Washington | 2082 | 91-1141254 | ||
(State or other jurisdiction
of
incorporation or organization) |
(Primary Standard Industrial
Classification Code Number) |
(I.R.S. Employer
Identification Number) |
Frank C. Woodruff, Esq.
|
Mary Ann Frantz, Esq. | |
Erin Joyce Letey, Esq.
|
David G. Post, Esq. | |
Riddell Williams P.S
|
Miller Nash LLP | |
1001 Fourth Avenue
|
111 S.W. Fifth Avenue | |
Suite 4500
|
Suite 3400 | |
Seattle, Washington
98154-1192
|
Portland, Oregon 97204 | |
(206) 624-3600
|
(503) 224-5858 |
Large accelerated
filer
o
|
Accelerated filer o |
Non-accelerated
filer
o
(Do not check if a smaller reporting company) |
Smaller reporting company þ |
The information in this joint proxy statement/prospectus is not
complete and may be changed. Redhook may not sell its securities
pursuant to the proposed transaction until the registration
statement filed with the Securities and Exchange Commission is
effective. This joint proxy statement/prospectus is not an offer
to sell these securities and it is not soliciting an offer to
buy these securities in any state where the offer or sale is not
permitted.
|
Paul S. Shipman
|
Kurt R. Widmer | |
Chief Executive Officer
|
President and Chief Executive Officer | |
REDHOOK ALE BREWERY, INCORPORATED
|
WIDMER BROTHERS BREWING COMPANY |
1. | To elect seven directors to serve until the 2009 Annual Meeting of Shareholders or until their earlier retirement, resignation or removal; |
2. | To consider and vote upon a proposal approving the issuance of Redhook common stock pursuant to the Agreement and Plan of Merger dated as of November 13, 2007, as amended, by and between Redhook and Widmer, a copy of which is attached as Annex A to the accompanying joint proxy statement/prospectus; |
3. | To ratify the appointment of Moss Adams LLP as Redhooks independent registered public accounting firm for the fiscal year ending December 31, 2008; and | |
4. | To transact such other business as may properly come before the annual meeting or any adjournment or postponement thereof. |
1. | To consider and vote upon a proposal to approve the Agreement and Plan of Merger dated as of November 13, 2007, as amended, by and between Redhook Ale Brewery, Incorporated and Widmer, a copy of which is attached as Annex A to the accompanying joint proxy statement/prospectus, pursuant to which Widmer will merge with and into Redhook, and each holder of shares of common or preferred stock of Widmer will receive, in exchange for each share held, 2.1551 shares of Redhook common stock, as more fully described in the accompanying joint proxy statement/prospectus. |
2. | To transact such other business as may properly come before the special meeting or any adjournment or postponement thereof. |
103
123
139
140
141
142
II-3
14300 NE 145th Street, Suite 210
Woodinville, WA 98072
Attn.: Investor Relations
(425) 483-3232
i
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F-1
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E-1
EXHIBIT 2.3
EXHIBIT 5.1
EXHIBIT 8.1
EXHIBIT 10.1
EXHIBIT 10.2
EXHIBIT 10.3
EXHIBIT 10.4
EXHIBIT 10.5
EXHIBIT 23.1
EXHIBIT 23.2
EXHIBIT 99.8
iv
Table of Contents
Q1:
What is the merger?
A1:
Redhook and Widmer have entered into an Agreement and Plan of
Merger dated as of November 13, 2007, as amended, which we
refer to as the merger agreement. A copy of the merger agreement
is attached to this joint proxy statement/prospectus as
Annex A. The merger agreement contains the terms and
conditions of the proposed business combination of Redhook and
Widmer. Under the merger agreement, Widmer will merge with and
into Redhook, which transaction we refer to as the merger.
Q2:
What will Widmer shareholders receive in the merger?
A2:
In connection with the merger, each holder of shares of common
or preferred stock of Widmer will receive, in exchange for each
share held, 2.1551 shares of Redhook common stock. Redhook
shareholders will continue to own their existing shares of
Redhook common stock. The shares of Redhook common stock that
Widmer security holders will be entitled to receive pursuant to
the merger are expected to represent approximately 50% of the
outstanding shares of the combined company immediately following
the consummation of the merger. This percentage assumes that no
security holder of Widmer exercises statutory dissenters
rights in connection with the merger and that currently
outstanding options held by Redhook employees, officers,
directors, and former directors to acquire 689,140 shares
of Redhook common stock are not exercised prior to consummation
of the merger.
Q3:
Why are the two companies proposing to merge?
A3:
Redhook and Widmer believe that the merger is a natural
extension of a working relationship that has existed between the
two companies since 2003 and that the combined company will have
many advantages. For a discussion of Redhooks and
Widmers reasons for the merger, please see the section
entitled The Merger Reasons for the
Merger in this joint proxy statement/prospectus beginning
on page 36.
Q4:
Why am I receiving this joint proxy statement/prospectus?
A4:
You are receiving this joint proxy statement/prospectus because
you have been identified as a shareholder of either Redhook or
Widmer as of the applicable record date. Each holder of common
stock of Redhook or Widmer as of the applicable record date is
entitled to vote at such companys shareholder meeting.
Holders of preferred stock of Widmer are entitled to notice of
its shareholder meeting but are not entitled to vote at the
meeting. This document serves as a joint proxy statement for
both Redhook and Widmer, as a solicitation of proxies for the
shareholder meetings. This document also serves as a prospectus
of Redhook offering shares of Redhook common stock in exchange
for shares of Widmer common stock and preferred stock pursuant
to the terms of the merger agreement. This joint proxy
statement/prospectus contains important information about the
merger and the shareholder meetings of Redhook and Widmer, and
you should read it carefully.
Q5:
When do you expect the merger to be consummated?
A5:
Redhook and Widmer anticipate that the consummation of the
merger will occur early in the third quarter of 2008, but cannot
predict the exact timing. For more information, please see the
section entitled The Merger Agreement
Conditions to the Completion of the Merger on page 52
of this joint proxy statement/prospectus.
Q6:
What do I need to do now?
A6:
In order to determine how the merger will affect you, Redhook
and Widmer urge you to carefully read this joint proxy
statement/prospectus, including its annexes, as well as
Redhooks Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007, which
accompanies this joint proxy statement/
v
Table of Contents
prospectus, and the other documents filed by Redhook with the
Securities and Exchange Commission under the Exchange Act that
are incorporated by reference in this joint proxy
statement/prospectus.
You may provide your proxy instructions by completing and
signing the enclosed proxy and mailing it in the enclosed return
envelope. If you are a Redhook shareholder, you may also submit
your proxy by telephone in accordance with the instructions on
the Redhook proxy card. Please provide your proxy instructions
only once and as soon as possible so that your shares can be
voted at the annual meeting of Redhook shareholders or the
special meeting of Widmer shareholders, as applicable. If you
hold your shares in street name through a bank,
broker or other nominee, you must instruct your bank, broker or
other nominee as to how to vote your shares using the enclosed
voting instruction card. Telephone and Internet voting may be
available in accordance with the instructions on the voting
instruction card.
Q7:
What happens if I do not return a proxy card or otherwise
provide proxy instructions?
A7:
If you are a Redhook shareholder and you fail to return your
proxy card or otherwise provide proxy instructions, your shares
will not be counted for purposes of determining whether a quorum
is present at the Redhook annual meeting, but otherwise this
failure will have no effect on the vote on the proposal to
approve the issuance of Redhook common stock pursuant to the
merger agreement, which is based solely on the number of votes
cast.
If you are a Widmer shareholder, the failure to return your
proxy card will have the same effect as voting against the
approval of the merger agreement, and your shares will not be
counted for purposes of determining whether a quorum is present
at the Widmer special meeting.
Q8:
May I vote in person?
A8:
If you are a shareholder of Redhook and your shares of Redhook
common stock are registered directly in your name with
Redhooks transfer agent, you are considered to be the
shareholder of record with respect to those shares, and the
proxy materials and proxy card are being sent directly to you by
Redhook. If you are a Redhook shareholder of record, you may
attend the annual meeting of Redhook shareholders to be held on
[ ], 2008 and vote your shares in person. Even
if you plan to attend the Redhook annual meeting in person,
Redhook requests that you sign and return the enclosed proxy
card to ensure that your shares will be represented at the
Redhook annual meeting if you are unable to attend.
If your shares of Redhook common stock are held, not in your
name, but rather in a brokerage or bank account or by another
nominee, you are considered the beneficial owner of shares held
in street name, and the proxy materials are being
forwarded to you together with a voting instruction card by your
bank, broker or other nominee. As the beneficial owner, you are
also invited to attend the annual meeting of Redhook
shareholders. Because a beneficial owner is not the shareholder
of record, you may not vote these shares in person at the
Redhook annual meeting unless you obtain a legal proxy from the
broker, trustee or nominee that holds your shares, giving you
the right to vote the shares at the meeting.
If you are a shareholder of Widmer and your shares of Widmer
common stock or preferred stock are registered directly in your
name, you are considered to be the shareholder of record with
respect to those shares and the proxy materials are being sent
directly to you by Widmer. If you are a holder of record of
Widmer common stock, you may attend the special meeting of
Widmer shareholders to be held on [ ], 2008 and
vote your shares in person. Even if you plan to attend the
Widmer special meeting in person, Widmer requests that you sign
and return the enclosed proxy card to ensure that your shares
will be represented at the Widmer special meeting if you are
unable to attend.
Q9:
If my Redhook shares are held in street name by
my bank, broker or other nominee, will my bank, broker or other
nominee vote my shares for me?
A9:
Your broker will be able to vote your shares of Redhook common
stock on the proposal to approve the issuance of Redhook common
stock pursuant to the merger only if it receives instructions
from you. To make sure that your vote on this proposal is
counted, you should instruct your broker to vote your shares,
following the procedure provided by your broker.
vi
Table of Contents
Q10:
May I change my vote after I have submitted a proxy or
provided proxy instructions?
A10:
Redhook shareholders of record may change their vote at any time
before their proxy is voted at the Redhook annual meeting in one
of three ways. First, a shareholder of record of Redhook can
send a written notice to the Secretary of Redhook stating that
the shareholder would like to revoke the earlier proxy. Second,
a shareholder of record of Redhook can submit new proxy
instructions on a new proxy card. Third, a shareholder of record
of Redhook can attend the Redhook annual meeting and vote in
person. Attendance alone will not revoke a proxy. If your shares
of Redhook stock are held in street name and you
have instructed a bank, broker or other nominee to vote your
shares of Redhook common stock, you must follow directions
received from your broker to change those instructions.
Holders of record of Widmer common stock may change their vote
at any time before their proxy is voted at the Widmer special
meeting by delivering to the Secretary of Widmer a signed notice
of revocation or a later-dated signed proxy, or by attending the
Widmer special meeting and voting in person. Attendance at the
Widmer special meeting does not in itself constitute the
revocation of a proxy.
Q11:
Should I send in my stock certificates now?
A11:
No. If you are a Widmer shareholder, after the merger is
consummated, you will receive written instructions from the
exchange agent for exchanging your certificates representing
shares of Widmer capital stock for certificates representing
shares of Redhook common stock. You will receive a cash payment
for any fractional share.
Q12:
Who is paying for this proxy solicitation?
A12:
Redhook is paying the cost of soliciting proxies, including the
printing and filing of this joint proxy statement/prospectus,
the proxy card and any additional information furnished to
shareholders. Arrangements will also be made with brokerage
firms and other custodians, nominees and fiduciaries who are
record holders of Redhook common stock for the forwarding of
solicitation materials to the beneficial owners of Redhook
common stock. Redhook will reimburse these brokers, custodians,
nominees and fiduciaries for the reasonable out-of-pocket
expenses they incur in connection with the forwarding of
solicitation materials.
Q13:
Who can help answer my questions?
A13:
If you are a Redhook shareholder and would like additional
copies, without charge, of this joint proxy statement/prospectus
or if you have questions about the merger, including the
procedures for voting your shares, you should contact:
Redhook Ale Brewery, Incorporated
14300 NE 145th Street, Suite 210
Woodinville, WA
98072-6950
Tel:
(425) 483-3232
Attn: Investor Relations
Investor.Relations@Redhook.com
If you are a Widmer shareholder, and would like additional
copies, without charge, of this joint proxy statement/prospectus
or if you have questions about the merger, including the
procedures for voting your shares, you should contact:
Widmer Brothers Brewing Company
929 North Russell Street
Portland, OR 97227
Tel:
(503) 281-2437
Attn: Investor Relations
vii
Table of Contents
1
Table of Contents
929 North Russell Street
Portland, OR 97227
(503) 331-7224
2
Table of Contents
The combined company will be a natural extension of a working
relationship that has existed between the two companies since
2003.
The merger will yield efficiencies, beyond those that have
already been achieved by the existing relationship, in utilizing
the two companies breweries and a national sales force, as
well as by reducing duplicate functions.
The national sales force of the combined company will support
further promotion of the products of Widmers partners,
Kona Brewery LLC, which brews Kona malt beverage products, and
Fulton Street Brewery, LLC, which brews Goose Island malt
beverage products.
The combined company will have greater access to capital markets
driven by increased size and expected growth rates.
The higher market capitalization and anticipated greater average
trading volume of the combined company should generally enhance
the markets perception of Redhook stock and possibly lead
to additional coverage by analysts.
The merger could provide an opportunity to utilize
Redhooks tax net operating loss carryforwards.
The merger will reduce the risk that the Redhook breweries will
have excess brewing capacity.
The merger will facilitate implementation of the national sales
strategy, giving the combined organization the resources to
address expanded market opportunities with the prospect for
achieving associated revenue growth.
Widmer brands will have access to expanded brewing capacity
through Redhooks production facilities, which will
eliminate the need for cumbersome contract brewing arrangements
between Widmer and Redhook.
Widmer brands will have access to Redhooks sales force in
the midwest and eastern U.S., which will offer an avenue to
achieving national brand status more quickly.
The receipt by Widmer shareholders of shares in a publicly
traded company in exchange for their Widmer shares will offer
the potential for liquidity not available to shareholders in a
privately held company.
The merger transaction implicitly treats the two companies as
approximately equal in value.
3
Table of Contents
Widmers shareholders will have the opportunity to
participate in any future growth and appreciation in market
value of the combined company.
Several members of current management at Widmer and Craft Brands
will have significant roles in management of the combined
organization.
4
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5
Table of Contents
Terry E. Michaelson
David J. Mickelson
Jay T. Caldwell
Mark D. Moreland
Martin J. Wall, IV
Timothy G. McFall
V. Sebastian Pastore
6
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7
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Obtaining required approvals and satisfying closing conditions
may delay or prevent completion of the proposed transaction.
If the conditions to the merger are not met or waived, the
merger will not occur.
Some of Redhooks and Widmers officers and directors
have conflicts of interest that may influence them to support or
approve the merger without regard to your interests.
The number of shares of Redhook common stock to be received by
Widmer shareholders in connection with the merger is not
adjustable based on the market price of Redhook common stock, so
the merger consideration at the closing may have a greater or
lesser value than at the time the merger agreement was signed.
Failure to complete the merger could harm Redhooks or
Widmers stock value and future business and financial
results.
The market price of the combined companys common stock may
decline as a result of the merger.
Redhook and Widmer shareholders may not realize a benefit from
the merger commensurate with the ownership dilution they will
experience in connection with the merger.
8
Table of Contents
Because the lack of a public market for the Widmer shares makes
it difficult to evaluate the fairness of the transaction, the
consideration to be paid by Redhook in the merger may
significantly exceed the fair market value of the Widmer shares.
The combined company will be dependent upon the continuing
relationship with A-B.
The terms of the amended distribution agreement with A-B may not
be favorable to the combined company.
Redhooks agreements with A-B contain limitations on
Redhooks ability to engage in or reject certain
transactions, including acquisitions and changes of control.
A-B will have significant control and influence over the
combined company.
The combined company may be unable to successfully integrate its
operations and realize all of the anticipated benefits of the
merger.
The combined company will be dependent upon accounting, finance
and information technology staff that may not possess experience
in a publicly traded corporate environment and may be unfamiliar
with the reporting and compliance requirements of a publicly
traded company in general or of Redhook specifically.
Management of the combined company intends to utilize financial,
accounting and reporting systems that have not previously been
used to support public company reporting requirements and have
not yet been reviewed or tested to insure compliance with
Sarbanes-Oxley Section 404 requirements.
If the combined company fails to maintain proper and effective
internal controls, its ability to produce accurate financial
statements could be impaired, which could adversely affect its
operating results, its ability to operate its business and
investors views of the combined company.
Changes in financial accounting standards or practices may cause
adverse, unexpected financial reporting fluctuations and affect
reported results of operations.
The integration of Widmer and Redhook may result in significant
expenses and accounting charges that adversely affect the
combined companys operating results.
The combined company will be capitalized partially with
long-term debt, which will be a use of its cash flow.
The combined company will be dependent upon the services of its
key personnel.
The combined company will be dependent on distributors for the
sale of its products.
Increased competition could adversely affect sales and results
of operations.
Future price promotions to generate demand for Redhook and
Widmer products may be unsuccessful.
Due to the concentration of sales in the Pacific Northwest and
California, the results of operations and financial condition of
the combined company may be subject to fluctuations in regional
economic conditions.
The craft beer business is seasonal in nature, and the combined
company is likely to experience fluctuations in results of
operations and financial condition.
The gross margins of the combined company may fluctuate while
expenses remain constant.
9
Table of Contents
Operating breweries at production levels substantially below
their current and maximum designed capacities could negatively
impact overall profit margins.
Changes in consumer preferences or public attitudes about the
combined companys products could reduce demand.
The combined company will be subject to governmental regulations
affecting its breweries and pubs; the costs of complying with
governmental regulations, or the combined companys failure
to comply with such regulations, could affect its financial
condition and results of operations.
An increase in excise taxes could adversely affect the combined
companys financial condition and results of operations.
Changes in state laws regarding distribution arrangements may
adversely impact operations of the combined company.
The combined company may experience material losses in excess of
insurance coverage.
Loss of income tax benefits could negatively impact results of
operations.
The combined company may experience a shortage in kegs necessary
to distribute draft beer.
The combined companys key raw materials may become
significantly more costly and adequate supplies may be difficult
to secure.
The combined company will be subject to the risks of litigation.
The combined companys stock price may be volatile
following the merger.
The expiration of
lock-up
agreements entered into with certain Widmer shareholders in
connection with the merger could cause the market price of the
combined companys common stock to decline.
The combined company does not anticipate paying cash dividends
in the foreseeable future and accordingly, shareholders must
rely on stock appreciation for any return on their investment in
the combined company.
The combined company may require additional capital in the
future to finance construction or expansion of production
facilities, and financing may not be available on acceptable
terms, if at all.
10
Table of Contents
11
Table of Contents
Year Ended December 31,
2007
2006
2005
2004
2003
$
41,470
$
35,714
$
31,099
$
33,372
$
38,715
(1,330
)
603
(837
)
(850
)
(1,676
)
(939
)
516
(1,200
)
(1,255
)
(1,839
)
$
(0.11
)
$
0.06
$
(0.15
)
$
(0.18
)
$
(0.30
)
$
(0.11
)
$
0.06
$
(0.15
)
$
(0.18
)
$
(0.30
)
$
2,050
$
3,987
$
2,227
$
2,210
$
1,407
316,900
271,600
225,300
216,400
228,800
$
5,527
$
9,435
$
6,436
$
5,590
$
6,123
5,714
8,310
5,232
3,661
4,511
71,390
73,841
72,578
74,128
77,131
47
4,786
5,211
5,625
6,075
16,233
$
60,080
$
60,692
$
60,027
$
61,161
$
47,916
8,354
8,281
8,223
8,188
6,226
$
$
$
$
$
$
7.19
$
7.33
$
7.30
$
7.47
$
7.70
(1)
Includes, but is not limited to, shipments of beer to Craft
Brands and beer brewed and shipped under a contract brewing
arrangement for Widmer. The consolidated operating data of
Widmer on page 14 also includes these shipments. These
shipments are eliminated in the combined condensed operating
data on page 16.
(2)
Includes bank debt and capital lease obligations.
(3)
Book value per common share is computed by dividing common
stockholders equity by the total number of shares of
common outstanding at the end of the period.
12
Table of Contents
Year Ended December 31,
2007
2006
2005
2004
2003
(In thousands)
$
(939
)
$
516
$
(1,200
)
$
(1,255
)
$
(1,839
)
(176
)
125
218
331
30
302
346
271
190
191
2,863
3,000
2,938
2,944
3,025
$
2,050
$
3,987
$
2,227
$
2,210
$
1,407
13
Table of Contents
Year Ended December 31,
2007
2006
2005
2004
2003
Restated
Restated
$
75,227
$
60,375
$
51,824
$
41,811
$
26,432
3,619
6,684
7,900
5,517
2,236
1
2,900
3,463
1,912
855
$
0.00
$
0.75
$
0.89
$
0.49
$
0.23
$
0.00
$
0.75
$
0.89
$
0.49
$
0.22
$
3,268
$
6,254
$
7,271
$
5,576
$
3,880
439,900
408,400
364,400
377,200
181,700
$
1,421
$
300
$
1,947
$
2,236
$
910
509
1,056
(38
)
(717
)
(289
)
64,794
46,552
37,126
35,835
33,482
22,395
7,597
3,417
7,455
8,532
150
150
150
18,250
$
23,989
$
23,988
$
21,118
$
17,686
$
(571
)
3,872
3,872
3,872
3,872
3,687
$
$
$
0.03
$
$
$
6.20
$
6.20
$
5.45
$
4.57
$
(0.15
)
14
Table of Contents
(1)
Includes, but is not limited to, shipments of Redhook beer to
Craft Brands and beer brewed and shipped under a contract
brewing arrangement by Redhook. The operating data of Redhook on
page 12 also includes these shipments. These shipments are
eliminated in the combined condensed operating data on
page 16.
(2)
Includes notes payable and capital lease obligations.
(3)
Book value per common share is computed by dividing common
stockholders equity by the total number of common share
equivalents outstanding at the end of the period.
Year Ended December 31,
2007
2006
2005
2004
2003
(In thousands)
$
1
$
2,900
$
3,463
$
1,912
$
855
383
1,268
1,599
1,412
689
707
178
433
553
669
2,177
1,909
1,776
1,701
1,668
$
3,268
$
6,254
$
7,271
$
5,576
$
3,880
15
Table of Contents
COMBINED CONDENSED FINANCIAL DATA
Year Ended
December 31,
2007
$
100,513
(1,383
)
(1,477
)
$
(0.09
)
$
(0.09
)
552,500
(1)
Book value per common share is computed by dividing common
stockholders equity by the total number of common shares
outstanding at the end of the period.
