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EXHIBIT 10-1
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ASSET PURCHASE AGREEMENT
BETWEEN
MONROE BREWING CO., LLC,
AS PURCHASER
AND
THE GENESEE BREWING COMPANY, INC.,
AS SELLER
Dated as of the 29th day of August, 2000
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I. DEFINITIONS................................................................................1
II. ASSETS TO BE ACQUIRED......................................................................7
2.1 Acquisition and Transfer of Assets............................................7
2.2 Excluded Assets...............................................................8
2.3 Assumed Liabilities...........................................................9
2.4 Excluded Liabilities..........................................................9
2.5 Reorganization...............................................................10
III. PURCHASE PRICE............................................................................11
3.1 Purchase Price and Payment...................................................11
3.2 Additional Purchase Price....................................................11
3.3 Allocation of Purchase Price.................................................12
3.4 General Adjustment of Purchase Price.........................................12
3.5 Management Agreement.........................................................13
IV. THE CLOSING...............................................................................14
4.1 Closing Date.................................................................14
4.2 Proceedings at Closing.......................................................14
4.3 Deliveries by Seller to the Purchaser........................................14
4.4 Deliveries by Purchaser to the Seller........................................15
V. REPRESENTATIONS AND WARRANTIES OF THE SELLER..............................................16
5.1 Organization, Standing, Power and Qualification..............................16
5.2 No Conflict..................................................................16
5.3 Consents.....................................................................17
5.4 Operational Statements.......................................................17
5.5 Absence of Undisclosed Liabilities...........................................17
5.6 Absence of Certain Developments..............................................17
5.7 Taxes........................................................................17
5.8 Real Property................................................................18
5.9 Environmental, Health and Safety Matters.....................................19
5.10 Insurance....................................................................20
5.11 Tangible Property............................................................20
5.12 Machinery....................................................................20
5.13 Intangible Assets............................................................21
5.14 Employees....................................................................21
5.15 Employee Benefit Matters.....................................................22
5.16 Compliance with Laws.........................................................23
5.17 Licenses and Permits.........................................................23
5.18 Legal Proceedings............................................................24
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5.19 Contracts....................................................................24
5.20 Books and Records............................................................24
5.21 No Brokers...................................................................24
5.22 Proxy Statement..............................................................24
5.23 Independence of Representations..............................................24
VI. REPRESENTATIONS AND WARRANTIES OF PURCHASER...............................................25
6.1 Organization, Standing, Power and Qualifications.............................25
6.2 No Conflict..................................................................25
6.3 Consents.....................................................................25
6.4 Legal Proceedings............................................................25
6.5 No Brokers...................................................................26
6.6 No Other Agreements to Sell the Assets or Capital Stock
of the Purchaser.............................................................26
6.7 Purchaser's History, Etc.....................................................26
6.8 Purchaser's Solvency.........................................................26
6.9 Projections..................................................................26
6.10 Financing and Availability of Funds..........................................26
6.11 No Knowledge of Inconsistent Information.....................................26
6.12 No Impediment to Governmental Approvals......................................26
6.13 Proxy Statement..............................................................27
VII. COVENANTS.................................................................................27
7.1 Conduct of Business..........................................................27
7.2 Alternative Proposal.........................................................28
7.3 Employment Matters...........................................................28
7.4 Purchaser's Access to Information............................................31
7.5 Consents, Cooperation........................................................31
7.6 Notification of Certain Matters..............................................31
7.7 Financing Commitments........................................................32
7.8 Supplements to Schedules.....................................................32
7.9 Title Insurance..............................................................32
7.10 Environmental Site Assessments...............................................32
7.11 Surveys......................................................................32
7.12 Transfer Tax Forms...........................................................33
7.13 Title Conditions.............................................................33
7.14 Zoning and Land Use Letter...................................................33
7.15 Additional Agreement.........................................................33
7.16 GC Support...................................................................33
7.17 Shareholder Meeting..........................................................34
VIII. CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATIONS.......................................34
8.1 Accuracy of Seller's Representations and Warranties..........................34
8.2 Performance by Seller........................................................34
8.3 Consents.....................................................................34
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8.4 Delivery of Documents........................................................34
8.5 Material Adverse Change......................................................34
8.6 Absence of Litigation and Prohibitions.......................................35
8.7 Liens........................................................................35
8.8 Corporate Documents..........................................................35
8.9 Legal Opinion................................................................35
8.10 Survey; Title Insurance......................................................35
8.11 Licenses and Permits.........................................................35
8.12 WARN.........................................................................35
8.13 Conduct of Business..........................................................35
8.14 Additional Agreement.........................................................36
8.15 Financing Commitments........................................................36
8.16 Net Working Capital..........................................................36
IX. CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATIONS..........................................36
9.1 Accuracy of the Purchaser's Representations and Warranties...................36
9.2 Performance by the Purchaser.................................................36
9.3 Consents.....................................................................36
9.4 Delivery of Documents........................................................36
9.5 Absence of Litigation and Prohibitions.......................................36
9.6 Legal Opinion................................................................37
9.7 Labor Contracts and Employee Benefit Plans...................................37
9.8 Management Employees Releases and Certificates...............................37
9.9 Other Contracts..............................................................37
9.10 Fairness Opinion.............................................................37
9.11 Financing....................................................................37
9.12 GC's Shareholders' Approval..................................................37
9.13 Environmental Matters........................................................37
X. ADDITIONAL POST-CLOSING COVENANTS.........................................................37
10.1 Further Assurances...........................................................37
10.2 Access to Information........................................................38
10.3 Mail.........................................................................38
10.4 Existing Insurance Coverage..................................................38
10.5 Confidentiality..............................................................38
10.6 Consents of Third Parties....................................................39
10.7 Employment Matters...........................................................39
XI. INDEMNIFICATION AND RELATED MATTERS.......................................................39
11.1 Indemnification by the Seller................................................39
11.2 Indemnification by the Purchaser.............................................40
11.3 Limitation on Indemnification Liabilities....................................41
11.4 Survival of Representations, Warranties, Covenants
and Indemnities..............................................................41
11.5 Notice of Indemnification....................................................41
11.6 Indemnification Procedure for Third-Party Claims.............................41
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11.7 Exclusive Remedy.............................................................42
XII. TERMINATION...............................................................................42
12.1 Termination..................................................................42
12.2 Effect of Termination........................................................44
12.3 Purchaser's Right to Damages or Expenses.....................................44
XIII. SPECIFIC PERFORMANCE......................................................................44
XIV. GENERAL AND MISCELLANEOUS.................................................................44
14.1 Prorations...................................................................44
14.2 Waiver of Compliance with Bulk Transfer Laws.................................44
14.3 Entire Agreement.............................................................45
14.4 Governing Law................................................................45
14.5 Costs........................................................................45
14.6 Transfer Taxes...............................................................45
14.7 Expenses.....................................................................45
14.8 Headings.....................................................................45
14.9 Notices......................................................................46
14.10 Severability.................................................................46
14.11 Binding Effect; No Assignment................................................46
14.12 Amendments...................................................................47
14.13 Counterparts.................................................................47
14.14 Extension; Waiver............................................................47
14.15 Incorporation of Exhibits and Schedules......................................47
14.16 Press Release and Public Announcement........................................47
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ASSET PURCHASE AGREEMENT
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ASSET PURCHASE AGREEMENT (this "Agreement") dated as of August 29, 2000
by and between THE GENESEE BREWING COMPANY, INC., a New York corporation (the
"Seller"), and MONROE BREWING CO., LLC, a New York limited liability company
(the "Purchaser").
WITNESSETH:
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WHEREAS, the Seller is the wholly-owned subsidiary of The Genesee
Corporation ( the "GC");
WHEREAS, the Seller owns a brewery and related warehouses and Real
Property (as defined herein) in Rochester, New York, described in EXHIBIT A
annexed hereto (collectively the "Genesee Brewery");
WHEREAS, the Genesee Brewery is a brewing facility capable of brewing
beer, packaging beer in kegs, cans and bottles and distributing such packaged
beer (the "Business"); and
WHEREAS, the Purchaser, which has been organized by certain officers
and members of Seller's senior management team, desires to purchase certain
assets related to the Genesee Brewery, which constitute all of the Real
Property, machinery and equipment and certain other personal property and
intangible assets owned and/or leased by Seller in Rochester, New York and to
assume certain liabilities of the Business, and Seller desires to sell such
assets and to have Purchaser assume such liabilities, all on the terms and
conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements hereinafter set forth, and
upon the terms and subject to the conditions hereinafter set forth, the Seller
and the Purchaser hereby agree as follows:
ARTICLE I
DEFINITIONS
For purposes of this Agreement, the terms defined in this Article shall
have the meanings specified below (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
1.1 "Affiliate" shall mean any director or officer of the parties
hereto and any member of the immediate family of any such director or officer
and any other Person which directly or indirectly controls, is controlled by or
is under common control with the parties hereto.
1.2 "Agreement" shall mean this Asset Purchase Agreement and all of its
Exhibits and Schedules, as the same may be amended or modified from time to time
as permitted herein.
1.3 "Alternative Proposal" shall have the meaning ascribed to it in
Section 7.2 below.
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1.4 "Assets" shall have the meaning ascribed to it in Section 2.1
1.5 "Assumed Liabilities" shall have the meaning ascribed to it in
Section 2.3 below.
1.6 "Brands" shall mean all brands of beer owned by the Seller or any
subsidiary or affiliate company of the Seller, including without limitation
Genesee Beer, Genesee Cream Ale, Genesee 12 Horse Ale, Genesee Bock, Genny NA,
Genny Light, Genny Ice, Genny Red, Koch's Golden Anniversary Beer, Koch's Ice,
Koch's Golden Anniversary Light, Michael Shea's Irish Amber, Michael Shea's
Black and Tan, JW Dundee's Honey Brown Lager, JW Dundee's Honey Light and JW
Dundee's Classic Lager.
1.7 "Books and Records" shall mean all operational statements, books,
records, files, and computerized storage media pertaining to the Business
located at the Genesee Brewery.
1.8 "Business" shall have the meaning ascribed to it in the preamble to
this Agreement.
1.9 "Business Day" shall mean any day of the year on which banks are
not required or authorized to be closed in the State of New York.
1.10 "Closing" shall have the meaning ascribed to it in Section 4.1
below.
1.11 "Closing Date" shall have the meaning ascribed to it in Section
4.1. below.
1.12 "Closing Date Balance Sheet" shall have the meaning ascribed to it
in Section 3.4 below.
1.13 "COBRA" shall mean the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended, as set forth in Section 4980B of the Code and Part 6 of
Title I of ERISA.
1.14 "Code" shall mean the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.
1.15 "Consents" shall have the meaning ascribed to it in Section 7.5
below.
1.16 "Contract" shall mean any contract, agreement, plan,
understanding, commitment, arrangement, mortgage, deed of trust, bond,
indenture, lease, license, note, franchise, certificate, option, warrant, right,
instrument or other similar document and any oral obligation, right, contract or
agreement.
1.17 "Customer Contracts" shall mean any and all Contracts of Seller
and its Affiliates with its distributors or other customers, including, without
limitation, that certain Amended and Restated Agreement between Boston Beer
Company and Seller dated April 30, 1997.
1.18 "Damages" shall mean all losses, damages, amounts paid in
settlement, settlements, costs, expenses, interest, penalties, fines, suits,
Judgments, orders, liens, Taxes, obligations and Liabilities (including, without
limitation, reasonable attorneys' fees and expenses
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and reasonable consultants, accountants and expert witnesses fees and reasonable
out-of-pocket costs, including costs of investigation or enforcement incident to
the foregoing).
1.19 "Debt Financing Commitments" means written legally binding
commitment letters or other documentation from one or more commercial
banks or other lending institution, which provides for the debt and
mezzanine financing disclosed in SCHEDULE 1.19 annexed hereto and
have closing conditions satisfactory to Seller in its reasonable
discretion.
1.20 "Dollars" or "$" shall mean the legal currency of the United
States of America.1.21 "Employee Benefit Plan" shall have the meaning given such
term in Section 3(3) of ERISA.
1.22 "Environmental Claim" shall mean any written claim from a
Governmental Authority or a third party (other than the Seller or the Purchaser
and their respective parents, affiliates, subsidiaries, joint ventures and
lenders) received by Seller alleging or asserting liability for investigatory
costs, cleanup costs, response costs (including, among others, Governmental
Authority response costs), damages to natural resources or other property,
personal injuries, fines or penalties or other Liabilities arising out of, based
on or resulting from (a) the presence, or release into the environment, of any
Hazardous Material exceeding a permissible limit under applicable Environmental,
Health and Safety Requirements at any location at, on, or from the Real Property
prior to Closing, or (b) circumstances existing prior to Closing which form the
basis of any violation, or alleged violation, of any Environmental, Health and
Safety Requirements or any Hazardous Environmental Effect at the Genesee
Brewery. The term "Environmental Claim" shall include any claim by any
Governmental Authority for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental, Health and
Safety Requirements, and any claim by any third party, only to the extent such
third party claim is expressly provided for in any Environmental, Health and
Safety Requirements, seeking damages, contribution, indemnification, cost
recovery, compensation or injunctive relief resulting from the presence at the
Genesee Brewery of Hazardous Materials existing prior to Closing which exceed a
permissible limit under applicable Environmental, Health and Safety Requirements
or arising from alleged injury or threat of injury to health, safety or the
environment.
1.23 "Environmental, Health, and Safety Requirements" shall mean all
federal, state, local statutes, regulations, ordinances and other provisions
having the force or effect of law, all legally enforceable judicial and
administrative orders of any Governmental Authority, all common law concerning
public health and safety, worker health and safety, and pollution or protection
of the environment, each as amended and as in effect or existing as of the
Closing, including, without limitation, all those governing the use, production,
generation, handling, transportation, treatment, storage, disposal
(distribution, labeling, testing, processing), discharge, release, threatened
release, control, or cleanup of any Hazardous Materials.
1.24 "Environmental Phase I Report and Phase II Investigation" shall
mean those environmental site assessments performed on the Real Property and
Improvements that are part of the Genesee Brewery and related information
regarding the environmental condition of the Real Property and Improvements, as
more fully described on SCHEDULE 7.10 annexed hereto.
1.25 "Equity Financing Commitments" means written legally binding
subscription agreements or other documentation from investors which provide for
the equity and debt
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financing disclosed in SCHEDULE 1.19 annexed hereto and have conditions
satisfactory to Seller in its reasonable discretion.
1.26 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.27 "ERISA Affiliate" shall mean as to any person, any trade or
business, whether or not incorporated, which together with such person would be
deemed, at any time through the Closing Date a single employer within the
meaning of Section 4001 of ERISA or Section 414(b), (c), (m) or (o) of the Code.
1.28 "Estimated Closing Date Balance Sheet" shall have the meaning
ascribed to it in Section 3.4(a) below.
1.29 "Excluded Liabilities" shall have the meaning ascribed to it in
Section 2.4 below.
1.30 "Execution Date" shall mean the date hereof.
1.31 "Final Balance Sheet" shall have the meaning ascribed to it in
Section 3.4(b) below.
1.32 "Financing Commitment Date" means the date on which Purchaser
shall have obtained, and Seller shall have indicated its satisfaction with
Purchaser's Debt Financing Commitments and Equity Financing Commitments, which
date shall be no later than September 30, 2000.
1.33 "GAAP" shall mean United States generally accepted accounting
principles.
1.34 "GC" shall have the meaning ascribed to it in the preamble to this
Agreement.
1.35 "Governmental Authority" shall mean the federal government, any
state, county, municipal, local or other political subdivision government and
any governmental agency, bureau commission, authority or body exercising
legislative, judicial or regulatory functions.
1.36 "Hazardous Environmental Effect" shall mean any action or omission
to act producing Liabilities under any applicable Environmental, Health and
Safety Requirements.
1.37 "Hazardous Material" shall mean any pollutants, hazardous or toxic
materials, chemical substances or mixtures, pesticides, contaminants, toxic
chemicals, substances or wastes including: petroleum and petroleum products and
derivatives; asbestos; radon; polychlorinated bi-phenyls; urea-forinaldehyde
foam insulation; explosives; radioactive materials; laboratory wastes and
medical wastes (including contaminated clothing, body fluids, contaminated
medical instruments and equipment, catheters, used bandages, gauzes, needles or
other sharp instruments); and any other chemicals, materials or substances in
concentrations designated or regulated as hazardous or as toxic substances,
materials, or wastes, or otherwise regulated, under any Environmental, Health
and Safety Requirement.
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1.38 "HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations promulgated thereunder.
1.39 "Improvements" shall have the meaning ascribed to it in Section
2.1(f) below.
1.40 "Indemnitee" shall have the meaning ascribed to it in Section 11.5
below.
1.41 "Indemnitor" shall have the meaning ascribed to it in Section 11.5
below.
1.42 "Initial Payment" shall have the meaning ascribed to it in Section
3.1 below.
1.43 "Insurance" shall have the meaning ascribed to it in Section 5.10
below.
1.44 "Intangible Assets" shall have the meaning ascribed to it in
Section 2.1(c) below.
1.45 "IRS" shall have the meaning ascribed to it in Section 5.7(c)
below.
1.46 "Judgment" shall mean any judgment, writ, order, injunction
determination, award or decree of or by any court, judge, justice or magistrate,
including any bankruptcy court or judge, and any order of or by any Governmental
Authority, or any arbitration awards.
