1
EXHIBIT 2.3
SHARE PURCHASE AGREEMENT
dated as of
______________ 1996
by and among
BEVERAGE WORKS, INC.
(the "Buyer")
and
ORANGE EMPIRE BREWING COMPANY
(the "Company")
and
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
(the "Management Shareholders")
and
those individuals whose names
are set forth on Schedule 1.1
who are not Management Shareholders
(the "Non-Management Shareholders")
2
TABLE OF CONTENTS
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ARTICLE I - PURCHASE AND SALE OF THE SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Purchase and Sale of the Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Default by a Shareholder at the Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Post-Closing Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.5 [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.6 Payment of Certain Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.7 Concurrent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II - THE CLOSING AND TRANSFER OF THE SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Deliveries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLES III AND IV - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE V - ADDITIONAL COVENANTS AND AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.1 Conduct of Business Pending Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.2 Records and Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.3 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.4 Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.5 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
5.6 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.7 Equipment Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.8 [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.9 Riverside National Bank Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.10 Updating of Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.11 Financial Statements of Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VI - CONDITIONS PRECEDENT TO OBLIGATIONS
OF THE BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.1 Accuracy of Warranties; Performance of Covenants . . . . . . . . . . . . . . . . . . . . . . . 14
6.2 Regulatory Consents, Authorizations, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.3 No Pending Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.4 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.5 No Adverse Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.6 Force majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.7 Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.8 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.9 Further Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
6.10 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.11 Concurrent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.12 [Intentionally Omitted] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.13 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.14 Initial Public Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.15 Absence of Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.16 Shareholder Debt; Equipment Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
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ARTICLE VII - CONDITIONS PRECEDENT TO OBLIGATIONS OF
EACH OF THE SHAREHOLDERS AND THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . 18
7.1 Accuracy of Warranties; Performance of Covenants . . . . . . . . . . . . . . . . . . . . . . . 18
7.2 Regulatory Consents, Authorizations, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.3 No Pending Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.4 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.5 No Adverse Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.6 Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.7 Third Party Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.8 Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.9 Further Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.10 Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
7.11 Legal Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.12 Concurrent Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.13 Initial Public Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE VIII - EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE IX - SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS; INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE IX - SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS; INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.2A Indemnification by Each of the Shareholders as
to Title to, and Transferability of, Shares . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.2B Indemnification by Each of the Management
Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.3 Indemnification by the Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.4 Event of Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
9.5 Notice and Demand, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
9.6 Limitation on Indemnification Amount;
Other Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
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ARTICLE X - MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.1 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.2 Entire Understanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.3 Waiver and Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.4 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.6 Severability; Relationship of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.8 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.9 Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.10 Governing Law and Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
10.11 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.12 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.13 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.14 Representation by Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
10.15 No Interpretation Against Draftsman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.16 Termination by Mutual Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.17 Termination for Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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EXHIBITS
EXHIBIT SUBJECT
I [Intentionally Omitted]
II Form of Management Agreement
III Agreement Not to Compete
IV A. Representations and Warranties of each of the
Sellers and the Shareholder
B. Representations and Warranties of Buyer
V Opinion of Counsel to the Company and the Shareholders
VI Opinion of Counsel to the Buyer
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EXHIBIT 2.3
SHARE PURCHASE AGREEMENT
THIS SHARE PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of this 10th day of September, 1996 by and among BEVERAGE WORKS,
INC., a California Corporation (the "Buyer"), on the one hand, and ORANGE
EMPIRE BREWING COMPANY, a California corporation (the "Company") and ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
(individually, a "Management Shareholder," and collectively, the "Management
Shareholders") and those individuals whose names and addresses are set forth on
Schedule 1.1, attached hereto and made a part hereof by this reference,
(individually, a "Non-Management Shareholder," and collectively, the
"Non-Management Shareholders") (the Management Shareholders and the
Non-Management Shareholders may hereinafter be referred to individually, as a
"Shareholder," and collectively, as the "Shareholders"), on the other hand.
RECITALS
WHEREAS, the Shareholders own all of the issued and outstanding shares
of capital stock of the Company (the "Shares"); and
WHEREAS, the Buyer desires to purchase from the Shareholders and the
Shareholders desire to sell to the Buyer, on the terms and subject to the
conditions of this Agreement, the Shares, in exchange for the Purchase Price
(as hereinafter defined), as more specifically set forth in this Agreement;
NOW, THEREFORE, in consideration of the respective mutual covenants,
promises, representations and warranties contained herein and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE SHARES
1.1 Purchase and Sale of the Shares. On the basis of the
representations and warranties contained herein, and subject to the terms,
conditions and other provisions contained herein, the Shareholders shall sell,
transfer, assign and deliver to the Buyer, and the Buyer shall purchase and
accept from the Shareholders, on the Closing Date (as hereinafter defined) all
right, title and interest in and to, the Shares, in exchange for the payment
and delivery to each Shareholder of his or her portion of the aggregate
Purchase Price (as hereinafter defined), as specifically set forth on Schedule
1.1 attached hereto.
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1.2 Default by a Shareholder at the Closing. Notwithstanding the
provisions of Section 1.1, if any Shareholder shall fail or refuse to deliver
any of the Shares owned by such Shareholder, or, if any Shareholder shall fail
or refuse to consummate the transactions described in this Agreement prior to
or on the Closing Date, such failure or refusal shall not relieve such
Shareholder of any obligations under this Agreement, and the Buyer, at its
option and without prejudice to its rights against such Shareholder, may either
(i) acquire the remaining Shares which it is entitled to acquire hereunder with
a proportional revision to the Purchase Price, or (ii) refuse to make such
acquisition and thereby terminate all of its obligations under this Agreement.
Each of the Shareholders acknowledges and agrees that the Shares are unique and
otherwise not available and that in addition to any other remedies, the Buyer
may invoke any equitable remedies to enforce delivery of the Shares hereunder,
including, without limitation, an action or suit for specific performance
against any Shareholder who shall fail or refuse to deliver any of the Shares
owned by such Shareholder or who shall fail or refuse to consummate the
transactions described in this Agreement.
1.3 Purchase Price. Subject to Section 1.4 of this Agreement, the
aggregate purchase price (the "Purchase Price") for the Shares is payable as
follows:
(i) One Hundred Forty-One Thousand Sixty-Three (141,063)
shares of Common Stock, no par value per share (the "Common Stock") of the
Buyer to be delivered at the Closing; and
(ii) One Hundred Fifty-Five Thousand (155,000) shares of
Common Stock of the Buyer (the "Earn-Out Shares"), to be paid as follows:
(a) The Earn-Out Shares shall be delivered as calculated
hereinbelow based on the performance of the Company in the period commencing
at 12:01 a.m. on the Closing Date and ending at 11:59 p.m. on December 31, 1998
(the "Measurement Period") as follows:
(I) For each barrel of beer that the Company
produces, ships and sells above Seven Thousand (7,000) and up to and
including Thirty-Seven Thousand (37,000) barrels of beer in the Measurement
Period, then the Shareholders shall be entitled to receive four (4) Earn-Out
Shares up to a maximum of One Hundred Twenty Thousand (120,000) Earn-Out
Shares if the Company produces, ships and sells Thirty-Seven Thousand (37,000)
or more barrels of beer during the Measurement Period;
(II) If the Company produces, ships and sells
Forty Thousand (40,000) or more barrels of beer in the Measurement Period,
then the Shareholders shall be entitled to receive as a bonus an additional
Thirty-Five Thousand (35,000) Earn-Out Shares;
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(III) For purposes of making the above calculations,
the number of barrels of beer produced by the Company will include (a) all
Riverside product produced irrespective of the location of production, (b) all
Humpback barrels produced at the Company's premises, however, in the case where
Riverside does not brew the beer and only fills kegs, the total number of
barrels produced shall be multiplied by .333 to determine the number of barrels
that will be credited towards the earn-out, (c) all Naked Aspen barrels produced
at the Company's premises, (d) all beers produced for Trader Joe's under the
proposed private label program, excluding, however, Heritage Brewing's Red Pig
and related products contract with The Cabo Group, Inc., (e) all San ▇▇▇▇ Obispo
keg business produced at the Company's premises and (f) all kegs of beer
produced as identified on Schedule 1.3 attached hereto and not otherwise
specified in (a) through (e) above, inclusive, which are produced on a contract
basis at the Company's premises; and
(IV) During the Measurement Period, the Company
covenants and agrees to provide up to 80 percent of the current potential
maximum capacity (i.e., 24,000 barrels out of a 30,000 barrel capacity) per
year for production of the products specified hereinabove and in the event that
such product is not produced because of capacity constraints at the Company's
premises and additional capacity cannot be provided elsewhere, then the parties
agree to negotiate in good faith to adjust the number of barrels required for
the Company to produce, ship and sell in order for the Shareholders to be
entitled to receive any or all of the Earn-Out Shares; and
(V) If earned, the Earn-Out shares will be
delivered to the individual Non-Management Shareholders in the percentages
specified on Schedule 1.1 and the delivery thereof shall be effected not later
than January 31, 1999.