16
Table of Contents
As of and for
the Year Ended
December 31, 2007
$
(0.11
)
$
(0.11
)
$
7.19
$
0.00
$
0.00
$
6.20
$
(0.09
)
$
(0.09
)
$
6.75
$
(0.04
)
$
(0.04
)
$
3.13
17
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High
Low
$
7.80
$
5.00
$
8.08
$
6.17
$
8.21
$
5.68
$
7.11
$
5.84
$
3.74
$
3.10
$
4.00
$
3.43
$
4.18
$
3.31
$
5.31
$
3.76
$
4.20
$
3.05
$
3.75
$
2.86
$
3.34
$
2.75
$
3.42
$
2.90
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failure to have pursued other beneficial opportunities as a
result of the focus of management on the merger, without
realizing any of the anticipated benefits of completing the
transaction;
a decline in the price of Redhook stock;
the payment of costs related to the merger, such as legal and
accounting fees which Redhook and Widmer estimate will total
approximately $1.1 million and $2.6 million,
respectively, even if the merger is not completed;
sharing of trade secrets; and
modifications to existing financial and production systems that
have been implemented in anticipation of the completion of the
merger that may not add value, and may even hinder, the
operations of Redhook and Widmer as separate companies.
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the combined company does not achieve the perceived benefits of
the merger as rapidly or to the extent anticipated by financial
or industry analysts;
the effect of the merger on the combined companys business
and prospects is not consistent with the expectations of
financial or industry analysts; or
investors react negatively to the effect of the merger on the
combined companys business and prospects.
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issuance of equity securities;
acquisition or sale of assets or stock;
amendment of the combined companys articles of
incorporation or bylaws;
grant of board representation rights;
entering into certain transactions with affiliates;
distributing the combined companys products in the
U.S. other than through A-B, Craft Brands or as provided in
the amended distribution agreement with A-B;
distributing or licensing the production of any malt beverage
product in any country outside of the U.S.; or
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voluntarily delisting or terminating the combined companys
listing on the Nasdaq Stock Market.
implementing operational, financial and management controls,
reporting systems and procedures;
coordinating geographically disparate organizations, systems and
facilities;
integrating personnel with diverse business backgrounds;
integrating distinct corporate cultures;
consolidating corporate and administrative functions;
consolidating operations;
retaining key employees; and
preserving Redhooks and Widmers collaboration,
distribution and other important relationships.
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the entry into, or termination of, key agreements;
the loss of key employees;
the introduction of new products by competitors of the combined
company;
changes in estimates or recommendations by securities analysts,
if any, who cover the combined companys common stock;
future sales of the combined companys common
stock; and
period-to-period fluctuations in the combined companys
financial results.
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those discussed and identified in public filings with the
Securities and Exchange Commission made by Redhook;
the vote of Redhook shareholders on the issuance of Redhook
common stock pursuant to the merger agreement at the Redhook
annual meeting;
the vote of Widmer shareholders on the on the merger at the
Widmer special meeting;
the timing of the completion of the merger;
the combined companys ability to integrate both businesses
and to achieve expected synergies, operating efficiencies and
other benefits; and
the expenses and other liabilities incurred or accrued between
the signing of the merger agreement and the closing of the
merger.
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The merger of Redhook and Widmer is a natural extension of an
existing working relationship. In 2003, Redhook licensed the
right to produce, market and sell
Widmer Hefeweizen
in 27
midwest and eastern states. In 2004, the Craft Brands joint
venture was created to market and sell the products of both
companies in the western United States. The merger will permit
the combined company to extend these combined sales and
marketing efforts nationwide for all of their products. The
parties believe that this focused marketing will improve
visibility with wholesalers and will permit the wholesalers to
compete more effectively for on-premises retail exposure and
retail shelf placement for off-premises distribution.
While some economies of scale have been achieved through the
existing contractual relationships, the companies believe
additional efficiencies will be realized as a result of
utilization of all three breweries, the combined nationwide
sales force, and reduction of duplicate functions.
The nationwide sales force will enhance existing sales
relationships with Widmers partners, Kona Brewery LLC,
which brews Kona malt beverage products, and Fulton Street
Brewery, LLC, which brews Goose Island malt beverage products.
The combined company will have greater access to capital markets.
Acceleration of the utilization of Redhooks tax NOL
carryforwards and other tax credits will improve cash flow.
The merger should enhance the markets perception of the
combined companys stock. The larger market capitalization
and anticipated greater average trading volume of the combined
company might help meet the threshold for better analyst
coverage. Elimination of the contractual relationships with
Widmer will make the stock easier for analysts and investors to
understand.
The combined company will have Redhooks significant tax
NOL carryforwards and will quickly achieve a larger size, both
of which items could enhance the value of the stock.
The board was concerned that, if the companies did not combine
and the contractual relationships with Widmer ended, Redhook
would be faced with over-capacity in its Woodinville,
Washington, and Portsmouth, New Hampshire breweries.
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The merger will facilitate implementation of the national sales
strategy developed by Widmer management in consultation with
Redhook and Craft Brands, giving the combined organization the
resources to address expanded market opportunities for the broad
portfolio of beer styles and brands offered by the two
companies, with the prospect for achieving associated revenue
growth.
Widmer brands will have access to expanded brewing capacity
through Redhooks Washington state and New Hampshire
production facilities and to Redhooks sales force in the
east and midwest, offering an avenue to achieving national brand
status more quickly through efficient, less expensive access to
eastern markets, as well as eliminating the need for cumbersome
contract brewing arrangements between Widmer and Redhook.
The receipt by Widmer shareholders of shares in a publicly
traded company in exchange for their Widmer shares will offer
the potential for liquidity not available to shareholders in a
privately-held company.
The merger transaction implicitly treats the two companies as
approximately equal in value.
Widmers shareholders will have the opportunity to
participate any future growth and appreciation in market value
of the combined company.
Several members of current management at Widmer and Craft Brands
will have significant roles in management of the combined
organization.
The integration of the two companies may present substantial
difficulties in bringing together different organizational
cultures and styles.
Significant expenditures may be required to integrate the
financial reporting and information technology functions of the
two companies and to enable the combined entity to achieve
continued full and timely compliance with Exchange Act reporting
requirements.
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The merger transaction will entail severance and other
restructuring costs estimated to total approximately
$5.7 million in 2008.
The merger agreement imposes restrictions on the operation of
Widmers business pending completion of the merger without
the prior consent of Redhook.
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reviewed the financial terms and conditions of the merger
agreement;
reviewed financial and other information with regard to Widmer,
including Widmers audited consolidated financial
statements for the fiscal years ended December 31, 2001
through December 31, 2006, Widmers unaudited
consolidated financial statements for the six month periods
ended June 30, 2005 and 2006, the audited financial
statements for Craft Brands for the fiscal years ended
December 31, 2005 and 2006, and other financial information
and projections prepared by Widmer;
reviewed publicly available financial information and other data
with respect to Redhook, including its Annual Report on
Form 10-K
for the year ended December 31, 2006, its Quarterly Reports
on
Form 10-Q
for the quarters ended March 31, 2007 and June 30,
2007, and other such publicly available financial information;
conducted an
on-site
visit and held discussions with the senior management of Widmer
regarding, among other items, the historic performance, current
situation, and future prospects for Widmer;
conducted an
on-site
visit and held discussions with the senior management of Redhook
regarding the selection process conducted with regard to the
acquisition, Redhooks decision to form a business
combination with Widmer, and Redhooks outlook for the
future prospects of Widmer;
reviewed an appraisal of Widmer prepared by an independent third
party appraiser as of May 4, 2007;
reviewed a proposal dated as of August 15, 2007 from a
potential lender to provide credit facilities to Redhook to
finance the potential acquisition of Widmer and to complete a
facility expansion ;
reviewed financial and operating information with respect to
certain publicly-traded companies in the brewery industry which
Houlihan Smith believed to be generally comparable to the
business of Redhook;
reviewed the financial terms of certain recent business
combinations in the brewery industry specifically and in other
industries generally; and
performed other financial studies, analyses and investigations,
and considered such other information, as it deemed necessary or
appropriate.
A market valuation approach, using the guideline public company
and comparable transactions methods; and
An income valuation approach, applying the discounted cash flow
method.
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visited Widmers facilities in Portland, Oregon and met
with its management to discuss the business operations of Widmer
and Craft Brands Alliance LLC;
reviewed various financial reports prepared by Widmer
management, including Widmers audited financial statements
from 2002 through 2005, and draft audited statements for 2006,
unaudited financial statements for Widmer for the two months
ending February 28, 2007, financial reports for Craft
Brands for the fiscal years ended December 31, 2004 through
2006, and other financial information and projections prepared
by Widmer;
reviewed Widmers Articles of Incorporation, with
amendments, Widmers restated Bylaws, and the Operating
Agreement of Craft Brands;
reviewed material agreements of Widmer and Craft Brands,
including the Master Distributor Agreement between Widmer
Brothers Brewing Company and Anheuser-Busch, Incorporated; dated
July 1, 2004; and the Supply, Distribution, and Licensing
Agreement by and between Craft Brands Alliance LLC and Widmer
Brothers Brewing Company, dated July 1, 2004;
reviewed certain minutes of the Widmer board of directors;
reviewed certain property appraisals relating to Widmer property;
researched and reviewed certain market pricing
information; and
performed such other analyses and review as CAA deemed
appropriate.
a precedent transaction analysis, which looked at other
transactions of domestic craft brewing companies where control
ownership changed hands;
a comparable public company analysis, which involved review of
the stock price, financial information, and implied valuation
ratios of certain publicly-traded companies operating in the
domestic craft brewing industry; .
a future projection analysis of Widmers projected
financial results for 2007 and 2008;
a valuation of Widmer on a going-concern basis; and
a valuation of Widmer on a net asset value basis.
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a certificate representing the number of whole shares of Redhook
common stock that such holder has the right to receive pursuant
to the provisions of the merger agreement; and
cash in lieu of any fractional share of Redhook common stock.
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a citizen or resident of the United States;
a corporation created or organized in or under the laws of the
United States, or any political subdivision thereof (including
the District of Columbia);
an estate the income of which is subject to U.S. federal
income taxation regardless of its source;
a trust if either a court within the United States is able to
exercise primary supervision over the administration of such
trust and one or more U.S. persons have the authority to
control all substantial decisions of such trust, or the trust
has a valid election in effect to be treated as a
U.S. person for U.S. federal income tax
purposes; and
any other person or entity that is treated for U.S. federal
income tax purposes as if it were one of the foregoing.
dealers, brokers, and traders in securities;
non-U.S. persons;
tax-exempt entities;
financial institutions, regulated investment companies, real
estate investment trusts, or insurance companies;
partnerships, limited liability companies that are not treated
as corporations for U.S. federal income tax purposes,
subchapter S corporations, and other pass-through entities
and investors in such entities;
holders who are subject to the alternative minimum tax
provisions of the Code;
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holders who acquired their shares in connection with stock
option or stock purchase plans or in other compensatory
transactions;
holders who hold shares that constitute small business stock
within the meaning of Section 1202 of the Code;
holders with a functional currency other than the
U.S. dollar;
holders who hold their shares as part of an integrated
investment such as a hedge or as part of a hedging, straddle, or
other risk reduction strategy; or
holders who do not hold their shares as capital assets within
the meaning of Section 1221 of the Code (generally,
property held for investment will be a capital asset).
the tax consequences of the merger under U.S. federal
non-income tax laws or under state, local, or foreign tax laws;
the tax consequences of transactions effectuated before, after,
or at the same time as the merger, whether or not they are in
connection with the merger, including, without limitation,
transactions in which Widmer shares are acquired or Redhook
shares are disposed of;
the tax consequences of the receipt of Redhook shares other than
in exchange for Widmer shares;
the tax consequences of the ownership or disposition of Redhook
shares acquired in the merger; or
the tax implications of a failure of the merger to qualify as a
reorganization within the meaning of Section 368(a) of the
Code.
Redhook, Widmer and the Redhook shareholders will not recognize
any gain or loss solely as a result of the merger.
Shareholders of Widmer will not recognize any gain or loss upon
the receipt of solely Redhook common stock for their Widmer
common or preferred stock, other than with respect to cash
received in lieu of fractional shares of Redhook common stock.
The aggregate tax basis of the shares of Redhook common stock
received by a Widmer shareholder in the merger (including any
fractional share deemed received, as described below) will be
equal to the aggregate tax basis of the shares of Widmer common
and preferred stock surrendered in exchange therefor.
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The holding period of the shares of Redhook common stock
received by a Widmer shareholder in the merger will include the
holding period of the shares of Widmer common and preferred
stock surrendered in exchange therefor.
Generally, cash payments received by Widmer shareholders in lieu
of fractional shares of Redhook common stock will be treated as
if such fractional shares were issued in the merger and then
sold. A shareholder of Widmer who receives a cash payment in
lieu of a fractional share will recognize gain or loss equal to
the difference, if any, between the shareholders basis in
the fractional share and the amount of cash received. The gain
or loss will be a capital gain or loss and will be long term
capital gain or loss if the Widmer common or preferred stock is
held by the shareholder as a capital asset at the effective time
of the merger and the shareholders holding period for his,
her, or its Widmer common or preferred stock is more than one
year.
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Each outstanding share of Widmer common stock that has not
exercised dissenters rights will be canceled and converted
into, and represent the right to receive, 2.1551 shares of
Redhook common stock.
Each outstanding share of Widmer Series D preferred stock
will be canceled and converted into, and represent the right to
receive, 2.1551 shares of Redhook common stock.
Each share of Widmer common stock that has exercised
dissenters rights will be converted into the right to
receive payment from CBAI in accordance with the OBCA.
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Terry E. Michaelson
David J. Mickelson
Jay T. Caldwell
Mark D. Moreland
Timothy G. McFall
V. Sebastian Pastore
Martin J. Wall, IV
Industry Relations and Assistant Secretary
Robert P. Widmer
Mary Ann Frantz
The registration statement on
Form S-4,
of which this joint proxy statement/prospectus is a part, must
have become effective in accordance with the Securities Act and
must not be subject to any stop order or proceeding, or any
proceeding threatened by the Securities and Exchange Commission,
seeking a stop order.
The issuance of shares of Redhook common stock in connection
with the merger must have been duly approved by the affirmative
vote of a majority of the total votes cast on the proposal.
The shares of Redhook common stock to be issued in connection
with the merger must have been approved for listing on the
Nasdaq Stock Market.
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No statute, rule, or regulation enacted or promulgated, nor any
action, suit, or proceeding pending or threatened before any
court or quasi judicial or administrative agency of any federal,
state, local, or foreign jurisdiction or before any arbitrator
wherein an unfavorable injunction, judgment, order, decree,
stipulation, ruling, or charge would: (A) prevent
consummation of the merger, or any other transaction or
agreement contemplated by the merger agreement; or
(B) cause the merger, or any other transaction or agreement
contemplated by the merger agreement, to be rescinded following
consummation (and no such judgment, order, decree, stipulation,
injunction, ruling or charge shall be in effect).
Employment agreements between Redhook and the following
individuals must have been duly executed and delivered by the
parties thereto: Kurt Widmer, Robert Widmer, Terry Michaelson,
David Mickelson, Timothy McFall, Martin Wall, and Sebastian
Pastore.
Widmers shareholders must have duly approved the merger.
All representations and warranties of the other party in the
merger agreement must be true and correct in all material
respects as of the closing date of the merger with the same
force and effect as if made on that date, except to the extent
such representations and warranties are expressly made only as
of an earlier date, in which case as of such earlier date.
The other party to the merger agreement must have given all
notices, made all filings and obtained all authorizations,
consents, and approvals required by the merger agreement.
The other party must have given all notices, made all filings,
and obtained all authorizations, consents, and approvals that
relate to the regulation of alcoholic beverages and that are
required by any governmental authority to be given, made, or
obtained by that other party in order to consummate the merger.
The other partys board of directors must have duly
approved the merger.
The other party must have delivered a certificate executed by
its Chief Executive Officer and Secretary on behalf of that
party stating that certain conditions specified in the merger
agreement have been satisfied in all respects.
The other party must have performed and complied in all material
respects with its covenants and obligations under the merger
agreement.
The total number of Widmer shares held by Widmer shareholders
who have exercised dissenters rights must be less than 5%
of the outstanding Widmer shares.
Widmer must have provided Redhook with certified copies of
resolutions of Widmers board of directors and shareholders
authorizing the execution and delivery of the merger agreement
and the consummation of the merger.
There must not have been any statute, rule, or regulation
enacted or promulgated, nor any action, suit, or proceeding
pending or threatened before any court or quasi judicial or
administrative agency of any federal, state, local, or foreign
jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, stipulation, ruling, or
charge would adversely affect Redhooks right to own its
assets and to operate its businesses (and no such injunction,
judgment, order, decree, stipulation, ruling, or charge must be
in effect).
Redhook must have received confirmation that any title policies
for Widmer real property that Redhook has requested will be
issued.
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Non-competition and non-solicitation agreements between Redhook
and Kurt Widmer and Robert Widmer must have been duly executed
and delivered to Redhook. The terms of these non-competition and
non-solicitation agreements are summarized under
Agreements Related to the Merger below.
Shareholder
lock-up
agreements between Redhook and each of the following Widmer
security holders must have been duly executed and delivered to
Redhook: Kurt Widmer, Robert Widmer, Ann Widmer, Barbara Widmer,
Timothy Boyle and Kristen Maier-Lenz. The terms of these
shareholder
lock-up
agreements are summarized under Agreements Related to the
Merger below.
Redhook must have received satisfactory evidence from A-B of
A-Bs waiver of its rights under the two Master Distributor
Agreements between A-B and Widmer dated June 6, 2006, and
July 1, 2004, respectively, to terminate those agreements
as a result of consummation of the merger.
Widmer must have entered into long-term leases for certain
parcels of real property.
Redhook must have received satisfactory evidence from Widmer
that Goose Holdings, Inc., and Fulton Street Brewery, LLC, have
each consented to the merger and have agreed to enter into an
amended operating agreement for Fulton Street Brewery, LLC after
the closing date of the merger.
Redhook must have received an opinion letter dated as of the
closing date from Miller Nash LLP, corporate counsel for Widmer,
regarding certain corporate and other matters in connection with
the merger.
Widmer must have delivered to Redhook: (i) a certificate of
existence of Widmer issued by the Oregon Secretary of State;
(ii) a certified copy of Widmers articles of
incorporation and bylaws; and (iii) a tax certification in
form and substance reasonably satisfactory to Redhook.
All actions to be taken by Widmer in connection with
consummation of the merger and all certificates, opinions,
instruments, and other documents required to effect the merger
must be reasonably satisfactory in form and substance to Redhook.
Redhook and Paul Shipman must have entered into a consulting
agreement. The terms of this consulting agreement are summarized
under Agreements Related to the Merger below.
Paul Shipman must have tendered his resignation from all officer
positions with Redhook as of the effective date of the merger.
Paul Shipman and two of Redhooks independent directors
must have tendered their resignations as directors of Redhook as
of the effective date of the merger.
Widmer must have received an opinion letter from Riddell
Williams P.S., corporate counsel for Redhook, regarding certain
corporate and other matters in connection with the merger.
Redhook must have delivered to Widmer a certificate of existence
of Redhook issued by the Washington Secretary of State.
All actions to be taken by Redhook in connection with
consummation of the merger and all certificates, opinions,
instruments, and other documents required to effect the merger
must be reasonably satisfactory in form and substance to Widmer.
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institute any new methods of operation, purchase, sale, lease,
management, or accounting (except as may be required under
GAAP), or engage in any transaction or activity other than in
the ordinary course of business consistent with past practice;
amend its articles of incorporation or bylaws;
purchase, issue, sell, transfer, pledge, dispose of, grant any
option in or encumber any shares of its capital stock or other
securities;
declare, set aside or pay any dividend or other distribution
payable in cash, stock or property with respect to any shares of
its capital stock or other securities;
split, combine or reclassify any shares of its capital stock or
other securities;
redeem, purchase or otherwise acquire directly or indirectly any
shares of its capital stock or other securities;
purchase or otherwise invest in any securities issued by any
entity;
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organize any subsidiary or acquire any capital stock or other
equity securities, or equity or ownership interest in the
business of any other entity;
modify, amend or terminate any of its material contracts, waive,
release or assign any material rights or claims thereunder, or
fail to continue to perform its obligations thereunder;
other than in the ordinary course of business consistent with
past practice:
incur or assume any indebtedness;
modify the terms of any indebtedness or other liability;
assume, guarantee, endorse or otherwise become liable or
responsible for the obligations of any other person or entity;
make any loans, advances, or capital contributions to, or
investments in, any other person or entity;
enter into any material contract; or
dispose of any material intellectual property or fail to perform
any acts which permit to lapse any rights to any material
intellectual property;
dispose of any assets (other than inventory) with a value in
excess of $100,000;
incur or create any encumbrance on any assets which,
collectively, have a value in excess of $100,000 in the
aggregate;
fail to maintain its assets in good working order in the
ordinary course of business;
purchase or lease assets other than in the ordinary course of
business consistent with past practice and for fair
consideration;
adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization;
take any action:
that would or is reasonably likely to result in any of the
conditions to the closing (summarized above) not being satisfied;
that would make any representation or warranty of the party
inaccurate in any material respect at the closing date;
that would result in a breach of the merger agreement in any
material respect;
or that would materially impair the partys ability to
consummate the merger or materially delay such consummation;
adopt or amend any employee benefit plan, or enter into or make
any change in the compensation payable or to become payable to
any of its officers or directors, or any other employees of the
party, except in the ordinary course of business consistent with
past practice or as required by applicable law;
enter into or amend any contract with any of its officers or
directors;
enter into or make any loans to any of its officers, directors,
employees, affiliates, agents or consultants or make any change
in its existing borrowing or lending arrangements for or on
behalf of any of such persons;
enter into any settlement, conciliation, or similar agreement,
the performance of which will involve payment or receipt of
consideration in excess of $25,000 or place restrictions on the
conduct of its business;
fail to maintain or permit to lapse or expire any professional
license or registration required for the conduct of its business
or its performance of any material contract;
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change, modify or make any new tax elections; or
enter into any agreement, contract, or arrangement to do any act
referred to above, or authorize, recommend, propose, or announce
an intention to do any of those acts.
changes resulting from developments or occurrences relating to
or affecting the United States economy in general or the craft
brewing industry in general; and
changes resulting from actions taken by the parties prior to the
closing that are in furtherance of the merger but that have an
effect on the business of a party, including any disruptions to
the business of a party as a result of the execution of the
merger agreement, the announcement by the parties of the
proposed merger, or the consummation of the merger.
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The parties may terminate the merger agreement by mutual written
consent.
Either party may terminate the merger agreement by giving
written notice to the other party if any of the following are
true:
The other party has breached a covenant contained in the merger
agreement in any material respect, the terminating party has
notified the other party of the breach, and the breach has
continued without cure for a period of 10 days after the
notice of breach.