1.47 "Knowledge" or "known": Of, to or by Seller, shall mean the actual
knowledge of Mark Leunig, Steve Morse, Ed Mullen, and Charles Wehle, together
with all employees of Seller reporting directly to any of them, and the
knowledge that any of the foregoing persons would have obtained upon reasonable
examination of the books and records and accounts of Seller generally available
to them, without any other imputation of knowledge; and of, to or by Purchaser
shall mean the actual knowledge of the Management Employees together with all
employees of Seller, other than Mark Leunig, Steve Morse or Ed Mullen, reporting
directly to any of them and the knowledge that any of the foregoing persons
would have obtained upon reasonable examination of the books and records and
accounts of Seller generally available to them, without any other imputation of
knowledge.
1.48 "Law" shall mean any statute, ordinance, code, rule, regulation or
order enacted, adopted, promulgated, applied or followed by any Governmental
Authority.
1.49 "Legal Proceeding" shall mean any judicial, administrative or
arbitral action, suit, proceeding (public or private), claim or governmental
proceeding.
1.50 "Liability" shall mean any debt, claim, liability, obligation,
damage or expense (whether vested or unvested, asserted or unasserted, absolute
or contingent, accrued or unaccrued, assessed or unassessed, liquidated or
unliquidated, actual or potential, and due or to become due).
1.51 "Licenses and Permits" shall have the meaning ascribed to it in
Section 5.17 below.
1.52 "Lien" shall mean any security agreement, financing statement
(whether or not filed), security or other interest, conditional sale or other
title retention agreement, lease, consignment or bailment given for security
purposes, lien, charge, restrictive agreement,
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mortgage, deed of trust, indenture, pledge, option, encumbrance, limitation,
restriction, adverse interest, constructive or other trust, claim charge
attachment, exception to or defect in title or other ownership interest
(including reservations, rights of entry, possibilities or reverter,
encroachments, easements, rights of way, restrictive covenants and licenses) of
any kind, whether direct, indirect, accrued or contingent.
1.53 "Machinery" shall have the meaning ascribed to it in Section
2.1(a) below.
1.54 "Management Agreement" shall have the meaning ascribed to it in
Section 3.5 below.
1.55 "Management Employees" means Samuel T. Hubbard, Jr., John
Henderson, Gary Geminn, Michael Atseff, Paul Rene and Scott Harman,
individually, each of whom are current senior management employees of Seller and
are now or will be senior officers and managers of Purchaser.
1.56 "Material Adverse Effect" shall mean a material adverse effect on
the condition (financial or otherwise) of the Assets, properties, or results of
operations of the Business, except for any material adverse effect caused by (i)
any change in the value of the Assets resulting from a change generally
reflective (but not materially worse than, exclusive of seasonal variations) of
year-to-date trends or the operating projections set forth in Fiscal 2001 Budget
of Seller set forth in SCHEDULE 1.56 annexed hereto, (ii) any individual change
or combination of changes occurring after the date hereof in any federal or
state law, rule or regulation or in GAAP, which change(s) affect(s) breweries
generally, (iii) any action taken by Seller at the request of Purchaser or (iv)
any changes in the economy or in the brewing industry.
1.57 "Multiemployer Plan" shall mean a multiemployer plan, as defined
in Sections 3(37) and 4001 (a)(3) of ERISA.
1.58 "Net Working Capital" shall mean the Working Capital Assets less
the liabilities set forth on SCHEDULE 2.3(C). An example of the calculation is
included in SCHEDULE 1.58 annexed hereto.
1.59 "Operational Statements" shall have the meaning ascribed to it in
Section 5.4 below.
1.60 "Outside Closing Date" shall have the meaning ascribed to it in
Section 12.1(b) below.
1.61 "Payables" shall mean the balance owed by the Seller to a
creditor.
1.62 "Pension Plan" shall mean any employee pension benefit plan, as
defined in Section 3(2) of ERISA.
1.63 "Person" shall mean any individual, trustee, corporation, general
or limited partnership, joint venture, joint stock company, bank, firm,
Governmental Agency, trust, association, organization or unincorporated entity
of any kind.
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1.64 "Phase II Investigation" shall have the meaning ascribed to it in
Sections 1.24 and 7.10.
1.65 "Permitted Exceptions" shall have the meaning ascribed to it in
Section 5.11 below.
1.66 "Prohibited Transaction" shall mean a transaction that is
prohibited under Section 4975 of the Code or Section 406 of ERISA and not exempt
under Section 4975 of the Code or Section 408 of ERISA, respectively.
1.67 "Projections" means the projections prepared by Purchaser and
contained in Purchaser's business plan dated ____, 2000 a copy of which was
provided to Seller.
1.68 "Purchase Price" shall have the meaning ascribed to it in Section
3.1 below.
1.69 "Purchaser" shall have the meaning ascribed to it in the preamble
to this Agreement.
1.70 "Real Property" shall have the meaning ascribed to it in Section
2.1(d).
1.71 "Real Property Permitted Exceptions" shall have the meaning
ascribed to it in Section 5.8.
1.72 "Returns" shall have the meaning ascribed to it in Section 5.7
below.
1.73 "Seller" shall have the meaning ascribed to it in the preamble to
this Agreement.
1.74 "Special Committee" shall mean the special committee of the Board
of Directors of GC authorized to investigate, negotiate, recommend and accept
transactions for the sale and purchase of the Genesee Brewery.
1.75 "Subsidiary" shall mean with respect to any Person, any
corporation, association or other business entity of which more than 50% of the
issued and outstanding stock or equivalent thereof having ordinary voting power
is owned or controlled by such Person, by one or more Subsidiaries or by such
Person and one or more Subsidiaries.
1.76 "Survey" shall have the meaning ascribed to it in Section 7.10
below.
1.77 "Tangible Property" shall have the meaning ascribed to it in
Section 2.1(b) below.
1.78 "Taxes" shall have the meaning ascribed to it in Section 5.7
below.
1.79 "Threshold Amount" shall have the meaning ascribed to it in
Section 11.3 below.
1.80 "WARN Act" shall mean the Worker Adjustment and Retraining
Notification Act of 1988, as amended.
1.81 "Welfare Plan" shall mean any employee welfare benefit plan, as
defined in Section 3(l) of ERISA.
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1.82 "Working Capital Assets" shall have the meaning ascribed to it in
Section 2.1(e) below.
ARTICLE II
ASSETS TO BE ACQUIRED
2.1 Acquisition and Transfer of Assets. Upon the terms and subject to
the conditions hereinafter set forth, the Seller shall sell, assign, transfer,
convey and deliver to the Purchaser, and the Purchaser shall purchase, acquire
and accept all of the right, title and interest of the Seller in, certain assets
related to the Genesee Brewery (such assets being collectively referred to
herein as, the "Assets"). The Assets shall include the right, title and interest
of the Seller in and to the assets, properties, rights and claims described in
the following paragraphs (a) through (i) used or held for use in or related to
the Business and the Genesee Brewery:
(a) Machinery and Equipment. All machinery and equipment
(whether leased, to the extent the lease is assignable, or owned, to the extent
owned) used in or related to the production and day-to-day Business at the
Genesee Brewery, including but not limited to vehicles, manufacturing machinery,
and all other machinery and equipment listed on SCHEDULE 2.1(A) attached hereto
(collectively, the "Machinery");
(b) Tangible Property. All tangible property used in the
day-to-day Business of the Genesee Brewery, including all books and records,
furniture, furnishings, telephones and communications equipment, computers and
management information systems and all other office equipment (collectively, the
"Tangible Property");
(c) Intangible Assets. All intangible assets necessary for
day-to-day Business at the Genesee Brewery, including, without limitation, all
goodwill, know-how, trademarks, trade names, processes, formulas, trade dress,
trade secrets, design patents, copyrights, software, licenses of Intangible
Assets, sponsorship arrangements and other intellectual property assets related
to the Brands, the Business and the Genesee Brewery and all other intangible
assets listed on SCHEDULE 2.1(C) attached hereto (collectively, the "Intangible
Assets");
(d) Real Property. All real property interests owned by Seller
described in EXHIBIT A annexed hereto (the "Real Property") including all
easements, privileges, rights-of-way, riparian and other water rights, and other
appurtenances pertaining to or accruing to the benefit of the land or
improvements;
(e) Working Capital Assets. All accounts receivable,
inventories and prepaid expenses as shown on SCHEDULE 2.1(E) annexed hereto;
(f) Improvements. All buildings, structures, fixtures and
improvements on the Real Property, including but not limited to the brewery and
all related warehouses, owned by Seller (collectively, the "Improvements");
(g) Customer Contracts. Any and all rights under any Customer
Contracts to the extent assignable; and
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(h) Reports, Permits and Surveys. To the extent assignable,
all reports, surveys, Licenses and Permits and approvals of Governmental
Authorities necessary for day to day Business at the Genesee Brewery, including
the Environment Phase I Report and Phase II Investigation, Real Property surveys
and all other reports, permits and surveys, all as collectively listed on
SCHEDULE 2.1(H) attached hereto.
(i) Membership Interest. All of Sellers' interest as the sole
member in GBC Equipment, LLC, organized pursuant to Section 2.5 below.
2.2 Excluded Assets. Notwithstanding anything to the contrary contained
in Section 2.1 hereof, the parties expressly understand and agree that the
Seller is not hereunder selling, assigning, transferring, conveying or
delivering to the Purchaser any assets other than those assets listed in Section
2.1 hereof. The parties hereto hereby acknowledge that without limiting the
excluded assets, Seller is not hereunder selling, assigning, transferring,
conveying or delivering to the Purchaser any of the assets listed on SCHEDULE
2.2 annexed hereto (collectively, the "Excluded Assets").
2.3 Assumed Liabilities. On the terms and subject to the conditions set
forth in this Agreement, at the time of Closing, the Purchaser will assume, and
become responsible for, those Liabilities and only those Liabilities of the
Business set forth in this Section 2.3 (collectively, the "Assumed
Liabilities"). The Seller will be responsible for all other Liabilities,
including, but not limited to, the Excluded Liabilities. Moreover, the
Purchaser's assumption of the Assumed Liabilities will not detract from any of
Seller's representations, warranties, covenants or agreements in this Agreement
or from any Seller's obligation to indemnify the Purchaser for any Damages
resulting from breach thereof. Effective upon the Closing, the Purchaser will
assume the Assumed Liabilities, which consist only of:
(a) The Liabilities arising after the time of Closing in
connection with the operation of the Business and use of the Assets by the
Purchaser, including compliance with all Environmental Health and Safety
Requirements, including, but not limited to, waste disposal, permit compliance,
asbestos management and employee training; excluding, however, Environmental
Claims which are caused by any and all actions, omissions to act or conditions
existing prior to or at the time of Closing but, for the avoidance of doubt, not
such matters for which Purchaser is providing indemnity under Section 11.2;
(b) Seller's obligations under any and all leases,
month-to-month tenancies, Customer Contracts and related commitments related to
the Business, all of which are listed on SCHEDULE 2.3(B) annexed hereto; and
(c) Those items listed on SCHEDULE 2.3(C) annexed hereto.
2.4 Excluded Liabilities. The Purchaser shall not assume, or become
liable for, any Liabilities of the Seller, any Affiliate thereof, any Person
which is, in whole or in part, a predecessor of the Seller, any Affiliate
thereof or any other Person, other than the Assumed Liabilities, regardless of
whether any such Liability was disclosed or required to be disclosed pursuant to
this Agreement (collectively, the "Excluded Liabilities"). Without limiting the
generality of the foregoing, the Excluded Liabilities include, but are not
limited to, any and all Liabilities:
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(a) of Seller arising under this Agreement and the
transactions contemplated hereby;
(b) to the extent caused by: (i) any violation of any
Environmental, Health and Safety Requirement, existing prior to or at the time
of Closing, (ii) any actions, omissions to act or conditions existing or
occurring prior to or at the Closing resulting in an Environmental Claim or
Hazardous Environmental Effect, (iii) any conditions after the Closing which
arise from or relate to actions or omissions to act occurring prior to or at the
time of Closing, resulting in an Environmental Claim or Hazardous Environmental
Effect;
(c) with respect to (i) Taxes for any period prior to the time
of Closing, (ii) Taxes related to the Business for any period prior to the time
of Closing, and (iii) Taxes in connection with the consummation of the
transactions contemplated hereby [including, without limitation, any income or
real property transfer Taxes arising out of or relating to the transfer by the
Seller to the Purchaser of the Assets but excluding any sales or use Taxes
arising out of or relating to the transfer by Seller to the Purchaser of the
Assets (which shall be Purchaser's obligations)];
(d) constituting indebtedness, including, without limitation,
Liabilities: (i) in respect of borrowed money or evidenced by bonds, notes,
debentures or similar instruments, (ii) representing the balance deferred and
unpaid of the purchase price of any property (including capital leases) which
are not part of the Assets, (iii) to the extent not otherwise included,
obligations under interest rate exchange, currency exchange, swaps, futures or
similar agreements, and (iv) for guarantees, direct or indirect, in any manner
including, without limitation, reimbursement agreements in respect of letters of
credit of all or any part of any indebtedness of any third party;
(e) of Seller or its Affiliates with respect to employees,
including, but not limited to, liabilities for medical benefits, retirement,
pension or employee benefit plans, workers compensation or COBRA which are not
assumed by Purchaser under Section 7.3(b);
(f) with respect to any Liability of Seller with respect to
any Employee Benefit Plan or any collective bargaining agreement to which Seller
(or any of Seller's Affiliates) is or was a party, and including, without
limitation, any employee-related Payables which are not assumed by Purchaser
under Section 7.3(b);
(g) arising out of Letters of Credit which are pending as well
as all underlying surety bonds related thereto;
(h) which arise out of or relate to any Legal Proceeding for
any events or occurrences related to the Business or the Genesee Brewery which
take place prior to the Closing Date;
(i) which arise out of or relate to any Legal Proceeding
relating to Seller's business, whether related to the Genesee Brewery or not, at
any time;
(j) relating to product liability actions, causes of action,
claims, suits or proceedings in connection with products of the Business based
on occurrences or products produced prior to the Closing;
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(k) for any actions, causes of action, claims, suits or
proceedings with respect to the operation of the Business prior to the Closing;
and
(l) for any Liabilities listed on SCHEDULE 2.4(L).
2.5 Reorganization. Prior to the Closing Date, Seller shall cause to be
organized GBC Equipment, LLC, a New York limited liability company, the Articles
of Organization and Operating Agreement of which shall be satisfactory to Seller
in its sole discretion. Seller shall contribute to such limited liability
company for the sole membership interest therein all of the Machinery and
Tangible Property.
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ARTICLE III
PURCHASE PRICE
3.1 Purchase Price and Payment. The consideration (the "Purchase
Price") to be paid by the Purchaser to the Seller for the sale, assignment,
delivery and transfer of the Assets and the Seller's other obligations made
under this Agreement shall be the sum of (a) Twenty-Two Million Dollars
($22,000,000) plus or minus the Net Working Capital (the "Initial Payment"), and
(b) the Purchaser's assumption of the Assumed Liabilities. The Initial Payment
shall be paid at the Closing as follows: Seventeen Million Five Hundred Thousand
Dollars ($17,500,000) plus or minus the amount of the Net Working Capital, as
determined from the Estimated Closing Date Balance Sheet, by wire transfer of
immediately available funds to the account or accounts designated by Seller,
with the remaining balance of Four Million Five Hundred Thousand Dollars
($4,500,000) by delivery of Purchaser's Subordinated Promissory Note (the
"Subordinated Note"), in the form attached hereto as EXHIBIT B-1, bearing
interest at the rate of twelve percent (12%) per annum, payable quarterly, with
annual principal payments on each anniversary of the Closing in the amount of
five Hundred Thousand Dollars ($500,000) on the first anniversary, One Million
Dollars ($1,000,000) on the second anniversary and the balance (Three Million
Dollars ($3,000,000)) on the third anniversary, and including a right of offset
to the maximum amount specified in Section 11.3, all as provided in EXHIBIT B-1.
The Subordinated Note will be secured by a perfected security interest in all of
Purchaser's assets. The security interest will be subordinate and subject only
to the security interest held by the lenders providing the financing
contemplated by the Debt Financing Commitments (and to be held by the New York
State Job Development Authority, but only to the extent that it replaces and
does not increase any portion of the Debt Financing Commitments) and shall be
superior to the debt portion of the equity investments made in Purchaser as
evidenced by the form of Investor Subordinated Note attached hereto as EXHIBIT
B-3. The security interest shall be granted pursuant to a general security
agreement in the form attached hereto as EXHIBIT B-2.
3.2 Additional Purchase Price.
(a) In the event that prior to the fourth anniversary of the
Closing Date Purchaser receives any tangible benefit of all or a portion of the
excess assets (determined on a plan termination basis as of the Closing Date)
from the over-funded pension plan which covers certain of Seller's employees,
whether by "holiday" in making additional contributions, by reduction of
contribution obligations over the level required on a per participant basis as
of the Closing Date, by increase in its benefits which, absent the over-funding,
would result in an increase in Purchaser's so-called "normal cost" for benefits,
by receipt of a loan or equity investment in Purchaser (through any means or
device, including but not limited to an ESOP investment by plan trustees) by a
reversion of excess assets to the Purchaser, by the use of the excess assets to
provide other benefits (e.g., health, disability or death benefits) or
otherwise, then Purchaser shall pay Seller an amount equal to 50% of such
benefit. If Seller and Purchaser cannot agree that a benefit was received and/or
what the amount thereof is, they shall refer the matter to a firm of independent
accountants (which may use actuaries) to resolve the matter. The Purchaser and
Seller shall share equal responsibility for the fees and expenses of the
independent accounting firm. This Section shall be binding on any successor to
Purchaser, whether through sale of substantially all of the Assets or the
capital stock of Purchaser or by merger or consolidation or otherwise.