1.4 Post-Closing Adjustments.
(i) Preparation of Closing Date Balance Sheet. Within 90
days after the Closing Date, the Company shall prepare a balance sheet for the
Company as of the Closing Date (the "Closing Date Balance Sheet"). The Closing
Date Balance Sheet shall be prepared in accordance with United States Generally
Accepted Accounting Principles ("GAAP"), using the same methods and criteria
employed by the Company in connection with preparation of its Latest Balance
Sheet (as hereinafter defined) to the extent such methods are consistent with
GAAP, and shall present fairly the Company's financial position as of the
Closing Date. Upon completion of the Closing Date Balance Sheet, copies
thereof shall promptly be provided to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ as
the representatives of the Shareholders (collectively, the "Shareholder
Representative").
(ii) Resolution of Disputes. If the Shareholder
Representative shall notify the Buyer within 15 days after receipt of the
Closing Date Balance Sheet that the Shareholders dispute any
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matter with respect to such Closing Date Balance Sheet, then any such matters
(the "Disputed Matters") shall be submitted to arbitration in Los Angeles
County, California within 30 days after such notice unless the parties agree in
writing to extend such 30-day period in an attempt to negotiate a settlement of
such Disputed Matters. The arbitrator (the "Arbitrator") shall be an
accounting firm (the "Accounting Firm") mutually agreed to by the Shareholder
Representative and the Buyer. Any reference herein to the Accounting Firm
shall be deemed to include a reference to any member or employee thereof (who
is a certified public accountant) which any such firm may designate as the
Arbitrator on its behalf. If within 20 days following the expiration of the
30-day period referred to above or any extension thereof the Shareholder
Representative and the Buyer shall have failed to agree upon the selection of
the Arbitrator or any such Arbitrator selected by them shall not have agreed to
perform the services called for hereunder, the Arbitrator shall thereupon be
selected in accordance with the rules of the American Arbitration Association,
which or who may be willing to perform such services, other than any such firm
which is then employed by any of the Shareholders, the Company or the Buyer or
any affiliate thereof. The Arbitrator shall consider only the Disputed Matters
and the arbitration shall be conducted in accordance with the rules of the
American Arbitration Association then in effect. The Arbitrator shall act
promptly to resolve all Disputed Matters and its decision with respect to all
Disputed Matters shall be final and binding upon the parties hereto and shall
not be appealable to any court. The costs and expenses of the Arbitrator shall
be shared equally by the Shareholders and the Buyer, except that Arbitrator
shall have the authority to award the reimbursement of such expenses to the
prevailing party.
(iii) Determination of Closing Net Book Value. The
Purchase Price has been determined on the assumption, and the parties have
entered into this Agreement with the reasonable expectation, that the excess
(the "Closing Net Book Value") of (1) the total assets of the Company as of the
Closing Date, over (2) the total liabilities of the Company as of the Closing
Date, will be $ X , which is based on the Latest Balance Sheet. As
used herein, the terms "total assets" and "total liabilities" shall mean the
aggregate amount of all assets or liabilities, respectively, of the Company
(whether classifiable in accordance with GAAP as current or long-term)
determined in accordance with GAAP and applied on a basis consistent with the
Latest Balance Sheet.
(iv) Adjustment of Purchase Price; Payment.
(a) The Purchase Price shall be increased dollar for
dollar by the amount by which the Closing Net Book Value on the
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Closing Date is greater than $___X__ plus $350,000, without giving effect to
the transactions contemplated by Section 5.9 of this Agreement. Within 15 days
after receipt by the Shareholders of the Closing Date Balance Sheet, the Buyer
shall pay the net amount of any increase to the Purchase Price, as calculated
in accordance with this Section 1.4, to the Shareholders in shares of Common
Stock of the Buyer valued at $8.00 per share; provided, however, that if there
are any Disputed Matters, any payment finally determined to be due either by
agreement or by arbitration shall be made by the Buyer within 10 days after
such determination.
(b) The Purchase Price shall be decreased dollar
for dollar by the amount by which the Closing Net Book Value on the Closing
Date is less than $ X minus $350,000. Within 15 days after receipt by
the Shareholders of the Closing Date Balance Sheet, the Shareholders shall pay
the net amount of any decrease to the Purchase Price, as calculated in
accordance with this Section 1.4, to the Buyer in shares of Common Stock of the
Buyer valued at $8.00 per share; provided, however, that if there are any
Disputed Matters, any payment finally determined to be due either by agreement
or by arbitration shall be made by the Shareholders within 10 days after such
determination. Any such payment required to be made by the Shareholders to the
Buyer shall be paid by the individual Shareholders in the percentages specified
on Schedule 1.1; provided, further, however that but only to the extent of
their respective percentages of liability specified on Schedule 1 each
Management Shareholder shall be jointly and severally liable to pay the full
amount due pursuant to this provision to the Buyer in shares of Common Stock
of the Buyer valued at $8.00 per share.
1.5 [Intentionally Omitted].
1.6 Payment of Certain Taxes. Any sales, use, transfer or other
tax arising from or relating to the Shares to be sold contemplated herein,
shall be paid by and shall be solely the responsibility of the Shareholders.
1.7 Concurrent Agreements. Concurrently herewith, (i) the Buyer
and certain of the Shareholders are entering into a management agreement, a
form of which is attached hereto as Exhibit II (the "Management Agreement");
and (ii) the Buyer, on the one hand, and each of the Management Shareholders
are entering into an Agreement Not to Compete, a form of which attached hereto
as Exhibit III (the "Agreement Not to Compete"). The Management Agreement and
the Agreements Not to Compete are collectively referred to herein as the
"Concurrent Agreements". Each of the Concurrent Agreements shall be effective
concurrently with the Closing (as hereinafter defined).
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ARTICLE II
THE CLOSING AND TRANSFER OF THE SHARES
2.1 Closing. The Closing of the transactions contemplated
by this Agreement (the "Closing") shall take place on that date (the "Closing
Date") which is the latest to occur of: (i) the date of the closing of the
Buyer's initial public offering as such date is set forth in the Prospectus for
such initial public offering; (ii) the first business day thereafter as all of
the conditions to the Closing set forth in Articles VI and VII hereof shall
have been satisfied or waived in accordance with the respective terms thereof,
(iii) the latest date which may from time to time be designated in writing by
the Buyer, but not later than the Latest Date (as defined hereinbelow); or
(iv) any other date mutually agreed upon in writing by the Buyer, the
Shareholders and the Company. The Closing shall take place at the offices
of ▇▇▇▇▇▇▇ & Mesereau, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇. If for any reason the Closing does not occur by March 31,
1997 (the "Latest Date"), either the Shareholder Representative, the Company or
the Buyer may unilaterally terminate this Agreement and all further obligations
of the parties hereunder shall thereupon terminate, except that it is expressly
agreed and understood that a party's right to pursue all legal rights and
remedies for breach of contract or otherwise hereunder, including, without
limitation, damages relating thereto, shall survive such termination unimpaired.
2.2 Deliveries. At the Closing, each of the Shareholders shall
transfer and deliver to the Buyer good and marketable title to the Shares owned
by such Shareholder immediately prior to the Closing, free and clear of any and
all liens, claims, mortgages, charges, commission arrangements, title retention
agreements, covenants, restrictions, options, purchase agreements, security
agreements, security interests, encumbrances and adverse interests of any kind
or nature whatsoever (each, an "Adverse Interest"), other than those disclosed
to the Buyer in writing and approved by the Buyer in writing, by delivering to
the Buyer the certificates for the Shares to be sold by such Shareholder in
negotiable form,
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duly endorsed in blank, or with separate notarized or guaranteed stock transfer
powers attached thereto and signed in blank, in exchange for the delivery by
the Buyer to the Shareholders of the Purchase Price as specified in Section
1.3. In addition, at the Closing, each of the parties shall execute and
deliver each and every Concurrent Agreement to which such party is also a
party. At the Closing, the Shareholders will make available to the Buyer the
written resignations of all of the directors and officers of the Company and
each Subsidiary effective as of the Closing and shall cause to be made
available to the successor directors and officers of the Company and each
Subsidiary all minute books, stock record books, books of account, corporate
seals, contracts, agreements, plans commitments, understandings and other
documents, instruments and papers belonging to the Company and each Subsidiary
and shall cause full possession and control of all of the assets, properties,
business, goodwill and rights of every kind and description, real and personal,
tangible and intangible, ▇▇▇▇▇▇ or inchoate, wherever situated belonging to the
Company and each Subsidiary (collectively, the "Assets") and of all other
things and matters pertaining to the operation of the existing and prospective
business, operations, facilities and other Assets, financial condition, results
of operations, finances, markets, products, competitive position, inventory and
other supplies, customers and customer relations and personnel of the Company
and each Subsidiary (collectively, the "Business") to be transferred and
delivered to the directors and officers elected to succeed the resigned
directors and officers of the Company and each Subsidiary. At the Closing, the
Shareholders shall also deliver to the Buyer, and the Buyer shall deliver to
the Shareholders, the certificates, opinions and other instruments and
documents referred to in Articles VI and VII of this Agreement. At any time
and from time to time after the Closing Date, the parties shall duly execute,
acknowledge and deliver all such further assignments, conveyances, instruments
and documents, and will take such other action consistent with the terms of
this Agreement, in each case, as may be reasonably necessary to assign,
transfer and convey to the Buyer good and marketable title to the Shares, free
and clear of any and all Adverse Interests, to carry out the transactions
contemplated by this Agreement, and to comply with the terms hereof.
