EXHIBIT 10.1
EXCHANGE AND RECAPITALIZATION AGREEMENT
THIS EXCHANGE AND RECAPITALIZATION AGREEMENT ("Agreement"), dated as of
June 30, 2004, and signed at 8:00 p.m., Seattle, Washington time on June 30,
2004 between Redhook Ale Brewery, Incorporated, a Washington corporation having
an office at 00000 XX 000xx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxxx 00000 ("Redhook"),
and Anheuser-Xxxxx, Incorporated, a Missouri corporation having an office at Xxx
Xxxxx Xxxxx, Xx. Xxxxx, Xxxxxxxx 00000 ("ABI").
W I T N E S S E T H:
WHEREAS, ABI or its designee currently holds 1,289,872 shares of Series
B Preferred Stock, par value $0.005 per share, of Redhook ("Series B Preferred
Stock") and 953,470 shares of Common Stock, par value $0.005 per share, of
Redhook ("Common Stock").
WHEREAS, ABI and Redhook desire that, upon the terms and conditions
hereinafter provided, ABI shall transfer all shares of Series B Preferred Stock
to Redhook in exchange for Redhook's issuance and delivery to ABI of an
additional 1,808,243 shares of Common Stock and a payment by Redhook to ABI,
such transfer, exchange and payment to qualify as a tax-free recapitalization
under IRC Section 368(a)(1)(E).
NOW, THEREFORE, in consideration of the premises and the covenants
hereinafter contained and intending to be legally bound hereby, it is agreed as
follows:
I. DEFINITIONS
"ABI Competitor" shall mean any person that, together with the
Affiliates of such Person, has annual alcohol beverage sales of $100,000,000 or
more in North America (such number to be adjusted annually in proportion to
changes in the Consumer Price Index from the date hereof).
"Affiliate" shall mean, with respect to any Person, (i) each Person
that, directly or indirectly, owns or controls, whether beneficially, or as a
trustee, guardian or other fiduciary, 5% or more of the Stock having ordinary
voting power in the election of directors of such Person, or (ii) each Person
that controls, is controlled by or is under common control with such Person or
any Affiliate of such Person. For the purpose of this definition, "control" of a
Person shall mean the possession, directly or indirectly, of the power to direct
or cause the direction of its management or policies, whether through the
ownership of voting securities, by contract or otherwise. The term "Affiliated"
shall have meanings correlative to the foregoing.
"A-BC" shall mean Anheuser-Xxxxx Companies, Inc., a Delaware
corporation and the parent corporation of ABI.
"Business Day" shall mean a day of the year on which banks are not
required or authorized to close in the States of Missouri, New York and
Washington.
"CBA" shall mean Craft Brands Alliance LLC.
"CBA Distribution Agreement shall mean the Master Distributor Agreement
between Craft Brands Alliance LLC and ABI dated July 1, 2004, as such agreement
may be amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof.
"Charges" shall mean all federal, state, county, city, municipal,
local, foreign or other governmental (including, without limitation, PBGC)
taxes, levies, assessments, charges, liens, claims or encumbrances upon or
relating to (i) Redhook's or any of its Subsidiaries' employees, payroll, income
or gross receipts, (ii) Redhook's or any of its Subsidiaries' ownership or use
of any of its assets, or (iii) any other aspect of Redhook's or any of the
Subsidiaries' business.
"Closing" shall have the meaning set forth in Section 2.2.
"Closing Date" shall have the meaning set forth in Section 2.2.
"Common Stock" shall initially mean the common stock, par value $0.005
per share, of Redhook and shall thereafter mean any shares of any class or
classes of capital stock resulting from any reclassification or
reclassifications thereof or otherwise issued and which have no preference in
respect of dividends or of amounts payable in the event of voluntary or
involuntary liquidation, dissolution or winding up of Redhook and which are not
subject to redemption by Redhook.
"Confidential Information" shall have the meaning set forth in Section
8.10.
"Distribution Agreement" shall mean the Master Distributor Agreement
between Redhook and ABI, dated as of the Closing Date and substantially in the
form attached hereto as Exhibit A, as such agreement may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
"Environmental Laws" shall mean all federal, state and local laws,
statutes, ordinances and regulations, now or hereafter in effect, and in each
case as amended or supplemented from time to time, and any judicial or
administrative interpretation thereof, including any applicable judicial or
administrative order, consent decree or judgment, relative to the applicable
property, relating to the regulation and protection of human health, safety, the
environment and natural resources (including, without limitation, ambient air,
surface water, groundwater, wetlands, land surface or subsurface strata,
wildlife, aquatic species and vegetation). Environmental Laws include but are
not limited to the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended (42 U.S.C. ss.9601 ET SEQ.) ("CERCLA"); the
Hazardous Material Transportation Act, as amended (49 U.S.C. ss.1801 ET SEQ.);
the Federal Insecticide, Fungicide, and Rodenticide Act, as amended (7 U.S.C.
ss.136 ET SEQ.); the Resource Conservation and Recovery Act, as amended (42
U.S.C. ss.6901 ET SEQ.) ("RCRA"); the Toxic Substance Control Act, as amended
(15 U.S.C. ss.2601 ET SEQ.); the Clean Air Act, as amended (42 U.S.C. ss.740 ET
SEQ.); the Federal Water Pollution Control Act, as amended (33 U.S.C. ss.1251 ET
SEQ.); the Occupational Safety and Health Act, as amended (29 U.S.C. ss.651 ET
SEQ.) ("OSHA"); and the Safe Drinking Water Act, as amended (42 U.S.C. ss.300f
ET SEQ.), and all analogous state and local counterparts or equivalents and any
transfer of ownership notification or approval statutes.
2
"ERISA" shall mean the Employee Retirement Income Security Act of 1974
(or any successor legislation thereto), as amended from time to time and any
regulations promulgated thereunder.
"ERISA Affiliate" shall mean, with respect to Redhook, any trade or
business (whether or not incorporated) under common control with Redhook and
which, together with Redhook, are treated as a single employer within the
meaning of Section 414 (b), (c), (m) or (o) of the IRC.
"Facility" shall have the meaning set forth in Section 4.10.
"Fiscal Year" shall mean the calendar year. Subsequent changes of the
fiscal year of Redhook shall not change the meaning of the term "Fiscal Year,"
unless ABI shall consent in writing to such changes.
"Fully Diluted Basis" shall mean that, for purposes of calculating any
Person's percentage ownership of the Common Stock, all convertible or
exchangeable securities shall be deemed to have been converted and exchanged
into the shares of Common Stock into which they are convertible and exchangeable
and all employee stock options with an exercise price of not more than $2.165
per share shall be assumed to be exercised into the shares of Common Stock into
which they, pursuant to their terms, may then or thereafter upon the passage of
time be exercised.
"GAAP" shall mean generally accepted accounting principles in the
United States of America as in effect from time to time.
"Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof, and any agency, department or other
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Group" shall mean any Group as defined by Sections 13(d)(3) and
14(d)(2) of the Securities Exchange Act.
"Hazardous Material" shall mean any substance, chemical, compound,
product, solid, gas, liquid, waste, byproduct, pollutant, contaminant or
material which is hazardous or toxic, and includes, without limitation, (a)
asbestos, polychlorinated biphenyls and petroleum (including crude oil or any
fraction thereof) and (b) any such material classified or regulated as
"hazardous," "dangerous" or "toxic" or like terms pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. ss.ss.9601
ET SEQ., Solid Waste Disposal Act, as amended by the Resource Conservation and
Recovery Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C.
ss.ss.6901 ET SEQ., Federal Water Pollution Control Act, as amended by the Clean
Water Act of 1977, 33 U.S.C. ss.ss.1251 ET SEQ., Clean Air Act of 1966, as
amended, 42 U.S.C. ss.ss.7401 ET SEQ., Toxic Substances Control Act of 1976, 15
U.S.C. ss.ss.2601 ET SEQ., or Hazardous Materials Transportation Act, 49 U.S.C.
App. ss.ss.1801 ET SEQ. and all analogous state and local counterparts or
equivalents.
3
"Independent Directors" shall mean those members of the Board of
Directors of Redhook that are deemed to be independent of Redhook under the
rules promulgated by NASDAQ Stock Market, Inc.
"Initial Registration Rights Agreement" shall mean the Registration
Rights Agreement dated as of October 18, 1994 between Redhook and ABI, as such
agreement has been amended and supplemented to the date hereof.
"Investment Agreement" shall mean the Investment Agreement dated as of
October 18, 1994 between Redhook and ABI, as such agreement has been amended and
supplemented to the date hereof.
"Involuntary Acquisition" shall mean, with respect to any Person, the
purchase or acquisition of Stock by such Person as a result of any stock split,
dividend, distribution, rights offering by Redhook or any Subsidiary of Redhook,
recapitalization of Redhook, reclassification or other change in the terms of
the Stock, or conversion or exchange of, or adjustment in the conversation or
exchange ratio of any exercisable, convertible or exchangeable security held by
such Person or any other Person.
"IRC" shall mean the Internal Revenue Code of 1986, as amended, and any
successor thereto.
"IRS" shall mean the Internal Revenue Service, or any successor
thereto.
"Lien" shall mean any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any lease or title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing, and the filing
of, or agreement to give, any financing statement perfecting a security interest
under the Uniform Commercial Code or comparable law of any jurisdiction).
"Material Adverse Effect" shall mean a material adverse effect on the
business, assets, operations, affairs or financial or other condition of Redhook
and its Subsidiaries taken as a whole.
"Material Contracts" shall mean (i) all of Redhook's contracts,
agreements, leases or other instruments to which Redhook is a party or by which
Redhook or its properties are bound, which involves payments by or to Redhook of
more than $500,000, (ii) all of Redhook's loan agreements, bank lines of credit
agreements, indentures, mortgages, deeds of trust, pledge and security
agreements, factoring agreements, conditional sales contracts, letters of credit
or other debt instruments, (iii) all operating or capital leases for equipment
to which Redhook is a party which involves aggregate payments by or to Redhook
of more than $500,000, (iv) all noncompetition and similar agreements to which
Redhook is a party, (v) all guarantees by Redhook, (v) all contracts and
agreements between Redhook and the wholesalers of its products, (vi) all
contracts relating to the license of trademarks or other intellectual property,
other than non-exclusive licenses of which Redhook is the licensee, and (vii)
all contracts relating to the brewing or distribution of malt beverage products
and (viii) all other contracts, oral or written, that Redhook considers to be
material to the business, assets, operations, prospects or financial or other
condition of Redhook and its Subsidiaries taken as a whole.
