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EXHIBIT 2.1
AGREEMENT AND PLAN OF REORGANIZATION
AGREEMENT AND PLAN OF REORGANIZATION, dated as of November 8, 1995, by
and among BEVERAGE WORKS, INC., a California corporation ("BrewCo"), HERITAGE
BREWING COMPANY, INC., a California corporation ("Heritage") (BrewCo and
Heritage being hereinafter collectively referred to as the "Constituent
Corporations") and the persons whose signatures appear on the signature page of
this Plan of Reorganization ("Selling Shareholders").
RECITALS
A. The Boards of Directors of BrewCo and Heritage have approved the
acquisition of up to 388,020 shares of Heritage, which are all of the
outstanding shares of Heritage, by BrewCo for up to 150,000 shares of its common
stock.
B. For federal income tax purposes, it is intended that the stock-for-stock
exchange shall qualify as a reorganization within the meaning of Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended (the "Code").
C. Each of the parties to this Agreement desires to make certain
representations, warranties and agreements in connection with the exchange and
also to prescribe various conditions thereto.
AGREEMENT
THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
EXCHANGE OF SHARES
1.1. RATIO OF EXCHANGE. Pursuant to this Agreement, each issued and
outstanding share of common stock of Heritage ("Heritage Common Stock") shall be
exchanged, and become exchangeable, for 0.3866 shares of validly issued, fully
paid and nonassessable common stock, without par value, of BrewCo ("BrewCo
Common Stock").
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1.2 EXCHANGE OF COMPANY CAPITAL STOCK CERTIFICATES.
a. On or prior to the Closing Date, BrewCo shall deposit with the
Closing Agent the certificates representing shares of BrewCo Common Stock
required to effect the exchange referred to in Section 1.2.c.
b. On or prior to the Closing Date, each holder of a certificate which
immediately prior to the Closing Date represented outstanding shares of Heritage
Common Stock, shall deposit with the Closing Agent the certificates representing
shares of Heritage Common Stock required to effect the exchange referred to in
Section 1.2.c.
c. Selling Shareholders shall be entitled to receive a certificate or
certificates representing the number of shares of BrewCo Common Stock into which
such holder's shares of Heritage Common Stock were converted pursuant to Section
1.1. BrewCo shall be entitled to receive the certificates representing the
number of shares of Heritage Common Stock, in the ratio specified in Section
1.1.
1.3 CLOSING. The closing (the "Closing") of the transactions contemplated
by this Agreement shall take place at the offices of BrewCo's counsel, Hecht,
Margolin & Steckman, P.C., 60 East 42nd Street, Suite 5101, New York, New York
10165 (the "Closing Agent") at 10:00 AM, local time, on November 22, 1995, or at
such other time and place and on such other date as BrewCo and Heritage shall
agree (the "Closing Date").
1.4 MINIMUM NUMBER OF OUTSTANDING SHARES. This Agreement shall not become
effective unless Selling Shareholders holding at least ninety percent (90%) of
the outstanding stock of Heritage enter into this Agreement.
ARTICLE II
FURTHER AGREEMENTS
2.1 EMPLOYMENT AGREEMENT. Prior to or at the Closing, BrewCo and John
Stoner and Mark Mericle shall execute employment agreements (the "Employment
Agreements"). The Employment Agreements shall be substantially in the form
attached as Exhibit A hereto, with such additional terms and conditions as may
be mutually agreed to by the various parties thereto.
2.2 CONTINUITY OF INTEREST AGREEMENT. On the date hereof, Controlling
Shareholders (as that term is defined in the Continuity
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of Interest Agreement) and BrewCo shall execute a continuity of interest
agreement ("Continuity of Interest Agreement") substantially in the form
attached as Exhibit B hereto.
2.3 CALL OPTION AGREEMENT. Prior to or at the Closing, BrewCo shall grant
a call option to Heritage's Shareholders ("Call Option") substantially in the
form attached as Exhibit C hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 GENERAL STATEMENT. The parties make the representations and warranties
to each other which are set forth in this Article III. The survival of all such
representations and warranties shall be in accordance with Section 7.1 hereof.
3.2 REPRESENTATIONS AND WARRANTIES OF BREWCO. BrewCo represents and
warrants to Heritage, as of the date hereof and as of the Closing Date, as
follows:
a. BrewCo is a California corporation in good standing.
b. BrewCo is authorized to execute this Agreement.
c. No governmental consent is required for BrewCo to execute this
Agreement.
