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EXHIBIT
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
▇▇▇▇▇▇▇▇▇ BREWING CO.,
FBC ACQUISITION CORPORATION,
AND
WILD GOOSE BREWERY INC.
DATED: DECEMBER 15, 1997
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AGREEMENT AND PLAN OF REORGANIZATION
TABLE OF CONTENTS
Page
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Article 1.0 Certain Definitions........................................... 1
1.1 Certain Definitions........................................... 1
Article 2.0 The Merger.................................................... 1
2.1 The Merger.................................................... 1
(a) Organization of FAC....................................... 1
(b) Merger of WGB and FAC..................................... 1
(c) Effect.................................................... 2
(d) Articles of Incorporation................................. 2
(e) Capital Stock............................................. 2
(f) Directors and Officers.................................... 2
2.2 Effective Time; Closing....................................... 2
2.3 Treatment of Capital Stock.................................... 3
2.4 Registration Rights........................................... 4
2.5 Stockholder Rights; Stock Transfers........................... 6
2.6 Dissenting Shares............................................. 6
2.7 Exchange Procedures........................................... 7
(a) The Exchange.............................................. 7
(b) Non-Surrendered Certificates.............................. 7
(c) No Dividends.............................................. 7
(d) No Obligation to Issue Shares of Frederick Common Stock... 7
2.8 Additional Actions............................................ 8
2.9 Structure of the Transaction.................................. 8
Article 3.0 Representations and Warranties of WGB......................... 8
3.1 Capitalization; Status and Qualification...................... 8
(a) Capitalization............................................ 8
(b) Status and Qualification.................................. 9
3.2 Authorization; Approval....................................... 9
3.3 Financial Statements.......................................... 10
3.4 Undisclosed Liabilities....................................... 10
3.5 Absence of Changes............................................ 10
3.6 Title to Assets............................................... 11
(a) Title..................................................... 11
(b) Condemnation.............................................. 11
3.7 Real Property................................................. 11
3.8 Tangible Personal Property.................................... 12
3.9 Intellectual Property......................................... 12
3.10 Litigation; Orders............................................ 13
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3.11 Compliance.................................................... 14
(a) Compliance (Non-Environmental)............................ 14
(b) Compliance (Environmental)................................ 14
(c) Definitions............................................... 15
3.12 Status of Contracts........................................... 17
(a) Status.................................................... 17
(b) Scale..................................................... 18
(c) Normality................................................. 18
(d) Affiliated Agreements..................................... 18
(e) Power of Attorney......................................... 19
(f) Pension Obligation........................................ 19
3.13 Assets; Inventory............................................. 19
3.14 Customers and Vendors......................................... 19
3.15 Taxes ...................................................... 20
3.16 Employees; Benefit Plans...................................... 20
(a) Employees................................................. 20
(b) Benefit Plans............................................. 21
3.17 Insurance..................................................... 22
3.18 Subsidiaries; Competing Interests............................. 22
3.19 No Pending Transactions....................................... 23
3.20 Broker's or Finder's Fees..................................... 23
3.21 Updating of Schedules......................................... 23
3.22 Ownership of Frederick Common Stock........................... 23
3.23 Transactions With Affiliates.................................. 23
3.24 Bank Accounts................................................. 24
3.25 Correct Information........................................... 24
Article 4.0 Representations and Warranties of Frederick................... 24
4.1 Structure; Status............................................. 24
(a) Frederick................................................. 24
(b) FAC ...................................................... 25
4.2 Authority; No Conflict........................................ 25
4.3 Broker's or Finder's Fees..................................... 26
4.4 Litigation; Orders............................................ 26
4.5 Authorized Frederick Common Stock............................. 26
4.6 Accuracy and Completeness of Reports.......................... 26
Article 5.0 Covenants..................................................... 26
5.1 Covenants of WGB.............................................. 26
5.2 No Solicitation............................................... 29
5.3 Stockholder Approval.......................................... 29
5.4 Access to Information; Confidentiality........................ 30
(a) Access to Information..................................... 30
(b) Confidentiality........................................... 30
(c) Confidentiality........................................... 31
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5.5 Consents; Efforts to Consummate............................... 32
5.6 Public Announcements.......................................... 32
5.7 Existence..................................................... 32
5.8 Articles of Merger............................................ 32
Article 6.0 General Matters............................................... 32
6.1 Survival of Representations and Warranties.................... 32
6.2 Benefits Plans and Arrangements............................... 32
(a) Plan Participation........................................ 32
(b) Employment................................................ 33
(c) Employment Agreement...................................... 33
(d) Retention Bonuses......................................... 33
(e) Attendance at Board Meetings.............................. 33
6.3 Failure to Fulfill Conditions................................. 34
6.4 Common Stock Restrictions..................................... 34
Article 7.0 Conditions to the Obligations of Frederick and FAC
to Consummate................................................. 34
7.1 Representations and Warranties................................ 35
7.2 Performance................................................... 35
7.3 Consents and Approvals........................................ 35
7.4 Stockholder Approval.......................................... 35
7.5 Dissenting Shares............................................. 35
7.6 Financing..................................................... 35
7.7 WGB Private Placements........................................ 35
7.8 Delivery of Documents......................................... 35
7.9 No Litigation................................................. 36
7.10 No Material Change............................................ 36
Article 8.0 Conditions to Obligations of WGB to Consummate ............... 36
8.1 Representations and Warranties................................ 36
8.2 Performance................................................... 36
8.3 Consents and Approvals........................................ 36
8.4 Officers' Certificate......................................... 36
8.5 Payment of Frederick Common Shares............................ 36
8.6 No Litigation................................................. 36
8.7 Delivery of Documents......................................... 37
Article 9.0 Termination................................................... 37
9.1 Termination................................................... 37
9.2 Procedure and Effect of Termination........................... 37
9.3 Payment of Expenses and Termination........................... 37
Article 10.0 Miscellaneous................................................. 38
10.1 Further Assurances............................................ 38
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10.2 Notices ...................................................... 38
10.3 Governing Law................................................. 39
10.4 Severability.................................................. 39
10.5 Entire Agreement; Amendment................................... 40
10.6 Assignment, etc............................................... 40
10.7 Counterparts.................................................. 40
Signatures .............................................................. 41
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Schedules:
Schedule 3.2............ Third Party Consents
Schedule 3.4............ Undisclosed Liabilities
Schedule 3.5............ Absence of Changes
Schedule 3.6............ Title to Assets
Schedule 3.7............ Real Property
Schedule 3.8A........... Significant Tangible Personal Property
Schedule 3.8B........... Leased Personal Property
Schedule 3.8C........... Restricted Personal Property
Schedule 3.9............ Intellectual Property
Schedule 3.10........... Litigation
Schedule 3.11A.......... Non-Compliance
Schedule 3.11B.......... Non-Compliance - Environmental
Schedule 3.12........... Contracts
Schedule 3.15........... Taxes
Schedule 3.16A.......... Employees
Schedule 3.16B.......... Benefit Plans
Schedule 3.17........... Insurance
Schedule 3.18........... Subsidiaries; Competing Interests
Schedule 3.24........... Bank Accounts
Schedule 4.4............ Litigation
Schedule 6.2(d)......... Retention Bonuses
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Exhibits:
Exhibit A............... Form of Employment Agreement between WGB
and ▇▇▇▇▇ ▇▇▇▇
Exhibit B............... Form of Opinion of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
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AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION ("Agreement")
is entered into as of December 15, 1997 by and among Wild Goose Brewery Inc.,
Cambridge, Maryland, a Maryland corporation ("WGB"), ▇▇▇▇▇▇▇▇▇ Brewing Co.,
Frederick, Maryland, a Maryland corporation ("▇▇▇▇▇▇▇▇▇") and FBC Acquisition
Corporation, a Maryland corporation in organization ("FAC") to be wholly owned
by Frederick as of the Closing Date (as defined in Section 2.2) hereof.
WITNESSETH:
WHEREAS, WGB is in the business of craft brewing beer as a
microbrewery (the "Business"), which operations are conducted out of its
facility located at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (the "Premises");
WHEREAS, the Boards of Directors of WGB and Frederick have
determined that it is in the best interests of their respective companies and
their respective shareholders to consummate the business combination
transactions provided for herein, including the merger of WGB with and into FAC
(the "Merger"), subject to the terms and conditions set forth herein; and
WHEREAS, the parties desire to provide for certain undertakings,
conditions, representations, warranties and covenants in connection with the
transactions contemplated hereby;
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE 1.0 CERTAIN DEFINITIONS.
1.1 Certain Definitions. For purposes of this Agreement,
certain terms are defined throughout the Agreement and shall have the meanings
given therein.
ARTICLE 2.0 THE MERGER.
2.1 The Merger
(a) Organization of FAC. Immediately prior to the
Closing Date (as defined in Section 2.2 hereof), Frederick shall have
organized, as a wholly owned subsidiary, FAC as a Maryland corporation pursuant
to Section 2-101, et. seq. of the Maryland General Corporation Law (the
"MGCL").
(b) Merger of WGB and FAC. Subject to the terms and
conditions of this Agreement, at the Effective Time (as defined in Section 2.2
hereof), WGB
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Agreement and Plan of Reorganization
Page 2
shall be merged with and into FAC in accordance with the provisions of Section
3-101 et. seq. of the MGCL. FAC shall be the surviving corporation
(hereinafter sometimes called the "Surviving Corporation") of the Merger, and
shall continue its corporate existence under the laws of the State of Maryland
as a wholly owned subsidiary of Frederick. The name of the Surviving
Corporation shall be changed to "Wild Goose Brewery Inc." promptly following
the Merger. Upon consummation of the Merger, the separate corporate existence
of WGB shall terminate.
(c) Effect. From and after the Effective Time,
the Merger shall have the effects set forth in Section 3-114 of the MGCL.
(d) Articles of Incorporation. The Articles
of Incorporation and Bylaws of FAC, as in effect immediately prior to the
Effective Time, shall be the Articles of Incorporation and Bylaws of the
Surviving Corporation until altered, amended or repealed in accordance with
their terms and applicable law.
(e) Capital Stock. The authorized capital stock of
the Surviving Corporation shall be as stated in the Articles of Incorporation
of FAC immediately prior to the Effective Time.
(f) Directors and Officers. Except as set forth
herein, the directors and officers of FAC immediately prior to the Effective
Time shall be the directors and officers of the Surviving Corporation, each of
whom shall hold office in accordance with the Articles of Incorporation and
Bylaws of the Surviving Corporation.
2.2 Effective Time; Closing. The Merger shall become
effective upon the occurrence of the filing of Articles of Merger with the
Department of Assessments and Taxation of the State of Maryland (the
"Department") pursuant to the MGCL, unless a later date and time is specified
as the effective time in such Articles of Merger (the "Effective Time"). A
closing of this Agreement (the "Closing") shall take place immediately prior to
the Effective Time at 10:00 a.m., eastern time, on or after the Business Day
following the satisfaction or waiver, to the extent permitted hereunder, of the
conditions to the consummation of the Merger specified in Articles 7 and 8 of
this Agreement (other than the delivery of certificates, opinions and other
instruments and documents to be delivered at the Closing) (the "Closing Date"),
at the offices of Elias, Matz, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.,
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, or at such other place, at such other time, or on such
other date as the parties may mutually agree upon. At the Closing, there shall
be delivered to Frederick, FAC and WGB the opinion, certificates and other
documents, as applicable, required to be delivered under Articles 7 and 8
hereof. Subject to the fulfillment or waiver at or prior to the Closing of the
conditions to its obligations set forth in Articles 7 and 8, at the Closing
each of FAC and WGB shall execute and deliver Articles of Merger for filing
with the Department. For purposes of this Agreement, a "Business Day" shall be
any day that banks in the State of Maryland are open for business.
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Agreement and Plan of Reorganization
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2.3 Treatment of Capital Stock. Subject to the provisions
of this Agreement, at the Effective Time, automatically by virtue of the Merger
and without any action on the part of the holder thereof;
(a) each share of the common stock, no par value per
share, of FAC (the "FAC Common Stock") issued and outstanding immediately prior
to the Effective Time shall be unchanged and shall remain issued and
outstanding and owned beneficially and of record by Frederick;
(b) subject to Sections 2.6 and 2.7 hereof, each share
of the preferred stock, $.01 par value per share of WGB (the "WGB Preferred
Stock") issued and outstanding (not including Dissenting Shares, as defined in
Section 2.6 hereof) immediately prior to the Effective Time shall be converted
into and become the right to receive that number of shares (rounded to the
nearest whole share) of the common stock, $.00004 par value per share of
Frederick (the "Frederick Common Stock") equal to $10.00 divided by the
Frederick Market Value. The Frederick Market Value means the average of the
Frederick Market Prices for the ten (10) consecutive trading days immediately
preceding the Business Day prior to the date of this Agreement. The Frederick
Market Price means, as of any date, the last sale price of a share of Frederick
Common Stock on the Nasdaq Small Cap Market System (as reported in the Wall
Street Journal, or if not reported therein, in another authoritative source);
(c) subject to Sections 2.6 and 2.7 hereof, each
share of the common stock, $0.1 par value per share of WGB (the "WGB Common
Stock") issued and outstanding (not including Dissenting Shares, as defined in
Section 2.6 hereof) immediately prior to the Effective Time shall be converted
into and become the right to receive, that number of shares (rounded to the
nearest whole share) of Frederick Common Stock equal to (i) the quotient of
$2,570,000 (the "WGB Common Purchase Price"), subject to the adjustments set
forth below, divided by the number of issued and outstanding shares of WGB
Common Stock (not including Dissenting Shares, as defined in Section 2.6
hereof), divided by (ii) the Frederick Market Value. The WGB Common Purchase
Price is subject to the following adjustments; (A) the WGB Common Purchase
Price will be reduced by the aggregate amount, as of the Closing, of the
outstanding principal balances and accrued interest thereon (and penalty
amounts, if any) of the Promissory Note from WGB to Signet Bank, dated October
3, 1995, and the Revolving Loan Note, dated October 3, 1995, entered into by
and between Signet Bank and WGB, (B) if the gross revenue of WGB, computed in
accordance with past practice, for the year ending December 31, 1997 (v) is
less than $2.4 million, the WGB Common Purchase Price will be reduced on a
dollar for dollar basis for each dollar WGB's gross revenue is less than $2.4
million, or (v) is greater than $2.4 million, the WGB Common Purchase Price
will be increased on a dollar for dollar basis for each dollar WGB's gross
revenue is greater than $2.4 million, (C) if, as of the Closing, the aggregate
of WGB's cash on hand, accounts receivable (60 days or less) and its salable
finished goods, usable ingredients and usable packaging materials (each valued
at cost) is
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Agreement and Plan of Reorganization
Page 4
less than WGB's accounts payable, the WGB Common Purchase Price will be reduced
on a dollar for dollar basis for each dollar the aggregate of WGB's cash on
hand, accounts receivable (60 days or less) and its salable finished goods,
usable ingredients and usable packaging materials (each valued at cost) is less
than WGB's accounts payable, (D) to the extent not otherwise specifically
disclosed in WGB's accounts payable, the WGB Common Purchase Price will be
reduced by the amount, as of the Closing, of (w) WGB's aggregate unpaid rent
with respect to its facility located at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, (x) all product at distributors and unsold for 120 days or greater,
(y) accrued but unpaid employee or director compensation, property, payroll,
excise, income and other taxes and equipment lease payments, and (z) amounts
owed on contracts (whether written or otherwise) to purchase or repair
equipment, parts or any other personal property; and (E) the fair value of
Dissenting Shares as determined pursuant to the MGCL;
(d) Shares of Frederick Common Stock to be issued as
part of the WGB Common Purchase Price as computed pursuant to Section 2.3(c)
above which equal $250,000 of Frederick Market Value will be retained by
Frederick as a holdback (the "Holdback Shares") and will be a further
adjustment to the WGB Common Purchase Price as of the Closing, but only for
purposes of computing the amount of WGB Common Purchase Price to be paid to WGB
stockholders as of the Effective Time and not for purposes of computing the
aggregate amount of the WGB Common Purchase Price. The Holdback Shares will be
retained by Frederick for a period of at least 270 days from the Closing as an
indemnity against any claims, actions, suits, proceedings or investigations
which may be made, brought, or threatened to be brought against Frederick or
FAC for actions taken or not taken by WGB prior to or as of the Closing,
including, but not by way of limitation, credits, allowances and returns
demanded by wholesale customers, litigation or environmentally related claims
of any nature not fully covered by insurance, the fair value of Dissenting
Shares as determined pursuant to the MGCL, and those arising out of or due to
the breach by WGB of any of its representations, warranties or covenants
contained in this Agreement; and
(e) The Frederick Common Stock to be received by the
stockholders of WGB will be subject to restrictions on transferability and
resale as set forth in Section 6.4 of this Agreement.
2.4 Registration Rights. (i) Frederick agrees that
within 120 days of the Effective Time it will file a registration statement
under the Securities Act of 1933, as amended (the "Securities Act") with
respect to the shares of Frederick Common Stock to be issued to the WGB
stockholders pursuant to the terms of this Agreement (the "Registration
Statement").