ARTICLES III AND IV
REPRESENTATIONS AND WARRANTIES
Each of the Management Shareholders (jointly and severally as to each
other, but only up to their respective percentages of liability as specified on
Schedule 1.1) and the Company, jointly and severally, represent and warrant to,
and agree with, the Buyer,
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its successors and assigns, as of the date hereof, as set forth in Section A of
Exhibit IV attached hereto, the entirety of which is hereby incorporated into
this Agreement by this reference. The Buyer represents and warrants to, and
agrees with, each of the Shareholders and the Company, each of their or its
successors and assigns, as the case may be, as of the date hereof, as set forth
in Section B of Exhibit IV attached hereto, the entirety of which is hereby
incorporated into this Agreement by this reference.
ARTICLE V
ADDITIONAL COVENANTS AND AGREEMENTS
5.1 Conduct of Business Pending Closing. Until the Closing Date,
except as may be approved by the Buyer in writing or as otherwise expressly
provided in this Agreement, the Company shall, and the Shareholders shall cause
the Company to:
(i) operate the Business only in the ordinary course and
in substantially the same manner as it has been operated in the past and not
sell any of the Assets except for sales from inventory in the ordinary course
of business;
(ii) not issue, repurchase or redeem or commit to issue,
repurchase or redeem, any shares of its capital stock, any options or other
rights to acquire such stock or any securities convertible into or exchangeable
for such stock;
(iii) not declare or pay any dividend on, or make any other
distribution with respect to, the Shares;
(iv) not (a) incur any amount of long or short-term debt
for money borrowed, (b) guarantee or agree to guarantee the obligations of
others, (c) indemnify or agree to indemnify others, or (d) incur any other
direct or indirect liability, indebtedness, obligation, expense, claim,
deficiency or endorsement of or by any person of any type, whether accrued,
absolute, contingent, matured, unmatured or otherwise (collectively,
"Liabilities");
(v) keep in full force and effect insurance covering
the Company, each Subsidiary, the Assets and the Business comparable in
amount and scope of coverage to that now maintained;
(vi) maintain the tangible Assets in good condition and
working order, ordinary wear and tear excepted and maintain the title to and
enforceability of claims pursuant to any intangible rights or Assets;
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(vii) use its best efforts to retain the Company's
employees and maintain the Business so that such employees will remain
available to the Company on and after the Closing Date and to maintain existing
relationships with suppliers, customers and others having business dealings
with the Company and its Subsidiaries and otherwise to preserve the goodwill of
the Business so that such relationships and goodwill will be preserved on and
after the Closing Date;
(viii) not amend the Articles of Incorporation or By-Laws of
the Company or any Subsidiary;
(ix) not merge with or into any other corporation,
partnership, association or entity or sell, assign, transfer, pledge or
encumber any part of the Assets or agree to do any of the foregoing;
(x) not enter into any written or oral contract,
agreement, lease, plan, commitment, arrangement, undertaking, practice,
authorization, obligation, instrument or other document that is or may be
binding on any person or its property under applicable law (each, a "Contract,"
and collectively, the "Contracts") that is material and not in the ordinary
course of business consistent with past practice, nor permit any amendment or
termination of any material contract;
(xi) not waive any rights of value or rights that would
otherwise accrue to the Company after the Closing Date;
(xii) not increase the salaries of, or make any bonus or
similar payments to or establish or modify any employee benefits plans for, any
of the Company's directors, officers or employees or enter into or modify any
employment, consulting or similar Contracts with any such persons or agree to
do any of the foregoing;
(xiii) continue to maintain all employee benefit plans in
accordance with applicable rules and regulations, and ensure that no employee
benefit plan, or any trust related thereto, shall be amended or terminated
prior to the Closing Date, except for any such amendment as may be required to
comply with applicable rules and regulations;
(xiv) collect its accounts receivable in the ordinary
course of business consistent with past practice;
(xv) pay its accounts payable in the ordinary course of
business consistent with past practice and not fail to pay or discharge when
due any Liabilities;
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15
(xvi) use its best efforts to help the Shareholders
complete the transactions contemplate by this Agreement and obtain the
satisfaction of the conditions specified in Article VI;
(xvii) promptly notify the Buyer of (a) a breach of or
default under any Contract, (b) the occurrence of an event that with the
passage of time, the giving of notice, or both would constitute a breach of or
default under any Contact, or (c) the occurrence of an event that with or
without the passage of time, the giving of notice, or both, would give rise to
a right of termination, renegotiation or acceleration under any Contract
(collectively, a "Default"), the threat or commencement of any litigation, or
any development that occurs before the Closing that could in any way materially
affect the Company, the Assets or the Business;
(xviii) use its best efforts to obtain any consents or
approvals required under any Contracts or otherwise that are necessary to
complete the transactions contemplated by this Agreement or to avoid a Default
under any such Contracts;
(xix) comply with all rules and regulations applicable to
it and to the conduct of its and their, as the case may be, Business;
(xx) provide the Buyer with such financial and other
reports of the Business as may be reasonably requested;
(xxi) not make any capital expenditures in excess of
$5,000; and
(xxii) promptly disclose to the Buyer in writing any
information set forth in any Schedule attached hereto which no longer is
correct and any information of the nature of that set forth in any such
Schedule which arises after the date hereof and which would have been required
to be included in any such Schedule if such information had obtained on the
date hereof.
5.2 Records and Documents. Each of the Shareholders and the
Company hereby grant the Buyer and its agents and representatives, at their
request, access to and the right to make copies, at the Buyer's expense, of all
records of the Company and the Shareholders that relate to the Business as
conducted prior to the Closing as may be necessary, useful, desirable or
appropriate in connection with the Buyer's operation of the Business after the
Closing. By way of example, and without limiting the generality of the
foregoing, the Shareholders shall, and they shall cause the Company to (i) give
to the Buyer's officers, employees, counsel, accountants and other
representatives free and full access to and the right to inspect, during normal
business hours, all of the
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16
Assets, records, Contracts and other documents relating to the Business, (ii)
permit them to consult with the officers, employees, accountants, counsel and
agents of the Company for the purpose of making such investigation of the
Company, the Business and the Assets as the Buyer shall desire to make,
provided that such investigation shall not unreasonably interfere with the
Company's business operations, and (iii) furnish to the Buyer all such
documents and copies of documents and records and information with respect to
the Company's affairs and copies of any working papers relating thereto as the
Buyer shall from time to time reasonably request.
5.3 Publicity. Each party hereto agrees not to issue any press
release or otherwise make any public statement in any general circulation
medium with respect to the transactions contemplated by this Agreement, without
the consent, which shall not be unreasonably withheld, of the Shareholder
Representative (in the case of releases or statements issued or made by the
Buyer) or the Buyer (in the case of releases or statements issued or made by
any of the Shareholders or the Company), except as may be required by law, in
which event such press release or public statement shall be made only after
consultation with the Shareholder Representative and the Company, on the one
hand, or the Buyer, on the other hand, as the case may be; provided, however,
that the Shareholder Representative consents to the Buyer issuing a press
release or public statement with respect to Buyer's filing a registration
statement with the United States Securities and Exchange Commission.
5.4 Additional Agreements. Subject to the terms and conditions
herein provided, each of the parties hereto shall use its reasonable best
efforts to bring about the transactions contemplated by this Agreement, as soon
as reasonably practicable, including the execution and delivery of all
instruments and other documents, and shall take or cause to be taken such
further actions necessary, proper or desirable to carry out the intent and
purposes of, and consummate the transactions contemplated by, this Agreement.
No party will take or knowingly permit to be taken any action or do or
knowingly permit to be done anything in the conduct of its business, or
otherwise, which would be contrary to or in breach of any of the terms or
provisions of this Agreement, or which would cause any of the representations
or warranties contained herein to become untrue or incomplete.
5.5 No Solicitation. The Company will not, and will authorize its
officers, directors, employees, agents or other representatives (including any
broker, financial advisor, attorney, accountant or other agent) not to, and the
Shareholders will not,
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and will cause their agents or other representatives (including any broker,
financial advisor, attorney, accountant or other agent) not to, and the
Shareholders will cause the Company not to, directly or indirectly, initiate
contact with, solicit or encourage or take any action to facilitate (including
by way of furnishing information), any proposal or inquiry by, or enter into or
take any action to facilitate any discussions or negotiations with, or provide
any information or assistance to, any third party (other than the Buyer as
contemplated in Section 5.2 of this Agreement or appropriate regulatory
authorities) concerning any acquisition (whether by merger, purchase of assets,
or otherwise) of any or all shares of capital stock of the Company or any
material portion of the assets of the Company. The Company or the
Shareholders, as the case may be, will notify the Buyer immediately upon
receipt of any inquiry, proposal or offer relating to any of the foregoing.
5.6. Tax Returns. The Shareholders will prepare and file all
federal, foreign, state or local tax returns required to be filed for any
period ending on or before the Closing Date, and will pay all federal, foreign,
state and local income taxes (including interest and penalties relating
thereto) due for the periods covered by such returns.
5.7 Equipment Leases. Brewery Leasing Company ("BLC"), the holder
of the Brewery Leasing identified on Schedule 7A, covenants and agrees to
(i) reduce the effective interest rate of such lease(s) to ten percent (10%),
(ii) extend such leases by that number of months which is equal to the number of
months payments on each such lease is in arrears for calendar year 1995 only,
and (iii) provide that all such equipment may be purchased by the Buyer upon
the expiration of such leases for an aggregate of $1.00, it being understood
and agreed by the Buyer that such provisions will not be effective until
immediately after the Closing.
