and Purchaser, and the parties shall
take such other and further actions as may be required by law to make the Merger
effective. The time the Merger becomes effective in accordance with applicable
law is hereinafter referred to as the "Effective Time."
2.4 Closing. The closing of the Merger (the "Closing") shall take place at
10:00 a.m. on a date to be specified by the parties, which shall be no later
than the third Business Day after satisfaction or waiver of all of the
conditions set forth in Article VII hereof (the "Closing Date"), at the offices
of Xxxxxxx Xxxxxx L.L.P., 000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxx
00000, unless another date, time or place is agreed to in writing by the parties
hereto.
2.5 Effects of the Merger. The Merger shall have the effects set forth in
Section 1107 of the GCL. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time all the property, rights, privileges,
powers and franchises of the Company and Purchaser shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Purchaser
shall become the debts, liabilities and duties of the Surviving Corporation.
2.6 Articles of Incorporation. The Articles of Incorporation of the
Company as in effect immediately prior to the Effective Time shall be amended as
of the Effective Time so that Article III thereof shall read in its entirety as
follows:
"III
This corporation is authorized to issue 1,000 shares of Common
Stock, no par value per share."
As so amended, such Articles of Incorporation shall be the Articles of
Incorporation of the Surviving Corporation, until thereafter changed or amended,
subject to Section 6.6 hereof, as provided therein or by applicable law.
2.7 Bylaws. The Bylaws of Company, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation, until
thereafter duly amended, subject to Section 6.6 hereof, in accordance with
applicable law, the Articles of Incorporation of the Surviving Corporation or
such Bylaws.
2.8 Directors. The directors of Purchaser immediately prior to the
Effective Time shall be the initial directors of the Surviving Corporation and
will hold office from the Effective Time until their respective successors are
duly elected or appointed and qualified in the manner provided in the Articles
of Incorporation
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and Bylaws of the Surviving Corporation, as such instruments may be amended from
time to time, either before or after the Effective Time, or as otherwise
provided by law.
2.9 Officers. The officers of the Purchaser immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation and
will hold office from the Effective Time until their respective successors are
duly elected or appointed and qualified in the manner provided in the Articles
of Incorporation and Bylaws of the Surviving Corporation, as such instruments
may be amended from time to time, either before or after the Effective Time, or
as otherwise provided by law.
2.10 Conversion of Shares. At the Effective Time, by virtue of the Merger
and without any action on the part of Parent, Purchaser, the Company or the
holders of the Shares:
(a) Each Share issued and outstanding immediately prior to the
Effective Time (other than Shares held, directly or indirectly, by Parent,
Purchaser, Gambrinus, the Company or any of their majority-owned
Subsidiaries, and any Dissenting Shares (as defined in Section 2.11)) shall
automatically be canceled and extinguished and be converted into the right
to receive from the surviving corporation in cash the Merger Consideration,
without interest thereon. Each holder (other than holders referred to in
Section 2.10(b)) of a certificate representing any Shares shall after the
Effective Time cease to have any rights with respect to such Shares, except
either to receive the Merger Consideration upon surrender of such
certificate, or to exercise such holder's dissenter's rights as provided in
Section 2.11 and the GCL.
(b) Each Share issued and outstanding immediately prior to the
Effective Time which is owned or held, directly or indirectly, by Parent,
Purchaser, Gambrinus, the Company or any of their majority-owned
Subsidiaries shall be canceled and extinguished and cease to exist, without
any conversion thereof, and no payment shall be made with respect thereto.
(c) Each share of Common Stock of Purchaser issued and outstanding
immediately prior to the Effective Time shall be converted into and
thereafter represent one validly issued, fully paid and nonassessable share
of Common Stock, no par value, of the Surviving Corporation.
2.11 Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, Shares which are outstanding immediately prior to the Effective Time
and which are held by a holder who has not voted in favor of the Merger or
consented thereto in writing and who has demanded appraisal for such Shares in
accordance with Section 1300 of the GCL, if Section 1300 provides for appraisal
rights for such Shares in the Merger ("Dissenting Shares"), shall not be
converted into the right to receive the Merger Consideration pursuant to Section
2.10, unless and until such holder fails to perfect or withdraws or otherwise
loses the right to appraisal and payment under the GCL. If, after the Effective
Time, any such holder shall have failed to perfect or shall withdraw or lose
such holder's right of appraisal and payment under the GCL, such holder's Shares
shall be treated as if they had been converted as of the Effective Time into the
right to receive the Merger Consideration, without interest thereon, as provided
in Section 2.10, and such Shares shall no longer be Dissenting Shares. The
Company shall give Parent and Purchaser prompt notice of any demands received by
the Company for appraisal of Shares, and of any withdrawals of demands for
appraisal, or of any other instruments served pursuant to Section 1300 of the
GCL and received by the Company. Prior to the Effective Time, Parent and
Purchaser shall have the right to participate in all negotiations and
proceedings with respect to such demands for appraisal. Prior to the Effective
Time, the Company shall not, except with the prior written consent of Parent and
Purchaser, make any payment with respect to, or settle or offer to settle, any
such demands. Each holder of Dissenting Shares shall have only such rights and
remedies as are granted to such holder under Section 1300 of the GCL.
2.12 Payment For Shares.
(a) Prior to the Effective Time, Purchaser shall select and appoint a bank
or trust company reasonably acceptable to the Company to act as agent for the
holders of Shares (the "Paying Agent") to receive and disburse the Merger
Consideration to which holders of Shares shall become entitled pursuant to
Section 2.10. At the Effective Time, Purchaser or Parent shall, and Gambrinus
shall cause Purchaser or Parent to, deposit in trust with the Paying Agent for
the benefit of holders of Shares the aggregate consideration to which such
holders shall be entitled at the Effective Time pursuant to Section 2.10. Such
funds shall be invested as
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directed by Parent or the Surviving Corporation pending payment thereof by the
Paying Agent to holders of the Shares. Earnings from such investments shall be
the sole and exclusive property of Purchaser and the Surviving Corporation and
no part thereof shall accrue to the benefit of the holders of the Shares. If for
any reason (including losses) such funds are inadequate to pay the amounts to
which holders of Shares shall be entitled under Section 2.10, Parent shall in
any event be liable for payment thereof. Such funds deposited with the Paying
Agent pursuant to this Section 2.12 shall not be used for any purpose except as
expressly provided in this Agreement. From time to time at or after the
Effective Time, Parent shall take all lawful action necessary to make the
appropriate cash payments, if any, to holders of Dissenting Shares.
(b) As soon as practicable after the Effective Time, Purchaser or Parent
shall cause the Paying Agent to mail to each record holder a certificate or
certificates representing Shares which as of the Effective Time represents the
right to receive the Merger Consideration (the "Certificates"), a form of letter
of transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon proper delivery of the
Certificates to the Paying Agent) and instructions for use in effecting the
surrender of the Certificates for payment therefor. Upon surrender to the Paying
Agent of a Certificate, together with such letter of transmittal duly executed
and completed in accordance with the instructions thereto, and such other
documents as may be reasonably required by the Paying Agent, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration and such Certificate shall forthwith be canceled. No interest
shall be paid or accrued on the Merger Consideration upon the surrender of the
Certificates. Until surrendered in accordance with the provisions of this
Section 2.12(b), each Certificate shall be deemed for all purposes to evidence
only the right to receive the Merger Consideration (without interest thereon),
and shall, subject to Section 2.11, have no other right.
(c) If the Merger Consideration (or any portion thereof) is to be delivered
to a person other than the person in whose name the Certificates surrendered in
exchange therefor are registered, it shall be a condition to the payment that
the Certificates so surrendered shall be properly endorsed or otherwise be in
proper form for transfer and that the person requesting such payment or delivery
shall pay any transfer or other taxes payable by reason of the payment of the
Merger Consideration to a person other than the person in whose name the
Certificates are registered or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Notwithstanding
the foregoing, neither the Paying Agent nor any party hereto shall be liable to
a holder of Shares for any Merger Consideration delivered to a public official
pursuant to any applicable abandoned property, escheat and similar laws.
(d) Promptly following the date that is one year after the Effective Time,
the Paying Agent shall return to the Surviving Corporation all Merger
Consideration and other cash, property and instruments in its possession
relating to the transactions described in this Agreement, and the Paying Agent's
duties shall terminate. Thereafter, such holders shall be entitled to look to
the Surviving Corporation (subject to abandoned property, escheat or similar
laws) only as general creditors thereof with respect to the Merger Consideration
payable upon due surrender of their Certificates, without any interest thereon.
Notwithstanding the foregoing, neither the Surviving Corporation nor the Paying
Agent shall be liable to any holder of a Certificate for Merger Consideration
delivered to a public official pursuant to any applicable abandoned property,
escheat or similar law.
2.13 No Further Rights or Transfers. All cash paid upon surrender of
Certificates in accordance with the terms of this Article II shall be deemed to
have been paid in full satisfaction of all rights pertaining to the Shares
theretofore represented by such Certificate. At and after the Effective Time the
holders of Certificates to be exchanged for the Merger Consideration pursuant to
this Agreement shall cease to have any rights as shareholders of the Company
except for the right to surrender such holder's Certificates in exchange for
payment of the Merger Consideration, and after the Effective Time there shall be
no transfers on the stock transfer books of the Surviving Corporation of the
Shares which were outstanding immediately prior to the Effective Time. Any
Certificates formerly representing Shares presented to the Surviving Corporation
or Paying Agent shall be canceled and exchanged for the Merger Consideration, as
provided in this Article II, subject to applicable law in the case of Dissenting
Shares.
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2.14 Supplementary Action. If at any time after the Effective Time, any
further assignments or assurances in law or any other things are necessary or
desirable to vest or to perfect or confirm of record in the Surviving
Corporation the title to any property or rights of either the Company or
Purchaser, or otherwise to carry out the provisions of this Agreement, the
officers and directors of the Surviving Corporation are hereby authorized and
empowered, in the name of and on behalf of the Company and Purchaser, to execute
and deliver any and all things necessary or proper to vest or to perfect or
confirm title to such property or rights in the Surviving Corporation, and
otherwise to carry out the purposes and provisions of this Agreement.
2.15 Lost, Stolen or Destroyed Certificates. In the event any Certificates
evidencing Shares shall have been lost, stolen or destroyed, the Paying Agent
shall pay to such holder the Merger Consideration required pursuant to Section
2.10, in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof with such assurances
as the Paying Agent, in its discretion and as a condition precedent to the
payment of the Merger Consideration, may reasonably require of the holder of
such lost, stolen or destroyed Certificates.
2.16 Company Stock Options.
(a) The Company shall take all commercially reasonable actions, if any,
necessary to provide that at the Effective Time, (i) each option outstanding at
the Effective Time to purchase Shares (an "Option") granted under (A) the
Company's 1986 Stock Option Plan, 1995 Stock Option Plan or 1995 Director Option
Plan or (B) any other stock-based incentive plan or arrangement of the Company,
excluding any options granted under the Company's 1995 Employee Stock Purchase
Plan (the "Stock Option Plans"), shall be canceled and (ii) in consideration of
such cancellation, each holder of an Option shall receive in consideration
thereof an amount (subject to any applicable withholding tax) in cash equal to
the product of (x) the excess, if any, of the Merger Consideration over the per
Share exercise price of such Option and (y) the number of Shares subject to such
Option. The Company shall use all commercially reasonable efforts to effectuate
the foregoing, including, if necessary, amending the Stock Plans and obtaining
any necessary consents from holders of Options.
(b) Except as may be otherwise agreed to by Parent or Purchaser and the
Company or as otherwise contemplated or required to effectuate this Section
2.16, the Stock Plans shall terminate as of the Effective Time and the
provisions in any other plan, program or arrangement providing for the issuance
or grant of any other interest in respect of the capital stock of the Company or
any of its Subsidiaries shall be deleted as of the Effective Time. The Company
shall take all actions necessary to provide that as of the Effective Time no
holder of Options under the Stock Plans will have any right to receive shares of
common stock of the Surviving Corporation upon exercise of any such Option.
(c) The Company shall take all commercially reasonable actions, if any,
necessary to provide that at or immediately prior to the Effective Time, (i)
each then outstanding option under the Company's 1995 Employee Stock Purchase
Plan (the "Stock Purchase Plan") shall automatically be exercised and (ii) in
lieu of the issuance of Certificates, each participant shall receive an amount
in cash (subject to any applicable withholding tax) equal to the product of (x)
the number of Shares otherwise issuable upon such exercise and (y) the Merger
Consideration. The Company shall use all commercially reasonable efforts to
effectuate the foregoing, including without limitation amending the Stock
Purchase Plan and obtaining any necessary consents from participants in the
Stock Purchase Plan. The Company (i) shall not permit the commencement of any
new offering period under the Stock Purchase Plan following the date hereof,
(ii) shall not permit any participant to increase his or her rate of
contributions under the Stock Purchase Plan following the date hereof, (iii)
shall terminate the Stock Purchase Plan as of the Effective Time, and (iv) shall
take any other actions necessary to provide that as of the Effective Time no
holder of options under the Stock Purchase Plan will have any right to receive
shares of common stock of the Surviving Corporation upon exercise of any such
option.
(d) In the event that an employee of the Company who is a holder of Options
is terminated by the Company after the date of this Agreement but prior to the
Effective Time, such employee shall receive at the Effective Time with respect
to all Options held by such employee as of the date of such termination of
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employment the cash payment determined in accordance with Section 2.16(a) that
such employee would have received had such employee been employed as of the
Effective Time.