There is an applicable law that makes consummation of any
transaction contemplated by the merger illegal or otherwise
prohibited, or any final judgment, injunction, order, or decree
permanently enjoining any of the parties from consummating such
transaction is entered.
The closing has not occurred on or before August 1, 2008,
and the terminating party is not in default of any of its
obligations under the merger agreement.
Either party may terminate the agreement if it is notified by
A-B that A-B will not consent to the merger.
corporate organization and power and similar corporate matters;
capital structure;
authority to enter into the merger agreement and the related
agreements;
any conflicts or violations of each partys agreements as a
result of the merger or the merger agreement;
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consents and notices required in connection with the merger;
governmental authorizations and regulatory compliance;
any brokerage or finders fee or other fee or commission
payable in connection with the merger;
any material changes or events;
tax matters;
licenses and permits; and
product quality.
title to and condition of properties and assets;
liens and encumbrances;
subsidiaries;
financial statements;
internal controls;
undisclosed liabilities;
condition of books and records;
compliance with legal requirements;
owned and leased real property;
intellectual property;
the validity of material contracts to which the parties or their
subsidiaries are a party and any violation, default or breach of
such contracts;
material customers and suppliers;
accounts receivable;
disputed accounts payable;
affiliate transactions;
legal proceedings;
employees, employee benefits, and related matters;
environmental, health, and safety matters;
insurance matters;
bank accounts;
product liability;
outstanding indebtedness; and
keg deposits.
actions that would jeopardize the tax treatment of the
merger; and
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documents filed with the Securities and Exchange Commission and
the accuracy of information contained in those documents.
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directly or indirectly engage in the manufacturing, advertising,
marketing, sale or distribution, whether for himself or for
others, of any malt beverage, soda beverage, or alcoholic
beverage product, in North America;
directly or indirectly (except on behalf of the combined
company), solicit or encourage any employees of the combined
company to leave employment with the combined company or enter
into an employment or service arrangement with a competitive
business;
hire or enter into any service arrangement with any combined
company employees; or
solicit or encourage any customer or potential customer of the
combined company to limit, restrict, or cease use of the
combined companys services or products related to malt
beverages, soda beverages, or alcoholic beverage products
A-B will consent to the consummation of the transactions
contemplated by the merger agreement.
A-B will agree that the execution of the merger agreement and
the consummation of the transactions contemplated by the merger
agreement will not constitute an event of default under the
Redhook, Widmer or Craft Brands distribution agreements or the
Redhook exchange and recapitalization agreement.
The following documents will be terminated upon consummation of
the merger:
the Exchange and Recapitalization Agreement, dated June 30,
2004, between Widmer and A-B;
the Master Distributor Agreement, dated July 1, 2004,
between Widmer and A-B;
the Registration Rights Agreement, dated July 1, 2004,
between Widmer and A-B; and
the Craft Brands Distribution Agreement, dated July 1,
2004, between Craft Brands and A-B.
The Master Distributor Agreement, dated July 1, 2004,
between Redhook and A-B will be amended to, among other things:
add distribution of Widmer and Kona brand malt beverage
products; and
extend the initial term through December 31, 2018, and
extend the renewal term through December 31, 2028.
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The Exchange and Recapitalization Agreement dated June 30,
2004, between Redhook and A-B will be amended to, among other
things:
change the threshold amounts triggering restrictions on
Redhooks ability, without A-Bs consent, to acquire
or invest in assets or businesses related to the production or
distribution of malt beverage products or to dispose of all or a
portion of its assets other than as part of a sale-leaseback
transaction; and
prohibit Redhook from taking any action that would cause A-B to
own 50 percent or more of Redhooks outstanding common
stock.
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The Redhook board of directors has determined and believes that
it is advisable to, and in the best interests of Redhook and its
shareholders that each named nominee serve as a member of
Redhooks board of directors until the 2009 Annual Meeting
of Shareholders or until their earlier retirement, resignation
or removal. The Redhook board of directors unanimously
recommends that Redhook shareholders vote FOR each
named nominee.
The Redhook board of directors has determined and believes that
the issuance of shares of Redhook common stock pursuant to the
merger is advisable to, and in the best interests of, Redhook
and its shareholders. The Redhook board of directors has
approved the merger agreement and recommends that Redhook
shareholders vote FOR approval of the issuance of
shares of Redhook common stock pursuant to the merger.
The Redhook board of directors has determined and believes that
it is advisable to, and in the best interests of Redhook and its
shareholders, to ratify the appointment of Moss Adams LLP as
Redhooks independent registered public accounting firm for
the fiscal year ending December 31, 2008. The Redhook board
of directors unanimously recommends that Redhook shareholders
vote FOR the ratification of the appointment of Moss
Adams LLP.
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To vote in person, come to the Redhook annual meeting and
Redhook will give you a ballot when you arrive.
To vote using the proxy card, simply mark, sign and date your
proxy card and return it promptly in the postage-paid envelope
provided. If you return your signed proxy card to Redhook before
the Redhook annual meeting, Redhook will vote your shares as you
direct.
To vote over the telephone, dial the toll-free number on your
proxy card or voting instruction form using a touch-tone phone
and follow the recorded instructions. You will be asked to
provide Redhooks number and control number from the
enclosed proxy card. Your vote must be received by
[ ] [ ].m. Pacific time on
[ ], 2008 to be counted.
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David Lord and John Rogers, Jr., two of Redhooks
independent directors elected at the annual meeting;
Anthony Short and Andrew Goeler, two A-B designated
directors; and
Three new directors designated by Widmer.
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The nominee must be of the highest ethical character;
The nominee must be able to read and understand financial
statements;
The nominee must be over 21 years of age;
The nominee must not have any significant and material conflict,
whether personal, financial or otherwise, presented by being a
member of the Redhook board;
The nominee must be able to meet regulatory approval; and
The nominee must have the time to be available to devote to
board activities.
Nominees should have relevant expertise and experience, and be
able to offer advice and guidance to Redhooks President
and Chief Operating Officer based on that expertise and
experience;
Nominees should possess any necessary independence or financial
expertise;
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Nominees should complement the skills, experience and background
of other directors; in making determinations regarding
nominations of directors, the committee may take into account
the benefits of diverse viewpoints; and
Nominees must be likely to have a constructive working
relationship with other directors.
Each non-employee Redhook director, other than A-B designated
directors, is entitled to receive a grant of 3,500 shares
of Redhook common stock upon
his/her
election to the board of directors at the annual meeting of
shareholders. In lieu of receiving 3,500 shares of Redhook
common stock, directors may elect to receive a lesser number of
shares plus a cash payment equal to the taxes to be paid on
his/her
stock grant.
Each non-employee Redhook director is entitled to receive annual
compensation of $10,000, which will be paid quarterly.
The chairs of each of the Redhook nominating and governance,
audit, marketing and compensation committees are entitled to
receive additional annual compensation of $4,000, which will be
paid following the Redhook annual meeting of shareholders.
Redhook audit committee members are each entitled to receive an
additional annual payment of $1,000, which will be paid
following the Redhook annual meeting of shareholders.
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Members of the Redhook corporate strategy committee are entitled
to receive, for service through March 31, 2008,
compensation of $7,500 per quarter. The chair of the corporate
strategy committee is also entitled to receive an additional
quarterly payment of $2,500 for service through March 31,
2008.
Fees Earned
Stock
Option
or Paid in Cash
Awards(1)
Awards
Total
$
53,400
$
16,100
$
$
69,500
$
10,000
$
$
$
10,000
$
52,400
$
16,100
$
$
68,500
$
63,400
$
16,100
$
$
79,500
$
53,400
$
16,100
$
$
69,500
$
10,000
$
$
$
10,000
(1)
On May 22, 2007, Messrs. Clement, Lord, Loughran and
Rogers were each granted 2,300 shares of fully-vested
Redhook common stock and a cash payment of $8,400. The fair
value of each stock grant was computed in accordance with FASB
SFAS No. 123R,
Share-Based Payment.
Frank H. Clement
John D. Rogers, Jr.
Audit Committee Members
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2007
2006
$
176,574
$
113,891
2,000
2,650
$
178,574
$
116,541
Audit services.
Audit services include work
performed for the audit of Redhooks financial statements
and the review of financial statements included in
Redhooks quarterly reports on
Form 10-Q,
as well as work that is normally provided by the independent
registered public accounting firm in connection with statutory
and regulatory filings.
Audit related services.
Audit related services
are for assurance and related services that are traditionally
performed by the independent registered public accounting firm
and reasonably related to the performance of the audit or review
of Redhooks financial statements.
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Tax services.
Tax services include all
services performed by the independent registered public
accounting firms tax personnel for tax compliance, tax
advice and tax planning.
Other services.
Other services are those
services not captured in the other categories.
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Base salary.
Base salary is the guaranteed
element of an executives annual cash compensation. The
level of base salary reflects the employees long-term
performance, skill set and the market value of that skill set.
Bonuses.
Discretionary bonus payments are
intended to reward executives for achieving specific financial
and operational goals.
Long-term incentive payments.
Long term
incentives, such as stock options, restricted stock and
performance units, are intended to focus the executives on
taking steps that they believe are necessary to ensure
Redhooks long-term success, as reflected in increases to
Redhooks stock price over a period of several years and
growth in its earnings per share.
Severance and Change of Control
payments.
Severance and change of control
payments are competitive measures intended to recruit and retain
top quality executives, by offering executives compensation in
the event their employment is involuntarily terminated without
defined cause or as a result of a merger or other change in
control transaction.
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Redhooks performance relative to goals set forth by the
Board of Directors at the beginning of the year and in
comparison to past years;
MBL reports from 2004 and 2007 setting out data points for
executive compensation, which included comparisons to
similarly-situated executives at peer companies;
individual performance by each executive officer; and
historical compensation for each executive officer.
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Paul S.
David J.
Jay T.
Gerard C.
Allen L.
Shipman
Mickelson
Caldwell
Prial(1)
Triplett(1)
59
%
68
%
83
%
87
%
87
%
22
%
17
%
0
%
0
%
0
%
4
%
3
%
17
%
13
%
13
%
15
%
12
%
0
%
0
%
0
%
(1)
Mr. Prial and Mr. Triplett resigned as executive
officers of Redhook in February 2008.
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Earnings before interest, taxes and depreciation and
amortization (EBITDA) greater than or equal to budgeted EBITDA
of $4,252,000 (weighted at 50% of the total nondiscretionary
award),
Sales growth of 4% or greater for the Washington Brewery and
Forecasters Public House over the prior year (weighted at 25% of
the total nondiscretionary award), and
EBITDA growth of 4% or greater for the New Hampshire Brewery and
Cataqua Public House over the prior year (weighted at 25% of the
total nondiscretionary award).
Target
Target
Performance
Discretionary
Performance
Discretionary
Total
Award
Bonus
Award Received
Bonus Received
Awarded
$
100,000
$
20,000
$
25,000
$
10,000
$
35,000
50,000
10,000
12,500
5,000
$
17,500
27,750
27,000
$
27,000
25,000
20,000
$
20,000
25,000
$
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Paul S. Shipman,
Chief Executive Officer
Delivering the Company in good financial condition at closing of
merger with Widmer
Up to 10% of base salary paid to date of merger
Closing of merger with Widmer
Up to 10% of base salary paid to date of merger
David J Mickelson,
President and
Chief Operating Officer
Delivering the Company in good financial condition at closing of
merger with Widmer
Up to 10% of base salary paid to date of merger
Closing of merger with Widmer
Up to 10% of base salary paid to date of merger
EBITDA greater than or equal to budgeted EBITDA
10% of base salary
Demonstrating leadership during the first half of 2008 during
the merger negotiations with Widmer
10% of base salary
Successfully directing the search and hiring of a controller and
a CFO for the combined company
$20,000
Jay T. Caldwell,
Chief Financial Officer and Treasurer
Delivering the Company in good financial condition at closing of
merger with Widmer
Up to 10% of base salary paid to date of merger
Closing of merger with Widmer
Up to 10% of base salary paid to date of merger
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Frank H. Clement
John D. Rogers, Jr.
Compensation Committee Members
Change in
Pension Value
and Nonqualified
Non-Equity
Deferred
Stock
Option
Incentive Plan
Compensation
All Other
Year
Salary
Bonus(1)
Awards(2)
Awards
Compensation(3)
Earnings
Compensation(4)
Total
2007
$
267,800
$
10,000
$
70,000
$
$
25,000
$
$
56,892
$
429,692
2006
257,500
8,000
100,000
19,000
384,500
2007
$
199,243
$
5,000
$
35,000
$
$
12,500
$
$
38,046
$
289,789
2006
191,580
4,000
50,000
18,404
263,984
2007
$
138,750
$
27,000
$
$
$
$
$
15,958
$
181,708
2006
53,778
10,000
63,778
2007
$
171,990
$
20,000
$
$
$
$
$
18,069
$
210,059
2006
165,375
25,000
17,215
207,590
2007
$
171,990
$
$
$
$
$
$
18,069
$
190,059
2006
165,375
25,000
17,215
207,590
(1)
Represents bonuses awarded at the discretion of the Compensation
Committee.
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(2)
Represents compensation expense recognized in 2007 for financial
reporting purposes under Statement of Financial Accounting
Standards No. 123(R). Stock awards for 2007 were granted
upon shareholder approval of the Redhook 2007 Stock Incentive
Plan at the 2007 Annual Meeting of Shareholders, and represent
awards for 2006 performance. No stock awards were granted in
2007 or 2008 for 2007 performance.
(3)
Represents performance based incentive awards. Performance based
incentive awards earned in a fiscal year are paid in the
following fiscal year, after confirmation that performance goals
were met.
(4)
Amounts shown for 2007 represent a car allowance of $10,200 and
401(k) employer matching contributions for each officer. Also
includes cash compensation of $37,692 and $18,846 paid to
Messrs. Shipman and Mickelson, respectively, to approximate
the federal income tax obligation resulting from the stock award.
(5)
Mr. Caldwell joined Redhook as Controller in July 2006 and
was appointed Chief Financial Officer and Treasurer in March
2007.
(6)
Mr. Prial and Mr. Triplett resigned as executive
officers of Redhook in February 2008.
All Other Stock Awards
Estimated Future Payments under
Number of
Grant Date Fair
Non-Equity Incentive Plan Awards
Shares of
Value of Stock
Grant Date
Threshold(1)
Target(1)(2)
Maximum(2)
Stock (#)(3)
Awards
May 22, 2007
$
25,000
$
100,000
$
100,000
10,000
$
70,000
May 22, 2007
$
12,500
$
50,000
$
50,000
5,000
$
35,000
(1)
The Compensation Committee of the Board of Directors sets target
payouts for Redhooks Chief Executive Officer and President
and COO at the beginning of the fiscal year. For 2007, the
Committee chose three specific performance criteria, for which
fixed amounts were payable if the specific performance criteria
were achieved by the executive officer. Payment for the
achievement of one performance criteria was not dependent on the
success of the executive in meeting the other criteria.
Therefore, the threshold number in the table above represents
the minimum amount the executive officer could receive if only
one specific performance criteria was met.
(2)
The Target and Maximum column above represent total payout if
all three specific performance criteria are met. Actual award
payments are reflected in the Non-Equity Incentive Plan
Compensation column of the Summary Compensation Table.
(3)
Represents stock grants awarded under Redhooks 2007 Stock
Incentive Plan. The shares were fully vested upon grant. Cash
compensation paid to Messrs. Shipman and Mickelson to
approximate the federal income tax obligation resulting on the
stock award is reflected in the All Other
Compensation column of the Summary Compensation Table.
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Number of
Number of
Securities
Securities
Underlying
Underlying
Unexercised
Unexercised
Option
Options
Options
Exercise
Option Expiration
Exercisable (#)
Unexercisable (#)
Price
Date
49,250
$
3.97
May 20, 2009
76,500
$
1.87
August 3, 2011
30,000
$
2.02
August 27, 2012
29,500
$
3.97
May 20, 2009
76,500
$
1.87
August 3, 2011
27,500
$
2.02
August 27, 2012
19,750
$
3.97
May 20, 2009
76,500
$
1.87
August 3, 2011
27,500
$
2.02
August 27, 2012
19,750
$
3.97
May 20, 2009
76,500
$
1.87
August 3, 2011
27,500
$
2.02
August 27, 2012
Number
of
Exercise
Options
Price
15,300
$
1.87
August 2006
12,000
$
2.02
August 2006 and August 2007
15,300
$
1.87
August 2006
11,000
$
2.02
August 2006 and August 2007
15,300
$
1.87
August 2006
11,000
$
2.02
August 2006 and August 2007
15,300
$
1.87
August 2006
11,000
$
2.02
August 2006 and August 2007
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Continuation
Monthly
of Medical/
Pro-rata
Value of
Total
Years of
Base
Cash
Welfare
Bonus
Unexercised
Potential
Service
Salary
Severance(6)
Benefits
Payments(7)
Stock Options(8)
Payments
26
(1)
$
22,317
$
605,784
$
17,008
$
53,560
$
637,022
$
1,313,374
21
(2)
16,604
393,393
17,008
99,697
572,495
1,082,593
2
(3)
15,000
194,693
8,310
36,000
239,003
16
(4)
14,333
263,622
15,118
34,398
546,355
859,493
23
(5)
14,333
349,395
5,941
34,398
546,355
936,089
(1)
Mr. Shipmans employment agreement provides for
severance of $267,800 per year for two years, plus
Mr. Shipman will also be paid for any vacation and sick
leave that accrues during the term but is not used, plus
reimbursement of COBRA premiums for up to eighteen months.
(2)
Mr. Mickelsons letter of employment provides for
severance equal to one month of base salary for each year of
service with the company, capped at a severance payment equal to
twenty-four months of base
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salary, plus reimbursement of COBRA premiums for the term of the
severance period, not to exceed eighteen months.
(3)
Mr. Caldwells letter of employment provides for
severance equal to twelve months base salary, plus reimbursement
of COBRA premiums for the severance period. Prior to the
execution of his letter of employment in December 2007,
Mr. Caldwell served without an employment agreement.
Therefore, if his employment had terminated prior to that date,
he would not have been entitled to severance.
(4)
Mr. Prials letter of employment provides for
severance equal to sixteen months base salary, plus
reimbursement of COBRA premiums for the severance period.
(5)
Mr. Tripletts letter of employment provides for
severance equal to twenty-three months base salary, plus
reimbursement of COBRA premiums for up to eighteen months.
(6)
Includes value of accrued but unpaid vacation and sick leave as
of December 31, 2007.
(7)
Assumes performance targets for the executive set forth by the
Compensation Committee were met.
(8)
Represents the number of unexercised stock options held by the
executive, multiplied by $6.65, the closing price of the
Companys common stock on December 31, 2007, less the
aggregate exercise price of the stock options. All outstanding
stock options held by the Companys executive officers are
fully vested and exercisable.
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issue equity securities exceeding 20% of its outstanding common
stock as of January 1, 2008 (other than securities issued
to employees or directors for compensatory purposes) or with
more than one vote per share or with a class vote on any matter;
issue any stock to any person engaged in the malt beverage or
alcoholic beverage business;
acquire any assets related to the production or distribution of
malt beverages which exceed 50% of the book value of its assets
as of the date of such acquisition, or acquire any assets
unrelated to the production or distribution of malt beverages
which exceed 10% of the book value of its assets as of the date
of such acquisition;
sell any assets which have a book value in excess of 30% of the
aggregate book value of its assets;
dispose of any of its interest in Craft Brands;
amend its articles of incorporation or bylaws,
grant board representation rights to any party,
enter into certain transactions with affiliates, except upon
fair and reasonable terms that are no less favorable to Redhook
than would be obtained in a comparable arms-length
transaction with a non-affiliate and that has been approved by a
majority of the independent directors of the Board of Directors;
distribute its products in the United States other than through
A-B, Craft Brands or as provided in the A-B distribution
agreement,
voluntarily delist or terminate its listing on the NASDAQ Stock
Market.
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executing a later-dated proxy card relating to the same shares
and delivering it to Widmers Secretary before the taking
of the vote at the Widmer special meeting;
filing with Widmers Secretary before the taking of the
vote at the Widmer special meeting a written notice of
revocation bearing a later date than the proxy card; or
attending the Widmer special meeting and voting in person
(although attendance at the Widmer special meeting will not, in
and of itself, revoke a proxy).
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2007
Base Salary
Percentage
Level
Increase
$
225,000
0
%
170,000
28
%
179,529
3
%
170,000
19
%
162,000
18
%
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Short-Term
Long-Term
Performance
Performance
Discretionary
Total
Bonus
Bonus(1)
Bonus
Bonuses
$
$
$
$
12,000
12,000
36,165
95,889
15,000
147,054
20,896
47,944
9,000
77,840
24,111
47,944
10,000
82,055
(1)
Long-term bonuses vest in three equal annual installments
beginning on the December 31 of the calendar year for which the
bonus is earned. Vested amounts are payable 50% by March 1 of
the year following the year in which the installment vests and
50% by the following March 1.
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Non-Equity
Incentive Plan
All Other
Year
Salary
Bonus(1)
Compensation(2)
Compensation(3)
Total
2007
$
225,000
$
$
$
10,250
$
235,250
2006
225,000
57,044
5,563
287,607
2007
$
147,391
$
12,000
$
$
7,750
$
167,141
2006
133,142
12,000
14,241
4,313
163,696
2007
$
178,121
$
15,000
$
132,054
$
10,250
$
335,425
2006
174,300
15,000
86,470
10,000
285,770
2007
$
152,770
$
9,000
$
68,840
$
7,750
$
238,360
2006
142,500
9,000
48,193
7,360
207,053
2007
$
146,572
$
10,000
$
72,055
$
7,750
$
236,377
2006
137,200
10,000
53,858
7,500
208,558
(1)
Represents discretionary quarterly bonuses.
(2)
Represents performance-based short-term and long-term incentive
bonuses earned for the year.
(3)
Represents matching employer contributions to 401(k) plan.
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Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards(1)(2)
Threshold
Target
Maximum
$
$
$
January 1, 2007
30,000
January 1, 2007
60,000
January 1, 2007
35,000
January 1, 2007
40,000
(1)
Represents target amounts for short-term performance bonuses
that are established by the Widmer compensation committee at the
beginning of the fiscal year. Actual amounts awarded are
included in the Non-Equity Incentive Plan Compensation column of
the Summary Compensation Table and described in detail above
under Widmer Executive Compensation
Compensation Discussion and Analysis Incentive
Payments.
(2)
Amounts payable as long-term performance bonuses are not
included in the table since there are no thresholds, targets or
maximum amounts payable. Actual long-term bonus awards are
included in the Summary Compensation Table under the column
Non-Equity Incentive Plan Compensation, and
described in detail above under Widmer Executive
Compensation Compensation Discussion and
Analysis Incentive Payments.
A material breach of the employment agreement by the executive;
The executives refusal or failure to comply with the
companys policies or to perform any significant job duties;
Any act of fraud or dishonesty involving the company or its
business; or
The executives conviction of or a plea of no contest to a
felony.