(ii) Frederick will pay all reasonable
registration expenses in connection with the Registration Statement, including
without limitation, all registration and filing fees, fees with respect to
filings required to be made with the National Association of Securities
Dealers, Inc., fees and expenses of compliance with securities or
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Agreement and Plan of Reorganization
Page 5
blue sky laws, printing expenses, and fees and expenses of counsel for
Frederick and of all independent public accountants of Frederick (including the
expenses of any "comfort" letters or update thereof required by or incident to
the foregoing) in connection with such registration except that the following
expenses shall not be borne by Frederick:
(A) the cost of any special audit required by the Securities Act
or the rules and regulations of the Securities and Exchange Commission
thereunder as a result of Frederick's obligation to maintain the
Registration Statement current for no more than 15 months, which costs
shall be prorated among the holders of the securities included in the
Registration Statement according to the number of shares of Frederick
Common Stock so covered by the Registration Statement during such
extended period; and
(B) the cost of any legal opinion required by Frederick or its
transfer agent to be provided by the selling stockholder in order to
establish such selling stockholder's compliance with the provisions of
the Securities Act.
(iii) Frederick shall immediately notify
each stockholder at any time when a prospectus relating thereto is required to
be delivered under the Securities Act, of the happening of any event as a
result of which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made, and at the request of the stockholder will promptly prepare and
furnish to the stockholder a reasonable number of copies of a supplement to or
an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances under which they were made. Each
stockholder agrees (A) that upon receipt of any notice from Frederick of the
happening of any event of the kind described above, such holder will forthwith
discontinue such holder's disposition of the shares of Frederick Common Stock
pursuant to the Registration Statement until such stockholder's receipt of the
copies of the supplemented or amended prospectus contemplated above, and if so
directed by Frederick, will deliver to Frederick (at ▇▇▇▇▇▇▇▇▇'▇ expense) all
copies then in such stockholder's possession of the prospectus relating to such
securities current at the time of receipt of such notice and (B) that it will
immediately notify Frederick, at any time when a prospectus relating to the
registration of such shares is required to be delivered under the Securities
Act, of the happening of any event as a result of which information previously
furnished by such stockholder to Frederick in writing for inclusion in such
prospectus contains an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances under which
they were made.
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Agreement and Plan of Reorganization
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(iv) In connection with the registration of the
shares of Frederick Common Stock issued pursuant to this Agreement under the
Securities Act, each stockholder shall furnish to Frederick in writing such
information and affidavits as Frederick reasonably requests for use in
connection with such registration statement and agrees, jointly and severally,
to indemnify and hold harmless Frederick, its directors, officers, each
underwriter, if any, and each controlling person of Frederick, if any, against
any losses, claims, damages or liabilities, joint or several (or actions in
respect thereof), to which Frederick, its directors, officers, such underwriter
or controlling person may be subject under the Securities Act or under any
other statute or at common law, insofar as such losses, claims, damages or
liabilities, joint or several (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement (or alleged untrue statement) of any
material fact contained in the Registration Statement, any selling document or
any amended selling document, or (ii) any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to
make the statements therein (in light of the circumstances in which they were
made with respect to any prospectus) not misleading, and shall reimburse
Frederick, its directors, officers, such underwriter and controlling person for
any legal or other expense reasonably incurred by such person in connection
with investigating of defending any such loss, claim, damage, liability or
action; in each case, to the extent, and only to the extent, that each untrue
statement or omission (or alleged untrue statement or omission) is made in
reliance upon information furnished to Frederick by such stockholder.
(v) Frederick shall maintain the effectiveness
of the Registration Statement for no more than 15 months.
2.5 Stockholder Rights; Stock Transfers. At the Effective
Time, the holders of the WGB Common Stock and the WGB Preferred Stock shall
cease to be and shall have no rights as a stockholder of WGB, other than to
receive the consideration provided under this Article 2.0. After the Effective
Time, there shall be no transfers on the stock transfer books of WGB or the
Surviving Corporation of shares of WGB Common Stock or shares of WGB Preferred
Stock.
2.6 Dissenting Shares. Each outstanding share of WGB
Common Stock and WGB Preferred Stock the holder of which has perfected his
right to dissent under the MGCL and has not effectively withdrawn or lost such
right as of the Effective Time shall not be converted into or represent a right
to receive shares of Frederick Common Stock as provided in Sections 2.3(b) and
(c) hereof, and the holder thereof shall be entitled only to such rights as are
granted by the MGCL. WGB shall give Frederick prompt notice upon receipt by
WGB of any such written demands for payment of the fair value of such shares of
WGB Common Stock or WGB Preferred Stock ("Dissenting Shares") and of
withdrawals of such demands and any other instruments provided pursuant to the
MGCL (any shareholder duly making such demand being hereinafter called a
"Dissenting Shareholder"). If any Dissenting Shareholder shall effectively
withdraw or lose (through
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Agreement and Plan of Reorganization
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failure to perfect or otherwise) his right to such payment at any time, such
holder's shares of WGB Preferred Stock or WGB Common Stock shall be converted
into the right to receive shares of Frederick Common Stock as provided in
Sections 2.3(b) and (c) hereof, respectively. Any payments made in respect of
Dissenting Shares shall be made by FAC, as the Surviving Corporation of the
Merger.
2.7 Exchange Procedures.
(a) The Exchange. On the Closing Date, ▇▇▇▇▇▇▇▇▇
shall, upon the surrender by the WGB stockholders of their certificates or an
affidavit of loss together with an indemnity and/or bond satisfactory to
▇▇▇▇▇▇▇▇▇ representing 100% of the issued and outstanding shares of WGB Common
Stock and WGB Preferred Stock (except for certificates representing Dissenting
Shares) (the "WGB Certificates") at the Closing Date, issue to the WGB
stockholders the consideration set forth in Sections 2.3(b) or (c), as the case
may be.
(b) Non-Surrendered Certificates. Each outstanding
WGB Certificate which prior to the Effective Time represented WGB Common Stock
or WGB Preferred Stock and which is not surrendered to ▇▇▇▇▇▇▇▇▇ in accordance
with the procedures provided for herein shall, except as otherwise herein
provided, until duly surrendered to ▇▇▇▇▇▇▇▇▇ be deemed to evidence the right
to receive the consideration set forth in Sections 2.3(b) or (c), as the case
may be.
(c) No Dividends. No holder of a WGB Certificate
shall be 35 entitled to receive any dividends in respect of ▇▇▇▇▇▇▇▇▇ Common
Stock into which such shares shall have been converted by virtue of the Merger
until the certificate or an affidavit of loss together with an indemnity and/or
bond satisfactory to ▇▇▇▇▇▇▇▇▇ representing such shares is surrendered in
exchange for a certificate or certificates representing whole shares of
▇▇▇▇▇▇▇▇▇ Common Stock. In the event that dividends are declared and paid by
▇▇▇▇▇▇▇▇▇ in respect of ▇▇▇▇▇▇▇▇▇ Common Stock after the Effective Time but
prior to the holder's surrender of WGB Certificates, dividends payable to such
holder in respect of whole shares of ▇▇▇▇▇▇▇▇▇ Common Stock not then issued
shall accrue (without interest). Any such dividends shall be paid (without
interest) upon surrender of the WGB Certificates.
(d) No Obligation to Issue Shares of ▇▇▇▇▇▇▇▇▇ Common
Stock. ▇▇▇▇▇▇▇▇▇ shall not be obligated to deliver a certificate or
certificates representing whole shares of ▇▇▇▇▇▇▇▇▇ Common Stock to which the
holder of WGB Common Stock or WGB Preferred Stock would otherwise be entitled
as a result of the Merger until such holder surrenders the certificate or
certificates representing such shares for exchange as provided in this Section
2.7, or, in default thereof, an appropriate affidavit of loss and indemnity
agreement and/or a bond in an amount as may be reasonably required in each case
by ▇▇▇▇▇▇▇▇▇.
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2.8 Additional Actions. If, at any time after the
Effective Time, the Surviving Corporation shall consider that any further
assignments or assurances in law or any other acts are necessary or desirable
to (i) vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of WGB acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger, or (ii)
otherwise carry out the purposes of this Agreement, WGB and its proper officers
and directors shall be deemed hereby to have granted to the Surviving
Corporation an irrevocable power of attorney to execute and deliver all such
proper deeds, assignments and assurances in law and to do all acts necessary or
proper to vest, perfect or confirm title to and possession of such rights,
properties or assets in the Surviving Corporation and otherwise to carry out
the purposes of this Agreement; and the proper officers and directors of the
Surviving Corporation are fully authorized in the name of WGB or otherwise to
take any and all such action.
2.9 Structure of the Transaction. ▇▇▇▇▇▇▇▇▇ reserves the
right to alter the structure of the transactions contemplated by this Agreement
prior to the Closing Date for tax or other business reasons, provided, however,
that the total consideration to be paid to the stockholders of WGB, or the tax
consequences to the stockholders of WGB is not altered, unless such alteration
in the consideration or the tax consequences is approved by WGB and the
stockholders thereof.
Article 3.0 Representations and Warranties of WGB. WGB represents
and warrants to ▇▇▇▇▇▇▇▇▇ as follows:
3.1 Capitalization; Status and Qualification.
(a) Capitalization The authorized capital stock of WGB
consists of fifty thousand (50,000) shares of WGB Common Stock and fifty
thousand (50,000) shares of WGB Preferred Stock. As of the date hereof, ten
thousand (10,000) shares of WGB Common Stock are issued and outstanding and are
owned of record by 29 shareholders and fifty thousand (50,000) shares of WGB
Preferred Stock are issued and outstanding and are owned by 27 shareholders.
All outstanding shares of WGB Common Stock and WGB Preferred Stock have been
duly authorized and validly issued and are fully paid and nonassessable, and
none of the outstanding shares of WGB Common Stock or WGB Preferred Stock has
been issued in violation of any law, regulation or policy of any governmental
authority, the WGB Articles of Incorporation, Bylaws, the terms of any
agreement to which WGB is a party or is bound or the preemptive rights of any
person, firm or entity. There are no Rights authorized, issued or outstanding
with respect to the capital stock of WGB. For purposes of this Agreement,
"Rights" shall mean any warrants, options, rights, convertible or exchangeable
securities and other arrangements or commitments which obligate an entity to
issue or dispose of any of its capital stock or ownership interests.
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(b) Status and Qualification. WGB is a corporation
which is duly organized, validly existing and in good standing under the laws
of the State of Maryland, has the full power and authority to carry on its
business as it is currently being conducted and to own, lease and operate the
property and the assets that it now owns, leases and operates and to execute,
deliver and perform this Agreement and the transactions contemplated hereby.
WGB has qualified as a foreign corporation, is in good standing, has obtained
all licenses, permits or other authorizations and has taken all other actions
required by or under the laws of all jurisdictions and all governmental
regulations where the failure to do so would have a material adverse effect on
the business, condition (financial or otherwise), results of operations, assets
or prospects of WGB ("Material Adverse Effect"). WGB has heretofore delivered
to ▇▇▇▇▇▇▇▇▇ true and complete copies of its Articles of Incorporation, Bylaws,
and stock transfer books, each as in effect as of the date hereof.
3.2 Authorization; Approval. The execution, delivery and
performance of this Agreement and the transactions contemplated hereby by WGB
have been duly and effectively authorized by all necessary action, corporate or
otherwise. This Agreement is a valid, legally binding and enforceable
obligation of WGB enforceable in accordance with its terms except to the extent
that enforceability may be limited by bankruptcy, reorganization, insolvency or
other laws affecting the enforcement of creditors' rights generally or the
availability of equitable remedies subject to the discretion of the court. A
certified copy of the resolutions of the Board of Directors of WGB has been
delivered to ▇▇▇▇▇▇▇▇▇, and such copies are complete and correct and such
resolutions are in full force and effect on the date hereof and will be in full
force and effect on the Closing Date. The execution, delivery, and performance
of this Agreement and the consummation of the transactions contemplated hereby
by WGB will not: (i) require notice to or filing with, or approval or consent
of any governmental or regulatory body, except as set forth in Schedule 3.2;
(ii) except for the consent of the stockholders of WGB, and except for consents
to assignment of the contracts described in Schedule 3.12, require the approval
or consent of any other person or entity, except as set forth in Schedule 3.2;
(iii) violate any provision of WGB's Articles of Incorporation or By-Laws; (iv)
violate, conflict with or result in a modification of the effect of, or
otherwise give any other contracting party the right to terminate, or
constitute (or with notice or lapse of time or both, constitute) a default
under, or result in the termination of, or accelerate the performance required
by, or cause the acceleration of the maturity of any liability or obligation
pursuant to, or result in the creation or imposition of any security interest,
lien, charge or other encumbrance upon any property or assets of WGB, under (a)
any statute or law or any judgment, decree, order, award, writ, injunction,
regulation or rule of any court, arbitrator or Governmental Authority (as
defined in Section 3.10(c)(vii)), or (b) any note, bond, mortgage, indenture,
deed of trust, license, lease, instrument, contract, commitment, franchise,
permit, understanding, arrangement, agreement or restriction of any kind or
character which is not satisfied or extinguished at or prior to the Closing;
(v) violate any statute, law or regulation as such statute, law or regulation
relates to WGB or its Business; or (vi) result in the creation of any adverse
claim on WGB or any of its property or assets.
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3.3 Financial Statements. WGB has delivered to ▇▇▇▇▇▇▇▇▇
true, complete, accurate and correct copies of WGB's balance sheets for the
years ended December 31, 1996, 1995 and 1994, and the related statements of
income, retained earnings and cash flows as well as the notes thereto and with
respect thereto the fiscal 1996, 1995 and 1994 statements have been audited by
WGB's independent certified public accountants for the fiscal years then ended
(the "Annual Financial Statements"). WGB has delivered to ▇▇▇▇▇▇▇▇▇ a true,
correct, complete and accurate copy of its balance sheet and related statements
of income, retained earnings, and cash flows for the nine months ended
September 30, 1997 (the "Interim Financial Statements"). The Annual Financial
Statements and Interim Financial Statements are collectively referred to herein
as the "Financial Statements." The Financial Statements present fairly the
financial condition, results of operations, retained earnings and changes in
cash flows of WGB at such dates and for such periods in accordance with
generally accepted accounting principles ("GAAP") consistently applied during
the periods indicated. The statements of income included in the Financial
Statements do not contain any items of special or non-recurring income or
expense or any other income not earned or expense not incurred in the ordinary
course of business except as expressly specified therein, and such Financial
Statements include all adjustments (including all normal recurring accruals for
unusual or non-recurring items) considered necessary for a fair presentation,
and no adjustments or restatements are or will be necessary in respect of any
items of an unusual or non-recurring nature, except as expressly specified
herein. Except as described on such Financial Statements there has been no
change by WGB in any method of accounting or keeping of its books of account or
accounting practices. WGB shall continue to provide to ▇▇▇▇▇▇▇▇▇ unaudited
balance sheets, statements of income and cash flows within fifteen (15)
calendar days after the end of each month prior to the Closing or termination
of this Agreement.
3.4 Undisclosed Liabilities. Except as set forth on
Schedule 3.4 or as reflected and disclosed on the Financial Statements, WGB has
no indebtedness, liability, claim, loss, damage, deficiency, obligation or
responsibility of any nature, whether fixed or unfixed, due or to become due,
liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent
or otherwise.
3.5 Absence of Changes. Except as set forth on Schedule
3.5, since December 31, 1996, there has not been, other than changes in the
ordinary course of business that in the aggregate have not been adverse, (i)
any material change in the financial position, results of operations, assets,
liabilities, net worth, Business or prospects of WGB, or (ii) any other event
or condition of any character (whether or not covered by insurance) that has
materially adversely affected or will or is likely to so affect the properties,
Business or prospects of WGB or the financial position, results of operations,
or net worth of WGB. Since December 31, 1996, WGB has conducted its business
only in the ordinary course and has not acquired or disposed of any material
assets or engaged in any material transaction.
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3.6 Title to Assets.
(a) Title. Except as set forth on Schedule 3.6, at
the Closing, WGB will own and have good and marketable title to all of its
properties and assets, free and clear of restrictions on or conditions to
transfer or assignment, mortgages, liens, pledges, charges, options,
encumbrances, claims, easements, security interests, covenants, title defects
or objections or restrictions of any kind, including, without limitation,
leases, chattel mortgages, conditional sales contracts, collateral security
arrangements, and other title or interest retention arrangements or other liens
("Liens"). After the Closing, FAC will own and be the legal, beneficial and
registered owner, or have the right to use under a valid lease, all of the
assets of WGB, free and clear of any Liens other than Permitted Liens.
"Permitted Liens" means (i) liens shown on the balance sheet in the Financial
Statements as securing specified liabilities (with respect to which no default
exists), (ii) liens for current taxes not yet due, and (iii) minor
imperfections of title and encumbrances, if any, which are not substantial in
amount, do not detract from the value of the property subject thereto or impair
the operations of WGB, have arisen only in the ordinary course of business and
consistent with past practice and do not preclude or materially adversely
affect the continued use of the property to which they relate as used in the
operation of the Business of WGB as currently conducted.