3.3 REPRESENTATIONS AND WARRANTIES OF HERITAGE. Heritage represents and
warrants to BrewCo as of the date hereof and at the Closing Date, except as
disclosed in Schedule A annexed hereto, as follows:
a. Heritage is a California corporation in good standing.
b. Heritage is registered to do business in all jurisdictions
required to operate its business.
c. Heritage's authorized and issued capital stock is 388,020 common
shares, no par value, and that Heritage has no other equity securities issued or
outstanding or required to be issued.
d. No governmental consent is required for Heritage to execute this
Agreement, except for approvals of the change of directors and change of
ownership by the Small Business Administration, Bureau of Alcohol Tobacco and
Firearms and the State of California Department of Alcohol Beverage Control.
e. Heritage is authorized to execute this Agreement.
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f. Execution would not cause a conflict with or default under any
other agreements to which Heritage or its shareholders are a party.
g. Heritage warrants that its financial statements, attached hereto
as Exhibit D, are complete and accurate.
h. Heritage warrants that it has no undisclosed liabilities.
i. With respect to Taxes (as defined below):
(i) Heritage has filed, within the time and in the manner
prescribed by law, all returns, declarations, reports, estimates,
information returns and statements ("Returns") required to be
filed under federal, state, local or any foreign laws by Heritage,
and all such Returns are true, correct and complete in all
material respects.
(ii) Heritage has within the time and in the manner prescribed
by law, paid all Taxes (as defined below) that are due and
payable.
(iii) Heritage has established on its respective books and
records reserves (to be specifically designated as an increase to
current liabilities) that are adequate for the payment of all
Taxes not yet due and payable.
(iv) There are no liens for Taxes upon the assets of Heritage.
(v) No deficiency for any Taxes has been proposed, asserted or
assessed against Heritage or any of its subsidiaries which has
not been resolved and paid in full.
(vi) There are no outstanding waivers or comparable consents
regarding the application of the statute of limitations with
respect to any Taxes or Returns that have been given by Heritage
or any of its subsidiaries.
(vii) No federal, state, local or foreign audits or other
administrative proceedings or court proceedings are presently
pending with regard to any Taxes or Returns.
(viii) For purposes of this Agreement, "Taxes" shall mean all
taxes, charges, fees, levies or other assessments of whatever kind
or nature, including, without limitation, all net income, gross
income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment,
excise, estimated, severance, stamp, occupancy or
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property taxes, customs duties, fees, assessments or charges of
any kind whatsoever (together with any interest and any penalties,
additions to tax or additional amounts) imposed by any taxing
authority (domestic or foreign) upon or payable by Heritage.
j. Heritage is not presently in litigation or subject to any claims,
except as disclosed in Schedule A annexed hereto.
k. Heritage has good and valid title to all assets identified in the
financial statements, which are not subject to any liens except as disclosed in
Schedule A annexed hereto.
3.4 REPRESENTATIONS AND WARRANTIES OF SELLING SHAREHOLDERS.
Each Selling Shareholder represents and warrants severally, and not
jointly, that:
a. The Heritage Common Stock to be delivered to BrewCo by such
Selling Shareholder is free from claims, liens, or other encumbrances.
b. Such Selling Shareholder has the unqualified right to transfer the
Heritage Common Stock to BrewCo.
c. All legends on the share certificates of the Heritage Common Stock
to be delivered by such Selling Shareholder, other than the legend imposed under
the Securities Act of 1933, have been lawfully removed or that the transfer to
BrewCo under the terms of this Plan of Reorganization are in compliance with
such legends.
ARTICLE IV
COVENANTS
4.1 CONDUCT OF BUSINESS OF HERITAGE. Heritage agrees from the date hereof:
a. To provide BrewCo access to Heritage's books and facilities.
b. To not issue or redeem stock, incur debt or pay or declare
dividends without the approval of BrewCo.
c. To not declare or pay bonuses or incur or pay any other
extraordinary item.
d. To otherwise conduct its business consistent with past
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practice.
4.2 FINANCIAL STATEMENTS. Heritage must furnish regular financial
statements to BrewCo and such further information as BrewCo reasonably requests.
4.4 APPROVAL OF SHAREHOLDERS. Heritage shall recommend to its shareholders
approval of this Agreement and mail to its shareholders a transmittal letter in
form and substance reasonably satisfactory to BrewCo to be used by such
shareholders in forwarding their certificates for surrender and exchange.