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(b) In the event that Purchaser recovers more than $700,000
net proceeds after expenses from the sale, scrapping or disposal of cooperage
included in the Assets in the three years following the Closing Date, Purchaser
shall pay Seller 50% of such amounts. In the event that in the three (3) years
following the Closing Date Purchaser recovers any amount from the disposal of
bottling/keg lines which is not reinvested in the business within six (6) months
or the time required to install the replacement/new facility, whichever is
later, Purchaser shall pay Seller 50% of such amount. Purchaser agrees to notify
Seller of any such recovery and for three years after Closing to provide Seller
with copies of its quarterly balance sheet within 45 days after the end of each
fiscal quarter except the period shall be 90 days for the final fiscal quarter
(year end).
(c) Sale of Assets. In the event that within one year after
Closing Purchaser sells substantially all of the Assets acquired in this
transaction and the proceeds net of shut-down and sale costs are greater than
the Purchase Price offered in Section 3.1, the Purchaser and Seller shall share
equally in the excess.
(d) The claims and rights of Seller under subsections (a), (b)
and (c) of this Section 3.2 may not be assigned except to a liquidating trust or
similar entity.
3.3 Allocation of Purchase Price. The Purchaser and the Seller hereby
agree that the Purchase Price of the Assets is allocable as shown on SCHEDULE
3.3 annexed hereto. In the event that Purchaser and Seller are unable to agree
on the allocation, each shall be free to file all returns and reports including
without limitation, all federal, state and local income, sales and use, and
franchise tax returns, on the basis of its own allocation, and on the basis of
the Purchase Price.
3.4 General Adjustment of Purchase Price.
(a) The Seller shall prepare and deliver to the Purchaser on
or prior to the Closing Date an unaudited balance sheet of Seller as of the
month ending nearest the Closing Date for which Seller has a month ending
unaudited balance sheet (the "Estimated Closing Date Balance Sheet"). As soon as
practicable after the Closing Date hereof, but in no event later than
seventy-five (75) calendar days after the Closing Date, the Seller shall prepare
an audited balance sheet of the Seller as at the Closing Date (the "Closing Date
Balance Sheet"), and shall deliver it to the Purchaser with an audit report
thereon. The Closing Date Balance Sheet shall be audited by the accounting firm
regularly serving the Seller (the "Auditor") at the expense of Seller, and shall
be prepared in accordance with GAAP, except that there shall be no accrual in
respect of Environmental Claims or other matters for which the Seller is
obligated to indemnify the Purchaser. The audit report delivered by the Auditor
shall be addressed to the Seller.
(b) The Purchaser and Seller shall have the right to dispute
any of the items or amounts set forth on or omitted from the Closing Date
Balance Sheet, and the accounting treatment of items for a period of thirty (30)
days from the date the Purchaser or Seller, as the case may be, receives the
Closing Date Balance Sheet and the Auditor's report thereon by notifying the
other party of the specific items or amounts being disputed and its position
with respect to such items or amounts. If the Purchaser and the Seller are
unable to resolve any such disputes within thirty (30) days, either party may
elect to refer the dispute or disputes to a mutually agreeable nationally
recognized accounting firm (the "Independent Accountant") for determination, and
such determination by the Independent Accountant shall be final and binding on
the parties. The Purchaser and the Seller shall cooperate fully with the
Independent
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Accountant and shall provide the Independent Accountant with any and all
information and records as shall be requested by the Independent Accountant. The
Closing Date Balance Sheet, as revised to reflect the agreement of the parties
with respect to all disputed items or amounts, or alternatively to reflect the
determination of the Independent Accountant, is referred to herein as the "Final
Balance Sheet".
(c) In the event either party submits a dispute to the
Independent Accountant for resolution as provided above, the Purchaser and the
Seller will share responsibility for the fees and expenses of the Independent
Accountant as follows:
(i) if the Independent Accountant resolves all of the
remaining disputes in favor of the Purchaser (the Net Working Capital so
determined is referred to herein as the "Low Value"), the Seller will be
responsible for all of the fees and expenses of the Independent Accountant;
(ii) if the Independent Accountant resolves all of the
remaining disputes in favor of the Seller (the Net Working Capital so determined
is referred to herein as the "High Value"), the Purchaser will be responsible
for all of the fees and expenses of the Independent Accountant; and
(iii) if the Independent Accountant resolves some of the
remaining disputed items in favor of the Purchaser and the rest of the remaining
disputed items in favor of the Seller (the Net Working Capital so determined is
referred to herein as the "Actual Value"), the Seller will be responsible for
that fraction of the fees and expenses of the Independent Accountant equal to
(x) the difference between the High Value and the Actual Value over (y) the
difference between the High Value and the Low Value, and the Purchaser will be
responsible for the remainder of the fees and expenses.
The Seller will make the work papers and back-up materials used in preparing the
Closing Date Balance Sheet, and the books and records of the Business available
to the Purchaser and its accountants and other representatives at reasonable
times and upon reasonable notice at any time during (A) the preparation of the
Closing Date Balance Sheet, (B) the review by the Purchaser of the Closing Date
Balance Sheet, and (C) the resolution by the parties of any disputes thereto.
(d) If the Net Working Capital as shown on the Final Balance
Sheet exceeds the Net Working Capital shown on the Estimated Closing Date
Balance Sheet, the Purchaser will pay to the Seller an amount equal to such
excess plus interest thereon at the prime rate of Chase Manhattan Bank from the
Closing Date in cash, certified check or wire transfer within three (3) Business
Days after the date of which the Final Balance Sheet is agreed to by Seller and
Purchaser or is finally determined by the Independent Accountant. If the Net
Working Capital of the Business as shown on the Final Balance Sheet is less than
the Net Working Capital shown on the Estimated Closing Date Balance Sheet, the
Seller will pay to the Purchaser the amount equal to such deficiency plus
interest thereon at the prime rate of interest of Chase Manhattan Bank from the
Closing Date in cash, certified check or wire transfer within three (3) Business
Days after the date on which the Final Balance Sheet is agreed to by Seller and
Purchaser or is finally determined by the Independent Accountant. In either case
the parties agree that any adjustment provided for herein shall be treated as an
adjustment to the Purchase Price.
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3.5 Management Agreement. The parties agree to enter into a management
agreement, in the form of EXHIBIT C annexed hereto (the "Management Agreement")
providing for (a) Purchaser's management of the assets and business of GC after
Closing, (b) rental of space and use of equipment in connection with the
management services being provided to GC by Purchaser, (c) ancillary costs of
continued operation of GC, and (d) payment by GC to Purchaser of a management
fee of Thirty Thousand Dollars ($30,000) per month. The initial term will be
four (4) months from the Closing Date and GC will have an option to extend the
term for two (2) additional four (4) month terms on the same terms and
conditions.
ARTICLE IV
THE CLOSING
4.1 Closing Date. The parties will endeavor to consummate the
transactions contemplated hereby (the "Closing") by October27, 2000 and in any
event on the date that is two (2) Business Days after the day on which each
condition set forth in Articles VIII and IX has been satisfied or is waived by
the party entitled to the benefit of such condition, or at such other place and
at such other time and date as may be mutually agreed upon by the parties
hereto. The date of the Closing is referred to in this Agreement as the "Closing
Date." The Closing shall take place at the offices of Underberg & Kessler LLP,
1800 Chase Square, Rochester, New York 14604, or such other location as the
parties may mutually agree, on the Closing Date.
4.2 Proceedings at Closing. All corporate proceedings to be taken and
all agreements, instruments and documents to be executed and delivered by the
Seller in connection with the consummation of the transactions contemplated
hereby shall be reasonably satisfactory in form and substance to the Purchaser
and its counsel. All corporate proceedings to be taken and all agreements,
instruments and documents to be executed and delivered by the Purchaser in
connection with the consummation of the transactions contemplated hereby shall
be reasonably satisfactory in form and substance to Seller and its counsel. All
corporate proceedings to be taken and all documents to be executed and delivered
by all parties at the Closing shall be deemed to have been taken, executed and
delivered simultaneously as of11:59 P.M., on the Closing Date, and no
proceedings shall be deemed taken nor any documents executed or delivered until
all have been taken, executed and delivered.
4.3 Deliveries by the Seller to the Purchaser. At the Closing, the
Seller shall deliver, or shall cause to be delivered, to the Purchaser the
following:
(a) duly executed and acknowledged instruments of transfer and
assignment of the Assets, including, as appropriate, bargain and sale deeds with
covenants against grantor's acts, assignments, transfers of Licenses and Permits
(to the extent assignable by Seller), bills of sale, certificates of title
and/or New York State (and, if applicable, city or county) transfer tax forms,
each dated the Closing Date, sufficient to vest in Purchaser the right, title
and interest in the Assets, free and clear of all Liens other than Permitted
Exceptions and Real Property Permitted Exceptions (as described in SCHEDULE 5.8
annexed hereto), each being conveyed at the Closing in accordance with the terms
of this Agreement;
(b) a receipt for the portion of the Purchase Price payable at
the Closing;
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(c) full undisturbed possession of the Assets, and full use
and enjoyment of the same subject to Permitted Exceptions and Real Property
Permitted Exceptions;
(d) secretary's certificates and such certificates from public
officials relating to legal existence, corporate good standing, certificate of
incorporation and Tax clearance, including certificates issued by the
appropriate Governmental Authorities dated as of a date within five days of the
Closing as to the good standing of the Seller in the state of New York and the
other deliveries required by Article VII, or additionally as the Purchaser may
reasonably request;
(e) an executed copy of the Management Agreement;
(f) executed copies of the Consents referred to in Section
7.5;
(g) agreements signed by GC consistent with the terms of
EXHIBIT D annexed hereto;
(h) duly executed certificates of amendment for the Seller, in
form suitable for filing with appropriate Governmental Authority, changing its
name to eliminate reference to the name "Genesee", "High Falls" or the names of
any of the Brands.
(i) such other agreements, instruments and documents as the
Purchaser or its counsel may reasonably request; and
(j) a certificate of the Secretary or other officer of Seller
not affiliated with the Purchaser to the effect that (i) the representations and
warranties of Seller set forth in this Agreement are true and correct in all
material respects on and as of the Closing Date as if made on and as of such
date, except as contemplated or permitted by this Agreement, (ii) Seller has
complied in all material respects with all of its covenants and agreements set
forth in this Agreement through the Closing Date, and (iii) all of the
conditions set forth in Article IX of this Agreement have been satisfied or
waived by Seller.
4.4 Deliveries by the Purchaser to the Seller. At the Closing, the
Purchaser shall deliver to the Seller the following:
(a) immediately available funds by wire transfer for that
portion of the Initial Payment as provided in Section 3.1 hereof;
(b) a duly executed Subordinated Note in the form of EXHIBIT
B-1 annexed hereto and a duly executed Security Agreement in the form of EXHIBIT
B-2 annexed hereto and UCC-1 financing statements;
(c) duly executed and acknowledged instruments of assumption
evidencing the assumption by the Purchaser of the Assumed Liabilities in
accordance with the terms of this Agreement, pursuant to which the Purchaser
will assume the Assumed Liabilities;
(d) secretary's certificates and such certificates from public
officials relating to legal existence, corporate good standing, articles of
organization and Tax clearance, as well as a certificate issued by the
appropriate Governmental Authorities dated as of a date within five (5)
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days of the Closing as to the good standing of Purchaser in the State of New
York, and the other deliveries required by Article IX, or additionally as the
Seller or its counsel may reasonably request;
(e) an executed copy of the Management Agreement;
(f) the other agreements, instruments and documents referred
to in Article IX hereof and such other agreements, instruments and documents as
the Seller or its counsel may reasonably request;
(g) a certificate of the President or other officer of
Purchaser to the effect that (i) the representations and warranties of Purchaser
set forth in this Agreement are true and correct in all material respects on and
as of the Closing Date as if made on and as of such date, except as contemplated
or permitted by this Agreement, (ii) Purchaser has complied in all material
respects with all of its covenants and agreements set forth in this Agreement
through the Closing Date, and (iii) all of the conditions set forth in Article
VIII of this Agreement have been satisfied or waived by the Purchaser.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser as follows:
5.1 Organization, Standing, Power and Qualification. The Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the state of New York, and has all necessary right, power and authority to
(i) own, operate, lease and sell the Assets; (ii) to enter into this Agreement;
(iii) to carry out its obligations hereunder; and (iv) to consummate the
transactions contemplated hereby. The Seller is duly qualified as a foreign
corporation and is in good standing, in each of the jurisdictions listed on
SCHEDULE 5.1 annexed hereto, those jurisdictions being all of the jurisdictions
where such qualification is required by Law except where the failure to so
qualify would not have a Material Adverse Effect. The execution, delivery and
performance of this Agreement and the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of the Seller, and
no other approval is necessary for the execution, delivery and performance of
this Agreement. This Agreement has been duly executed and delivered by the
Seller, and assuming due authorization, execution and delivery by the Purchaser,
this Agreement constitutes a legal, valid and binding obligation of the Seller
enforceable against it in accordance with its terms, except as may be limited by
bankruptcy, moratorium and insolvency laws and by other laws affecting the
rights of creditors generally and except as may be limited by the availability
of equitable remedies.
5.2 No Conflict. The execution and delivery of this Agreement do not,
the consummation of the transactions described herein and contemplated hereby,
and the compliance by the Seller with any of the provisions hereof, will not
result in or constitute (a) a default, breach or violation of the Certificate of
Incorporation or the By-laws of the Seller or any Contract or Lien to which the
Seller is a party or by which any of the Assets are bound; (b) subject to the
receipt of the Consents required as referred to in Section 5.3, an event which
(with notice or lapse of time or both) would permit any Person to terminate,
accelerate the performance required by, or accelerate the maturity of any
indebtedness or obligation of the Seller under any Contract or Lien
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to which the Seller is a party or by which any of the Assets are bound; (c) the
creation or imposition of any Lien on any property of the Seller associated with
the Genesee Brewery, under any Contract to which the Seller is a party or by
which any of the Assets are bound; (d) a violation of any Law or Judgment of any
court or other Governmental Authority or any other restriction of any kind or
character by which the Seller or any of the Assets are bound; or (e) violate or
conflict with any other restrictions of any kind or character to which the
Seller or an Affiliate thereof or any of the Assets is subject that,
individually or in the aggregate, could have a Material Adverse Effect.
5.3 Consents. Except as set forth on SCHEDULE 5.3 annexed hereto, the
execution and delivery of this Agreement by the Seller does not, and the
performance of this Agreement by the Seller will not, require any Consent, other
than (a) routine filings, if any, required by the alcoholic beverage control and
corporate laws of jurisdictions in which Seller is qualified to transact
businesses as a foreign corporation, and (b) Consents, the failure to obtain
which, individually or in the aggregate, would not have a Material Adverse
Effect on the Business.
5.4 Operational Statements. SCHEDULE 5.4 annexed hereto contains
complete and correct copies of the financial statements of the Genesee Brewery
for the 1999 and 2000 fiscal year and the period from May 1, 2000 through July
29, 2000 (the "Operational Statements").
5.5 Absence of Undisclosed Liabilities. Except as set forth in the
Schedules to this Agreement, to the Seller's Knowledge, the Seller has no
Liabilities related to or arising from the operation of the Genesee Brewery or
other ownership, possession or use of the Assets (other than Liabilities arising
in the ordinary course of business).
5.6 Absence of Certain Developments. Since April 30, 2000, the
operations of the Genesee Brewery have not experienced any change or event which
has had or would, individually or in the aggregate, have a Hazardous
Environmental Effect, and, except as set forth on SCHEDULE 5.6 annexed hereto,
to Seller's Knowledge, the Seller has not taken any of the actions or permitted
to occur any of the events specified in Section 7.1 or committed to do any of
the foregoing in connection with the Genesee Brewery.
5.7 Taxes.
(a) Except as set forth on SCHEDULE 5.7 annexed hereto, the
Seller has filed, been included in or sent, or will file, be included in or
send, all returns, declarations and reports and all information returns and
statements (collectively, "Returns") required to be filed or sent with respect
to all net income, gross income, alternative or add-on minimum, environmental,
gross receipts, sales, use, goods and services, ad valorem, transfer, toll-gate,
capital stock, franchise, profits, license, withholding, payroll, single
business, employment, excise, severance, documentary, stamp, occupation,
property, unemployment, real estate taxes and assessments or other taxes,
customs, duties, fees, levies, assessments or charges of any kind whatsoever,
and any installments with respect thereto, together with any interest penalties,
additions to tax or additional amounts imposed or proposed to be assessed
thereon by any taxing authority (domestic or foreign) in connection with the
Genesee Brewery (collectively, "Taxes"), for any period on or before the time of
Closing.
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(b) All Taxes (plus any interest, penalties and additions to
Taxes that were or are proposed to be assessed thereon, if any) due and with
respect to the Returns with respect to the Business have been fully paid or, as
described in greater detail in SCHEDULE 5.7, are being contested in good faith
by appropriate proceedings. All required Tax estimates, deposits, prepayments
and similar reports or payments for all periods have been properly made. The
Seller is not delinquent in the filing of any Return or the payment of any Tax
and has not requested any extension of time within which to file any Return.