(b) Condemnation. WGB has not received any notice
from any Governmental Authority having jurisdiction over the Premises or any
other office or locations of WGB (the Premises and such other office or
locations being collectively referred to herein as the "Extended Premises")
that the Extended Premises are presently the subject of any condemnation,
special assessment or similar charge or proceeding, and no such condemnation,
special assessment or charge is currently threatened or contemplated.
3.7 Real Property. Schedule 3.7 sets forth a list and
summary description of (i) all of the real property which is used in the
Business of WGB, including without limitation, all land, buildings and other
structures and improvements and fixtures located on such land (collectively,
the "Real Property"), and a description of each parcel of such land, and (ii)
all leases, subleases or other agreements which allow the use or occupancy of
the Real Property, or any portion thereof, or which give or grant any rights
therein (collectively, the "Real Property Leases"). All of the Real Property
Leases, true and correct copies of which (including all amendments or
extensions thereto) have been delivered to ▇▇▇▇▇▇▇▇▇, are in effect, and WGB is
not in default under or with respect to any provision thereof and WGB has not
received or sent any notice of any default under or with respect to any
provision thereof, and no other party to any thereof is in default under or
with respect to any provision thereof. Other than the landlord's consent to
assignment required under the Real Property Leases, there are no approvals or
consents of any persons or entities which are required in order to assign any
Real Property Leases. The Real Property, or the use thereof, does not violate
the material provisions of any applicable Environmental Laws (as defined in
Section 3.11(c)(iv), or any trade, criminal, building code,
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Agreement and Plan of Reorganization
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fire, health or safety or other governmental ordinances, orders or regulations
and WGB is in material compliance with all applicable laws, regulations,
ordinances, orders, rules and restrictions relating to the Real Property. All
structures and improvements located on the Real Property are in workable and
useable condition and repair (excepting ordinary wear and tear) and are
suitable for the uses for which they were intended and are used. The
operations conducted on any of the Real Property, whether now or in the past,
do not violate the rights of any Person (as defined below) with respect to such
property or with respect to any other property. WGB has no knowledge of and
has not received any notice in regard to the foregoing and is not aware of any
state of facts or situation which, with notice or the passage of time or
otherwise, would constitute such a violation.
3.8 Tangible Personal Property. Schedule 3.8A lists each
item of tangible personal property (other than inventory) owned by WGB having
an initial purchase price in excess of $1,000. Schedule 3.8B lists each item
of tangible personal property leased by WGB (other than pursuant to individual
leases having an annual rental of less than $1,000 or which are terminable by
WGB within 90 days of the date hereof without penalty) and each item of
personal property having a value of $1,000 or more used by WGB and owned or
leased by any individual, partnership, proprietorship, corporation, limited
liability company, joint venture, trust, or other similar entity or
governmental agency or court (a "Person") providing services to WGB
(collectively, the "Tangible Personal Property"). The Tangible Personal
Property, together with other tangible personal property owned or used by WGB
and owned by Persons providing services to WGB constitutes substantially all of
the tangible personal property used in the operation of the Business of WGB and
constitutes substantially all tangible personal property necessary to conduct
the Business of WGB as presently conducted by it. Except as set forth on
Schedule 3.8C, (i) the Tangible Personal Property owned by WGB and all other
personal property, whether tangible or intangible, owned by WGB is free and
clear of any and all Liens, and (ii) all the Tangible Personal Property is
located at the Real Property and there is no material tangible personal
property located at the Real Property which is not owned or leased by WGB. The
Tangible Personal Property is in all material respects in good working order,
ordinary wear and tear excepted. All the Tangible Personal Property has been
maintained in all material respects in accordance with the past practice of WGB
and generally accepted industry practice. All leased Tangible Personal
Property of WGB is in all material respects in the condition required of such
property by the terms of the lease applicable thereto during the term of the
lease and upon the expiration thereof.
3.9 Intellectual Property. Schedule 3.9 contains an
accurate and complete list of all (i) registered and unregistered: trademarks,
service marks, trade names, corporate names, company names, fictitious business
names, trade styles, trade dress, logos, and other source or business
identifiers (the "Trademarks"); patents; copyrights; proprietary formulas,
recipes, technology, Business Know-How (as defined below) and other trade
secrets (the "Trade Secrets") used in or necessary to conduct the business of
WGB as currently conducted, and all registrations and recordings thereof, all
applications for
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registration pending therefor, all extensions and renewals thereof, all
goodwill associated therewith, and all proprietary rights therein, in any
jurisdiction in which WGB operates or does business, (ii) licenses,
permissions, software and other agreements used in or necessary to the Business
of WGB, and (iii) licenses, permissions, software and other agreements relating
to technology, Business Know-How or processes used in the Business of WGB,
which WGB is licensed or authorized to use by others ((i) - (iii) above
collectively referred to herein as the "Intellectual Property"). "Business
Know-How" means all books, records, technology, formulas, know-how recorded on
paper or other media in the books and records of WGB, quality control records,
finished product specifications, packaging supplies specifications, product
registrations, records relating to the adoption and use of the Intellectual
Property (as defined above), marketing plans, sales records and histories,
market research data, promotional advertising and marketing materials, radio,
television and Internet commercials, Internet web sites, print advertisements,
customer lists, label and shipping carton dies, designs, films, earthwork,
photography, mechanical art, color separations, prints, plates, and graphic
materials, permits and licenses, and inventory records, used in or necessary to
conduct the Business as currently conducted. In regard to the Intellectual
Property, and except as set forth on Schedule 3.9, (i) the patents, Trademarks
and the copyrights are valid, subsisting and enforceable, and the patents, the
Trademarks and the copyrights are duly recorded in the name of WGB, and can be
recorded in the name of FAC, (ii) WGB has, and after the Closing FAC will have,
the sole and exclusive ownership and right, free from any Liens, to use
Intellectual Property and applications therefor and the full right to use the
trade names, assumed names, fictitious names, technology, know-how and
processes referred to in such lists and all trade secrets used in or necessary
to the conduct of the Business of WGB, and the consummation of the transactions
contemplated hereby will not alter or impair any such rights. Except as set
forth on Schedule 3.9, within the last ten (10) years, no claims have been
asserted by any entity or person with respect to the ownership, validity,
enforceability or use of or challenging or questioning the validity or
effectiveness of any of the Intellectual Property. Furthermore, the use or
other exploitation of such Intellectual Property by WGB does not infringe or
dilute the rights of any other entity or person; and WGB is not able to
identify any entity or person infringing the rights of WGB with respect to such
Intellectual Property.
3.10 Litigation; Orders. Except as set forth on Schedule
3.10, there are no claims, actions, suits, proceedings, grievances,
arbitrations, investigations or inquiries pending or, to the best knowledge of
WGB, threatened, at law or in equity, before or by any federal, state, local,
foreign or other governmental department, commission, board, arbitrator(s),
agency, instrumentality or authority by or against WGB which: (i) restrain or
prohibit or which may restrain or prohibit, or otherwise affect, the
consummation of the transactions contemplated hereby; (ii) affect or which may
affect WGB with respect to the Merger; or (iii) affect or might affect the
Business, operations, condition (financial or otherwise), liabilities, assets,
earnings or prospects of WGB, nor is there any valid basis for any such claim,
action, suit, proceeding, inquiry or investigation. Neither WGB nor any of its
property or assets is subject to any judgment, arbitration award, order or
decree. There
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are no petitions pending by, against or on behalf of WGB under any applicable
bankruptcy or insolvency laws.
3.11 Compliance.
(a) Compliance (Non-Environmental). Except as set
forth in Schedule 3.11A., WGB and its respective officers, directors and
employees have all material licenses, permits, approvals and other
authorizations and have made all material filings and registrations that are
necessary in order to enable WGB to conduct its Business as it is now being
conducted. WGB and its respective officers, directors and employees have
materially complied and are in material compliance with all laws, regulations
and ordinances that are applicable to WGB's Business as now being conducted or
are applicable to any of its assets or properties, including, without
limitation, all laws, regulations and ordinances relating to or regulating the
safe and proper conduct of business, consumer protection, trade practices,
franchises, licensing requirements, wage and hour, antitrust, taxes, currency
exchange, equal opportunity, public accommodation and services, sanitation,
fire, zoning, building, labor, occupational health and safety, pension,
securities, trademark or copyright. WGB has not received notification in the
last five (5) years of any asserted present or past failure to so comply; and
there are no actions threatened or likely to be commenced against WGB alleging
any material violation of or non-compliance with any of such laws, regulations
or ordinances. Attached as Schedule 3.11A. are all reports relating to the
Business or the Premises received within the last three (3) years by WGB from
any Governmental Authority or from any consultants regarding compliance with
the regulations of the Occupational Safety and Health Administration, the Equal
Employment Opportunity Commission or the U.S. Department of Labor or any
equivalent state agency. The terms and conditions and circumstances of the
employment of employees of WGB, including former and inactive employees,
comply, and at all times have complied, to the extent material, with applicable
laws and regulations (including any federal, state or local laws relating to
taxation, employee benefits, wage-hour, health and safety, nondiscrimination
and labor relations).
(b) Compliance (Environmental). Except as set forth
in Schedule 3.11B. (the "Scheduled Conditions"):
(i) WGB and the Extended Premises comply in all
material respects with any applicable Environmental Law;
(ii) WGB has obtained all Governmental Approvals
required for the operation of WGB and the Extended Premises under any
applicable Environmental Law;
(iii) WGB has not, and has no knowledge of any
other person who has, caused any Release, threatened Release, or disposal of
any Hazardous Substance at the Extended Premises in any material quantity; the
Extended Premises are
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not adversely affected by any Release, threatened Release, or disposal of a
Hazardous Substance originating or emanating from any other property;
(iv) the Extended Premises do not contain and
have not contained any: (A) underground storage tank, (B) material amounts of
asbestos-containing building material, (C) landfills or dumps, (D) hazardous
waste management facility as defined pursuant to RCRA or any comparable state
law, or (E) site on or nominated for the National Priority List promulgated
pursuant to CERCLA or any state remedial priority list promulgated or published
pursuant to any comparable state law;
(v) WGB has used no material quantity of any
Hazardous Substance and has conducted no Hazardous Substance Activity on the
Extended Premises;
(vi) WGB has no material liability for
remediation, response or corrective action, natural resource damage, or other
harm pursuant to CERCLA, RCRA, or any comparable state law; WGB is not subject
to, has no notice or knowledge of, and is not required to give any notice of
any Environmental Claim involving WGB or the Extended Premises; there are no
conditions or occurrences at the Extended Premises which could form the basis
for an Environmental Claim against WGB or the Extended Premises;
(vii) the Extended Premises are not subject to
any, and WGB has no knowledge of any imminent, restriction on the ownership,
occupancy, use, or transferability of the Extended Premises in connection with
any (A) Environmental Law or (B) Release, threatened Release, or (C) disposal
of a Hazardous Substance;
(viii) there are no conditions or circumstances
at the Extended Premises which pose a risk to the environment or to the health
and/or safety to or of persons; and
(ix) WGB has provided or otherwise made available
to ▇▇▇▇▇▇▇▇▇ any Environmental Record concerning WGB and Extended Premises
which WGB possesses or could reasonably be obtained by WGB.
(c) Definitions. For purposes of this Agreement, the
following terms as used herein shall have the following meanings:
(i) "CERCLA" shall mean the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended by
the Superfund Amendments and Reauthorization Act of 1986, 42 USC 9601 et seq.,
and any future amendments.
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Agreement and Plan of Reorganization
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(ii) "Damages" shall mean all damages, and
includes, without limitation, punitive damages, liabilities, costs, losses,
diminutions in value, fines, penalties, demands, claims, cost recovery actions,
lawsuits, administrative proceedings, orders, response action costs, compliance
costs, investigation expenses, arbitration expenses, consultant fees,
attorneys' and paralegals' fees, and litigation expenses.
(iii) "Environmental Claim" shall mean any
investigation, notice, violation, demand, allegation, action, suit, injunction,
judgment, order, consent decree, penalty, fine, lien, proceeding or claim in
connection with the Extended Premises (whether administrative, judicial, or
private in nature) arising (A) pursuant to, or in connection with, an actual or
alleged violation of, any Environmental Law, (B) in connection with any
Hazardous Substance or actual or alleged Hazardous Substance Activity, (C) from
any abatement, removal, remedial, corrective, or other response action in
connection with a Hazardous Substance, Environmental Law or other order of a
Governmental Authority or (D) from any actual or alleged damage, injury,
threat, or harm to health, safety, natural resources, or the environment.
(iv) "Environmental Law" shall mean any past or
current Legal Requirement pertaining to (A) the protection of health, safety,
and the indoor or outdoor environment, (B) the conservation, management, or use
of natural resources and wildlife, (C) the protection or use of surface water
and groundwater, (D) the management, manufacture, possession, presence, use,
generation, transportation, treatment, storage, disposal, Release, threatened
Release, abatement, removal, remediation or handling of, or exposure to, any
Hazardous Substance or (E) pollution (including any Release to air, land,
surface water, and groundwater), and includes, without limitation, CERCLA, the
Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery
Act of 1976 and Hazardous and Solid Waste Amendments of 1984, 42 USC 6901 et
seq., Federal Water Pollution Control Act, as amended by the Clean Water Act of
1977, 33 USC 1251 et seq., Clean Air Act of 1966, as amended, 42 USC 7401 et
seq., Toxic Substances Control Act of 1976, 15 USC 2601 et seq., Hazardous
Materials Transportation Act, 49 USC App. 1801 et seq., Occupational Safety and
Health Act of 1970, as amended 29 USC 651 et seq., Oil Pollution Act of 1990,
33 USC 2701 et seq., Emergency Planning and Community Right-to- Know Act of
1986, 42 USC 11001 et seq., National Environmental Policy Act of 1969, 42 USC
4321 et seq., Safe Drinking Water Act of 1974, as amended, 42 USC 300(f) et
seq., and any similar state law, including but not limited to the Waste
Reduction Policy Act of 1991 (Health and Safety Code 361.501-361.510); the
Hazardous Substances Spill Prevention and Control Act (Water Code 26.264); the
Clean Air Act Amendments of 1990 (Health and Safety Code chap. 382); the Water
Quality Act (Water Code 26.019); and the Hazard Communication Act (Health and
Safety Code 502.002) and any similar, implementing or successor law, and any
amendment, rule, regulation, order, or directive issued thereunder.
(v) "Environmental Record" shall mean any
document, correspondence, pleading, report, assessment, analytical result,
Governmental Approval, or
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Agreement and Plan of Reorganization
Page 17
other record concerning a Hazardous Substance, compliance with an Environmental
Law, and Environmental Claim, or other environmental subject.
(vi) "Governmental Approval" shall mean any
permit, license, variance, certificate, consent, letter, clearance, closure,
covenant not to ▇▇▇, release, no further action letter, exemption, decision,
action or approval or non-disapproval of a Governmental Authority.
(vii) "Governmental Authority" shall mean any
federal, state, regional, county, or local person or body having governmental
or quasi-governmental authority or a sub-division thereof.
(viii) "Hazardous Substance" shall mean any
substance, chemical, compound, product, solid, gas, liquid, waste, byproduct,
pollutant, contaminant, or material which is classified or regulated as
hazardous or toxic under any Environmental Law, and includes, without
limitation, asbestos, polychlorinated biphenyls, and petroleum (including crude
oil or any fraction thereof).
(ix) "Hazardous Substance Activity" shall mean
any activity, event, or occurrence involving a Hazardous Substance, including,
without limitation, the manufacture, possession, presence, use, generation,
transportation, treatment, storage, disposal, Release, threatened Release,
abatement, removal, remediation, handling of or corrective or response action
to any Hazardous Substance.
(x) "Legal Requirement" shall mean any treaty,
convention, statute, law, regulation, ordinance, Governmental Approval,
injunction, judgment, order, consent decree, or other requirement of any
Governmental Authority.
(xi) "RCRA" shall mean the Solid Waste Disposal
Act, as amended by the Resource Conservation and Recovery Act of 1976 and
Hazardous and Solid Waste Amendments of 1984, 42 USC 6901 et seq., and any
future amendments.
(xii) "Release" shall mean any releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, dumping, or disposing into the indoor or outdoor
environment, of any Hazardous Substance, including, without limitation, the
abandonment or discharge of such Hazardous Substances in or from barrels,
drums, containers, tanks, and other receptacles containing or previously
containing any Hazardous Substance.