4.5 THIRD PARTY CONSENTS. Each party to this Agreement shall use its best
efforts to obtain, as soon as reasonably practicable, all permits,
authorizations, consents, waivers and approvals from third parties or
governmental authorities necessary to consummate this Agreement and the
transactions contemplated hereby or thereby.
ARTICLE V
CONDITIONS TO CLOSING
5.1 CONDITIONS TO EACH PARTY'S OBLIGATION. The respective obligations of
each party shall be subject to the fulfillment of all of the following
conditions precedent at or prior to the Closing Date:
a. No statute or regulation enacted which would prevent consummation
of this Agreement.
b. All governmental consents and approvals required to consummate
this Agreement have been obtained.
5.2 CONDITIONS TO OBLIGATIONS OF HERITAGE AND SELLING SHAREHOLDERS. The
obligations of Heritage and Selling Shareholders are subject to fulfillment of
all of the following conditions precedent at or prior to the Closing Date:
a. Representations and warranties made by BrewCo are true.
b. All obligations of BrewCo under this Agreement have been
performed.
c. The Employment Agreements, substantially in the form attached
hereto as Exhibit A, shall be executed by BrewCo.
d. The Continuity of Interest Agreement in substantially the form
attached hereto as Exhibit B shall be executed by BrewCo.
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e. The Call Option in substantially the form attached hereto as
Exhibit C shall be executed by BrewCo.
5.3 CONDITIONS TO OBLIGATIONS OF BREWCO. The obligations of BrewCo are
subject to the fulfillment of all of the following conditions precedent at or
prior to the Closing Date:
a. Representations and warranties made by Heritage and Selling
Shareholders are true.
b. All obligations of Heritage and Selling Shareholders under this
Agreement have been performed.
c. The Employment Agreements, substantially in the form attached
hereto as Exhibit A, shall be executed by Controlling Shareholders.
d. The Continuity of Interest Agreement in substantially the form
attached hereto as Exhibit B, shall be fully executed and shall be in full force
and effect.
ARTICLE VI
INDEMNIFICATION
6.1 HERITAGE AND CONTROLLING SHAREHOLDER INDEMNIFICATION COVENANTS. John
Stoner and Mark Mericle ("Controlling Shareholders") and Heritage shall
indemnify, save and keep BrewCo and its affiliates, successors and permitted
assigns (the "BrewCo Indemnitees"), harmless against and from all liability,
demands, claims, actions or causes of action, assessments, losses, fines,
penalties, costs, damages and expenses, including reasonable attorneys' fees,
disbursements and expenses (collectively, "Damages"), sustained or incurred by
any of the BrewCo Indemnitees as a result of, arising out of or by virtue of any
misrepresentation, breach of any warranty or representation, or non-fulfillment
of any agreement or covenant on the part of Heritage, whether contained in this
Agreement or any exhibit or schedule hereto or thereto or any written statement
or certificate furnished or to be furnished to BrewCo pursuant hereto or in any
closing document delivered by Heritage to BrewCo in connection herewith.
Controlling Shareholders shall not be liable for a claim of Damages (under this
Section 6.1) which is less than $50,000, nor shall Controlling Shareholders be
liable for a claim or claims of Damages to the extent such claim or claims
exceeds the Controlling Shareholders' value in their BrewCo Common Stock,
whether acquired pursuant to this Agreement or otherwise. Controlling
Shareholders' obligations under this Section 6.1, and any other liability
hereunder, shall terminate two years from the date hereof.
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6.2 SELLING SHAREHOLDER INDEMNIFICATION COVENANTS. Each Selling
Shareholder shall indemnify, save and keep the BrewCo Indemnitees, as defined in
Section 6.1, harmless against and from all Damages, as defined in Section 6.1,
sustained or incurred by any of the BrewCo Indemnitees as a result of any
warranty or representation, or non-fulfillment of any agreement or covenant on
the part of such Selling Shareholder, whether contained in this Agreement or any
exhibit or schedule hereto or thereto, or any written statement or certificate
furnished or to be furnished to BrewCo pursuant hereto or in any closing
documents delivered by such Selling Shareholder to BrewCo in connection
herewith. Each Selling Shareholder's liability under this Section 6.2, or
otherwise under this Agreement, shall terminate two years from the date hereof.