A substantial adverse change in the nature or status of the
executives title, position, duties, or reporting
responsibilities;
Failure by the company to comply with any material term of the
agreement;
Relocation of the executive to an office more than
200 miles from the present location;
A reduction in base salary below the level specified in the
agreement; or
Failure to provide the executive with benefits comparable to
those made available by the company to its executives generally.
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Kurt R.
V. Sebastian
Terry E.
Timothy G.
Martin J.
Widmer
Pastore
Michaelson
McFall
Wall, IV
$
$
182,000
$
323,540
$
190,896
$
186,111
36,165
20,896
24,111
95,889
47,944
47,944
43,266
141,254
76,448
72,948
20,550
13,700
13,700
10,581
21,382
32,037
4,232
15,603
$
10,581
$
246,648
$
649,435
$
354,116
$
360,417
(1)
Represents the maximum total amount payable if the executive
exercises his noncompete option. The maximum number
of monthly noncompete payments is as follows: Mr. McFall,
12; Mr. Michaelson, 18; Mr. Pastore, 12; and
Mr. Wall, 12.
(2)
These amounts were earned for calendar 2007, as shown on
page 103 above.
(3)
These amounts were earned for years prior to 2007, but were
unpaid at December 31, 2007. All bonuses vest immediately
upon termination without cause or for good reason.
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54
Co-Chief Executive Officer
48
Co-Chief Executive Officer
55
Chief Financial Officer and Treasurer
43
Chief Accounting Officer
36
Vice President, Sales
42
Vice President, Marketing
41
Vice President, Brewing Operations and Technology
56
Chairman of the Board
58
Director
51
Director
58
Director
59
Director
64
Director
48
Director
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS
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In November 2006, Widmer commenced a significant brewery
expansion and renovation. A significant portion of the
$24.5 million project was completed in April 2008. During
the construction period, Widmer has relied on contract brewing
arrangements for a significant amount of its production.
Contract brewing fees are typically higher than internal
production costs.
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Production and distribution of Kona products that are promoted
by, and distributed through Widmer and the A-B wholesaler
distribution network have experienced significant growth in 2007
from levels in 2006 and 2005.
Widmer has incurred professional fees and other costs related to
the proposed merger with Redhook.
Year Ended December 31,
2007
2006
Change
% Change
Restated
$
77,734
$
63,599
$
14,135
22.2
%
2,507
3,224
(717
)
22.2
75,227
60,375
14,852
24.6
51,868
38,686
13,182
34.1
23,359
21,689
1,670
7.7
18,186
14,651
3,535
24.1
1,554
1,554
(354
)
354
100.0
3,619
6,684
(3,065
)
45.9
(707
)
(178
)
(529
)
297.2
(84
)
21
(105
)
500.0
382
295
87
29.5
(409
)
138
(547
)
396.4
3,210
6,822
(3,612
)
52.9
383
1,267
(884
)
69.8
2,827
5,555
(2,728
)
49.1
2,826
2,655
171
6.4
$
1
$
2,900
$
(2,899
)
100.0
%
117
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Year Ended December 31
2007
2006
Restated
103.3
%
105.3
%
3.3
5.3
100.0
100.0
68.9
64.1
31.1
35.9
24.2
24.3
2.1
(0.5
)
4.8
11.1
(0.9
)
(0.3
)
(0.1
)
0.5
0.5
(0.5
)
0.2
4.3
11.3
0.5
2.1
3.8
9.2
3.8
4.4
%
4.8
%
Sales of Widmer and Redhook products, excluding Kona products,
and sales to the Texas market grew $2,840,000 year over
year. This increase was driven by both a price increase and
increase in volume.
Sales of Kona products through the A-B distribution network
increased $3,088,000 in 2007 when compared to 2006.
Increased production volume of Kona products at the Portland
Oregon brewery under an alternating proprietorship agreement
resulted in increased fees paid to Widmer of $2,851,000 in 2007
or a 75% increase over fees earned in 2006.
Sales in Texas during 2007 were $1,876,000, an increase of
$1,552,000 over 2006. Widmer introduced products in the Texas
market in August 2006 and, therefore, 2007 represented the
first full year of shipments in this market.
118
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Year Ended December 31,
2007
2006
Draft
Bottle
Total
Draft
Bottle
Total
Increase/
%
Shipments
Shipments
Shipments
Shipments
Shipments
Shipments
(Decrease)
Change
207,100
228,000
435,100
196,900
207,100
404,000
31,100
7.7
%
2,900
1,900
4,800
2,700
1,700
4,400
400
9.1
210,000
229,900
439,900
199,600
208,800
408,400
31,500
7.7
%
119
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120
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121
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Year Ended December 31,
2006
2005
Change
% Change
Restated
Restated
$
63,599
$
55,017
$
8,582
15.6
%
3,224
3,194
30
0.9
60,375
51,823
8,552
16.5
38,686
29,793
8,893
29.8
21,689
22,030
(341
)
1.5
122
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Year Ended December 31,
2006
2005
Change
% Change
Restated
Restated
14,651
14,130
521
3.7
(354
)
(354
)
6,684
7,900
(1,216
)
15.4
(178
)
(433
)
255
58.9
21
(13
)
34
261.5
295
295
138
(446
)
584
130.9
6,822
7,454
(632
)
8.5
1,267
1,599
(332
)
20.8
5,555
5,855
(300
)
5.1
2,655
2,392
263
11.0
$
2,900
$
3,463
$
(563
)
16.3
%
Year Ended December 31
2006
2005
Restated
Restated
105.3
%
106.2
%
5.3
6.2
100.0
100.0
64.1
57.5
35.9
42.5
24.3
27.3
(0.5
)
11.1
15.2
(0.3
)
(0.8
)
0.5
(0.1
)
0.2
(0.9
)
11.3
14.4
2.1
3.1
9.2
11.3
4.4
4.6
4.8
%
6.7
%
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Increased shipments of Widmer and Redhook products into Arizona,
California, Oregon and Washington resulted in revenue growth of
$5,281,000 in 2006 from 2005.
An increase in Kona brand sales pursuant to the distribution and
licensing agreements of $1,848,000.
Increase in retail sales at the Widmer Brothers Gasthaus Pub.
Year Ended December 31,
2006
2005
Draft
Bottle
Total
Draft
Bottle
Total
Increase/
%
Shipments
Shipments
Shipments
Shipments
Shipments
Shipments
(Decrease)
Change
196,900
207,100
404,000
177,100
183,400
360,500
43,500
12.1
%
2,700
1,700
4,400
2,400
1,500
3,900
500
12.8
199,600
208,800
408,400
179,500
184,900
364,400
44,000
12.1
%
124
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125
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126
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127
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Quarter Ended
Required by Bank
December 31,
Less than: 4.50:1
4.48:1
Greater than: 1.25:1
2.47:1
128
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Year Ended December 31,
2008
2009
2010
2011
2012
Thereafter
Total
$
1,075
$
1,382
$
1,474
$
1,572
$
1,676
$
15,216
$
22,395
232
210
175
111
100
1,442
2,270
6,470
817
688
555
472
9,001
$
7,777
$
2,409
$
2,337
$
2,238
$
2,248
$
16,658
$
33,666
(1)
Represents annual principal payments required on Widmers
bank debt. Interest accrues at LIBOR plus 1.5% Monthly interest
payments on the bank debt agreements are not reflected above.
(2)
Represents minimum aggregate future lease payments under
noncancelable operating leases.
(3)
Represents purchase commitments to ensure supply of wheat,
malted barley and specialty hops to meet future production
requirements. Payments for malted barley are made as deliveries
are received. Hop contracts generally provide for payment upon
delivery of the product with the balance due on any unshipped
product during the year following the harvest year.
129
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130
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Value
$
5,969,860
816,676
687,608
555,014
471,638
$
8,500,796
131
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To reclassify certain short-term liabilities to be consistent
with the classifications used by Redhook.
the estimated purchase price;
amounts related to Widmers and Craft Brands net
tangible and intangible assets at an amount equal to the
preliminary estimate of their fair values, along with the
amortization expense related to the estimated identifiable
intangible assets and stock-based compensation;
changes in depreciation and amortization expense resulting from
the estimated fair value adjustments to net tangible assets;
the income tax effect related to the pro forma
adjustments; and
elimination of intercompany balances.
132
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133
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As of December 31, 2007
Pro Forma Adjustments & Eliminations
Proforma
Redhook
Widmer
(a)
(b)
(c)
(d)
(e)
(f)
Combined
$
5,526,843
$
1,421,455
$
$
$
78,675
$
$
$
$
7,026,973
for doubtful accounts
3,892,737
9,681,497
(1,405,431
)
(13,699
)
12,155,104
670,469
(670,469
)
2,927,518
2,693,882
5,621,400
854,613
13,699
868,312
944,361
944,361
1,043,034
314,987
(153,711
)
1,204,310
15,004,962
14,966,434
(153,711
)
(1,997,225
)
27,820,460
55,862,297
44,659,329
924,419
101,446,045
415,592
4,172,779
(415,592
)
4,172,779
107,489
995,182
1,500,000
2,602,671
28,692,546
(2,424,419
)
909,157
27,177,284
$
71,390,340
$
64,793,724
$
$
28,538,835
$
(2,412,817
)
$
$
$
909,157
$
163,219,239
$
$
11,296,074
$
(11,296,074
)
$
$
$
$
$
$
3,148,613
8,729,253
(1,622,336
)
10,255,530
416,116
(416,116
)
1,524,240
1,481,718
3,005,958
3,500,200
2,085,746
(3,490
)
5,582,456
686,261
1,085,103
44,819
1,816,183
capital lease obligations
15,498
1,075,620
1,091,118
9,290,928
14,457,440
(1,997,123
)
21,751,245
net of current portion
31,118
21,319,694
21,350,812
1,762,428
4,301,331
909,157
6,972,916
226,123
160,862
386,985
415,694
(415,694
)
150,000
(150,000
)
41,771
15,463,367
(15,421,559
)
83,579
69,303,848
52,635,731
121,939,579
(9,265,876
)
8,525,336
(8,525,336
)
(9,265,876
)
60,079,743
23,988,703
28,688,835
112,757,281
stockholders equity
$
71,390,340
$
64,793,724
$
$
28,538,835
$
(2,412,817
)
$
$
$
909,157
$
163,219,239
134
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For the Year Ended December 31, 2007
Pro Forma Adjustments & Eliminations
Proforma
Redhook
Widmer
(a)
(b)
(c)
(d)
(e)
(f)
Combined
$
46,543,501
$
77,734,152
$
$
$
(15,380,431
)
$
$
(142,970
)
$
$
108,754,252
5,073,564
2,507,353
660,000
8,240,917
41,469,937
75,226,799
(15,380,431
)
(802,970
)
100,513,335
36,785,214
51,868,498
(15,396,215
)
57,830
73,315,327
4,684,723
23,358,301
15,784
(57,830
)
(802,970
)
27,198,008
8,841,079
19,739,459
28,580,538
(327
)
(327
)
(4,156,356
)
3,618,515
15,784
(57,830
)
(802,970
)
(1,382,857
)
302,429
707,331
1,009,760
517,577
(83,867
)
(15,784
)
417,926
2,825,928
382,366
(2,825,927
)
382,367
(1,115,280
)
3,209,683
(2,825,927
)
(57,830
)
(802,970
)
(1,592,324
)
(175,794
)
382,845
(322,800
)
(115,749
)
(939,486
)
2,826,838
(2,825,927
)
(57,830
)
(802,970
)
322,800
(1,476,575
)
(2,825,927
)
2,825,927
$
(939,486
)
$
911
$
$
$
$
(57,830
)
$
(802,970
)
$
322,800
$
(1,476,575
)
$
(0.11
)
$
0.00
$
(0.09
)
$
(0.11
)
$
0.00
$
(0.09
)
135
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1.
Basis of
Presentation
2.
Purchase
Price
$
52,677,538
153,711
$
52,831,249
$
24,138,703
15,262
1,500,000
27,177,284
$
52,831,249
136
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3.
Pro Forma
Adjustments
137
Table of Contents
Widmers articles of incorporation authorize the issuance
of up to 25,000,000 shares of common stock, par value
$0.01, and 2,000,000 shares of preferred stock,
$0.01 par value.
Redhooks articles of incorporation authorize the issuance
of up to 50,000,000 shares of common stock, par value
$0.005, and 7,467,271 shares of preferred stock, par value
$0.005.
Widmers articles of incorporation provide that the number
of directors that constitute the board of directors will be
determined in the manner provided by Widmers bylaws.
Widmers bylaws provide that the board of directors shall
consist of eight directors.
Redhooks bylaws provide that Redhooks board of
directors will consist of seven directors.
Widmers articles of incorporation and bylaws do not
address how a shareholder can make a director nomination or
propose business for an annual meeting of shareholders.
Redhooks bylaws provide that, in order for a shareholder
to make a director nomination or propose business for an annual
meeting of shareholders, the shareholder must give timely
written notice to Redhooks secretary not less than
120 days prior to the first anniversary of the date
Redhooks proxy statement for the previous years
annual meeting was first released to shareholders (with certain
adjustments if the date of the annual meeting is changed by more
than 30 days from the date
138
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of the previous years annual meeting). Any such notice
must comply with other requirements specified in the bylaws.
Under Widmers bylaws, at a meeting of shareholders called
expressly for that purpose, one or more directors may be
removed, with or without cause, by a vote of the holders of a
majority of the Widmer shares then entitled to vote on the
election of directors, so long as the number of votes cast to
remove the director exceeds the number of votes cast not to
remove the director.
Under Redhooks bylaws, one or more directors may be
removed, with or without cause, at a special meeting of
shareholders called expressly for that purpose. A director may
be removed only if the number of votes cast in favor of removing
such director exceeds the number of votes cast against removal.
However, a director may not be removed if a number of votes
sufficient to elect such director under cumulative voting
(computed on the basis of the number of votes actually cast at
the meeting on the question of removal) is cast against such
directors removal.
Widmers bylaws provide that a special meeting of the
shareholders may be called by the chairman of the board of
directors, the president, the board of directors or holders of
not less than one-tenth of the outstanding shares entitled to
vote on any issue proposed to be considered at the meeting.
Redhooks bylaws provide that a special meeting of the
shareholders may be called by the board of directors, the
chairman of the board of directors, the President or
shareholders holding not less than 25% of all the shares
entitled to be cast on any issue proposed to be considered at
that meeting.
Holders of Widmers common stock are not entitled to
cumulative voting in the election of directors.
Redhooks articles of incorporation provide that
shareholders generally will not have the right to cumulate
voting in the election of directors. However, shareholders will
generally have the right to cumulative voting in the election of
directors if, prior to the record date for the shareholder
meeting at which such election is to be held, Redhook or a
shareholder of Redhook publicly announces that such holder and
its affiliates are the beneficial owners of at least 30% of
Redhooks outstanding common stock.
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Widmers bylaws provide that any vacancy on the board of
directors, including a vacancy created by an increase in the
number of directors, may be filled by Widmers
shareholders, by its board of directors or by the affirmative
vote of a majority of the remaining directors though less than a
quorum. A director elected to fill a vacancy shall be elected
for the unexpired term of his or her predecessor in office.
Redhooks bylaws provide that any vacancy on the board of
directors may be filled by the affirmative vote of a majority of
the directors present at a meeting of the board at which a
quorum is present, or, if the directors in office constitute
less than a quorum, by the affirmative vote of a majority of all
of the directors in office. A director elected to fill a vacancy
will hold office until the next meeting of shareholders at which
directors are elected, and until his or her successor is elected
and qualified.
Under the OBCA, the holders of Widmer common stock are entitled,
subject to any voting rights that may be granted by the board of
directors to the holders of any class or series of preferred
stock, to vote at all meetings of shareholders and are entitled
to cast one vote in person or by proxy for each share of stock
held by them as of the record date for the meeting.
Under the WBCA, the holders of Redhook common stock are
entitled, subject to any voting rights that may be granted by
the board of directors to the holders of any class or series of
preferred stock, to vote at all meetings of shareholders and are
entitled to cast one vote in person or by proxy for each share
of stock held by them as of the record date for the meeting
fixed by Redhooks board of directors.
Widmers bylaws provide that any action that could be taken
at a meeting of shareholders may be taken without a meeting if a
written consent setting forth the action so taken is signed by
all shareholders entitled to vote with respect to the subject
matter thereof. Any action taken by written consent is effective
on the date on which the last signature is placed on the
consent, or at such earlier or later time as is set forth in the
consent.
Redhooks bylaws provide that any action that may be or is
required by law to be taken at a meeting of shareholders may be
taken, without a meeting or notice of a meeting, if one or more
consents in writing, setting forth the action so taken, are
signed by all of the shareholders entitled to vote or, in the
place of any one or more of such shareholders, by a person
holding a valid proxy to vote with respect to the subject matter
thereof, and are delivered to Redhook for inclusion in the
minutes or filing with the corporate records.
Under Widmers bylaws, written notice of each shareholder
meeting must include the place, day and
Under Redhooks bylaws, not less than 10 nor more than
sixty 60 days before the date of any
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hour of the meeting and must be given not less than 10 nor more
than 60 days prior to the date of the meeting to each
shareholder entitled to notice of or to vote at such meeting. In
the case of a special meeting, the purpose or purposes for which
the meeting is called must be included in the notice.
meeting of shareholders, written notice stating the place, day,
and time of the meeting must be given to each shareholder of
record entitled to vote at the meeting. If the business to be
conducted at any meeting includes any proposed amendment to the
articles of incorporation or any proposed merger or exchange of
shares, or any proposed sale, lease, exchange, or other
disposition of all or substantially all of Redhooks
property and assets not in the usual or regular course of its
business, then the written notice must be given not less than
20 days before the date of the meeting.
Widmers articles of incorporation provide that, to the
full extent permitted by the OBCA, Widmer shall indemnify any
person who is made, or threatened to be made, a party to any
action, suit or proceeding, whether civil, criminal,
administrative, investigative or otherwise, by reason of the
fact that the person is or was a director of Widmer or a
fiduciary with respect to an employee benefit plan of Widmer, or
serves or served at the request of Widmer as a director or
officer or as a fiduciary of an employee benefit plan of Widmer
or another corporation, partnership, joint venture, trust or
other enterprise. Indemnification under Widmers articles
is not exclusive.
Widmer carries directors and officers insurance insuring its
directors and officers against certain liabilities.
Redhooks articles of incorporation and bylaws provide that
Redhook shall, to the full extent permitted by the WBCA,
indemnify all directors and officers of Redhook. In addition,
Redhooks articles of incorporation contain a provision
eliminating the personal liability of directors to Redhook or
its shareholders for monetary damage arising out of a breach of
fiduciary duty.
Redhook maintains appropriate policies of insurance on behalf
of its directors and officers against liabilities asserted
against any such person arising out of his or her status as
such.
Under the OBCA, a merger in which Widmer will not be the
surviving corporation or a sale of substantially all of
Widmers assets requires the affirmative vote of holders of
a majority of all the votes entitled to be cast on the
Under the WBCA and Redhooks articles of incorporation, a
merger in which Redhook will not be the surviving corporation or
a sale of substantially all of Redhooks assets also
requires the affirmative approval of holders of a majority
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transaction. Only holders of Widmers outstanding common
stock are entitled to vote on approval of the merger agreement.
of outstanding Redhook common stock.
In addition, the WBCA generally prohibits corporations such as
Redhook that have a class of voting stock registered under the
Exchange Act from engaging in any significant business
transaction (defined to include mergers or consolidations,
certain sales, termination of 5% or more of a corporations
employees, sales of assets, liquidation or dissolution, and
other specified transactions) for a period of five years after a
person or group acquires 10% or more of the corporations
outstanding voting stock, unless the acquisition is approved in
advance of the stock acquisition by a majority vote of the board
of directors.
Under the OBCA, Widmers articles of incorporation may be
amended upon the affirmative vote of holders of a majority of
its outstanding voting shares.
Widmers bylaws may be amended at any regular or special
meeting of the shareholders or by the board of directors.
Under the WBCA and Redhooks articles of incorporation,
amendment of the articles of incorporation generally requires
the affirmative vote of the holders of a majority of
Redhooks outstanding voting stock. However, Redhooks
board of directors may make certain amendments, as listed in the
WBCA, to the articles of incorporation without shareholder
approval. These amendments include authorization of the rights
and preferences of preferred stock that the board of directors
may determine to issue in the future. The rights and preferences
of any such preferred stock may have priority over the rights of
holders of Redhook common stock.
Redhooks board of directors may, by a majority vote,
amend Redhooks bylaws, which may also be amended by
shareholders.
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each person or group of affiliated persons who is known by
Redhook to own beneficially more than 5% of Redhooks
common stock;
each of Redhooks current directors;
each of Redhooks named executive officers identified
below; and
all of Redhooks directors and executive officers as a
group.
Number of Shares of Common
Percent of Common Stock
Stock Beneficially Owned(1)
Outstanding(1)
2,761,713
33.06
%
705,338
8.44
%
316,550
3.72
%
281,070
3.35
%
180,500
2.13
%
133,750
1.58
%
125,750
1.48
%
18,073
*
16,800
*
14,900
*
*
*
*
1,087,393
12.15
%
*
Less than 1%
(1)
Includes shares of common stock subject to options currently
exercisable or exercisable within 60 days of
February 29, 2008. Shares subject to an option are not
deemed outstanding for purposes of computing the percentage
ownership of any person other than the person holding the option.
(2)
The business address of Busch Investment Corporation is
1220 N. Market Street, Suite 606, Wilmington,
Delaware 19801.
(3)
The business address of Dimensional Fund Advisors LP is
1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401.
The number of shares shown as beneficially owned is based
entirely on information contained in the Schedule 13G/A
filed by Dimensional Fund Advisors LP on February 6,
2008. As noted in the Schedule 13G/A, Dimensional
Fund Advisors LP disclaims beneficial ownership of these
shares.
(4)
Includes 155,750 shares subject to options. Also includes
650 shares held by Mr. Shipmans spouse.
(5)
Includes 32,000 shares subject to options,
33,436 shares held by Mr. Clements spouse, and
28,430 shares held by Mr. Clement as trustee for his
children.
143
Table of Contents
(6)
Includes 133,500 shares subject to options.
(7)
Includes 123,750 shares subject to options.
(8)
Includes 12,000 shares subject to options.
(9)
Includes 8,000 shares subject to options. Also includes
3,000 shares held by Mr. Rogers spouse.
(10)
Includes 4,000 shares subject to options.
(11)
Includes 592,750 shares subject to options.
144
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each person or group of affiliated persons who is known by
Widmer to own beneficially more than 5% of Widmers common
stock;
each of Widmers current directors;
each of Widmers executive officers identified
below; and
all of Widmers directors and executive officers as a group.