4
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
Section 4001 (a)(3) of ERISA, and to which Redhook, any of its Subsidiaries or
any ERISA Affiliate is making, is obligated to make, has made or been obligated
to make, contributions on behalf of participants who are or were employed by any
of them.
"Original Distribution Agreement" shall mean the Master Distributor
Agreement between Redhook and ABI dated October 18, 1994, as amended or
modified.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
successor thereto.
"Pension Plan" shall mean an employee pension benefit plan, as defined
in Section (3)(2) of ERISA (other than a Multiemployer Plan), which is not an
individual account plan, as defined in Section 3(34) of ERISA, and which
Redhook, any of its Subsidiaries or, if a Title IV Plan, any ERISA Affiliate
maintains, contributes to or has an obligation to contribute to on behalf of
participants who are or were employed by any of them.
"Person" shall mean any individual, sole proprietorship, partnership,
joint venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, entity or government (whether federal,
state, county, city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).
"Plan" shall mean, with respect to Redhook or any ERISA Affiliate, at
any time, an employee benefit plan, as defined in Section 3(3) of ERISA, which
Redhook or any of its Subsidiaries maintains, contributes to or has an
obligation to contribute to on behalf of participants who are or were employed
by any of them.
"Purchaser" shall have the meaning assigned to it in Section 5.3 (c).
"Purchasing Contract" shall mean that letter agreement between ABI and
Redhook dated November 21, 2002.
"Qualified Plan" shall mean an employee pension benefit plan, as
defined in Section 3(2) of ERISA, which is intended to be tax-qualified under
Section 401 (a) of the IRC, and which Redhook, any of its Subsidiaries or any
ERISA Affiliate maintains, contributes to or has an obligation to contribute to
on behalf of participants who are or were employed by any of them.
"Qualified Takeover Defense Plan" shall mean any shareholder rights
plan or provision of the articles of incorporation or bylaws of Redhook or any
Subsidiary of Redhook or other contract, security or arrangement in each case
applicable to and intended to deter or delay, or with the
5
reasonably anticipated consequences of deterring or delaying, the acquisition of
a specified percentage of Redhook's voting stock or the merger, consolidation or
share exchange of Redhook with or into any other Person that, except in the
event of an acquisition or proposed acquisition by any Person of an aggregate
percentage of the outstanding Common Stock or other securities of Redhook having
ordinary voting power in the election of directors of Redhook specified therein
or the merger, consolidation or share exchange of Redhook with or into any other
Person, does not provide holders of Stock of Redhook with economic, voting or
other substantive rights and that, except in the event of an acquisition or
proposed acquisition by ABI or its Affiliates of an aggregate percentage of the
outstanding Common Stock or other securities of Redhook having ordinary voting
power in the election of directors of Redhook specified therein or the merger,
consolidation or share exchange of Redhook with or into ABI or its Affiliates,
provides ABI or its Affiliates with the same rights generally provided to other
holders of Stock. The terms of a Qualified Takeover Defense Plan shall not be
applicable to, and no rights under a Qualified Takeover Defense Plan shall arise
as a result of, (a) the acquisition or purchase by ABI or its Affiliates of
Stock if such purchase or acquisition does not result in ABI or its Affiliates
holding in excess of 35% in aggregate of the outstanding Common Stock, (b) any
Involuntary Acquisition by ABI or its Affiliates, (c) any increase in the
percentage ownership of ABI or its Affiliates of the Common Stock resulting from
the cancellation, retirement or acquisition by Redhook or any Subsidiary of
Redhook of any Stock, (d) any purchase or acquisition of Stock by ABI or its
Affiliates if the respective entity disposes of shares of Common Stock equal to
the number of shares so purchased or acquired within 10 Business Days of the
date of such purchase or acquisition, or (e) any other action by ABI or its
Affiliates if ABI or its Affiliates eliminate the consequences of such action
within 10 Business Days of the date that it has occurred.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement by and between Redhook and ABI, dated as of the Closing Date and
substantially in the form attached hereto as Exhibit B, as such agreement may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof.
"Representatives" shall have the meaning set forth in Section 8.10.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securities Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
"Stock" shall mean all shares, options, warrants, general or limited
partnership interests, rights, participations or other equivalents (regardless
of how designated) of or in a corporation, partnership or equivalent entity
whether voting or nonvoting, including, without limitation, common stock,
preferred stock, or any other "equity security" (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act).
"Subsidiary" shall mean, with respect to any Person, (a) any
corporation of which an aggregate of more than 50% of the outstanding Stock
having ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether, at the time, Stock of any other class
or classes of such corporation shall have or might have voting power by reason
of the happening of any contingency) is at the time, directly or indirectly,
owned legally or beneficially by such Person and/or one or more Subsidiaries of
such Person, and (b) any partnership or other entity in which such Person and/or
one or more Subsidiaries of such Person shall have an interest (whether in the
form of voting or participation in profits or capital contribution) of more than
50%.
6
"Termination Date" shall mean any date on which (i) the Distribution
Agreement is duly terminated or expires pursuant to its terms, (ii) the CBA
Distribution Agreement is duly terminated or expires pursuant to its terms or
(iii) the products of Redhook are excluded from the CBA Distribution Agreement
pursuant to its terms.
"Title IV Plan" shall mean a Pension Plan, other than a Multiemployer
Plan, which is covered by Title IV of ERISA.
"Transaction Documents" shall mean this Agreement, the Distribution
Agreement, the Registration Rights Agreement, the Purchasing Contract and
Redhook's guaranty of CBA's obligations under the CBA Distribution Agreement.
"Xxxxxx" shall mean Xxxxxx Brothers Brewing Company.
II. THE EXCHANGE OF EQUITY SECURITIES
2.1. EXCHANGE OF EQUITY SECURITIES. Subject to the terms and conditions
set forth in this Agreement, ABI agrees to transfer and deliver to Redhook
1,289,872 shares of Series B Preferred Stock and in exchange therefor Redhook
agrees to issue and deliver to ABI 1,808,243 shares of Common Stock. In
addition, Redhook shall pay to ABI $2,000,000 on or before December 1, 2004.
2.2. CLOSING. The closing of the exchange described in Section 2.1 (the
"Closing") shall take place at the offices of Xxxxxxx Xxxxxxxx XX, 0000 0xx
Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx Xxxxxxxxxx 00000 commencing at 10:00 a.m.,
local time, on July 1, 2004 or such other date and time as Redhook and ABI may
mutually determine (the "Closing Date").
On the Closing Date, ABI shall deliver to Redhook certificates
representing the Series B Preferred Stock and Redhook shall deliver to ABI
certificates representing the Common Stock to be acquired by ABI hereunder
registered in such names and in such denominations as ABI requests. Promptly
upon receipt of the certificates for the Series B Preferred Stock, Redhook shall
cancel all shares of Series B Preferred Stock and shall not reissue or transfer
any such shares.
2.3. LEGENDS. Each certificate representing the shares acquired by ABI
at the Closing shall bear a legend substantially in the following form:
THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
("THE ACT") AND MAY NOT BE SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION THEREFROM.
7
The legend described in this Section 2.3 and any legend on any
certificate acquired by ABI prior hereto shall be removed promptly, and Redhook
shall issue to ABI a new certificate without such legend with respect to which
(i) a prospectus meeting the requirements of Section 10 of the Securities Act is
available or (ii) ABI has provided to Redhook an opinion of counsel,
satisfactory in the reasonable judgment of Redhook, that the public sale,
transfer or assignment thereof may be made without registration under the
Securities Act.
III. ABI'S REPRESENTATIONS AND WARRANTIES
ABI makes the following representations and warranties to Redhook, each
and all of which shall survive the execution and delivery of this Agreement and
the Closing:
3.1. CORPORATE EXISTENCE. ABI is a corporation duly organized, validly
existing and in good standing under the laws of the State of Missouri.
3.2. CORPORATE POWER; AUTHORIZATION; ENFORCEABLE OBLIGATIONS. The
execution, delivery and performance by ABI of this Agreement, the other
Transaction Documents to which it is a party and all instruments and documents
to be delivered by ABI hereunder and thereunder and the consummation of the
other transactions contemplated by any of the foregoing: (i) are within ABI's
corporate power; (ii) have been duly authorized by all necessary corporate
action on the part of ABI; (iii) are not in contravention of any provision of
ABI's articles of incorporation or bylaws; (iv) will not violate any law or
regulation, or any order or decree of any court or government instrumentality;
(v) will not conflict with or result in the breach or termination of, constitute
a default under or accelerate any performance required by, any indenture,
mortgage, deed of trust, lease, agreement or other instrument to which ABI is a
party or by which ABI or any of its property is bound; (vi) will not result in
the creation or imposition of any Lien upon any of the property of ABI; and
(vii) do not require the consent or approval of, or any filing with, any
Governmental Authority or any other Person. This Agreement has been duly
executed and delivered by ABI and constitutes a legal, valid and binding
obligation of ABI, enforceable against it in accordance with its terms, subject,
as to the enforceability thereof, to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting creditors'
rights generally and to the effect of general principles of equity. At the
Closing Date, the other Transaction Documents to which ABI is a party will have
been duly executed and delivered by ABI and each will then constitute a legal,
valid and binding obligation of ABI, enforceable against it in accordance with
its terms, subject, as to the enforceability thereof, to the effect of any
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and to the effect of general principles of
equity.
3.3 ABSENCE OF LIENS ON THE SERIES B PREFERRED STOCK. ABI has good
title to the Series B Preferred Stock, free and clear of all Liens and upon
delivery to Redhook of the certificates therefor in accordance with the terms
hereof, ABI shall no longer own any interest in the Series B Preferred Stock.