ARTICLE VII
MISCELLANEOUS
7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations,
warranties, covenants and agreements made by any party in this Agreement or
pursuant hereto shall survive the Agreement and Plan of Reorganization. All
claims made by BrewCo by virtue of any such representations, warranties,
covenants and agreements shall be made under, and subject to the limitations set
forth in, Article III hereof.
7.2 NOTICES. All notices required or permitted to be given hereunder shall
be in writing and shall be deemed given when delivered in person or sent by
confirmed facsimile, or when received if given by Federal Express or other
nationally recognized overnight courier service, or five (5) business days after
being deposited in the United States mail, postage prepaid, registered or
certified mail, addressed to the applicable party as follows:
BEVERAGE WORKS, INC. HERITAGE BREWING COMPANY, INC.
9800 Sepulveda Blvd. 571-C Crane Street
Suite 720 Lake Elsinore, CA 92530
Los Angeles, CA 90045
(310) 568-4077 (fax)
Notices to any Selling Shareholder shall sent to such address as set forth next
to such Selling Shareholder's name on the signature page herein.
7.3 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between the parties.
7.4 NON-WAIVER. Failure of a party to insist upon performance of
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terms, covenants or conditions shall not be construed as a subsequent waiver of
any such terms, covenants, conditions.
7.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all of the parties had signed the same
document. All counterparts shall be construed together and shall constitute one
agreement.
7.6 SEVERABILITY. If any term or provision hereof is illegal or invalid for
any reason whatsoever, such illegality or invalidity shall not affect the
validity or legality of the remainder of this Agreement.
7.7 GOVERNING LAW. The laws of the State of California shall govern the
validity of this Agreement and the construction of its terms.
7.8 BINDING EFFECT; BENEFIT. Except as otherwise provided in this
Agreement, every covenant, term, and provision of this Agreement shall be
binding upon and inure to the benefit of the parties and their respective heirs,
legatees, legal representatives, successors, transferees, and assigns.
7.9 ASSIGNABILITY. This Agreement shall not be assignable by either party
without prior written consent of other party.
IN WITNESS WHEREOF, the parties have executed this Agreement and Plan
of Reorganization on the date first above written.
BEVERAGE WORKS, INC.
By: /s/ FREDERIK G.M. RODENHUIS
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Frederik G.M. Rodenhuis
President
HERITAGE BREWING COMPANY, INC.
By: /s/ JOHN STONER
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John Stoner
President
SELLING SHAREHOLDERS:
Number of Heritage
Name Address Shares Owned
/s/ MARK B. MERICLE 82,508
- --------------------------- ----------------------- ---------------------
Mark B. Mericle
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/s/ JOHN G. STONER 115,512
- ----------------------------- --------------------- ---------------------
John G. Stoner
/s/ JACK STONER 30,000
- ----------------------------- --------------------- ---------------------
Jack Stoner
/s/ PATRICIA STONER
- ----------------------------- --------------------- ---------------------
Patricia Stoner
/s/ JOHN LANGHAS 38,000
- ----------------------------- --------------------- ---------------------
John Langhas
/s/ TERRI LANGHAS
- ----------------------------- --------------------- ---------------------
Terri Langhas
/s/ J. LELAND MOTHERSHEAD III 10,000
- ----------------------------- --------------------- ---------------------
J. Leland Mothershead III
/s/ JOHN L. MOTHERSHEAD IV 7,000
- ----------------------------- --------------------- ---------------------
John L. Mothershead IV
/s/ BENJAMIN HO 10,000
- ----------------------------- --------------------- ---------------------
Benjamin Ho
/s/ CHARLES NOFFLETT 5,000
- ----------------------------- --------------------- ---------------------
Charles Nofflett
/s/ CHARLES NOFFLETT 5,000
- ----------------------------- --------------------- ---------------------
Adam Nofflett
/s/ STEVEN LEWKOWITZ 5,000
- ----------------------------- --------------------- ---------------------
Steven Lewkowitz
- ----------------------------- --------------------- ---------------------
Hein Vinh Phan
/s/ DONALD LEA 5,000
- ----------------------------- --------------------- ---------------------
Donald Lea
/s/ FAY LEA
- ----------------------------- --------------------- ---------------------
Fay Lea
- ----------------------------- --------------------- ---------------------
Jeff S. Mericle
/s/ ANDREW S. MEYER 5,000
- ----------------------------- --------------------- ---------------------