2.17 Company Warrants. The Company shall take all commercially reasonable
actions, if any, necessary to provide that at the Effective Time, each warrant
outstanding at the Effective Time to purchase Shares (a "Warrant") shall be
canceled. The Company shall take all commercially reasonable efforts to
effectuate the foregoing, including, if necessary, amending a Warrant and
obtaining any necessary consents from holders of Warrants.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth on the disclosure schedule delivered by the Company to
Parent prior to the execution of this Agreement (the "Company Disclosure
Schedule"), the Company represents and warrants to Parent and Purchaser as
follows:
3.1 Organization, Standing and Corporate Power. Each of the Company and
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is organized and, except
as would not have a Material Adverse Effect, has all requisite corporate power
and authority to carry on its Business as now being conducted. Each of the
Company and its Subsidiaries is duly qualified or licensed to do business and is
in good standing in each jurisdiction in which the nature of its Business or the
ownership, leasing or operation of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to be so
qualified or licensed or to be in good standing would not have a Material
Adverse Effect on the Company. The Company has delivered or made available to
Parent complete and correct copies of its Restated Articles of Incorporation and
Bylaws, in each case as amended to the date hereof.
3.2 Subsidiaries. The Company Disclosure Schedule sets forth in Section
3.2 a complete list of the Company's Subsidiaries. All the outstanding shares of
capital stock of, or other equity interests in, each such subsidiary have been
validly issued and are fully paid and nonassessable and are owned directly by
the Company, free and clear of all pledges, claims, liens, charges, encumbrances
and security interests of any kind or nature whatsoever (collectively, "Liens")
and free of any other restriction (including any restriction on the right to
vote, sell or otherwise dispose of such capital stock or other ownership
interests). Except as set forth in Section 3.2 of the Company Disclosure
Schedule, the Company does not own any significant equity interest in any
corporation or other entity.
3.3 Capital Structure.
(a) The authorized capital stock of the Company consists of 50,000,000
shares of Company Common Stock and 5,000,000 shares of preferred stock, no par
value per share ("Preferred Stock"). At the close of business on May 20, 1998,
(i) 10,838,982 shares of Company Common Stock and no shares of Preferred Stock
were issued and outstanding, (ii) no shares of Company Common Stock were held by
the Company in its treasury, (iii) 2,041,482 shares of Company Common Stock were
reserved for issuance pursuant to outstanding Options under the Stock Option
Plans and 352,197 shares of Company Common Stock were reserved for issuance
pursuant to options available for grant under the Stock Option Plans, (iv)
309,397 shares of Company Common Stock were reserved for issuance pursuant to
the Stock Purchase Plan, (v) 1,140,284 shares of the Company Common Stock were
reserved for issuance upon exercise of an outstanding Warrant and (vi) 50,000
shares of Series A Participating Preferred Stock, no par value per share, were
reserved for issuance in connection with the Company's Preferred Shares Rights
Agreement dated November 25, 1996 (the "Rights Agreement"). Except as set forth
above, at the close of business on May 20, 1998, no shares of capital stock or
other voting securities of the Company were issued, reserved for issuance or
outstanding. All outstanding shares of capital stock of the Company are, and all
shares which may be issued pursuant to the Stock Option Plans and the Stock
Purchase Plan will be, when issued in accordance with the terms thereof, duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. There are no bonds, debentures, notes or other indebtedness
of the Company having the right to vote
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(or convertible into securities having the right to vote) on any matters on
which shareholders of the Company may vote. Except as set forth above, there are
no securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or any of its
Subsidiaries is a party, or by which the Company or any of its Subsidiaries is
bound, obligating the Company or any of its Subsidiaries to issue, deliver or
sell, or cause to be issued, delivered or sold, additional shares of capital
stock or other voting securities of the Company or any of its Subsidiaries or
obligating the Company or any of its Subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. The Company is not a party to any voting
agreement with respect to the voting of any of its securities. There are not any
outstanding contractual obligations of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its Subsidiaries.
(b) Section 3.3 of the Company Disclosure Schedule sets forth a complete
and accurate list, as of the date hereof, of: (i) all Options outstanding under
the Stock Option Plans (ii) all Warrants outstanding for the purchase of Shares,
(iii) the per Share exercise price of all such Options and Warrants, as adjusted
pursuant to the provisions of the respective Stock Option Plans and Warrant, and
(iv) the number of Shares subject to issuance upon exercise of all such Options
and Warrants, as adjusted pursuant to the provisions of the respective Stock
Option Plans and Warrant. The Company has not reduced the per Share exercise
price of the Options or Warrant, due to a reduction in the fair market value of
the Shares or otherwise, or established an option exchange program with respect
to any Stock Option Plan or Warrant.
3.4 Authority; Noncontravention. The Company has all requisite corporate
power and authority to enter into this Agreement and, subject to the approval of
the Merger and the adoption of this Agreement by the affirmative vote of the
holders of a majority of the Shares (the "Company Shareholder Approval"), to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the transactions contemplated by this Agreement have been duly authorized by all
necessary corporate action on the part of the Company, subject, in the case of
this Agreement, to the Company Shareholder Approval. This Agreement has been
duly executed and delivered by the Company and, assuming due and valid
authorization, execution and delivery hereof by Gambrinus, Parent and Purchaser,
constitutes a valid and binding obligation of the Company, enforceable against
the Company in accordance with its terms, except that (i) such enforcement may
be subject to applicable bankruptcy, insolvency or other similar laws, now or
hereafter in effect, affecting creditors' rights generally, and (ii) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceedings therefor may be brought. The execution and delivery of this
Agreement do not, and the consummation by the Company of the transactions
contemplated by this Agreement and compliance by the Company with the provisions
of this Agreement will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any material
obligation or to loss of a material benefit under, or result in the creation of
any material Liens in or upon any of the properties or assets of the Company or
any of its Subsidiaries under, any provision of (i) the Restated Articles of
Incorporation or Bylaws of the Company or the comparable organizational
documents of any of its Subsidiaries, (ii) any loan or credit agreement, note,
bond, mortgage, indenture, lease or other agreement, instrument, permit,
concession, franchise or license applicable to the Company or any of its
Subsidiaries or any of their respective properties or assets or (iii) subject to
the governmental filings and other matters referred to in the following
sentence, any (A) statute, law, ordinance, rule or regulation or (B) judgment,
order or decree applicable to the Company or any of its Subsidiaries or any of
their respective properties or assets, other than, in the case of clause (iii),
any such conflicts, violations, defaults, rights, losses or Liens that would not
have a Material Adverse Effect on the Company. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Federal,
state or local government or any court, administrative agency or commission or
other governmental authority or agency, domestic or foreign (a "Governmental
Entity"), is required by or with respect to the Company or any of its
Subsidiaries in connection with the execution and delivery of this Agreement by
the Company or the consummation by the Company of the transactions contemplated
by this Agreement, except for (1) filings, permits, authorizations, consents and
approvals as may be required under the Xxxx Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended
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(xxx "XXX Xxx"), (2) the filing with the SEC and the NASDAQ Stock Market, Inc.
of (A) a proxy statement relating to the Company Shareholder Approval (as
amended or supplemented from time to time, the "Proxy Statement") and (B) such
reports under the Securities Exchange Act of 1934 ("Exchange Act") as may be
required in connection with this Agreement and the transactions contemplated by
this Agreement, (3) the filing of an agreement of merger with the Secretary of
State pursuant to the GCL and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do business,
(4) such filings and approvals as may be required by any applicable state
securities, "blue sky" or takeover laws, (5) compliance with any applicable
requirements of the Exchange Act and (6) such other consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of which to
be obtained or made would not have a Material Adverse Effect on the Company.
3.5 SEC Documents; Financial Statements.
(a) The Company has timely filed all required reports, schedules, forms,
statements and other documents with the SEC and any exchange on which the
Company Common Stock is listed since January 1, 1996 (the "SEC Documents"). As
of their respective dates, or if amended, as of the date of the last such
amendment, the SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
or the Exchange Act, as the case may be, the rules and regulations of the SEC
promulgated thereunder applicable to such SEC Documents, and the rules and
regulations of any such exchange, and none of the SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(b) The Company has delivered to Parent true, correct and complete copies
of (i) the Company's audited financial statements set forth in Section 3.5(b) to
the Company Disclosure Schedule (the "Audited Financial Statements"), and (ii)
the Company's unaudited financial statements set forth in Section 3.5(b) to the
Company Disclosure Schedule (the "Unaudited Financial Statements"), certified,
on behalf of the Company, by the Company's chief financial officer. The Audited
Financial Statements and the Unaudited Financial Statements shall together be
referred to herein as the "Financial Statements." The Financial Statements
comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with GAAP (except, in the case of
unaudited statements, as permitted by Form 10-Q of the Exchange Act) applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto) and fairly presented the financial position of the Company
and its consolidated Subsidiaries as of the dates thereof and the results of its
operations and cash flows for the periods then ended (subject, in the case of
Unaudited Financial Statements, to normal year-end audit adjustments and the
absence of footnotes).
3.6 Absence of Certain Changes or Events. Except as disclosed in the SEC
Documents filed and publicly available prior to the date of this Agreement (the
"Filed SEC Documents"), since the date of the most recent Financial Statements
and until the date hereof, the Company and its Subsidiaries have conducted their
respective businesses only in the Ordinary Course of Business, and there has not
been (i) any event, change or effect having a Material Adverse Effect on the
Company, (ii) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of the
Company's capital stock, (iii) any split, combination or reclassification of any
of its capital stock or any issuance or the authorization of any issuance of any
capital stock, warrant, option or any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, (iv) (a) any granting by the
Company or any of its Subsidiaries to any director or officer of the Company or
its Subsidiaries of any increase in compensation, except in the Ordinary Course
of Business or as was required under employment agreements in effect as of the
date of the most recent Financial Statements, (b) any granting by the Company or
any of its Subsidiaries to any officer of any increase in severance or
termination pay, except as was required under any employment, severance or
termination agreements, plans or arrangements in effect as of the date of the
most recent Financial Statements or (c) any entry by the Company or any of its
Subsidiaries into any employment, severance or termination agreement with any
officer; (v) any material damage, destruction or loss, whether or not covered by
insurance; (vi) any Indebtedness created, incurred, assumed or guaranteed,
involving more than $50,000 in the aggregate; (vii) any postponement or delay
(outside the Ordinary Course of Business) in
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any material respect of, the payment of accounts payable and other liabilities
or obligations; (viii) any cancellation, compromise, waiver or release of any
right or claim (or series of related rights or claims) involving more than
$50,000 in the aggregate; (ix) any action taken expressly prohibited by Section
5.1; (x) any acceleration, termination, modification, amendment, or cancellation
of any material Contract (or series of Contracts), including the Xxxxx Agreement
or any Contract with a distributor, to which the Company is a party or to which
it is bound; and (xi) the Company has not committed to do any of the foregoing.
3.7 No Undisclosed Liabilities. Except (a) as recognized or disclosed in
the Filed SEC Documents and (b) for liabilities and obligations (i) incurred in
the Ordinary Course of Business since the date of the most recent Financial
Statements, or (ii) pursuant to the terms of this Agreement, neither the Company
nor any of its Subsidiaries has incurred any material liabilities or obligations
of any nature, whether or not accrued, contingent or otherwise required by GAAP
to be recognized or disclosed on a consolidated balance sheet of the Company and
its Subsidiaries or in the notes thereto.
3.8 Litigation. There is no suit, action or proceeding pending or, to the
Knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries, nor is there any judgment, decree, injunction, rule or order
of any Governmental Entity or arbitrator outstanding against, or, to the
Knowledge of the Company, investigation by any Governmental Entity involving,
the Company or any of its Subsidiaries.
3.9 Compliance with Laws. Each of the Company and its Subsidiaries is in
compliance with all applicable statutes, laws, ordinances, regulations, rules,
judgments, decrees and orders of any Governmental Entity (collectively, "Legal
Provisions") applicable to their business or operations, except for instances of
possible noncompliance that would not have a Material Adverse Effect on the
Company. Each of the Company and its Subsidiaries has in effect all Federal,
state, local and foreign governmental approvals, authorizations, certificates,
filings, franchises, licenses, notices, permits and rights, ("Permits"),
necessary for it to own, lease or operate its properties and assets and to carry
on its Business as now conducted, and there has occurred no default under, or
violation of, any such Permit, except for the lack of Permits and for defaults
under, or violations of, Permits, which lack, default or violation would not
have a Material Adverse Effect on the Company.
3.10 Absence of Changes in Benefit Plans; Labor Relations. Except as
disclosed in the Filed SEC Documents, since the date of the most recent
Financial Statements until the date hereof, there has not been any adoption or
amendment (or any agreement to adopt or amend) in any material respect by the
Company or any of its Subsidiaries of any material employment contract, material
collective bargaining agreement or any material bonus, pension, profit sharing,
deferred compensation, incentive compensation, stock ownership, stock purchase,
stock option, phantom stock retirement, vacation, severance, disability, death
benefit, hospitalization, medical or other material plan, arrangement or
understanding (whether or not legally binding) providing material benefits to
any current or former employee, officer or director of the Company or any
subsidiary (collectively, "Benefit Plans"). Except as disclosed in the Filed SEC
Documents, there exist, as of the date hereof, no material employment,
consulting or indemnification agreements, arrangements or understandings between
the Company or any of its Subsidiaries, and any current or former employee,
officer or director of the Company. Except as set forth in the Employee Handbook
of the Company, a complete and accurate copy of which has been provided to
Parent, there are no severance, termination or change of control plans,
agreements, arrangements or understandings between the Company or any of its
Subsidiaries, and any current or former employee, officer or director of the
Company. There are no collective bargaining or other labor union agreements to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound. Since January 1, 1996, neither the Company
nor any of its Subsidiaries has encountered any labor union organizing activity,
nor had any actual or threatened employee strikes, work stoppages, slowdowns or
lockouts.