8
IV. REDHOOK'S REPRESENTATIONS AND WARRANTIES
Redhook makes the following representations and warranties to ABI, each
and all of which shall survive the execution and delivery of this Agreement and
the Closing:
4.1. AUTHORIZED AND OUTSTANDING SHARES OF CAPITAL STOCK. The authorized
capital stock of Redhook consists of 50,000,000 shares of Common Stock, par
value $0.005 per share, of which 6,271,006 shares are issued and outstanding as
of April 30, 2004 and 8,757,143 shares of Preferred Stock, $0.005 par value per
share, of which 1,289,872 shares of Series B Preferred Stock are issued and
outstanding. All of the issued and outstanding shares of Redhook are validly
issued, fully paid and non-assessable. Except as set forth on Schedule 4.1 (b),
(i) there is no existing option, warrant, call, commitment or other agreement to
which Redhook is a party requiring, and there are no convertible securities of
Redhook outstanding which upon conversion would require, the issuance of any
additional shares of Stock of Redhook or other securities convertible into
shares of equity securities of Redhook, other than the Series B Preferred Stock,
and (ii) other than the Transaction Documents, there are no agreements to which
Redhook is a party or, to the best knowledge of Redhook, to which Redhook is not
a party, in each case, among, between or with any of the stockholders of Redhook
with respect to the voting or transfer of the Stock of Redhook or with respect
to any other aspect of Redhook's affairs. Schedule 4.1 (b) sets forth a
complete, correct and accurate statement of the option terms, exercise price and
identity of the optionee with respect to each outstanding stock option or other
stock incentive of Redhook. Except pursuant to the terms of the Series B
Preferred Stock, Redhook is not a party to any agreement or instrument requiring
Redhook to repurchase or redeem equity securities.
4.2. AUTHORIZATION AND ISSUANCE OF EQUITY SECURITIES. The Common Stock
to be acquired by ABI hereunder has been duly authorized by all necessary
corporate action on the part of Redhook. Upon delivery to ABI of certificates
therefor in accordance with the terms hereof, the Common Stock to be issued to
ABI hereunder will be validly issued and fully paid and nonassessable, free and
clear of all Liens and preemptive rights. The shares of Common Stock to be
acquired by ABI hereunder, together with the 953,470 shares of Common Stock
acquired by ABI prior hereto, represent 31.0% of the outstanding shares of
Common Stock on the Closing Date, calculated on a Fully Diluted Basis.
4.3. SECURITIES LAWS. The offer, issuance, sale and delivery of the
Common Stock as provided in this Agreement are exempt from the registration and
prospectus delivery requirements of the Securities Act and all applicable state
securities laws, and are otherwise in compliance with such laws.
4.4. CORPORATE EXISTENCE: COMPLIANCE WITH LAW.
(a) Redhook (i) is a corporation duly organized, validly existing and
in good standing under the laws of the State of Washington; (ii) is duly
qualified as a foreign corporation and in good standing under the laws of each
jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification (except for jurisdictions in which such
failure to so qualify or to be in good standing would not have a Material
Adverse Effect); (iii) has the requisite corporate power and authority and the
legal right to own, pledge, mortgage or otherwise encumber and operate its
properties, to lease the property it operates under lease, and to conduct its
business as now, heretofore and proposed to be conducted; (iv) has all material
licenses, permits, consents or
9
approvals from or by, and has made all material filings with, and has given all
material notices to, all Governmental Authorities having jurisdiction or other
Persons, to the extent required for such ownership, operation and conduct
(including all alcohol beverage control licenses issued by Governmental
Authorities to the extent required in each state in which Redhook does
business); (v) is in compliance with its articles of incorporation and bylaws;
and (vi) is in compliance with all applicable provisions of law except failures
to comply that, singly or in the aggregate, would not have a Material Adverse
Effect.
(b) At the Closing, CBA (i) will be a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Oregon; (ii) will be duly qualified and in good standing under the laws of each
jurisdiction where its ownership or lease of property or the conduct of its
business requires such qualification (except for jurisdictions in which such
failure to so qualify or to be in good standing would not have a Material
Adverse Effect); (iii) will have the requisite power and authority and the legal
right to own, pledge, mortgage or otherwise encumber and operate its properties,
to lease the property it operates under lease, and to conduct its business as
now, heretofore and proposed to be conducted; (iv) will have all material
licenses, permits, consents or approvals from or by, and has made all material
filings with, and has given all material notices to, all Governmental
Authorities having jurisdiction or other Persons, to the extent required for
such ownership, operation and conduct (including all alcohol beverage control
licenses issued by Governmental Authorities to the extent required in each state
in which CBA does business); (v) will be in compliance with its organizational
documents and all agreements between it and Redhook or Xxxxxx, ; and (vi) will
be in compliance with all applicable provisions of law except failures to comply
that, singly or in the aggregate, would not have a material adverse effect on
the business, assets, operations, affairs or financial or other condition of
CBA. The agreements between CBA, Redhook, Xxxxxx and ABI relating to the
establishment and operation of CBA are legal, valid and binding obligations of
CBA, enforceable against it in accordance with its terms, subject, as to the
enforceability thereof, to the effect of any applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting creditors'
rights generally and to the effect of general principles of equity.
4.5. SUBSIDIARIES. Except as set forth on Schedule 4.5, Redhook does
not control, directly or indirectly, nor does Redhook have any direct or
indirect equity participation in, any corporation, partnership, trust or other
business association.
4.6. CORPORATE POWER; AUTHORIZATION: ENFORCEABLE OBLIGATIONS. The
execution, delivery and performance by Redhook of this Agreement, the other
Transaction Documents to which it is a party and all instruments and documents
to be delivered by Redhook hereunder and thereunder, the issuance and exchange
of the Common Stock, and the consummation of the other transactions contemplated
by any of the foregoing: (i) are within Redhook's corporate power; (ii) have
been duly authorized by all necessary or proper corporate action on the part of
Redhook; (iii) are not in contravention of any provision of Redhook's articles
of incorporation or bylaws; (iv) will not violate any law or regulation, or any
order or decree of any court or governmental instrumentality; (v) will not
conflict with or result in the breach or termination of, constitute a default
under or accelerate any performance required by, any indenture, mortgage, deed
of trust, lease, agreement or other instrument to which Redhook is a party or by
which Redhook or any of its property is bound; (vi)
10
will not result in the creation or imposition of any Lien upon any of the
property of Redhook; (vii) do not require the consent or approval of, or any
filing with, any Governmental Authority or any other Person (except to the
extent previously obtained or made) and (viii) will not obligate Redhook to
issue any Stock to any other Person or provide any Person with the right to
acquire Stock from Redhook (including pursuant to the terms of the Redhook
rights agreement). The consummation of the transactions described herein do not
require approval by the stockholders of Redhook. This Agreement has been duly
executed and delivered by Redhook and constitutes the legal, valid and binding
obligation of Redhook, enforceable against it in accordance with its terms,
subject, as to the enforceability thereof, to the effect of any applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws affecting
creditors' rights generally and to the effect of general principles of equity.
At the Closing Date, the other Transaction Documents shall have been duly
executed and delivered by Redhook, and each shall then constitute a legal, valid
and binding obligation of Redhook to the extent it is a party thereto,
enforceable. The Closing shall not impair or affect the validity of the
Purchasing Contract and the Purchasing Contract is a legal, valid and binding
obligation of Redhook, enforceable against it in accordance with its terms,
subject, as to the enforceability thereof, to the effect of any applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws affecting
creditors' rights generally and to the effect of general principles of equity.
There are no restrictions on the corporate power or authority of Redhook that
are not disclosed in the Articles of Incorporation or the By-Laws, Washington
corporate law and the listing standards of the Nasdaq Stock Market, Inc. There
are no other facts, documents, or agreements that may or could restrict or limit
the terms or enforceability of the Transaction Documents. Redhook has, and at
the time of the Closing shall have, no setoffs, counterclaims, recoupments or
defenses to the enforcement of any of its obligations thereunder. The agreements
between Redhook, Xxxxxx and CBA relating to the establishment and operation of
CBA are legal, valid and binding obligations of Redhook, enforceable against it
in accordance with its terms, subject, as to the enforceability thereof, to the
effect of any applicable bankruptcy, reorganization, insolvency, moratorium or
similar laws affecting creditors' rights generally and to the effect of general
principles of equity. Subject to the exceptions set forth in Supply,
Distribution and Licensing Agreement between CBA and Redhook, Redhook has
provided CBA with the exclusive right to sell and market its malt beverage
products in the states in which CBA operates.
4.7. FINANCIAL STATEMENTS.
(a) All of the following balance sheets and statements of
income, retained earnings and cash flows of Redhook have been, except as noted
therein, prepared in conformity with GAAP consistently applied throughout the
periods involved and present fairly the financial position of Redhook in each
case as at the dates thereof, and the results of operations and cash flows for
the periods then ended (as to the unaudited interim financial statements,
subject to normal year-end audit adjustments not material in amount):
(i) the unaudited balance sheet of Redhook as at
March 31, 2004, and the related statements of income, retained earnings and cash
flows for the three months ending on such date; and
11
(ii) the audited balance sheets of Redhook as at
December 31, 2003, as at December 31, 2002 and as at December 31, 2001, and the
related statements of income, retained earnings and cash flows for the year then
ended, with the opinion thereon of Ernst & Young LLP.
(b) Redhook has no obligations, contingent or otherwise,
including, without limitation, liabilities for Charges, long-term leases or
unusual forward or long-term commitments which are not reflected in the balance
sheets of Redhook, other than those that are both incurred in the ordinary
course of business and are immaterial in amount.
4.8. OWNERSHIP OF PROPERTY.
(a) Redhook owns good and marketable fee simple title to all
of the real estate owned (subject to only those Liens disclosed on such Schedule
4.8 (a) and those Liens that would not have a material adverse effect on the use
of or sale of the property by Redhook and would not, singly or in the aggregate,
have a Material Adverse Effect), and good and marketable title to, or valid
leasehold interests in, all of its other properties and assets. Each lease of
real estate is a valid and binding agreement of Redhook, enforceable against
Redhook in accordance with its terms and, to the knowledge of Redhook, is a
valid and binding agreement of each other party to such lease, enforceable
against such other parties in accordance with its terms. Redhook is not in
default of its obligations under any lease and has not delivered or received any
notice of default under any such lease, nor has any event occurred which, with
the giving of notice, the passage of time or both, would constitute a default on
the part of Redhook under any such lease. To Redhook's knowledge, no other party
is in default under any such lease.