5.8 [Intentionally Omitted].
5.9 Riverside National Bank Loan.
(i) The Company shall obtain the agreement of ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ and Riverside National Bank ("RNB") to modify and
amend the loan (the "Riverside Loan") from RNB to the Company and Riverside
Brewing Company, Inc. ("RBC") which is evidenced by that certain promissory
note dated May 10, 1996 and is identified as Loan Number 121399771 such that
concurrently with the Closing, the Riverside Loan will be evidenced by two
Promissory
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notes, one in the principal amount of $220,940.67, the makers of which shall be
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ("Loan I") and the other in the
principal amount of the principal balance of the Riverside Loan on the date of
Closing less the principal amount of Loan I, the makers of which shall be the
Company and RBC ("Loan II"). To induce ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
to assume Loan I, Buyer shall issue to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
pro rata, that number of shares of the Buyer's Common Stock equal to the
principal balance of Loan I divided by 8, said shares to be delivered at the
Closing. In addition, if, on January 1, 1999, the per share "Fair Market
Value" (as hereinafter defined) of the Buyer's Common Stock is equal to or less
than $6.00, then the Buyer agrees to issue to ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ an additional 9,227 shares no later than January 10, 1999.
(ii) The Company shall obtain the agreement of RNB to
release the Company and each of its Subsidiaries from all of their respective
obligations under and pursuant to the Riverside Loan and to terminate any and
all financing statements that it filed against the assets of the Company and
any of its Subsidiaries effective as of the Closing, provided, however, that
RNB may take a security interest for Loan II in the tangible fixed assets of
the Company and RBC as such assets exist on the Closing Date but not in the
proceeds of such tangible fixed assets or in any after acquired assets or
properties.
(iii) "Fair Market Value" means the average of the daily
closing prices for fifteen (15) consecutive trading days commencing immediately
before the date of such computation. The closing price for each day shall be
the last reported sales price regular way or in case no such reported sale
takes place on such day, the average of the closing bid and asked prices
regular way for such day, in either case on the principal national securities
exchange on which the shares are listed or admitted to trading, of it they are
not listed or admitted to trading on any national securities exchange, but are
traded in the over-the-counter market, the closing sale price of the Common
Stock or, in case no sale is publicly reported, the average of the
representative closing bid and asked quotations for the Common Stock on the
National Association of Securities Dealers Automated Quotation ("NASDAQ")
system or any comparable system, or if the Common Stock is not listed on the
NASDAQ system or any comparable system, the closing price of the Common Stock
or, in case no sale is publicly reported, the average of the closing bid and
asked prices as furnished by two members of the National Association of
Securities Dealers selected from time to time by the Company for that purpose,
or if there are no closing bid and asked prices available, "Fair Market Value"
shall be determined by the Board of Directors of the Buyer in good faith.
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5.10 Updating of Schedules. The Company shall notify the Buyer of
any changes, additions or events which may cause any change in or addition to
any of the Schedules attached hereto or to any of the documents delivered to
the Buyer pursuant to the terms of this Agreement promptly after the occurrence
of the same and again at the Closing by delivery of appropriate updates to all
Schedules and documents previously delivered. No such notification or delivery
of updates made shall be deemed to cure any breach of any representation and
warranty made in this Agreement, nor shall any such notification or delivery of
updates be considered to constitute or give rise to a waiver by the Buyer of
any condition set forth in this Agreement.
5.11 Financial Statements of Subsidiary. Each of the Company and
Buyer covenant and agree to provide each Shareholder Representative with the
monthly financial statements that are produced by the Subsidiary for the
Buyer's management.
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER
Unless, at the Closing, each of the following conditions is either
satisfied or waived by the Buyer in writing, the Buyer shall not be obligated
to purchase the Shares and shall not otherwise be obligated to consummate or
effect the transactions contemplated by this Agreement. The Buyer shall have
the right to waive in writing any or all of the foregoing conditions precedent
to the obligations of the Buyer; provided, however, that no waiver by the Buyer
of any conditions precedent to the obligations of the Buyer shall constitute a
waiver by the Buyer of any other condition precedent.
6.1 Accuracy of Warranties; Performance of Covenants. The
representations and warranties of each of the Shareholders and the Company
contained or incorporated herein shall be true, accurate and correct on the
date hereof and on the Closing Date, and each of the Shareholders and the
Company shall have performed each and every obligation and complied with each
and every agreement and covenant required by this Agreement to be performed or
complied with on or prior to the date hereof and the Closing Date,
respectively. Each of the documents required to be delivered by each of the
Shareholders and the Company to the Buyer hereunder shall be in form and
substance reasonably satisfactory to the Buyer.
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6.2 Regulatory Consents, Authorizations, etc. All consents,
authorizations, orders and approvals of, and filings and registrations with,
any governmental commission, board or other regulatory body which are required
in connection with the execution and delivery of this Agreement and the
consummation by each party hereto of the transactions contemplated on its part
hereby, shall have been obtained or made, other than consents, authorizations,
orders, approvals, filings and registrations as to which the failure to obtain
or make will not, after the Closing, (i) materially and adversely affect the
assets, properties, operations, prospects, or the condition, financial or
otherwise, or the results of operations of the Business, (ii) limit the right
of the Buyer to own each of the Assets or conduct any material aspect of the
Business, or (iii) subject the Buyer, any of its Subsidiaries or affiliates or
any of its or their respective directors or officers to liability on the ground
that it or they have breached any law or regulation or have otherwise acted
improperly in relation to the transactions contemplated by this Agreement.
6.3 No Pending Action. No (i) claim, investigation, action, suit,
proceeding or litigation, either administrative or judicial, at law or in
equity, by any governmental or regulatory commission, agency or other body or
authority or by any other person, firm, corporation or other entity shall have
been instituted, threatened or pending on the Closing Date (a) which challenges
or seeks to prohibit, enjoin, restrict or delay the consummation of this
Agreement or any of the transactions contemplated by this Agreement, or any of
the conditions to the consummation of the transactions contemplated by this
Agreement, (b) which claims damages against the Buyer or any of the
Shareholders, the Company or any Subsidiary as a result of the consummation of
the transactions contemplated hereby or otherwise claims that this Agreement or
the consummation thereof is improper, or (c) which in the reasonable opinion of
the Buyer, could materially or adversely affect the right of the Buyer to own
the Assets or to conduct any aspect of the Business after the Closing, or the
ability of each of the Shareholders and the Company to consummate the
transactions contemplated hereby, and (ii) injunction or restraining order
shall be in effect prohibiting the transactions contemplated by this Agreement.
6.4 No Material Adverse Change. There shall have been no material
and adverse change in the Assets, condition, financial or otherwise, operations
or prospects of the Business since April 30, 1996. There shall be no
conditions existing or threatened with respect to the Assets, condition,
financial or otherwise, operations or prospects of the Business that might be
expected to have a material and adverse effect on any of them.
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6.5 No Adverse Laws. There shall not have been enacted or
promulgated by any federal, state or local governmental agency, body or entity,
any statute, ordinance or regulation which has a material and adverse affect
upon the Assets, condition, financial or otherwise, operations or prospects of
the Business.
6.6 Force Majeure. All or any material part of the Assets of the
Business shall not have been adversely affected in any way by any act of God,
fire, flood, war, legislation (proposed or enacted) or other event or
occurrence, whether or not covered by insurance.
6.7 Third Party Consents. All consents of third parties,
including, without limitation, lenders and lessors of the Company and
governmental authorities, which are required for the consummation of the
transactions contemplated hereby shall have been obtained in writing on terms
and conditions and in form and substance satisfactory to the Buyer in its sole
and absolute discretion, including, without limitation, estoppel certificates.
6.8 Authority. The Buyer shall have received from the Company a
copy of the resolutions of its Board of Directors and of the Shareholders
authorizing the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby. Said resolutions shall be certified
by a duly authorized officer of the Company as being true and correct and in
full force and effect as of the Closing Date. The Buyer shall also have
received a certificate of incumbency executed by the Secretary of the Company
certifying the names, titles and signatures of the officers authorized to
execute and deliver this Agreement and the other documents contemplated hereby
to be executed and delivered by the Company, and further certifying that the
Articles of Incorporation and Bylaws of the Company delivered to the Buyer at
the Closing have been validly adopted, have not been amended or modified and
are in full force and effect.
6.9 Further Actions. All proceedings to be taken in connection
with the consummation of the transactions contemplated by this Agreement, and
all certificates, documents and instruments incidental thereto, shall be
reasonably satisfactory in form and substance to the Buyer, and the Buyer shall
have received copies of such documents and instruments as the Buyer and its
counsel may reasonably request in connection with such transactions.