3.11 ERISA Compliance.
(a) Section 4.12(i) to the Company Disclosure Schedule contains a list and
brief description of all material "employee pension benefit plans" (as defined
in Section 3(2) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA")) (sometimes referred to herein as "Pension Plans"), material
"employee welfare benefit plans' (as defined in Section 3 (1) of ERISA) and all
other Benefit Plans
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maintained, or contributed to, by the Company or any of its Subsidiaries or any
person or entity that, together with the Company and its Subsidiaries, is
treated as a single employer under Section 414(b), (c), (m) or (o) of the
Internal Revenue Code of 1986, as amended (the "Code") (the Company and each
such other person or entity, (a "Commonly Controlled Entity") for the benefit of
any current or former employees, officers or directors of the Company or any of
its Subsidiaries. The Company has made available to Parent true, complete and
correct copies of (1) each Benefit Plan (or, in the case of any unwritten
Benefit Plans, descriptions thereof), (2) the most recent annual report on Form
5500 filed with the Internal Revenue Service with respect to each Benefit Plan
(if any such report was required), (3) the most recent summary plan description
for each Benefit Plan for which such summary plan description is required and
(4) each trust agreement and group annuity contract relating to any Benefit
Plan. Each Benefit Plan has been administered in all material respects in
accordance with its terms. Except as would not have a Material Adverse Effect on
the Company, the Company, each of its Subsidiaries and all the Benefit Plans are
in compliance with applicable provisions of ERISA and the Code.
(b) Except as would not have a Material Adverse Effect on the Company, all
Pension Plans have been the subject of determination letters from the Internal
Revenue Service to the effect that such Pension Plans are qualified and exempt
from Federal income taxes under Sections 401(a) and 501(a), respectively, of the
Code, and no such determination letter has been revoked nor has any event
occurred since the date of its most recent determination letter or application
therefor that would adversely affect its qualification or materially increase
its costs.
(c) Neither the Company, nor any of its Subsidiaries, nor any Commonly
Controlled Entity has maintained, contributed or been obligated to contribute to
any Benefit Plan that is subject to Title IV of ERISA.
(d) Except as provided by this Agreement, no employee of the Company or any
of its Subsidiaries will be entitled to any additional compensation or benefits
or any acceleration of the time of payment or vesting of any compensation or
benefits under any Benefit Plan as a result of the transactions contemplated by
this Agreement.
3.12 Taxes.
(a) Except to the extent the failure to do so would not have a Material
Adverse Effect, all Tax Returns (including, for purposes of this Section 3.12,
all related reports, notices, declarations and information reports and returns)
required to have been filed by the Company and each of its Subsidiaries have
been timely filed (taking into account duly granted extensions) and are true,
correct and complete in all material respects. Except as disclosed in Section
3.12(a) of the Company Disclosure Schedule, (i) neither the Company nor any of
its Subsidiaries is currently the beneficiary of any extension of time within
which to file any tax return, and (ii) no claim is pending by any governmental
authority in a jurisdiction where the Company or any of its Subsidiaries does
not file Tax Returns that the Company or any of its Subsidiaries is or may be
subject to taxation by that jurisdiction.
(b) All Taxes of the Company or any of its Subsidiaries which have become
due (without regard to any extension of the time for payment and whether or not
shown on any tax return) have been paid, or adequate reserves therefor have been
established. Except to the extent the failure to do so would not have a Material
Adverse Effect, the Company and each of its Subsidiaries has withheld and paid
over all taxes required to have been withheld and paid over and has complied
with all information reporting and back-up withholding requirements relating to
Taxes. There are no liens with respect to taxes on any of the assets of the
Company or any of its Subsidiaries, other than liens for Taxes not yet due and
payable.
(c) No deficiencies exist or have been asserted (verbally or in writing)
with respect to Taxes of the Company or any of its Subsidiaries and neither the
Company nor any of its Subsidiaries has received notice (verbally or in writing)
that it has not filed a Tax Return or paid any Taxes required to be filed or
paid by it. No audit, examination, investigation, action, suit, claim or
proceeding relating to the determination, assessment or collection of any Tax of
the Company or any of its Subsidiaries is currently in process, pending or
threatened (verbally or in writing). Except as disclosed in Section 3.12(e) of
the Company Disclosure
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Schedule, no waiver or extension of any statute of limitations relating to the
assessment or collection of any Tax of the Company or any of its Subsidiaries is
in effect. There are no outstanding requests for rulings with any tax authority
relating to Taxes of the Company or any of its Subsidiaries.
(d) Neither the Company nor any of its Subsidiaries is or ever has been (i)
a party to any Tax sharing agreement or arrangement (formal or informal, verbal
or in writing), or (ii) a member of an affiliated group of corporations (within
the meaning of Code Section 1504) filing a consolidated federal income Tax
Return, or any similar group under analogous provisions of other law, other than
the affiliated group of which the Company is the common parent. Neither the
Company nor any of its Subsidiaries is liable for the Taxes of any other person
pursuant to Treasury regulations Section 1.1502-6 or other law, as a transferee
or successor, by contract or otherwise, other than for the Taxes of another
member of the affiliated group of which the Company is presently the common
parent.
(e) Neither the Company nor any of its Subsidiaries (i) has filed and
pending (nor will they have filed prior to the Closing, except with the prior
written consent of Parent) any claim for refund of any Taxes attributable to any
net operating or other loss or credit carryover or carryback, or (ii) has made
or prior to the Closing Date will make any election under Code Section
172(b)(3).
3.13 Parachute Payments. Neither the Company nor any of its Subsidiaries
has made any payments, obligated itself to make any payments or become a party
to any agreement that under any circumstance could obligate it or any successor
or assignee of it to make any payments that are not or will not be deductible
under Code Section 280G, or that would be subject to excise tax under Code
Section 4999. As a result of any of the transactions contemplated by this
Agreement, no employee, independent contractor, officer or director of the
Company or any of its Subsidiaries is or will become entitled to receive any
additional payment from the Company or any of its Subsidiaries, the Surviving
Corporation or any other person (a "Parachute Gross-Up Payment") in the event
that the excise tax of Section 4999(a) of the Code is imposed on such person.
The Company has not granted to any officer, director, independent contractor, or
employee of the Company any right to receive any Parachute Gross-Up Payment.
3.14 Information in Proxy Statement. The Proxy Statement (or any amendment
thereof or supplement thereto), at the date mailed to Company shareholders and
at the time of the meeting of Company shareholders to be held in connection with
the Merger, will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading, except that no representation is made by the Company with
respect to statements made therein based on information supplied in writing by
Parent or Purchaser expressly for inclusion in the Proxy Statement. The Proxy
Statement will comply in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder.
3.15 State Takeover Statutes. No California takeover statute or similar
statute applies or purports to apply to the Merger, or to this Agreement, or the
transactions contemplated hereby.
3.16 Rights Agreement. The Company Board of Directors has adopted
resolutions providing that the Rights Agreement shall be amended, and the Rights
Agreement shall be so amended, within two Business Days following the date
hereof, to (i) render the Rights Agreement inapplicable to the Merger and this
Agreement, (ii) ensure that (y) none of Parent, Purchaser or any of their
respective affiliates is an Acquiring Person (as defined in the Rights
Agreement) pursuant to the Rights Agreement solely by virtue of the execution of
this Agreement and the consummation of the Merger and (z) a Distribution Date or
a Shares Acquisition Date (as such terms are defined in the Rights Agreement)
does not occur by reason of the Merger, the execution of this Agreement, or the
consummation of the Merger and (iii) provide that the Final Expiration Date (as
defined in the Rights Agreement) shall occur immediately prior to the Effective
Time, and such amendment will not be further amended by the Company without the
prior consent of Parent in its sole discretion.
3.17 Brokers. No broker, investment banker, financial advisor or other
person, other than Xxxxxx Xxxxxxx, the fees and expenses of which will be paid
by the Company, is entitled to any broker's, finder's,
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financial advisor's or other similar fee or commission in connection with the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company. The Company has furnished to Parent true and complete
copies of all agreements under which any such fees or expenses are payable and
all indemnification and other agreements related to the engagement of the
persons to whom such fees are payable.
3.18 Title to Assets. The Company and its Subsidiaries have good and
marketable title to, or a valid leasehold interest in, the properties and assets
used by them, in the Business, or shown on the most recent Financial Statements
provided to the Parent or acquired after the date thereof, free and clear of any
and all Liens, except for such Liens as would not have a Material Adverse Effect
and taxes not yet due.
3.19 Product Liability. With respect to the Company or its Subsidiary, (i)
there is no written notice, demand, claim, inquiry, hearing, proceeding, written
notice of violation or investigation of a civil, criminal or administrative
nature by or before any Governmental Entity against or involving any product,
substance or material manufactured, produced or distributed or sold by or on
behalf of the Company (collectively, a "Product") which is pending or, to the
Knowledge of the Company, threatened, resulting from a defect or alleged defect
in design, manufacture, materials or workmanship of any Product, or any failure
or alleged failure to warn, or from any breach or alleged breach of implied
warranties or representations, except for such notices, demands, claims,
inquiries, hearings or proceedings that would not have a Material Adverse
Effect.
3.20 Material Contracts. The Company Disclosure Schedule sets forth in
Section 3.20 a true and correct list of all material Contracts of the Company as
of the date of this Agreement, and identifies those material Contracts entered
into since the date of the Financial Statements. With respect to each such
Contract, including the Xxxxx Agreement: (a) the Contract is legal, valid,
binding, enforceable and in full force and effect; (b) the consummation of the
transactions contemplated hereby will in no way cause the Contract to no longer
be legal, valid, binding, enforceable, and in full force and effect on identical
terms following the consummation of the transactions contemplated hereby; (c) to
the Knowledge of the Company, no party is in material breach or default, and no
event has occurred which with notice or lapse of time would constitute a
material breach or default, or permit termination, modification, or
acceleration, under the Contract; (d) to the Knowledge of Company, no party has
repudiated any material provision of the Contract; (e) the Company has not
received notice of any plan or intention of any other party to any Contract to
exercise any right to cancel or terminate any such Contract, and the Company
does not have any Knowledge of any condition or state of facts which would
justify the exercise of any such right; and (f) the Company does not currently
contemplate, or have any Knowledge that any other Person currently contemplates,
any material amendment or change to any material Contract.
3.21 Title to Intellectual Property.
(a) Intellectual Property. As of the date hereof, the Intellectual Property
of the Company includes without limitation the registered trademarks and service
marks, the common law trademarks and service marks, the reserved trade names and
the registered copyrights listed in Section 3.21 of the Company Disclosure
Schedule.
(b) Ownership. The Company (i) is the sole owner and holder of, or has the
legal right to use, all Intellectual Property, or can obtain such right on
commercially reasonable terms which will not have a Material Adverse Effect;
(ii) has full and unrestricted legal and equitable title to the Intellectual
Property, free and clear of any material liens, pledges, claims and encumbrances
or can obtain such title or rights on commercially reasonable terms which will
not have a Material Adverse Effect. All such rights of the Company in the
Intellectual Property are valid, subsisting and enforceable. Section 3.21 of the
Company Disclosure Schedule lists all registered trademarks and service marks,
all common law trademarks and service marks, all reserved trade names and all
registered copyrights, which are used in the Business of the Company or which
are otherwise necessary for the conduct of the Business as presently conducted.
(c) Trade Secret Protection. To the Company's Knowledge, trade secrets of
the Company, including recipes for its malt beverage Products, (i) have at all
times been maintained in confidence and (ii) have been disclosed by the Company
only to employees, contractors and consultants having "a need to know" the
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contents thereof in connection with the performance of their duties to the
Company, except for such failures to maintain in confidence or disclosures that
would not have a Material Adverse Effect.
(d) Personnel Agreements. All personnel, including employees, agents,
consultants, and contractors have executed, upon their employment or association
with the Company, a nondisclosure agreement providing that such employee shall
keep confidential all confidential information of the Company.
(e) Absence of Claims. No claim or litigation has been asserted and the
Company has not received notice of any threatened claim or litigation by any
person or entity contesting the right of the Company to use, or the validity or
enforceability of the Intellectual Property or challenging or questioning the
validity or effectiveness of any license or agreement pertaining thereto or
asserting misuse thereof, and to the Company's Knowledge, use of such
Intellectual Property by the Company does not materially infringe on the rights
of any person or entity or violate any license or other agreement applicable
thereto by any person or entity to the use of the Intellectual Property, and the
Company has no Knowledge of any valid basis for any such claim. The Company has
not asserted any claim or litigation concerning infringement of Intellectual
Property by third parties, and the Company has no Knowledge of any infringement
of Intellectual Property by third parties.
(f) Third-Party Interests. The Company has not granted, transferred, or
assigned any right or interest in the Intellectual Property to any person or
entity. Other than those entered into in the Ordinary Course of Business, there
are no contracts, agreements, licenses, or other commitments or arrangements in
effect with respect to the marketing, distribution, licensing, or promotion of
the Intellectual Property by any independent person, distributor, sublicensor,
or other remarketer or sales organization.
3.22 Distributors and Distributorship Agreements. The Company has
identified in Section 3.22 of the Company Disclosure Schedule all the
distributors of its Products ("Distributor") and the name and address of each.
There is a written agreement for each such Distributor except as set forth on
the Company Disclosure Schedule. Upon the execution hereof by Company, Company
shall furnish Purchaser with a copy of each written Contract with any
Distributor. With respect to each such Contract with a distributor: (a) the
Contract is legal, valid, binding, enforceable and in full force and effect; (b)
the consummation of the transactions contemplated hereby will in no way cause
the Contract to no longer be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby; (c) to the Knowledge of the Company, no party
is in material breach or default, and no event has occurred which with notice or
lapse of time would constitute a material breach or default, or permit
termination, modification or acceleration, under the Contract; (d) to the
Knowledge of Company, no party has repudiated any material provision of the
Contract; (e) the Company has not received notice of any plan or intention of
any other party to any Contract to exercise any right to cancel or terminate any
such Contract, and the Company does not have any Knowledge of any condition or
state of facts which would justify the exercise of any such right; and (f) the
Company does not currently contemplate, or have any Knowledge that any other
Person currently contemplates, any material amendment or change to any such
material Contract.
3.23 Real Property.
(a) Neither the Company nor any of its Subsidiaries owns any real property.