(b) All real estate and improvements owned, leased, used or
occupied by Redhook have adequate connections to all necessary utilities and
conform with all applicable zoning, building, subdivision and other requirements
of any Governmental Authority and all restrictive covenants affecting such real
estate and improvements except any such failures to conform that, singly or in
the aggregate, would not have a Material Adverse Affect.
4.9 MATERIAL CONTRACTS. Schedule 4.9 contains a true, correct and
complete list and description of all Material Contracts, whether oral or
written, and any amendments or supplements thereto or extensions thereof, and
Redhook has made available to ABI for its review complete, current and accurate
copies of each Material Contract including any amendments or supplements thereto
or extensions thereof or has completely, currently and accurately described the
terms of any oral agreement, amendment, supplement or extension. Each Material
Contract is a valid and binding agreement of Redhook enforceable against Redhook
in accordance with its terms, and Redhook does not have any knowledge that any
Material Contract is not a valid and binding agreement against the other parties
thereto. Redhook has fulfilled all obligations required pursuant to each
Material Contract to have been performed by Redhook on its part. Redhook is not
in default or breach, nor to Redhook's knowledge is any third party in default
or breach, under or with respect to any Material Contract and Redhook is not in
default or breach of any contract between ABI and Redhook.
12
4.10. ENVIRONMENTAL PROTECTION.
Except as would not, singly or in the aggregate, have a
Material Adverse Effect,
(1) Redhook and all real property owned, leased or
otherwise operated by Redhook (each, a "Facility") comply in material respects
with any applicable Environmental Law;
(2) Redhook has not, and has no knowledge of any
other person who has, caused any release, threatened release or disposal of any
Hazardous Material at any Facility, and the Facilities are not adversely
affected by any release, threatened release or disposal of a Hazardous Material
originating or emanating from any other property; and
(3) There are no investigations, judicial or
administrative proceedings, pending litigation or, to Redhook's knowledge,
threatened investigations, proceedings or litigation affecting or relating to
Redhook or the Facilities relating to Environmental Laws or Hazardous Materials.
4.11. LABOR MATTERS. There are no strikes or other labor disputes
against Redhook pending or, to Redhook's knowledge, threatened. Hours worked by
and payments made to employees of Redhook have not been in violation of the Fair
Labor Standards Act or any other applicable law dealing with such matters. All
payments due from Redhook on account of employee health and welfare insurance
have been paid or accrued as a liability on the books of Redhook. Redhook does
not have any obligation under any collective bargaining agreement or similar
agreement. There is no organizing activity involving Redhook pending or, to
Redhook's knowledge, threatened by any labor union or group of employees. There
are no representation proceedings pending or threatened with the National Labor
Relations Board, and no labor organization or group of employees of Redhook has
made a pending demand for recognition. There are no complaints or charges
against Redhook pending or, to Redhook's knowledge, threatened to be filed with
any federal, state, local or foreign court, governmental agency or arbitrator
based on, arising out of, in connection with, or otherwise relating to the
employment or termination of employment by Redhook of any individual. There are
no collective bargaining agreements or other labor agreements covering any
employees of Redhook.
4.12. TAXES. All federal, state, local and foreign tax returns, reports
and statements required to be filed by Redhook have been timely filed with the
appropriate Governmental Authority or Redhook has received extensions for such
filings, and all such returns, reports and statements are complete and accurate.
All Charges and other impositions shown thereon to be due and payable have been
paid prior to the date on which any fine, penalty, interest or late charge may
be added thereto for nonpayment thereof, or any such fine, penalty, interest,
late charge or loss has been paid. Proper and accurate amounts have been
withheld by Redhook from its employees for all periods in full and complete
compliance with the tax, social security and unemployment withholding provisions
of applicable federal, state, local and foreign law and such withholdings have
been timely paid to the respective governmental.
4.13. NO LITIGATION. No action, claim or proceeding is now pending or,
to the knowledge of Redhook, threatened against Redhook, at law, in equity or
otherwise, before any court, board, commission, agency or instrumentality of any
federal, state, or local government or of any agency
13
or subdivision thereof, or before any arbitrator or panel of arbitrators that
would result in a Material Adverse Effect. To the knowledge of Redhook, no state
of facts exist which is reasonably likely to give rise to any such action, claim
or proceeding that would result in a Material Adverse Event. There is no action,
suit, proceeding, inquiry, arbitration, hearing, notice of hearing or
investigation pending or, to the knowledge of Redhook, threatened against
Redhook or its officers or employees by the federal Alcohol and Tobacco Tax and
Trade Bureau, by the State of Washington, any other state in which Redhook does
business or any agency of any such state.
4.14. BROKERS. No broker or finder acting on behalf of Redhook brought
about the consummation of the transactions contemplated pursuant to this
Agreement, and Redhook has no obligation to any Person, in respect of any
finder's or brokerage fees in connection with the transactions contemplated by
this Agreement. Redhook is solely responsible for the payment of all fees of
brokers or finders acting on behalf or at the request of Redhook.
4.15. EMPLOYMENT AGREEMENTS. Except for the agreements that are
attached or incorporated by reference into Redhook's Annual Report on Form 10-K
for the year ended December 31, 2003, there are no employment, consulting or
management agreements between Redhook and any other Person.
4.16. PATENTS, TRADEMARKS, COPYRIGHTS AND LICENSES. Redhook owns all
licenses, patents, patent applications, copyrights, service marks, trademarks,
trademark applications, trade dress, trade secrets, trade names and other
intellectual property rights necessary to continue to conduct its business as
heretofore conducted by it, now conducted by it and proposed to be conducted by
it. Redhook conducts its businesses without infringement, unfair competition or
dilution or claim of infringement, unfair competition or dilution of any
license, patent, copyright, service xxxx, trademark, trade name, trade secret or
other intellectual property right of others. There is no infringement or claim
of infringement by others of any material license, patent, copyright, service
xxxx, trademark, trade name, trade dress, trade secret or other intellectual
property right of Redhook.
4.17. FULL DISCLOSURE. No information contained in this Agreement, the
filings made by Redhook with the Securities and Exchange Commission or any other
Transaction Document or any written statement prepared by Redhook or its
representatives furnished by or on behalf of Redhook pursuant to or in
connection with the terms of this Agreement or any other Transaction Document
contains any untrue statement of a material fact or, when taken as a whole,
omits to state a material fact necessary to make the statements contained herein
or therein not misleading in light of the circumstances under which they were
made.
4.18. NO MATERIAL ADVERSE EFFECT. No event has occurred since December
31, 2003 that has had, or is reasonably likely to have, a Material Adverse
Effect.
14
4.19. ERISA.
(a) Redhook has no ERISA Affiliates.
(b) Each of the Qualified Plans and the trusts maintained
pursuant thereto are exempt from federal income taxation under Section 501 of
the IRC, and nothing has occurred with respect to the operation of such
Qualified Plans which could cause the loss of such qualification or exemption or
the imposition of any liability, penalty or tax under ERISA or the IRC.
(c) All contributions (including all employer contributions
and employee salary reduction contributions) required to have been made under
any of the Plans or by law (without regard to any waivers granted under Section
412 of the IRC), to any funds or trusts established thereunder or in connection
therewith have been made by the due date thereof (including any valid
extension), and all contributions for any period ending on or before the Closing
Date which are not yet due will have been paid or accrued on or prior to the
Closing Date.
(d) There is no material violation of ERISA with respect to
the filing of applicable reports, documents and notices regarding the Plans or
any tax-exempt trust related to any of the Plans with the Secretary of Labor and
the Secretary of the Treasury or the furnishing of such documents to the
participants or beneficiaries of the Plans.
(e) There are no pending actions, claims or lawsuits which
have been asserted or instituted against the Plans, the assets of any of the
trusts under such Plans or the plan sponsor or the plan administrator, or
against any fiduciary of the Plans with respect to the operation of such Plans
(other than routine benefit claims), nor does Redhook have knowledge of facts
which could form the basis for any such claim or lawsuit.
(f) The Plans have been maintained, in all material respects,
in accordance with their terms and with all provisions of ERISA and other
applicable federal and state laws and regulations, and neither Redhook nor any
"party in interest" or "disqualified person" with respect to the Plans has
engaged in a "prohibited transaction" within the meaning of Section 4975 of the
IRC or Section 406 of ERISA. No fiduciary has any liability for breach of
fiduciary duty or any other failure to act or comply in connection with the
administration or investment of the assets of any Plan.
(g) No Pension Plan has an accumulated funding deficiency as
defined in Section 412 of the IRC. Redhook does not have any existing or
potential liability for a complete or partial withdrawal from a Multiemployer
Plan.
(h) No "reportable event" as defined in ERISA section
4143 has occurred with respect to any Plan.
(i) Redhook does not maintain any retiree medical plan.
4.20 SECURITIES FILINGS.
(a) Redhook has filed in a timely matter all the material required to
be filed by it pursuant to Section 13, 14 or 15 (d) of the Securities Exchange
Act. All reports filed by Redhook conformed in all material respects to the
requirements of the Securities Exchange Act, and none of such documents
contained an untrue statement of material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading.
15
(b) Redhook has adequate and effective disclosure controls and
procedures and internal controls over financial reporting, as each such term is
defined by the Securities Exchange Act.
(c) Redhook is in full compliance with the Securities Exchange Act, as
amended by the Xxxxxxxx-Xxxxx Act of 2002, and the regulations applicable to
companies whose securities are listed on the Nasdaq Stock Market and, to its
knowledge, there have been no material violations of those policies or
regulations by its officers and employees.
4.21 RELATED PARTY TRANSACTIONS. No employee, officer, stockholder or
director of Redhook or member of his or her immediate family is indebted to
Redhook, nor is Redhook indebted (or committed to make loans or extend or
guarantee credit) to any of them, other than (i) for payment of salary for
services rendered, (ii) reimbursement for reasonable expenses incurred on behalf
of Redhook, and (iii) for other standard employee benefits made generally
available to all employees (including stock option agreements outstanding under
any stock option plan approved by the Board of Directors of Redhook). To the
best of Redhook's knowledge, none of such persons has any direct or indirect
ownership interest in any Person with which Redhook is affiliated or with which
Redhook has a business relationship, or any Person that competes with Redhook,
except that employees, stockholders, officers, or directors of Redhook and
members of their immediate families may own stock in publicly traded companies
that may compete with Redhook. To the best of Redhook's knowledge, no officer,
director, or stockholder or any member of their immediate families is, directly
or indirectly, interested in any material contract with Redhook (other than such
contracts as relate to any such person's ownership of capital stock or other
securities of Redhook). This representation and warranty shall not apply to any
arrangements between Redhook and A-BC, ABI or any employee or officer of A-BC or
ABI.