3.12 Status of Contracts.
(a) Status. Except as listed on Schedule 3.12 and
except for purchase orders made in the ordinary course of business entered into
subsequent to October
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31, 1997 which are individually or in the aggregate to any one vendor or
distributor not in excess of $10,000, WGB is not party to and is not bound by
any contract which is not terminable by WGB upon thirty (30) days written
notice without penalty, whether or not in the ordinary course of business, and
including, without limiting the generality of the foregoing, bank loans,
leases, mortgages, union contracts, employment agreements, pension, retirement
or welfare agreements (whether oral or written, formal or informal or employee
benefit plans within the meaning of the Employee Retirement and Income Security
Act of 1975, as amended ("ERISA"), agreements for the sale or distribution of
its services or products, vendor contracts, supply contracts, license
agreements, service agreements and other agreements or instruments. Except as
set forth on Schedule 3.12, there have been and are no material defaults under
any contract to which WGB is a party, nor has any event occurred which, after
the giving of notice or, with the passage of time, or both, would constitute a
material default under any such contract. All such contracts are valid and
binding and in full force and effect; WGB has complied with the provisions of
its contracts in all material respects; and no notice of a claimed breach has
been received by WGB. Assuming that WGB obtains the consents described in
Schedule 3.2, the Merger and the consummation by WGB of the transactions herein
contemplated will not conflict with, or result in a breach, violation,
termination or modification of, any of the terms of any contract, agreement or
other instrument to which WGB is a party or by which WGB or any of its
properties is or may be bound, or constitute a default thereunder which would
prevent or interfere with the Merger or the consummation of the transactions
herein contemplated.
(b) Scale. Except as set forth in Schedule 3.12, WGB
is not party to or bound by any contract which is material to its Business,
operations, financial condition or prospects or which involves, or is
reasonably likely to involve, the expenditure or receipt by WGB after December
31, 1996 of more than $5,000. The legal enforceability after the Closing by
WGB of its contracts will not be affected in any material respect by the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby.
(c) Normality. No purchase commitment of WGB, or by
which WGB is bound, is materially in excess of the normal, ordinary and usual
requirements of the Business or is at an excessive price.
(d) Affiliated Agreements. Except as set forth in
Schedule 3.12, WGB is not a party to or bound by (i) any contract with a
stockholder or former shareholders of WGB or any Person known to WGB to be an
Affiliate or Associate of a stockholder or former shareholder of WGB, (ii) any
contract with officers, employees, agents, consultants, advisors, salesmen,
sales representatives, distributors or dealers that are not cancelable by WGB
at will without liability, penalty or premium, (iii) any contract providing for
the payment of any bonus or commission based on sales or earnings, (iv) any
contract that contains any severance or termination or change in control pay
liability or obligation, (v) any contract for the purchase or sale of any
security (other than this
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Agreement and Plan of Reorganization
Page 19
Agreement), (vi) any contract for the borrowing of money (or guarantee of
indebtedness), (vii) any contract for leasing personal property which requires
annual payments in excess of $5,000 or the term of any of which exceeds one (1)
year, (viii) any contract relating to express product or service warranties,
(ix) any contract containing a covenant not to compete by WGB, (x) any contract
granting a Lien, security interest or other material encumbrance on any
property or assets of WGB or on its assets, (xi) any contract providing for
exclusive purchases by or from WGB or containing a requirement purchase
obligation, (xii) any contract providing for administration, service,
utilization review, adjustment, claims management or similar functions relating
to insurance, litigation or Plans of WGB, or (xiii) any contract for the sale
of any of the assets, property or rights of WGB outside of the ordinary course
of business, except as contemplated by this Agreement.
(e) Power of Attorney. WGB has not given any power of
attorney (whether revocable or irrevocable) to any Person that is or may
hereafter be in force for any purpose whatsoever.
(f) Pension Obligation. WGB is not paying, nor has it
any obligation to pay, any pension, deferred compensation or retirement
allowance to any Person.
True, complete and correct copies of each of the contracts set forth in
Schedule 3.12 or expressly referred to in the notes to the Financial Statements
have heretofore been provided to ▇▇▇▇▇▇▇▇▇ by WGB.
3.13 Assets; Inventory. All of the properties and assets
used in the Business, except for such assets which are immaterial to the
business of WGB, are workable and useable in the ordinary course of business
and are suitable for the uses for which they were intended and are used. The
inventory of WGB has been acquired in the ordinary course of business and has
been and will be reflected on the books of WGB in accordance with the GAAP,
consistently applied. The inventory consists of items of a quality and
quantity useable and saleable at normal prices without discount in the normal
course of business. The level of the inventory as of the Closing Date is
reasonable in light of WGB's business prospects. WGB knows of no material
adverse condition affecting WGB's ability to manufacture or obtain inventory in
the future in the quality and quantity as now being manufactured or obtained.
3.14 Customers and Vendors. WGB has received no notice
that, and WGB has no knowledge or reason to believe that, any vendor or any
customer of WGB does not plan to continue to do business with FAC, or plans to
reduce its sales to or volume of orders from FAC or will not do business on
substantially the same terms and conditions with FAC subsequent to the Closing
Date as such vendor or customer did with WGB before the Closing Date. WGB will
not take any action to influence its customers or vendors to change or reduce
their volume of business activity with FAC after the Closing Date.
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Agreement and Plan of Reorganization
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3.15 Taxes. Except for Taxes which are being contested in
good faith by appropriate proceedings and are listed on Schedule 3.15 and
except for Taxes which are accrued on the balance sheets which are part of the
Financial Statements and are listed on Schedule 3.15 and except as otherwise
listed on Schedule 3.15, WGB has paid all Taxes required to be paid by it
through the date hereof. Except as set forth on Schedule 3.15, WGB has timely
filed all returns, reports and other documents and furnished all information
required or requested by any federal, state or local governmental agency with
respect to its Business or properties (except for tax returns not yet due), and
all such returns, reports and other documents and all such information are
true, correct and complete. No audit of any of the foregoing is in progress,
and no extension of time with respect to the date of filing of any of the
foregoing is in force, other than as set forth on Schedule 3.15. No waiver or
agreement by WGB is in force for the extension of time for the assessment or
payment of any of the Taxes. All deficiencies or other additions to any of the
Taxes, including any assessments, interest or penalties thereon, accrued for,
applicable to or arising from any period ending on or prior to the date of this
Agreement have been timely paid when due prior to the date hereof or have been
accrued on the balance sheets which are part of the Financial Statements. For
purposes of this Agreement, "Taxes" means all taxes, charges, fees, levies or
other assessments, including, without limitation, income, gross receipts,
excise, property, sales, withholding, social security, occupation, use,
service, service use, value added, license, payroll, franchise, transfer and
recording taxes, fees and charges, including estimated taxes, imposed by the
United States, the State of Maryland, any other state, or any taxing authority
(domestic or foreign), whether computed on a separate, consolidated, unitary,
combined or any other basis; and such term shall include any interest, fines,
penalties or additional amounts attributable to, or imposed upon, or with
respect to any such taxes, charges, fees, levies or other assessments.
3.16 Employees; Benefit Plans.
(a) Employees. Listed on Schedule 3.16A are the names
of all officers, directors and employees of WGB together with their respective
wage rates and rates of total compensation and a designation of whether such
individual is covered by a collective bargaining agreement. WGB has paid in
full to its employees, agents and contractors all wages, salaries, commissions,
bonuses and other direct compensation due for all services performed by them
and has paid in full its contractual obligations due under any union contract.
Schedule 3.16A sets forth a summary of all grievances, claims, actions, suits,
proceedings, arbitrations, investigations or inquiries instituted or threatened
within the past five (5) years or currently pending by or against WGB. WGB is
not liable for any severance pay or other payments on account of termination of
former employees, nor will any severance payments or other payments (including
unemployment compensation, "golden parachute" or otherwise) become payable as a
consequence of the transactions contemplated herein. WGB has complied with all
applicable federal and state laws relating to the employment of labor,
including the provisions thereof relating to wages, hours, collective
bargaining, discrimination and civil rights and the withholding and payment of
social security
28
Agreement and Plan of Reorganization
Page 21
and similar taxes and is not liable for any arrears, wages or any such taxes or
penalties for failure to comply with any of the foregoing. There is no labor
strike, dispute, slowdown, stoppage or lockout pending or threatened against or
affecting WGB. No representation question exists respecting the employees or
any strike, work stoppage or other labor difficulty. There are no unfair labor
practice charges, complaints or proceedings pending or threatened against or
involving WGB; there are no claims, complaints or proceedings involving breach
of contract, tortious interference with contract rights, violation of any
State's unfair competition or unfair trade practice or trade secret statute;
there is no organizing activity involving WGB pending or threatened by a labor
union or group of employees; there are no representation proceedings pending
with the National Labor Relations Board and no labor organization or group of
employees has made a pending demand for recognition. Except as set forth in
Schedule 3.16A, WGB has had no layoffs or recalls during the past ten (10)
years. Schedule 3.16A sets forth the name of each employee and his or her
accrued vacation or leave payments due.
(b) Benefit Plans. As of the Closing Date: (i) all
"employee benefit plans," as defined in Section 3(3) of ERISA including any
"multi-employer plan," as defined in Section 4001(a)(3) of ERISA
("Multi-employer Plan,") or any other employee benefit arrangements or payroll
practices (whether or not qualified for Federal income tax purposes, whether or
not funded, whether formal or informal, whether for the benefit of a single
individual or more than one individual and whether for the benefit of current
or former employees or their beneficiaries), including, without limitation,
severance, pension, retirement, profit sharing, deferred compensation, stock
purchase, stock option, restricted stock, stock appreciation rights, incentive,
bonus or other similar plans, hospitalization, medical, vision, dental or other
health plans, sick leave, vacation pay, salary continuation for disability,
consulting or other compensation arrangements (the "Plans") maintained, or
contributed to, by WGB or any trade or business (whether or not incorporated)
which is under common control with WGB, or is treated as a single employer
under Section 414(b), (c), (m) or (o) of the Internal Revenue Code of 1986, as
amended ("Code") ("ERISA Affiliate") are set forth on Schedule 3.16B; (ii) each
Plan is in compliance in all material respects with the applicable provisions
of ERISA and the Code, including the filing of reports thereunder, and with
respect to each Plan all required contributions and benefits have been paid
when due in accordance with the provisions of each such Plan and the applicable
provisions of ERISA; (iii) each of the Plans, including Multi-employer Plans,
is subject to Title IV of ERISA and no Plan has been terminated with any
outstanding liability; and (iv) neither WGB nor any ERISA Affiliate has
incurred or reasonably expects to incur any partial or complete withdrawal
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 of
ERISA as a result of a complete or partial withdrawal from a Multi-employer
Plan. With respect to all Plans which are pension plans, as defined in Section
3(2) of ERISA, other than plans intended to be taxed-qualified under Section
401(a) of the Code, as of the Closing Date, the present value of the
liabilities for participants thereunder using Pension Benefit Guaranty
Corporation interest assumptions does not exceed, as of the
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Agreement and Plan of Reorganization
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Closing Date, the assets of the Plans. Except as set forth on Schedule 3.16B,
as of the Closing Date, no Plan which is a "welfare plan," as defined in
Section 3(1) of ERISA, provides for continuing benefits or coverage for any
participant or beneficiary of a participant after such participant's
termination of employment (except as may be required by Section 490B of the
Code and at the sole expense of the participant or the beneficiary of the
participant). With respect to all Plans which are welfare plans, as defined in
Section 3(1) of ERISA, providing retiree benefits, the present value of future
anticipated expenses pursuant to the latest actuarial projections of
liabilities does not exceed $0. WGB and each ERISA Affiliate have complied
with the notice and continuation requirements of Section 4980B of the Code and
the regulations thereunder. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby will result in the
acceleration of the time of payment or vesting of Plan benefits as set forth on
Schedule 3.16B. Schedule 3.16B also sets forth the administrative costs due
and paid for WGB's 401(k) plan as of the Closing Date.
3.17 Insurance. Schedule 3.17 sets forth all policies or
binders of fire, liability, worker's compensation, vehicular, disability,
employee liability, business interruption, product liability, health, or other
insurance (including medical self-insurance) held by WGB relating to, on behalf
of or covering the Business of WGB (specifying the insurer, the policy number
or covering note number with respect to binders, and describing each pending
claim thereunder of more than $5,000). Such policies and binders are in full
force and effect. WGB is not in default with respect to any provision
contained in any such policy or binder and has not failed to give any notice or
present any claim under any such policy or binder in due and timely fashion.
Except for claims set forth on Schedule 3.17, there are no outstanding unpaid
claims under any such policy or binder. WGB has not received a notice of
cancellation or non-renewal of any such policy or binder. WGB has no knowledge
of any inaccuracy in any application for such policies or binders, any failure
to pay premiums when due or any similar state of facts which might form the
basis for termination of any such insurance. Schedule 3.17 also sets forth
WGB's loss experience for the last three (3) years relating to product
liability, worker's compensation and property damage and health and medical
coverage. Schedule 3.17 sets forth any medical insurance, hospitalization or
long-term disability "run-out" as of the Closing Date.
3.18 Subsidiaries; Competing Interests. Except as set forth
in Schedule 3.18, WGB does not directly or indirectly, own any capital stock or
other equity securities of any corporation, limited liability company,
partnership, association, trust, joint venture or other entity or business or
have any direct or indirect equity, partnership or other ownership interest in
any business except for stock of companies publicly traded on the New York or
American Stock Exchange or the Nasdaq Stock Market, not to exceed 5% of the
total outstanding shares of such companies. WGB does not have any interest,
directly or indirectly, in any corporation, partnership, association,
proprietorship, or any other entity or business which is engaged in a similar
business, or is a competitor of, or a vendor to or customer of, WGB.
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Agreement and Plan of Reorganization
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3.19 No Pending Transactions. Except for the transactions
contemplated by this Agreement, WGB is not a party to or bound by or the
subject of any agreement, undertaking or commitment to: (i) merge or
consolidate with, or acquire all or substantially all of the property and
assets of, any other corporation or Person which would in any way affect the
Business of WGB; or, (ii) sell, lease or exchange all or substantially all of
WGB's property and assets to any other corporation or Person or enter into any
other transaction which would in any way affect the Business of WGB or the
Merger or the transactions contemplated hereby.
3.20 Broker's or Finder's Fees. Neither WGB nor any of its
directors, officers, employees or agents has employed any broker, finder or
financial advisor or incurred any liability for any commission, broker's or
finder's fees to any such persons in connection with the transactions
contemplated hereby.
3.21 Updating of Schedules. WGB shall notify ▇▇▇▇▇▇▇▇▇ of
any changes, additions or events which may cause any change in or addition to
any Schedules delivered by it under this Agreement, promptly after the
occurrence of same and no later than the Closing Date by delivery of updates of
all Schedules, including future quarterly and annual Financial Statements. No
notification made pursuant to this Section 3.21 shall be deemed to cure any
breach of any representation or warranty made in this Agreement or any Schedule
unless ▇▇▇▇▇▇▇▇▇ shall specifically agree thereto in writing, nor shall any
such notification be considered to constitute or give rise to a waiver by
▇▇▇▇▇▇▇▇▇ of any condition set forth in this Agreement unless specifically
waived in writing by Frederick.
3.22 Ownership of ▇▇▇▇▇▇▇▇▇ Common Stock. As of the date
hereof, neither WGB nor any officer, director or 5% or greater stockholder of
WGB, (i) beneficially own, directly or indirectly, or (ii) are parties to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, in each case, shares of ▇▇▇▇▇▇▇▇▇ Common Stock.
3.23 Transactions With Affiliates. Other than this
Agreement, WGB is not bound by or a party to any contract with, does business
with or has any obligations or liabilities to any stockholder or any Affiliate
or Associate of any stockholder. As used in this Agreement, an "Affiliate" of,
or a Person "Affiliated" with, a specified person, is a Person that directly,
or indirectly through one or more intermediaries, controls, or is controlled
by, or is under common control with, the Person specified. Moreover, as used
in this Agreement, the term "Associate" used to indicate a relationship with
any Person, means: (a) any corporation or organization (other than WGB) of
which such Person is an officer or partner or is, directly or indirectly, the
beneficial owner of 10 percent or more of any class of equity securities, (b)
any trust or other estate in which such Person has a substantial beneficial
interest or as to which such Person serves as trustee or in a similar fiduciary
capacity, and (c) any relative or spouse of such Person, or any relative of
such
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Agreement and Plan of Reorganization
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spouse, who has the same home as such Person or who is a director or officer of
the corporation or organization or any of its parents or subsidiaries.
3.24 Bank Accounts. Schedule 3.24 sets forth the names and
locations of all banks or other financial institutions in which WGB has an
account or safe deposit box and the names of all Persons authorized to draw
thereon or to have access thereto. At the Closing, WGB will deliver to
▇▇▇▇▇▇▇▇▇ copies of all records, including all signature or authorization cards
pertaining to such bank accounts and safe deposit boxes and will assign such
authorization to FAC or ▇▇▇▇▇▇▇▇▇ and provide evidence satisfactory to
▇▇▇▇▇▇▇▇▇ that such assignment will be effective immediately subsequent to the
Closing and, at such time, no Person determined by FAC or ▇▇▇▇▇▇▇▇▇ to be
unauthorized shall have the authority to access such accounts or safe deposit
boxes or draw on such accounts.