Schedule 3.23 of the Company Disclosure Schedule accurately lists and correctly
describes all material real properties of which the Company or any of its
Subsidiaries is the lessee and, for each of those properties, the address
thereof, the type and square footage of each structure located thereon the
Company or a Subsidiary is leasing and the expiration date of its lease and the
use thereof in the Business of the Company and the Subsidiaries.
(b) The Company has provided Parent with true, correct and complete copies
of all leases under which the Company or a Subsidiary is leasing each of the
properties listed in Section 3.23 of the Company Disclosure Schedule as being
leased and, except as accurately set forth in Section 3.23 of the Disclosure
Schedule, (i) each of those leases is, to the Knowledge of the Company, valid
and binding on the lessor party thereto, and (ii) the lessee party thereto has
not sublet any of the leased space to any Person.
3.24 Insurance. The Company has provided Parent with: (i) an accurate list
of all insurance policies carried by each of the Company and its Subsidiaries;
and (ii) true, complete and correct copies of all insurance policies carried by
each of the Company and its Subsidiaries which are in effect, all of which
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currently are in full force and effect. No insurance carried by the Company or
any of its Subsidiaries has been canceled by the insurer during the past five
years.
3.25 Customers, Suppliers. As of the date of this Agreement, to the
Company's Knowledge, all suppliers material to the Company will continue to sell
the products and services currently sold to it, and all customers that are
material to the Company will continue purchasing, without significant
reductions, Products from the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND PURCHASER
Parent, Purchaser and Gambrinus, jointly and severally, represent and
warrant to the Company as follows:
4.1 Organization, Standing and Corporate Power. Each of Parent, Purchaser
and Gambrinus is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction in which it is incorporated and has
all requisite corporate power and authority to carry on its business as now
being conducted except where the failure to be so organized, existing and in
good standing or to have such power and authority would not have a material
adverse effect on Parent, Purchaser or Gambrinus. Each of Parent, Purchaser and
Gambrinus is duly qualified or licensed to do business and is in good standing
in each jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties makes such qualification or licensing
necessary, other than in such jurisdictions where the failure to be so qualified
or licensed or to be in good standing would not have a material adverse effect
on Parent, Purchaser or Gambrinus. Parent has delivered or made available to the
Company complete and correct copies of its Certificate of Incorporation and
By-Laws and the Certificate of Incorporation and Bylaws of Purchaser, in each
case as amended to the date hereof.
4.2 Authority: Noncontravention. Parent, Purchaser and Gambrinus have all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The execution and
delivery of this Agreement and the consummation by Parent, Purchaser and
Gambrinus of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of Parent, Purchaser
and Gambrinus. This Agreement has been duly executed and delivered by Parent,
Purchaser and Gambrinus and assuming due and valid authorization, execution and
delivery hereof of the Company, constitutes a valid and binding obligation of
each such party, enforceable against each such party in accordance with its
terms, except that (i) such enforcement may be subject to applicable bankruptcy,
insolvency or other similar laws, now or hereafter in effect, affecting
creditors' rights generally, and (ii) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceedings
therefor may be brought. The execution and delivery of this Agreement do not,
and the consummation by Parent, Purchaser and Gambrinus of the transactions
contemplated by this Agreement and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of, or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to loss
of a material benefit under, or result in the creation of any Liens in or upon
any of the properties or assets of Parent, Purchaser or Gambrinus under, any
provision of (i) the Certificate of Incorporation or Bylaws of Parent, Purchaser
or Gambrinus, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to Parent, Purchaser or Gambrinus or their respective
properties or assets or (iii) subject to the governmental filings and other
matters referred to in the following sentence, any (A) statute, law, ordinance,
rule or regulation or (B) judgment, order or decree applicable to Parent,
Purchaser or Gambrinus or any of their respective properties or assets, other
than, in the case of clauses (ii) and (iii), any such conflicts, violations,
defaults, rights or Liens that would not have a material adverse effect on
Parent. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to Parent, Purchaser or Gambrinus in connection with the execution and
delivery of this Agreement by Parent,
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Purchaser or Gambrinus or the consummation by Parent and Purchaser of the
transactions contemplated by this Agreement, except for (1) filings, permits,
authorizations, consents and approvals as may be required under the HSR Act, (2)
the filing with the SEC of such reports under the Exchange Act as may be
required in connection with this Agreement and the transactions contemplated by
this Agreement, (3) the filing of an agreement of merger with the Secretary of
State pursuant to the GCL and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do business,
(4) such filings and approvals as may be required by any applicable state
securities, "blue sky" or takeover laws, (5) compliance with any applicable
requirements of the Exchange Act and (6) such other consents, approvals, orders,
authorizations, registrations, declarations and filings, the failure of which to
be obtained or made would not have a material adverse effect on Parent.
4.3 Information in Proxy Statement. None of the information supplied by
Parent, Purchaser or Gambrinus in writing expressly for inclusion or
incorporation by reference in the Proxy Statement (or any amendment thereof or
supplement thereto) will, at the date mailed to shareholders and at the time of
the meeting of shareholders to be held in connection with the Merger, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements made
therein, in light of the circumstances under which they are made, not
misleading.
4.4 Interim Operations of Purchaser. Purchaser was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
4.5 Brokers. No broker, investment banker, financial advisor or other
person, other than Chase Securities Inc., the fees of which shall be paid by the
Parent or Purchaser, is entitled to any broker's, finder's, financial advisor's
or other similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
Parent, Purchaser or Gambrinus.
4.6 Financing. At the Effective Time, Parent, Purchaser and Gambrinus will
have available all the funds necessary to perform their respective obligations
under this Agreement, including without limitation payment in full for all
Shares outstanding at the Effective Time and the payment of all expenses in
connection herewith. Parent and Purchaser have received, and have furnished to
the Company, true and complete copies of the written commitment from a third
Person (the "Financing Commitment") with respect to the financing of the Merger
(the "Financing"). The aggregate proceeds of the Financing, together with
internal corporate funds of Parent, Purchaser or Gambrinus, are sufficient to
acquire all of the Shares in the Merger and to pay anticipated expenses in
connection therewith. The Financing Commitment is valid, binding and enforceable
in accordance with their terms and have not been revoked as of the date hereof.
Nothing has come to the attention of Parent, Purchaser or Gambrinus which would
cause either Parent or Purchaser to believe that the proceeds of the Financing
will not be available to them at the Effective Time. Parent will not enter into
any amendments or supplements to the Financing Commitment that would materially
reduce the likelihood of obtaining the Financing.
4.7 Share Ownership. Neither Parent, Purchaser nor Gambrinus are the
beneficial owner of any shares of capital stock of the Company.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
5.1 Interim Operations of the Company. After the date hereof and until the
earlier of (x) termination of this Agreement in accordance with Article VIII
hereof or (y) consummation of the Merger, the Company shall not, and shall not
permit any of its Subsidiaries to, engage in any practice, take any action, or
enter into any transactions other than (i) in the Ordinary Course of Business,
(ii) as otherwise contemplated by this Agreement or (iii) as agreed in writing
by Parent. Without limiting the generality of the foregoing, the Company shall
not, and shall not permit any of its Subsidiaries to:
(a) other than dividends and distributions by a wholly owned
subsidiary of the Company to its parent (or pursuant to the Rights
Agreement) (x) declare, set aside or pay any dividends on, or make any
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other distributions (whether in cash, stock or property), in respect of,
any of its capital stock, (y) split, combine or reclassify any of its
capital stock or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its capital stock
(other than (i) the issuance of shares of Company Common Stock upon the
exercise of Options outstanding on the date of this Agreement and in
accordance with their present terms or (ii) the issuance of shares of
Company Common Stock in accordance with the Stock Purchase Plan) or (z)
purchase, redeem or otherwise acquire any shares of capital stock of the
Company or any of its Subsidiaries or any other securities thereof or any
rights, warrants or options to acquire any such shares or other securities;
(b) issue, deliver, sell, pledge or otherwise encumber any shares of
its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than (i)
pursuant to the Rights Agreement or (ii) the issuance of shares of Company
Common Stock upon the exercise of Options outstanding on the date of this
Agreement and in accordance with their present terms or (iii) the issuance
of shares of Company Common Stock in accordance with the Stock Purchase
Plan);
(c) amend its Restated Articles of Incorporation, Bylaws or other
comparable charter or organizational documents;
(d) except in the Ordinary Course of Business, in any material
respect, modify, amend or terminate any note, bond, mortgage, indenture,
lease, license, contract, agreement or other instrument to which the
Company or any of its Subsidiaries is a party or by which any of them or
any of their properties or assets may be bound, including the Xxxxx
Agreement or any Contract with any transporter, distributor or purchaser of
Products;
(e) acquire or agree to acquire (including, without limitation, by
merger, consolidation or acquisition of stock or assets) any business,
including through the acquisition of any interest in any corporation,
partnership, joint venture, association or other business organization or
division thereof;
(f) sell, lease, license, mortgage or otherwise encumber or otherwise
dispose of any of its properties or assets, other than selling its
inventory and trade receivables in the Ordinary Course of Business;
(g) (y) incur any Indebtedness or guarantee any such Indebtedness of
another person, issue or sell any debt securities or warrants or other
rights to acquire any debt securities of the Company or any of its
Subsidiaries, or guarantee any debt securities of another person, other
than short-term bank financing in the Ordinary Course of Business or (z)
make any loans, advances or capital contributions to, or investments in,
any other Person;
(h) make or agree to make one or more new financial payments or
commitments, whether for capital expenditures, marketing or otherwise,
other than payments or commitments (individually not in excess of $100,000)
made pursuant to the execution by the Company in the Ordinary Course of
Business of a mutually agreeable 1998 revised budget to be prepared by the
Company promptly following the execution of this Agreement and other than
the payment of the fees and expenses of counsel and financial advisors
relating to this Agreement and the transactions contemplated hereby;
(i) except as required to comply with applicable law or agreements,
plans or arrangements existing on the date hereof, (A) adopt, enter into,
terminate or amend in any material respect any employment contract,
collective bargaining agreement or Benefit Plan, (B) increase in any manner
the compensation or fringe benefits of, or pay any bonus to, any director,
officer or employee (except for normal increases of cash compensation or
cash bonuses in the Ordinary Course of Business consistent with past
practice), (C) pay any benefit not provided for under any Benefit Plan or
any other benefit plan or arrangement of the Company or its Subsidiaries,
(D) increase in any manner the severance or termination pay of any officer
or employee, (E) except as permitted in clause (B), grant any awards under
any bonus, incentive, performance or other compensation plan or arrangement
or Benefit Plan (including the grant of stock options, stock appreciation
rights, stock based or stock related awards, performance units or
restricted stock or the removal of existing restrictions in any Benefit
Plans or agreements or awards made thereunder), (F) take any action to fund
or in any other way secure the payment of compensation or
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benefits under any employee plan, agreement, contract or arrangement or
Benefit Plan, or (G) take any action to accelerate the vesting of, or cash
out rights associated with, any Options;
(j) enter into any Contract of a nature that would be required to be
filed as an exhibit to Form 10-K under the Exchange Act;
(k) except as required by GAAP, make any material change in accounting
methods, principles or practices;
(l) make any material Tax election or enter into any settlement or
compromise with respect to any material income Tax liability;
(m) hire any new employees; or
(n) authorize any of, or commit or agree to take any of, the foregoing
actions.
5.2 No Solicitation.
(a) From the date of this Agreement until the earlier of termination of
this Agreement or the Effective Time, the Company shall not, nor shall it
authorize or permit any of its officers, directors or employees or any
investment banker, financial advisor, attorney, accountant or other
representative or agent retained by it to, directly or indirectly, (i) solicit,
initiate or knowingly encourage the submission of any Takeover Proposal (as
defined below) or (ii) participate in any discussions or negotiations regarding,
or furnish to any person any nonpublic information with respect to, or take any
other action designed or reasonably likely to facilitate any inquiries or the
making of any proposal that constitutes a Takeover Proposal; provided, however,
that if, at any time prior to the Effective Time, the Company Board of Directors
determines in good faith, after consultation with outside counsel, that it is
necessary to do so in order to comply with its fiduciary duties to the Company's
shareholders under applicable law, the Company may, in response to a Takeover
Proposal which was not solicited subsequent to the date hereof, and subject to
compliance with Section 5.2(c), (x) furnish information with respect to the
Company to any person pursuant to a confidentiality agreement with terms no more
favorable to such person than the terms of the Confidentiality Agreement (as
hereinafter defined) and (y) participate in discussions and negotiations
regarding such Takeover Proposal. For purposes of this Agreement, "Takeover
Proposal" means any inquiry, proposal or offer from any person relating to any
direct or indirect acquisition or purchase of a substantial amount of assets of
the Company and its Subsidiaries taken as a whole (other than inventory in the
Ordinary Course of Business), or more than a 20% interest in the total voting
securities of the Company or any tender offer or exchange offer that if
consummated would result in any person beneficially owning 20% or more of any
class of equity securities of the Company or any merger, consolidation, business
combination, sale of substantially all assets, recapitalization, liquidation,
dissolution or similar transaction involving the Company, other than the
transactions contemplated by this Agreement.