4.22 BOOKS AND RECORDS. The books of account, minute books, stock
record books, and other records of Redhook, all of which have been made
available to ABI, are complete and correct and have been maintained in
accordance with sound business practices and the requirements of Section
13(b)(2) of the Securities Exchange Act, including the maintenance of an
adequate system of internal controls. The minute books of Redhook contains
accurate and complete records of all meetings held of, and corporate action
taken by, the shareholders, the Boards of Directors, and committees of the
Boards of Directors of Redhook, and no meeting of any such shareholders, Board
of Directors, or committee has been held for which minutes have not been
prepared and are not contained in such minute books.
V. COVENANTS
5.1. Redhook covenants and agrees that, unless duly waived by ABI, from
and after the date hereof:
(a) PERMITTED ACQUISITIONS OR INVESTMENTS. Redhook shall not,
and shall not permit any of its Subsidiaries to, directly or indirectly in any
transaction or related series of transactions, acquire or invest in, whether for
cash, debt, Stock, or other property or assets or by
16
guaranty of any obligation, (i) any assets or business related to the production
or distribution of malt beverage products the aggregate purchase price of which
in any such transaction or related series of transactions exceeds 50% of the
book value of Redhook's assets on the date of such acquisition or investment
immediately before giving effect thereto, or (ii) any assets or business not
related to the production or distribution of malt beverage products the
aggregate purchase price of which in any such transactions or related series of
transactions exceeds 10% of the book value of Redhook's assets on the date of
such acquisition or investment immediately before giving effect thereto. Redhook
shall not acquire any alcohol or non-alcohol malt beverage brand or the assets
or Stock of any producer of alcohol malt beverages unless it delivers to ABI a
written plan providing for the exclusive distribution of such malt beverages by
ABI that is satisfactory to ABI.
(b) SALES OF ASSETS.
(i) Redhook shall not, and shall not permit any
Subsidiary of Redhook to, sell, lease, transfer, convey or otherwise dispose of
assets in any transaction or related series of transactions, which assets have
an aggregate book value exceeding 30% of the aggregate book value of Redhook's
assets on the date of such sale, lease, transfer, conveyance or disposition
immediately before giving effect thereto; PROVIDED, HOWEVER, that the foregoing
shall not prohibit any bona fide sale-leaseback transaction in which all leases
entered into by Redhook or any Subsidiary of Redhook in connection with such
transaction are capital leases as determined in accordance with GAAP.
(ii) Redhook and its Subsidiaries shall not sell,
transfer, convey, license, pledge or otherwise dispose of any trademark or trade
name acquired or owned by any of them after the date hereof if 15% or more of
the revenues of Redhook and its consolidated Subsidiaries for the preceding
Fiscal Year were attributable to sales of products using such trademark or trade
name.
(iii) Redhook shall not dispose of any of its
interest in CBA.
(c) BOOKS AND RECORDS. Redhook shall, and shall cause its
Subsidiaries to, keep adequate records and books of account with respect to
their business activities, in which proper entries, reflecting all of their
financial transactions, are made in accordance with GAAP consistently applied.
(d) FINANCIAL AND BUSINESS INFORMATION.
(i) PROJECTIONS. Redhook will deliver to ABI,
together with appropriate supporting details, within 30 days prior to the
beginning of each Fiscal Year (and Redhook, at its option, may deliver such
information to its other security holders contemporaneously therewith):
(A) a projected consolidated balance sheet
of Redhook and its Subsidiaries, for each month of such Fiscal Year;
(B) projected consolidated and consolidating
cash flow statements of Redhook and its Subsidiaries, including summary details
of cash disbursements (including for capital expenditures), for each month of
such Fiscal Year; and
17
(C) projected consolidated and consolidating
income statements of Redhook and its Subsidiaries for each quarter of such
Fiscal Year;
(ii) OTHER INFORMATION. Redhook will deliver to ABI
such other information with respect to Redhook's business, financial condition
or prospects as ABI may, from time to time, reasonably request; provided that
ABI shall be entitled to no information concerning the specific brewing
processes and formulae used by Redhook to brew its malt beverage products.
(e) COMMUNICATION WITH ACCOUNTANTS. Redhook authorizes ABI to
communicate directly with its independent certified public accountants and tax
advisors, authorizes those accountants to disclose to ABI any and all financial
statements and other supporting financial documents and schedules including
copies of any management letter with respect to the business, financial
condition and other affairs of Redhook and any of its Subsidiaries and those
advisors to disclose to ABI any information requested by ABI concerning the tax
filings or reports made by Redhook and any of its Subsidiaries. Redhook shall
not interfere or attempt to restrain any such communications or disclosures and
at the request of ABI from time to time shall issue written instructions or
authorizations to its accountants or advisors to facilitate such communications
or disclosures.
(f) TAX COMPLIANCE. Redhook shall pay all transfer, excise or
similar taxes (not including income or franchise taxes) in connection with the
issuance, sale, delivery or transfer by Redhook to ABI of the Common Stock or
the transfer of Series B Preferred Stock by ABI to Redhook hereunder.
Additionally, Redhook shall indemnify and save ABI from all such taxes.
(g) CAPITAL STRUCTURE.
(i) Notwithstanding any other provision of this
Section 5.1(g), Redhook shall not issue, sell or transfer or agree to issue,
sell or transfer any of its authorized but not outstanding shares of Stock,
except, (A) issuances of Common Stock pursuant to any stock split, reverse stock
split or stock dividend or pursuant to the exercise of any option or warrant or
the conversion of any convertible security either now outstanding or otherwise
permitted by this Section, (B) prior to January 1, 2006 issuances of Common
Stock not exceeding 20% of the Common Stock on the date of the Closing and for
each successive two year period thereafter issuances of Common Stock not
exceeding 20% of the outstanding Common Stock on the first day of such period,
(C) issuances of Common Stock to ABI as required hereby, (D) issuances of Stock
by Redhook pursuant to any Qualified Takeover Defense Plan, and (E) issuances of
Stock by Redhook to employees or directors for compensatory purposes, pursuant
to any employee or director stock option or other stock incentive plan approved
in accordance with the requirements set forth in Section 5.1(h).
(ii) Redhook shall not amend its certificate of
incorporation or bylaws (other than an amendment the sole effect of which is to
increase its authorized capital stock) without the written approval of ABI.
18
(iii) Redhook shall not issue any Stock to any Person
with more than one vote per share or with a class vote on any matter.
(iv) Redhook shall not issue or sell or agree to
issue or sell any Stock to any Person engaged in the business of brewing,
producing or distributing malt or any alcoholic beverages in North America or
South America or to any Person known by Redhook to be an Affiliate of any such
Person other than to (A) to any Person who is a wholesaler of the products of
ABI or (B) to ABI.
(v) Without providing ABI with at least 10 days'
advance written notice thereof, Redhook shall not issue or sell shares of Stock,
the effect of which would be to decrease the aggregate percentage ownership of
the Common Stock registered in the name of ABI and its designees to under 20% of
the outstanding Common Stock.
(vi) Redhook shall not, pursuant to any agreement or
the terms of any Stock issued by Redhook, give to any Person or Persons the
right to name or designate more than one member of the board of directors of
Redhook.
(viii) Redhook shall not cause or permit any
Subsidiary of Redhook to issue any Stock to any Person other than to Redhook or
to any other Subsidiary of Redhook.
(h) TRANSACTIONS WITH AFFILIATES.
(i) Redhook shall not and shall not permit any
Subsidiary of Redhook to enter into or be a party to any transaction with any
Affiliate of Redhook or such Subsidiary unless such transaction is (i) upon fair
and reasonable terms that are fully disclosed to ABI and are no less favorable
to Redhook or such Subsidiary than would be obtained in a comparable
arm's-length transaction with a Person not an Affiliate of Redhook or such
Subsidiary, and (ii) has been approved by a majority of the Independent
Directors of the Board of Directors of Redhook or a committee of the Board of
Directors composed entirely of Independent Directors.
(ii) Redhook shall not enter into, amend, modify or
waive any provision of any agreement with an executive officer or director of
Redhook (or any Affiliate thereof) without the approval by a majority of the
Independent Directors of the Board of Directors or a committee of the Board of
Directors of Redhook composed entirely of Independent Directors. Redhook shall
establish and maintain a committee of the board of directors, composed entirely
of Independent Directors, and such committee shall determine the compensation
(including salary, bonus and stock incentives) for each executive officer of
Redhook. Redhook shall not amend the terms of any stock option or other stock
incentive or create any stock incentive plan except as approved by such
committee.
(i) MAINTENANCE OF EXISTENCE AND CONDUCT OF BUSINESS. Redhook
shall and shall cause each of its Subsidiaries to: (i) continue to conduct its
business in the brewing of malt beverages substantially as now conducted or as
otherwise permitted hereunder and shall not engage in any material respect in
any business other than the producing and distributing of malt beverages, and,
consistent with past practice, operation of the restaurants located at its
breweries; (ii) comply in
19
all material respects with all applicable laws, rules, regulations and orders of
any Governmental Authority; (iii) duly and timely make all filings and take such
other action as may be required by any Governmental Authority in connection with
the transactions described in the Transaction Documents; and (iv) assure that
none of its products are adulterated or misbranded within the meaning of the
federal Food, Drug and Cosmetic Act, as amended, and cause all of its products
to comply with the applicable provisions of the Code of Federal Regulations.
(j) DISTRIBUTION OF REDHOOK PRODUCTS. Redhook shall not
distribute products in the United States other than through ABI, CBA or other
wholesalers to the extent permitted by Section 11.05 of the Distribution
Agreement. If Redhook desires to investigate the production, sale, distribution
or licensing the production of any malt beverage product in any country outside
of the United States of America, Redhook shall notify ABI and shall provide ABI
with all information reasonably requested by ABI in connection with such
arrangement. Redhook shall give ABI a period of at least 90 days to make a
proposal to Redhook pursuant to which ABI would serve as a master distributor in
such country, and Redhook shall not conduct negotiations or discussions with any
other party during such 90 day period. Upon the end of such 90 day period,
Redhook shall be permitted to select any entity to brew or distribute the
products of Redhook in any such country, except that Redhook shall not be
permitted to select an ABI Competitor or any Affiliate thereof for such purpose.