Number of Shares of Common
Percent of Common Stock
Stock Beneficially Owned
Outstanding
1,534,655.0
40.5
%
914,056.0
24.1
%
510,334.0
13.5
%
222,635.0
5.9
%
210,970.0
5.6
%
*
*
*
*
21,720.0
*
*
6,532.5
*
*
*
1,650,012.5
43.4
%
*
Less than 1%
(1)
The business address of Busch Investment Corporation is
1220 N. Market Street, Suite 606, Wilmington,
Delaware 19801.
(2)
The business address of Kurt Widmer is 929 N. Russell,
Portland, Oregon 97227. Includes 18,035 shares held by
Mr. Widmers spouse.
(3)
Messrs. Kurt and Robert Widmer will each transfer
6,800 shares of Widmer common stock to Mr. Michaelson
prior to the closing of the merger, if the merger closes on or
before July 31, 2008. Shares shown in the table as
beneficially owned by Messrs. Kurt and Robert Widmer
include the 6,800 shares that each will transfer to
Mr. Michaelson. As well, shares shown in the table as
beneficially owned by Mr. Michaelson include the
13,600 shares that will be transferred from
Messrs. Kurt and Robert Widmer.
145
Table of Contents
(4)
The business address of Mr. Robert Widmer is
929 N. Russell, Portland, Oregon 97227. Includes
6,162 shares held by Mr. Widmers spouse.
(5)
The business address of Ms. Maier-Lenz is Schavinsland Str.
85, 0-79100 Freiburg, Germany. Includes 28,494 shares held
by the children of Ms. Maier-Lenz.
(6)
Includes 844 shares held by Mr. Boyles daughter,
as to which Mr. Boyle disclaims beneficial ownership.
(7)
Messrs. McFall, Michaelson and Wall are executive officers
of Craft Brands. Due to the nature of their roles at Craft
Brands, each individuals ownership has been reflected here.
(8)
Pursuant to a consulting agreement between Mr. Michaelson
and Widmer, Mr. Michaelson will be compensated $288,000 and
issued 8,120 shares of Widmer common stock if the merger
closes on or before July 31, 2008. The cash compensation
and stock issuance will occur immediately prior to the closing
of the merger.
146
Table of Contents
each person or group of affiliated persons who Redhook knows
will beneficially own more than 5% of Redhooks common
stock;
each person who will serve as a director of the combined company;
each person identified below who will serve as an executive
officer of the combined company; and
all person who will serve as directors and executive officers as
a group.
Number of Shares of Common
Percent of Common Stock
Stock Beneficially Owned(1)
Outstanding(1)
6,069,047
36.3
%
1,955,227
11.7
%
1,085,165
6.5
%
479,800
2.9
%
454,661
2.7
%
180,500
1.1
%
46,808
*
18,073
*
16,800
*
*
*
*
*
*
*
*
2,672,069
15.8
%
*
Less than 1%
(1)
Includes shares of common stock subject to options currently
exercisable or exercisable within 60 days of
February 29, 2008. Shares subject to an option are not
deemed outstanding for purposes of computing the percentage
ownership of any person other than the person holding the option.
(2)
The business address of Busch Investment Corporation is
1220 N. Market Street, Suite 606, Wilmington,
Delaware 19801.
(3)
The business address of Kurt Widmer is 929 N. Russell,
Portland, Oregon 97227. Includes 38,867 shares that will be
held by Mr. Widmers spouse.
(4)
Messrs. Kurt and Rob Widmer each will transfer
6,800 shares of Widmer common stock to Mr. Michaelson
prior to the closing of the merger, if the merger closes on or
before July 31, 2008. These shares will be exchanged for a
total of 29,309 shares of Redhook common stock upon closing
of the merger.
(5)
The business address of Mr. Robert Widmer is
929 N. Russell, Portland, Oregon 97227. Includes
13,279 shares that will be held by Mr. Widmers
spouse.
147
Table of Contents
(6)
The business address of Ms. Maier-Lenz is Schavinsland Str.
85, 0-79100 Freiburg, Germany. Includes 61,407 common shares
that will be held by the children of Ms. Maier-Lenz.
(7)
Includes 1,818 shares that will be held by
Mr. Boyles daughter, as to which Mr. Boyle
disclaims beneficial ownership.
(8)
Includes 133,500 shares subject to options.
(9)
Pursuant to a consulting agreement between Mr. Michaelson
and Widmer, Mr. Michaelson will be compensated $288,000 and
granted 8,120 shares of Widmer common stock, which will be
exchanged for 17,499 shares of Redhook common stock upon
closing of the merger, if the merger closes on or before
July 31, 2008. The cash compensation and stock issuance
will occur immediately prior to the closing of the merger.
(10)
Includes 12,000 shares subject to options.
(11)
Includes 8,000 shares subject to options. Also includes
3,000 shares held by Mr. Rogers spouse.
(12)
Includes 153,500 shares subject to options.
148
Table of Contents
149
Table of Contents
Amendment No. 3 to Redhooks Annual Report on
Form 10-K
for the fiscal year ended December 31, 2007 filed on
May 1, 2008 (a copy of which accompanies this joint proxy
statement/prospectus);
Redhooks Current Reports on
Form 8-K
filed on January 7, 2008, February 12, 2008,
February 19, 2008, February 25, 2008 and April 1,
2008; and
The description of Redhooks common stock contained in
Redhooks Registration Statement on
Form 8-A
filed on August 1, 1995, including any amendment or reports
filed for the purpose of updating that description.
Widmer Brothers Brewing Company
929 North Russell
Portland, OR 97227
Tel: (503) 331-7224
Attn: Investor Relations
150
Table of Contents
151
Table of Contents
WIDMER BROTHERS BREWING COMPANY
Page
F-3
F-4
F-5
F-6
F-7
F-8
F-9
F-1
Table of Contents
and
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2007, 2006 and 2005
F-2
Table of Contents
F-3
Table of Contents
F-4
Table of Contents
Years Ended December 31,
2007
2006
2005
Restated
Restated
$
77,734,152
$
63,598,644
$
55,017,048
2,507,353
3,223,679
3,193,505
75,226,799
60,374,965
51,823,543
51,868,498
38,686,211
29,793,222
23,358,301
21,688,754
22,030,321
18,185,614
14,650,652
14,130,328
1,553,845
(327
)
(353,703
)
175
3,618,515
6,684,399
7,900,168
(707,331
)
(178,084
)
(432,676
)
(83,867
)
20,641
(12,904
)
382,366
295,393
(408,832
)
137,950
(445,580
)
3,209,683
6,822,349
7,454,588
382,845
1,267,516
1,599,170
2,826,838
5,554,833
5,855,418
(2,825,927
)
(2,655,248
)
(2,391,936
)
$
911
$
2,899,585
$
3,463,482
F-5
Table of Contents
Years Ended December 31,
2007
2006
2005
$
911
$
2,899,585
$
3,463,282
68,775
$
911
$
2,899,585
$
3,532,057
F-6
Table of Contents
Common Stock
Series D
No Par Value
Preferred Stock
Retained
Accumulated
25,000,000 Shares
$.01 Par Value
Earnings
Other
Authorized
78,155 Shares Authorized
(Accumulated
Comprehensive
Shares
Amount
Shares
Amount
Deficit)
Income (Loss)
Total
3,793,605
$
15,463,367
78,155
$
150,000
$
2,261,558
$
(39,401
)
$
17,835,524
68,775
68,775
(100,000
)
(100,000
)
3,463,282
3,463,282
3,793,605
15,463,367
78,155
150,000
5,624,840
29,374
21,267,581
(29,374
)
(29,374
)
2,899,585
2,899,585
3,793,605
15,463,367
78,155
150,000
8,524,425
24,137,792
911
911
3,793,605
$
15,463,367
78,155
$
150,000
$
8,525,336
$
$
24,138,703
F-7
Table of Contents
Years Ended December 31,
2007
2006
2005
$
911
$
2,899,585
$
3,463,282
2,152,372
1,884,476
1,757,265
24,699
24,673
18,917
327
353,703
(175
)
(323,526
)
(157,321
)
30,687
(461,548
)
954,522
160,862
2,825,927
2,655,248
2,391,936
(3,081,326
)
(2,702,506
)
(1,449,472
)
1,212,560
(1,582,762
)
(227,818
)
1,010,468
(824,129
)
(175,827
)
2,026,250
3,238,135
1,001,067
(476,817
)
(1,006,727
)
(97,246
)
979,238
150,395
28,242
6,542,632
4,471,222
7,664,693
(17,707,874
)
(4,025,978
)
(1,323,258
)
(3,541,932
)
26,013
(110,000
)
(17,681,861
)
(7,677,910
)
(1,323,258
)
(5,864,685
)
(2,320,000
)
(10,584,191
)
20,663,333
6,500,000
6,546,250
(2,537,890
)
(2,620,498
)
(2,492,088
)
(100,000
)
12,260,758
1,559,502
(6,630,029
)
1,121,529
(1,647,186
)
(288,594
)
299,926
1,947,112
2,235,706
$
1,421,455
$
299,926
$
1,947,112
F-8
Table of Contents
NOTE 1
ORGANIZATION
NOTE 2
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
F-9
Table of Contents
F-10
Table of Contents
F-11
Table of Contents
2006
As Previously
Reported
Correction
As Restated
$
73,190,734
$
(9,592,090
)
$
63,598,644
48,367,622
(9,681,411
)
38,686,211
$
227,271
$
(89,321
)
$
137,950
2005
As Previously
Reported
Correction
As Restated
$
64,641,175
$
(9,624,127
)
$
55,017,048
39,506,606
(9,713,384
)
29,793,222
$
(356,523
)
$
(89,057
)
$
(445,580
)
NOTE 3
EQUITY
INVESTMENTS
F-12
Table of Contents
Fulton Street Brewery
2007
2006
$
7,864,869
$
6,243,648
$
3,467,536
$
2,490,162
$
4,370,325
$
3,753,486
$
15,419,368
$
3,063,833
$
14,802,528
$
2,875,550
NOTE 4
RECENT
ACCOUNTING PRONOUNCEMENTS
F-13
Table of Contents
NOTE 5
CRAFT
BRANDS ALLIANCE
F-14
Table of Contents
NOTE 6
RELATED
PARTY TRANSACTIONS
F-15
Table of Contents
F-16
Table of Contents
F-17
Table of Contents
NOTE 7
INVENTORIES
2007
2006
$
1,104,188
$
1,979,122
836,430
1,106,733
314,021
416,941
48,633
42,264
363,411
332,257
27,199
29,125
$
2,693,882
$
3,906,442
NOTE 8
PROPERTY,
EQUIPMENT AND LEASEHOLD IMPROVEMENTS
2007
2006
$
10,796,459
$
10,796,459
19,261,417
18,547,805
7,259,467
6,106,839
2,449,492
335,031
38,477
18,215
624,030
364,078
14,777,693
2,181,238
55,207,035
38,349,665
8,068,630
7,271,682
758,975
758,975
64,034,640
46,380,322
(19,375,311
)
(17,276,168
)
$
44,659,329
$
29,104,154
F-18
Table of Contents
NOTE 9
DEBT
2007
2006
$
753,333
$
13,500,000
7,541,981
6,996,667
200,000
200,000
200,000
200,000
200,000
200,000
22,395,314
7,596,667
1,075,620
1,120,000
$
21,319,694
$
6,476,667
F-19
Table of Contents
$
1,075,620
1,381,744
1,473,660
1,571,694
1,676,255
15,216,341
$
22,395,314
NOTE 10
DERIVATIVE
FINANCIAL INSTRUMENTS
NOTE 11
STOCKHOLDERS
EQUITY AND SERIES D REDEEMABLE PREFERRED STOCK
F-20
Table of Contents
NOTE 12
INCOME
TAXES
2007
2006
2005
$
450,218
$
1,502,735
$
495,667
(98,061
)
216,342
148,981
352,157
1,719,077
644,648
129,905
(144,853
)
782,482
(99,217
)
(306,708
)
172,040
30,688
(451,561
)
954,522
$
382,845
$
1,267,516
$
1,599,170
2007
2006
2005
$
1,226,286
$
2,319,599
$
2,534,492
(1,095,809
)
(902,784
)
(829,704
)
(63,279
)
131,601
273,519
79,737
9,479
19,430
235,278
(120,538
)
632
(169,841
)
(398,567
)
$
382,845
$
1,267,516
$
1,599,170
F-21
Table of Contents
2007
2006
$
154,328
$
274,220
285,372
42,530
439,700
316,750
4,285,737
4,141,728
455,294
445,666
4,741,031
4,587,394
$
(4,301,331
)
$
(4,270,644
)
NOTE 13
RETIREMENT
PLAN
NOTE 14
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION
2007
2006
$
1,110,184
$
311,015
$
832,586
$
2,735,791
$
55,000
$
29,374
NOTE 15
CONTINGENCIES
AND COMMITMENTS
$
232,384
209,480
174,660
111,141
100,150
1,441,955
$
2,269,770
F-22
Table of Contents
$
6,469,639
816,676
687,608
555,014
471,638
$
9,000,575
NOTE 16
MERGER
COSTS
F-23
Table of Contents
NOTE 17
SUBSEQUENT
EVENTS
F-24
Table of Contents
Agreement and Plan of Merger, as amended
A-1
Opinion of Houlihan Smith
B-1
Valuation Report of Corporate Advisory Associates
C-1
Section 60.551 to Section 60.594 of the Oregon Business
Corporation Act
D-1
Excerpt from Amended and Restated Bylaws of Redhook Ale Brewery,
Incorporated, dated November 30, 2007
E-1
F-25
Table of Contents
Table of Contents
Page
Definitions
A-1
Basic Transaction
A-6
(a) The Merger
A-6
(b) The Closing
A-6
(c) Merger Consideration
A-6
Effect of Merger
A-6
(a) General
A-6
(b) Articles of Incorporation
A-6
(c) Bylaws
A-6
(d) Directors
A-6
(e) Conversion of Target Shares
A-6
(f) Fractional Shares
A-6
(g) Exchange of Certificates
A-7
The Closing
A-7
Representations and Warranties of Target
A-7
(a) Organization, Qualification, and Corporate Power
A-8
(b) Capitalization
A-8
(c) Authorization of Transaction
A-8
(d) Noncontravention
A-9
(e) Brokers Fees
A-9
(f) Title to Properties; Encumbrances; Condition of
Properties
A-9
(g) Subsidiaries
A-9
(h) Financial Statements
A-9
(i) Internal Controls
A-10
(j) No Undisclosed Liabilities
A-10
(k) Books and Records
A-10
(l) Absence of Certain Changes
A-10
(m) Legal Compliance
A-11
(n) Licenses and Permits
A-11
(o) Tax Matters
A-11
(p) Real Property
A-12
(q) Intellectual Property
A-12
(r) Contracts
A-12
(s) Customers and Suppliers
A-13
(t) Accounts Receivable
A-13
(u) Disputed Accounts Payable
A-14
(v) Affiliate Transactions
A-14
(w) Litigation
A-14
(x) Employee Benefits
A-14
(y) Employees
A-16
(z) Environmental, Health, and Safety Matters
A-16
(aa) Insurance
A-16
(bb) Bank Accounts
A-17
(cc) Product Liability
A-17
(dd) Outstanding Indebtedness
A-17
A-i
Table of Contents
Page
(ee) Keg Deposits
A-17
(ff) Product Quality
A-17
(gg) Correctness of Representations and Warranties
A-17
Representations and Warranties of Buyer
A-17
(a) Organization
A-17
(b) Authorization of Transaction
A-18
(c) Noncontravention
A-18
(d) Capitalization
A-18
(e) Brokers Fees
A-18
(f) No Buyer Material Adverse Effect
A-19
(g) Tax Matters
A-19
(h) Tax Treatment
A-19
(i) Licenses and Permits
A-19
(j) Product Quality
A-19
(k) Correctness of Representations and Warranties
A-19
(l) SEC Filings; Buyer Financial Statements
A-19
Covenants
A-20
(a) From Execution through Closing
A-20
(b) From and After the Date of Closing
A-24
Conditions to Obligation to Close
A-25
(a) Conditions to Obligation of Buyer
A-25
(b) Conditions to Obligation of Target
A-26
Specific Performance
A-27
Termination
A-28
(a) Termination of Agreement
A-28
(b) Effect of Termination
A-28
Miscellaneous
A-28
(a) Nonsurvival of Representations, Warranties, and
Agreements
A-28
(b) Press Releases and Public Announcements
A-28
(c) No Third-Party Beneficiaries
A-29
(d) Entire Agreement
A-29
(e) Succession and Assignment
A-29
(f) Counterparts
A-29
(g) Headings
A-29
(h) Notices
A-29
(i) Governing Law and Disputes
A-29
(j) Consent to Jurisdiction; Waivers of Trial by Jury
A-29
(k) Amendments and Waivers
A-30
(l) Severability
A-30
(m) Fees and Expenses
A-30
(n) Construction
A-30
(o) Further Assurances
A-30
A-32
A-ii
Table of Contents
Organization, Qualification, and Corporate Power
Capitalization
Noncontravention
Brokers Fees
Title to Properties; Encumbrances; Condition of Properties
Absence of Certain Changes
Licenses and Permits
Real Property
Intellectual Property
Contracts
Powers of Attorney
Customers
Suppliers
Affiliate Transactions
Employee Benefits
Employees
Environmental, Health, and Safety Matters
Insurance
Banks Accounts
Outstanding Indebtedness
Keg Deposits
Organization
Noncontravention
Licenses and Permits
A-iii
Table of Contents
A-1
Table of Contents
A-2
Table of Contents
A-3
Table of Contents
A-4
Table of Contents
A-5
Table of Contents
A-6
Table of Contents
A-7
Table of Contents
A-8
Table of Contents
A-9
Table of Contents
A-10
Table of Contents
A-11
Table of Contents
A-12
Table of Contents
A-13
Table of Contents
A-14
Table of Contents
A-15
Table of Contents
A-16
Table of Contents
A-17
Table of Contents
A-18
Table of Contents
A-19
Table of Contents
A-20
Table of Contents
A-21
Table of Contents
A-22
Table of Contents
A-23
Table of Contents
A-24
Table of Contents
A-25
Table of Contents
A-26
Table of Contents
A-27
Table of Contents
A-28
Table of Contents
Mary Ann Frantz
Miller Nash LLP
111 S.W. Fifth Avenue, Suite 3400
Portland, Oregon 97204
Phone: 503-224-5858
Fax: 503-224-0155
Douglass A. Raff
Riddell Williams P.S.
1001 Fourth Avenue, Suite 4500
Seattle, WA 98154
Phone: 206-624-3600
Fax: 206-389-1708
A-29
Table of Contents
A-30
Table of Contents
BY:
BY:
A-31
Table of Contents
TO
AGREEMENT AND PLAN OF MERGER
BETWEEN
REDHOOK ALE BREWERY, INCORPORATED
AND
WIDMER BROTHERS BREWING COMPANY
A-32
Table of Contents
Timothy P. Boyle
Andrew R. Goeler
Kevin R. Kelly
David R. Lord
John D. Rogers, Jr.
Anthony J. Short
Kurt Widmer
Paul Shipman
David Mickelson
Terry Michaelson
Jay Caldwell
Mark Moreland
Timothy McFall
Sebastian Pastore
Martin Wall
Robert Widmer
Mary Ann Frantz
Nancy Deibert
A-33
Table of Contents
By:
By:
A-34
Table of Contents
Opinion of the Special Committee to the Board of Directors
Financial Advisor
105 W. Madison, Suite 1500
Tel: 312.499.5900 Toll Free: 800.654.4977
www.houlihansmith.com
Fax: 312.499.5901
www.fairnessopinion.com
www.solvencyopinion.com
B-1
Table of Contents
Redhook Ale Brewery, Incorporated
14300 NE
145
th
Street, Suite 210
Woodinville, WA 98072
Attn: CEO
Phone: 425-483-3232
Fax: 425-485-0761
Douglass A. Raff
Riddell Williams P.S.
1001 Fourth Avenue, Suite 4500
Seattle, WA 98154
Phone: 206-624-3600
Fax: 206-389-1708
B-2
Table of Contents
B-3
Table of Contents
1001 Fourth Avenue, Suite 3810
Tel
206-382-9898
Seattle, WA 98154
Fax
206-382-0355
BREWING
COMPANY
AS OF MARCH 31,
2007
Table of Contents
C-1
Table of Contents
Redhook Ale Brewery, Inc.
May 4, 2007
Page 2
C-2
Table of Contents
Redhook Ale Brewery, Inc.
May 4, 2007
Page 3
Boston Beer Co., Inc.
Mendocino Brewing Co., Inc.
Pyramid Breweries, Inc.
Redhook Ale Brewery, Inc.
C-3
Table of Contents
Redhook Ale Brewery, Inc.
May 4, 2007
Page 4
Projected
Projected
Actual
2007
2006
8.50
10.50
13.50
1.02
1.15
1.28
C-4
Table of Contents
Redhook Ale Brewery, Inc.
May 4, 2007
Page 5
C-5
Table of Contents
Redhook Ale Brewery, Inc.
May 4, 2007
Page 6
C-6
Table of Contents
VALUATION RATIOS FOR ACQUISITIONS IN THE NORTH AMERICAN MALT
BEVERAGE INDUSTRY
FINANCIAL DATA OF TARGET COMPANY ($000)
DATE
PRICE
PURCHASE
ANNUAL
INTEREST
CASH &
OF
PAID
PMT
%
ASSETS/
PRODUCTION
BEARING
EQUIV-
TOTAL
MVIC/
MVIC/
ACQ
($000)
METHOD
ACQD
STOCKS
(BARRELS)
DEBT
ALENTS
ASSETS
REVENUE
PROD
REV
ACQUIRED COMPANY DESCRIPTION
acq
FREDERICK BREWING CO
5/06
1,650
CASH
100.0
%
ASSETS
28,500
0
0
NA
NA
57.89
NA
Brews and distributes five styles of craft beer
primarily in the mid-atlantic states. Assets purchased
in receivership.
acq
PORTLAND BREWING CO
7/04
4,552
CASH + STOCK
100.0
%
ASSETS
45,000
0
26
4,299
10,859
100.58
0.42
Brews and distributes craft beer primarily in the
western states, under the MacTarnahans, Saxer,
and NorWester names. Also operates a pub.