(b) Except as set forth in this Section 5.2, neither the Company Board of
Directors nor any committee thereof shall (i) withdraw or modify, or propose
publicly to withdraw or modify, in a manner adverse to Parent, the approval or
recommendation by such Company Board of Directors or such committee of the
Merger or this Agreement, (ii) approve or recommend, or propose publicly to
approve or recommend, any Takeover Proposal or (iii) cause the Company to enter
into any letter of intent, agreement in principle, acquisition agreement or
other similar agreement (each, an "Acquisition Agreement") related to any
Takeover Proposal. Notwithstanding the foregoing, in the event that prior to the
Effective Time, the Company Board of Directors determines in good faith, after
consultation with outside counsel, that it is necessary to do so in order to
comply with its fiduciary duties to the Company's shareholders under applicable
law, the Company Board of Directors may, in response to an unsolicited Superior
Proposal (as defined below) (subject to the following proviso), (x) withdraw or
modify or propose publicly to withdraw or modify its approval or recommendation
of the Merger or this Agreement, (y) approve or recommend any such Superior
Proposal if concurrently with such approval or recommendation the Company
terminates this Agreement or (z) cause the Company to enter into an Acquisition
Agreement related to any Superior Proposal if concurrently with the execution of
such Acquisition Agreement the Company terminates this Agreement; provided, that
in the case of clauses (y) and (z), only at a time that is after the later of
(i) the second Business Day following Parent's receipt of written notice
advising Parent that the Company Board of Directors has received a Superior
Proposal,
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specifying the material terms and conditions of such Superior Proposal and
identifying the person making such Superior Proposal and (ii) in the event of
any amendment to the price or any material term of a Superior Proposal, one
Business Day following Parent's receipt of written notice containing the
material terms and conditions of such amendment (it being understood that each
further amendment to any material terms or conditions of a Superior Proposal
shall necessitate an additional written notice to Parent and an additional one
Business Day period prior to which the Company can take the actions set forth in
clauses (y) and (z) above). For purposes of this Agreement, a "Superior
Proposal" means any bona fide Takeover Proposal made by a third party (i) that
is on terms which the Company Board of Directors determines in its good faith
judgment (based on consultation with a nationally recognized investment banking
firm) to be more favorable to the Company's shareholders than the Merger and
(ii) for which financing, to the extent required, is then committed, or which,
in the good faith judgment of the Company Board of Directors, is capable of
being readily obtained by such third party.
(c) In addition to the obligations of the Company set forth in paragraphs
(a) and (b) of this Section 5.2, the Company shall promptly advise Parent orally
and in writing of any request for nonpublic information (except in the Ordinary
Course of Business and not in connection with a possible Takeover Proposal) or
of any Takeover Proposal known to it, the material terms and conditions of such
request or Takeover Proposal and the identity of the person making such request
or Takeover Proposal. The Company will promptly inform Parent of any change in
the material terms and conditions (including amendments or proposed amendments)
of any such request or Takeover Proposal.
(d) Nothing contained in this Section 5.2 or in any other provision of this
Agreement shall prohibit the Company or the Company Board of Directors from (i)
taking and disclosing to the Company's shareholders a position with respect to a
tender or exchange offer by a third party pursuant to Rule 14d-9 or Rule 14e-2
promulgated under the Exchange Act or (ii) making such disclosure to the
Company's shareholders as, in the good faith judgment of the Company Board of
Directors, after consultation with outside counsel, is necessary for the Company
Board of Directors to comply with its fiduciary duties under applicable law.
(e) The Company agrees that it will immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any parties
conducted prior to the date of this Agreement with respect to any Takeover
Proposal.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Shareholder Approval; Preparation of Proxy Statement.
(a) The Company shall in accordance with applicable law, as soon as
practicable, duly call, give notice of, convene and hold a meeting of its
shareholders (the "Shareholders Meeting") for the purpose of obtaining the
Company Shareholder Approval. At the Shareholders Meeting the Company shall use
its commercially reasonable efforts to solicit from shareholders of the Company
proxies in favor of the Merger and shall take all other action necessary or, in
the reasonable opinion of Purchaser, advisable to secure any vote or consent of
shareholders required by the GCL to effect the Merger. Subject to the fiduciary
obligations of the Company Board of Directors under applicable law, the Company
shall, through the Company Board of Directors, recommend to its shareholders
that the Company Shareholder Approval be given.
(b) The Company shall, as soon as practicable, but in no event later than
15 Business Days after the date of this Agreement, prepare and file a
preliminary Proxy Statement with the SEC and shall use its best efforts to
respond to any comments of the SEC or its staff and to cause the Proxy Statement
to be mailed to the Company's shareholders as promptly as practicable after
responding to all such comments to the satisfaction of the staff. The Company
shall notify Parent promptly of the receipt of any comments from the SEC or its
staff and of any request by the SEC or its staff for amendments or supplements
to the Proxy Statement or for additional information and will supply Parent with
copies of all correspondence between the Company or any of its representatives,
on the one hand, and the SEC or its staff, on the other hand, with respect to
the Proxy Statement or the Merger. If at any time prior to the Shareholders
Meeting there shall occur any event that
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should be set forth in an amendment or supplement to the Proxy Statement, the
Company shall promptly prepare and mail to its shareholders such an amendment or
supplement.
(c) Parent shall provide the Company with the information concerning
Gambrinus, Parent and Purchaser required by applicable securities laws to be
included in the Proxy Statement.
6.2 Access to Information; Confidentiality. The Company shall, and shall
cause each of its Subsidiaries to, afford to Parent and to the officers,
employees, accountants, counsel and other representatives of Parent reasonable
access, during normal business hours, upon reasonable notice and during the
period prior to the Effective Time, to all their properties, books, contracts,
commitments and records and, during such period, the Company shall, and shall
cause each of its Subsidiaries to, make available promptly to Parent upon
request (a) a copy of each report, schedule, registration statement and other
document filed or received by it during such period pursuant to the requirements
of the federal or state securities laws or the federal Tax laws, or state, local
or foreign Tax laws and (b) all other information concerning its Business,
properties and personnel as Parent may reasonably request. Except as otherwise
agreed to by the Company, and notwithstanding termination of this Agreement, the
terms of the Confidentiality Agreement dated February 26, 1998, between
Gambrinus and the Company, as amended (the "Confidentiality Agreement") shall
apply to all information about the Company which has been furnished under this
Agreement by the Company to Gambrinus, Parent or Purchaser. In the event this
Agreement is terminated for any reason, Gambrinus and Parent shall, in
accordance with the provisions of the Confidentiality Agreement, promptly return
or destroy all information about the Company which has been furnished under this
Agreement.
6.3 Commercially Reasonable Efforts. Upon the terms and subject to the
conditions set forth in this Agreement, each of the parties agrees to use all
commercially reasonable efforts to take, or cause to be taken (including
Gambrinus causing Parent or Purchaser to take), all actions, and to do, or cause
to be done, and to assist and cooperate with the other parties in doing, all
things necessary, proper or advisable to consummate and make effective, in the
most expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement, including using commercially reasonable efforts
to take the following actions: (i) the taking of all reasonable acts necessary
to cause the conditions to the Merger to be satisfied, (ii) the obtaining of all
necessary actions or nonactions, waivers, consents and approvals from
Governmental Entities and the making of all necessary registrations and filings
(including filings with Governmental Entities, if any) and the taking of all
reasonable steps as may be necessary to avoid an action or proceeding by any
Governmental Entity, (iii) the obtaining of all necessary consents, approvals or
waivers from third parties, (iv) the defending of any lawsuits or other legal
proceedings, whether judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated hereby, including seeking to
have any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed, and (v) the execution and delivery of
any additional instruments necessary to consummate the transactions contemplated
by, and to fully carry out the purposes of, this Agreement. Each of the Company,
Gambrinus, Purchaser and Parent shall take all reasonable actions necessary to
file, as soon as practicable, notifications under the HSR Act, or under
comparable merger notification laws of non-U.S. jurisdictions and to respond as
promptly as practicable to any inquiries received from the Federal Trade
Commission and the Antitrust Division of the Department of Justice or the
authorities of such other jurisdiction for additional information or
documentation and to respond as promptly as practicable to all inquiries and
requests received from any State Attorney General or other Governmental Entity
in connection with antitrust matters. In case at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, the proper officers and directors of the Company, Gambrinus,
Parent and Purchaser shall use all reasonable efforts to take, or cause to be
taken, all such necessary actions.
6.4 Notification of Certain Matters. The Company shall give prompt notice
to Parent and Purchaser and Parent and Purchaser shall give prompt notice to the
Company, of (i) the occurrence or non-occurrence of any event whose occurrence
or non-occurrence would be likely to cause either (x) any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Effective Time or (y) any
condition to Closing set forth in Article VII to be unsatisfied in any material
respect at any time from the date hereof to the Effective Time (except to the
extent it refers to a specific date) and (ii) any material failure of the
Company, Purchaser or Parent, as the case may be, or any
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officer, director, employee or agent thereof, to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by it
hereunder; provided, however, that the delivery of any notice pursuant to this
Section 6.4 shall not limit or otherwise affect the remedies available hereunder
to the party receiving such notice or the representations or warranties of the
parties or the conditions to the obligations of the parties hereto.
6.5 Fees and Expenses.
(a) Except as expressly provided below in this Section 6.5, all fees, costs
and expenses incurred in connection with the Merger, this Agreement and the
transactions contemplated by this Agreement shall be paid by the party incurring
such fees, costs or expenses, whether or not the Merger is consummated.
(b) The Company shall pay, or cause to be paid, in same day funds to Parent
the amount of 2% of the aggregate Merger Consideration (the "Termination Fee")
under the circumstances and at the times set forth as follows:
(i) if the Company terminates this Agreement under Section 8.1(e), the
Company shall pay the Termination Fee simultaneously with such termination;
(ii) if Parent or Purchaser terminates this Agreement under Section
8.1(d) and in addition, if within six months after such termination the
Company shall enter into an Acquisition Agreement providing for a Company
Acquisition or the Company shall within such six months recommend to its
shareholder that they accept a Company Acquisition of the type referred to
in Section 6.5(d)(iii), the Company shall pay the Termination Fee
simultaneously with the entering into of such Acquisition Agreement or
making of such recommendation;
(iii) if, at the time of any termination of this Agreement pursuant to
Section 8.1(b)(i) (as a result of a failure to obtain Company Shareholder
Approval), or Section 8.1 (c), any person shall have publicly announced a
proposal to effect a Company Acquisition and if, within six months after
such termination, the Company shall enter into an Acquisition Agreement
providing for a Company Acquisition or the Company shall recommend to its
shareholders that they accept a Company Acquisition of the type referred to
in Section 6.5(d)(iii), the Company shall pay the Termination Fee
simultaneously with the entering into of such Acquisition Agreement or
making of such recommendation; and
(c) If this Agreement is terminated pursuant to Section 8.1(c) (i.e. breach
or failure by Company of representation, warranty or covenant), ("Company
Breach") then promptly, but in no event later than two Business Days after the
date of such termination, the Company shall pay to the Parent all of Parent's
(and its affiliates) reasonably documented out-of-pocket expenses paid to third
parties, up to an aggregate of $500,000, in connection with the transaction,
which amount when paid shall be credited against the Termination Fee if and when
any shall become due under Section 6.5(b)(iii) above; provided, however, the
payment of expenses pursuant to this Section 6.5(c) shall be made only in the
event a Company Breach arises out of the action or inaction of the Company, as
opposed to a Company Breach which arises out of the action or inaction of a
third party in respect to the Company.
(d) For purposes of this Agreement a "Company Acquisition" shall mean any
of the following transactions (i) a merger, consolidation, business combination
or a recapitalization pursuant to which the shareholders of the Company
immediately preceding such transaction hold less than 50% of the equity
interests in the surviving or resulting entity of such transaction (other than
the transactions contemplated by this Agreement); (ii) a sale by the Company of
assets (excluding the sale of the Company's products in the Ordinary Course of
Business) representing in excess of 50% of the fair market value of the Company
immediately prior to such sale or the issuance by the Company to any person or
group of shares representing in excess of 50% of the then outstanding shares of
capital stock of the Company (other than in connection with an underwritten
public offering); or (iii) the acquisition by any person or group, by way of a
tender offer, exchange offer, or by way of open market purchases of beneficial
ownership of 50% or more of the then outstanding shares of capital stock of the
Company.
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(e) If this Agreement is terminated pursuant to Section 8.1(f) (i.e. breach
or failure by Parent of representation, warranty or covenant) ("Parent Breach"),
then promptly, but in no event later than two Business Days after the date of
such termination, Parent or Gambrinus, shall pay to the Company all the
Company's reasonably documented out-of-pocket expenses paid to third parties, up
to an aggregate of $500,000, in connection with the transaction; provided,
however, the payment of expenses pursuant to this Section 6.5(e) shall be made
only in the event a Parent Breach arises out of the action or inaction of the
Parent, Purchaser or Gambrinus, as opposed to a Parent Breach which arises out
of the action or inaction of a third party in respect to the Parent, Purchaser
or Gambrinus.
6.6 Indemnification and Directors' and Officers' Insurance.
(a) From and after the consummation of the Offer, Gambrinus and Parent
will, and will cause the Surviving Corporation (or any successor to the
Surviving Corporation) to, fulfill and honor in all respects the obligations of
the Company pursuant to (i) each indemnification agreement in effect at such
time between the Company and each person who is or was a director or officer of
the Company at or any time prior to the Effective Time and (ii) any
indemnification provisions under the Company's Restated Articles of
Incorporation or Bylaws as each is in effect on the date of this Agreement (the
persons to be indemnified pursuant to the agreements or provisions referred to
in clauses (i) and (ii) of this Section 6.6(a) shall be referred to as,
collectively, the "Indemnified Parties"). The Articles of Incorporation and
Bylaws of the Surviving Corporation shall contain the provisions with respect to
indemnification and exculpation from liability set forth in the Company's
Articles of Incorporation and Bylaws on the date of this Agreement, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years after the Effective Time in any manner that would adversely affect the
rights thereunder of any Indemnified Party.
(b) Gambrinus, Parent or the Surviving Corporation shall maintain or extend
the Company's existing officers' and directors' liability insurance ("D&O
Insurance") for a period of not less than six years after the Effective Time;
provided, that Parent may substitute therefor policies of substantially
equivalent coverage and amounts, including extension or tail coverage policies,
containing terms substantially as favorable to such former directors or
officers; provided, further, that if the existing D&O Insurance expires, is
terminated or canceled during such period, Parent or the Surviving Corporation
will use all reasonable efforts to obtain substantially similar D&O Insurance
coverage; provided, further, however, that in no event shall Parent be required
to pay aggregate premiums for insurance under this Section 6.6(b) in excess of
150% of the average of the aggregate premiums paid by the Company in 1995, 1996
and 1997 on an annualized basis for such purpose (the "Average Premium"), which
true and correct amounts are set forth in Section 6.6(b) of the Company
Disclosure Schedule; and provided, further, that if Parent or the Surviving
Corporation is unable to obtain the amount of insurance required by this Section
6.6(b) for such aggregate premium, Gambrinus, Parent or the Surviving
Corporation shall obtain as much insurance as can be obtained for an annual
premium not in excess of 150% of the Average Premium.