(k) FINANCIAL AND OTHER INFORMATION.
(i) MONTHLY STATEMENTS. Redhook shall deliver to ABI
as soon as practicable after the end of each month, but in any event within 30
days thereafter: (A) an unaudited consolidated balance sheet of Redhook and its
Subsidiaries as at the end of such month, (B) unaudited consolidated statements
of income, retained earnings and changes in financial position of Redhook and
its Subsidiaries for such month and for the portion of such year ending with
such month, and (C) a sales report for such month, which report will show sales
by product, by distributor and whether by bottle or draft in each state in which
Redhook sells its products, in each case for such month and for the portion of
the Fiscal Year ending with such month and showing a comparison of such year to
date sales results with those of the previous year, including growth figures for
each product on a state by state basis but which need not show sales to CBA.
(ii) QUARTERLY INFORMATION. Redhook shall deliver to
ABI as soon as practicable after the end of each of the first three quarterly
fiscal periods in each Fiscal Year of Redhook, but in any event within 45 days
thereafter, (A) an unaudited consolidated balance sheet of Redhook and its
Subsidiaries as at the end of such quarter, and (B) unaudited consolidated
statements of income, retained earnings and changes in financial position of
Redhook and its Subsidiaries for such quarter and (in the case of the second and
third quarters) for the portion of the Fiscal Year ending with such quarter.
Such statements shall be (1) prepared in accordance with GAAP consistently
applied, (2) in reasonable detail and (3) certified by the principal financial
or accounting officer of Redhook as presenting fairly the financial condition,
results of operation, and cash flows of Redhook and its consolidated
Subsidiaries in accordance with GAAP consistently applied (subject to normal
year-end audit adjustments not material in amount).
20
(iii) ANNUAL INFORMATION. Redhook will deliver to ABI
as soon as practicable after the end of each fiscal year of Redhook, but in any
event within 90 days thereafter, (A) an audited consolidated balance sheet of
Redhook and its Subsidiaries as at the end of such year, and (B) audited
consolidated statements of income, retained earnings and changes in financial
position of Redhook and its Subsidiaries for such year, setting forth in each
case in comparative form the figures for the previous year. Such statements
shall be (1) prepared in accordance with GAAP consistently applied, (2) in
reasonable detail, and (3) certified as presenting fairly the financial
condition, results of operation and cash flows of Redhook and its consolidated
Subsidiaries in accordance with GAAP consistently applied by Xxxxxx & Xxxxx
L.L.P. or such other firm of independent certified public accountants selected
by Redhook that is acceptable in the reasonable judgment of ABI.
(iv) FILINGS. Redhook will deliver to ABI, promptly
upon their becoming available, one copy of each report, notice or proxy
statement sent by Redhook to its stockholders generally, and of each regular or
periodic report (pursuant to the Securities Exchange Act) and any registration
statement, prospectus or other writing (including, without limitation, by
electronic means) pursuant to the Securities Act filed by Redhook with (i) the
Securities and Exchange Commission, or (ii) any securities exchange or the
NASDAQ Stock Market on which shares of Common Stock of Redhook are listed or
quoted. Prior to filing or making publicly available any such report, notice,
proxy statement, registration statement, prospectus or other writing which
references or makes any disclosure concerning ABI or its business, Redhook shall
provide ABI a reasonable opportunity to review such report, notice, proxy
statement, registration statement, prospectus or other writing and shall not
make any such reference or disclosure to ABI or its business to which ABI
reasonably objects. Redhook shall timely file all material required to be filed
by it pursuant to Section 13, 14 or 15 (d) of the Securities Exchange Act. All
reports filed by Redhook shall conform in all material respects to the
requirements of the Securities Exchange Act, and none of such documents shall
contain an untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(v) OWNERSHIP PERCENTAGE. From time to time, ABI
shall be permitted to request that Redhook determine the percentage ownership of
the outstanding Common Stock held by ABI or any other Person specified by ABI,
and Redhook shall promptly (but in any event no later than five Business Days
after such request is made) and accurately provide ABI with a written
determination of the percentage ownership of the outstanding Common Stock of ABI
or such other Person, as of the date such request is made with such verification
and detail as reasonably requested by ABI.
(vi) NASDAQ LISTING. Redhook shall not voluntarily
delist or terminate the listing or quotation of the Common Stock on the NASDAQ
Stock Market.
(l) ACCESS TO BOOKS AND RECORDS. Redhook shall permit
representatives of ABI to visit and inspect, at no charge to ABI, any of the
properties of Redhook and its Subsidiaries, to examine the corporate books and
make copies or extracts therefrom and to discuss the affairs, finances and
accounts of Redhook and its Subsidiaries with the principal officers or
employees of Redhook, all at such reasonable times, upon reasonable notice and
as often as ABI may reasonably
21
request; provided that ABI shall be entitled to no information concerning the
specific brewing processes or formulae used by Redhook to brew its malt beverage
products.
(m) EXCHANGE OF STOCK CERTIFICATES. Redhook will, at its
expense, promptly upon surrender by ABI of any certificates representing shares
of Common Stock at the corporate offices of Redhook, execute and deliver to ABI
a new certificate or certificates in any denominations specified by ABI for an
aggregate number of shares of Common Stock equal to the number of shares of such
stock represented by the certificates surrendered.
(n) LOST, STOLEN, DESTROYED OR MUTILATED STOCK CERTIFICATES.
Upon receipt of evidence reasonably satisfactory to Redhook of the loss, theft,
destruction or mutilation of any certificate for shares of Common Stock and, in
the case of loss, theft or destruction, upon delivery of an indemnity reasonably
satisfactory to Redhook (which, at the option of ABI, may be an undertaking by
ABI to so indemnify Redhook), or, in the case of mutilation, upon surrender and
cancellation thereof, Redhook will issue to ABI a new certificate of like tenor
for a number of shares of Common Stock equal to the number of shares of such
stock represented by the certificate lost, stolen, destroyed or mutilated.
(o) AUDITORS. Redhook shall not change its independent
certified public accounting firm except to an independent certified public
accounting firm acceptable in the reasonable judgment of ABI.
(p) COLLECTIVE BARGAINING AGREEMENTS. Redhook acknowledges
that Redhook shall have complete responsibility and authority concerning
recognition of collective bargaining units within its employees or those of its
Subsidiaries, the determination as to whether to enter into collective
bargaining agreements or labor agreements with its employees or those of its
Subsidiaries, and the terms of any such agreement.
(q) REPRESENTATION OF ABI ON THE BOARD OF DIRECTORS. ABI shall
be entitled to designate two individuals as directors of Redhook, and except as
provided in this section, Redhook shall cause the number of members on the Board
of Directors not to exceed 7. The Board of Directors of Redhook shall recommend
to the shareholders of Redhook the election of such individuals. If the
shareholders do not elect such individuals, within 30 days after the meeting of
the shareholders the board of directors of Redhook shall amend the Bylaws of
Redhook to increase the number of members on the Board of Directors to nine and
appoint such individuals to the Board of Directors to fill these vacancies. ABI
shall be entitled to designate a individual to be a member of each committee of
the Board of Directors, except (i) with respect to a committee on which the
individual is not permitted to be a member under applicable law or the
requirements of any exchange or market on which the securities of Redhook are
listed or quoted or (ii) with respect to a committee formed to review or
determine transactions or proposed transactions between ABI and Redhook.
(r) CBA. Redhook shall not enter into any agreements relating
to the establishment or operation of CBA, amend, waive or fail to enforce any
provision of any such agreement or agree to admit any new member into CBA.
Redhook shall comply with its obligations under all agreements relating to the
establishment or operation of CBA and shall not consent or
22
cause the merger, consolidation, termination or dissolution of CBA or the
transfer by CBA of all or substantially all of its assets. Redhook shall not
permit CBA to acquire any alcohol or non-alcohol malt beverage brand or the
assets or Stock of any producer of alcohol malt beverages unless CBA delivers to
ABI a written plan providing for the exclusive distribution of such malt
beverages by ABI that is satisfactory to ABI.
(s) DISTRIBUTION FEES. Within 30 days after the Closing,
Redhook shall pay to ABI the amount by which the product of (i) the number of
case equivalents of products sold by Redhook (including Xxxxxx products brewed
and sold by Redhook), on and after June 1, 2004, but prior to the effective date
of the CBA Distribution Agreement, and (ii) $0.50 exceeds the margin to which
ABI is entitled to retain or receive under the Original Distribution Agreement
arising out of sales on and after June 1, 2004, but prior to the effective date
of the CBA Distribution Agreement.
5.2. TERMINATION OF CERTAIN COVENANTS. The obligations of Redhook and
ABI set forth in Section 5.1(a), (b)(i), (ii), (c)-(e), (g), (h), (k), (l), (o)
and (q) and Section 5.3 shall terminate on the date on which ABI and its
Affiliates do not hold, in aggregate, 5% or more of the outstanding Common Stock
(unless caused by a breach or default by Redhook under any Transaction
Document). The obligations of Redhook and ABI set forth in Section 5.1(j) shall
terminate on the Termination Date. The obligations of Redhook and ABI set forth
in Section 5.1(i) shall terminate on the later of (i) the Termination Date, and
(ii) the date on which ABI and its Affiliates do not hold, in aggregate, 5% or
more on the outstanding Common Stock. Section 5.1(b)(iii) and Section 5.1(r)
shall terminate on the date on which ABI or its Affiliates do not distribute the
products of CBA.