(c) All Taxes that the Seller was required, or prior to the
Closing Date will be required, by Law to withhold or collect have been (in the
case of those Taxes that were already required to be withheld or collected) or
will be duly withheld or collected and, to the extent required, have been (in
the case of those Taxes that were already required to be paid) or will be paid
to the appropriate Governmental Authorities. There are no Liens with respect to
Taxes upon any of the Assets except for the Permitted Exceptions and Taxes not
yet due.
(d) Except as set forth on SCHEDULE 5.7(D), the business
conducted by the Seller at the Genesee Brewery is not currently under
examination by the Internal Revenue Service (the "IRS") or any other
Governmental Authority with respect to Taxes. Except as set forth in SCHEDULE
5.7(D), neither the Seller nor the Business has been contacted by or is
currently corresponding with any Governmental Authority with respect to failure
of Seller to file Returns and/or pay any Taxes.
5.8 Real Property. With respect to all of the Real Property and except
for the permitted exceptions (the "Real Property Permitted Exceptions") as set
forth on SCHEDULE 5.8 annexed hereto:
(a) the Seller has no Knowledge that Seller does not have
insurable fee simple title to the Real Property free and clear of any Liens
except the Real Property Permitted Exceptions;
(b) to the Knowledge of Seller and except as set forth in
SCHEDULE 5.8(B) annexed hereto, there are no pending or to the Knowledge of the
Seller any threatened condemnation proceedings, lawsuits or administrative
actions relating to the Real Property or other matters having a Material Adverse
Effect on the current use, occupancy or value thereof (determined with respect
to each separate parcel thereof);
(c) the legal description for the Real Property contained in
EXHIBIT A describes such Real Property,
(d) to the Knowledge of Seller,(i) the buildings and
improvements are located within the boundary lines of the described parcels of
land, (ii) there exists no material violation of applicable setback
requirements, zoning laws, and ordinances, (iii) the land does not serve any
adjoining property for any purpose inconsistent with the use of the land, and
(iv) the Real Property is not located within any flood plain or subject to any
similar type restriction for which any Licenses or Permits necessary to the use
thereof have not been obtained;
(e) to the Knowledge of Seller, all facilities have received
all necessary approvals of governmental authorities (including Licenses and
Permits) required in connection with the ownership or operation thereof and have
been and are being operated and maintained in
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material accordance with applicable Laws, rules and regulations and the terms
and conditions of such Licenses and Permits;
(f) to the Knowledge of Seller, there are no leases,
subleases, licenses, concessions or other agreements granting to any party or
parties the right of use or occupancy of any portion of the Real Property except
as may be included in the Real Property Permitted Exceptions;
(g) to the Knowledge of Seller, there are no outstanding
options or rights of first refusal to purchase the Real Property or any portion
thereof or interest therein;
(g) to the Knowledge of Seller, there are no parties in
possession of the Real Property other than Seller;
(h) to the Knowledge of Seller all facilities and Improvements
located on the Real Property are supplied with utilities and other services
necessary for the operation of such facilities as operated by Seller, including
gas, electricity, water, telephone, sanitary sewer, and storm sewer, all of
which services are adequate to the knowledge of Seller in accordance with all
applicable laws, ordinances, rules, and regulations and are provided via public
roads or via permanent, irrevocable, appurtenant easements benefiting the Real
Property;
(i) to the Knowledge of Seller, the Real Property abuts on and
has direct vehicular access to public roads and access to the property is
provided by paved public right-of-way with adequate curb cuts available;
(j) to the Knowledge of Seller, the Real Property constitutes
numerous tax parcels as set forth on EXHIBIT A for purposes of ad valorem
taxation;
(k) to the Knowledge of Seller, the Real Property does not
require any rights over, or restrictions against, other property, in order to
comply with any zoning or land use laws or regulations or to operate the
Business thereon; and
(l) Except for the specific representations and warranties set
forth herein, the Purchaser agrees to accept the Real Property and all
Improvements in "AS IS" condition as of the Execution Date and agrees that
Seller has no obligation to repair, restore or rebuild any portion thereof,
including the CSX trestle. In the event that the Real Property or Improvements
are damaged prior to Closing, Seller shall either repair the damage or give
Purchaser a credit against the cash portion of the Purchase Price for the
reasonable cost of repair, subject to the provisions of Section 12.1(l).
5.9 Environmental, Health and Safety Matters. Except as set forth in
the Environmental Phase I Report and Phase II Investigation annexed hereto as
SCHEDULE 5.9.
(a) The Seller has materially complied and is in material
compliance with all Environmental, Health, and Safety Requirements in connection
with its ownership, occupation and operation of the Real Property, Improvements
and the Business.
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(b) Without limiting the generality of Section 5.9(a), the
Seller has obtained and complied with, and is in material compliance with,
Licenses and Permits required for the ownership, occupation and operation of the
Real Property and Improvements, and any other facilities and the operation of
the Business.
(c) Within the past five (5) years, the Seller has not
received any written notice, claim, report or other information regarding any
actual or alleged violation of Environmental, Health and Safety Requirements, or
any Liabilities or potential Liabilities (whether accrued, absolute, contingent,
unliquidated or otherwise), including any investigatory, remedial or corrective
action obligations, or any worker safety or other toxic tort Liabilities
relating to the Real Property or Improvements or other facilities or the
Business arising under Environmental, Health and Safety Requirements or arising
from any third party claim or action. There are no unresolved notices of
violation or liability against the Seller.
(d) None of the following exists on the Real Property or
Improvements: (1) underground storage tanks, (2) materials or equipment
containing polychlorinated biphenyls at levels at or above 50 parts per million
or (3) landfills, surface impoundments, lagoons or disposal areas.
(e) With respect to the Real Property and Improvements, the
Seller has never expressly, or by operation of law (except as may arise under
applicable statutory or regulatory provisions as may pertain to the acquisition
of real property) assumed or undertaken any Liability, including without
limitation any obligation for corrective or remedial action, of any other Person
relating to Environmental, Health, and Safety Requirements or any third party
claim or action.
(f) The Real Property and Improvements are free from
contamination by Hazardous Materials that exceed any permissible limit and that
would require investigation and/or remediation under any Environmental, Safety
and Health Requirements, except for such Hazardous Materials for which a no
further action determination has been received from an applicable Governmental
Authority, as disclosed on SCHEDULE 5.9.
5.10 Insurance. To the Knowledge of Seller, the Seller has casualty,
general liability and other insurance policies for the assets and properties of
the Business that are sufficient for compliance with all requirements of law and
all Contracts relating to machinery, equipment and vehicles at the Genesee
Brewery up to the Closing Date (the "Insurance").
5.11 Tangible Property. The Seller has, and as of the time of the
Closing, through sole membership interest in GBC Equipment, LLC, Seller will
have and transfer to the Purchaser good, marketable or insurable title to, or a
valid leasehold interest in, all Tangible Property constituting part of the
Assets, free and clear of any Liens, except for (i) minor imperfections of
title, none of which is substantial in amount, detracts from the value or
impairs the use of the property or the operation of the Business and which are
described on SCHEDULE 5.11 attached hereto, or (ii) Liens for Taxes not yet due
or which are being contested in good faith by appropriate proceedings (the items
in clauses (i) and (ii) being "Permitted Exceptions"). Except for the specific
representations and warranties set forth herein, all Tangible Property is taken
"AS IS" and "WHERE IS." In the event that the Tangible Property is damaged prior
to Closing, Seller shall either repair the damage or give Purchaser a credit
against the cash portion of the Purchase Price for the reasonable cost of
repair, subject to the provisions of Section 12.1(l).
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5.12 Machinery. The Seller has, and as of the time of the Closing,
through sole membership interest in GBC Equipment, LLC, Seller will have and
transfer to the Purchaser good, marketable or insurable title to, or a valid
leasehold interest in, all Machinery constituting part of the Assets, free and
clear of any Liens, except for minor imperfections of title, none of which is
substantial in amount, detracts from the value or impairs the use of the
Machinery or the operation of the Business and which are described on SCHEDULE
5.12 attached hereto. Any and all leases relating to Machinery are set forth on
SCHEDULE 5.12 annexed hereto are, and as of the time of the Closing will be, in
full force and effect, will expire on the dates set forth on SCHEDULE 5.12
hereto and, except as provided on SCHEDULE 5.12(I) annexed hereto, will be fully
assignable. Except for the specific representations and warranties set forth
herein, all Machinery is taken "AS IS" and "WHERE IS." In the event that the
Machinery is damaged prior to Closing, Seller shall either repair the damage or
give Purchaser a credit against the cash portion of the Purchase Price for the
reasonable cost of repair, subject to the provisions of Section 12.1(l).
5.13 Intangible Assets.
(a) SCHEDULE 2.1(C) attached hereto sets forth an accurate and
complete list of all registered and granted Intangible Assets and applications
therefor used in the Business. To Seller's Knowledge, the Seller has not during
the past three years been known by or done business under any name other than as
listed in SCHEDULE 2.1(C).
(b) To Seller's Knowledge, no use of the Intangible Assets,
the nature of any of the products they sell, the services they provide, or the
conduct of the Business infringes upon, is inconsistent with or otherwise
violates the rights of any third party in or to such Intangible Assets. In
addition, no claim has been asserted or, to Seller's Knowledge, threatened with
respect to the foregoing. Except as set forth on SCHEDULE 5.13, the Seller has
no Knowledge of any claim which can be asserted successfully by any Person
against the Seller with respect to the use of any of the Intangible Assets
challenging or questioning the validity or effectiveness of such use of any such
item. The Seller has taken reasonably necessary measures to protect the
proprietary nature of each of the Intangible Assets, and to maintain the
confidentiality of all confidential information, that the Seller owns or uses in
connection with the Business. Except as set forth on SCHEDULE 5.13 annexed
hereto, to the Knowledge of the Seller, neither the conduct of any other
Person's business, nor the nature of any of the products it sells or services it
provides, infringes upon or is inconsistent with any of the Intangible Assets,
the infringement of which would have Material Adverse Effect.
(c) Except as set forth in SCHEDULE 5.13, to Seller's
Knowledge: (i) all of the registrations or grants relating to the Intangible
Assets are subsisting and unexpired, free of all Liens, and have not been
abandoned; (ii) the Seller is an owner of record of each application,
registration or grant for each of the Intangible Assets, and has properly
executed and recorded all documents necessary to perfect its title to such
Intangible Assets; and (iii) there has been no claim to the title of any right
to the Intangible Assets which could have a Material Adverse Effect on title or
use of such Intangible Asset.
(d) To Seller's Knowledge, SCHEDULE 5.13 sets forth a correct
and complete list, of all material existing licenses, sublicenses, and
permissions to use any of the Intangible Assets (in each case identifying the
Intangible Asset licensed, the license parties, and the date of the license
agreement or other agreement permitting use of the item). To Seller's Knowledge,
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SCHEDULE 5.13 sets forth a correct and complete list of all material licenses,
sublicenses, and permissions to use any of the Intangible Assets to which the
Seller is a party. To Seller's Knowledge, there is no material default by the
Seller under such licenses, sublicenses, or permissions that is reasonably
likely to have a Material Adverse Effect.
5.14 Employees.
(a) SCHEDULE 5.14 annexed hereto sets forth an accurate and
complete list of all Employment Agreements related to the Business to which the
Seller is a party or is bound; (b) there are no material controversies pending
or, to the knowledge of the Seller, threatened involving any employee or group
of employees, other than Management Employees, in connection with the Business
which would have a Material Adverse Effect; (c), except as set forth in SCHEDULE
5.14, there are no other collective bargaining or other union contracts
involving the Business; (d) except as set forth on SCHEDULE 5.14, there is no
unfair labor practice charge or complaint against or related to the Business
pending ; (e) to Seller's Knowledge Seller has not received notice of the intent
of any federal, state or local governmental authority responsible for
enforcement of labor or employment laws to conduct an investigation with respect
to the Business; (f) no such investigation is in progress. In the last five
years, the Business has not suffered or sustained any work stoppage;, and (g) no
such work stoppage is threatened.
5.15 Employee Benefit Matters.
(a) SCHEDULE 5.15 annexed hereto lists the all Employee
Benefit Plans of the Seller. Listed separately, and designated as such on
SCHEDULE 5.15, are all Pension Plans subject to Title IV of ERISA, all
Multiemployer Plans, any union sponsored multiemployer welfare benefit fund and
any "welfare benefit fund" defined in Section 419(e) of the Code.
(b) There is no pending dispute between Seller or ERISA
Affiliate, and any Multiemployer Plan concerning payment of contributions or
payment of withdrawal liability payments.
(c) None of the Company or any ERISA Affiliate has incurred
any liability under, arising out of or by operation of Title IV of ERISA (other
than liability for premiums to the Pension Benefit Guaranty Corporation (the
"PBGC") arising in the ordinary course), including, without limitation, any
material liability in connection with (i) the termination or reorganization of
any employee pension benefit plan subject to Title IV of ERISA or (ii) the
withdrawal from any Multiemployer Plan or Multiple Employer Plan, and no fact or
event exists which could give rise to any such material liability. Except as set
forth on SCHEDULE 5.15, no complete or partial termination has occurred within
the five years preceding the date hereof with respect to any Employee Benefit
Plan.
(d) Each of the Employee Benefit Plans sponsored by Seller
intended to qualify under Section 401 of the Code ("Qualified Plans") so
qualifies, and, except as disclosed on SCHEDULE 5.15, nothing has occurred with
respect to the operation of any such plan which, either individually or in the
aggregate, would cause the loss of such qualification or the imposition of any
liability, penalty or tax under ERISA or the Code.
(e) All contributions and premiums required by law or by the
terms of any Employee Benefit Plan or any agreement relating thereto have been
timely made (without regard
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to any waivers granted with respect thereto) and, except as disclosed on
SCHEDULE 5.15, no accumulated funding deficiencies exist in any of the Employee
Benefit Plans subject to Section 412 of the Code.
(f) The liabilities of each Employee Benefit Plan that has
been terminated or otherwise wound up, have been fully discharged in compliance
with applicable law.
(g) There has been no "reportable event" as that term is
defined in Section 4043 of ERISA and the regulations thereunder with respect to
any of the Employee Benefit Plans subject to Title IV of ERISA which would
require the giving of notice, or any event requiring notice to be provided under
Section 4063(a) of ERISA.
(h) There has been no violation of ERISA with respect to the
filing of applicable returns, reports, documents and notices regarding any of
the Seller's Employee Benefit Plans with the Secretary of Labor or the Secretary
of the Treasury or the furnishing of such notices or documents to the
participants or beneficiaries of the Employee Benefit Plans which, either
individually or in the aggregate, could result in material liability to the
Company.
(i) Complete and correct copies of the following documents,
with respect to each of the Seller's Employee Benefits Plans (as applicable),
have been delivered to Buyer: (i) any plan documents and related trust
documents, and all amendments thereto; (ii) the most recent Forms 5500 and
schedules thereto; (iii) the most recent IRS determination letter; (iv) the most
recent summary plan descriptions; and (v) written descriptions of all nonwritten
agreements relating to the Seller's Employee Benefit Plans.
(j) There are no pending legal proceedings which have been
asserted or instituted against any of the Employee Benefit Plans, the assets of
any such plans or the Company or any of the Seller, the plan administrator or
any fiduciary of the Employee Benefit Plans with respect to the operation of
such plans (other than routine, uncontested benefits claims).
(k) Each of the Seller's Employee Benefit Plans has been
maintained, in all material respects, in accordance with its terms and all
provisions of applicable laws and regulations. All amendments and actions
required to bring each of the Seller's Employee Benefit Plans into conformity in
all material respects with all of the applicable provisions of ERISA and other
applicable laws and regulations have been made or taken except to the extent
that such amendments or actions are not required by law to be made or taken
until a date after the Closing Date.
5.16 Compliance With Laws. To Seller's Knowledge, the Seller's Business
at the Genesee Brewery and the Assets substantially comply, and have
substantially complied, with all applicable Laws, Judgments, Licenses and
Permits, except for violations, if any, which are not either, individually or in
the aggregate, reasonably likely to have a Material Adverse Effect with respect
to the Genesee Brewery. With respect to the Business, to the Seller's Knowledge,
no changes are required in connection with the Genesee Brewery's manufacturing
or packaging processes, properties or procedures to comply with such Laws,
Judgments and Licenses and Permits, and the Seller has received no notice which
alleges or suggests any non-compliance that has not been cured. To Seller's
Knowledge, all material notices and complaints of violations or alleged
violations of Laws and Judgments received in the last three years by the Seller
in connection with the Business or any of the are set forth on SCHEDULE 5.16.
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5.17 Licenses and Permits. SCHEDULE 5.17 annexed hereto contains an
accurate and complete list (including the name of the licensor, a summary of the
license and the date of expiration or renewal) of any licenses, permits,
approvals, franchises, registrations, accreditations, authorizations or
variances issued to the Seller and used in connection with the Genesee Brewery,
necessary to the conduct of the Business or required by any Governmental
Authority or Law for the conduct of the Business,(except where the lack of such
license or permit would not have a Material Adverse Effect on the Business), or
applications therefor (collectively, the "Licenses and Permits"). Except as set
forth in SCHEDULE 5.9 or SCHEDULE 5.17, all Licenses and Permits are valid and
in full force and effect. Except as set forth on SCHEDULE 5.17, there are no
pending or, to Seller's Knowledge, threatened proceedings which could result in
the termination, revocation, limitation or impairment of any of such Licenses
and Permits. The Licenses and Permits are sufficient to enable the ownership and
conduct of the Business, as currently conducted. Except as set forth on SCHEDULE
5.17, none of the Licenses and Permits are transferable to Purchaser. Purchaser
shall be responsible for affecting the transfer of any Licenses and Permits that
are transferable and for acquiring in its name any Licenses and Permits that
cannot be transferred, all at Purchaser's expense, provided that Seller shall,
prior to the Closing Date and for a period of one year thereafter, execute and
deliver to Purchaser any document and provide such other assistance as may
reasonably be requested by Purchaser to effect any such transfer or in
connection with the transfer or acquisition by Purchaser of any Licenses and
Permits. To Seller's Knowledge, all notices and complaints of violations or
alleged violations of Licenses and Permits received by the Seller in the last
three years are set forth in SCHEDULE 5.17.