(c) This Section 6.6 will survive the consummation of the Merger at the
Effective Time, is intended to be for the benefit of, and enforceable by, the
Company, Parent, the Surviving Corporation and each Indemnified Party and such
Indemnified Party's heirs and representatives, and shall be binding on all
successors and assigns of Parent and the Surviving Corporation.
6.7 Certain Litigation. The Company agrees that it shall not settle any
litigation commenced after the date hereof against the Company or any of its
directors by any shareholder of the Company relating to the Merger or this
Agreement without the prior written consent of Parent, which consent shall not
to be unreasonably withheld.
6.8 Purchaser Compliance. Gambrinus shall cause Parent and Purchaser to
comply with all of their respective obligations under this Agreement.
6.9 Shareholder Agreement. Each of the Persons identified in Section 6.9
of the Company Disclosure Schedule shall, contemporaneously with the execution
of this Agreement, enter into a Stockholder Agreement (the "Stockholder
Agreement") with the Parent and the Company, substantially in the form of
Exhibit "A" attached hereto.
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6.10 Interim Financial Statements. From the date of this Agreement until
the Effective Date, the Company shall prepare and submit to Parent within 15
Business Days after the end of each month, updated monthly or quarterly, as the
case may be, financial statements of the Company ("Interim Financial
Statements") certified in each case, on behalf of the Company, by the Company's
chief financial officer. The quarterly Interim Financial Statements shall comply
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, shall have
been prepared in accordance with GAAP (except as permitted by Form 10-Q of the
Exchange Act) applied on a consistent basis during the periods involved (except
as may be indicated in the notes thereto), and the monthly Interim Financial
Statements shall be prepared by the Company consistent with past practices and
in each case the Interim Financial Statements shall fairly present the financial
position of the Company and its consolidated Subsidiaries as of the dates
thereof and the results of its operations and cash flows for the periods then
ended (subject to normal year-end audit adjustments and the absence of
footnotes).
6.11 Stop Transfer Instruction. Promptly following the execution of this
Agreement, the Company shall give instructions to the transfer agent of the
Company Common Stock in order to implement the restrictions on transfer set
forth in Section 5 of Stockholder Agreements.
ARTICLE VII
CONDITIONS
7.1 Conditions to Parent and Purchaser's Obligation to Effect the
Merger. The respective obligation of each of Parent and Purchaser to effect the
Merger shall be subject to the satisfaction or waiver on or prior to the Closing
Date of the following conditions:
(a) the Company Shareholder Approval shall have been obtained; and the
number of Dissenting Shares shall not exceed 20% of the number of
outstanding shares of Company Common Stock;
(b) the applicable waiting period under the HSR Act shall have expired
or been terminated and the parties shall have received all other
authorizations, consents and approvals, if any, of any Governmental Entity;
(c) no suit, action or proceeding shall be instituted or pending
before any Governmental Entity (i) seeking to restrain or prohibit the
consummation of the Merger, (ii) seeking to prohibit or materially limit
the ownership or operation by the Company, Parent or any of Parent's
Subsidiaries of a material portion of the Business or assets of the Company
or Parent and its Subsidiaries, taken as a whole, or to compel the Company
or Parent to dispose of or hold separate any material portion of the
Business or assets of the Company or Parent and its Subsidiaries, taken as
a whole, in each case as a result of Merger or (iii) seeking to impose
material limitations on the ability of Parent or Purchaser to acquire or
hold, or exercise full rights of ownership of, any Shares to be accepted
for payment pursuant to the Merger; provided, however, that each of the
parties shall have used reasonable efforts to resolve any such suit, action
or proceeding as promptly as practicable without resulting in any of the
consequences referred to in clause (i) through (iii) above;
(d) there shall be no statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable
(pursuant to an authoritative interpretation by or on behalf of a
Governmental Entity) to the Merger, or any other action by any Governmental
Entity or court, other than the application to the Merger of applicable
waiting periods under the HSR Act, that is likely to result in any of the
consequences referred to in clauses (i) through (iii) of paragraph (c)
above; provided, however, that each of the parties shall have used
reasonable efforts to prevent the entry of any such judgments, injunctions,
or orders and to appeal as promptly as practicable any injunction or other
order that may be entered;
(e) the Company Board of Directors or any committee thereof shall not
have withdrawn or materially modified in a manner adverse to Parent or
Purchaser its recommendation of the Merger or its adoption of this
Agreement, or approved or recommended any Takeover Proposal;
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(f) the representations and warranties of the Company set forth in
this Agreement shall be true and correct (determined without regard to any
materiality qualifiers, including without limitation Material Adverse
Effect) as of the Closing Date, as though made on and as of the Closing
Date (provided that any such representation and warranty made as of a
specific date shall be true and correct as of such specific date), except
for such inaccuracies as individually or in the aggregate would not have a
Material Adverse Effect on the Company;
(g) the Company shall have performed in all material respects any
material obligation or complied in all material respects with any material
agreement or material covenant of the Company to be performed or complied
with by it under this Agreement;
(h) there shall not have occurred any one or more events which shall
have caused or are reasonably likely to cause a Material Adverse Effect on
the Company and such event or change has not been cured; and
(i) the Parent and Purchaser shall have received, in form and
substance reasonably satisfactory to the Parent and Purchaser, from the
Company:
(i) an officer's certificate to the effect set forth in Section
7.1(f) and (g) with respect to the representations, warranties,
agreements and covenants of the Company;
(ii) a certificate of the secretary of the Company respecting, and
to which is attached, (A) the Articles of Incorporation of the Company
and its Subsidiaries (certified by the Secretary of State of the State
of California), (B) the Bylaws of the Company and its Subsidiaries, and
(C) the resolutions of the board of directors and shareholders of the
Company approving this Agreement and the transactions contemplated
hereby;
(iii) a certificate of the secretary of the Company respecting the
incumbency and true signatures of the authorized officers who execute
this Agreement and any other closing documents on behalf of the Company;
(iv) for each of the Company and its Subsidiaries, a certificate,
dated as of a date not more than 10 days prior to the Effective Time,
duly issued by the appropriate Governmental Entity of the state of its
incorporation and, unless waived by the Parent and Purchaser, in each
other jurisdiction in which the Company and its Subsidiaries has
qualified to do business as a foreign corporation, showing it to be in
existence, good standing (if available in such state) and authorized to
do business in such jurisdiction, and that all state franchise and/or
income tax returns and taxes due by it for all periods prior to the
Effective Time have been filed and paid;
(v) an opinion dated as of the Effective Time, of Xxxxxx Xxxxxxx
Xxxxxxxx & Xxxxxx, counsel for the Company containing opinions and
qualifications usual and customary in a transaction of the type
contemplated by this Agreement and in form and substance reasonably
satisfactory to Parent; and
(vi) such other documents reasonably requested by the Parent and
Purchaser.
The foregoing conditions are for the sole benefit of Parent and Purchaser
and may, subject to the terms of this Agreement, be waived by, Parent and
Purchaser in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right, the waiver
of any such right with respect to particular facts and circumstances shall not
be deemed a waiver with respect to any other facts and circumstances and each
such right shall be deemed an ongoing right that may be asserted at any time and
from time to time.
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7.2 Conditions to Company's Obligation to Effect the Merger. The
obligation of the Company to effect the Merger shall be subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) the Company Shareholder Approval shall have been obtained;
(b) the applicable waiting period under the HSR Act shall have expired
or been terminated and the parties shall have received all other
authorizations, consents and approvals, if any, of any Governmental Entity;
(c) no suit, action or proceeding shall be instituted or pending
before any Governmental Entity (i) seeking to restrain or prohibit the
consummation of the Merger, (ii) seeking to prohibit or materially limit
the ownership or operation by the Company, Parent or any of Parent's
Subsidiaries of a material portion of the Business or assets of the Company
or Parent and its Subsidiaries, taken as a whole, or to compel the Company
or Parent to dispose of or hold separate any material portion of the
Business or assets of the Company or Parent and its Subsidiaries, taken as
a whole, in each case as a result of Merger or (iii) seeking to impose
material limitations on the ability of Parent or Purchaser to acquire or
hold, or exercise full rights of ownership of, any Shares to be accepted
for payment pursuant to the Merger; provided, however, that each of the
parties shall have used reasonable efforts to resolve any such suit, action
or proceeding as promptly as practicable without resulting in any of the
consequences referred to in clause (i) through (iii) above;
(d) there shall be no statute, rule, regulation, judgment, order or
injunction enacted, entered, enforced, promulgated or deemed applicable
(pursuant to an authoritative interpretation by or on behalf of a
Governmental Entity) to the Merger, or any other action by any Governmental
Entity or court, other than the application to the Merger of applicable
waiting periods under the HSR Act, that is likely to result in any of the
consequences referred to in clauses (i) through (iii) of paragraph (c)
above; provided, however, that each of the parties shall have used
reasonable efforts to prevent the entry of any such judgments, injunctions,
or orders and to appeal as promptly as practicable any injunction or other
order that may be entered;
(e) the representations and warranties of the Parent or Purchaser set
forth in this Agreement that are not qualified as to materiality or by
reference to a material adverse effect shall be true and correct in all
material respects and any other representations or warranties shall be true
and correct in all respects, as of the date of this Agreement and as of the
Closing Date;
(f) the Parent and Purchaser, respectively, shall have performed in
all material respects any material obligation or complied in all material
respects with any material agreement or material covenant of the Parent or
Purchaser to be performed or complied with by it under this Agreement; and
(g) the Company shall have received, in form and substance reasonably
satisfactory to the Company, from each of the Parent and Purchaser:
(i) an officer's certificate to the effect set forth in Section
7.2(e) and (f) with respect to the representations, warranties,
agreements and covenants of the Parent and Purchaser;
(ii) a certificate of the secretary of the Parent and Purchaser
respecting, and to which is attached, (A) the Articles of Incorporation
of the Parent and Purchaser (certified by the Secretary of State of the
State of Texas or California, as appropriate), (B) the Bylaws of the
Parent and Purchaser, and (C) the resolutions of the board of directors
of the Parent and Purchaser approving this Agreement and the
transactions contemplated hereby;
(iii) a certificate of the secretary of the Parent and Purchaser
respecting the incumbency and true signatures of the authorized officers
who execute this Agreement and any other closing documents on behalf of
the Parent or Purchaser;
(iv) for each of the Parent and Purchaser, a certificate, dated as
of a date not more than 10 days prior to the Effective Time, duly issued
by the appropriate Governmental Entity of the state
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of its incorporation and, unless waived by the Company, in each other
jurisdiction in which the Parent or Purchaser is required to be
qualified to do business as a foreign corporation, showing it to be in
existence, good standing (if available in such state) and authorized to
do business in such jurisdiction, and that all state franchise and/or
income tax returns and taxes due by it for all periods prior to the
Effective Time have been filed and paid;
(v) an opinion dated as of the Effective Time, of Xxxxxxx Xxxxxx
LLP, counsel for the Parent and Purchaser, containing opinions and
qualifications usual and customary in a transaction of the type
contemplated by this Agreement and in form and substance reasonably
satisfactory to the Company; and
(vi) such other documents reasonably requested by the Company.
The foregoing conditions are for the sole benefit of the Company and may,
subject to the terms of this Agreement, be waived by the Company in whole or in
part at any time and from time to time in their sole discretion. The failure by
the Company at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, the waiver of any such right with respect to
particular facts and circumstances shall not be deemed a waiver with respect to
any other facts and circumstances and each such right shall be deemed an ongoing
right that may be asserted at any time and from time to time.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated and the transactions
contemplated herein may be abandoned at any time prior to the Effective Time,
whether before or after approval of the terms of this Agreement by the
shareholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Merger has not been consummated prior to September 30,
1998 ("Cut-Off Date"); provided, however, that if the Merger shall not
have been consummated solely due to the waiting period (or any extension
thereof) under the HSR Act not having expired or been terminated, or due
to an action having been instituted by the Department of Justice or
Federal Trade Commission challenging or seeking to enjoin the
consummation of the Merger, then such date shall be extended to December
31, 1998; and provided, further, however that the right to terminate
this Agreement pursuant to this Section 8.1(b)(i) shall not be available
to any party whose failure to perform any of its obligations under this
Agreement results in the failure of such condition or if the failure of
such condition results from facts or circumstances that constitute a
willful breach of representation or warranty under this Agreement by
such party; or
(ii) if a court of competent jurisdiction or any other Governmental
Entity shall have issued an order, decree or ruling or taken any other
action permanently enjoining, restraining or otherwise prohibiting the
acceptance for payment of, or payment for, Shares pursuant to the Merger
and such order, decree or ruling or other action shall have become final
and nonappealable;
(c) by Parent prior to the Effective Time in the event of a breach or
failure to perform by the Company of any representation, warranty, covenant
or other agreement contained in this Agreement which breach or failure to
perform (i) results in the failure of a condition set forth in Section
7.1(f) or (g) above and (ii) is not reasonably capable of being cured prior
to the earlier of: (a) within 15 Business Days after the giving of written
notice thereof, or (b) 2 Business Days prior to the Cut-Off Date;
(d) by Parent or Purchaser at any time after the Shareholders' Meeting
in the event this Agreement and the Merger fail to receive Company
Shareholder Approval;
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(e) by the Company in accordance with Section 5.2, provided that it
has complied with all provisions thereof, including the notice provisions
therein, and that it complies with applicable requirements relating to the
payment (including the timing of any payment) of the Termination Fee as
provided in Section 6.5; or
(f) by the Company prior to the Effective Time in the event of a
breach or failure to perform in any material respect by Gambrinus, Parent
or Purchaser of any representation, warranty, covenant or other agreement
contained in this Agreement which breach or failure to perform (i) results
in the failure of a condition set forth in Section 7.2 (e) or (f) above and
(ii) is not reasonably capable of being cured prior to the earlier of: (a)
within 15 Business Days after the giving of written notice thereof or (b) 2
Business Days prior the Cut-Off Date.