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6.10 Certificates. Prior to or at the Closing, the Buyer shall
have received from each of the Shareholders and the Company a certificate dated
the Closing Date and signed by the President and Secretary of the Company and
by each of the Shareholders certifying that the conditions set forth in Section
6.1, 6.2, 6.3, 6.4, 6.5, 6.6 and 6.7 hereof have been satisfied. Prior to or
at the Closing, the Buyer shall have also received from the Company or the
Shareholders, as appropriate, (a) a certificate from the Secretary of State of
the State of California to the effect that the Company is in good standing or
subsisting in such jurisdiction and listing all charter documents of the
Company on file, (b) a certificate from the Secretary of State or other
appropriate official in each state in which the Company is qualified or
licensed to do business as a foreign corporation to the effect that the Company
is in good standing in such state, (c) a certificate as to the tax status of
the Company from the appropriate official in the State of California and each
state in which the Company is qualified or licensed to do business as a foreign
corporation and (d) such additional supporting documentation and other
information with respect to the transactions contemplated hereby as the Buyer
or its counsel may reasonably request.
6.11 Concurrent Agreements. Each of the Shareholders and the
Company shall have delivered to the Buyer executed originals of each of the
Concurrent Agreements to which they are parties.
6.12 [Intentionally Omitted]
6.13 Legal Opinion. The Buyer shall have received the legal
opinion, dated the Closing Date, of counsel to the Shareholders and the Company
in the form acceptable to Buyer's Shareholders' and Company's respective legal
counsel attached hereto as Exhibit V.
6.14 Initial Public Offering. The registration statement relating
to the Buyer's initial public offering shall have been declared effective by
the Securities and Exchange Commission (the "SEC"), the closing contemplated by
the prospectus (the "Prospectus") which forms a part of such registration
statement shall have occurred and the Buyer shall have received an aggregate of
$6,000,000 as shown in the column entitled Price to Public-Total on the cover
page of the final Prospectus and in addition the Price per Share shall not be
less than $8.00, unless such initial public offering is priced on a unit basis
(i.e., including warrants), in which case the Price per Share shall be not less
than $7.90.
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6.15 Absence of Liens. At or prior to the Closing Date, the Buyer
shall have obtained a Uniform Commercial Code search report dated as of a date
not more than five days prior to the Closing Date issued by the Secretary of
State of the State of California indicating that there are no filings under the
Uniform Commercial Code on file with such Secretary of State which name the
Company as debtor or otherwise indicting any lien on the Assets, except for
liens otherwise disclosed in the Schedules hereto and which the Buyer has
agreed to assume.
6.16 Equipment Leases and Riverside National Bank Debt. The
agreements contemplated by Section 5.7 and 5.9 shall have been obtained and
shall be in full force and effect.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS OF EACH
OF THE SHAREHOLDERS AND THE COMPANY
Unless, at the Closing, each of the following conditions is either
satisfied, or waived by each of the Shareholders and the Company in writing,
the Shareholders shall not be obligated to sell the Shares and shall not be
otherwise obligated to consummate or effect the transactions contemplated by
this Agreement. Each of the Shareholders and the Company shall have the right
to waive in writing any or all of the foregoing conditions precedent to the
obligations of each of the Shareholders and the Company, respectively;
provided, however, that no waiver by any of the Shareholders or the Company of
any conditions precedent to the obligations of said Shareholders or the Company
shall constitute waiver by said Shareholder or the Company of any other
condition precedent.
7.1 Accuracy of Warranties; Performance of Covenants. The
representations and warranties of the Buyer contained or incorporated herein
shall be true, accurate and correct on the date hereof and on the Closing Date,
and the Buyer shall have performed each and every obligation and complied with
each and every covenant required by this Agreement to be performed or complied
with on its part on or prior to the date hereof and the Closing Date,
respectively. Each of the documents required to be delivered by the Buyer to
each of the Shareholders and the Company hereunder shall be in form and
substance reasonably satisfactory to each of the Shareholders and the Company.
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7.2 Regulatory Consents, Authorizations, etc.. All consents,
authorizations, orders and approvals of, and filings and registrations with,
any governmental commission, board or other regulatory body which are required
in connection with the execution and delivery of this Agreement and the
consummation by each party hereto of the transactions contemplated on its part
hereby, shall have been obtained or made, other than consents, authorizations,
orders, approvals, filings and registrations as to which the failure to obtain
or make will not, after the Closing, materially and adversely affect the right
of the Shareholders to receive the Purchase Price.
7.3 No Pending Action. No (i) claim, investigation, action, suit,
proceeding or litigation, either administrative or judicial, at law or in
equity, by any governmental or regulatory commission, agency or other body or
authority or by any other person, firm corporation or other entity shall have
been instituted, threatened or pending on the Closing Date (a) which challenges
or seeks to prohibit, enjoin, restrict or delay the consummation of this
Agreement or any of the transactions contemplated by this Agreement, or any of
the conditions to the consummation of the transactions contemplated by this
Agreement or (b) which claims damages against the Buyer or any of the
Shareholders or the Company as a result of the consummation of the transactions
contemplated hereby or otherwise claims that this Agreement or the consummation
thereof is improper, and (ii) injunction or restraining order shall be in
effect prohibiting the transactions contemplated by this Agreement.
7.4 No Material Adverse Change. There shall have been no material
and adverse change in the assets, condition, financial or otherwise, operations
or prospects of the business of Buyer since April 30, 1996. There shall be no
conditions existing or threatened with respect to the assets, condition,
financial or otherwise, operations or prospects of the business of Buyer that
might be expected to have a material and adverse effect on any of them.
7.5 No Adverse Laws. There shall not have been enacted or
promulgated by any federal, state or local governmental agency, body or entity,
any statute, ordinance or regulation which has a material and adverse affect
upon the assets, condition, financial or otherwise, operations or prospects of
the Buyer.
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25
7.6 Force Majeure. All or any material party of the assets of
Buyer shall not have been adversely affected in any way by any act of God,
fire, flood, war, legislation (proposed or enacted) or other event or
occurrence, whether or not covered by insurance.
7.7 Third party Consents. All consents of third parties,
including, without limitation, governmental authorities, which are required for
the consummation of the transactions contemplated hereby shall have been
obtained in writing on terms and conditions and in form and substance
reasonably satisfactory to the Shareholder Representative.
7.8 Authority. The Shareholder Representative shall have received
from the Buyer a copy of the resolutions of its Board of Directors authorizing
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby. Said resolutions shall be certified by a
duly authorized officer of the Buyer as being true and correct and in full
force and effect as of the Closing Date. The Shareholder Representative shall
also have received a certificate of incumbency executed by the Secretary of the
Buyer certifying the names, titles and signatures of the officers authorized to
execute and deliver this Agreement and the other documents contemplated hereby
to be executed and delivered by the Company, and further certifying that the
Articles of Incorporation and Bylaws of the Buyer delivered to the Shareholder
Representative at the Closing have been validly adopted, have not been amended
or modified and are in full force and effect.
7.9 Further Actions. All proceedings to be taken in connection
with the consummation of the transactions contemplated by this Agreement, and
all certificates, documents and instruments incidental thereto, shall be
reasonably satisfactory in form and substance to the Shareholder
Representative, and the Shareholder Representative shall have received copies
of such documents and instruments as the Shareholders Representative and
counsel for the Company may reasonably request in connection with such
transactions.
7.10 Certificate. Prior to the Closing, each of the Shareholders
and the Company shall have received from the Buyer a certificate dated the
Closing Date and signed by the President and Secretary of the Buyer certifying
that the conditions set forth in Sections 7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7 and
7.13 hereof have been satisfied.
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26
7.11 Legal Opinion. The Company and the Shareholders shall have
received the legal opinion, dated the Closing Date, of counsel to the Buyer in
the form attached as Exhibit VI.
7.12 Concurrent Agreements. The Buyer shall have delivered to each
of the Shareholders executed originals of each of the Concurrent Agreements to
which he or she is a party.
7.13 Initial Public Offering. The registration statement relating
to the Buyer's initial public offering shall have been declared effective by
the SEC, the closing contemplated by the Prospectus shall have occurred and the
Buyer shall have received an aggregate of $6,000,000 as shown in the column
entitled Price to Public-Total on the cover page of the Prospectus and in
addition the Price per Share shall not be less than $8.00, unless such initial
public offering is priced on a unit basis (i.e., including warrants), in which
case the Price per Share shall not be less than $7.90.
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27
ARTICLE VIII
EMPLOYEES
Except pursuant to the terms and conditions of Employment Agreements
which the Buyer intends to present to certain key employees of the Company, the
Buyer shall not be obligated in any way to offer employment to any employee of
the Company or any Subsidiary after the Closing, and the Buyer will not be
responsible or liable in connection with any employment arrangements (whether
written or oral) with employees of the Company or any Subsidiary, or for any
salaries, severance pay, vacation accruals, health insurance benefits and other
benefits owed or payable to any employees of the Company or any Subsidiary;
provided, however, that the Buyer shall be responsible for any salaries,
severance pay, vacation accruals, health insurance benefits or other benefits
owed or payable to employees of the Company or any Subsidiary employed by the
Buyer, the Company or any Subsidiary after the Closing Date.
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ARTICLE IX
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS; INDEMNIFICATION
9.1 Survival. Each of the representations, warranties, covenants
and agreements of the Buyer, each of the Shareholders and the Company contained
in this Agreement (including those made in the Exhibits and Schedules hereto
and certificates and other documents delivered pursuant to the terms hereof)
shall survive the Closing and shall be fully effective and enforceable for a
period of two years following the Closing provided, however, that any
representation and warranty relating to Taxes shall survive until any
applicable statute of limitations has run; and provided, further, however, that
any representation and warranty relating to title to the shares and transfer of
the Shares to the Buyer shall survive in perpetuity) , notwithstanding any
investigation or examination by, or on behalf of, any party hereto, any notice
of a breach or of a failure to perform, not waived in writing, and the
consummation of the transactions contemplated hereby with knowledge of such
breach or failure.