3.25 Correct Information. All representations, warranties,
covenants, schedules, exhibits, documents, certificates, reports or statements
furnished or to be furnished to ▇▇▇▇▇▇▇▇▇ by or on behalf of WGB in connection
with this Agreement or the transactions contemplated hereby are true, complete
and accurate in all material respects. Without limiting the specificity of
such representations or warranties made in this Agreement or information
furnished pursuant hereto to ▇▇▇▇▇▇▇▇▇, neither WGB has not failed to disclose
to ▇▇▇▇▇▇▇▇▇ any facts material to the Business, operations, condition
(financial or otherwise), liabilities, assets, earnings, working capital or
prospects of WGB.
ARTICLE 4.0 REPRESENTATIONS AND WARRANTIES OF FREDERICK.
▇▇▇▇▇▇▇▇▇ hereby represents and warrants to WGB as follows:
4.1 Structure; Status.
(a) ▇▇▇▇▇▇▇▇▇.
(i) The authorized capital stock of Frederick
consists of 9,000,000 shares of ▇▇▇▇▇▇▇▇▇ Common Stock and 1,000,000 shares of
▇▇▇▇▇▇▇▇▇ preferred stock, $.01 value par share ("▇▇▇▇▇▇▇▇▇ Preferred Stock").
As of November 30, 1997, there were 4,428,286 shares of ▇▇▇▇▇▇▇▇▇ Common Stock
issued and outstanding, and there were 2,950 shares of ▇▇▇▇▇▇▇▇▇ Preferred
Stock issued and outstanding, which are convertible into 1,872,540 shares of
▇▇▇▇▇▇▇▇▇ Common Stock. All outstanding shares of ▇▇▇▇▇▇▇▇▇ Common Stock and
▇▇▇▇▇▇▇▇▇ Preferred Stock have been duly authorized and validly issued and are
fully paid and nonassessable, and none of the outstanding shares of Frederick
Common Stock or ▇▇▇▇▇▇▇▇▇ Preferred Stock has been issued in violation of the
preemptive rights of any person, firm or entity. As of the date hereof, there
are no Rights authorized, issued or outstanding with respect to the capital
stock of Frederick, except for shares of ▇▇▇▇▇▇▇▇▇ Common Stock issuable (A)
pursuant to the ▇▇▇▇▇▇▇▇▇ 1995 Stock Option Plan and the ▇▇▇▇▇▇▇▇▇ Non-Employee
Directors Stock Option Plan, (B) pursuant to the exercise of
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Agreement and Plan of Reorganization
Page 25
outstanding warrants, (C) upon conversion of the ▇▇▇▇▇▇▇▇▇ Preferred Stock and
(D) by virtue of this Agreement.
(ii) Frederick is a corporation duly organized,
validly existing and in good standing under the laws of the State of Maryland,
has full power and authority to carry on its businesses as it is now conducted
and to own, lease and operate the property and assets that it now owns, leases
and operates and to execute and deliver this Agreement and to perform the
transactions contemplated hereby.
(b) FAC.
(i) At the Closing Date, the authorized capital
stock of FAC will consist of one thousand (1,000) shares of FAC common stock,
no par value per share ("FAC Common Stock"), all of which shares will be issued
and outstanding and owned beneficially and of record by ▇▇▇▇▇▇▇▇▇. At the
Closing Date, all outstanding shares of FAC Common Stock will have been duly
authorized and validly issued and will be fully paid and non-assessable, and
none of the outstanding shares of FAC Common Stock will have been issued in
violation of the preemptive rights of any person, firm or entity. As of the
Closing Date, there will be no Rights authorized, issued or outstanding with
respect to the capital stock of FAC.
(ii) FAC will, at the Closing Date, be a
corporation duly organized, validly existing and in good standing under the
laws of the State of Maryland, will have the full power and authority to
execute and deliver this Agreement and to enter into the Merger and perform the
transactions contemplated hereby.
4.2 Authority; No Conflict. The execution, delivery and
performance of this Agreement and the transactions contemplated hereby by
▇▇▇▇▇▇▇▇▇ and FAC will, on the Closing Date, have been duly and effectively
authorized by all necessary corporate action of ▇▇▇▇▇▇▇▇▇ and FAC and this
Agreement will, on the Closing Date, be a valid and legally binding obligation
of ▇▇▇▇▇▇▇▇▇ and FAC enforceable in accordance with its terms except to the
extent that enforceability may be limited by bankruptcy, reorganization,
insolvency or other laws affecting the enforcement of creditors' rights
generally or the availability of equitable remedies subject to the discretion
of the court. A certified copy of the resolutions of the Boards of Directors
of ▇▇▇▇▇▇▇▇▇ and FAC will be delivered to WGB, and such copies will be complete
and correct and such resolutions will be in full force and effect on the date
of such delivery. The execution, delivery, and performance of this Agreement
and the consummation of the transactions contemplated hereby by ▇▇▇▇▇▇▇▇▇ and
FAC will not: (i) require the approval or consent of any governmental or
regulatory body, except for compliance with applicable federal and state ("blue
sky") securities laws in connection with the issuance of the New ▇▇▇▇▇▇▇▇▇
Shares pursuant to this Agreement and the filing of Articles of Merger with the
Department pursuant to Section 3-107 of the MGCL; (ii) require the approval or
consent of any other person or entity except for (a) the
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Agreement and Plan of Reorganization
Page 26
approval of the Merger by ▇▇▇▇▇▇▇▇▇ as the sole stockholder of FAC, (b) the
possible approval of Frederick's stockholders, and (c) the approval of Signet
Bank; (iii) violate any provision of Frederick's or FAC's Articles of
Incorporation or Bylaws; or (iv) violate any statute, law or regulation as such
statute, law or regulation relates to ▇▇▇▇▇▇▇▇▇ or FAC.
4.3 Broker's or Finder's Fees. No agent, broker, person or
firm acting on behalf of ▇▇▇▇▇▇▇▇▇ or FAC is, or will be, entitled to any
commission or broker's or finder's fees from any of the parties hereto in
connection with any of the transactions contemplated herein.
4.4 Litigation; Orders. Except as set forth on Schedule
4.4, there are no claims, actions, suits, or proceedings, grievances,
arbitrations, investigations or inquiries pending or, to the best knowledge of
▇▇▇▇▇▇▇▇▇, threatened, at law or in equity or before or by any federal, state,
local, foreign or other governmental department, commission, board,
arbitrator(s), agency, instrumentality or authority by or against ▇▇▇▇▇▇▇▇▇
which restrains or prohibits or which may restrain or prohibit or otherwise
affect, the consummation of the transactions contemplated hereby.
4.5 Authorized Frederick Common Stock. Frederick has
sufficient authorized shares of ▇▇▇▇▇▇▇▇▇ Common Stock in order to issue the
required amount of new shares of ▇▇▇▇▇▇▇▇▇ Common Stock to WGB's stockholders
at the Closing. The ▇▇▇▇▇▇▇▇▇ Common Stock to be issued to WGB's stockholders
pursuant to Sections 2.3(b) and (c) hereof shall, on the Closing Date, be duly
authorized, and, upon their issuance, validly issued, fully paid and
non-assessable and free and clear of all Liens. As of the date hereof and the
Closing Date, the ▇▇▇▇▇▇▇▇▇ Common Stock is and will be qualified and listed on
the Nasdaq Small Cap Market System and ▇▇▇▇▇▇▇▇▇ knows of no restriction on the
ability of the ▇▇▇▇▇▇▇▇▇ Common Stock to trade thereon, except for the
restrictions set forth herein and those resulting from applicable law,
regulation and the rules of the Nasdaq.
4.6 Accuracy and Completeness of Reports. ▇▇▇▇▇▇▇▇▇ has
delivered a true, correct and complete copy of the annual report submitted to
its shareholders for its fiscal year ended December 31, 1996 (the "Annual
Report"), the Proxy Statement for the 1997 Annual Meeting of June 5, 1997
("Proxy Statement") and the Form 10-Q for the quarter ended September 30, 1997
("Form 10-Q"). The Annual Report, Proxy Statement and Form 10-Q do not contain
any untrue statement of a material fact, and do not omit to state a material
fact required to be stated therein or necessary to make the statements
contained therein not misleading.
ARTICLE 5.0 COVENANTS.
5.1 Covenants of WGB. During the period from the date of
this Agreement to the Closing Date, WGB will conduct its operations according
to its ordinary and usual course of business consistent with past practice,
will use its best efforts to preserve
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Agreement and Plan of Reorganization
Page 27
intact its business organization, to keep available the services of its
officers and employees and to maintain satisfactory relationships with
licensors, licensees, vendors, employees, contractors, distributors, customers
and others having business relationships with it. Without limiting the
generality of the foregoing and except as otherwise expressly provided in this
Agreement, prior to the Closing Date, WGB will not, without the prior written
consent of ▇▇▇▇▇▇▇▇▇:
(a) pay any dividends or other distributions (cash or
otherwise) on or redeem or repurchase or otherwise acquire its capital stock,
subdivide or reclassify its shares of capital stock, pay any bonus, increase
the wages or salaries of its employees, increase the fees to its directors,
increase compensation to any consultants or other professionals, commit itself
to any new or renewed collective bargaining agreement or to any additional
pension, profit-sharing, bonus, incentive, deferred compensation, stock
purchase, stock option, stock appreciation right, group insurance, severance
pay, retirement or other compensation or benefit plan, agreement or
arrangement, or to any employment or consulting agreement with or for the
benefit of any person, to amend or make any payment or contribution (other than
in the ordinary course of business and consistent with past practice) with
respect to any of such plans or any of such agreements in existence on the date
hereof except as may be required to comply with applicable law, notice of which
shall be provided to ▇▇▇▇▇▇▇▇▇;
(b) except in the ordinary course of business or as
otherwise contemplated hereby purchase, dispose of, or encumber, or agree to
sell, transfer, mortgage or otherwise dispose of or encumber, any of its
properties or assets or make any capital expenditure in excess of $1,000;
(c) enter into any agreements, commitments or
contracts, except agreements, commitments or contracts for the purchase, sale
or lease of goods or services in the ordinary course of business, consistent
with past practice and not in excess of current requirements, or otherwise make
any material change in the conduct of the business or operations of WGB,
provided, however, that WGB shall not enter into any agreements, commitments or
contracts regarding production, shipment of product, ordering of ingredients
and packaging materials and point of sale and marketing materials without
Frederick's prior written consent;
(d) authorize, recommend, propose or announce an
intention to authorize, recommend, propose, or enter into any agreement in
principle or an agreement with respect to any merger, consolidation or business
combination (except for this Agreement), any acquisition of a material amount
of assets or securities, any disposition of a material amount of assets or
securities or any material change in its capitalization, or any entry into a
material contract or any amendment or modification of any material contract or
any release or relinquishment of any material contract rights not in the
ordinary and usual course of business;
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Agreement and Plan of Reorganization
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(e) incur or guarantee any obligation or liability
(whether absolute, accrued, contingent or otherwise and whether due or to
become due) material to WGB or pay, discharge or satisfy any Lien or liability
(whether absolute, accrued, contingent or otherwise and whether due or to
become due), other than liabilities shown on the balance sheet as of September
30, 1997 in the Financial Statements and immaterial liabilities incurred after
the date thereof in the ordinary course of business in normal amounts, and no
such payment, discharge or satisfaction shall be affected other than in
accordance with the ordinary payment terms relating to the liability paid,
discharged or satisfied;
(f) permit or allow its properties or assets, real,
personal or mixed, tangible or intangible, to be mortgaged, pledged or
subjected to any Lien, except for Permitted Liens;
(g) cancel any debts or claims except in the ordinary
course of business and consistent with past practice, or waive any rights of
material value;
(h) permit an Intellectual Property right to lapse;
(i) issue, grant or sell any shares of its capital
stock or any equity interest or security, or issue, grant or sell any security,
option, warrant, call, subscription or other right of any kind, fixed or
contingent, that directly or indirectly calls for the issuance, sale, pledge or
other disposition of any shares of its capital stock or any equity interest or
security;
(j) make any change in any accounting principles,
practices or methods, including its principles, practices or methods relating
to calculation of reserves for receivables;
(k) pay, loan, or advance any amount to or in respect
of, or sell, transfer or lease any property or assets (real, personal or mixed,
tangible or intangible) to, or enter into any transaction with or for the
benefit of, any stockholder of WGB or any of their respective Affiliates or
Associates;
(l) enter into any lease or sub-lease of Real Property
or material lease of Personal Property;
(m) terminate or amend, or fail to perform any of its
obligations or cause any breach under, any contract set forth in Schedule 3.12.
WGB will exercise its commercially reasonable efforts to renew each of the
contracts set forth on Schedule 3.12 which is scheduled to terminate prior to
the Closing Date;
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Agreement and Plan of Reorganization
Page 29
(n) will not permit the insurance referred to in
Schedule 3.17 to lapse, expire, terminate or be cancelled;
(o) violate in any material respect any laws,
regulations, orders, or agreements applicable to it and its properties,
operations, Business and employees;
(p) amend its Articles of Incorporation or Bylaws; or
(q) agree to do any of the foregoing.
5.2 No Solicitation. WGB shall not and WGB shall use its
best efforts to cause its officers, directors, employees, agents, Affiliates
and representatives (including, without limitation, investment bankers,
attorneys and accountants) not to, directly or indirectly, (i) initiate contact
with, solicit or encourage any inquiries or proposals by, or (ii) except as
required by applicable law as advised in writing by counsel reasonably
acceptable to ▇▇▇▇▇▇▇▇▇, enter into any discussions or negotiations with, or
disclose directly or indirectly any information not customarily disclosed
concerning its Business and properties to, or afford any access to its
properties, books and records to, any Person or other entity or group in
connection with any possible proposal (an "Acquisition Proposal") regarding a
sale of WGB's capital stock or a merger, consolidation, or sale of all or a
substantial portion of the assets of WGB, or any similar transaction. WGB will
notify ▇▇▇▇▇▇▇▇▇ immediately if any discussions or negotiations are sought to
be initiated, any inquiry or proposal is made, or any such information is
requested, with respect to an Acquisition Proposal or potential Acquisition
Proposal or if any Acquisition Proposal is received or indicated to be
forthcoming. The foregoing restrictions on disclosures shall not apply to
disclosures required to be made by any law, regulation or order of a court or
governmental agency of competent jurisdiction; provided, however, before any
disclosure is made WGB shall notify ▇▇▇▇▇▇▇▇▇ immediately of any such request
for information and shall take all reasonable action to support any request or
motion ▇▇▇▇▇▇▇▇▇ may make for confidential treatment or a protective order.
5.3 Stockholder Approval. As soon as practical after the
execution of this Agreement, WGB will take all steps necessary to call a
special meeting of its stockholders for the purpose of adopting and approving
this Agreement, the Merger and the transactions contemplated hereby and for
such other purposes as may be necessary or desirable. WGB shall provide to the
stockholders of WGB certain information regarding this Agreement, the Merger,
the transactions contemplated hereby and the ▇▇▇▇▇▇▇▇▇ Common Stock, which
information shall be reasonably satisfactory to ▇▇▇▇▇▇▇▇▇ prior to its
dissemination to them. The Board of Directors of WGB has unanimously
determined that this Agreement is advisable and in the best interests of the
stockholders of WGB and will (i) recommend to the stockholders of WGB the
adoption and approval of this Agreement and the transactions contemplated
hereby and (ii) use their best efforts to obtain the
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Agreement and Plan of Reorganization
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necessary approvals by the stockholders of WGB of this Agreement, the Merger
and the transactions contemplated hereby.
5.4 Access to Information; Confidentiality.
(a) Access to Information. Between the date of this
Agreement and the earlier of the Closing Date or the date of the termination of
this Agreement, WGB shall provide to ▇▇▇▇▇▇▇▇▇ and its representatives full
access to its premises, properties, equipment, books and records and shall make
its directors, officers, employees, agents, distributors and other vendors
available to confer with ▇▇▇▇▇▇▇▇▇ and its representatives; and during such
period, WGB shall: (i) disclose and make available to ▇▇▇▇▇▇▇▇▇ and its
representatives all documents and records relating to the assets, properties,
operations, obligations and liabilities of WGB, including but not limited to,
all books of account (including the general ledger), tax records and returns,
minute books of directors', committees', and stockholders' meetings,
organizational documents, material contracts, distributors' inventories and
▇▇▇▇-backs, customer list and agreements, filings with and communications from
any Governmental Authority, litigation files, accountants' work papers, all
account records, plans or records relating to employees and any other business
activities of WGB as ▇▇▇▇▇▇▇▇▇ or its representatives may require; and (ii)
promptly furnish to ▇▇▇▇▇▇▇▇▇ all other information concerning WGB's Business,
properties and personnel as Frederick may request. During this period,
▇▇▇▇▇▇▇▇▇ may perform any review, analysis or testing that it, in its sole
discretion, deems appropriate. ▇▇▇▇▇▇▇▇▇ will use its best efforts not to
unduly interfere with the business operations of WGB during such review.