8.2 Effect of Termination. In the event of a termination of this Agreement
by either the Company or Parent or Purchaser as provided in Section 8.1, this
Agreement shall forthwith become null and void and there shall be no liability
or obligation on the part of Parent, Purchaser or the Company or their
respective officers or directors, except with respect to the last sentence of
Section 6.2,. Section 6.5, this Section 8.2 and Article IX; provided, however,
that nothing herein shall relieve any party for liability for any wilful breach
hereof.
8.3 Amendment. This Agreement may be amended by the parties hereto, by
duly authorized action taken, at any time before or after obtaining the Company
Shareholder Approval, but after the Company Shareholder Approval, no amendment
shall be made which by law requires further approval by such shareholders
without obtaining such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
8.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, subject to Section 8.3, (i)
extend the time for the performance of any of the obligations or other acts of
the other parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto or
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those
rights.
ARTICLE IX
MISCELLANEOUS
9.1 Nonsurvival of Representations, Warranties and Agreements. None of the
representations and warranties in this Agreement or in any instrument, schedule
or other document delivered pursuant to this Agreement shall survive the
Effective Time. This Section 9.1 shall not limit any covenant or agreement of
the parties which by its terms contemplates performance after the Effective
Time, including Section 6.6.
9.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which is
confirmed), sent by overnight courier (providing proof of delivery) or mailed by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Parent, Purchaser or Gambrinus, to
00000 Xxx Xxxxx Xxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
Attention: Mr. Xxxxxx Xxxxxxx
Telecopy No.: (000) 000-0000
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with a copy to:
Xxxxxxx Xxxxxx L.L.P.
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Telecopy No.: (000) 000-0000
and
(b) if to the Company, to
Pete's Brewing Company
000 Xxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxx, Esq.
Xxxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
9.3 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
9.4 Entire Agreement; No Third Party Beneficiaries. This Agreement and the
Confidentiality Agreement (a) constitute the entire agreement among the parties
with respect to the subject matter hereof and thereof and supersede all other
prior agreements and understandings, both written and oral, among the parties or
any of them with respect to the subject matter hereof and thereof (provided that
the provisions of this Agreement shall supersede any conflicting provisions of
the Confidentiality Agreement), and (b) except as provided in Section 6.6
hereof, are not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
9.5 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California without regard to any
applicable principles of conflicts of law thereof.
9.6 Publicity. The initial press release with respect to the execution of
this Agreement shall be a joint press release acceptable to Parent and the
Company. Except as otherwise required by law, court process or the listing
agreement or listing rules of the NASDAQ National Market or as contemplated or
provided elsewhere herein, for so long as this Agreement is in effect, neither
the Company nor Parent shall, or shall permit any of its Subsidiaries to, issue
or cause the publication of any press release or other public announcement with
respect to the transactions contemplated by this Agreement without the consent
of the other party, which consent shall not be unreasonably withheld.
9.7 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties, except that Purchaser may assign, in its sole discretion, any or all of
its rights, interests and obligations hereunder to Parent or to any direct or
indirect wholly owned subsidiary of Parent. Subject to the preceding sentence
but without relieving any party hereof of any obligation hereunder, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
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9.8 Enforcement. The parties agree that irreparable damage would occur in
the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of California or in any California state court, this being
in addition to any other remedy to which they are entitled at law or in equity.
In addition, each of the parties hereto (a) consents to submit itself to the
personal jurisdiction of any court of the United States located in the State of
California or of any California state court in the event any dispute arises out
of this Agreement or the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or the transactions contemplated by
this Agreement in any court other than a court of the United States located in
the State of California or a California state court.
9.9 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible to the fullest extent permitted by applicable law
in an acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible.
IN WITNESS WHEREOF, Parent, Purchaser, Gambrinus and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
PBC HOLDINGS, INC.
By: /s/ XXXXX X. XXXX
------------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President
PBC ACQUISITION CORP.
By: /s/ XXXXX X. XXXX
------------------------------------
Name: Xxxxx X. Xxxx
Title: Vice President
THE GAMBRINUS COMPANY
By: /s/ XXXXX X. XXXX
------------------------------------
Name: Xxxxx X. Xxxx
Title: Finance Director, Treasurer
PETE'S BREWING COMPANY
By: /s/ XXXXXXX X. XXXXXX
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chief Executive Officer
30
34
EXHIBIT A
STOCKHOLDER AGREEMENT
AGREEMENT dated as of May 22, 1998 between PBC Holdings, Inc., a Texas
corporation ("Parent") and ______________ (the "Stockholder").
W I T N E S S E T H:
WHEREAS, immediately prior to the execution of this Agreement, Parent,
Pete's Brewing Company, a California corporation (the "Company"), and PBC
Acquisition Corp., a California corporation and wholly-owned subsidiary of
Parent ("Merger Subsidiary"), have entered into an Agreement and Plan of Merger
(as such agreement may hereafter be amended from time to time, the "Merger
Agreement"), pursuant to which Merger Subsidiary will be merged with and into
the Company (the "Merger"); and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has requested that the Stockholder agree, and the Stockholder
has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound hereby, agree as
follows:
SECTION 1. CERTAIN DEFINITIONS. Capitalized terms used and not defined
herein have the respective meanings ascribed to them in the Merger Agreement.
For purposes of this Agreement:
(a) "Affiliate" shall mean, when used with respect to any Person, any
other Person directly or indirectly controlling, controlled by or under common
control with such Person( and with respect to any individual Person shall
include such individual's spouse, parents or siblings). As used in this
definition, the term "control" means possession, directly or indirectly, of the
power to direct or control the direction of management or policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
(b) "Beneficially Owned" or "Beneficial Ownership" with respect to any
securities shall mean having "beneficial ownership" of such securities (as
determined pursuant to Rule 13d-3 under the Exchange Act), including pursuant to
any agreement, arrangement or understanding, whether or not in writing. Without
duplicative counting of the same securities by the same holder, securities
Beneficially Owned by a Person shall include securities Beneficially Owned by
all other Persons with whom such Person would constitute a "group" within the
meaning of Section 13(d) of the Exchange Act with respect to securities of the
same issuer.
(c) "Company Common Stock" shall mean at any time the common stock, no
par value, of the Company.
35
(d) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(e) "Existing Shares" shall mean the shares of Company Common Stock
Beneficially Owned by the Stockholder on the date hereof.
(f) "HSR Act" shall mean the Xxxx Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
(g) "Person" shall mean an individual, corporation, limited liability
company, partnership, joint venture, association, trust, unincorporated
organization or other entity.
(h) "Purchaser" shall mean PBC Acquisition Corp., a Texas corporation
and a wholly-owned subsidiary of Parent.
(i) "Representatives" shall have the meaning set forth in Section 3(f)
hereof.
(j) "Securities Act" shall mean the Securities Act of 1933, as amended.
(k) "Shares" shall mean the Existing Shares and any shares of Company
Common Stock and/or other equity securities of the Company acquired by the
Stockholder in any capacity after the date hereof and prior to the termination
of this Agreement, whether upon the exercise of options, warrants or rights, the
conversion or exchange of convertible or exchangeable securities, or by means of
purchase, dividend, distribution, split-up, recapitalization, combination,
exchange of shares or the like, gift, bequest, inheritance or as a successor in
interest in any capacity or otherwise Beneficially Owned by the Stockholder.
(l) "Takeover Proposal" shall mean any inquiry, proposal or offer from
any person relating to any direct or indirect acquisition or purchase of a
substantial amount of assets of the Company and its Subsidiaries taken as a
whole (other than inventory in the Ordinary Course of Business), or more than a
20% interest in the total voting securities of the Company or any tender offer
or exchange offer that if consummated would result in any person beneficially
owning 20% or more of any class of equity securities of the Company or any
merger, consolidation, business combination, sale of substantially all assets,
recapitalization, liquidation, dissolution or similar transaction involving the
Company, other than the transactions contemplated by this Agreement.
SECTION 2. PROVISIONS CONCERNING COMPANY COMMON STOCK.
(a) Voting of Company Common Stock. The Stockholder hereby agrees that
during the period commencing on the date hereof and continuing until the
termination of this Agreement, at any meeting (whether annual or special and
whether or not an adjourned or postponed meeting) of the holders of Company
Common Stock, however called, or in connection with any written consent of the
holders of Company Common Stock, the Stockholder will appear at the meeting or
otherwise cause the Shares to be counted as present thereat for purposes of
establishing a quorum and the Stockholder shall
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vote or consent (or cause to be voted or consented) the Shares held of record or
Beneficially Owned by the Stockholder, whether issued, heretofore owned or
hereafter acquired, (i) in favor of the Merger, the execution and delivery by
the Company of the Merger Agreement and the approval and adoption of the terms
thereof and each of the other actions contemplated by the Merger Agreement and
this Agreement and any actions required in furtherance thereof and hereof; (ii)
against any action or agreement that would result in a breach in any respect of
any covenant, representation or warranty or any other obligation or agreement of
the Company under the Merger Agreement or this Agreement (after giving effect to
any materiality or similar qualifications contained therein); and (iii) except
as otherwise agreed to in writing in advance by Parent, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement): (A) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or its
subsidiaries; (B) a sale, lease or transfer of a material amount of assets of
the Company or its subsidiaries, or a reorganization, recapitalization,
dissolution or liquidation of the Company or its subsidiaries; (C) (1) any
change in a majority of the persons who constitute the Board of Directors of the
Company; (2) any change in the present capitalization of the Company or any
amendment of the Company's articles of incorporation or bylaws; (3) any other
material change in the Company's corporate structure or business; or (4) any
other action involving the Company or its subsidiaries which is intended, or
could reasonably be expected, to impede, interfere with, delay, postpone, or
materially adversely affect the Merger and the transactions contemplated by this
Agreement and the Merger Agreement. Such Stockholder shall not enter into any
agreement or understanding with any Person or entity the effect of which would
be inconsistent with or in violation of the provisions and agreements contained
in this Section 2.
(b) Grant of Irrevocable Proxy; Appointment of Proxy.
(i) Subject to Section 7, the Stockholder hereby irrevocably
grants to and appoints Xxxxx X. Xxxx (as Vice President) and Xxxxxxx Xxxxxxxxxx
(as Secretary) or either of them, in their respective capacities of officers of
Parent, and any individual who shall hereafter succeed to any of such office of
Parent, and each of them individually, such Stockholder's proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of such Stockholder, to vote such Stockholder's Shares, or grant a
consent or approval in respect of the Shares in favor of the various
transactions contemplated by the Merger Agreement and against any proposal for
Company Acquisition.
(ii) Subject to Section 7, the Stockholder represents that any
proxies heretofore given in respect of such Stockholder's Shares are not
irrevocable, and that any such proxies are hereby revoked.
(iii) The Stockholder understands and acknowledges that Parent is
entering into the Merger Agreement in reliance upon the Stockholder's execution
and delivery of this Agreement. The Stockholder hereby affirms that the
irrevocable proxy set forth in this Section 2(b) is given in connection with the
execution of the Merger Agreement and that such irrevocable proxy is given to
secure the performance of the duties of the Stockholder under this Agreement.
The Stockholder hereby further affirms that the irrevocable proxy is coupled
with an interest and, except as provided under Section 7, may under no
circumstances be revoked. The Stockholder hereby ratifies and confirms all that
such
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37
irrevocable proxy may lawfully do and caused to be done in accordance with
the terms of this Agreement prior to termination of this Agreement.
(c) OPTIONS. In the event the Stockholder holds Options or
Warrants to acquire shares of Company Common Stock, the Stockholder shall, if
requested by the Company, consent to the cancellation of such Options or
Warrants in exchange for a cash payment in accordance with the terms of the
Merger Agreement and shall execute all appropriate documentation in connection
with such cancellation.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER. The
Stockholder hereby represents and warrants to Parent as follows:
(a) Ownership of Shares. The Stockholder is the record and Beneficial
Owner of Existing Shares consisting of _______ shares of Company Common Stock.
On the date hereof, the Existing Shares constitute all of the Shares owned of
record or Beneficially Owned by the Stockholder. The Stockholder has sole voting
power and sole power to issue instructions with respect to the matters set forth
in Section 2 hereof, sole power of disposition, sole power of conversion, sole
power to demand appraisal rights and sole power to agree to all of the matters
set forth in this Agreement, in each case with respect to all of the Existing
Shares with no limitations, qualifications or restrictions on such rights,
subject to applicable securities laws and the terms of this Agreement. Upon
consummation of the Merger, the Stockholder will have sole voting power and sole
power to issue instructions with to the matters set forth in Section 4 hereof,
sole power of disposition, sole power of conversion, sole power to demand
appraisal rights and sole power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of the shares of Company Common
Stock it holds of record or Beneficially Owns with no limitations,
qualifications or restrictions on such rights, subject to applicable securities
laws and the terms of this Agreement.