9.2A Indemnification by Each of the Shareholders as to Title to,
and Transferability of, the Shares. Notwithstanding anything herein to the
contrary, each of the Shareholders, severally and not jointly, hereby agrees to
indemnify, defend and hold harmless the Buyer and every subsidiary and
affiliate of Buyer, and every officer, director, shareholder, employee and
agent of the Buyer and every such subsidiary and affiliate, and the successors
and assigns of each of them, from any and all claims, liabilities, losses,
damages (including without limitation incidental, consequential and punitive
damages), costs and expenses, including court costs, reasonable attorneys'
fees, reasonable accountant's fees investigative fees, expert witness fees and
the costs associated therewith, arising out of or relating to the failure of
any Shareholder to transfer and deliver to the Buyer good and marketable title
to such Shareholder's Shares owned by such Shareholder immediately prior to
Closing, fee and clear of any and all Adverse Interests.
9.2B Indemnification by Each of the Management Shareholders. Each
of the Management Shareholders (jointly and severally as to each other but only
up to their respective percentages of liability as specified on Schedule 1),
hereby agrees to indemnify, defend and hold harmless the Buyer and every
subsidiary and affiliate of Buyer, and every officer, director, shareholder
employee and agent of the Buyer and every such subsidiary and affiliate, and
the successors and assigns of each of them, from any and all claims,
liabilities, losses, damages (including without limitation incidental,
consequential and punitive damages), costs and
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29
expenses, including court costs, reasonable attorneys' fees, reasonable
accountant's fees, investigative fees, expert witness fees and the costs
associated therewith, arising out of or relating to an Event of Breach, as
defined in Section 9.4 hereof, of any Shareholder or the Company except with
respect to any indemnification obligation already undertaken pursuant to
Section 9.2A.
9.3 Indemnification by the Buyer. The Buyer hereby agrees to
indemnify, defend and hold harmless each of the Shareholders and every
affiliate thereof, and every agent of each of the Shareholders and every such
affiliate, and the successors and assigns of each of them, from any and all
claims, liabilities, losses, damages (including without limitation incidental,
consequential and punitive damages), costs and expenses, including court costs
and reasonable attorneys' fees, investigative fees, expert witness fees and the
costs associated therewith, arising out of or relating to an Event of Breach,
as defined in Section 9.4 hereof, of Buyer.
9.4 Event of Breach. As used herein, an "Event of Breach" shall
mean, as to a party, any one or more of the following: (i) any untruth,
inaccuracy or misrepresentation or breach of any of the representations,
warranties, covenants or agreements made by said party in this Agreement; (ii)
any failure of said party to perform or observe any term, provision, covenant,
obligation, agreement or condition on the part of said party to be performed or
observed pursuant to the terms of this Agreement; and (iii) any
misrepresentation of said party in, or omission from, any statement,
certificate, Schedule, Exhibit or other document prepared or furnished by said
party pursuant to the terms of this Agreement. In addition, "Event of Breach"
shall also mean, as to any of the Shareholders and/or the Company, claims or
liabilities of any kind or nature which arise out of, result from or are
related to the operations, ownership, conduct, activities or failure to act of
any of the Management Shareholders, the Company, any Subsidiary or their
respective affiliates prior to or on the Closing Date and irrespective of the
date that any claim, suit or other cause of action related to any of the
foregoing is filed or otherwise instituted against the Company, the Buyer or
any of its subsidiaries or affiliates including, without limitation, claims or
liabilities related to actual, potential or inchoate security interests, liens,
claims, obligations or encumbrances involving the Business (e.g., any claim or
liability relating to, arising out of, or based upon negligence, strict
liability or any express or implied representation, warranty, agreement or
guaranty made by or on behalf of the Company or any Subsidiary, or alleged to
have been made by or on behalf of the Company or any Subsidiary or which is
imposed or asserted to be imposed on the Company or any Subsidiary
- 24 -
30
by operation of law or otherwise, in connection with any product designed,
used, rented, sold, manufactured, shipped or installed by or on behalf of the
Company or any Subsidiary, or for any service performed by or on behalf of the
Company or any Subsidiary, in any case prior to or on the Closing Date), and
further, including, without limitation, claims, liabilities or liens which may
result from (i) any commencement, termination or other activity with respect to
any employee benefit plan and (ii) any unpaid federal, foreign, state or local
tax liabilities of the Company or any Subsidiary for all periods (or portions
thereof) ended on or before the Closing Date, together with any interest or
penalties attributable to any such liabilities.
9.5 Notice and Demand, etc. Each indemnified party hereunder
agrees that upon its obtaining actual knowledge of facts indicating that there
may be a basis for a colorable claim for indemnity under the provisions hereof,
including, but not limited to, receipt by it of notice of any demand,
assertion, claim, action or proceeding, judicial or otherwise, by any third
party, it will give prompt written notice thereof to the indemnifying
party(ies) (such written notice being hereinafter referred to as a "Notice of
Claim"), which Notice of Claim shall contain a brief description of the nature
of such claim and an estimate of the dollar amount at issue. The failure of an
indemnified party to send a Notice of Claim shall not relieve the indemnifying
party(ies) from any liability hereunder with respect to any claim except to the
extent such failure results in insufficient time being available to permit the
indemnifying party(ies) or its or their, as appropriate, counsel to effectively
defend any such claim and to make a timely response thereto and thereby
prejudices the indemnifying party's(ies') ability to defend such claim. The
indemnifying party(ies) shall thereupon be obligated to defend, contest or
otherwise protect the indemnified party against any such demand, assertion,
claim, action or proceeding, at the indemnifying party's(ies') sole cost and
expense. The indemnified party shall have the right, but not the obligation,
to participate at its own expense in the defense thereof by counsel of the
indemnified party's choice. In the event that the indemnifying party(ies)
fails timely to defend, contest or otherwise protect against such demand,
assertion, claim, action or proceeding, the indemnified party shall have the
right to do so, including, without limitation, the right to make any compromise
or settlement thereof, and the indemnified party shall have the right to
recover the entire cost thereof from the indemnifying party(ies), including,
without limitation, attorneys' fees, disbursements and amounts paid as a result
of such demand, assertion, claim, action, or proceeding.
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31
9.6 Limitation on Indemnification Amount; Other Limitations. Each
party hereto agrees that it shall not be permitted to pursue any claim for an
Event or Events of Breach until the aggregate of all such claims for an Event
or Events of Breach exceed $59,999.99 (the "Deductible"); provided however,
that, notwithstanding the Deductible, Buyer shall be permitted to pursue any
claim regardless of amount at issue under Section 9.2A of this Agreement. Any
provision of this Agreement to the contrary notwithstanding, but subject to the
provisions of Section 5.10 of this Agreement, no claim for indemnification
shall lie with respect to any representation or warranty given herein where the
claim is based upon any event, circumstance or condition which is disclosed in
this Agreement or in the Schedules or Exhibits attached and incorporated herein
on the date of this Agreement, it being expressly understood by the parties
that any updating of Schedules that occurs after the date of this Agreement
shall not relieve such party from any indemnification obligation if such
updated schedule adds, deletes, amends or modifies information set forth on
such Schedule as of the date of this Agreement; provided, however, that a claim
for indemnification shall lie with respect to the items set forth on Schedule
9.6; and provided, further however, that a claim for an Event or Events of
Breach relating to a matter set forth on Schedule 9.6 shall not be subject to
the Deductible (i.e., the Buyer shall have the right to seek indemnification
from the first dollar).
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ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Brokers. The Buyer, on the one hand, and each of the
Shareholders and the Company, on the other hand, represent and warrant to each
other that, except as set forth on Schedule 10.1 attached hereto, no broker,
investment banker or finder is entitled to any financial advisory fee,
brokerage fee or finder's fee or other similar payment from it or him, as the
case may be, with respect to (i) the execution of this Agreement or (ii) the
transactions contemplated hereby. The Buyer, on the one hand, and each of the
Shareholders and the Company, on the other hand, each agree to indemnify,
defend and hold each other harmless against and in respect of all claims,
losses, liabilities and expenses which may be asserted by any broker or other
person who claims to be entitled to a broker's, finder's or similar fee or
commission from it or him, as the case may be, in respect of the execution of
this Agreement, or the consummation of the transactions contemplated hereby, by
reason of his acting at the request of said person.
10.2 Entire Understanding. This Agreement (including the Schedules
and Exhibits hereto, each of which is incorporated herein and made a part of
this Agreement) and the other agreements and instruments, the execution and
delivery of which are provided for herein, constitute the entire agreement and
understanding of the parties hereto and terminates and supersedes any and all
prior agreements, arrangements and understandings, both oral and written, among
the parties hereto concerning the subject matter of this Agreement.
10.3 Waiver and Amendment. No waiver, amendment, modification or
change of any provision of this Agreement shall be effective unless and until
made in writing and signed by all of the parties hereto. No waiver,
forbearance or failure by any party of its right to enforce any provision of
this Agreement shall constitute a waiver or estoppel of such party's right to
enforce any other provision of this Agreement or a continuing waiver by such
party of compliance with any provision.