HARMONIC AVERAGE
NM
NM
73.49
0.42
MEAN
4,299
10,859
79.24
0.42
C-7
Table of Contents
VALUATION RATIOS FOR SELECTED PUBLIC COMPANIES
a
MVIC; based on:
SHARE PRICE
Average Share Price ($000)
March
March
March
MARKET
MARKET
LESS
MKT VAL
2007
2007
2007
VALUE OF
VALUE OF
CASH &
INVESTED
High
Low
Avg
EQUITY
DEBT
o
EQUIV
o
CAPITAL
34.70
30.80
32.75
467,299
0
82,370
384,929
4.19
3.09
3.64
33,257
8,561
227
41,591
7.80
6.25
7.03
58,340
4,786
9,435
53,691
MVIC/EBITDA RATIOS; based on:
MVIC/R RATIOS; based on:
Latest
Latest
Latest 3 Yr
Latest 3 Yr
Latest
Latest
12 Months
Fiscal Year
Wtd Avg
Str Avg
12 Months
Fiscal Year
EBITDA
EBITDA
EBITDA
EBITDA
Net Revenue
Net Revenue
11.45
11.45
12.71
13.40
1.35
1.35
29.33
29.33
28.21
32.95
0.83
0.83
14.54
14.54
18.47
20.24
1.50
1.50
15.77
15.77
17.83
19.43
1.15
1.15
18.44
18.44
19.80
22.20
1.23
1.23
14.54
14.54
18.47
20.24
1.35
1.35
(a)
Earnings data adjusted for interest income
(b)
Harmonic average is calculated by averaging the reciprocals of
each number in the sample, and then taking the reciprocal of the
result. It is one of the statistical methods used to calculate
the average of a group of numbers which are ratios.
o
Book value is assumed to approximate market value
C-8
Table of Contents
PROJECTION FOR 2007 & 2008
PROJECTED
PROJECTED
ACTUAL
12/31/08
12/31/07
12/31/06
($000)
%
($000)
%
($000)
%
20,600
55.38
17,145
56.37
13,749
55.99
20,800
55.91
16,649
54.74
14,393
58.61
(4,200
)
(11.29
)
(3,379
)
(11.11
)
(3,586
)
(14.60
)
37,200
100.00
30,415
100.00
24,557
100.00
13,400
36.02
11,378
37.41
8,625
35.12
18,750
50.40
15,998
52.60
13,290
54.12
600
1.61
469
1.54
1
0.00
32,750
88.04
27,844
91.55
21,916
89.25
4,450
11.96
2,570
8.45
2,640
10.75
250
0.67
225
0.74
101
0.41
175
0.47
153
0.50
27
0.11
2,750
7.39
2,620
8.61
2,575
10.48
3,175
8.53
2,997
9.86
2,703
11.01
1,275
3.43
(427
)
(1.40
)
(63
)
(0.26
)
(2,000
)
(5.38
)
(1,078
)
(3.54
)
(175
)
(0.71
)
0
0.00
0
0.00
(59
)
(0.24
)
200
0.54
165
0.54
143
0.58
710
1.91
643
2.11
431
1.75
6,131
16.48
5,129
16.86
3,719
15.14
5,041
13.55
4,860
15.98
4,059
16.53
6,316
16.98
4,433
14.57
3,996
16.27
2,690
7.23
1,862
6.12
1,678
6.83
3,626
9.75
2,571
8.45
2,317
9.44
2,900
7.80
1,813
5.96
1,940
7.90
215,000
187,958
159,066
170,000
140,261
124,298
(a)
Includes barrels produced by Redhook.
C-9
Table of Contents
VALUATION ANALYSIS
($000, except value per share)
I.
Capitalizing
Earnings Before Interest, Tax, Depreciation, & Amortization
(EBITDA)
Projected
Projected
Actual
2008
2007
2006
$
11,216
$
7,324
$
6,110
8.50
10.50
13.50
95,336
76,902
82,485
(10,220
)
(10,220
)
(10,220
)
(16,541
)
0
0
0
5,459
5,459
150
150
150
3,692
3,692
3,692
$
72,417
$
75,983
$
81,566
II.
Multiple
of Revenue
Projected
Projected
Actual
2008
2007
2006
$
72,912
$
58,785
$
48,558
1.02
1.15
1.28
74,370
67,603
62,154
(10,220
)
(10,220
)
(10,220
)
(16,541
)
0
0
0
5,459
5,459
150
150
150
3,692
3,692
3,692
$
51,451
$
66,684
$
61,235
III. Concluded
Range of Value
$60,000
to $77,000
(a)
Balance at 3/31/07
(b)
Assumes additional construction costs are 100% debt-financed.
(c)
Balance is added because the debt level subtracted reflects the
investment in
construction-in-progress.
(d)
Original cost.
(e)
Consolidated Widmer/CBA revenue, less Redhook product sales.
C-10
Table of Contents
DETERMINATION OF NET ASSET VALUE
BOOK VALUE
MARKET VALUE
STATEMENT TYPE
3/31/07
3/31/07
($000)
%
($000)
%
184
0.41
184
0.42
4,573
10.22
4,573
10.37
1,826
4.08
1,826
4.14
1,280
2.86
1,280
2.90
7,863
17.58
7,863
17.83
11,750
26.26
11,000
(a)
24.95
5,459
12.20
5,459
(b)
12.38
10,539
23.56
10,539
(b)
23.90
3,563
7.96
3,563
(b)
8.08
349
0.78
349
(b)
0.79
496
1.11
496
(b)
1.13
87
0.20
87 b
0.20
32,244
72.07
31,493
71.42
192
0.43
150
(c)
0.34
3,500
7.82
3,692
(c)
8.37
43
0.10
0
0.00
896
2.00
896
(d)
2.03
4,631
10.35
4,738
10.74
44,738
100.00
44,095
100.00
1,120
2.50
1,120
2.54
6,049
13.52
6,049
13.72
1,210
2.70
1,210
2.74
8,379
18.73
8,379
19.00
8,950
20.01
8,950
20.30
3,661
8.18
3,661
8.30
12,611
28.19
12,611
28.60
20,990
46.92
20,990
47.60
342
0.76
342
0.78
150
0.34
150
0.34
23,256
51.98
22,613
51.28
(a)
Appraised by Cushman Wakefield of Oregon, Inc.; report dated
April 10, 2007.
(b)
Net book vlaue assumed to approximate market value.
(c)
Original cost.
(d)
Carrying value. Original purchase price was $1.5 million.
C-11
Table of Contents
Qualifications of Valuation Consultant
C-12
Table of Contents
Trustee
(1988-1995)
President, Board of Trustees
(1988-1991)
C-13
Table of Contents
D-1
Table of Contents
D-2
Table of Contents
D-3
Table of Contents
D-4
Table of Contents
D-5
Table of Contents
E-1
Table of Contents
E-2
Table of Contents
Item 20.
Indemnification
of Directors and Officers.
II-1
Table of Contents
Item 21.
Exhibits
and Financial Statement Schedules
Exhibit
2
.1
Agreement and Plan of Merger between the Registrant and Widmer
Brothers Brewing Company, dated November 13, 2007 (included
as part of Annex A to the joint proxy statement/prospectus
forming a part of this registration statement)
2
.2
Amendment No. 1 dated April 30, 2008 to Agreement and
Plan of Merger between the Registrant and Widmer Brothers
Brewing Company (included as part of Annex A to the joint
proxy statement/prospectus forming a part of this registration
statement)
2
.3
Form of
Lock-Up
Agreement to be delivered by certain of the shareholders of
Widmer Brothers Brewing Company
Exhibit
4
.1*
Form of Common Stock Certificate of Craft Brewers Alliance, Inc.
Exhibit
5
.1
Opinion of Riddell Williams P.S. regarding the legality of the
securities
Exhibit
8
.1
Form of opinion of Riddell Williams P.S. regarding the federal
income tax consequences of the transaction
Exhibit
10
.1
Loan Agreement dated as of December 28, 2007 between Bank
of America, N.A., and Widmer Brothers Brewing Company
10
.2
Master Lease Agreement dated as of June 6, 2007 between
Banc of America Leasing & Capital, LLC and Widmer
Brothers Brewing Company
10
.3
Amended and Restated License Agreement dated as of
February 28, 1997 between Widmer Brothers Brewing Company
and Widmers Wine Cellars, Inc. and Canandaigua Wine
Company, Inc.
10
.4
Restated Lease dated as of January 1, 1994 between
Smithson & McKay Limited Liability Company and Widmer
Brothers Brewing Company
10
.5
Commercial Lease (Restated) dated as of December 18, 2007
between Widmer Brothers LLC and Widmer Brothers Brewing Company
Exhibit
23
.1
Consent of Moss Adams LLP, Independent Registered Public
Accounting Firm
23
.2
Consent of Moss Adams LLP, Independent Registered Public
Accounting Firm
23
.3
Consent of Riddell Williams P.S. (included in Exhibit 5.1
and Exhibit 8.1)
Exhibit
24
.1
Power of Attorney (included in the signature page hereto)
II-2
Table of Contents
Exhibit
99
.1
Form of proxy card for the Registrants annual meeting of
shareholders
99
.2
Form of proxy card for the special meeting of shareholders of
Widmer Brothers Brewing Company
99
.3
Consent of Houlihan Smith
99
.4
Consent of Kurt R. Widmer to be named as a director
99
.5
Consent of Timothy P. Boyle to be named as a director
99
.6
Consent of Kevin R. Kelly to be named as a director
99
.7
Consent of Andrew R. Goeler to be named as a director
99
.8
Consent of Corporate Advisory Associates
*
To be filed by amendment
Previously filed
Item 22.
Undertakings.
Table of Contents
II-4
Table of Contents
By:
Chief Executive Officer and
Chairman of the Board
(Principal Executive Officer)
May 1, 2008
President and
Chief Operating Officer
(Principal Executive Officer)
May 1, 2008
Chief Financial Officer and Treasurer
(Principal Financial and
Accounting Officer)
May 1, 2008
Director
May 1, 2008
Director
May 1, 2008
Director
May 1, 2008
Director
May 1, 2008
Director
May 1, 2008
Director
May 1, 2008
Attorney-in-Fact
II-5
Table of Contents
Exhibit
2
.1
Agreement and Plan of Merger between the Registrant and Widmer
Brothers Brewing Company, dated November 13, 2007 (included as
part of Annex A to the joint proxy statement/prospectus forming
a part of this registration statement)
2
.2
Amendment No. 1 dated April 30, 2008 to Agreement and
Plan of Merger between the Registrant and Widmer Brothers
Brewing Company (included as part of Annex A to the joint
proxy statement/prospectus forming a part of this registration
statement)
2
.3
Form of Lock-Up Agreement to be delivered by certain of the
shareholders of Widmer Brothers Brewing Company
4
.1*
Form of Common Stock Certificate of Craft Brewers Alliance, Inc.
5
.1
Opinion of Riddell Williams P.S. regarding the legality of the
securities
8
.1
Form of opinion of Riddell Williams P.S. regarding the federal
income tax consequences of the transaction
10
.1
Loan Agreement dated as of December 28, 2007 between Bank
of America, N.A., and Widmer Brothers Brewing Company
10
.2
Master Lease Agreement dated as of June 6, 2007 between
Banc of America Leasing & Capital, LLC and Widmer
Brothers Brewing Company
10
.3
Amended and Restated License Agreement dated as of
February 28, 1997 between Widmer Brothers Brewing Company
and Widmers Wine Cellars, Inc. and Canandaigua Wine
Company, Inc.
10
.4
Restated Lease dated as of January 1, 1994 between
Smithson & McKay Limited Liability Company and Widmer
Brothers Brewing Company
10
.5
Commercial Lease (Restated) dated as of December 18, 2007
between Widmer Brothers LLC and Widmer Brothers Brewing Company
23
.1
Consent of Moss Adams LLP, Independent Registered Public
Accounting Firm
23
.2
Consent of Moss Adams LLP, Independent Registered Public
Accounting Firm
23
.3
Consent of Riddell Williams P.S. (included in Exhibit 5.1 and
Exhibit 8.1)
24
.1
Power of Attorney (included in the signature page hereto)
99
.1
Form of proxy card for the Registrants annual meeting of
shareholders
99
.2
Form of proxy card for the special meeting of shareholders of
Widmer Brothers Brewing Company
99
.3
Consent of Houlihan Smith
99
.4
Consent of Kurt R. Widmer to be named as a director
99
.5
Consent of Timothy P. Boyle to be named as a director
99
.6
Consent of Kevin R. Kelly to be named as a director
99
.7
Consent of Andrew R. Goeler to be named as a director
99
.8
Consent of Corporate Advisory Associates
*
To be filed by amendment
previously filed
|
(a) | the Merger Agreement; | |
(b) | the Registration Statement; | |
(c) | tax representation letters dated [the effective date of the Registration Statement] from officers of each of Redhook and Widmer (the Tax Representation Certificates); and | |
(d) | such other instruments and documents as we have deemed necessary or appropriate. |
(i) | Original documents submitted to us (including signatures thereto) are authentic, documents submitted to us as copies conform to the original documents, and that all such documents have been (or will be by the Effective Time) duly and validly executed and delivered where due execution and delivery are a prerequisite to the effectiveness thereof; | |
(ii) | All representations, warranties, and statements made or agreed to by Redhook and Widmer and by their managements, employees, officers, directors and shareholders in connection with the Merger, including, but not limited to (x) those set forth in the Merger Agreement (including exhibits thereto), (y) those set forth in the Registration Statement, and (z) those set forth in the Tax Representation Certificates, are, or will be, true, complete and accurate at all relevant times; | |
(iii) | Any representation or statement made to the knowledge of or similarly qualified is correct without such qualification; | |
(iv) | All covenants contained in the Merger Agreement (including exhibits thereto) will be performed without waiver or breach of any material provision thereof; and | |
(v) | The Merger will be consummated in accordance with the Merger Agreement without any waiver or breach of any provision thereof, and the Merger will be effective under applicable state laws. |
| The LIBOR Rate plus the Applicable Rate as defined below. | ||
| The IBOR Rate plus the Applicable Rate as defined below. |
LOAN AGREEMENT | aws/0460/widmer |
- 1 -
Applicable Rate | ||||||||||||||||
(in percentage points per annum) | ||||||||||||||||
Pricing Level | Funded Debt to EBITDA | LIBOR/IBOR + | Prime +/- | Fee Margin: | ||||||||||||
1 |
>
to 4.0 to 1
|
1.500 | 0.00 | 0.250 | ||||||||||||
2 |
<4.0 to 1 but
>
3.0 to 1
|
1.250 | -0.25 | 0.225 | ||||||||||||
3 |
<3.0 to 1 but
>
2.0 to 1
|
1.125 | -0.50 | 0.200 | ||||||||||||
4 |
< 2.0 to 1
|
1.000 | -0.75 | 0.175 |
LOAN AGREEMENT | aws/0460/widmer |
- 2 -
LOAN AGREEMENT | aws/0460/widmer |
- 3 -
| The LIBOR Rate plus the Applicable Rate as defined in Section 1.6. | ||
| The IBOR Rate plus the Applicable Rate as defined in Section 1.6. |
LIBOR Rate =
|
London Inter-Bank Offered Rate | |
|
(1.00 - Reserve Percentage) |
LOAN AGREEMENT | aws/0460/widmer |
- 4 -
LOAN AGREEMENT | aws/0460/widmer |
- 5 -
IBOR Rate =
|
IBOR Base Rate | |
|
(1.00 - Reserve Percentage) |
LOAN AGREEMENT | aws/0460/widmer |
- 6 -
LOAN AGREEMENT | aws/0460/widmer |
- 7 -
LOAN AGREEMENT | aws/0460/widmer |
- 8 -
LOAN AGREEMENT | aws/0460/widmer |
- 9 -
LOAN AGREEMENT | aws/0460/widmer |
- 10 -
LOAN AGREEMENT | aws/0460/widmer |
- 11 -
Period | Ratios | |
From the closing date
through September 30, 2008:
|
4.5 to 1 | |
|
||
From December 31, 2008
through September 30, 2009
|
4.0 to 1 | |
|
||
From December 31, 2009
through September 30, 2010
|
3.5 to 1 | |
|
||
From December 31, 2010,
and thereafter
|
3.0 to 1 |
LOAN AGREEMENT | aws/0460/widmer |
- 12 -
LOAN AGREEMENT | aws/0460/widmer |
- 13 -
LOAN AGREEMENT | aws/0460/widmer |
- 14 -
LOAN AGREEMENT | aws/0460/widmer |
- 15 -
LOAN AGREEMENT | aws/0460/widmer |
- 16 -
LOAN AGREEMENT | aws/0460/widmer |
- 17 -
LOAN AGREEMENT | aws/0460/widmer |
- 18 -
LOAN AGREEMENT | aws/0460/widmer |
- 19 -
LOAN AGREEMENT | aws/0460/widmer |
- 20 -
LOAN AGREEMENT | aws/0460/widmer |
- 21 -
Bank: | Borrower: | |||||||||
|
||||||||||
BANK OF AMERICA, N.A. | WIDMER BROTHERS BREWING COMPANY | |||||||||
|
||||||||||
By
|
/s/ Michael Snook | By | /s/ Rob Widmer | |||||||
|
|
|
||||||||
|
||||||||||
Address where notices to the Bank are to be sent: | Address where notices to the Borrower are to be sent: | |||||||||
|
||||||||||
Oregon Commercial Banking | 929 North Russell | |||||||||
OR1-129-17-15 | Portland, Oregon 97227 | |||||||||
121 SW Morrison St., Suite 1700 | Telephone: 503-281-2437 | |||||||||
Portland, OR 97204 | Telefacsimile: 503-281-1496 | |||||||||
Attention: Eric Eidler | ||||||||||
Telephone: (503) 275-1407 | ||||||||||
Telefacsimile: (503) 275-1391 |
LOAN AGREEMENT | aws/0460/widmer |
- 22 -
Banc of America Leasing & Capital, LLC | Master Lease Agreement Number: 17495-90000 |
1
2
3
4
5
BANC OF AMERICA LEASING & CAPITAL, LLC (Lessor) | Widmer Brothers Brewing Company (Lessee) | |||||||||||||
|
||||||||||||||
|
By: | /s/ | By: | /s/ Richard G. Shawen | ||||||||||
|
|
|
||||||||||||
|
Print Name: | Print Name: | Richard G. Shawen | |||||||||||
|
||||||||||||||
|
||||||||||||||
|
Title: | Title: | Vice President Finance | |||||||||||
|
||||||||||||||
|
||||||||||||||
|
Taxpayer ID # : | |||||||||||||
|
Org. ID # (if any) |
|
||||||||||||
|
Chief Executive Office: |
|
||||||||||||
|
929 N. Russell | |||||||||||||
|
Portland, OR 97227 |
6
|
Schedule (Lease Intended as Security) | Schedule | ||
Banc of America Leasing & Capital, LLC
|
to Master Lease Agreement | Number 17495-90001 |
Quantity | Description | Serial Number | Lessors Cost | |||
|
Location | Address | City | County | State | ZIP | |||||
A
|
929 North Russell Street | Portland | Multnomah | Oregon | 97227 |
Page 1 of 3
BANC OF AMERICA LEASING & CAPITAL, LLC | Widmer Brothers Brewing Company | |||||||
|
||||||||
By:
|
/s/ | By: | /s/ Richard G. Shawen | |||||
|
|
|
||||||
Printed Name:
|
Printed Name: | Richard G. Shawen | ||||||
|
||||||||
|
||||||||
Title:
|
Title: | Vice President Finance | ||||||
|
||||||||
|
||||||||
|
Acceptance Date: | 6/20/07 |
Page 2 of 3
DESCRIPTION | YR | RUL | ||||||||
BREWHOUSE 250,000 BBL/YR
|
||||||||||
|
||||||||||
1 |
Malt Handling System, Huppmann, 15 tons per hour, c/o:
|
1996 | 14 | |||||||
1 - Dry Grist Mill, Buhler, Maltomat 07, s/n 20-351-733,
type DBZC-073110, 6 roller, 4 ton per hour
|
||||||||||
2 - Malt Silo, 30 ton capacity
|
||||||||||
2 - Malt Silo, 125 ton capacity
|
||||||||||
1 - Dust Collection System, Buhler
|
||||||||||
1 - Grist Bin, 7 ton
|
||||||||||
2 - Bucket Elevator, 6x10 30-40
|
||||||||||
2 - Chain Conveyor, 12x60
|
||||||||||
1 - Screw Conveyor, 16x20
|
||||||||||
1 - Malt Weigh Hopper, with load cell
|
||||||||||
1 - Super Sack Hopper, Huppmann, 500CS, s/n X10877-00
|
||||||||||
1 - Hoist, overhead, Coffing, 1-ton, with support
|
||||||||||
1 - Item of related equipment, piping and controls
|
||||||||||
|
||||||||||
1 |
Wet Spent Grain Silo, Vetter, 70 cubic meter, with ball
cleaning device and rotary discharge valve
|
1996 | 19 | |||||||
|
||||||||||
1 |
Mash Tun, Huppmann, 242 hl, 7,440 gal, Co # 1 w/ mixer, mash
pump, piping, valves and fittings
|
1996 | 19 | |||||||
|
||||||||||
1 |
Lauter Tun Kettle, Huppmann, 615 hl, 18,900 gal, with
Saccharometer, spent grain discharge, piping, valves and
fittings
|
1996 | 19 | |||||||
|
||||||||||
1 |
Wort Kettle, Huppmann, 470 hl, 12,462 gal, Co #4 with 15 hp
pump, piping, valves and fittings
|
1996 | 19 | |||||||
|
||||||||||
1 |
Whirlpool, Huppmann, 440 hl, 11,687 gal, Co #5, piping,
valves and fittings
|
1996 | 19 | |||||||
|
||||||||||
1 |
Pre-run Kettle, Huppmann, 380 hl, piping, valves and fittings
|
2001 | 24 | |||||||
|
||||||||||
1 |
Traub Tank, Mueller, 25 hl, 790 gal, Co # #6, w/ pump,
piping, valves and fittings
|
1996 | 19 |
1
DESCRIPTION | YR | RUL | ||||||||
1 |
Wart Cooling System, glycol c/o:
|
1996 | 14 | |||||||
1 - Oxygen Aeration Unit, Huppmann
|
||||||||||
1 - Heat Exchanger, APV, mdl Delta #SR62AG, s/n 11483
|
||||||||||
1 - Water Filter, Culligan, apprx 42 dia x 60
|
||||||||||
1 - Ultraviolet Disinfection, Aquafine, CSL-6R, s/n JS97024
|
||||||||||
|
||||||||||
1 |
Warm Water Tank, Mueller, s/n M6406-3, stainless steel, 910
hl, 23,560 gal with piping, valves and fittings
|
1996 | 19 | |||||||
|
||||||||||
1 |
Cold Water Tank, Mueller, s/n 1640D6-2, 510 hl, 13,175 gal
with piping, valves and fittings
|
1996 | 19 | |||||||
|
||||||||||
1 |
Chilled Water Tank, Mueller, s/n 104006-1, 510 hl, 13,175
gal with piping, valves and fittings
|
1996 | 19 | |||||||
|
||||||||||
1 |
Clean in Place System, Brewhouse c/o:
|
1996 | 19 | |||||||
1 - Water Panel, Sudmo, 5 valve
|
||||||||||
3 - Caustic Tank, Carl Karrer, apprx 5 dia x 8 high
|
||||||||||
1 - Heat Exchanger, APV, mdl Delta SR22/1, s/n 11484
|
||||||||||
1 - Automatic Sieve
|
||||||||||
1 - Lot of various pumps
|
||||||||||
1 - Item of related equipment, piping and controls
|
||||||||||
|
||||||||||
1 |
Brewhouse Control System, Huppmann, Brewmaxx, with
Wonderware interface, Siemens and Allen Bradley PLCs,
updated 2006.