Throughout this period, WGB will cause Mr. ▇▇▇▇▇ ▇▇▇▇ and one or more other
designated representatives to confer with Frederick's representatives on a
regular and frequent basis and to report the general status of WGB's ongoing
condition and operations. In addition, WGB will permit ▇▇▇▇▇▇▇▇▇ to
communicate with its agents, customers and creditors. WGB will immediately
notify ▇▇▇▇▇▇▇▇▇ of any material change in the ordinary course of its business
or in the operations of its properties or of any governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated) or the institution, continuation or the threat of litigation or
other similar proceeding involving WGB or its Affiliates or affiliated persons
and will keep ▇▇▇▇▇▇▇▇▇ fully informed of such events.
(b) Confidentiality. ▇▇▇▇▇▇▇▇▇ will hold and will
cause its employees, officers, directors, consultants and advisors to hold in
strict confidence, unless compelled to disclose by judicial or administrative
process and then only with written notice prior to disclosure to WGB, all
documents and information concerning WGB furnished to ▇▇▇▇▇▇▇▇▇ in connection
with the transactions contemplated by this Agreement (except to the extent that
such information can be shown to have been (i) previously known by ▇▇▇▇▇▇▇▇▇
other than through a breach of a confidentiality agreement by a third party;
(ii) in the public domain through no fault of ▇▇▇▇▇▇▇▇▇; or (iii) later
lawfully acquired by ▇▇▇▇▇▇▇▇▇ from other sources) (the "WGB Confidential
Information") and will not release
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Agreement and Plan of Reorganization
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or disclose the WGB Confidential Information to any other person, except its
auditors, attorneys, financial advisors and other consultants and advisors and
lending institutions (including banks) or lending authorities in connection
with this Agreement (it being understood that such persons shall be informed by
▇▇▇▇▇▇▇▇▇ of the confidential nature of such information and shall be directed
by ▇▇▇▇▇▇▇▇▇ to treat such information confidentially). If the transactions
contemplated by this Agreement are not consummated, such confidence shall be
maintained for a period of one year from the date of termination of this
Agreement, except to the extent the WGB Confidential Information comes into the
public domain through no fault of ▇▇▇▇▇▇▇▇▇. If requested by WGB, ▇▇▇▇▇▇▇▇▇
will return to WGB, all physical materials furnished by WGB to ▇▇▇▇▇▇▇▇▇ or
their respective agents, representatives or advisors and all copies thereof, in
whatever medium, and all materials prepared by ▇▇▇▇▇▇▇▇▇ which evaluate or
reflect the WGB Confidential Information. It is understood that ▇▇▇▇▇▇▇▇▇
shall be deemed to have satisfied its obligation to hold the WGB Confidential
Information confidential if it exercises the same care as it takes to preserve
confidentiality for its own similar information. WGB will be entitled to
equitable relief in the event of a breach by ▇▇▇▇▇▇▇▇▇ of the provisions
contained in this Section 5.4(b).
(c) Confidentiality. WGB will hold and will cause its
employees, officers, directors, consultants and advisors to hold in strict
confidence, unless compelled to disclose by judicial or administrative process
and then only with written notice prior to disclosure to ▇▇▇▇▇▇▇▇▇, all
documents and information concerning ▇▇▇▇▇▇▇▇▇ furnished to WGB in connection
with the transactions contemplated by this Agreement (except to the extent that
such information can be shown to have been (i) previously known by WGB other
than through a breach of a confidentiality agreement by a third party; (ii) in
the public domain through no fault of WGB; or (iii) later lawfully acquired by
WGB from other sources) (the "▇▇▇▇▇▇▇▇▇ Confidential Information") and will not
release or disclose the ▇▇▇▇▇▇▇▇▇ Confidential Information to any other person,
except its auditors, attorneys, financial advisors and other consultants and
advisors and lending institutions (including banks) or lending authorities in
connection with this Agreement (it being understood that such persons shall be
informed by WGB of the confidential nature of such information and shall be
directed by WGB to treat such information confidentially). If the transactions
contemplated by this Agreement are not consummated, such confidence shall be
maintained for a period of one year from the date of termination of this
Agreement, except to the extent the ▇▇▇▇▇▇▇▇▇ Confidential Information comes
into the public domain through no fault of WGB. If requested by ▇▇▇▇▇▇▇▇▇, WGB
will return to ▇▇▇▇▇▇▇▇▇, all physical materials furnished by ▇▇▇▇▇▇▇▇▇ to WGB
or their respective agents, representatives or advisors and all copies thereof,
in whatever medium, and all materials prepared by WGB which evaluate or reflect
the ▇▇▇▇▇▇▇▇▇ Confidential Information. It is understood that WGB shall be
deemed to have satisfied its obligation to hold the ▇▇▇▇▇▇▇▇▇ Confidential
Information confidential if it exercises the same care as it takes to preserve
confidentiality for its own similar information. ▇▇▇▇▇▇▇▇▇ will be entitled to
equitable relief in the event of a breach by WGB of the provisions contained in
this Section 5.4(c).
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Agreement and Plan of Reorganization
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5.5 Consents; Efforts to Consummate. WGB and ▇▇▇▇▇▇▇▇▇ will
each use their respective best efforts to obtain consents of all third parties,
including Signet Bank, and Governmental Authorities necessary to the
consummation of the transactions contemplated by this Agreement. The parties
hereto shall use their respective best efforts to permit the termination (or
renegotiation on terms acceptable to ▇▇▇▇▇▇▇▇▇) of certain agreements of WGB
without obligation or penalty (including, but not limited to, the lease
agreement relating to WGB's facility located at ▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇), and shall use their respective best efforts to permit the
Merger to be accounted for as a pooling-of-interests under GAAP. Each of WGB
and ▇▇▇▇▇▇▇▇▇ agree to use all reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate and
make effective, as soon as practicable after the date of this Agreement, the
transactions contemplated by this Agreement.
5.6 Public Announcements. WGB and ▇▇▇▇▇▇▇▇▇ will consult
with each other before issuing any press release or otherwise making any public
statements with respect to the Agreement and shall not issue any such press
release or make any such public statement prior to such consultation, except as
may be required by law or judicial or administrative process.
5.7 Existence. WGB will take such action as may be
necessary to maintain, preserve, renew and keep in full force and effect WGB's
existence (corporate or otherwise), rights and franchises.
5.8 Articles of Merger. WGB and FAC shall, on the Closing
Date, execute and file Articles of Merger with the Department to effectuate the
Merger and will file Articles of Amendment to the Articles of Incorporation of
FAC to change the corporate name of FAC to "Wild Goose Brewery, Inc."
ARTICLE 6.0 GENERAL MATTERS.
6.1 Survival of Representations and Warranties. The warranties,
representations and covenants contained in or made pursuant to this Agreement
shall, with respect to the terms of Section 2.3(d) of this Agreement, survive
the Closing.
6.2 Benefit Plans and Arrangements
(a) Plan Participation. As soon as administratively
practicable after the Effective Time, Frederick shall take all reasonable
action so that employees of the Surviving Corporation shall be entitled to
participate in the ▇▇▇▇▇▇▇▇▇ employee benefit plans of general applicability,
and until such time the employee plans of WGB shall remain in effect. For
purposes of determining eligibility to participate in and the vesting of
benefits
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Agreement and Plan of Reorganization
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(but not for purposes of benefit accrual) under the ▇▇▇▇▇▇▇▇▇ employee plans,
Frederick shall recognize years of service with WGB prior to the Effective
Time.
(b) Employment. All employees of WGB as of the
Effective Time may, at the discretion of the Board of Directors of the
Surviving Corporation, become employees of the Surviving Corporation as of the
Effective Time, provided that, except as set forth in Section 6.2(c), below,
neither ▇▇▇▇▇▇▇▇▇ nor the Surviving Corporation shall have any obligation to
continue the employment of any such person and nothing contained in this
Agreement shall give any employee of the Surviving Corporation a right to
continuing employment with the Surviving Corporation after the Effective Time.
(c) Employment Agreement. On the Closing Date, the
Surviving Corporation and Mr. ▇▇▇▇▇ ▇▇▇▇ shall execute an employment agreement
in the form as set forth as Exhibit A, attached hereto and made a part hereof,
which shall commence upon the Closing Date. Said employment agreement shall be
separate and independent from this Agreement and such employment agreement
shall stand alone and not be connected in its operation or with respect to the
rights and remedies of the parties thereto.
(d) Retention Bonuses. Set forth on Schedule 6.2(d)
are the names, job description, weekly salary and monthly medical insurance
premium payments made by WGB on behalf of each employee of WGB. Each employee
of WGB identified on Schedule 6.2(d) shall be entitled to receive a "retention
bonus" from ▇▇▇▇▇▇▇▇▇ or the Surviving Corporation equal to two times such
employees weekly salary as set forth on Schedule 6.2(d) in the event that such
employee remains an employee of WGB until the Effective Time and satisfactorily
fulfills the duties and responsibilities of the position of such employee of
WGB through the Effective Time. Furthermore, WGB and the Surviving Corporation
agree hereby to continue making (or make arrangements which are the equivalent
thereof) the monthly medical insurance premium payments with respect to each
employee and in the amount set forth on Schedule 6.2(d) to and including
February 1998 in the event that such employee remains an employee of WGB until
the Effective Time.
(e) Attendance at Board Meetings. Prior to the
Closing Date, WGB's Board of Directors shall select from among its membership
one person to attend meetings of Frederick's Board of Directors during the
first year following the Closing Date. The person selected to attend meetings
of Frederick's Board of Directors shall not be a member of Frederick's Board of
Directors, will be permitted to attend board meetings for one year only as an
observer and without a vote on any matter and only provided such person
conducts himself in a proper business like manner. The person selected to
attend the ▇▇▇▇▇▇▇▇▇ board meetings will be informed that he has an obligation
under federal and state law to maintain all non public information in strict
confidence similar to the obligations of a member of Frederick's Board of
Directors.
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Agreement and Plan of Reorganization
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6.3 Failure to Fulfill Conditions. In the event that
either of the parties hereto determines that a condition to its respective
obligations to consummate the transactions contemplated may not be fulfilled on
or prior to the termination of this Agreement, it will promptly notify the
other party. Each party will promptly inform the other party of any facts
applicable to it that would be likely to prevent or materially delay approval
of the Merger by any Governmental Authority or third party or which would
otherwise prevent or materially delay completion of the Merger.
6.4 Common Stock Restrictions. Except with the prior
written consent of Frederick, the shares of ▇▇▇▇▇▇▇▇▇ Common Stock to be
delivered to the stockholders of WGB at the Closing shall not be sold, pledged,
hypothecated, gifted or otherwise transferred or disposed of until (i) with
respect to 1/3 of such shares the date which is 180 days after the Closing
Date, (ii) with respect to 1/3 of such shares the date which is 270 days after
the Closing Date, and (iii) with respect to 1/3 of such shares the date which
is 360 days after the Closing Date and all certificates representing such
shares of ▇▇▇▇▇▇▇▇▇ Common Stock shall contain a legend to such effect as set
forth below. Except with the prior written consent of ▇▇▇▇▇▇▇▇▇, 1/3 of the
shares of ▇▇▇▇▇▇▇▇▇ Common Stock which will be part of the Holdback Shares, to
the extent Holdback Shares are released to the former shareholders of WGB,
shall not be sold, pledged, hypothecated, gifted or otherwise transferred or
disposed of until the date which is 360 days after the Closing Date and all
certificates representing such shares of ▇▇▇▇▇▇▇▇▇ Common Stock shall contain a
legend to such effect as set forth below.
"The shares of Common Stock represented by this certificate have
been issued pursuant to a claim of exemption from the registration
or qualification requirements of federal and state securities laws
and may not be sold or transferred without registration or
qualification or otherwise except pursuant to an applicable
exemption therefrom as evidenced by an opinion of counsel
satisfactory to the issuer hereof."
"Except with the prior written consent of ▇▇▇▇▇▇▇▇▇ Brewing Co.,
the shares of Common Stock represented by this certificate may not
be sold, pledged, hypothecated, gifted or otherwise transferred or
disposed of until [THE DATE WHICH IS ___ DAYS AFTER THE CLOSING
DATE.]
ARTICLE 7.0 CONDITIONS TO THE OBLIGATIONS OF ▇▇▇▇▇▇▇▇▇ AND FAC TO
CONSUMMATE.
The obligations of ▇▇▇▇▇▇▇▇▇ and FAC to consummate the
transactions contemplated by this Agreement are subject to the satisfaction or,
unless prohibited by law, the waiver by ▇▇▇▇▇▇▇▇▇ and FAC of each of the
following conditions:
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Agreement and Plan of Reorganization
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7.1 Representations and Warranties. The representations and
warranties of WGB contained herein shall be true, complete, and accurate in all
material respects on the date of this Agreement and on the Closing Date as
though such representations and warranties were made at and on such date.
7.2 Performance. WGB shall have performed and complied
with all agreements, obligations and conditions required by this Agreement to
be so performed or complied with by it at or prior to the Closing.
7.3 Consents and Approvals. All necessary consents and
approvals of any Governmental Authority or any third party, including Signet
Bank, required for consummation of the transactions contemplated by this
Agreement shall have been obtained.
7.4 Stockholder Approval. The stockholders of WGB and, if
deemed necessary by Frederick, the stockholders of ▇▇▇▇▇▇▇▇▇, shall have
approved the Agreement by the vote required by applicable law after full
disclosure of the terms and conditions of this Agreement and the transactions
contemplated hereby.
7.5 Dissenting Shares. No more than 5% of the issued and
outstanding shares of WGB Common Stock and WGB Preferred Stock shall have been
deemed to be Dissenting Shares pursuant to Section 2.6 hereof.
7.6 Financing. ▇▇▇▇▇▇▇▇▇, in its sole discretion, shall
have obtained the financing necessary for it to consummate the transactions
contemplated by this Agreement.
7.7 WGB Private Placements. ▇▇▇▇▇▇▇▇▇ shall have satisfied
itself that there are no issues relating to the prior issuance of shares of WGB
Common Stock or WGB Preferred Stock which could adversely effect ▇▇▇▇▇▇▇▇▇, FAC
or the transactions contemplated by this Agreement.
7.8 Delivery of Documents. At or before the Closing, WGB
shall have executed and delivered to ▇▇▇▇▇▇▇▇▇ and FAC certain documents,
including, but not limited to: (i) a certificate dated the Closing Date
executed by the President and Secretary of WGB evidencing compliance with the
conditions set forth in this Article 7; (ii) the surrender by the stockholders
of WGB of the certificates representing 100% of the issued and outstanding
shares of WGB Common Stock and WGB Preferred Stock, duly endorsed in blank (or
as required by ▇▇▇▇▇▇▇▇▇) or an affidavit of loss together with an indemnity
and/or bond satisfactory to ▇▇▇▇▇▇▇▇▇; (iii) the Articles of Merger executed by
a duly authorized officer of WGB; (iv) the opinion of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.,
counsel to WGB, addressed to the Board of Directors of ▇▇▇▇▇▇▇▇▇ substantially
in the form of Exhibit B; and (v) such other documents as ▇▇▇▇▇▇▇▇▇ or its
counsel may reasonably require. All such documents shall be in form and
substance satisfactory to ▇▇▇▇▇▇▇▇▇.
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7.9 No Litigation. None of the parties hereto shall be a
party to, or shall have received notice of, any suit, claim or proceeding or
threatened suit, claim or proceeding to enjoin or restrain any or all of the
transactions contemplated herein or to nullify or render ineffective all or any
part of such transactions if accomplished or alleging damages in connection
therewith.
7.10 No Material Change. No change, event, development or
combination of developments shall have occurred which, individually or in the
aggregate, has resulted in or could reasonably be expected to result in a
material adverse change in the Business, condition (financial or otherwise) or
prospects of WGB.
ARTICLE 8.0 CONDITIONS TO OBLIGATIONS OF WGB TO CONSUMMATE.
The obligation of WGB to consummate the transactions
contemplated by this Agreement is subject to the satisfaction or, unless
prohibited by law, the waiver by WGB of each of the following conditions:
8.1 Representations and Warranties. The representations and
warranties of ▇▇▇▇▇▇▇▇▇ contained herein shall be true, complete, and accurate
in all material respects on the date of this Agreement and on the Closing Date
as though such representations and warranties were made at and on such date.
8.2 Performance. ▇▇▇▇▇▇▇▇▇ and FAC shall have performed and
complied with all agreements, obligations and conditions required by this
Agreement to be so performed or complied with by them at or prior to the
Closing.
8.3 Consents and Approvals. All necessary consents and
approvals of any Governmental Authority or any third party, including Signet
Bank, required for consummation of the transactions contemplated by this
Agreement shall have been obtained.
8.4 Officers' Certificate. ▇▇▇▇▇▇▇▇▇ shall have delivered
to WGB a certificate signed by a duly authorized officer, dated the Closing
Date, certifying the fulfillment of the conditions specified in Sections 8.1
and 8.2 of this Agreement.
8.5 Payment of ▇▇▇▇▇▇▇▇▇ Common Stock. In exchange for
certificates representing the issued and outstanding shares of WGB Common Stock
and WGB Preferred Stock, Frederick shall have delivered to the stockholders of
WGB on the Closing Date the shares of Frederick Common Stock as set forth in
Section 2.3(b) and (c) hereof.