10.4 Headings. The headings herein are for convenience only, do
not constitute a part of this Agreement, and shall not be deemed to limit or
affect any of the provisions hereof.
10.5 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
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33
10.6 Severability; Relationship of the Parties. The provisions of
this Agreement are intended to be interpreted and construed in a manner so as
to make such provisions valid, binding and enforceable. In the event that any
provision of this Agreement is determined to be partially or wholly invalid,
illegal or unenforceable, then such provision shall be deemed to be modified or
restricted but only to the limited extent reasonably necessary to make such
provision valid, binding and enforceable, or, if such provision cannot be
modified or restricted in a reasonable manner so as to make such provision
valid, binding and enforceable, then such provision shall be deemed to be
excised from this Agreement and the validity, binding effect and enforceability
of the remaining provisions of this Agreement shall not be affected or impaired
in any manner. Nothing in this Agreement shall be interpreted or construed as
creating, expressly or by implication, a partnership, joint venture, agency
relationship or employment relationship (other than pursuant to any Employment
Agreement) between or among the parties hereto or any of their respective
officers, directors, agents, employees or representatives.
10.7 Notices. ALl notices, requests, demands and other
communications under this Agreement shall be in writing and shall be deemed to
have been delivered three business days after having been mailed in a general
or branch U.S. post office and enclosed in a registered or certified post-paid
envelope; one business day after having been sent by overnight courier; when
telecopied on a business day, or otherwise on the next succeeding business day
thereafter; and, in each case, addressed to the respective parties at the
addresses stated below or to such other changed addresses the parties may have
fixed by notice as provided herein:
If to any of the
Shareholders: To the addresses set forth on Schedule __.
If to the Company: Orange Empire Brewing Company
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇-▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Telephone: ( )
Telecopier: ( )
With a copy to: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Shimoff & ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
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34
If to the Buyer: Beverage Works, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇
Chief Financial Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇▇▇ & Mesereau
1900 Avenue of the Stars, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
10.8 Successors and Assigns. This Agreement shall not be assigned
or delegated by any party without the prior written consent of the other
parties hereto, except that the Buyer may assign this Agreement and the rights
under this Agreement after the Closing (i) to one or more subsidiaries or
affiliates of the Buyer or, (ii) to one or more lending institutions for
security purposes so long as Buyer remains primarily liable for its obligations
hereunder. Subject to the preceding sentence, each term and provision of this
Agreement shall be binding upon and enforceable against and inure to the
benefit of any successors or assigns of the Buyer and any successors or assigns
of any of the Shareholders or the Company. Nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the
parties and their respective successors and assigns any rights or remedies
under or by reason of this Agreement.
10.9 Attorney's Fees. If any action (whether it be for contract or
tort, at law or in equity, or otherwise) is brought to enforce or interpret the
provisions of this Agreement or any other agreement or instrument provided for
herein, the prevailing party in such action shall be entitled to recover as an
element of such party's costs of suit, and not as damages, a reasonable
attorneys' fee to be fixed by the court. The prevailing party shall be the
party who is entitled to recover its costs of suit as ordered by the court or
by applicable law or court rules. A party not entitled to recover its costs
shall not recover attorneys' fees. No sum for attorneys' fees shall be counted
in calculating the amount of judgment for purposes of determining whether a
party is entitled to recover its costs or attorneys' fees.
10.10 Governing Law and Jurisdiction. This Agreement shall be
governed by and construed in accordance with the internal substantive laws of
the State of California, without regard to principles of choice of law or
conflict of laws. Each of the
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35
parties hereto recognizes and hereby irrevocably consents to the exclusive
jurisdiction over it or him, as the case may be, of the Federal District Court
for the Central District of California or the Superior Court of California,
County of Los Angeles, in connection with any action or proceeding (whether it
be for contract or tort, at law or in equity, or otherwise) arising out of or
relating in any way to this Agreement, or any other document relating hereto or
delivered in connection with the transactions contemplated hereby.
10.11 Construction. Whenever in this Agreement the context so
requires, references to the masculine shall be deemed to include the feminine
and the neuter, reference to the neuter shall be deemed to include the
masculine and feminine, and references to the plural shall be deemed to include
the singular and the singular to include the plural as appropriate and apparent
in the context used. The disjunctive "or" and the conjunctive "and" shall mean
"and/or" unless otherwise required in the context in which such words are used.
Except as otherwise specified, the agreements, covenants, representations,
warranties, undertakings, liabilities and obligations herein of the Company and
each of the Shareholders are several and not joint. All dollar amounts set
forth in this Agreement or any Exhibit or Schedule attached hereto, are
expressed in terms of U.S. Dollars. All time periods specified herein are to
Pacific time.
10.12 Cooperation. Each party hereto shall cooperate with the other
parties and shall take such further action and shall execute and deliver such
further documents as may be necessary or desirable in order to carry out the
provisions and purposes of this Agreement.
10.13 Expenses. Whether or not the transactions contemplated by
this Agreement and the related agreements are consummated, each party to this
Agreement shall pay its or his, as the case may be, own costs and expenses in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby,
including, but not limited to, attorneys' fees, accountants' fees and other
professional fees and expenses.
10.14 Representation by Counsel. Each party hereto represents and
agrees with the others that such party has been represented by or had the
opportunity to be represented by, independent counsel of such party's own
choosing, and that such party has had the full right and opportunity to consult
with such party's respective attorneys, that to the extent, if any, that such
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36
party desired, such party availed itself or himself of this right and
opportunity, that such party, if an individual, or such party's authorized
officers, have carefully read and fully understand this Agreement in its
entirety and have had it fully explained to them by such party's respective
counsel, that each is fully aware of the contents hereof and its meaning,
intent and legal effect, and that such party, if an individual, or such party's
authorized officer, is competent to execute this Agreement and has executed
this Agreement free from coercion, duress or undue influence. Each party
hereto further represents and agrees with the others that such party has
consulted and is relying solely upon such party's independent counsel as to
tax, legal and related matters concerning this Agreement and consummation of
the transactions contemplated hereby.
10.15 No Interpretation Against Draftsman. This Agreement is the
product of negotiations between the parties hereto, and any rules of
construction relating to interpretation against the draftsman of an agreement
shall not apply to this Agreement.
10.16 Termination by Mutual Consent. This Agreement may be
terminated at any time on or prior to the Closing Date by the mutual written
consent of the parties hereto. In consenting to the termination of this
Agreement, the Shareholder Representative shall have authority to act on behalf
of all Shareholders.
10.17 Termination for Breach. The Buyer may terminate its
obligations under this Agreement at any time prior to the Closing Date if any
of the Shareholders or the Company shall have breached any of their respective
representations, warranties or other obligations under this Agreement in any
material respect. The Shareholders and the Company may likewise terminate
their obligations under this Agreement at any time prior to the Closing Date if
the Buyer shall have breached any of its representations, warranties or other
obligations under this Agreement in any material respect. Such termination may
be effected by written notice from either the Buyer, on the one hand, or the
Shareholders and the Company, on the other hand, as appropriate, citing the
reasons for termination.
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37
subject the terminating party to any liability for any valid termination. For
purposes of this provision only, "material" shall mean __________________.
IN WITNESS WHEREOF, the Buyer, the Company and each of the
Shareholders have executed and delivered this Agreement as of the day and year
first above written.
"MANAGEMENT SHAREHOLDERS"
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Trustee of the ▇▇▇▇▇▇▇▇▇
Living Trust u/d/t December 16, 1986
By:
----------------------------------
Name:
Title:
SECURITY TRUST COMPANY, a California
corporation, as Trustee of ▇▇▇
No. 100048-00, FBO ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
By:
----------------------------------
Name:
Title:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Trustee of
the ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1987
Trust u/d/t dated May 25, 1987
By:
----------------------------------
Name:
Title:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
By:
----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
- 32 -
38
MLPF&S CUST FBO ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇
By:
----------------------------------
Name:
Title:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By:
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By:
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By:
----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
BREWERY LEASING COMPANY
(as to Section 5.7)
By:
----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title:
"COMPANY"
ORANGE EMPIRE BREWING COMPANY
a California Corporation
By:
----------------------------------
Name:
Title:
"BUYER"
BEVERAGE WORKS, INC.
a California corporation
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
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39
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
By:
----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ AND ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
By:
----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
By:
----------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
By:
----------------------------------
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee of the
▇▇▇▇ ▇. ▇▇▇▇▇▇ 1992 Living Trust u/d/t
January 13, 1992
By:
----------------------------------
Name:
Title:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Trustee of the
▇▇▇▇▇▇▇▇ Family Trust u/d/t dated 6/9/92
By:
----------------------------------
Name:
Title:
- 34 -
40
▇▇▇▇▇ ▇▇▇▇▇
By:
----------------------------------
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇, CPA'S, INC., a
California corporation, formerly
▇▇▇▇▇▇ & ▇▇▇▇▇▇, CPA's, a partnership
By:
----------------------------------
Name:
Title:
▇▇▇▇ ▇. ▇▇▇▇▇▇
By:
----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
- 35 -
41
SPOUSAL CONSENT
I, ____________________, acknowledge that I have read the Share
Purchase Agreement (the "Agreement"), dated as of _______________, 1996 by and
among Beverage Works, Inc., a California corporation (the "Buyer"), Orange
Empire Brewing Company, a California corporation (the "Company") and the
Shareholders (as such term is defined in the Agreement), and that I know and
understand its contents. I am aware that by its provisions, my spouse agrees
to sell all of his shares of common stock (the "Shares") of the Company,
including any community or joint ownership interest I may have in it, on the
occurrence of certain events. I hereby consent to the sale, approve of the
provisions of the Agreement, and agree that I will take no action at any time
to hinder operation of the Agreement, including, without limitation, all
covenants of my spouse contained therein, on those Shares or my interest in
them. Further, I agree that I shall not bequeath to anyone but my spouse any
interest I may have in such Shares (or, to the extent that such Shares would be
affected, in any entity which holds such Shares); that the residuary clause of
my will shall not apply to such Shares (or, to the extent that such Shares
would be affected, to any entity which holds such Shares); and that in the
event of a dissolution of my marriage, I shall make no claim to the Shares of
the Company (or, to the extent that such Shares would be affected, to any
entity which holds such Shares) but shall look to my spouse for compensating
equity apart from any interest in the Company.