|
2006 | 14 | |||||||
|
||||||||||
1 |
Item of Proces Piping, including steam, water, gas, air,
CO2, grain
|
1996 | 19 | |||||||
|
||||||||||
1 |
Item of HVAC in brewery including ductwork, exhausters and
related
|
1996 | 19 | |||||||
|
||||||||||
SOUTH CELLAR
|
||||||||||
|
||||||||||
6 |
Fermentation Tank, Mueller, Co #s S7-12, 12 dia x 40, 900
bbl, 31,000 gal capacity
|
1996 | 19 |
2
DESCRIPTION | YR | RUL | ||||||||
6 |
Fermentation Tank, Mueller, Co #s S1-6, 10 dia x 40, 750
bbl, 24,229 gal capacity
|
1996 | 19 | |||||||
|
||||||||||
1 |
Yeast Brink Tank, JV Northwest, Inc, 340 gal with pump
|
1996 | 19 | |||||||
|
||||||||||
1 |
Collection Brink Tank, JV Northwest, Inc, est 1,000 gal
|
1996 | 19 | |||||||
|
||||||||||
1 |
Weigh Scale, GSE, mdl 460 and 550 readout, Yeast Brink and
Collection
|
1996 | 4 | |||||||
|
||||||||||
1 |
Tank Support Equipment, S7-12 c/o:
|
1996 | 19 | |||||||
1 - Valve Manifold/Matrix, Station, 36 valves
|
||||||||||
1 - Platform Bridge
|
||||||||||
1 - Item of pumps, piping, valves and fittings
|
||||||||||
|
||||||||||
1 |
Clean in Place System Fermentation, Huppmann, c/o:
|
1996 | 19 | |||||||
2 - Pumping Matrix with pumps, valves and fittings
|
||||||||||
1 - Item of related equipment, piping and controls
|
||||||||||
|
||||||||||
1 |
Control System, Fermentation including PLCs, panels, wiring
and related
|
1996 | 10 | |||||||
|
||||||||||
1 |
Caustic Water Treament System c/o:
|
1996 | 10 | |||||||
4 - Caustic and Hot Water Tanks, stainless steel
|
||||||||||
1 - Waste Tank
|
||||||||||
1 - Water Tank
|
||||||||||
1 - Manifold System
|
||||||||||
|
||||||||||
BOILER ROOM
|
||||||||||
|
||||||||||
2 |
Scotch Marine Boiler, Cleaver-Brooks, package, mdl
CB1700-350, s/ns L-94377 and L-94378
|
1996 | 19 | |||||||
|
||||||||||
1 |
Boiler Feed System, w/ 3 - pumps, feed tank, est 4 dia x 8
|
1996 | 14 | |||||||
|
||||||||||
COMPRESSOR ROOM
|
3
DESCRIPTION | YR | RUL | ||||||||
2 |
Air Compressor, rotary screw, Kobelco, mdl KNW0-W/L, s/n
88C0397 & 89C0741, 75 hp
|
1996 | 10 | |||||||
|
||||||||||
1 |
Refrigerated Air Dryer, Company ID #D-1, Zeks, mdl
400HSTA400, s/n 93172
|
1996 | 10 | |||||||
|
||||||||||
1 |
Refrigeration Compressor, rotary screw, 150 hp, Frick, mdl
VYARGF-46, s/n AOR-015
|
2006 | 24 | |||||||
|
||||||||||
1 |
Heat Exchanger Plate, ammonia to glycol exchange, est 2-1/2
x 6 x 6 overall
|
1996 | 14 | |||||||
|
||||||||||
1 |
Glycol Refrigeration System, Wescold, including 2 -
Compressor, 125 hp, Vilter, mdl VMC450, s/ns 45610 and
45609, condensate tank, various pumps and piping
|
1996 | 14 | |||||||
|
||||||||||
BOTTLING
|
||||||||||
|
||||||||||
1 |
Item of Controls and PLCs for packaging line
|
1996 | 4 | |||||||
|
||||||||||
1 |
Filler/Crowner, Krones, 66 valve, mdl DK/2VIL, # K013
|
1996 | 10 | |||||||
|
||||||||||
1 |
Bottle Coder, Videojet, mdl Excel 2000 Opaque
|
2002 | 10 | |||||||
|
||||||||||
1 |
Crown Feeder, Qublelette Machinery Systems, mdl BC3060504DX,
s/n 098
|
1996 | 10 | |||||||
|
||||||||||
1 |
Decaser, Hartness, mdl D1000
|
1996 | 10 | |||||||
|
||||||||||
1 |
Case Coder, Videojet, mdl Excel, Series 100
|
1998 | 6 | |||||||
|
||||||||||
1 |
Case Slitter/Sealer, Hertel Company, mdl 540, with Nordsen
gluer, discharge, and related
|
1996 | 10 | |||||||
|
||||||||||
1 |
Labeler, Krones, mdl Topomatic
|
1996 | 10 |
4
DESCRIPTION | YR | RUL | ||||||||
1 |
Bottling Line Equipment, Bevco, including: 2 - Combiner,
bidirectional, mdl ZD450, 14; 1 - Rinser, M810, s/n J7639;
1 - Accumulater, 8x16, bidirectional; 1 - Lot of link belt
conveyor; 1 - Item of controls
|
1996 | 10 | |||||||
|
||||||||||
2 |
Fill Level Inspector, Filtec, mdl FT-50, s/n 113940
|
1996 | 10 | |||||||
|
||||||||||
1 |
Full Case Inspector, Filtec, mdl FT-100, s/n 40196
|
1996 | 4 | |||||||
|
||||||||||
1 |
Case Packer, Hartness, mdl 825, s/n 8635
|
1996 | 14 | |||||||
|
||||||||||
1 |
Item of Bottling Line Change Parts, 22 oz, for filler,
labeler, decaser, caser, and related
|
2002 | 15 | |||||||
|
||||||||||
PACKAGING
|
||||||||||
|
||||||||||
1 |
Palletizer, Columbia Machine Company, mdl FL150 0RR-AB-0607,
s/n 0607-6529-2525
|
2006 | 24 | |||||||
|
||||||||||
1 |
Pallet Elevator, Titan, with live roll conveyor 60x30
|
1996 | 14 | |||||||
|
||||||||||
1 |
Stretch Wrapper, Lantech, mdl TQ-600, s/n QA001163 with
conveyor
|
1996 | 10 | |||||||
|
||||||||||
1 |
De Palletizer, Western Atlas, Von Gal, s/n 7096, Company
ID #LS6 & #PRS1
|
1996 | 14 | |||||||
|
||||||||||
1 |
Item of Case Conveyor, Western Atlas, 24 wide, approx 250
lf overall, with merry-go-round live roll section with
incline and decline belts
|
1996 | 14 | |||||||
|
||||||||||
NORTH BREWERY
|
||||||||||
|
||||||||||
1 |
Centrifuge/Separator, Westphalia, mdl KC-1152 T/S, s/n 5807,
est 25 hp with Pinpoint carbonator, pump and piping
|
1996 | 10 | |||||||
|
||||||||||
5 |
Transfer Pump, sanitary, centrifugal, 1-1/2 x 1-1/2
|
2000 | 8 |
5
DESCRIPTION | YR | RUL | ||||||||
1 |
Sterilizer, Market Forge, Sterilmatic, apprx 18 dia x 30
|
1996 | 2 | |||||||
|
||||||||||
3 |
Bright BierTank, JV Northwest, Inc, Co #s B5-7, stainless
steel, 167 bbl, 5,115 gal
|
2002 | 25 | |||||||
|
||||||||||
2 |
Aging Tank, Paul Mueller, Co #s 6-8, stainless steel, apprx
8 dia, x 12
|
1985 | 10 | |||||||
|
||||||||||
1 |
Schenk Filter, Schenk, mdl 2HF-S15-B1, s/n 8815
|
1996 | 14 | |||||||
|
||||||||||
5 |
Bright Bier Tank, JV Northwest, Inc, Co #s 17-21, stainless
steel, 220 bbl, 2 6,820 gal
|
1994 | 17 | |||||||
|
||||||||||
4 |
Bright Bier Tank, JV Northwest, Inc, Co #s B5-7stainless
steel, 225 bbl, 7,960 gal
|
1996 | 19 | |||||||
|
||||||||||
1 |
Kegging Line, Monarch, Company #6, CPO9-602-27, includes a
wash tunnel, 4 - filling line, scissor table, digital
readout, and related * NOTE: To be replaced during plant
expansion, RUL reflects expected remaining service life
|
1994 | *3 | |||||||
|
||||||||||
1 |
Inkjet Coder, Videojet, Excel
|
1996 | 4 | |||||||
|
||||||||||
1 |
Tank Control Panel, North Fermenters, including Sudmo 16
valve matrix
|
1990 | 10 | |||||||
|
||||||||||
3 |
Fermentation Tank, Mueller, Co #s 1-3, stainless steel,
dimpled jacketed, 2,071 gal
|
1990 | 13 | |||||||
|
||||||||||
1 |
Fermentation Tank, DCI, Co #4, stainless steel, dimpled
jacketed, 1,985 gal
|
1990 | 13 | |||||||
|
||||||||||
8 |
Fermentation Tank, JV Northwest, Inc, Co #s 5-12, 14 & 15,
stainless steel, 2,781 gal
|
1991 | 14 | |||||||
|
||||||||||
2 |
Yeast Fermentation Tank, manufacture n/a, Co #s 10 & 16,
stainless steel, est 1,000 gal
|
1985 | 10 | |||||||
|
||||||||||
1 |
Tank, stainless, Co #3, 1,273 gal
|
1998 | 21 |
6
DESCRIPTION | YR | RUL | ||||||||
1 |
Tank, stainless, Co #2, 1,609 gal
|
1998 | 21 | |||||||
|
||||||||||
1 |
Lager Tank, stainless, Co #1, 2,416 gal
|
1998 | 21 | |||||||
|
||||||||||
1 |
Boiler, Scotch Marine, Columbia, 50 hp, year 1994, w/
related peripherals Located on mezzanine
|
1994 | 17 | |||||||
|
||||||||||
1 |
Refrigeration Compressor, Trane, mdl CVWV0604
|
1993 | 11 | |||||||
|
||||||||||
1 |
Tank Support Equipment, North Cellar c/o:
|
2001 | 24 | |||||||
1 - Control System
|
||||||||||
1 - Platform Bridge
|
||||||||||
1 - Item of pumps, piping, valves and fittings
|
||||||||||
|
||||||||||
LAB EQUIPMENT
|
||||||||||
|
||||||||||
3 |
(3) Analyzer, Gehaltemeter, mdl DGM-03
|
1998 | 1 | |||||||
|
||||||||||
1 |
CO2 Analyzer, Gehaltemeter, s/n 85
|
2007 | 7 | |||||||
|
||||||||||
1 |
Micrologger, (DO2 and Gaseous) s/n 80850
|
2006 | 6 | |||||||
|
||||||||||
1 |
Micrologger, (DO2 and Gaseous) s/n 81534
|
2006 | 6 | |||||||
|
||||||||||
1 |
Microscope, Olympus, mdl BX41
|
2006 | 6 | |||||||
|
||||||||||
1 |
DMA Density Meter, s/n 80115144
|
2007 | 7 | |||||||
|
||||||||||
1 |
Alcolyzer Plus Beer Nir Analyzer, s/n 80021766
|
2007 | 7 | |||||||
|
||||||||||
1 |
Autosampler, s/n 8012694
|
2007 | 7 | |||||||
|
||||||||||
THROUGHOUT
|
||||||||||
|
||||||||||
1 |
Waste Water Storage Tank, 12,000 gal, in upper lot
|
1998 | 21 | |||||||
|
||||||||||
1 |
Telephone System, Shortel, 130 desksets throughout
|
2006 | 9 |
7
DESCRIPTION | YR | RUL | ||||||||
RESTAURANT
|
||||||||||
|
||||||||||
1 |
Lot of Restuarant Furniture, Fixtures & Equipment including:
|
*2000 | 8 | |||||||
1 - Stand, hostess, wood
|
||||||||||
1 - Ice Machine, Ice-O-Matic
|
||||||||||
2 - Prep Station, salad, Delfield, refrigerated
|
||||||||||
1 - Pie Cabinet, Delfield, overhead, 2-door, glass, 48
|
||||||||||
1 - Bun Warmer, Wells, 2 drawer
|
||||||||||
1 - Range, Jaderan, gas fired, 6 burner
|
||||||||||
1 - Griddle, gas fired, 2 burner
|
||||||||||
1 - Char broiler, US Range, 36
|
||||||||||
1 - Warmer, 2 drawer
|
||||||||||
1 - Hood, Exhuast, stainless steel with ansul fire protection
|
||||||||||
2 - Prep Station, salad, Delfield, refrigerated, 2 door, 60
|
||||||||||
1 - Lot of tables, chairs, booths, stools and other furniture
throughout, est seating for 100
|
||||||||||
1 - Bar and back bar with sink, coolers and related
|
||||||||||
2 - TVs, 24
|
||||||||||
1 - Walkin Cooler, prefab
|
||||||||||
2 - Prep Station, salad, Delfield, refrigerated, 2 door, 54
|
||||||||||
1 - Mixer with stand
|
||||||||||
1 - Meat Slicer, Globe
|
||||||||||
1 - Dishwashing line including washer, disposal, tables, sink and shelves
|
||||||||||
1 - Glasswasher
|
||||||||||
1 - Point of Sale System, Micros, with terminals and printers
|
||||||||||
1 - Misc Lot, throughout
|
||||||||||
* YR reflects average.
|
||||||||||
|
||||||||||
KEGS
|
||||||||||
|
||||||||||
1 |
Lot of 66,302 half barrel kegs, Sankey kegs per WBBC
Account 2297 Deposits, as of 12/31/06. Note: YR reflects
weighted average
|
2003 | 10 |
8
- 1 -
i) | Except as expressly provided herein, Widmers Wine shall maintain and keep current all right, title, and interest in and to the Trademarks and the goodwill associated therewith; | ||
ii) | Widmer Brewing acknowledges this Agreement does not grant to Widmer Brewing any right, title, or interest in or to the Trademarks or the goodwill associated therewith; |
- 2 -
iii) | Except as expressly provided herein, Widmer Brewing acknowledges that Widmers Wine has the sole right, title and interest in and to the Trademarks and the goodwill associated therewith, and Widmer Brewing shall never challenge Widmers Wines right, title or interest therein or thereto and shall not, directly or indirectly, seek to register the Trademarks or any mark confusingly similar thereto; however, it is understood and agreed that WIDBERRY and WIDBERRY WEIZEIN are not confusingly similar; | ||
iv) | Widmer Brewing shall promptly notify Widmers Wine in writing of any infringement or suspected infringement of the Trademarks which comes to the attention of Widmer Brewing during the term of this License and will supply information reasonably requested by Widmers Wine with respect to such infringement; | ||
v) | Representative examples of Products, Other Products, and packaging, advertising and promotional material of Widmer Brewing using the Trademarks, including but not limited to, WIDMER, WIDMER BREWING, WIDBIER, WIDBIER BREWING COMPANY, WIDMER BROTHERS, or WIDMER BROTHERS BREWING, shall be available for inspection by Widmers Wine at Widmer Brewing premises during normal business hours, upon ten (10) days notice. The packaging, advertising, and promotional materials of Widmer Brewing shall not disparage or tarnish in any material manner Widmers Wines products or Trademarks. |
- 3 -
- 4 -
- 5 -
|
If to Widmers Wine: | Robert S. Sands, Esq. | ||
|
Canandaigua Wine Company, Inc. | |||
|
116 Buffalo Street | |||
|
Canandaigua, New York 14424 | |||
|
Telefacsimile No. 716-396-7675 |
- 6 -
|
If to Widmer Brewing: | Mr. Kurt Widmer | ||
|
Widmer Brothers Brewing Company | |||
|
929 North Russell | |||
|
Portland, Oregon 97227 | |||
|
Telefacsimile No. 603-281-1496 | |||
|
||||
|
With a copy to: | Kermit A. Brashear, Esquire Brashear & Ginn | ||
|
800 Farnam Plaza | |||
|
1623 Farnam Street | |||
|
Omaha, Nebraska 68102-2106 | |||
|
Telefacsimile No. 402-348-1111 |
WIDMER BROTHERS BREWING
COMPANY, INC. |
WIDMERS WINE CELLARS, INC. | |||||||||
|
||||||||||
By:
|
/s/ Kurt Widmer
|
By: |
/s/ Robert S. Sands
|
|||||||
Its: Pres | Its: Secretary | |||||||||
|
||||||||||
CANANDAIGUA WINE COMPANY, INC. | ||||||||||
|
||||||||||
|
By: | /s/ Robert S. Sands | ||||||||
|
||||||||||
Its: Executive Vice President, General
Counsel |
- 7 -
A. | Lessor is the owner of the real property described as 929 N. Russell, City of Portland, County of Multnomah, State of Oregon (Premises), as more fully described in Exhibit A attached hereto and incorporated herein; and | |
B. | Lessor wishes to continue to lease to Lessee and Lessee wishes to continue to lease from Lessor said real property (Premises): | |
C. | This Lease restates and supersedes all lease documents for the Premises executed prior to the date of this document. Where there is a conflict between this Restated Lease and any predecessor documents, this document shall prevail. |
1. | Lease of Premises . Lessor hereby leases and demises to Lessee, and Lessee hereby leases and takes from Lessor, the Premises for the term and upon the agreements, covenants and conditions set forth herein. The Premises consist of the underlying real estate and shell condition upon which Lessees offices, restaurant, and part of its brewery are located. Lessee has made substantial improvements to the shell condition of the Premises. | |
2. | Term . |
2.1 | The term of this Lease commenced on May 1, 1989 (Commencement Date) and terminates on December 31, 2034, unless sooner terminated pursuant to any provisions hereof. | ||
2.2 | Option to Extend. Lessee may extend the term until the tenth (10th) anniversary of the expiration date by written notice of its election to do so given to Lessor at least one (1) year prior to the December 31, 2034 expiration date. Lessee may extend for a second term of ten (10) years by giving written notice to Lessor at least one (1) year prior to the expiration of the first extended term. The terms and conditions of the Lease applicable at the expiration date will govern the extended term; however, the monthly rent will be the fair market rent for the Premises on the expiration date. If Lessor and Lessee are unable to agree upon the fair market rent prior to the expiration date, the question will be submitted to arbitration according to Paragraph 30. In that event, Lessee will continue to pay rent according to the Lease until the arbitration decision is rendered. At that time, Lessor and Lessee will make appropriate adjustments as of the expiration date. Lessee will not have any rights under this Paragraph if: (a) an event of default |
- 1 -
exists on the expiration date or on the date on which Lessee gives its notice; or (b) Lessee exercises its rights less than one (1) year before the expiration date. |
3. | Rent . |
3.1 | Lessee will pay Lessor the monthly rent in equal consecutive monthly installments on or before the first day of each month during the term of this Lease. The monthly rent will be paid in advance at the address specified for Lessor in the basic lease information or such other place as Lessor designates, without prior demand and without any abatement, deduction or setoff. If the commencement date occurs on a day other than the first day of a calendar month, or if the expiration date occurs on a day other than the last day of the calendar month, then the monthly rent for each fractional month will be prorated on a daily basis. This is a triple net lease with all expenses, maintenance, renovation, and replacement assumed by Lessee. | ||
3.2 | Monthly rent is as follows: Three Thousand Dollars ($3,000.00) per month subject to a yearly consumer price index adjustment as described below. | ||
CPI Adjustments: The Basic Annual Rent shall be subject to upward adjustments, based on the Consumer Price Index, one year after the Commencement Date of this Lease and at the end of each subsequent year, during the Lease Term in accordance with the following procedure: |
(A) | The index to be used for this adjustment shall be the Consumer Price Index for All Urban Consumers (CPI-U), All Items, U.S. City Average (1982-1984 equals 100), published by the U.S. Department of Labor, Bureau of Labor Statistics. | ||
(B) | The Base Period Consumer Price index shall be subtracted from the Adjustment Period Consumer Price Index; the difference shall be divided by the Base Period Consumer Price Index. This quotient shall then be multiplied by $3,000.00. The result shall be added to the monthly rent of $3,000.00. This arithmetical sum shall then be the Adjusted Monthly Rent for such immediately succeeding leasehold year which shall be paid monthly. | ||
(C) | If the Consumer Price Index is, at any time during the term of this Lease, discontinued or no longer published, then the most nearly comparable published measure of inflation, as determined by Lessor in its sole discretion, shall be substituted for the purpose of this calculation. |
4. | Taxes and Other Charges . |
4.1 | Lessee agrees to pay and discharge, as additional rent for the Premises during the entire term of this Lease, before delinquency, all taxes, assessments, water rents, sewer rentals, utility rates and fees, levies or other charges of any kind which are or may during the term of this Lease be levied, charged, assessed or imposed upon |
- 2 -
or against the Premises or any buildings or improvements which are hereafter located thereon, or against any legal or equitable interest of Lessor in the Premises, or against any of Lessees personal property now or hereafter located thereon, or which may be levied, charged, assessed or imposed upon or against the leasehold estate created hereby. All taxes, assessments and other charges covered by this Paragraph 4 shall be prorated between Lessor and Lessee as of the commencement and expiration dates of the Lease Term. If at any time during the term of the Lease any tax, assessment or other charge is levied for a benefit which shall have a useful life longer than the remaining Lease Term, and if the law permits the payment of any such tax, assessment or other charge, in installments (whether or not interest accrues on the unpaid balance), such tax, assessment or other charge shall be paid in installments, with Lessee paying such installment during the term of this Lease and Lessor paying any installments thereafter. | |||
4.2 | Anything herein to the contrary notwithstanding, Lessee shall not be required to pay pursuant to this Paragraph 4 any franchise, capital levy or transfer tax of Lessor, or any income, profits, or excess profits tax, or any tax which may, at any time during the term of this Lease, be required to be paid on any gift, or demise, deed, mortgage, descent or other alienation of any part or all of the estate of Lessor in and to the Premises or any buildings or improvements which are now or hereafter located thereon. | ||
4.3 | Lessee shall furnish to Lessor, upon request, receipts or other appropriate evidence establishing payment of any taxes, assessments or other charges required to be paid hereunder by Lessee. | ||
4.4 | Lessee shall pay prior to delinquency all taxes assessed against and levied upon trade fixtures, furnishings, equipment and all other personal property of Lessee contained in the Premises. When possible, Lessee shall cause said trade fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Lessor. | ||
If any of Lessees said personal property shall be assessed with Lessors real property, Lessee shall pay the taxes attributable to Lessee prior to the delinquency date for payment of such taxes, provided that Lessor shall at reasonable time prior thereto provide Lessee with a written statement setting forth the taxes applicable to Lessees property and an explanation of Lessors method of computation thereof. |
5. | Lessors Warranty of Title and Quiet Enjoyment . Lessor hereby covenants and warrants to Lessee that Lessor has good and marketable fee simple title to the Premises, free and clear of all claims, liens and encumbrances except those certain exceptions set forth in the Title Report attached hereto and incorporated herein as Exhibit B. Upon Lessee paying the rent reserved hereunder and observing and performing all of the covenants, conditions and provisions on Lessees part to be observed and performed hereunder, Lessee shall peaceably hold and quietly enjoy the Premises for the entire term hereof, without hindrance, molestation or interruption by Lessor or any other party. Without limiting the |
- 3 -
generality of the foregoing, Lessor shall pay prior to delinquency all sums due and owing under any encumbrance on the fee interest in the Premises, and shall perform in a timely fashion all covenants and obligations on Lessors part to be performed under any such encumbrances. In the event Lessor fails to pay sums due or perform such covenants and obligations under such encumbrances, Lessee shall be entitled, upon no less than ten (10) days written notice to Lessor, to pay any such sums, perform any such covenants or obligations or cure any defaults under such encumbrances and offset any sums paid or expended in performance or curing with interest thereon at the rate of twelve percent (12%), against the rental owing hereunder. Lessor hereby warrants and certifies that as of the date hereof there are no defaults, or events which with the passage of time or the giving of notice of both would become defaults, under any encumbrances on the fee interest in the Premises. | ||
6. | Use . Lessee shall have the right to use the Premises for any lawful purpose, in accordance with all present and future zoning laws, rules and regulations of governmental authorities having jurisdiction thereof, and subject to all covenants, easements and rights-of-way of record, if any, which are presently in existence and irrespective of whether the same are being contested by Lessee. | |
7. | Condition of Premises; Utilities . |
7.1 | Lessee hereby accepts the Premises in an as is condition, existing as of the date of the execution hereof, subject to all applicable zoning, municipal, county and state ordinances and regulations covering and regulating the use of the Premises, and accepts this Lease subject thereto and to all matters disclosed thereby. Lessee acknowledges that neither Lessor nor Lessors agent has made any representation or warranty as to the suitability of the Premises for the conduct of any type of business. | ||
7.2 | Lessee shall pay for all water, sewer, gas, heat, light, power, steam, telephone, or other utilities and services supplied to the Premises, together with any taxes thereon. |
8. | Repairs, Governmental Regulations and Waste . |
8.1 | Lessee shall keep the Premises as improved and every part thereof, structural or non-structural, in good order, condition and repair, whether or not such portion of the Premises requiring repair, or the means of repairing the same, are reasonably or readily accessible to Lessee, and whether or not the need for such repairs occurs as a result of Lessees use, any prior use, the elements or the age of such portion of the Premises, including without limiting the generality of the foregoing, all plumbing, heating, air conditioning, ventilating, electrical lighting facilities and equipment from time to time within the Premises, fixtures, walls (interior and exterior), floors, windows, doors, plate glass and sky lights located within the Premises, and all landscaping, driveways, parking lots, fences and signs located on the Premises, and sidewalks adjacent to the Premises. The foregoing provisions shall not, however, be construed to limit the right of Lessee to make |
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alterations, additions or improvements to the Premises as provided in Paragraph 9 hereof. | |||
8.2 | Upon the termination of this Lease, except to the extent provided otherwise (in Paragraphs 7, 9, 10, and 16 hereof), Lessee shall surrender the Premises to Lessor in the same condition as when received, ordinary wear and tear excepted. Lessee shall repair any damage to the Premises occasioned by the removal of Lessees trade fixtures, furnishings and equipment; which repairs shall include the patching and filling of holes and repair of structural damage. Lessee shall, at Lessees sole cost and expense comply promptly with all applicable statutes, ordinances, rules, regulations and restrictions of record, if any, and requirements in effect during the term of this Lease regulating the use by Lessee of the Premises. Lessee agrees and acknowledges that it has inspected the Premises and has made all necessary investigations and inquiries with respect to compliance by Lessor with all applicable current municipal, county and state statutes, ordinances, rules and regulations and assumes full responsibility for compliance therewith. | ||