8.6 No Litigation. None of the parties hereto shall be a
party to, or shall have received notice of, any suit, claim or proceeding or
threatened suit, claim or proceeding to enjoin or restrain any or all of the
transactions contemplated herein or to
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Agreement and Plan of Reorganization
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nullify or render ineffective all or any part of such transactions if
accomplished or alleging damages in connection therewith.
8.7 Delivery of Documents. At or before the Closing,
Frederick and FAC shall execute and deliver to WGB all other documents
contemplated by this Agreement.
ARTICLE 9.0 TERMINATION.
9.1 Termination. This Agreement may be terminated at any
time prior to the Closing Date, whether before or after approval by the
stockholders of WGB:
(a) by mutual consent of the Boards of Directors of
the Frederick and WGB; or
(b) by either Frederick or WGB if, without fault of
such terminating party, the transactions contemplated by this Agreement shall
not have been consummated on or before February 28, 1998, unless extended by
mutual written consent; or
(c) by Frederick if any condition to its obligations
as set forth in Article 7.0 shall become incapable of fulfillment and shall not
have been waived by Frederick in writing, or by WGB if any of the conditions to
the obligations of WGB set forth in Article 8.0 shall have become incapable of
fulfillment and shall not have been waived by WGB in writing; provided that
neither party may terminate this Agreement hereunder if it is in material
breach of any of its representations, warranties, covenants or agreements in
this Agreement; or
(d) by Frederick, in the event of a material
deterioration of the assets, Business or financial condition of WGB, in
Frederick's sole discretion; or
(e) by WGB, in the event of a material deterioration
of the assets, Business or financial condition of Frederick, in WGB's sole
discretion; or
(f) by Frederick or WGB upon a material breach of a
representation or warranty by the other or the failure to perform any covenant
or agreement contained herein, if such breach or failure to perform shall not
have been cured within fifteen (15) calendar days after receipt by the
breaching party of notice of such breach from the non-breaching party.
(g) by Frederick if the WGB disclosure schedules
contemplated by this Agreement have not been completed in form and substance
satisfactory to Frederick by the close of business on December 23, 1997.
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9.2 Procedure and Effect of Termination. In the event of
termination and abandonment of this Agreement by Frederick or WGB pursuant to
Section 9.1, written notice thereof shall forthwith be given to the other and
this Agreement shall terminate and the transactions contemplated hereby shall
be abandoned, without further action by any of the parties hereto. If this
Agreement is terminated as provided herein, the obligations stated in this
Section 9.2 and in Sections 5.4(b), 5.6, and 9.3 shall survive any such
termination for the periods therein stated, if any. No termination of this
Agreement under Section 9.1(f) for any reason or in any manner shall release,
or be construed as so releasing, any party hereto from any liability or damage
to the other party hereto arising out of, in connection with, or otherwise
relating to, directly or indirectly, such party's material breach, such party's
material default or such party's failure in performance of any of its material
covenants, agreements, duties or obligations arising hereunder.
9.3 Payment of Expenses and Termination. Other than as
expressly provided elsewhere in this Agreement, whether or not the Agreement
shall be consummated, all costs and expenses incurred in connection with this
Agreement will be paid by the party incurring such expenses.
ARTICLE 10.0 MISCELLANEOUS.
10.1 Further Assurances. From time to time, and without
further consideration, each of the parties hereto agrees to execute and deliver
any and all further agreements, documents or instruments necessary to
effectuate this Agreement, the Merger and the transactions referred to herein
or contemplated hereby and to vest good, valid and marketable title to the
assets transferred in connection herewith or reasonably requested by the other
party to perfect or evidence its rights hereunder. Each party will promptly
notify the other party of any information delivered to or obtained by such
party which would prevent the consummation of the transactions contemplated by
this Agreement, or would indicate a breach of the representations, warranties
or covenants of any of the parties to this Agreement.
10.2 Notices. Any notices hereunder shall be deemed
sufficiently given by one party to another only if in writing and if and when
delivered or tendered either in person or as of one (1) business day after sent
by recognized overnight service for next day delivery, with all costs prepaid,
or as of five (5) business days after deposit in the United States mail,
registered or certified, with postage prepaid, addressed as follows:
46
Agreement and Plan of Reorganization
Page 39
If to Frederick or FAC:
▇▇▇▇▇▇▇▇▇ Brewing Co.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman of the Board
and a copy to:
Elias, Matz, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to WGB:
Wild Goose Brewery Inc.
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇, President
and a copy to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address as the party addressed shall have previously
designated by written notice to the serving party, given in accordance with
this Section 10.2; provided, however, that a notice not given as above shall,
if it is in writing, be deemed given if and when actually received by the party
to whom it is required or permitted to be given.
10.3 Governing Law. This Agreement shall be governed by,
and construed and enforced in accordance with the laws of the State of
Maryland. Except as prohibited by applicable law, each party hereby waives any
right it may have to a trial by jury in any litigation directly or indirectly
arising out of, under, or in connection with this Agreement. This waiver is
knowingly, intentionally and voluntarily made by each party, and each party
acknowledges that no representative, agent or attorney of either party has made
any representations of fact to induce this waiver of trial by jury or in any
way to nullify or modify its effect. The parties each hereby agree that this
Agreement constitutes a written consent to waiver of trial by jury.
10.4 Severability. Should any term or provision or portion
of such provision of this Agreement be invalid or unenforceable because of the
scope thereof or the
47
Agreement and Plan of Reorganization
Page 40
period covered thereby or otherwise, such term, provision or portion of such
provision shall be deemed to be reduced and limited to enable Frederick or WGB
or the Surviving Corporation to enforce it to the maximum extent permissible
under the laws and public policies applied under the jurisdiction in which
enforcement is sought. If any term or provision of this Agreement is held or
deemed to be invalid or unenforceable, in whole or in part, by a court of
competent jurisdiction, such term or provision shall be ineffective to the
extent of such invalidity or unenforceability without rendering invalid or
unenforceable the remaining terms and provisions of this Agreement which shall
be construed to preserve to the maximum permissible extent the intent and
purposes of this Agreement. Any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such terms or
provisions in any other jurisdiction.
10.5 Entire Agreement; Amendment. This Agreement (including
the schedules and exhibits hereto and the lists and documents delivered
pursuant hereto) is intended by the parties to and does constitute the entire
agreement of the parties with respect to the transactions contemplated by this
Agreement and supersedes any and all prior understandings, written or oral,
between the parties. If there is any question of interpretation or if there
are or appear to be inconsistencies between this Agreement and any Schedule or
Exhibit hereto the terms of this Agreement shall govern. This Agreement may
not be amended, modified, waived, discharged or terminated orally, but only by
an instrument in writing signed by an authorized executive officer of the party
against which enforcement of the amendment, modification, waiver, discharge or
termination is sought. No waiver of the breach of any provision or term of
this Agreement shall be deemed or construed to be a waiver of other or
subsequent breaches.
10.6 Assignment, etc. Except for the assignment of certain
rights under this Agreement by Frederick to its wholly-owned subsidiary FAC,
the rights and obligations of any of the parties to this Agreement may not be
assigned without the prior written consent of the other parties to this
Agreement, and any assignment made in violation of the foregoing shall be void
and have no legal effect. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns but
nothing herein, express or implied, is intended to or shall confer any rights,
remedies or benefits upon any person other than the parties hereto. All
section headings used herein are for convenience and ease of reference only and
do not constitute part of this Agreement and shall not be referred to for the
purpose of defining, interpreting, construing or enforcing any of the
provisions of this Agreement. All pronouns and variations thereof shall be
deemed to refer to the masculine, feminine, neuter, singular or plural as the
identity of the party or parties to this Agreement may require.
10.7 Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
48
Agreement and Plan of Reorganization
Page 41
IN WITNESS WHEREOF, Frederick, FAC and WGB have caused this
Agreement to be duly executed and delivered under seal, by their respective
authorized officers, on the date first above written.
▇▇▇▇▇▇▇▇▇ BREWING CO.
Witness: By:
--------------------- -----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Chairman of the Board
FBC ACQUISITION CORPORATION
(In Organization)
Witness: By:
--------------------- -----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President
WILD GOOSE BREWERY, INC.
Witness: By:
--------------------- -----------------------------
▇▇▇▇▇ ▇▇▇▇
President
49
EXHIBIT A
AGREEMENT
AGREEMENT, dated as of this ______ day of ___________ 1998, between Wild
Goose Brewery, Inc. (the "Employer"), a Maryland corporation, and ▇▇▇▇▇ ▇▇▇▇
(the "Executive").
WITNESSETH
WHEREAS, in order to induce the Executive to serve as the President of
the Employer, the Employer and the Executive desire to enter into this
Agreement to specify the terms of the Executive's employment,
NOW THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereby agree as follows:
1. DEFINITIONS. The following words and terms shall have the meanings
set forth below for the purposes of this Agreement:
(a) BASE SALARY. "Base Salary" shall have the meaning set forth in
Section 3(a) hereof.
(b) CAUSE. Termination of the Executive's employment for "Cause" shall
mean a finding by the Board of Directors and approved by a majority thereof,
which establishes that Executive has been terminated as a direct result of his
conviction, plea of nolo contendere or has otherwise been found guilty in a
court of competent jurisdiction of theft, fraud, embezzlement, intentional or
reckless conversion or destruction of Employer funds, property or other assets,
or has been found by the appropriate regulatory authority to have violated the
laws and regulations governing the licensing of manufacturers, distributors or
retailers of alcoholic beverages, where such offense has, as an element, an
intentional or reckless state of mind, incompetence, willful misconduct, breach
of fiduciary duty involving personal profit, intentional failure to perform
stated duties, willful violation of a final cease-and-desist order of any
governmental authority or court of competent jurisdiction, or, any material
breach of any provision of this Agreement.
(c) DATE OF TERMINATION. "Date of Termination" shall mean (i) if the
Executive's employment is terminated for Cause or for Disability, the date
specified in the Notice of Termination, and (ii) if the Executive's employment
is terminated for any other reason, the date on which a Notice of Termination
is given or as specified in such Notice.
(d) DISABILITY. Termination by the Employer of the Executive's
employment based on "Disability" shall mean termination because of any physical
or mental impairment which qualifies the Executive for disability benefits
under the applicable long-term disability plan maintained by the Employer or
▇▇▇▇▇▇▇▇▇ Brewing Co. ("FBC") or, if no such plan applies,
50
2
which would qualify the Executive for disability benefits under the Federal
Social Security System.
(e) NOTICE OF TERMINATION. Any purported termination of the
Executive's employment by the Employer for any reason, including without
limitation for Cause, Disability or Retirement, or by the Executive for any
reason, shall be communicated by written "Notice of Termination" to the other
party hereto. For purposes of this Agreement, a "Notice of Termination" shall
mean a dated notice which (i) indicates the specific termination provision in
this Agreement relied upon, (ii) sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment under the provision so indicated, (iii) specifies a Date of
Termination which shall be not less than thirty nor more than ninety days after
such Notice of Termination which is given, except in the case of the Employer's
termination of Executive's employment for Cause, which shall be effective
immediately; and (iv) is given in the manner specified in Section 10 hereof.
(f) RETIREMENT. Termination by the Employer of the Executive's
employment based on "Retirement" shall mean voluntary termination by the
Executive in accordance with the Employer's retirement policies, including
early retirement, generally applicable to the Employer's salaried employees.
2. TERM OF EMPLOYMENT.
(a) The Employer hereby employs the Executive as President, and the
Executive hereby accepts said employment and agrees to render such services to
the Employer on the terms and conditions set forth in this Agreement. In
addition, as of ____________ 1998, Executive shall serve as a member of the FBC
Board of Directors until the next annual meeting of FBC's stockholders, at
which meeting the FBC Board will nominate Executive to the class of directors
whose terms expire in 1999. Executive agrees to resign from FBC's Board of
Directors upon the request of a majority of the Board or simultaneously with
the termination of this Agreement.
(b) The initial term of employment under this Agreement shall be, at
the discretion of the Board of Directors, for one year, commencing on
_____________, 1998. If the Board of Directors notifies the Executive in
writing at least 90 days prior to the expiration of this Agreement of its
intention to renew this Agreement, and Executive provides his written consent
to such renewal, this Agreement shall extend for an additional one year term.
(c) During the term of this Agreement, the Executive shall devote his
full time to the business of the Employer and shall perform such executive
services for the Employer as may be consistent with his title and annually
assigned to him by the Employer's Board of Directors. Executive will be
provided with a "hoteling" work space arrangement at Employer's corporate
headquarters, provided, however, that it is the Executive's understanding that
he will work primarily from his home and, except as provided in this Agreement,
the expense of such home office will be Executive's responsibility.
51
3
3. COMPENSATION AND BENEFITS.
(a)(i) Subject to the conditions set forth below, the Employer
shall compensate and pay Executive for his services during the term of this
Agreement at a minimum base salary of $85,000 per year ("Base Salary").
(ii) The Base Salary shall be supplemented by a cash bonus
("Cash Bonus") equal to a percentage of Executive's Base Salary not to exceed
20%. [THIS CASH BONUS WILL BE BASED UPON BOTH INDIVIDUAL PERFORMANCE CRITERIA
AND COMPANY PERFORMANCE CRITERIA AND THE CASH BONUS WILL BE RECOMMENDED BY
SENIOR MANAGEMENT OF THE EMPLOYER TYPICALLY ON OR BEFORE JANUARY 15TH OF EACH
YEAR AND THEREAFTER RATIFIED BY THE BOARD'S COMPENSATION COMMITTEE.] [CRITERIA
FOR BONUS TO BE PROVIDED.]
(b) Upon the execution of this Agreement and pursuant to the
terms of the Employer's 1995 Stock Option Plan, Executive shall also receive a
grant of non-transferable options for 10,000 shares of the Employer's common
stock exercisable in three equal annual installments beginning 180 days after
commencement of employment, and if employment is terminated, all unvested and
unexercisable options will be forfeited. The grant of such options shall be
evidenced by a separate written Stock Option Agreement. The options will be
exercisable at $__________ per share (the market price of the Employer's common
stock on the closing date of the Agreement and Plan of Reorganization, dated
_________, 1997, between ▇▇▇▇▇▇▇▇▇ Brewing Co., FBC Acquisition Corporation and
Wild Goose Brewery Inc.) and additional options, if any, may be granted to the
Executive within the discretion of the Compensation Committee of Employer's
Board of Directors. Nothing paid to Executive under any plan or arrangement
presently in effect or made available in the future shall be deemed to be in
lieu of the Base Salary payable to Executive pursuant to Section 3(a) hereof.
(c) During the term of this Agreement, Executive shall be
entitled to the following additional benefits:
(i) Health Insurance: The Employer will pay 100% of
the premiums for the Executive and one dependent for all health and
dental insurance plans covering all other Employer employees.
Additional dependents may be covered, at the Executive's option and
at the Executive's expense, on such terms as permitted by the
Employer's insurer. Coverage shall commence 30 days after full-time
employment begins.
(ii) Paid Leave: The Employer will pay for leave for
15 working days, which shall accrue ratably as earned; provided,
however, that no leave time shall be paid during the first 90 days
after employment begins and that any leave time accrued shall be
deemed to have been forfeited if the Executive's employment
terminates for any reason within 90 days after full-
52
4
time employment begins. As of December 31 of each year, all unused
leave time in excess of eight days shall be deemed waived.
(iii) 401(k) Plan: The Executive will be eligible to
participate in this plan on the same basis as all similarly situated
employees.
(iv) Car Allowance: The Employer will pay for a car
allowance of $600 per month and reimbursement for all cellular phone
expenses.
(v) Business Expenses: The Employer will pay or
reimburse the Executive for all reasonable and documented
business-related expenses including hotel and meals when traveling
on Employer business and the costs of telephone and facsimile
transmission when working from home.
4. TERMINATION.
(a) The Employer shall have the right, at any time upon prior
Notice of Termination, to terminate the Executive's employment hereunder for
any reason, including without limitation termination for Cause, Disability,
Retirement or the Executive's death, and Executive shall have the right, upon
prior Notice of Termination, to terminate his employment hereunder for any
reason.
(b) In the event that (i) Executive's employment is terminated by
the Employer for Cause, Disability, Retirement or the Executive's death or (ii)
Executive terminates his employment hereunder for any reason other than as set
forth in Section 4(c)(ii) below, Executive shall have no right pursuant to this
Agreement to compensation or other benefits for any period after the applicable
Date of Termination.
(c) In the event that (i) Executive's employment is terminated by
the Employer for other than Cause, Disability, Retirement or the Executive's
death or (ii) such employment is terminated by the Executive due to a material
breach of this Agreement by the Employer, which breach has not been cured
within fifteen days after a written notice of non-compliance has been given by
the Executive to the Employer, then the Employer shall pay to the Executive a
cash severance, (A) if the Executive's termination occurs during the initial
term of this Agreement, in six equal monthly installments an amount equal to
one half of the Executive's Base Salary, or (B) if the Executive's termination
occurs during the renewal period of this Agreement, in three equal monthly
installments an amount equal to one quarter of the Executive's Base Salary.