5.3 TRANSFERS OF SECURITIES.
(a) Prior to any sale, transfer or conveyance by ABI of any
shares of Common Stock, ABI shall provide Redhook with written notice of its
determination to sell, transfer or convey such shares, and Redhook shall, within
five Business Days of receipt of such notice, give ABI written notice informing
ABI as to whether it desires to negotiate the purchase of such shares of Common
Stock. Promptly upon ABI's receipt of a written notice delivered by Redhook
indicating a desire to negotiate the purchase and sale of such shares of Common
Stock, Redhook and ABI shall negotiate in good faith the terms governing the
purchase and sale of such shares of Common Stock. In the event that ABI and
Redhook do not, within 30 days of ABI's receipt of the written notice from
Redhook, agree upon the terms governing the purchase and sale of such shares of
Common Stock or in the event that Redhook does not deliver to ABI written notice
indicating a desire to negotiate the purchase of such shares of Common Stock
within such five day period, ABI may attempt to sell, transfer or convey such
shares of Common Stock to any other Person, but shall not sell, transfer or
convey such shares to any other party for cash, without giving Redhook a 15 day
right of first refusal concerning the same. In the event that ABI does not sell,
transfer or convey such shares or enter into an agreement to sell, transfer or
convey such shares within 90 days, ABI may not sell, transfer or convey such
shares without compliance with the notice and negotiation provisions of this
Section 5.3(a).
(b) The provisions of Section 5.3(a) shall not apply to any
sale, transfer or conveyance of shares by ABI (i) in a registered public
offering pursuant to the terms of the Registration Rights Agreement, (ii) in
connection with a tender or exchange offer made by any Person or Group other
than ABI or its Affiliates, (iii) as a result of any merger, consolidation or
share exchange of Redhook with or into any other Person or (iv) to any Affiliate
of ABI.
23
(c) In the event of a Termination Date, ABI shall be entitled
to solicit and negotiate offers from any Person ("Purchaser") to purchase all or
substantially all of the assets of Redhook or all of the outstanding securities
of Redhook or to merge or consolidate into or with Redhook or to have Redhook
merge or consolidate into it. At the request of ABI, Redhook shall provide to
the Purchaser any information reasonably requested by Purchaser in connection
with its determination whether or not to extend an offer to purchase such assets
or securities or to enter into such merger or consolidation transaction, subject
only to agreement by Purchaser to preserve the confidentiality of such
information in a form satisfactory in the reasonable judgment of Redhook. At the
direction of ABI, the board of directors shall create a committee composed
entirely of Independent Directors and direct such committee to review any offer
made by the Purchaser to purchase all or substantially all of the assets of
Redhook or all of the outstanding securities of Redhook or to enter into any
merger or consolidation transaction with Redhook and to make recommendations
with respect to such offer to the Board of Directors. The committee shall be
authorized to engage an investment banking firm and other advisors to assist it
in such review and such recommendation and to incur any other expenses deemed
advisable by it in connection with such review and recommendation. At the option
of ABI, ABI may publicize and disclose any offer made by a Purchaser. Nothing
herein shall require the members of the Board of Directors to take any action
that would violate their fiduciary duties to Redhook or its shareholders.
5.4 EFFECT ON OTHER AGREEMENTS. The parties agree that upon the
consummation of the transactions described herein, the rights and obligations of
the parties under the Investment Agreement, the Original Distribution Agreement
and the Initial Registration Rights Agreement, as supplemented and amended to
the date hereof, shall be terminated and of no further force and effect, but
that any liabilities of Redhook accrued thereunder prior to the Closing shall
survive the Closing. The parties agree that upon the consummation of the
transactions described herein the shares of Series B Preferred Stock shall be
cancelled and of no further force and effect. The parties also agree that the
Purchase Contract shall survive the Closing and that, in addition to the other
provisions therein providing for the termination thereof, ABI shall be permitted
to terminate the Purchase Contract in the event of a Termination Event.
5.5 PAYMENTS WITH RESPECT TO SYSTEMS COSTS. ABI is engaged in revising
the systems and procedures by which the wholesalers of ABI generate and transmit
orders to Redhook, Xxxxxx and CBA and by which Redhook and Xxxxxx schedule
production of products. ABI expects to incur out of pocket costs and also costs
internally allocated to it by the management systems group of ABC. Redhook
agrees to pay one-half of such costs, but not to exceed $260,000. During each
calendar quarter, ABI shall invoice Redhook for one-half of the costs incurred
by ABI therefor during the preceding calendar quarter and within 30 days after
receipt of such invoice Redhook shall pay to ABI such amount.
VI. CONDITIONS PRECEDENT
6.1. The obligation of ABI to consummate the transactions described
in Section 2.1 hereof is subject to the following:
24
(a) ABI shall have received a favorable opinion of Xxxxxxx
Xxxxxxxx X.X. in a form satisfactory to ABI in its reasonable judgment.
(b) ABI shall have received resolutions of the board of
directors of Redhook, certified by the Secretary or Assistant Secretary of
Redhook, as of the Closing Date, to be duly adopted and in full force and effect
on such date, authorizing (i) the consummation of each of the transactions
contemplated by this Agreement and (ii) specific officers to execute and deliver
this Agreement and each other Transaction Document to which it is a party.
(c) ABI shall have received copies of the Distribution
Agreement and the Registration Rights Agreement duly executed by Redhook.
(d) ABI shall have received certificates of the Secretary or
an Assistant Secretary of Redhook, dated the Closing Date, as to the incumbency
of the officers of Redhook executing this Agreement and the other Transaction
Documents.
(e) All of the representations and warranties of Redhook
contained herein or in the other Transaction Documents shall be correct on and
as of the date made and as of the Closing Date as though made on and as of the
Closing Date, Redhook shall have complied with all of its obligations hereunder
or thereunder to be satisfied on or prior to the Closing Date, and ABI shall
have received a certificate dated as of the Closing Date executed by an
executive officer of Redhook to that effect.
(f) All licenses, permits, consents or approvals from or by,
and all filings with and all notices to, all Governmental Authorities having
jurisdiction, to the extent required for ABI and Redhook to consummate the
transaction described herein and the other transactions contemplated by the
Transaction Documents, shall have been received or made.
(g) There shall have been no material adverse change in the
business, assets, operations, prospects or financial or other condition of
Redhook since the date hereof.
(h) No United States or state governmental authority or other
agency or commission thereof or any court of the United States or state court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered, and there shall not be threatened, instituted or pending before any
United States or state governmental authority or other agency or commission
thereof or any court of the United States or state court of competent
jurisdiction, any statute, rule, regulation, litigation, proceeding, injunction
or other order (whether temporary, preliminary or permanent) that has or would
have the effect of making the consummation of the transactions described herein
illegal, prohibiting consummation of such transactions, seeking damages in
connection with such transactions, or otherwise seeking to challenge such
transaction or impose limitations on the ability of ABI to hold the Common Stock
to be acquired hereunder or to exercise its rights under any Transaction
Document.
25
(i) Redhook, Xxxxxx Brothers Brewing Company and ABI shall
have entered into agreements establishing CBA with terms and conditions
satisfactory to ABI and all governmental consents and licenses necessary for the
operations of CBA shall have been obtained.
(j) ABI shall have received such additional information and
materials concerning Redhook as ABI may reasonably request.
6.2. CONDITIONS OF REDHOOK WITH RESPECT TO THE CLOSING. The obligation
of Redhook to issue and deliver the Common Stock pursuant to Section 2.1 hereof
is subject to the following conditions:
(a) Redhook shall have received copies of the Distribution
Agreement and the Registration Rights Agreement duly executed by ABI.
(b) All of the representations and warranties of ABI contained
herein and in the other Transaction Documents shall be correct on and as of the
date made and as of the Closing Date as though made on and as of the Closing
Date, ABI shall have complied with all of its obligations hereunder or
thereunder to be satisfied on or prior to the Closing Date, and Redhook shall
have received a certificate dated as of the Closing Date executed by an officer
of ABI to that effect.
(c) Redhook shall have received certificates of the Secretary
or an Assistant Secretary of ABI, dated the Closing Date, as to the incumbency
of the officers of ABI executing this Agreement, the Distribution Agreement, and
any certificate or other document to be delivered pursuant hereto or thereto.
(d) All licenses, permits, consents or approvals from or by,
and all filings with and all notices to, all Governmental Authorities having
jurisdiction, to the extent required for ABI and Redhook to consummate the
transaction describe herein and the other transactions contemplated by the
Transaction Documents, shall have been received or made.
(e) No United States or state governmental authority or other
agency or commission thereof or any court of the United States or state court of
competent jurisdiction shall have enacted, issued, promulgated, enforced or
entered, and there shall not be threatened, instituted or pending before any
United States or state governmental authority or other agency or commission
thereof or any court of the United States or state court of competent
jurisdiction, any statute, rule, regulation, litigation, proceeding, injunction
or other order (whether temporary, preliminary or permanent) that has or would
have the effect of making the consummation of the transactions described herein
illegal, prohibiting consummation of such transactions, seeking damages in
connection with such transactions, prohibiting consummation of such transactions
or otherwise seeking to challenge such transaction or impose limitations on the
ability of Redhook to exercise its rights under any Transaction Document.
6.3. TERMINATION.
(a) Subject to Section 6.3(b), the parties hereto may
terminate this Agreement as provided below:
26
(i) ABI and Redhook may terminate this Agreement by
mutual written consent at any time prior to the Closing.
(ii) ABI may terminate this Agreement by giving
written notice to Redhook at any time prior to the Closing (A) in the event that
Redhook has breached any covenant, representation or warranty contained in this
Agreement, or (B) if the Closing shall not have occurred on or before August 31,
2004 by reason of the failure of any condition precedent under Section 6.1
hereof (unless the failure results primarily from ABI itself breaching any
representation, warranty or covenant contained in this Agreement or in any other
Transaction Document).
(iii) Redhook may terminate this Agreement by giving
written notice to ABI at any time prior to the Closing (A) in the event that ABI
has breached any covenant, representation or warranty contained in this
Agreement or (B) if the Closing shall not have occurred on or before August 31,
2004 by reason of the failure of any condition precedent under Section 6.2
hereof (unless the failure results primarily from Redhook itself breaching any
representation, warranty or covenant contained in this Agreement or in any other
Transaction Document).
(b) In the event of a termination of this Agreement as
described in this Article VI, all rights and obligation of each party hereunder
shall terminate without any liability of either party to the other except for
any liability of either party arising out of any breach of this Agreement;
provided however, that Article VII and Section 8.1, 8.2, 8.4, 8.5, 8.6, 8.7,
8.8, 8.9, 8.10, 8.12, 8.13, 8.14, 8.15 and 8.17 shall survive termination.