Andrew S. Meyer
- ----------------------------- --------------------- ---------------------
Gordon J. Kuhlman
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/s/ GEORGE A. SEDIA 5,000
- ----------------------------- --------------------- ---------------------
George A. Sedia
/s/ ARTHUR R. CATHEY 5,000
- ----------------------------- --------------------- ---------------------
Arthur R. Cathey
/s/ DANIEL D. ALUSTIZA 5,000
- ----------------------------- --------------------- ---------------------
Daniel D. Alustiza
/s/ MARK WILLBURGER 4,000
- ----------------------------- --------------------- ---------------------
Mark Willburger
/s/ KATHRYN WILLBURGER
- ----------------------------- --------------------- ---------------------
Kathryn Willburger
- ----------------------------- --------------------- ---------------------
Edward D. Sybesma, Jr.;
APC Employees Pension Plan Trust
/s/ DAVID WALSER 31,000
- ----------------------------- --------------------- ---------------------
David Walser
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SCHEDULE A
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EXHIBIT B
CONTINUITY OF INTEREST AGREEMENT
BEVERAGE WORKS, INC. a California corporation ("BrewCo") and the
undersigned shareholders ("Controlling Shareholders") of HERITAGE BREWING
COMPANY, INC., a California corporation ("Heritage"), hereby enter into this
Agreement on November 8, 1995 for the purposes hereinafter set forth.
WHEREAS, BrewCo, Heritage and Heritage's Shareholders entered into an
Agreement and Plan of Reorganization dated as of November 8, 1995 (the "Plan of
Reorganization"); and
WHEREAS, the BrewCo, Controlling Shareholders and Heritage are willing
to consummate the Plan of Reorganization only if such transaction will qualify
as a tax free reorganization under Section 368 of the Internal Revenue Code of
1986, as amended (the "Code");
NOW, THEREFORE, THE PARTIES AGREE AS FOLLOWS:
1. The Controlling Shareholders represent and warrant that they have,
and as of the Closing Date will have, no present plan, intention or arrangement
to sell, transfer or otherwise dispose of the shares of BrewCo Common Stock to
be received in the Plan of Reorganization that would reduce former Heritage
shareholders' ownership of BrewCo Common Stock to a number of shares having a
value, as of the Closing Date, of less than fifty percent (50%) of the value of
all of the issued and outstanding capital stock of Heritage immediately prior to
the Closing Date.
2. The Controlling Shareholders represent that as of the date hereof
they own more than fifty percent (50%) of the outstanding shares of Heritage
Common Stock.
3. The Controlling Shareholders agree that prior to the Closing Date,
they will not sell, transfer or otherwise dispose of any Heritage Common Stock.
4. The Controlling Shareholders agree that, for a period of one year
after the Closing Date (the "Post-Closing Continuity Period"), they will not
sell, transfer or otherwise dispose of an aggregate number of shares of BrewCo
Common Stock having a value, as of the date of the Closing Date, of more than
fifty percent (50%) of the value of all of the issued and outstanding capital
stock of Heritage immediately prior to the Closing Date.
5. The Controlling Shareholders shall deliver written notice to BrewCo
within ten days after disposing of any shares of BrewCo
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Common Stock during the Post-Closing Continuity Period (as permitted by
paragraph 4), stating the number of shares disposed of and the manner of
disposition.
6. This Agreement shall be binding upon and shall be enforceable
against the successors and assigns of BrewCo.
7. This Agreement shall not be modified, amended, altered or
supplemented except by a written agreement executed by all of the parties
hereto.
8. In the event of the termination of the Plan of Reorganization, this
Agreement shall terminate.
9. This Agreement may be executed in two or more counterparts, each of
which together shall constitute one and the same document. This Agreement
constitutes the entire agreement among the Parties with respect to the subject
matter hereof. The terms used herein have the same meaning as defined in the
Plan of Reorganization unless otherwise stated.
IN WITNESS WHEREOF, the parties hereto have caused this Continuity of
Interest Agreement to be duly executed on the date first set forth above.
BEVERAGE WORKS, INC.
By: /s/ FREDERIK G.M. RODENHUIS
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Frederik G.M. Rodenhuis
President
CONTROLLING SHAREHOLDERS
By: /s/ JOHN G. STONER
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John G. Stoner
By: /s/ MARK B. MERICLE
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Mark B. Mericle
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