(b) Corporate Authorization. The Stockholder has the legal capacity,
power and authority to enter into and perform all of the Stockholder's
obligations under this Agreement. This Agreement has been duly and validly
executed and delivered by the Stockholder and constitutes a valid and binding
agreement enforceable against the Stockholder in accordance with its terms
except to the extent (i) such enforcement may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors rights and (ii) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
(c) No Conflicts. Except for filings, authorizations, consents and
approvals as may be required under the HSR Act, the Exchange Act, and the
Securities Act, (i) no filing with, and no permit, authorization, consent or
approval of, any state or federal governmental body or authority is necessary
for the execution and delivery of this Agreement by the Stockholder and the
consummation by the Stockholder of the transactions contemplated hereby and (ii)
none of the execution and delivery of this Agreement by the Stockholder, the
consummation by the Stockholder of the transactions contemplated hereby or
compliance by the Stockholder with any of the provisions hereof shall (A) if
Stockholder is
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a corporation, limited liability company, limited partnership or other entity,
conflict with or result in any breach of the organizational documents of the
Stockholder, (B) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or acceleration)
under any of the terms, conditions or provisions of any note, loan agreement,
bond, mortgage, indenture, license, voting agreement, shareholder agreement,
voting trust, contract, commitment, arrangement, understanding, agreement or
other instrument of obligation of any kind to which the Stockholder is a party
or by which the Stockholder of any of its properties or assets may be bound, or
(C) violate any order, writ, injunction, decree, judgment, statute, law, rule or
regulation applicable to the Stockholder or any of its properties or assets.
(d) No Encumbrances. Except as applicable in connection with the
transactions contemplated hereby, the Shares and the certificates representing
such Shares are now, and at all times during the term hereof, will be, held by
the Stockholder, or by a nominee or custodian for the benefit of the
Stockholder, free and clear of all liens, claims, security interests, proxies,
voting trusts or agreements, understandings or arrangements or any other
encumbrances whatsoever, except for any such encumbrances or proxies arising
hereunder.
(e) No Finder's Fees. Other than as contemplated by the Merger Agreement
with respect to fees payable by the Company, no broker, investment banker,
financial advisor or other Person is entitled to any broker's, finder's,
financial advisor's or other similar fee or commission in connection with the
transactions contemplated hereby based upon arrangements made by or on behalf of
the Stockholder.
(f) Reliance by Parent. The Stockholder understands and acknowledges
that Parent is entering into the Merger Agreement in reliance upon the
Stockholder's execution and delivery of this Agreement.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PARENT. Parent hereby
represents and warrants to the Stockholder as follows:
(a) Organization. Parent is a corporation duly organized, validly
existing and in good standing under the laws of the State of Texas, has all
requisite corporate power and authority to execute and deliver this Agreement
and perform its obligations hereunder. The execution and delivery by Parent of
this Agreement and the performance by Parent of its obligations hereunder have
been duly and validly authorized by the Board of Directors of Parent and no
other corporate proceedings on the part of Parent are necessary to authorize the
execution, delivery or performance of this Agreement or the consummation of the
transactions contemplated hereby.
(b) Corporate Authorization. This Agreement has been duly and validly
executed and delivered by Parent and constitutes a valid and binding agreement
of Parent enforceable against Parent in accordance with its terms except to the
extent (i) such enforcement may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors rights and (ii) the remedy of specific
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performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought.
(c) No Conflicts. Except for filings, authorizations, consents and
approvals as may be required under the HSR Act, the Exchange Act and the
Securities Act, (i) no filing with, and no permit, authorization, consent or
approval of, any state or federal governmental body or authority is necessary
for the execution and delivery of this Agreement by Parent and the consummation
by Parent of the transactions contemplated hereby and (ii) none of the execution
and delivery of this Agreement by Parent, the consummation by Parent of the
transactions contemplated hereby or compliance by Parent with any of the
provisions hereof shall (A) conflict with or result in any breach of the
certificate of incorporation or by-laws of Parent, (B) result in a violation or
breach of, or constitute (with or without notice or lapse of time or both) a
default (or give rise to any third-party right of termination, cancellation,
material modification or acceleration) under any of the terms, conditions or
provisions of any note, loan agreement, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or other instrument
or obligation of any kind to which Parent is a party or its properties or assets
may be bound, or (C) violate any order, writ, injunction, decree, judgment,
statute, law, rule or regulation applicable to Parent or any of its properties
or assets.
(d) No Finder's Fee. Except for Chase Securities Inc. whose fees will be
paid by Parent, no broker, investment banker, financial advisor or other person
is entitled to any broker's, finder's, financial advisor's or other similar fee
or commission in connection with the transactions contemplated hereby based upon
arrangements made by or on behalf of Parent.
SECTION 5. COVENANTS OF THE STOCKHOLDER. The Stockholder hereby
represents and warrants to Parent as follows:
(a) No Solicitation.
(i) From the date of this Agreement until the earlier of
termination of this Agreement or the Effective Time, the Stockholder shall not,
nor shall it authorize or permit its Affiliates, the Company or any of its
officers, directors or employees or any investment banker, financial advisor,
attorney, accountant or other representative or agent (herein collectively
referred to as "Representatives") to, directly or indirectly, (i) solicit,
initiate or knowingly encourage the submission of any Takeover Proposal (as
defined below) or (ii) participate in any discussions or negotiations regarding,
or furnish to any person any nonpublic information with respect to the Company,
or take any other action designed or reasonably likely to facilitate any
inquiries or the making of any proposal that constitutes a Takeover Proposal.
(ii) The Stockholder shall, or shall cause the Company to,
promptly advise Parent orally and in writing of any request for nonpublic
information (except in the Ordinary Course of Business and not in connection
with a possible Takeover Proposal) or of any Takeover Proposal known to it, the
material terms and conditions of such request or Takeover Proposal and the
identity of the person making such request or Takeover Proposal. The Company
will promptly inform Parent of any
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change in the material terms and conditions (including amendments or proposed
amendments) of any such request or Takeover Proposal.
(iii) The Stockholder shall, and shall cause its Representatives
to, immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted prior to the date of this
Agreement with respect to any Takeover Proposal.
(iv) Notwithstanding the restrictions set forth in this Section
5(a), each of the Company or any person who is an officer or director of the
Company may take any action consistent with the terms of the Merger Agreement.
(b) Restriction on Transfer, Proxies; Non-Interference. The Stockholder
shall not, directly or indirectly: (i) offer for sale, sell, transfer, tender,
pledge, encumber (other than by operation of law), assign or otherwise dispose
of, or enter into any contract, option or other arrangement or understanding
with respect to or consent to the offer for sale, sale, transfer, tender,
pledge, encumbrance, assignment or other disposition of, any or all of the
Shares or any interest therein; (ii) except as contemplated by this Agreement,
grant any proxies or powers of attorney, deposit the Shares into a voting trust
or enter into a voting agreement with respect to the Shares; or (iii) take any
action that would make any representation or warranty of the Stockholder
contained herein untrue or incorrect or would result in a breach by the
Stockholder of its obligations under this Agreement or a breach by the Company
of its obligations under the Merger Agreement or the effect of which would be
inconsistent or violative of any provision or agreement contained in this
Agreement.
(c) Waiver of Appraisal Rights. The Stockholder hereby waives any rights
of appraisal or rights to dissent from the Merger that the Stockholder may have.
SECTION 6. STOP TRANSFER; LEGEND.
(a) The Stockholder agrees with, and covenants to, Parent that the
Stockholder shall not request that the Company register the transfer (book-entry
or otherwise) of any certificate or uncertificated interest representing any of
the Shares unless such transfer is made in compliance with this Agreement.
(b) In the event of a stock dividend or distribution, or any change in
the Company Common Stock by reason of any stock dividend, split-up,
recapitalization, combination, exchange of shares or the like other than
pursuant to the Merger, the term "Shares" shall be deemed to refer to and
include the shares of Company Common Stock as well as all such stock dividends
and distributions and any shares into which or for which any or all of the
Shares may be changed or exchanged and appropriate adjustments shall be made to
the terms and provisions of this Agreement.
(c) In the event the Company shall not have issued a stop transfer order
with respect to the transfer of the Shares within 5 days from the date hereof,
the Stockholder shall promptly surrender to
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the Company all certificates representing the Shares, and the Company shall
place the following legend on such certificates:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO A STOCKHOLDER AGREEMENT DATED AS OF
MAY 22, 1998 BY AND BETWEEN PBC HOLDINGS, INC. AND
________________ WHICH AMONG OTHER THINGS RESTRICTS
THE TRANSFER AND VOTING THEREOF.
SECTION 7. TERMINATION. The covenants and agreements contained in this
Agreement with respect to the Shares, including but not limited to the grant of
the irrevocable proxy set forth in Section 2(b) hereof, shall terminate upon the
earlier to occur of (i) the Effective Time and (ii) the termination of the
Merger Agreement in accordance with its terms.
SECTION 8. CONFIDENTIALITY. The Stockholder recognizes that successful
consummation of the transactions contemplated by this Agreement may be dependent
upon confidentiality with respect to the matters referred to herein. In this
connection, pending public disclosure thereof, the Stockholder hereby agrees not
to disclose or discuss such matters with anyone not a party to this Agreement
(other than to the Company and to its and the Company's counsel and advisors)
without the prior written consent of Parent, except for filings required
pursuant to the HSR Act, the Exchange Act and the Securities Act and the rules
and regulations thereunder or disclosures its counsel advises are necessary in
order to fulfill its obligations imposed by law, in which event the Stockholder
shall give prior notice of such disclosure to Parent as promptly as practicable
so as to enable Parent to seek a protective order from a court of competent
jurisdiction with respect thereto.
SECTION 9. DISCLOSURE. The Stockholder hereby agrees to permit Parent,
Merger Subsidiary and the Company to publish and disclose in the Proxy Statement
(including all documents, exhibits and schedules filed with the SEC), and any
press release or other disclosure documents which counsel of Parent, Merger
Subsidiary or the Company advises are necessary in connection with the Merger
and any transactions related thereto, the Stockholder's identity and ownership
of Company Common Stock or shares of Company Common Stock, as the case may be,
and the nature of its commitments, arrangements and understandings under this
Agreement.
SECTION 10. MISCELLANEOUS.
(a) Entire Agreement. This Agreement and the Merger Agreement referred
to therein constitute the entire agreement between the parties with respect to
the subject matter hereof and thereof and supersedes all other prior agreements
and understandings, both written and oral, between the parties with respect to
the subject matter hereof and thereof.
(b) Binding Agreement. The Stockholder agrees that this Agreement and
the obligations hereunder shall attach to the Shares and shall be binding upon
any person to which legal or Beneficial Ownership of such Shares shall pass,
whether by operation of law or otherwise, including, without
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limitation, the Stockholder's heirs, distributees, guardians, administrators,
executors, legal representatives, or successors, partners or other transferees
(for value or otherwise) and any other successors in interest. Notwithstanding
any transfer of Shares, the transferor shall remain liable for the performance
of all obligations under this Agreement of the transferor. Nothing in this
clause (b) shall permit any transfer of Shares otherwise prohibited by the
provisions of this Agreement.
(c) Assignment. No party may assign any of its rights or obligations
hereunder, by operation of law or otherwise, without the prior written consent
of the other party; provided that Parent may assign, in its sole discretion, its
rights and obligations hereunder to any direct or indirect wholly owned
subsidiary of Parent, but no such assignment shall relieve Parent of its
obligations hereunder if such assignee does not perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated, except upon
the execution and delivery of a written agreement executed by the parties
hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if given) by hand delivery or telecopy (with a
confirmation copy sent for next-day delivery via courier service, such as
Federal Express), or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to Stockholder:
____________________
__________________________
Attention: ______________
Telephone: ______________
Telecopy No.: ______________
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxx, Esq.
Telephone: (000) 000-0000
Telecopy No.: (000) 000-0000
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If to Parent:
PBC Holdings, Inc.
00000 Xxx Xxxxx Xxx., Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxxx Xxxxxxx
Telephone: Separately supplied
Telecopy No.:___________________
with a copy to:
Xxxxxxx Xxxxxx, L.L.P.
000 X. Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy No.: (000) 000-0000
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein.
(g) Specific Performance. Each of the parties hereto recognizes and
acknowledges that a breach by it of any covenants or agreements contained in
this Agreement will cause the other party to sustain damages for which it would
not have an adequate remedy at law for money damages, and therefore each of the
parties hereto agrees that in the event of any such breach the aggrieved party
shall be entitled to the remedy of specific performance of such covenants and
agreements and injunctive and other equitable relief in addition to any other
remedy to which it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise of any thereof by any
party shall not preclude the simultaneous or later exercise of any such right,
power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist
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upon compliance by any other party hereto with its obligations hereunder, and
any custom or practice of the parties at variance with the terms hereof, shall
not constitute a waiver by such party of its right to exercise any such or other
right, power or remedy or to demand such compliance.
(j) Third-Party Beneficiaries. The Company shall be a third party
beneficiary of, and entitled to enforce, the provisions contained in Section
3(i) and Section 9 of this Agreement. Except for such Sections 3(i) and 9
hereof, this Agreement is not intended to be for the benefit of, and shall not
be enforceable by, any Person who or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of California, without giving effect to
the principles of conflicts of law thereof.
(l) Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of California or in any California state court, this being
in addition to any other remedy to which they are entitled at law or in equity.
In addition, each party (a) consents to submit itself to the personal
jurisdiction of any court of the United States or any California state court
located in Santa Xxxxx County, California in the event any dispute arises out of
this Agreement or the transactions contemplated by this Agreement, (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court and (c) agrees that it will not
bring any action relating to this Agreement or the transactions contemplated by
this Agreement in any court other than a court of the United States located in
Santa Xxxxx County, California.
(m) Stockholder Capacity. No person executing this Agreement who is or
becomes during the term hereof a director of the Company makes any agreement or
understanding herein in his or her capacity as such director.
(n) Further Assurances. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further lawful action as may be
necessary or desirable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement.
(o) Descriptive Headings. The descriptive headings used herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
(p) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed to be an original, but all of which, taken together,
shall constitute one and the same Agreement.
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45
IN WITNESS WHEREOF, Parent and the Stockholder have caused this
Agreement to be duly executed as of the day and year first above written.
PBC HOLDINGS, INC.
By:_____________________________________
Name: Xxxxx X. Xxxx
Title: Vice President
STOCKHOLDER
By:_____________________________________
Name: _________________
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