5.18 Legal Proceedings. Except as disclosed in SCHEDULE 5.18 annexed
hereto: (a) the Seller is not engaged in or a party to or, to the knowledge of
the Seller, threatened with any Legal Proceeding with respect to the Assets or
the Business; (b) the Seller has not received notice of any investigation
threatened or contemplated by any Governmental Authority with respect to the
Assets; (c) neither the Seller, the Business nor the Assets is subject to any
Judgment or other agreement which, among other things, restricts or adversely
affects the ability of the Seller from operating its business at the Genesee
Brewery, as it is currently conducted, which would have a Material Adverse
Effect on the Seller or which restricts the ability of the Seller to consummate
the transactions contemplated by this Agreement; and (d) there is no Legal
Proceeding pending or, to the knowledge of the Seller, threatened by or before
any Governmental Authority which questions the validity of this Agreement or any
action taken or to be taken by the Seller in connection with the transactions
contemplated hereby.
5.19 Contracts. To Seller's Knowledge: (a)the Seller is not a party to
any material Contract relating to the Business which is not set forth in
SCHEDULE 5.19 annexed hereto; (b) the Contracts listed in SCHEDULE 5.19 are
valid, binding and enforceable on all parties thereto and in full force and
effect; (c) the Seller has not violated any of the terms thereof in any material
respect; (d) no material violation of the terms thereof by any party thereto has
occurred and is continuing; (e) no claim has been made by any party thereto that
any other party is in default thereunder; and the Seller has not received notice
that any such Contract is being or will be cancelled. Except as described in
SCHEDULE 5.19, neither the execution of this Agreement nor the consummation of
the transactions contemplated hereby will or constitutes an event which will,
upon the giving of notice, lapse of time or both, result in a default under or
termination of any such Contract.
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5.20 Books and Records. To Seller's Knowledge, no Books and Records
have been altered or destroyed in contemplation of this transaction.
5.21 No Brokers. Except as set forth in SCHEDULE 5.21 annexed hereto,
to Seller's Knowledge, the Seller has not entered into any Contract, arrangement
or understanding with any Person which may result in the obligation of any party
hereto to pay any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement or the
transactions contemplated hereby.
5.22 Proxy Statement. The Proxy Statement of GC which will be used in
connection with the special or annual meeting of GC shareholders to be called
pursuant to Section 7.16 hereof will not, at the date of the Shareholders
Meeting, contain any untrue statement of a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; except that no
representation is made by Seller with respect to statements therein as to
information concerning Purchaser or its Affiliates supplied in writing by
Purchaser or its Affiliates specifically for inclusion in the Proxy Statement.
5.23 Independence of Representations. Each of the separate
representations and warranties set forth in this Article V will not affect the
interpretation of any other Section. The lack or omission of a representation or
warranty on specific subject matter will not be construed to exclude that
subject matter from the scope of a more general representation or warranty
applicable thereto.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Seller as follows:
6.1 Organization, Standing, Power and Qualification. The Purchaser is a
limited liability company duly organized, validly existing and in good standing
under the laws of the State of New York, and has all necessary power and
authority (i) to carry on its business as now conducted; (ii) to enter into this
Agreement; (iii) to carry out its obligations hereunder; and (iv) to consummate
the transactions contemplated hereby. The Purchaser is, or will at Closing be,
duly qualified as a foreign limited liability company, and is in good standing,
in New York and in each other jurisdiction where the failure to so qualify would
have a Material Adverse Effect. The execution, delivery and performance of this
Agreement and the transactions contemplated hereby have been duly authorized by
all necessary action on the part of the Purchaser. This Agreement has been duly
executed and delivered by the Purchaser, and assuming due authorization,
execution and delivery by the Seller, this Agreement constitutes a legal, valid
and binding obligation of the Purchaser enforceable against the Purchaser in
accordance with its terms, except as may be limited by bankruptcy, moratorium
and insolvency laws and by other laws affecting the rights of creditors
generally and except as may be limited by the availability of equitable
remedies.
6.2 No Conflict. The execution and delivery of this Agreement do not,
and the consummation of the transactions described herein and contemplated
hereby, and the compliance by Purchaser with any of the provisions hereof, will
not, result in or constitute (a) a default,
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breach or violation of the Articles of Organization or the Operating Agreement
of the Purchaser; (b) subject to the receipt of the Consents required as set
forth on SCHEDULE 6.3 annexed hereto, an event which (with notice or lapse of
time or both) would permit any Person to terminate, accelerate the performance
required by, or accelerate the maturity of any material indebtedness or
obligation of the Purchaser under any material Contract to which the Purchaser
is a party or by which any of its material assets are bound; (c) the creation or
imposition of any Lien on any property of the Purchaser, under any material
Contract to which the Purchaser is a party or by which any of its material
assets are bound; or (d) a violation of any Law or Judgment of any court or
other Governmental Authority or any other restriction of any kind or character
by which the Purchaser or any of its material assets are bound, except, in each
case, for such defaults, breaches, violations, events, Liens or restrictions as
would not prevent the Purchaser from performing any of its material obligations
under this Agreement and would not have a Material Adverse Effect on the
Purchaser.
6.3 Consents. Except as set forth on SCHEDULE 6.3 annexed hereto, the
execution and delivery of this Agreement by the Purchaser do not, and the
performance of this Agreement by the Purchaser will not, require any Consent,
other than routine filings, if any, required by the corporate laws of
jurisdictions in which the Purchaser is qualified to transact business as a
foreign corporation, except where the failure to obtain such Consent would not
have a Material Adverse Effect.
6.4 Legal Proceedings. There is no Legal Proceeding pending or, to the
knowledge of the Purchaser, threatened, by or before any Governmental Authority
which questions the validity of this Agreement or any action taken or to be
taken by the Purchaser in connection with the transactions contemplated hereby.
6.5 No Brokers. Except as set forth in SCHEDULE 6.5 annexed hereto, the
Purchaser has not entered into any Contract, arrangement or understanding with
any Person which may result in the obligation of any party hereto to pay any
finder's fees, brokerage or agent's commissions or other like payments in
connection with the negotiations leading to this Agreement or the transactions
contemplated hereby.
6.6 No Other Agreements To Sell The Assets Or Capital Stock Of The
Purchaser. The Purchaser does not have any legal obligation, absolute or
contingent, other than the obligations of the Purchaser under this Agreement or
related agreements with Seller or any debt or equity financing commitments to
any person or firm to (a) sell assets other than in the ordinary course of
business consistent with past practices, (b) sell any equity or debt obligations
of the Purchaser (other than as described in SCHEDULE 1.19) or effect any
merger, consolidation or other reorganization of the Purchaser or (c) enter into
any agreement with respect to any of the foregoing.
6.7 Purchaser's History, Etc. Purchaser has been organized solely for
the purpose of consummating the transactions contemplated hereunder, has
conducted no business or operations of any nature and has incurred no
obligations or liabilities other than those created by or in connection with
this Agreement. Purchaser is its own "ultimate parent entity," as such term is
defined under the HSR Act. Purchaser is not a $10 million person, as determined
under the HSR Act.
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6.8 Purchaser's Solvency. After giving effect to the consummation of
the transactions contemplated hereunder, as of the Closing the assets of
Purchaser will exceed its liabilities and it will have the financial resources
and ability to pay and discharge its obligations as they become due.
6.9 Projections. The Projections have been prepared in good faith based
upon reasonable assumptions, reasonably believed by the Purchaser to be
reasonable and fair as of the Execution Date in the context of the Seller's
history and current and reasonably foreseeable business conditions.
6.10 Financing and Availability of Funds. The financing provided for
under the Debt Financing Commitments together with the Equity Financing
Commitments described in SCHEDULE 1.19 which Purchaser is seeking to raise will
be sufficient to allow Purchaser to pay the Purchase Price at the times and in
the manner set forth in this Agreement, to satisfy all its other obligations
under this Agreement and to Purchaser's Knowledge are reasonably believed to be
sufficient to otherwise carry out its business plan. At Closing, the Purchaser
will have available sufficient funds to enable it to consummate the transactions
contemplated by this Agreement.
6.11 No Knowledge of Inconsistent Information. The Purchaser does not
have any Knowledge of, and has not learned of, any information that is
inconsistent with any of the representations or warranties of Seller made
herein, including the information contained in each of the Schedules annexed
hereto.
6.12 No Impediment to Governmental Approvals. To Purchaser's Knowledge
neither the Management Employees, nor any officer, director, employee or source
of debt or equity financing to Purchaser is subject to any condition, status or
circumstance that would prevent Purchaser from being issued any federal, state
or local permits, licenses or other governmental approvals needed to operate the
Business after the Closing.
6.13 Proxy Statement. The information to be supplied by Purchaser or
its Affiliates for inclusion in the Proxy Statement shall not, on the date the
Proxy Statement (or any amendment or supplement thereto) is first mailed to GC
shareholders and at the time of the Shareholders Meeting, contain any statement
which, at such time and in light of the circumstances under which it shall be
made, is false or misleading with respect to any material fact, or omit to state
any material fact necessary in order to make such statements made in the Proxy
Statement not false or misleading. If any time prior to the Shareholders Meeting
any event relating to the Purchaser or any of its Affiliates, officers or
directors should be discovered by Purchaser which should be set forth in a
supplement to the Proxy Statement, Purchaser shall promptly inform Seller.
ARTICLE VII
COVENANTS
From and after the date hereof and until the Closing, the parties
hereby covenant and agree as follows:
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7.1 Conduct of Business. Except as otherwise expressly contemplated by
this Agreement or reflected on a Schedule hereto, or as specifically consented
to in writing by the Chief Executive Officer or Chief Financial Officer of the
Purchaser, from and after the Execution Date until the Closing Date, the Seller
will use its commercially reasonable best efforts to preserve its present
relationships with Persons having business dealings with the Business, operate
its business at the Genesee Brewery in the ordinary course, maintain its Books
and Records in accordance with good business practices on a basis consistent
with prior practices, and maintain all material Insurance and Licenses and
Permits necessary for the conduct of the Business as currently conducted, and
without limiting the generality of the foregoing the Seller will not take any of
the following actions or permit to occur any of the following events, except in
the ordinary course of business:
(i) sell, assign, transfer or otherwise dispose of any Asset,
except as consistent with past practices or except as otherwise permitted
hereunder;
(ii) damage, harm or destroy any Asset in any manner;
(iii) cancel or waive any claims or rights of value or sell,
transfer, distribute or otherwise dispose of any Asset;
(iv) dispose of or permit to lapse any rights in, to or for
the use of any of the Assets (including, without limitation, the Intangible
Assets) except pursuant to judicial or administrative process;
(v) disclose to any Person not an employee of the Seller any
confidential or proprietary information not heretofore a matter of public
knowledge;
(vi) in any way increase respective indebtedness levels with
respect to any of the Assets, except for Payables;
(vii) grant any increase in base compensation or other payment
to any of its directors, officers, employees or agents from the Assets of the
Business;
(viii) enter into, amend or modify in any respect any
collective bargaining agreement;
(ix) borrow any funds or incur or assume, directly or
indirectly (by way of guaranty or otherwise), any Liabilities (whether accrued,
contingent, absolute or otherwise) on behalf of the Business;
(x) mortgage, pledge or subject to any Lien any Asset (whether
real, personal or mixed, or tangible or intangible);
(xi) fail to maintain in full force and effect adequate
Insurance coverage for destruction, damage to, or loss of any of the Assets;
(xii) enter into any Contract which would bind Purchaser after
the time of Closing in connection with the Business except as otherwise
permitted hereunder;
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(xiii) take or omit to take any action with respect to the
Assets which would, individually or in the aggregate, have a Material Adverse
Effect;
(xiv) take or omit to take any action with respect to the
Assets which would, individually or in the aggregate, have a Hazardous
Environmental Effect; or
(xv) agree or commit orally or in writing to do any of the
foregoing.
7.2 Alternative Proposal. In the event that the Seller receives from a
responsible person or entity a proposal to acquire the Seller or the Assets and
the Special Committee, after consultation with and based upon the advice of
independent counsel, determines in good faith that furnishing information to, or
entering into discussions or negotiations and/or an agreement with such person
or entity is necessary for the Special Committee and/or the Board of GC to
comply with its fiduciary duties to shareholders under applicable law (an
"Alternative Proposal"), the Seller shall promptly notify the Purchaser of such
Alternative Proposal and the terms thereof and Purchaser shall have 20 days to
submit an improved offer.
7.3 Employment Matters.
(a) The Purchaser shall offer employment, effective at the
Closing, to all then active employees of Seller and all employees out on
disability, or leave under the Family Medical Leave Act or any other approved
leave except those employees specified by name, job description or employment
unit listed on SCHEDULE 7.3 annexed hereto. All employees of the Seller who are
hired by the Purchaser are referred to in the remaining subsections of this
Section 7.3 as "Transferred Employees" and Purchaser shall defend and indemnify
Seller from and against any liability under the WARN Act with respect to those
employees.
(b) The Purchaser shall, effective as of the Closing Date,
adopt for the benefit of the Transferred Employees all the Employee Benefit
Plans listed on SCHEDULE 5.15 that cover employees of the Seller immediately
prior to the Closing Date (except that portion of any plan providing retiree
medical and life insurance benefits to Seller's retired employees). With respect
to each such plan, the Purchaser shall be solely responsible on or after the
Closing Date for all plan liabilities and responsibilities that apply to a plan
sponsor, except to the extent of unfunded liabilities or benefits.
(c) The Seller agrees to cooperate with the Purchaser, both
before and after the Closing Date, in providing such information or taking such
other action as the Purchaser may reasonably request so as to secure an orderly
and effective transition of the plan sponsor responsibilities (except for
unfunded liabilities or benefits) of the Employee Benefit Plans from the Seller
to the Purchaser. The Seller agrees that from the date of this Agreement to the
Closing Date it shall maintain the Employee Benefit Plans in the ordinary course
and that it will not, except with the written consent of the Purchaser (which
agrees not to withhold such consent unreasonably) make any material
modifications to such plans or to the procedures and policies by which they are
operated.
(d) If any employee of the Seller as of the Closing Date
ceases to be covered by an insured Employee Benefit Plan because such employee
is not included as a Transferred Employee, the Seller agrees that such employee
shall continue benefit coverage through the end
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of the period for which premiums have been paid and, with respect to medical
benefits, any COBRA coverage to which the employee or any other qualified
beneficiary may be entitled.
(e) The Seller agrees that it shall be solely responsible for
the following obligations whether or not they relate to an event described in
(c) above: (1) making all employer contributions to plans due prior to the
Closing Date; (2) paying all benefits due under a plan's terms and conditions in
effect up to the Closing Date except those set forth in (c) above as being the
responsibility of the Purchaser upon the termination of plan participation; (3)
paying all severance benefits due under any severance arrangement with any
employee who ceases employment with the Seller and does not become a Transferred
Employee, including WARN Act obligations; and (4) providing retiree health and
life insurance benefits for persons who retire from the Seller on or prior to
the Closing Date in accordance with the Seller's plan or plans (for this
purpose, Seller agrees to establish and be the plan sponsor of such plans as may
be required to provide such benefits).
(f) The Purchaser shall be responsible for all claims
submitted with respect to the Transferred Employees under the Employee Benefit
Plans on or after the Closing Date, whether the circumstances giving rise to
such claims occur before or after the Closing Date. In addition, the Purchaser
agrees to provide coverage for and to administer COBRA coverage for all persons
having such coverage or entitled to receive notice of such coverage as of the
Closing Date under an Employee Benefit Plan that is a medical benefit plan,
including coverage for any employee of the Seller who does not become a
Transferred Employee but as of the Closing Date has a qualifying event for COBRA
purposes.
(g) Purchaser and Seller intend that the sale of the assets
pursuant to this Agreement shall constitute a sale of assets under Section 4204
of ERISA with regard to each Multiemployer Plan listed in SCHEDULE 5.15 annexed
hereto with respect to which the Seller may incur withdrawal liability on the
sale in order to avoid the imposition of complete or partial withdrawal
liability to Seller under each such Multiemployer Plan. Purchaser and Seller
agree to comply with the provisions of Section 4204 of ERISA with respect to the
Multiemployer Plan:
(i) Purchaser agrees to contribute to each Multiemployer
Plan for substantially the same number of contribution base units (as defined by
Section 4001(a)(11) of ERISA) for which Seller had an obligation to contribute
immediately prior to the Closing to each Multiemployer Plan within the meaning
of Section 4204(a)(1)(A) of ERISA, provided, however, that thereafter Purchaser
shall not be obligated to contribute more contribution base units than Purchaser
is required to contribute under the applicable collective bargaining agreements
taking into account any right that Purchaser may have to terminate its
employees.