53
5
5. MITIGATION; EXCLUSIVITY OF BENEFITS.
(a) The Executive shall not be required to mitigate the amount of
any benefits hereunder by seeking other employment or otherwise, nor shall the
amount of any such benefits be reduced by any compensation earned by the
Executive as a result of employment by another employer after the Date of
Termination or otherwise.
(b) The specific arrangements referred to herein are not intended
to exclude any other benefits which may be available to the Executive upon a
termination of employment with the Employer pursuant to employee benefit plans
of the Employer or otherwise.
6. PROPRIETARY INFORMATION.
(a) The Employer and FBC have disclosed to Executive confidential
business plans, marketing strategies, product formulations, packaging design,
advertising copy, funding sources, wholesale and retail customer lists,
equipment designs and sources, financial projections and results and other
information in the course of Executive's duties. This information and similar
information yet to be developed by the Employer and FBC is generally unknown to
the public and gives the Employer and FBC a competitive advantage over those
who do not have access to this information. The Employer and FBC have taken
and will take care to protect this information from becoming generally known.
The Employer and FBC have revealed this information to the Executive on the
condition that he keep it confidential and will require confidentiality from
the Executive and all other persons with access to the information in the
future. The information described above, therefore, constitutes valuable trade
secrets of the Employer and FBC and is referred to below as "Proprietary
Information." In the course of performing his duties under this Agreement, the
Executive will both help develop and be privy to Proprietary Information.
(b) As a condition of his employment with the Employer and as an
inducement to the Employer to enter into this Agreement, Executive agrees to
contribute to the Employer all recipes and formulations for alcoholic and
non-alcoholic beverages and methods and techniques for producing, packaging or
marketing such beverages he now has and which he may later develop, whether or
not they are committed to writing, during the term of this Agreement or any
extension hereof. These recipes, formulations, methods and techniques are now
and, if later developed, shall become Proprietary Information of the Employer.
(c) The Employer has and shall retain all exclusive rights in the
Proprietary Information. During the term of this Agreement and for the later
of five years following the termination hereof or as long as permitted by law,
Executive shall not disclose Proprietary Information to any third party or make
any commercial or academic use of the
54
6
Proprietary Information without the express written consent of the Employer,
which consent may be withheld for any or no reason in the Employer's sole
discretion.
(d) These restrictions on the use and disclosure of Proprietary
Information shall survive the expiration or termination of this Agreement,
regardless of the grounds or lack of grounds therefor. The parties recognize
and agree that, in the event of a threatened or actual breach of this Section
6, the Employer's remedy at law will be inadequate to fully compensate the
Employer for its losses. Therefore, the Employer may enforce its rights
hereunder by equitable remedies, including without limiting the generality of
the foregoing, injunctive relief and specific performance.
7. COVENANT NOT TO COMPETE.
(a) In consideration of this offer of employment and as an
inducement for the Employer to enter into this Agreement, Executive agrees
that, during the term of this Agreement and for a period of twelve calendar
months after its expiration or termination, Executive shall not engage,
directly or indirectly, in the business of producing, packaging or marketing of
beers or ales or similar grain-based beverages in the states of Maryland,
Virginia, West Virginia or Pennsylvania or the District of Columbia (the
"Restricted Area").
(b) For purposes of this Agreement, to "engage, directly or
indirectly, in the business of producing, packaging or marketing of beers or
ales or similar grain-based beverages" shall mean directly or indirectly,
owning, managing, operating, joining, being employed by, or controlling or
participating in the ownership, management, operation or control of, or being a
director, officer, stockholder, partner or employee of, or an advisor or
consultant to, any practice, business, firm, partnership, venture, corporation
or entity which is conducting any business which in any manner competes with
the business of Employer or its successors, as now conducted or as conducted
hereinafter during the term hereof. The parties hereto recognize that the
business of Employer is highly competitive in the Restricted Area. It is the
well-considered intent of the parties that this covenant not to compete be
given the broadest possible interpretation and scope for the protection of the
business interests and goodwill of the Employer and its successors. It is
further represented by the Executive that he has the skills and background to
obtain employment and provide a livelihood for himself and his family in a
location outside the Restricted Area or in a business other than one in
competition with the Employer in the event of termination hereunder. This
covenant not to compete shall not apply to the holding or acquiring shares of a
corporation whose stock is traded publicly on a recognized stock exchange or on
the NASDAQ.
(c) Executive further covenants and agrees that he will not,
directly or indirectly during the term hereof and for a period of thirty-six
calendar months after the date of termination of this Agreement for any reason
whatsoever: (i) induce or attempt to induce any other employee, agent or
independent contractor to leave the Employer or its
55
7
successors; (ii) interfere with or disrupt the relationship between Employer
and its successors and any of their employees; or (iii) solicit, entice, take
away or employ any person employed by Employer or its successors at the Date of
Termination.
(d) The covenant set forth in this Section 7 shall survive the
termination or expiration of this Agreement unless and until: (a) the Employer
is in substantial breach of the Agreement at the time of termination or
expiration; or (b) the Employer is acquired by, merged or consolidated with a
similar business having combined facilities which manufacture not less than
500,000 barrels of malt beverages per year; or (c) the Executive is terminated
by the Employer without Cause; or (d) the Employer becomes insolvent or enters,
voluntarily or involuntarily, proceedings in bankruptcy. The parties agree and
acknowledge that, in the event of a threatened or actual breach of this
covenant not to compete, the Employer's remedies at law will be inadequate to
compensate the Employer for its losses. Therefore, this covenant may be
enforced by equitable remedies including, without limiting the generality of
the above, injunctive relief and specific performance.
(e) It is intended by the parties that this covenant not to
compete be given its widest possible effect. If, however, any part of this
covenant is found to be overly broad, unreasonably restrictive or otherwise
unenforceable, this covenant shall remain fully effective and valid to the
greatest extent permitted by law.
(f) The non-competition provisions set forth in Section 7(b)
above do not apply, after the termination of the Executive's employment, to any
work relating to restaurants that make and sell beer (e.g., brewpubs).
8. WITHHOLDING. All payments required to be made by the Employer
hereunder to the Executive shall be subject to the withholding of such amounts,
if any, relating to tax and other payroll deductions as the Employer may
reasonably determine should be withheld pursuant to any applicable law or
regulation.
9. ASSIGNABILITY. The Employer may assign this Agreement and its
rights and obligations hereunder in whole, but not in part, to any corporation
or other entity with or into which the Employer may hereafter merge or
consolidate or to which the Employer may transfer all or substantially all of
its assets, if in any such case said corporation or other entity shall by
operation of law or expressly in writing assume all obligations of the Employer
hereunder as fully as if it had been originally made a party hereto, but may
not otherwise assign this Agreement or its rights and obligations hereunder.
The Executive may not assign or transfer this Agreement or any rights or
obligations hereunder.
10. NOTICE. For the purposes of this Agreement, notices and all other
communications provided for in this Agreement shall be in writing and shall be
deemed to have been duly given when delivered or mailed by certified or
registered mail, return receipt requested, postage prepaid, addressed to the
respective addresses set forth below:
56
8
To the Employer: Board of Directors
Wild Goose Brewery, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
To the Executive: ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
11. AMENDMENT; WAIVER. No provisions of this Agreement may be
modified, waived or discharged unless such waiver, modification or discharge is
agreed to in writing signed by the Employee and such officer or officers as may
be specifically designated by the Board of Directors of the Employer to sign on
its behalf. No waiver by any party hereto at any time of any breach by any
other party hereto of, or compliance with, any condition or provision of this
Agreement to be performed by such other party shall be deemed a waiver of
similar or dissimilar provisions or conditions at the same or at any prior or
subsequent time.
12. ENTIRE AGREEMENT. This Agreement contains the entire agreement
between Employer and Employee and supersedes all prior agreements, written or
oral (including the non-binding offer of employment dated _________________,
1997), arrangements and understandings with respect thereto.
13. CHOICE OF LAW, JURISDICTION AND VENUE. The Corporation is a
Maryland corporation whose manufacturing, distribution and office facilities
are currently located in ▇▇▇▇▇▇▇▇▇ County, Maryland. Employee by executing
this Agreement agrees to be employed at the Corporation's facilities in
▇▇▇▇▇▇▇▇▇ County, Maryland. Therefore, this Agreement shall be interpreted,
construed and enforced in accordance with Maryland law. The ▇▇▇▇▇▇▇▇▇ County
Circuit Court or the U.S. District Court for Maryland shall have the sole
jurisdiction over and shall be the exclusive venue for any actions between the
parties concerning the validity, construction, enforcement or avoidance of this
Agreement.
14. NATURE OF OBLIGATIONS. Nothing contained herein shall create or
require the Employer to create a trust of any kind to fund any benefits which
may be payable hereunder, and to the extent that the Employee acquires a right
to receive benefits from the Employer hereunder, such right shall be no greater
than the right of any unsecured general creditor of the Employer.
15. HEADINGS. The section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
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16. VALIDITY. The invalidity or unenforceability of any provision of
this Agreement shall not affect the validity or enforceability of any other
provisions of this Agreement, which shall remain in full force and effect.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
IN WITNESS WHEREOF, this Agreement has been executed as of the date first
above written.
Attest: ▇▇▇▇▇▇▇▇▇ BREWING CO.
By:
------------------------ ------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Director,
Secretary Member of Compensation
Committee
By:
------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Director,
Member of Compensation
Committee
Witness:
------------------------ ------------------------------
▇▇▇▇▇ ▇▇▇▇
58
EXHIBIT B
[LETTERHEAD OF ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇]
___________________, 1998
Board of Directors
▇▇▇▇▇▇▇▇▇ Brewing Co.
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Re: Agreement and Plan of Reorganization dated December __, 1997
Gentlemen:
I have acted as counsel to Wild Goose Brewery Inc., a Maryland
corporation ("WGB"), in connection with the proposed merger of WGB with and
into FBC Acquisition Corporation, a Maryland corporation ("FAC"), which is a
wholly owned subsidiary of Frederick Brewing Co., a Maryland corporation
("Frederick"), pursuant to an Agreement and Plan of Reorganization dated
December __, 1997 (the "Agreement") by and among WGB, FAC and Frederick. I
have been requested to render this opinion pursuant to Section 7.8(iv) of the
Agreement. Capitalized terms used herein shall have the meaning attributed to
them in the Agreement unless otherwise defined herein.
In rendering the opinions set forth below, I have examined the original,
or photostatic or certified copy of such certificates, agreements, documents
and other papers, and have made such inquiries and investigations of law, as I
have deemed relevant and necessary for the opinions hereinafter set forth. In
making such examination, I have assumed the legal capacity of all natural
persons, the genuiness of all signatures, the authenticity of all documents
submitted to us as originals, and the conformity to the originals of all non-
original documents submitted to me as certified, photostatic, facsimile or
conformed copies or reproductions thereof. As to matters of fact material to
the opinions expressed herein, I have performed such investigation as I have
deemed necessary.
For purposes of this opinion, I have assumed with your permission and
without investigation: (a) all documents executed by any person or entity in
connection with the Agreement, other than those delivered by WGB, constitute
the legal, valid and binding obligations of, and are enforceable against all
such persons or entities; (b) the due and proper authorization, execution,
acknowledgement and delivery of the Agreement by the
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respective parties thereto, other than WGB; (c) that Frederick and FAC are duly
organized, validly existing and in good standing under the laws of the State of
Maryland; (d) that Frederick and FAC have full power, authority and legal right
under the laws of the State of Maryland to execute and deliver the Agreement
and to consummate the transactions contemplated thereby; and (e) the
authenticity and genuineness of the signatures to all documents.
Each of the opinions hereinafter expressed is subject to the following
further qualifications, whether or not such opinions refer to such
qualifications:
(1) the effect of bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance, fraudulent transfer, conservatorship or other similar
laws now or hereafter in effect relating to or affecting creditors' rights
generally; and,
(2) limitations imposed by general principles of equity and the
discretion of the court (including with respect to specific performance and
other forms of injunctive relief) and the requirement that rights and remedies
be exercised in good faith and in a commercially reasonable manner.
Based upon and subject to the foregoing, it is my opinion that:
(1) WGB is a corporation duly organized, validly existing and in good
standing under the laws of the State of Maryland and has the full corporate
power and authority to carry on its business as it is currently being conducted
and to own, lease and operate the property and the assets that it now owns,
leases and operates and to execute, deliver and perform the Agreement and the
transactions contemplated thereby.
(2) The authorized capital stock of WGB consists of fifty thousand
(50,000) shares of WGB Common Stock and fifty thousand (50,000) shares of WGB
Preferred Stock. As of the date hereof, ten thousand (10,000) shares of WGB
Common Stock are issued and outstanding and are owned of record by 29
stockholders and fifty thousand (50,000) shares of WGB Preferred Stock are
issued and outstanding and are owned of record by 27 stockholders. All of the
outstanding shares of WGB Common Stock and WGB Preferred Stock have been duly
authorized and validly issued and are fully paid and non-assessable, and none
of the outstanding shares of WGB Common Stock or WGB Preferred Stock has been
issued in violation of any law, regulation or policy of any governmental
authority, the WGB Articles of Incorporation, Bylaws, the terms of any
agreement to which WGB is a party or is bound and the shareholders of WGB have
no preemptive rights with respect to any shares of capital stock of WGB. There
are no Rights authorized, issued or outstanding with respect to the WGB Common
Stock or the WGB Preferred Stock.
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(3) The execution, delivery and performance of the Agreement and the
transactions contemplated thereby by WGB has been duly and effectively
authorized by all necessary corporate action, and the Agreement is a valid,
legally binding and enforceable obligation of WGB in accordance with its terms.
(4) The execution, delivery and performance of the Agreement and the
consummation of the transactions contemplated thereby by WGB will not: (i)
violate any provision of WGB's Articles of Incorporation or bylaws; (ii)
violate, conflict with or otherwise give WGB or any other contracting party the
right to terminate or constitute (or with notice or lapse of time or both) a
default under, or result in the termination of, or accelerate the performance
required by, or cause the acceleration of the maturity of any liability or
obligation pursuant to, or result in the creation or imposition of any security
interest, lien, charge or other encumbrance upon any of WGB's properties or
assets under (a) any statute or law or (b) any judgment, decree, order, award,
writ, injunction, regulation or rule of any court, arbitrator or Governmental
Authority, or (c) any material note, bond, mortgage, indenture, deed of trust,
license, lease, instrument, contract, commitment, franchise, permit,
understanding, arrangement, agreement or restriction of any kind or character;
or (iii) violate any statute, law or regulation as such statute, law or
regulation relates to WGB; or (iv) result in the creation of any adverse claim
on the properties or assets of WGB thereunder.
(5) There are no claims, actions, suits, proceedings, grievances,
arbitrations, investigations or inquiries pending or threatened, at law or in
equity or before or by any federal, state, local, foreign or other governmental
department, commission, board, arbitrator(s), agency, instrumentality or
authority by or against WGB that: (i) restrains or prohibits or that may
restrain or prohibit, or otherwise affect, the Agreement, the Merger or
consummation of the transactions contemplated thereby; or (ii) affect or might
affect the business, operations, condition (financial or otherwise),
liabilities, assets or earnings of WGB. WGB is not subject to any judgment,
arbitration award, order or decree except as scheduled on the Agreement. There
are no petitions pending by, against or on behalf of WGB under any applicable
bankruptcy or insolvency laws.
(6) WGB in the past has complied, and presently is in compliance, with
all applicable laws (whether statutory or otherwise), rules, regulations,
orders, ordinances, judgments or decrees of all Governmental Authorities
(federal, state, local, or otherwise) (collectively, "Laws"), including, but
not limited to, all Laws relating to the safe conduct of business and
environmental protection and conservation, and any applicable labor, trade,
health, sanitation, fire, safety, labor, zoning and building laws and
ordinances, as well as all criminal laws, and WGB has not received notification
of any asserted present or past failure to so comply.
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(7) WGB has in effect all federal, state, local, or other governmental
approvals, authorizations, certifications, filings, franchises, licenses,
notices, permits, registrations, variances and rights ("Permits") necessary for
it to own, lease or operate its properties and assets and to carry on its
business as now conducted, and there has occurred no default under any such
Permit.
(8) As of the date hereof, WGB has obtained all necessary consents or
approvals from the stockholders of WGB, all lessors of WGB and other third
parties, including Signet Bank, and the approval of all Governmental
Authorities in order to permit WGB to consummate the Agreement in accordance
with the terms and conditions thereof. No other consents or approvals are
necessary to permit WGB to consummate the Agreement in accordance with the
terms and conditions thereof.
(9) WGB is not a party or bound by any contract with, does business with
or has any obligations or liabilities to any stockholder of WGB or any of their
affiliates or associates.
The opinions given herein are as of the date hereof. This opinion is
rendered solely for the benefit of the addressees in connection with the
closing of the matters contemplated by the Agreement and may not, without my
prior written consent, be copied, distributed to, relied upon in any manner, or
used by any other person or for any other purpose.
Very truly yours,
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