VII. INDEMNIFICATION
(a) Redhook agrees to indemnify and hold harmless ABI, its
corporate Affiliates and its and their officers, directors and employees from
and against any liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, attorneys' fees, expenses and disbursements of
any kind which may be imposed upon, incurred by or asserted against them, such
officers, directors and employees in any manner relating to or arising out of
(i) any untrue representation, breach of warranty or failure to perform any
covenants by Redhook contained herein or in any other Transaction Document to
which Redhook is a party or in any certificate or document delivered pursuant
hereto or thereto, (ii) any Environmental Law applicable to Redhook, (iii) any
liability of Redhook or its Subsidiaries that is not explicitly assumed by the
indemnified party hereunder or in any other Transaction Document, (iv) any
liability to or claim of any former, present or future shareholder of Redhook or
other third party made on behalf of Redhook or on their own behalf, arising out
of the consummation or disclosure of the transactions described in the
Transaction Documents, and (v) the status of any employee or designee of ABI as
a director of Redhook.
(b) ABI agrees to indemnify and hold harmless Redhook and its
officers, directors and employees from and against any liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, claims, costs, attorneys'
fees, expenses and disbursements of any kind which may be imposed upon, incurred
by or asserted against Redhook and such officers, directors and employees in any
matter relating to or arising out of any untrue representation, breach of
27
warranty or failure to perform any covenants by ABI contained herein or in any
other Transaction Document to which ABI is a party or in any certificate or
document delivered pursuant hereto or thereto.
(c) The foregoing indemnification provisions are in addition
to, and not in derogation of, any statutory, equitable or common law remedy ABI,
Redhook and their respective officers, directors and employees may have for
breach or representation, warranty or covenant.
(d) Notwithstanding the foregoing provisions, the rights of
indemnity of Redhook, ABI, the corporate Affiliates of ABI and their respective
officers, directors, employees and designees arising out of the Distribution
Agreement or any certificate or document delivered pursuant thereto shall be
governed by the terms of the Distribution Agreement.
VIII. MISCELLANEOUS
8.1. NOTICES. Whenever it is provided herein that any notice, demand,
request, consent, approval, declaration or other communication shall or may be
given to or served upon any of the parties by another, or whenever any of the
parties desires to give or serve upon another any such communication with
respect to this Agreement, each such notice, demand, request, consent, approval,
declaration or other communication shall be in writing and either shall be
delivered in person with receipt acknowledged or by registered or certified
mail, return receipt requested, postage prepaid, or by telecopy and confirmed by
telecopy answer back addressed as follows:
If to Redhook at:
Redhook Ale Brewery, Incorporated
00000 XX 000xx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxxx 00000
Attention: President
Telecopy Number: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxxx, X.X.
0000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxx
Telecopy Number: (000) 000-0000
If to ABI at:
Anheuser-Xxxxx, Incorporated
Xxx Xxxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Vice President- Business and
Wholesaler System Development
Telecopy Number: (000) 000-0000
28
with a copy to:
Anheuser-Xxxxx Companies, Inc.
Xxx Xxxxx Xxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Vice President and General Counsel
Telecopy Number: (000) 000-0000
The parties agree to send such notices to such other address as may be
substituted by notice given as herein provided. The giving of any notice
required hereunder may be waived in writing by the party entitled to receive
such notice. Every notice, demand, request, consent, approval, declaration or
other communication hereunder shall be deemed to have been duly given or served
on the date on which personally delivered, with receipt acknowledged, telecopied
and confirmed by telecopy answerback, or three Business Days after the same
shall have been deposited with the United States mail.
8.2. BINDING EFFECT; BENEFITS. Except as otherwise provided herein,
this Agreement shall be binding upon and inure to the benefit of the parties to
this Agreement and their respective successors and permitted assigns. Nothing in
this Agreement, express or implied, is intended or shall be construed to give
any person other than the parties to this Agreement or their respective
successors or assigns any legal or equitable right, remedy or claim under or in
respect of any agreement or any provision contained herein.
8.3. AMENDMENT. Any amendment or waiver of any provision of this
Agreement or any other Transaction Document or any consent to any departure
therefrom shall not be effective unless the same shall be in writing and signed
by Redhook and ABI and shall specifically refer to this Agreement or such
Transaction Document. Except as provided in the preceding sentence, no action
taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained herein. The waiver by any party
hereto of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any preceding or succeeding breach, and no failure by
either party to exercise any right or privilege hereunder shall be deemed a
waiver of such party's rights or privileges hereunder or shall be deemed a
waiver of such party's rights to exercise the same at any subsequent time or
times hereunder.
8.4. SUCCESSORS AND ASSIGNS: ASSIGNABILITY. Except as provided in the
next sentence, neither this Agreement nor any right, remedy, obligation or
liability arising hereunder or by reason hereof shall be assignable by either
party hereto without the prior written consent of the other party hereto. Any
right or remedy, arising hereunder or by reason hereof, shall be assignable by
ABI to any direct or indirect subsidiary of A-BC without the prior written
consent of Redhook, so long as such Person assumes ABI's obligations hereunder
and ABI remains liable for ABI's obligations hereunder. All covenants contained
herein shall bind and inure to the benefit of the parties hereto and their
respective successors and assigns.
29
8.5. REMEDIES. ABI and Redhook, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of their rights under this Agreement. Redhook
and ABI agree that monetary damages would not be adequate compensation for any
loss incurred by reason of a breach by them of the provisions of Article V of
this Agreement and hereby agree to waive the defense in any action for specific
performance that a remedy at law would be adequate. Each party hereto shall be
paid by the other party hereto for any reasonable costs and expenses incurred by
it (including reasonable fees and expenses of counsel and whether incurred as a
result of negotiations, legal proceedings or otherwise) in connection with the
enforcement of its rights under the Transaction Documents against such other
party.
8.6. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the law of the State of Washington, without regard to the
principles thereof regarding conflict of laws.
8.7. SECTION AND OTHER HEADINGS. The section and other headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement.
8.8. SEVERABILITY. In the event that any one or more of the provisions
contained in this Agreement shall be determined to be invalid, illegal or
unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision or provisions in every other respect and
the remaining provisions of this Agreement shall not be in any way impaired.
8.9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
8.10. NONDISCLOSURE OF CONFIDENTIAL INFORMATION. Without the prior
written consent of Redhook, any information relating to Redhook provided to ABI
in connection with, or as a result of, its acquisition of the Common Stock
(including any such received under Article V hereof) which is either
confidential, proprietary, or otherwise not generally available to the public
(but excluding (a) information ABI has obtained independently or from
third-party sources without ABI's knowledge that the source has violated any
fiduciary or other duty not to disclose such information, (b) information that
otherwise becomes generally available to the public, or (c) information known to
ABI other than as a result of its ownership of the securities of Redhook or its
designation of directors for Redhook (the "Confidential Information")) will be
kept confidential by ABI, using the same standard of care in safeguarding the
Confidential Information as ABI employs in protecting its own proprietary
information which ABI desires not to disseminate or publish and ABI will
instruct its directors, officers, employees, and representatives (collectively,
"Representatives") to so keep such Confidential Information confidential. ABI
further represents that it will not, and it will instruct its Representatives
not to, trade in Common Stock while in possession of material Confidential
Information. It is understood (i) that such Representatives shall be informed by
ABI of the confidential nature of the Confidential Information and (ii) that
such Representatives shall be bound by the provisions of this Section 8.10 as a
condition of receiving the Confidential Information. ABI shall not use any such
confidential information to produce a malt beverage the formula of which
duplicates any formula for a malt beverage produced by Redhook.
30
8.11. PUBLICITY. Neither ABI nor Redhook shall issue any press release
or make any public disclosure regarding the transactions contemplated hereby or
their consummation without consulting the other party hereto.
8.12. ENTIRE AGREEMENT. This Agreement and the other Transaction
Documents constitute the entire agreement among the parties hereto and supersede
any prior understandings, agreements or representations by or among the parties
hereto, written or oral, to the extent they are related in any way to the
subject matter hereof.
8.13. FEES AND EXPENSES. Each of the parties hereto shall bear its own
costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby.
8.14. EXHIBITS AND SCHEDULES. The exhibits and schedules identified in
this Agreement are incorporated herein by reference and made a part hereof.
8.15. CONDITIONS TO CLOSING. Each party hereto shall use commercially
reasonable efforts to satisfy the conditions described in Article VI hereof
contemplated to be satisfied by it.
8.16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
of ABI and Redhook hereunder shall survive the Closing and continue in full
force and effect forever thereafter (subject to any applicable statute of
limitations).
8.17. CONSTRUCTION. Any reference to any federal, state, local or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. If either party has
breached any representation, warranty or covenant contained herein in any
respect, the existence of another representation, warranty or covenant related
to the same subject matter (regardless of the relative levels of specificity)
that the party has not breached shall not detract from or mitigate the breach of
the former representation, warranty or covenant.
References to this Agreement shall mean this Exchange Agreement,
including all amendments, modifications and supplements and any exhibits or
schedules to any of the foregoing, and shall refer to the Agreement as the same
may be in effect at the time such reference becomes operative.
Any accounting term used in this Agreement shall have, unless otherwise
specifically provided herein, the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
consistently applied. That certain terms or computations are explicitly modified
by the phrase "in accordance with GAAP" shall in no way be construed to limit
the foregoing. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole, including the exhibits and
schedules hereto, as the same may from time to time be amended, modified or
supplemented, and not to any particular section, subsection or clause contained
in this Agreement. Wherever from the context it appears appropriate, each term
stated in either the singular or plural shall include the singular and the
plural, and pronouns stated in the masculine, feminine or neuter gender shall
include the masculine, the feminine and the neuter.
31
(SIGNATURE PAGE FOLLOWS)
32
IN WITNESS WHEREOF, Redhook and ABI have executed this Agreement as of
the day and year first above written.
REDHOOK ALE BREWERY, INCORPORATED
By:/S/ XXXX XXXXXXX
-----------------------------------------------
Title: President and Chief Executive Officer
ANHEUSER-XXXXX, INCORPORATED
By: /S/ XXXXX X. XXXXXXXXXXX
-----------------------------------------------
Title: Vice President-Administration