(ii) To the extent required, Purchaser agrees to comply with
the provisions of Section 4204(a)(1)(B) of ERISA and provide to each
Multiemployer Plan for a period of five (5) plan years commencing with the first
plan year beginning after the Closing Date, a bond issued by a corporate surety
company that is an acceptable surety within the meaning of Section 4204(a)(1)(B)
of ERISA, or an amount (including a letter of credit, if acceptable to the plan)
held in escrow by a bank or similar financial institution satisfactory to the
plan, in an amount (calculated separately for each such plan) equal to the
greater of (A) the average annual contribution required to be made by Seller
with respect to the Multiemployer Plan for the three (3) plan years preceding
the plan year in which the Closing Date occurs, or (B) the annual contribution
that Seller was required to make with respect to the Multiemployer Plan for
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the last plan year before the plan year in which the Closing Date occurs, which
bond (or escrowed funds or letter of credit) shall be paid to the Multiemployer
Plan if Purchaser withdraws from the plan or fails to make a contribution to the
plan when due, at any time during the first five (5) plan years beginning after
the Closing Date; provided, however, that Purchaser shall not be obligated to
provide such bond (or escrowed funds or letter of credit) if excepted from such
obligation under a variance that may be obtained under applicable law,
including, without limitation, the provisions of 29 C.F.R. Section 4204.11,
4204.13 and 4204.21 and further provided that the aforesaid amount shall be
doubled if the Multiemployer Plan is in reorganization, within the meaning of
ERISA, in the plan year in which the Closing occurs. Notwithstanding any of the
foregoing provisions, Purchaser shall have no obligation to provide such bond
(or escrowed funds or letter of credit) until notified by the plan trustees of
their decision with respect to Purchaser's application to the Multiemployer Plan
for variance from such obligation as set forth herein, provided Purchaser timely
applies for any variance. The cost of each bond, escrow or letter of credit (and
any deposits necessary with regard to any of the foregoing) shall be paid by
Purchaser and Purchaser shall be the sole obligor thereunder.
(iii) If Purchaser withdraws from the Multiemployer Plan in
a complete withdrawal, or a partial withdrawal, during the first five (5) plan
years beginning after the Closing Date, Purchaser shall be liable for any
withdrawal liability resulting from such action. If the Purchaser withdraws in a
complete withdrawal, or a partial withdrawal, with respect to operations during
such first five (5) plan years, Seller shall be secondarily liable to the
Multiemployer Pension Plan for any withdrawal liability it would have had to the
Multiemployer Plan with respect to the operations (but for Section 4204 of
ERISA) if the liability of Purchaser with respect to the Multiemployer Plan is
not paid.
(iv) If at any time after the Closing, and prior to the end
of the five (5) year period referred to in (iii) above, the Seller intends to
distribute all, or substantially all, of its assets or liquidate, the Seller
shall give the Purchaser 90 days notice prior to taking any such action. In such
event and assuming the waiver referred to below in this Section 7.3(g)(iv) is
not obtained, the Purchaser and the Seller shall each post such bond, escrow or
letter of credit in an amount, for the period of time, and in a form that
complies with its respective obligations under Section 4204(a)(3) of ERISA. The
Purchaser shall on a timely basis seek from the Multiemployer Plan a waiver of
the requirement for Seller to post such bond, escrow or letter of credit based
on the criteria set forth in PBGC Regulation Sections 4204.12 and 4204.13 and
such other factors as the Purchaser, in its sole discretion, deems appropriate
(but with no requirement to agree to any concessions requested by the Fund which
are not legally required). The Seller hereby authorizes the Purchaser to seek
such waiver on its behalf and agree to cooperate with it as reasonably necessary
with regard to execution of documents and providing of information.
(h) The Purchaser acknowledges that Seller shall have (as of
closing) terminated all collective bargaining agreements with unions
representing employees past and present. Purchaser shall be responsible for all
claims by Transferred Employees alleging breach of a collective bargaining
agreement by Seller.
7.4 Purchaser's Access to Information. From the date hereof, the
Purchaser and its counsel, accountants, representatives and agents shall have
full access, upon reasonable notice and during normal business hours, to the
Genesee Brewery, including all financial, legal and other representatives of the
Seller with knowledge of the Business, the Assets and the offices, properties,
books, facilities and records of the Business and, upon reasonable notice, shall
be
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furnished in confidence copies of all relevant documents, records and other
information concerning the business, finances and properties of the Seller and
the Business that they may reasonably request.
7.5 Consents, Cooperation. Each of the parties hereto will in good
faith use its reasonable efforts and shall fully cooperate with each other party
to make promptly all registrations, filings and applications, give all notices
and obtain all governmental and third party consents, permits, approvals,
orders, authorizations, authorities, qualifications, exemptions and waivers
necessary for the consummation of the sale and purchase of the Assets
contemplated by this Agreement (collectively, the "Consents"). In furtherance of
the foregoing, and not by way of limitation, Seller and Purchaser will fully
cooperate with each other, use reasonable efforts and work closely together to
achieve (a) an assignment of that certain Amended and Restated Agreement, dated
April 30, 1997, between Seller and Boston Beer Company on terms acceptable to
both Seller and Purchaser (subject to Seller's right of termination set forth in
Section 12.1(g) of this Agreement), (b) an assignment of the Contract
Manufacturing Supply Agreement dated August 1, 2000 between Seller and Mark
Anthony Brewing, Inc., on terms acceptable to both Seller and Purchaser, (c)
amendments as desired by Purchaser and Seller with respect to those certain
Union and collective bargaining agreements listed and described in SCHEDULE
7.5(C) annexed hereto, on terms acceptable to both Seller and Purchaser (subject
to Seller's right of termination set forth in Section 12.1(h) of this
Agreement), and (d) an assignment of the agreements and contractual obligations
listed in SCHEDULE 5.3 annexed hereto.
7.6 Notification of Certain Matters. The parties hereto each agree to
give prompt notice to the other of any fact or occurrence or failure to occur of
any event, which fact or occurrence or failure to occur would or could
reasonably be expected to (i) cause any representation or warranty contained in
this Agreement to be materially untrue or inaccurate at any time from the date
hereof to the Closing Date, (ii) cause any Material Adverse Effect on the
Business or any party hereto, (iii) cause any Hazardous Environmental Effect on
the Business or the Genesee Brewery or (iv) cause any material inability or
failure on its part to comply with, perform, consummate or satisfy any covenant,
condition, transaction or agreement to be performed, consummated, complied with
or satisfied by it hereunder.
7.7 Financing Commitments. The Purchaser shall diligently
pursue and use its best efforts to obtain Debt and Equity
Financing Commitments as soon as practicable after the
Execution Date and prior to the Financing Commitment Date and
to consummate the equity financing contemplated thereby and to
close the financing necessary to close the transactions
hereunder. Purchaser shall provide Seller with true and
complete copies of the Debt and Equity Financing Commitments
and any amendments thereto promptly upon securing them. Seller
shall be deemed to have approved any such Debt and Equity
Financing Commitments, unless Purchaser is notified to the
contrary within 24 hours after Purchaser has provided copies
of both to Seller.
7.8 Supplements to Schedules. Prior to the Closing, the parties hereto
will supplement or amend the Schedules hereto with respect to any matter
hereafter arising which, if existing or occurring at the date of this Agreement,
would have been required to be set forth or described in such Schedules. No
supplement or amendment of the Schedules made pursuant to this Section 7.8 shall
be deemed to cure any breach of any representation or warranty made in this
Agreement unless the other parties hereto specifically agree thereto in writing.
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7.9 Title Insurance. The Purchaser will obtain at its cost in
preparation for the Closing with respect to the Real Property a commitment for
an ALTA Owner's Policy of Title Insurance (10/17/92) with Standard New York
Endorsement, in such amount as the Purchaser reasonably may determine to be the
fair market value of such real property (including all Improvements located
thereon), and shall at Closing purchase insurance thereunder insuring title to
the Real Property insuring the interests of Purchaser as of the Closing.
The title insurance policy delivered under this Section 7.9 shall
insure title to the Real Property subject to the Real Property Permitted
Exceptions. The title policy affirmatively shall (a) insure that the Real
Property includes all property as shown on the Survey, (b) contain an
endorsement insuring that each street adjacent to the Real Property is a public
street and that there is direct and unencumbered vehicular access to such
streets from the Real Property, and (c) include such endorsements available in
New York as Purchaser may elect to obtain.
7.10 Environmental Site Assessments. Seller has retained Haley &
Aldrich of New York to conduct a Phase I environmental site assessment of the
Real Property at the Genesee Brewery, and has provided to the Purchaser for its
independent review and comment an Environmental Phase I Report, dated December,
1999 and related information and documents. The cost and expense of the
Environmental Phase I Report and environmental site assessment has been or shall
be paid solely by the Seller. Seller has also retained Haley & Aldrich of New
York to conduct an environmental Phase II investigation and report (a "Phase II
Investigation") mutually agreeable to the Purchaser and Seller in scope, nature
and schedule, the cost and expense of the Phase II Investigation to be paid
solely by the Seller. Seller has made the final Phase II Study available to
Purchaser and the same is satisfactory to Purchaser. Seller makes no
representations and warranties to Purchaser as to the accuracy or reliability of
the work product prepared by Haley & Aldrich or any third party on behalf of the
Seller regarding the environmental condition of the Real Property and
Improvements. In the event this Agreement is terminated before consummation,
Purchaser shall return to Seller all copies of the Environmental Phase I Report
and Phase II Investigation and related information and documents in the
possession of Purchaser, its officers, directors, employees, agents, attorneys,
lenders, consultants and any other representative.
7.11 Surveys. With respect to the Real Property, and as to which a
title insurance policy is to be procured pursuant to Section 7.9 above, the
Seller has provided a survey dated February 21, 2000 made by Charles J. Costich
("Survey")_which is acceptable in all respects to Purchaser except the following
which Seller shall complete prior to the Closing:
(a) Certify the Survey to Purchaser, Purchaser's lender(s),
Purchaser's counsel and the title insurance company issuing the title insurance
policy pursuant to SECTION 7.9 of this Agreement.
(b) Redate the Survey to not more than thirty (30) days prior
to the closing.
7.12 Transfer Tax Forms. Seller shall deliver at Closing New York State
and, if applicable, City of Rochester or Monroe County transfer tax forms,
completed and ready for filing (except for Purchaser's signature and
acknowledgment), and Seller shall pay and be liable for all New York State and,
if applicable, City of Rochester or Monroe County real property transfer taxes
associated with the sale of the Real Property to Purchaser.
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7.13 Title Conditions. Seller and Purchaser acknowledge that the Real
Property consists of various parcels of real estate assembled over decades, and
that the title to the Real Property may be subject to easements, covenants or
restrictions, reservations of mineral rights or other matters, some of which may
have lapsed, have otherwise become invalid, ineffective or inoperative ("Title
Conditions") all of which shall be set forth in the title insurance commitment
to be obtained by Purchaser pursuant to SECTION 7.9. It shall be Seller's
obligation to undertake, at its sole expense and prior to Closing, such
commercially reasonable steps as are necessary or desirable to remove from title
such Title Conditions which have a Material Adverse Effect and for which the
title insurance to be obtained by Purchaser does not provide affirmative
coverage reasonably acceptable to Purchaser. Upon Purchaser's request, Seller
shall cooperate with Purchaser after the Closing to take commercially reasonable
steps without substantial expense to Seller (not exceeding $5,000.00) to remove
from title such Title Conditions which were neither removed from title prior to
Closing nor for which affirmative coverage, reasonably satisfactory to Purchaser
was provided.
7.14 Zoning and Land Use Letter. Seller shall cooperate with Purchaser,
if Purchaser so elects, in seeking to obtain from the relevant authorities in
the City of Rochester a "comfort letter" regarding Seller's compliance with all
applicable zoning and land use restrictions currently in effect, including but
not limited to compliance with height and setback requirements, parking
requirements, density restrictions and certificates of occupancy (copies of
which shall, to the extent in Seller's possession, be delivered to Purchaser).
7.15 Additional Agreement. The Seller shall cause GC to enter into
agreements with the principals in the Purchaser consistent with the terms stated
in EXHIBIT D.
7.16 GC Support. Provided that Purchaser obtains, by September 15,
2000, the written consent of Boston Brewing Co., Inc. to the assignment of the
Amended and Restated Agreement between Boston Brewing Company, Inc. ("Boston")
and Seller dated April 30, 1997 on terms satisfactory to Seller in its sole
discretion, Seller agrees to obtain from GC its agreement to indemnify Boston
from all Damages which it sustains from a breach by Purchaser of the assigned
contract, to a maximum of Five Million Dollars ($5,000,000), which sum shall
include any claim by Boston for the unamortized cost of the No. 2 bottling line
attributable to Boston's contribution to the purchase thereof. Purchaser agrees
to provide to Seller at Closing Purchaser's agreement to indemnify GC from any
Damages resulting from GC's indemnification payments to Boston and to cause any
debt obligations of Purchaser issued to its equity investors to be subordinate
to Seller's right to indemnification from Purchaser required in this Section.
Purchaser will use its best efforts to secure from governmental sources such
contribution to, or participation in, the indemnification of Boston to the end
that the GC indemnification is reduced to the minimum possible amount.
7.17 Shareholder Meeting. Prior to the Financing Commitment Date,
Seller shall cause GC to call a special or annual meeting of GC shareholders
("Shareholder Meeting") at which it shall present for a vote proposals
("Shareholder Approval Proposal") to approve the sale of the Assets and the
Business in accordance with this Agreement ("Shareholder Approval"). The GC
proxy statement for the Shareholder Meeting (as amended or supplemented, the
"Proxy Statement") shall include the Shareholder Approval Proposal and GC shall
give Purchaser and its counsel reasonable opportunity to review and comment on
the Proxy Statement before its being sent to GC shareholders. GC shall give
reasonable consideration to any comments Purchaser or
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its counsel may provide with respect to the Proxy Statement or any amendment or
supplement thereto insofar as it relates to the Shareholder Approval Proposal.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE PURCHASER'S OBLIGATIONS
The obligation of the Purchaser to consummate the purchase of the
Assets and the assumption of the Assumed Liabilities as of the time of the
Closing and all other transactions contemplated by this Agreement is subject to
the satisfaction at or prior to the Closing Date of the following conditions,
any of which may be waived in writing by the Purchaser:
8.1 Accuracy of the Seller's Representations and Warranties. Subject to
such exceptions as would not, individually or in the aggregate, result in a
Material Adverse Effect, the representations and warranties of the Seller shall
be true and correct in all material respects as of the date when made and as of
the Closing Date, as though made at that time, and the Purchaser shall have
received a certificate dated as of the Closing Date attesting thereto signed by
a duly authorized officer of the Seller.
8.2 Performance by the Seller. Subject to such exceptions as would not,
individually or in the aggregate, result in a Material Adverse Effect, the
Seller shall have performed, satisfied and complied in all material respects
with all covenants, agreements and conditions required by this Agreement and the
Purchaser shall have received a certificate dated as of the Closing Date of a
duly authorized officer of the Seller to such effect.
8.3 Consents. The Seller shall have obtained all (a) Consents of
Governmental Authorities which are required for the consummation of the purchase
and sale and all other transactions contemplated by this Agreement, other than
those Consents the failure to obtain would not, individually or in the
aggregate, result in a Material Adverse Effect or render such consummation
illegal, and (b) third party Consents listed in SCHEDULE 5.3.
8.4 Delivery of Documents. The Seller shall have executed and delivered
or caused to be delivered to the Purchaser the deliveries listed in Section 4.3.
8.5 Material Adverse Change. Since the Execution Date, there shall not
have occurred a Material Adverse Effect.
8.6 Absence of Litigation and Prohibitions. There shall not (a) have
been issued and be in effect any Law or any Judgment of any court or tribunal of
competent jurisdiction which prohibits or restrains, or (b) be any pending or
threatened Legal Proceeding which Purchaser reasonably believes has a
substantial likelihood of succeeding and, if successful, would or would seek to
prohibit or restrain the validity or legality of the purchase of the Assets or
the performance of other transactions contemplated by this Agreement by the
Purchaser. Purchaser agrees that the legal proceedings disclosed in SCHEDULE
5.18 are not a violation of this condition.
8.7 Liens. The Assets will be free and clear of all Liens except for
the Permitted Exceptions and Real Property Permitted Exceptions and Liens which,
individually or in the aggregate, would not have a Material Adverse Effect.
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8.8 Corporate Documents. The Purchaser will have received from the
Seller all documents relating to the existence of the Seller and certified
copies of the resolutions duly adopted by the board of directors and shareholder
of the Seller and the shareholders of GC approving the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby,
(including changing Seller's name to one which does not include "Genesee" or
"High Falls"), and such resolutions will be in full force and effect as of the
Closing Date; and Purchaser will have received evidence that a Certificate of
Amendment changing Seller's name has been filed with the New York Secretary of
State.
8.9 Legal Opinion. Purchaser shall have received from Seller's legal
counsel an opinion addressed to Purchaser and dated the Closing Date in the form
of SCHEDULE 8.9 annexed hereto.
8.10 Survey; Title Insurance. The Survey shall not disclose any
material survey defect or encroachment from or onto the Real Property which has
not been cured or insured over prior to Closing, other than those which,
individually or in the aggregate, would not have a Material Adverse Effect. The
Purchaser shall have obtained the title insurance policy contemplated by SECTION
7.9, above.