Dated as of ____________________, 1996
________________________________
Spouse of:
________________________________
Name of person of whom signatory
is spouse:
- 36 -
42
AMENDMENT AGREEMENT
This Amendment Agreement (the "Amendment Agreement") is made and
entered into as of the 7th day of January, 1997 by and among Beverage Works,
Inc., a California corporation (the "Buyer"), on the one hand, and Orange
Empire Brewing Company, a California corporation (the "Company"), and ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
(individually, a "Management Shareholder," and collectively, the "Management
Shareholders") and those individuals whose names and addresses are set forth on
Schedule 1.1 of the Share Purchase Agreement (the "Agreement"), dated as of
September 10, 1996 by and among the Buyer, the Company and the Shareholders (as
such term is defined in the Agreement), on the other hand.
RECITALS
WHEREAS, the parties desire to amend the Agreement to provide for the
changes and modifications set forth herein.
NOW, THEREFORE, in consideration of the respective mutual covenants,
promises, representations and warranties contained herein and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
1. Purchase Price
(i) Section 1.3(i) if the Agreement is hereby amended by deleting
the words "Two Hundred Forty-Seven Thousand Four Hundred Seventy-Nine
(247,479)" and replacing them with the following: "One Hundred Forty-One
Thousand Sixty-Three (141,063)".
(ii) Section 1.3(ii) of the Agreement is hereby amended by
deleting the words "One Hundred Thirty Thousand (130,000)" and replacing them
with the following: "One Hundred Fifty-Five Thousand (155,000)".
(iii) Section 1.3(ii)(a)(i) of the Agreement is hereby amended by
deleting the words "Twelve Thousand (12,000)" and replacing them with "Seven
Thousand (7,000)" and by deleting the words "One Hundred Thousand (100,000)"
and replacing them with "One Hundred Twenty Thousand (120,000)".
(iv) Section 1.3(ii)(a)(ii) of the Agreement is hereby amended by
deleting the words "Forty-Five Thousand (45,000)" and replacing them with
"Forty Thousand (40,000)" and by
-1-
43
deleting the words "Thirty Thousand (30,000)" and replacing them with
"Thirty-Five Thousand (35,000)".
(v) Section 1.3(ii)(a)(iii) of the Agreement is hereby amended by
adding the following at the end of subsection (b) thereof "...provided,
however, in the case where Riverside does not brew the beer and only fills the
kegs, the total number of barrels produced shall be multiple by .333 to
determine the number of barrels that will be credited hereunder,".
2. Post-Closing Adjustments.
(i) Section 1.4(iv)(a) of the Agreement is hereby amended by
deleting "$ x plus $350,000" and replacing it with "$(911,542) minus $500,000".
(ii) Section 1.4(iv)(b) of the Agreement is hereby amended by
deleting "$ x minus $350,000" and replacing it with "$(911,542) minus $500,000".
(iii) Section 1.4(iv)(b) of the Agreement is hereby amended by
adding the following between the words "provided, further, however that" and
"each Management Shareholder": "(but only to the extent of their respective
percentages of liability specified on Schedule 1)".
3. Closing.
(i) Section 2.1 of the Agreement is hereby amended by deleting
"March 30, 1997" wherever it appears and replacing it with "March 31, 1997".
4. Equipment Leases
(i) Section 5.7 of the Agreement is hereby deleted in its
entirety and replaced with the following:
"5.7 Equipment Leases. Brewery Leasing Company ("BLC"), the holder
of the brewery leases identified on Schedule 5.7, covenants and agrees
to (i) reduce the effective interest rate of such leases to ten percent
(10%), (ii) extend such leases by that number of months which is equal
to the number of months payments on each such lease was in arrears for
calendar year 1995 and (iii) provide that all such equipment may be
purchased by the Buyer upon the expiration of such leases for an
aggregate of $1.00, it being understood and agreed by Buyer that such
provisions will not be effective until immediately after the Closing."
5. Additional Covenants and Agreements.
The following Sections are hereby added to Article V of the
Agreement.
-2-
44
(i) "5.12 Registration Rights. The Company covenants and agrees to
provide the Shareholders with the same registration rights as to the shares of
Buyer's Common Stock they will own upon consummation of the transactions
contemplated hereby as may be given to any of the executive officers of the
Buyer in the future with respect to any of Buyer's shares of Common Stock owned
by any such executive officers."
(ii) "5.13 Rule 144. Buyer covenants and agrees to cause the
restrictive legend on any of the shares of Buyer's Common Stock provided to the
Shareholders hereunder to be removed after the period of time required to
elapse under Rule 144(k) as promulgated under the Securities Act of 1933, as
amended (the "Act"), as such Rule may be amended from time to time and provided
further that all other provisions of such Rule have been satisfied."
6. Legal Opinion.
(i) Section 6.13 of the Agreement is hereby amended by deleting
the words "attached hereto as Exhibit V" and replacing them with "reasonably
acceptable to the legal counsel for each of the Company, the Shareholders and
the Buyer".
7. Indemnification.
(i) Section 9.28 of the Agreement is hereby amended by deleting
the words "Schedule 1.1" and replacing them with "Schedule 1".
(ii) Section 9.3 of the Agreement is hereby amended by adding the
following to the end thereof.
"or arising out of or relating to any untrue statement or
alleged untrue statement of a material fact contained in the
Registration Statement (the "Registration Statement") filed by
the Buyer with the Securities and Exchange Commission whereby
the Buyer is registering its securities for sale or the
omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading;
provided however, that the Buyer will not be liable to the
extent that any such claim, liability, loss, damage, cost or
expense arises out of or is based upon information furnished to
the Buyer by or on behalf of the Shareholders that is used in
the preparation of the Registration Statement."
(iii) Section 9.6 of the Agreement is hereby amended by adding the
following to the end thereof:
-3-
45
"Notwithstanding anything in this Agreement to the
contrary, the parties agree that the liability of
the Shareholders for any matter relating to ▇▇▇ ▇▇▇▇▇▇▇▇
as set forth in Schedule 11, as amended, shall be
limited to paying up to a maximum of fifty percent (50%)
of the costs of any settlement reached with ▇▇.
▇▇▇▇▇▇▇▇, with a cap of $2,500.00, which amount
shall not be subject to the Deductible."
IN WITNESS WHEREOF, the Buyer, the Company and each of the Shareholders
have executed and delivered this Agreement as of the day and year first above
written.
"MANAGEMENT SHAREHOLDERS"
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
By:
------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By:
------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-4-
46
"NON-MANAGEMENT SHAREHOLDERS"
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Trustee of the
▇▇▇▇▇▇▇▇▇ Living Trust u/d/t/
December 16, 1966
By:
------------------------------
Name:
Title:
SECURITY TRUST COMPANY, a California
corporation, as Trustee of ▇▇▇ No.
100046-00, FBO ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
By:
------------------------------
Name:
Title:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Trustee of the
▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1967 Trust
u/d/t/ dated May 26, 1967
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
Name:
Title: Trustee
MLPF&S CUSTFBO ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇
By:
------------------------------
Name:
Title:
-5-
47
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By:
--------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
By:
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
BREWERY LEASING COMPANY
(as to Section 5.7)
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: President
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
By:
------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ AND ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
By:
--------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
By:
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
By:
--------------------------------
▇▇▇▇ ▇▇▇▇▇▇
-6-
48
▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee of the
▇▇▇▇ ▇. ▇▇▇▇▇▇ 1992 Living Trust
U/D/T January 13, 1992
By:
------------------------------
Name:
Title:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By:
------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Trustee of the
▇▇▇▇▇▇▇▇ Family Trust u/d/t
dated 6/9/92
By:
------------------------------
Name:
Title:
▇▇▇▇▇ ▇▇▇▇▇
By:
-------------------------------
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇, CPA'S, INC., a
corporation, formerly ▇▇▇▇▇▇ & ▇▇▇▇▇▇,
CPA's, a partnership
By:
------------------------------
Name:
Title:
▇▇▇▇ ▇. ▇▇▇▇▇▇
By:
------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
-7-
49
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:
---------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
"COMPANY"
ORANGE EMPIRE BREWING COMPANY,
a California Corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: President
"BUYER"
BEVERAGE WORKS, INC.
a California Corporation
By:
---------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
-8-