8.11 Licenses and Permits. All material Licenses and Permits set forth
in SCHEDULE 8.11 shall have been transferred to Purchaser as of the Closing
Date, or transferred to Purchaser promptly following the Closing Date, as a
ministerial matter. The reissuance of the Monroe County Pure Waters contract and
permit shall contain substantially the same terms and conditions as the present
contract and permit, unless otherwise satisfactory to Purchaser. In the event
any such License or Permits of material consequences cannot be transferred to
Purchaser as a matter of law, Seller shall, to the extent possible, cooperate
with Purchaser in obtaining an equivalent permit (or permits).
8.12 WARN. If required by applicable law, Seller shall have satisfied
the sixty (60) day written notice requirement under the WARN Act in connection
with the mass layoff of employees at the Genesee Brewery. To the extent Seller
breaches this covenant such that Purchaser could be subject to liabilities under
the WARN Act, Seller agrees to indemnify Purchaser for any such liability, that
occurs following the Closing Date.
8.13 Conduct of Business. There shall not have been any changes in
Seller's current operations or conduct of Business which individually or in the
aggregate, would have a Material Adverse Effect not previously disclosed to
Purchaser in writing in this Agreement or a Schedule hereto.
8.14 Additional Agreement. GC shall have executed and delivered to the
principals of the Purchaser the agreements described in EXHIBIT D.
8.15 Financing Commitments. Purchaser shall have obtained the Debt
Financing Commitments and the Equity Financing Commitments and the lenders who
provided the Debt Financing Commitments and the investors providing the Equity
Financing Commitments shall have provided the funds contemplated thereunder in
accordance with the terms thereof.
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8.16 Net Working Capital. The Seller shall have a positive Net Working
Capital position at Closing.
ARTICLE IX
CONDITIONS PRECEDENT TO THE SELLER'S OBLIGATIONS
The obligations of the Seller to consummate the sale, transfer and
assignment to the Purchaser of the Assets, the assignment of any Assumed
Liabilities, and all other transactions contemplated by this Agreement as of the
time of the Closing is subject to the satisfaction at or prior to the Closing
Date of the following conditions, any of which may be waived in writing by the
Seller:
9.1 Accuracy of the Purchaser's Representations and Warranties. The
representations and warranties of the Purchaser shall be true and correct in all
material respects as of the date when made and as of the Closing Date, as though
made at that time, and the Seller shall have received a certificate dated as of
the Closing Date attesting thereto signed by a duly authorized officer of the
Purchaser.
9.2 Performance by the Purchaser. The Purchaser shall have performed,
satisfied and complied in all material respects with all covenants, agreements
and conditions required by this Agreement and the Seller shall have received a
certificate dated as of the Closing Date of a duly authorized officer of the
Purchaser to such effect.
9.3 Consents. The Purchaser shall have obtained all Consents of
Governmental Authorities which are required for the consummation of the purchase
and sale and all other transactions contemplated by this Agreement, other than
those Consents the failure to obtain would not prohibit, jeopardize or delay the
consummation of such transactions or render such consummation illegal.
9.4 Delivery of Documents. The Purchaser shall have executed and
delivered to the Seller, at the Closing, all deliveries in Section 4.4.
9.5 Absence of Litigation and Prohibitions. There shall not (a) have
been issued and be in effect any Law or any Judgment of any court or tribunal of
competent jurisdiction which prohibits or restrains, or (b) be any pending or
threatened Legal Proceeding which Seller reasonably believes has a substantial
likelihood of succeeding and, if successful, would or would seek to prohibit or
restrain the validity or legality of the sale of the Assets or the performance
of other transactions contemplated by this Agreement by the Seller.
9.6 Legal Opinion. Seller shall have received from Purchaser's outside
legal counsel an opinion addressed to Seller and dated the Closing Date, in the
form of SCHEDULE 9.6 annexed hereto.
9.7 Labor Contracts and Employee Benefit Plans. Seller shall have
negotiated its release from and termination of all material union and collective
bargaining agreements related to the Genesee Brewery and Employee Benefit Plans
on terms acceptable to Seller, in its sole discretion. Seller shall also have
negotiated its release from all obligations to Closing Date under
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the Employee Benefit Plans administered by trustees and terms acceptable to
Seller, in its sole discretion.
9.8 Management Employees Releases and Certificates. Seller shall have
received from the Management Employees (a) general releases releasing Seller and
GC and their respective Affiliates, representatives and agents from any all
claims, damages or losses of any kind other than rights to stock options
previously issued to them and rights under severance agreements entered into
with Seller in the form of EXHIBIT D annexed hereto and (b) certificates wherein
they certify to not having any Knowledge of information that is inconsistent
with or would otherwise cause, any of the representations and warranties of
Seller or Purchaser surviving the Closing to be untrue or inaccurate in any
respect or if such information exists, stating such information in appropriate
detail.
9.9 Other Contracts. Seller shall have received consents required for
transfer to Purchaser of all other contracts to be assigned hereunder on terms
satisfactory to Seller in its sole discretion.
9.10 Fairness Opinion. Within 10 days after the Financing Commitment
Date, Seller shall have received from Houlihan Lokey Howard & Zukin their
opinion as to the fairness, from a financial points of view, to GC and
shareholders of GC of the consideration to be received by Seller in this
transaction.
9.11 Financing. Purchaser shall have received the proceeds of debt and
equity financing of Purchaser on terms previously approved by Seller.
9.12 GC's Shareholders' Approval. The transactions contemplated by this
Agreement shall have been approved by the shareholders of GC.
9.13 Environmental Matters. Purchaser shall have executed and delivered
to Seller the Settlement and Release attached hereto as EXHIBIT E.
ARTICLE X
ADDITIONAL POST-CLOSING COVENANTS
10.1 Further Assurances. From time to time after the Closing Date, the
Seller shall at the reasonable request of the Purchaser, without further
consideration, promptly execute, acknowledge and deliver such other and further
documents and take such other and further action as the Purchaser may reasonably
request in order (i) to vest in the Purchaser all rights and titles to the
Assets; and (ii) to comply with all the terms of this Agreement and consummate
the transactions herein provided. From time to time after the Closing Date, the
Purchaser shall at the reasonable request of the Seller, without further
consideration, promptly execute, acknowledge and deliver such other and further
instruments of assumption and take such other and further action as the Seller
may reasonably request to give effect to the Purchaser's assumption of the
Assumed Liabilities.
10.2 Access to Information. From time to time subsequent to the Closing
Date both the Purchaser and the Seller will allow the other at reasonable times
and upon reasonable notice, to have access to, and to copy and use, any records
or information and personnel which may be
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relevant in connection with the preparation of any Tax Returns, any audit or
other examination by any authority, or any judicial or administrative
proceedings relating to Liability for Taxes, or any other legitimate purpose.
The party requesting assistance hereunder shall reimburse the other party for
reasonable expenses incurred in providing such assistance. Any information
obtained pursuant to this Section shall be held in strict confidence and shall
be used solely in connection with the reason for which it was requested.
10.3 Mail. The Seller agrees that subsequent to the Closing, Purchaser
will have the right and authority to open all mail and other communications
received by the Business, even if addressed to the Seller, for processing or
forwarding to the Seller, as appropriate.
10.4 Existing Insurance Coverage. As of the Closing Date, the Seller
will remove the Assets from coverage under any insurance policies and any and
all costs associated with such policies shall be borne by the Seller, except
that Seller shall continue its products liability coverage for the joint benefit
of Seller and Purchaser with respect to all products manufactured and
distributed by Seller prior to Closing hereunder for a term of three (3) years
after Closing. Such "tail" coverage shall provide coverage in the same amounts
and upon the same terms as Seller's present coverage.
10.5 Confidentiality.
(a) By the Seller. Except as required by applicable law or by
Governmental Authorities having jurisdiction over the Real Property or the
Improvements, Seller and its representatives will not disclose any information
which is confidential, proprietary or otherwise not publicly available
("Confidential Information") about (i) the Genesee Brewery, or (ii) the
Purchaser obtained in the performance of this Agreement, in either case for a
period of five years following the Closing Date.
(b) By the Purchaser. Except as required by applicable law or
by Governmental Authorities having jurisdiction over the Real Property or the
Improvements, the Purchaser and its representatives will not disclose any
Confidential Information including but not limited to, the Environmental Phase I
Report and any Phase II Study, about the Seller and/or the environmental
conditions of the Real Property or the Improvements obtained in the performance
of the Agreement (other than with respect to the Genesee Brewery, the Assets
and/or the Business), for a period of five years following the Closing Date.
Notwithstanding the foregoing, Purchaser may disclose the Environmental Phase I
Report and any Phase II Study to an actual or prospective lender of Purchaser or
other party who may acquire an interest (including a leasehold interest) in all
or any portion of the Real Property Improvements or the Business, provided that
in connection with any such disclosure, Purchaser will obtain such party(ies)
agreement to comply with the confidentiality requirements of this Section.
(c) Exceptions. The obligations provided for in this Section
10.5 will not apply to information which: (i) can be reasonably shown to have
been in the possession of the party receiving the information as of the date of
receipt; (ii) is disclosed to the receiving party by a third party which has a
legal right to make such disclosure; (iii) was in the public domain or generally
available as of the date of disclosure through no fault of the receiving party;
or (iv) which is required by law to be disclosed.
10.6 Consents of Third Parties.
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(a) Notwithstanding anything in this Agreement to the
contrary, this Agreement shall not constitute an agreement to assign any asset
or any claim or right or any benefit arising thereunder or resulting therefrom
if any attempted assignment thereof, without the consent of a third party, would
constitute a breach or other contravention thereof, would be ineffective with
respect to any party thereto or would in a substantial way adversely affect the
rights of the Seller or, upon transfer, the Purchaser, thereunder; and, subject
to paragraph (b) of this Section, any transfer or assignment by the Seller to,
or any assumption by, the Purchaser of any interest in, or liability, obligation
or commitment under, any such asset that requires the consent of a third party
shall be made subject to such consent being obtained.
To the extent any Assumed Contract may not be assigned to the
Purchaser by reason of the absence of any such consent, the Purchaser shall not
be required to assume any Assumed Liabilities arising under such Assumed
Contract.
(b) If any such consent is not obtained prior to the Closing,
the Seller and the Purchaser shall cooperate (at their own expense) in any
lawful and reasonable arrangement under which Purchaser shall obtain the
economic claims, rights and benefits under the asset, claim or right with
respect to which the consent has not been obtained in accordance with this
Agreement, including subcontracting, sublicensing or subleasing to the Purchaser
and enforcement of any and all rights of the Seller against the other party
thereto arising out of a breach or cancellation thereof by the other party,
provided, however, that if such an arrangement is made and the Purchaser obtains
the economic claims, rights and benefits under any such asset, claim or right,
any liability, obligation or commitment of the Seller under such asset, claim or
right shall be an Assumed Liability.
10.7 Employment Matters. The Seller shall provide coverage and be
liable for all payments and other termination benefits that may be required to
be made under any termination, severance or similar plan, policy or arrangement
as in effect on the date of this Agreement with respect to employees of Seller
or any of Seller's subsidiaries or affiliates who become employees of the
Purchaser and who are terminated by Purchaser, in Purchaser's sole discretion,
within four (4) months of the Closing Date; provided, however, that (i) Seller
shall not be liable to any such employee for amounts greater than Seller would
have been obligated to pay had the employee been terminated at the Closing, and
(ii) the maximum aggregate amount for which Seller will be liable under this
Section 10.7 is Two Hundred Fifty Thousand Dollars ($250,000).
ARTICLE XI
INDEMNIFICATION AND RELATED MATTERS
11.1 Indemnification by the Seller. Subject to the provisions of this
Article XI, the Seller agrees to indemnify and hold the Purchaser harmless from
and against all Damages sustained by the Purchaser resulting from, arising from,
arising out of, relating to, or caused by:
(a) the Seller's (or in the event any third party alleges
facts that, if true, would mean a breach has occurred) breach of any of the
representations, warranties, covenants or agreements of the Seller contained in
this Agreement or in any certificate delivered by the Seller at the Closing
pursuant to this Agreement (such breach to be determined for this purpose
without regard to any materiality, Material Adverse Effect, or similar standard
or limitation (other than
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Knowledge where applicable) set forth in any representation or warranty) when
made or as of the Closing Date, it being understood that to the extent that any
of such representations or warranties were made as of a specified date the same
shall apply only to the failure of such representations and warranties to be
true as of such specified date;
(b) regardless of whether a breach of any representation,
warranty or covenant under this Agreement exists, (i) any failure of the Seller
to transfer to the Purchaser good and marketable title to any of the Assets
other than the Real Property, free of all Liens other than Permitted Exceptions;
and (ii) any failure of the Seller to transfer to Purchaser insurable title free
and clear of all Liens other than the Real Property Permitted Exceptions except
to the extent covered by title insurance;
(c) regardless of whether a breach of any representation,
warranty or covenant under this Agreement exists, any Excluded Liabilities; or
(d) regardless of whether a breach of any representation,
warranty or covenant under this Agreement exists, the operation of the Business
by Seller, or the ownership of the Assets prior to the time of Closing,
including without limitation Liabilities (except for Assumed Liabilities that
involve "new releases" as contemplated by Section 11.2(c)) arising from any
Hazardous Environmental Effect existing prior to the Closing, subject to
reduction, if any, to the extent the Liabilities have been exacerbated by
Purchaser or Purchaser has failed to use reasonable efforts to mitigate such
Assumed Liabilities.
11.2 Indemnification by the Purchaser. Subject to the provisions of
this Article XI, the Purchaser agrees to indemnify and hold the Seller harmless
from and against all Damages sustained by the Seller resulting from, arising
from, arising out of, relating to, or caused by:
(a) The Assumed Liabilities;
(b) the Purchaser's (or in the event any third party alleges
facts that, if true, would mean a breach has occurred) breach of any of the
representations, warranties, covenants or agreements of the Purchaser contained
in this Agreement or in any certificate delivered by the Purchaser at the
Closing pursuant to this Agreement (such breach to be determined for this
purpose without regard to any materiality, Material Adverse Effect, or similar
standard or limitation (other than Knowledge where applicable) set forth in any
representation or warranty) when made or as of the Closing Date, it being
understood that to the extent that any of such representations or warranties
were made as of a specified date the same shall apply only to the failure of
such representations and warranties to be true as of such specified date; and
(c) the operation of the Business or ownership of the Assets
on or after the Closing, including but not limited to all Liabilities, Hazardous
Environmental Effects, Environmental Claims and environmental harms of whatever
nature, occupation or operation, any Hazardous Material contamination on, under,
from or into the Real Property or Improvements caused by a new release of
Hazardous Materials by Purchaser (for the avoidance of doubt, "a new release"
shall be construed to mean an independent spill or other affirmative event and
any exacerbation of or failure by Purchaser to use reasonable efforts to
mitigate such Liabilities after the Closing Date, to the extent Purchaser
actually knew or should have known of such Liabilities).
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11.3 Limitation on Indemnification Liabilities. No claim for
indemnification under this Article XI may be brought or maintained by the
Purchaser unless and until the aggregate dollar amount of all Damages sought by
it to be indemnified against under such aforesaid Article exceeds $250,000 (the
"Threshold Amount"); provided, however, that the Threshold Amount shall not be
applicable with respect to Purchaser's claim for indemnification for breach of
Sections 7.3, 7.13, 8.7 or 14.6 and Purchaser's right for indemnification for
such claims shall be from the first dollar of Damages claimed by Purchaser. No
claim for indemnification under Section 11.2 may be brought or maintained by the
Seller unless and until the aggregate dollar amount of all Damages sought by it
to be indemnified against under the aforesaid Section exceeds the Threshold
Amount. The maximum amount of liability of Seller to Purchaser under this
Article XI shall not exceed $4, 500,000.
11.4 Survival of Representations, Warranties, Covenants and
Indemnities. The parties agree that (a) Seller's representations and warranties
in Sections 5.6, (as to environmental matters only), 5.7 and 5.9 shall survive
the Closing and continue in full force and effect until the expiration of the
applicable statutes of limitation; (b) Seller's representations and warranties,
in Sections 5.14 and 5.15 shall survive the Closing and continue in full force
and effect until 36 months after the Closing Date; and (c) all of the other
representations, warranties and covenants of the Seller and the Purchaser shall
survive the Closing and continue in full force and effect until 18 months after
the Closing Date. All indemnity claims for breach of a representation, warranty
or covenant herein must be brought prior to expiration of the applicable
survival period. Any indemnity claim which is made prior to the expiration of
the applicable survival period shall survive until final adjudication or other
disposition.
11.5 Notice of Indemnification. In the event any Legal Proceeding shall
be threatened or instituted or notice thereof given or any claim or demand shall
be asserted by any Person in respect of which payment may be sought by one party
hereto from the other party under the provisions of this Article XI for breach
of any of the representations, warranties, covenants or agreements set forth
herein, the party seeking indemnification (the "Indemnitee") shall promptly
cause written notice of the assertion of any such claim of which it has
knowledge which is covered by this indemnity to be forwarded to the other party
(the "Indemnitor"), which notice must be received by the Indemnitor not later
than the conclusion of the applicable survival period set forth in Section 11.4.
Any notice of a claim by reason of any of the representations, warranties,
covenants or agreements contained in this Agreement shall state in reasonable
detail the representation, warranty, covenant or agreement with respect to which
the claim is made, the facts giving rise to an alleged basis for the claim, and
the amount of the liability asserted against the Indemnitor by reason of the
claim.
11.6 Indemnification Procedure for Third-Party Claims. Except as
otherwise provided in this Article XI, in the event of the initiation of any
Legal Proceeding against an Indemnitee by a third party, once the Indemnitee has
given notice of the matter to the Indemnitor, the Indemnitor may defend against
the matter in any manner it reasonably may deem appropriate. The Indemnitor will
reimburse the Indemnitee for all reasonable expenses (including, without
limitation, fees and expenses of counsel selected by the Indemnitee) as they are
accrued in connection with investigating and defending against any such matter.
The Indemnitor will not consent to the entry of a judgment or enter into any
settlement with respect to such matter without the written consent of the
Indemnitee (which shall not be unreasonably withheld or delayed). The Indemnitee
shall cooperate in all reasonable respects with the Indemnitor and its attorneys
in the investigation, trial and defense of any Legal Proceeding and any appeal
from
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(including the filing in the Indemnitee's name of appropriate cross claims and
counterclaims). The Indemnitee may, at its own cost, participate in any
investigation, trial and defense of such Legal Proceeding controlled by the
Indemnitor and any appeal arising therefrom. If the Indemnitor does not notify
the Indemnitee within 30 days after the Indemnitee has given notice of the
matter that the Indemnitor is assuming all responsibility therefor, the
Indemnitee, with the consent of the Indemnitor which consent shall not be
unreasonably withheld, may defend against, consent to the entry of judgment or
enter into any settlement with respect to the matter in any manner the
Indemnitee reasonably deems appropriate without waiving any right to indemnity
therefor by the Indemnitor.
11.7 Exclusive Remedy. Indemnification pursuant to this Article XI
shall constitute the exclusive remedy available to any party under this
Agreement on account of any claim which it may have arising after the Closing
for any Damages. Any claim by Purchaser for any Damages shall be limited to Four
Million Five Hundred Thousand Dollars ($4,500,000) and may only be satisfied by
Purchaser by offsetting such Damages against the Subordinated Note delivered by
Purchaser to Seller at the Closing Date as contemplated by Section 3.1.
Purchaser shall give Seller written notice of any claim for Damages, specifying
the details thereof and if Seller objects thereto, Purchaser shall deduct the
amount of such claim from the payments(s) due to Seller under the Subordinate
Note and pay said amount to a joint bank account in the names of Purchaser and
Seller at a mutually agreeable bank. Withdrawal of that amount may only be made
if the Seller and Purchaser consent thereto in writing or if a court determines
in a final non-appealable order or judgment that the Damages are owed by Seller
to Purchaser. Payment to the joint bank account shall be deemed a payment under
the Subordinated Note and interest under the Subordinated Note shall stop
accruing on such payment. Interest earned in the joint account shall follow the
principal paid out therefrom. In any event, the right of offset shall be
exercised against payments due under the Subordinated Note only in the inverse
order in which they are due. Notwithstanding the foregoing, indemnification for
money Damages under this Article XI shall not preclude injunctive relief for any
claims for breach of any of the representations, warranties or covenants
contained in Sections 7.2, 10.1, 10.2, or 10.5.
ARTICLE XII
TERMINATION
12.1 Termination. This Agreement may be terminated prior to the Closing
Date as follows:
(a) By mutual written consent of the Seller and the Purchaser;
(b) By either the Purchaser on one hand or the Seller on the
other, so long as the terminating party has not breached in any material respect
any of its obligations hereunder, after October 31, 2000 or such later date to
which the Closing may be extended by written agreement of the parties hereto
(such date being herein referred to as the "Outside Closing Date"), if the
Closing shall not have occurred on or before such date;
(c) By the Seller at any time, by written notice given to
Purchaser prior to the Financing Commitment Date, if the Special Committee
determines in good faith, upon advice of legal counsel, that termination of this
Agreement is required for the directors of GC to fulfill their fiduciary duties
and obligations under New York law so that Seller may continue operation
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of the Genesee Brewery, liquidate the Genesee Brewery or pursue another course
of action other than sale or other disposition of the Genesee Brewery; and by
the Seller at any time, if the Special Committee does not approve the terms of
the Equity or Debt Financing Commitments which have been delivered to it by
Purchaser prior to the Financing Commitment Date.
(d) By the Seller at any time if the Special Committee
determines in good faith, upon advice of legal counsel, that termination of this
Agreement is required for the directors of GC to fulfill their fiduciary duties
and obligations under New York law.
(e) By the Seller, if the proposed terms of the consent to
assignment of the agreements identified in Sections 7.5(a), (b) and (d) hereof,
or the consequences to Seller of the non-assignment thereof are not satisfactory
to Seller in its sole discretion.
(f) By the Seller, if the termination of those certain Union
and collective bargaining agreements listed and described in SCHEDULE 7.5(C) and
the Employee Benefit Plans are not satisfactory to Seller, in its sole
discretion.
(g) By Seller if it fails to receive from Houlihan Lokey
Howard & Zukin a favorable opinion as to the fairness, from a financial point of
view, to GC and the public shareholders of GC of the consideration to be
received by GC in connection with the transactions hereunder; or if GC fails to
receive from its shareholders approval of this transaction.
(h) By Purchaser by giving written notice to the Seller at any
time prior to the Closing in the event the Seller has within the ten (10)
previous Business Days given Purchaser any notice pursuant to Section 7.6 and
Seller has failed to cure any defect that would have a Material Adverse Effect
set forth in such notice within ten (10) Business Days of the date that it
learns of such defect;
(i) By the Seller by giving written notice to the Purchaser at
any time prior to the Closing in the event Purchaser has within the ten (10)
previous Business Days given Seller any notice pursuant to Section 7.6 and
Purchaser has failed to cure any defect that would have a Material Adverse
Effect set forth in such notice within ten (10) Business Days of the date that
it learns of such defect;
(j) By the Seller, so long as the Seller has not breached any
of its obligations hereunder, if the Purchaser fails to perform any covenant in
this Agreement when performance thereof is due and does not cure any such
failure that would have a Material Adverse Effect within ten (10) Business Days
after the Seller delivers written notice thereof to the Purchaser; and
(k) By the Purchaser so long as the Purchaser has not breached
any of its obligations hereunder, if the Seller fails to perform any covenant in
this Agreement when performance thereof is due and does not cure any such
failure that would have a Material Adverse Effect within ten (10) Business Days
after written notice by the Purchaser thereof to the Seller.
(l) In the event that after the Execution Date and before
Closing the Real Property, Improvements, Tangible Property or Machinery are
damaged in the amount of $500,000 or more, or to an extent that the ability of
Purchaser to continue normal operations
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would be substantially impaired, then either Seller or Purchaser may terminate
this Agreement. If Purchaser elects to proceed to Closing and Seller does not
terminate this Agreement, then Purchaser shall have a credit against the cash
portion of the Purchase Price for the reasonable cost of repair less the amount
of insurance proceeds which are payable to Seller as a result of the damage and
are assigned by Seller to Purchaser.
12.2 Effect of Termination. If this Agreement is terminated pursuant to
Section 12.1, all rights and obligations of the parties hereunder shall
terminate, except for the confidentiality covenants set forth in Section 10.5
hereof, and none of the parties will have any Liability to any other party
hereunder, except that Sections 11.7, 12.3, 14.5 and 14.7 will remain in effect,
and provided that nothing herein will relieve any party from Liability for any
intentional breach of any representation, warranty, covenant or agreement in
this Agreement prior to such termination.
12.3 Purchaser's Right to Damages or Expenses. Notwithstanding anything
herein to the contrary, if this Agreement is terminated by Seller in breach of
this Agreement or for any reason other than Purchaser's failure under Section
7.7 diligently to pursue and use its best efforts to obtain the Debt and Equity
Financing Commitments set forth in SCHEDULE 1.19 (of which Seller shall give
Purchaser 10 days' notice to cure), then Seller shall pay the sum of Purchaser's
aggregate reasonable documented costs, fees and expenses incurred in connection
with the transactions contemplated by this Agreement and the financing thereof,
not to exceed $250,000 , provided that appropriate supporting documentation is
delivered to Seller by Purchaser. In consideration of the foregoing, Purchaser
agrees that under no circumstances shall Seller be liable to Purchaser for
Damages prior to Closing in excess of $250,000, whether claimed under the
preceding sentence or as a result of an alleged breach by Seller.
ARTICLE XIII
SPECIFIC PERFORMANCE
Each of the Parties acknowledges and agrees that the other Party would
be damaged irreparably in the event any of the provisions of this Agreement are
not performed in accordance with their specific terms or otherwise are breached.
Accordingly, each of the Parties agrees that the other Party shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement and to enforce specifically this Agreement and the terms and
provisions hereof in any action instituted in the State of New York, as
prescribed in Section 14.4 below, in addition to any other remedy to which it
may be entitled, at law or in equity.
ARTICLE XIV
GENERAL AND MISCELLANEOUS
14.1 Prorations. All taxes relating to the Assets shall be prorated by
the parties as of the Closing Date, and all such taxes applicable to periods of
time prior to the Closing date shall be the sole obligation responsibility and
expense of the Seller and shall be paid by the Seller. All such assessments and
taxes applicable to periods following the closing Date shall be the sole
obligation, responsibility and expense of the Purchaser and shall be paid by the
Purchaser. All utility services to the Real Property shall either have final
readings as of the Closing or be adjusted by Seller and Purchaser as of the
Closing.
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14.2 Waiver of Compliance with Bulk Transfer Laws. The Purchaser hereby
waives compliance by the Seller with the provisions of the bulk transfer laws of
any jurisdiction in connection with the transactions contemplated by this
Agreement, and in exchange therefor the Seller agrees to be liable for and to
pay, honor and discharge when due any claims of creditors asserted against the
Purchaser by reason of such noncompliance.
14.3 Entire Agreement. This Agreement (with its Schedules and Exhibits)
and related documents delivered concurrently herewith or at the Closing
hereunder, contain, and are intended as, a complete statement of all of the
terms and the arrangements between the parties hereto with respect to the
matters provided for herein, and supersedes any and all previous agreements and
understandings between the parties hereto with respect to those matters,
including but not limited to certain Memorandums of Proposal and memorandums
from Seller's representatives commenting thereon and a certain letter agreement
dated June 8, 2000 regarding the payment of certain expenses and fees up to a
maximum of $150,000. Neither party has executed this Agreement in reliance on
any representation or promise not contained herein or therein, including,
without limitation, any representation or promise as to the admissibility of any
oral representation or agreement. There are no restrictions, promises,
warranties, covenants or undertakings other than those expressly set forth
herein or in the Schedules or Exhibits hereto.
14.4 Governing Law. This Agreement shall be governed by and construed
in accordance with the law of the State of New York without giving effect to any
choice or conflict of law provision or rule. All actions and proceedings arising
out of or relating to this Agreement shall be heard and determined in any New
York state or federal court sitting in Rochester, New York, and the parties
hereto hereby consent to the jurisdiction of such courts in any such action or
proceeding.
14.5 Costs. If any legal action or proceeding is brought relating to
this Agreement, or because of an alleged dispute, breach, default or
misrepresentation in connection with any of the provisions of this Agreement, a
party or parties who receive more than a majority of the money damages initially
alleged in such action or proceeding, shall be entitled to recover reasonable
attorneys' fees and other costs incurred in that action or proceeding, in
addition to any other relief to which it or they may be entitled.
14.6 Transfer Taxes. The Seller shall pay all transfer and documentary
gains, excise and other transfer or similar Taxes and fees imposed with respect
to instruments of conveyance in the transaction contemplated hereby and
Purchaser shall pay all sales, use and similar Taxes on the transfer of the
Assets contemplated hereunder, including any and all recording fees. The
Purchaser or the Seller, as the case may be, shall execute and deliver to the
other at the Closing any certificates or other documents as the other may
reasonably request to perfect any exemption from any such transfer, documentary,
sales, gains, excise or use Tax.
14.7 Expenses. Except as otherwise provided in Section 12.3, each of
the parties hereto shall bear its own expenses (including without limitation,
fees and disbursements of its counsel, accountants and other experts), incurred
by it in connection with the preparation, negotiation, execution, delivery and
performance of this Agreement, each of the other documents and instruments
executed in connection with or contemplated by this Agreement and the
consummation of the transactions contemplated hereby and thereby.
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14.8 Headings. The section headings of this Agreement are for reference
purposes only and are to be given no effect in the construction or
interpretation of this Agreement.
14.9 Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed duly given when delivered personally or
by facsimile or four days after being mailed by registered mail, return receipt
requested, or by documented overnight delivery to a party at the following
address (or to such other address as such party may have specified by notice
given to the other party pursuant to this provision):
If to the Seller, to:
William Buckingham, Chairman
Special Board Committee
The Genesee Corporation
P.O. Box 762
Rochester, New York 14603
with a copy to:
Harry P. Messina, Jr., Esq.
Woods Oviatt Gilman LLP
700 Crossroads Bldg.
2 State Street
Rochester, New York 14614
If to the Purchaser, to:
Samuel T. Hubbard, Jr.
Monroe Brewing Co., LLC
c/o Genesee Brewery
445 St. Paul Street
Rochester, New York 14605
with a copy to:
Underberg & Kessler LLP
1800 Chase Square
Rochester, New York 14604
Attn: Michael C. Dwyer, Esq.
14.10 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement will nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any adverse manner to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto will negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an
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acceptable manner so that the transactions contemplated hereby are fulfilled to
the greatest extent possible.
14.11 Binding Effect, No Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
assigns. Nothing in this Agreement, express or implied, is intended to confer on
any Person other than the parties hereto or their respective successor and
assigns any rights, remedies or liabilities under or by any reason of this
Agreement. No assignment of this Agreement or of any rights or obligations
hereunder may be made by any party (by operation of law or otherwise) without
the prior written consent of each of the other parties hereto and any attempted
assignment without such required consents shall be void; provided, however,
Seller may assign this Agreement and its rights, interests and obligations
hereunder to a liquidating trust or similar entity.
14.12 Amendments. This Agreement may be amended, supplemented or
modified, and any provision hereof may be waived, only pursuant to a written
instrument making specific reference to this Agreement signed by each of the
parties hereto.
14.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14.14 Extension; Waiver. At any time, the parties may extend the time
for the performance of any of the obligations or other acts of the other party,
waive any inaccuracies in the representations and warranties contained in this
Agreement and waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver will be valid only if set forth in an instrument signed on
behalf of such party. The waiver by any party hereto of a breach of any
provision hereunder will not operate to be construed as a waiver of any prior or
subsequent breach of the same or any other provision hereunder.
14.15 Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
14.16 Press Release and Public Announcements. Upon execution of this
Agreement by the parties hereto, Seller may issue a news release and file a Form
8-K announcing the Agreement. Until the Closing, no party hereto or Affiliate
thereof shall issue any press release or make any general public announcement
relating to the subject matter of this Agreement without the prior written
approval of the Purchaser and the Seller; provided, however, that any party
hereto may make any public disclosure it believes in good faith is required by
applicable law.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this instrument as
of the date and year first above written.
THE GENESEE BREWING COMPANY, INC.
By the Special Board Committee:
/s/ William A. Buckingham
------------------------------------
Name: William A. Buckingham
Title: Chairman
/s/ Stephen B. Ashley
------------------------------------
Name: Stephen B. Ashley
Title: Member
/s/ Charles S. Wehle
------------------------------------
Name: Charles S. Wehle
Title: Member & Chairman of the Board
MONROE BREWING CO., LLC
By: /s/ Samuel T. Hubbard, Jr.
---------------------------------
Name: Samuel T. Hubbard, Jr.
Title: Chief Executive Officer
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SCHEDULES
---------
1.19 Purchaser's Financing
1.56 Seller's Fiscal 2001 Budget
1.58 Example of Net Working Capital Calculation
2.1(a) Machinery
2.1(c) Intangible Assets
2.1(e) Working Capital Assets
2.1(h) Reports, Permits and Surveys
2.2 Excluded Assets
2.3(b) Leases, Customer Contracts and Other Obligations Assumed
2.3(c) Working Capital Liabilities
2.4(l) Excluded Liabilities
3.3 Allocation of Purchase Price
5.1 Jurisdictions Where Qualified (Seller)
5.3 Consents Required
5.4 Seller's Operational Statements
5.6 Absence of Certain Developments
5.7 Tax Exceptions
5.7(d) Tax Investigations
5.8 Real Property Permitted Exceptions
5.8(b) Condemnation Proceedings, Etc.
5.9 Environmental, Health and Safety Exceptions
5.11 Tangible Property Permitted Exceptions
5.12 Machinery, Permitted Exceptions and Leases
5.12(i) Leases Not Fully Assignable
5.13 Intangible Assets Exceptions [(b), (c) and (d)]
5.14 Employee Exceptions
5.15 Employee Benefit Plans and Exceptions
5.16 Law Compliance-Notices, Etc.
5.17 Licenses and Permits and Exceptions
5.18 Legal Proceedings
5.19 Material Contracts
5.21 Brokers - Seller
6.3 Consents for Purchaser
6.5 Brokers - Purchaser
7.3 Non-Transferred Employees
7.5(c) Union/Collective Bargaining Agreements
7.10 Environmental Site Assessments
8.9 Legal Opinion - Seller's Counsel
8.11 Material Environmental Permits and Licenses
9.7 Legal Opinion - Purchaser's Counsel
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EXHIBITS
--------
A. Real Property
B-1 Subordinated Promissory Note
B-2 Security Agreement
B-3 Investor Subordinated Note
C. Management Agreement
D. GC Agreement With Management Employees
E. Settlement and Release