8.3 | If Lessee fails to perform Lessees obligations under this Paragraph 8, Lessor may, at its option (but shall not be required to), enter upon the Premises after thirty (30) days prior written notice to Lessee of the specific failures of Lessee under this Paragraph 8, and provided that Lessee has not theretofore cured such failures or, in the case of any such failure which cannot be cured within said 30-day period, commenced to cure the same and thereafter is diligently prosecuting such curing), put the same in good order, condition and repair, and the cost thereof, together with interest thereon at the rate of twelve (12%) percent per annum, shall become due and payable as additional rental to Lessor together with Lessees next rental installment. | ||
8.4 | Except for the obligations of Lessor under Paragraph 10 (Damage or Destruction) and Paragraph 16 (Eminent Domain), it is intended by the parties hereto that Lessor shall have no obligation in any manner whatsoever to repair and maintain the Premises, nor any buildings or improvements located thereon, nor the equipment therein, whether structural or nonstructural, all of which obligations are those of Lessee under this paragraph. Lessee expressly waives the benefit of any statute now or hereafter in effect which would otherwise afford Lessee the right to make repairs at Lessors expense, or to terminate this Lease because of Lessors failure to keep the Premises in good order, condition and repair. | ||
8.5 | Lessee shall have the right to contest by appropriate judicial or administrative proceedings, without cost or expense to Lessor, the validity or application of any law, ordinance, order, rule, regulation or requirement (hereinafter called law) that Lessee repair, maintain, alter or replace the improvements on the Premises in whole or in part or that would affect Lessees use of the Premises. In the event that any such contest is finally determined in a manner adverse to Lessee, Lessee shall either undertake such repairs, maintenance, alterations or replacements to or of the Premises as is required by such law or modify its use of the Premises as is required by such law. |
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9. | Improvements, Changes, Alterations, Demolition and Replacement by Lessee . |
9.1 | At any time and from time to time during the term of this Lease, Lessee shall have the right but not the obligation to make alterations, additions or improvements to the Premises, provided that Lessee is not then in default under any Condition or provision of this Lease and that the Premises following the work are at least equal in value to the Premises as they were before such alterations, additions or improvements were made, | ||
9.2 | Any work referred to in Subparagraph 9.1 above shall be undertaken in all cases subject to the following additional conditions which Lessee covenants to observe and perform: |
9.2.1 | No such work shall be undertaken until Lessee shall have procured and paid for, so far as the same may be required from time to time, all municipal and other governmental permits and authorizations of the various municipal departments and governmental subdivisions having jurisdiction, and Lessor agrees to join in the application for such permits or authorizations and in all other ways cooperate with Lessee in obtaining such permits and authorizations whenever such action is necessary (provided that Lessee shall reimburse Lessor for any expenses incurred by Lessor, in connection therewith). | ||
9.2.2 | All improvements, additions and alterations, when completed, shall be of such a character that the value of the buildings and improvements on the Premises immediately after any such improvement, addition or alteration shall be equal to or greater than the value of any buildings and improvement, addition or alteration. | ||
9.2.3 | Lessee shall protect the adjacent property against damage resulting from the performance of any work and shall indemnify and hold Lessor harmless against all liens or liability in any way arising out of the performance of the work or the furnishing of labor, services, materials, supplies, equipment or power in connection therewith. | ||
9.2.4 | No prior written notice of Lessees intent to begin work is required, but Lessor shall have the right upon ten (10) days written notice to require copies of all government permits, drawings, specifications and inspection reports pertaining to any work undertaken by Lessee. | ||
9.2.5 | All work done in connection with any improvement, addition or alteration shall be done promptly and in a good and workmanlike manner and in compliance with all laws, ordinances, orders, rules, regulations and requirements of all Federal, state and municipal governments and the appropriate departments, commissions, boards and officers thereof. All such work shall be at the sole expense of Lessee and, upon completion thereof, shall be free and clear of all liens and encumbrances of any nature |
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whatsoever, including mechanics liens except for any Leasehold mortgage obtained by Lessee for purposes of obtaining construction financing. The work with respect to any improvement, addition or alteration shall be prosecuted with reasonable dispatch, unavoidable delays (as hereinafter defined) excepted. | |||
9.2.6 | In addition to the insurance coverage referred to in Paragraph 13 below, workmens compensation insurance covering all persons employed in connection with the work and with respect to whom death or injury claims could be asserted against Lessor, Lessee or the Premises, shall be maintained by Lessee, at Lessees sole cost and expense, at all times when and work is in process in connection with any improvement, addition or: alteration. All such insurance shall be obtained and kept in force as otherwise provided in Paragraph 13 below. |
9.3 | Lessor shall from time to time during the term of this Lease execute and deliver all applications for permits, licenses or other authorizations relating to the use and occupancy of the Premises required by any municipal, county, state or Federal authorities, or required In connection with any repair or alteration of any buildings or improvements now or hereafter located on the Premises. Lessor will from time to time during the term of this Lease execute, acknowledge and deliver any and all instruments required to grant rights-of-way and easements in favor of municipal and other governmental authorities or public utility companies incident to the installation of water lines, fire hydrants, sewers, electricity, telephone, gas, steam and other facilities and utilities reasonably required for the use and occupancy of the Premises. Lessee shall reimburse Lessor for any expenses reasonably so incurred. | ||
9.4 | All alterations, improvements, additions and installations, which may be made to the Premises, shall be owned by Lessee during the term of this Lease and shall, upon the termination of this Lease, become the property of Lessor without compensation to Lessee and remain upon and be surrendered with the Premises. In such event, Lessor shall take such alterations, improvements, additions and installations, free and clear of all claims to or against the same by Lessee or any third person (except for any claims created or consented to by Lessor or otherwise arising from actions taken by Lessor), and Lessee shall defend and indemnify Lessor against all liability and loss arising from such claims. The foregoing provisions shall not apply to any alterations, improvements, additions or installations made by Lessee or any sublessee which can be removed without substantial and unrepairable damage to the Premises, and which Lessee or any sublessee elects to remove upon the termination of this Lease, provided that Lessee or any sublessee promptly repairs, at its sole cost and expense, all damage to the remaining improvements on the Premises caused by such removal, and provided further, that the value of the improvements remaining on the Premises following such removal are substantially equal to what the value of the improvements existing on the Premises at the time of the execution of this Lease, would have been if the same had remained on the Premises at the time of |
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termination of this Lease, assuming no alterations and additions thereto and only normal wear and tear since the date of execution of this Lease. | |||
9.5 | On completion of any work of alteration, addition or improvement by Lessee, or sublessee, Lessee shall maintain and make available to Lessor upon Lessors request as built drawings accurately reflecting all such work. |
10. | Damage or Destruction . |
10.1 | No loss or damage by fire or other cause required to be insured against by Lessee hereunder, resulting in either partial or total destruction of any building or improvement on the Premises, shall, except as otherwise provided herein, operate to terminate this Lease, or to relieve or discharge Lessee from the performance and observance of any of the agreements, covenants and conditions herein contained on the part of Lessee to be performed and observed. Without limiting the generality of the foregoing, Lessee shall not be relieved from its obligation to pay rent hereunder on the event of such damage or destruction, unless Lessee shall elect to terminate this Lease as provided below. | ||
10.2 | If any buildings or improvements located on the Premises, or any fixture, equipment or machinery used or intended to be used in connection with the Premises, at any time during the term of this Lease shall be damaged or destroyed by fire or other cause and Lessee does not terminate this Lease pursuant to Subparagraph 10.3 below, then Lessee may, at its option, elect to exercise the option to purchase the Premises contained in Paragraph 28 hereof (irrespective of the year of the Lease Term in which such damage or destruction occurs) or instead may elect to repair, reconstruct or replace such buildings or improvements and such fixtures, equipment and machinery to a condition substantially similar to their condition immediately prior to such destruction, in which case such work shall be carried out with all reasonable diligence. All such repair, reconstruction or replacement shall be at the sole cost and expense of Lessee and, upon completion thereof, shall be (subject to the provisions relative to financing by Lessee hereof) free and clear of all liens and encumbrances of any nature whatsoever, including mechanics liens. | ||
10.3 | If (i) any buildings or improvements hereafter located on the Premises are totally destroyed, or are partially destroyed or damaged and the cost to repair or reconstruct the Premises exceeds twenty percent (20%) of the replacement value of the Premises (replacement value as used herein shall mean the actual cost of replacing the entire Premises), or (ii) the then existing laws do not permit the repair, reconstruction or replacement of such buildings and improvements, or (iii) such total or partial destruction occurs during the last five (5) years of the term of this Lease, then, in any of such events, Lessee may, at its option, elect to repair, reconstruct or replace such buildings or improvements, or elect to terminate this Lease by giving Lessor notice thereof within ninety (90) days after such total or substantial destruction, or elect to exercise the option to purchase the Premises contained in Paragraph 28 hereof (irrespective of the year of the Lease Term in |
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which such damage or destruction occurs). If Lessee elects to terminate this Lease, then, upon Lessors written request made upon Lessee within ninety (90) days after Lessors receipt of Lessees notice of election to terminate, Lessee shall deliver the Premises to Lessor after, at Lessees option, either (i) promptly demolishing any remaining portion of the Building in its Shell Condition as well as all improvements located on the Premises, leaving the Premises clear of all debris and graded to the level of surrounding sidewalks and/or streets, whereupon this Lease shall terminate; or (ii) promptly restoring the Premises to the condition thereof as of January 1, 1994 but with the right to remove improvements and fixtures as described in this Restated Lease, normal wear and tear excepted, whereupon this Lease shall terminate. Should Lessor and Lessee for any reason disagree as to whether any destruction of such buildings or improvements is sufficient to entitle Lessee to terminate this Lease under this paragraph, the matter shall be determined by arbitration in the manner provided in Paragraph 30 hereof. | |||
10.4 | In the event that Lessee elects or becomes obligated under this Paragraph 10 to restore the Premises, Lessee at its cost shall cause to be prepared final plans and specifications and working drawings complying with applicable laws as necessary for restoration of the Premises. The plans and specifications and working drawings must be approved by Lessor, provided that Lessor shall not unreasonably withhold its approval thereof. Lessor shall have thirty (30) days after receipt of the plans and specifications and working drawings to either approve or disapprove the plans and specifications and working drawings and return them to Lessee. If Lessor disapproves the plans and specifications and working drawings, Lessor shall notify Lessee of its objections and Lessors proposed solution to each objection. In the event of any disagreement between the parties as to whether Lessors disapproval is reasonable, the matter will be settled in the same manner as provided in Paragraph 30 hereof. Lessee acknowledges that the plans and specifications and working drawings shall be subject to approval of the appropriate governmental bodies and that they will be prepared in such a manner as to obtain that approval. | ||
The work of restoration shall be accomplished subject to the conditions set forth in Subparagraph 9.2 hereof, and otherwise shall be accomplished as follows: |
10.4.1 | Lessee shall undertake and complete the restoration with due diligence, subject to unavoidable delays as defined in Paragraph 31 hereof; | ||
10.4.2 | Lessee shall perform the work itself or retain a licensed contractor. Lessee or such contractor shall be required to carry public liability and property damage insurance, standard fire and extended coverage insurance, with vandalism and malicious mischief endorsements, during the period of construction in accordance with Paragraph 13. Such insurance shall contain a waiver of subrogation clause in favor of Lessor and Lessee in accordance with the provisions of Subparagraph 13.3; |
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10.4.3 | Lessee shall notify Lessor of the date of commencement of the restoration not later than ten (10) days before commencement of the restoration to enable Lessor to post and record notices of nonresponsibility. Lessee may elect at its option to obtain a performance and payment bond covering the contractor performing the work of restoration; provided that if Lessee does elect to obtain a bond, Lessor shall be named as an additional obligee and a copy of such bond shall be delivered to Lessor; | ||
10.4.4 | On completion of the restoration Lessee shall immediately record a notice of completion in the county in which the Premises are located; |
10.5 | If this Lease is cancelled or terminated under any of the provisions of this Paragraph 10 following any destruction all of the insurance proceeds paid on account of such destruction, less any portion thereof used by Lessee in demolishing any remaining improvements and clearing or restoring the Premises pursuant to Paragraph 10.3, under any of the hazard insurance policies which Lessee is obligated to maintain and keep in full force and effect during the term of this Lease under the provisions of Paragraph 13, shall belong to Lessor, and Lessee shall have no right, title or interest therein; provided, however, that if Lessee has exercised the option to purchase the Premises contained in Paragraph 28 hereof or if Lessee has elected to restore the Premises pursuant to Subparagraphs 10.3 or 10.4 hereof, then all such proceeds shall belong to Lessee and Lessor shall have no right, title or interest therein. |
11. | Assignment and Subletting . |
11.1 | Lessee shall not have the right to assign or otherwise transfer Lessees interest in this Lease and the estate created by this Lease without Lessors prior written consent, which consent will not be unreasonably withheld, provided that any such assignment consented to by Lessor shall comply with the following conditions: |
11.1.1 | Lessee shall give Lessor not less than fifteen (15) days prior written notice of the proposed assignment; | ||
11.1.2 | The proposed assignee shall, in recordable form, expressly assume all the covenants and conditions of this Lease; | ||
11.1.3 | Lessee shall deliver to Lessor within ten (10) days after the execution and delivery of such assignment, a true and correct manually signed copy of the assignment; | ||
11.1.4 | Any such assignment shall not in any way affect or limit the liability of Lessee under the terms of this Lease, even if such assignment alters the primary liability of Lessee to pay rent and to perform all other obligations to be performed by Lessee hereunder; provided, however, that Lessee shall be relieved of any obligation under this Lease to the extent that such obligation arises out of any amendment or modification of this Lease between Lessor and Lessees assignee or any subsequent assignee made |
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without the written consent of Lessee thereto. The acceptance of rent by Lessor from any other person shall not be deemed to be a waiver by Lessor of any provision hereof. In the event of default by any assignee of Lessee, or any successor of Lessee in the performance of any of the terms hereof, Lessor may proceed directly against Lessee without the necessity of exhausting remedies against said successor Lessee. |
Notwithstanding the foregoing, Lessee shall have the right at any time to assign or otherwise transfer its interest in this Lease and the estate created by this Lease without Lessors prior consent to a partnership or corporate subsidiary controlled by Lessee, an entity that controls Lessee, or to an entity that is controlled by an entity which also controls Lessee. Control as used in this Paragraph 11 shall mean ownership of fifty (50%) percent or more of the voting stock or rights. | |||
11.2 | Lessee shall have the right (without any prior approval or consent by Lessor being required), in the regular and ordinary course of maintaining and operating the buildings and improvements now or hereafter located on the Premises, to sublease any offices, spaces or related facilities in the buildings and improvements on the Premises for any use permitted by Paragraph 6 hereof; provided, however, that each such sublease shall be subject to the terms, covenants and conditions of this Lease and the rights of Lessor hereunder. |
12. | Mortgage of Leasehold . |
12.1 | Subject to the provisions of this paragraph, Lessee shall have the right to encumber the leasehold estate created by this Lease by one or more mortgages, deeds of trust or other security instruments, including, without limitation, assignments of the rents, issues and profits from the Premises, to secure repayment of any loans, and associated obligations, made to Lessee for the purpose of interim and long-term financing or refinancing of the construction of new buildings and improvements to the Premises. | ||
12.2 | As used herein, Leasehold Mortgage shall mean any mortgage, deed of trust or other security instrument, including, without limitation, an assignment of the rents, issues and profits from the Premises, which constitutes a lien on the leasehold estate created by this Lease and Lender shall mean an owner and holder of a Leasehold Mortgage. | ||
12.3 | During the continuance of any Leasehold Mortgage and until such time as the lien of any Leasehold Mortgage has been extinguished: |
12.3.1 | Lessor shall not agree to any mutual termination nor accept any surrender of this Lease, nor shall Lessor consent to any amendment or modification of this Lease, without the prior written consent of any Lender. | ||
12.3.2 | Notwithstanding any default by Lessee in the performance or observance of any agreement, covenant or condition of this Lease on the part of Lessee to be performed or observed, Lessor shall have no right to |
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terminate this Lease unless an event of default shall have occurred and be continuing, Lessor shall have given any Lender written notice of such event of default, and such Lender shall have failed to remedy such default or acquire Lessees leasehold estate created hereby or commence foreclosure or other appropriate proceedings in the nature thereof, all as set forth in and within the time specified by this Paragraph 12. | |||
12.3.3 | Any Lender shall have the right, but not the obligation, at any time prior to termination of this Lease and without payment of any penalty, to pay all of the rents due hereunder, to effect any insurance, to pay any taxes and assessments, to make any repairs and improvements, to do any other act or thing required of Lessee hereunder, and to do any act or thing which may be necessary and proper to be done in the performance and observance of the agreements, covenants and conditions hereof to prevent termination of this Lease. All payments so made and all things so done and performed by any Lender shall be as effective to prevent a termination of this Lease as the payments would have been if made, done and performed by Lessee instead of by such Lender. | ||
12.3.4 | Should any event of default under this Lease occur, any Lender shall have sixty (60) days after receipt of notice from Lessor setting forth the nature of such event of default, and, if the default is such that possession of the Premises may be reasonably necessary to remedy the default, a reasonable time after the expiration of such sixty (60) day period, within which to remedy such default, provided that (A) the Lender shall have fully cured by default in the payment of any monetary obligations of Lessee under this Lease within such sixty (60) day period and shall continue to pay currently such monetary obligations as and when the same are due and (B) the Lender shall have acquired Lessees leasehold estate created hereby or commenced foreclosure or other appropriate proceedings in the nature thereof within such period, or prior thereto, and is diligently prosecuting any such proceedings. All right of Lessor to terminate this Lease as the result of the occurrence of any such event of default shall be subject to, and conditioned upon, Lessor having first given any Lender written notice of such event of default and such Lender having failed to remedy such default or acquire Lessees leasehold estate created hereby or commence foreclosure or other appropriate proceedings in the nature thereof as set forth in and within the time specified by this Paragraph. | ||
12.3.5 | Any event of default under this Lease which in the nature thereof cannot be remedied by a Lender shall be deemed to be remedied if: (A) within sixty (60) days after receiving written notice from Lessor setting forth the nature of such event of default, or prior thereto, the Lender shall have acquired Lessees leasehold estate created hereby or shall have commenced foreclosure or other appropriate Proceedings in the nature thereof, (B) the Lender shall diligently prosecute any such proceedings to completion, and (C) the Lender shall have fully cured any default in the |
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payment of any monetary obligations of Lessee hereunder which do not require possession of the Premises within such sixty (60) day period and shall thereafter continue to faithfully perform all such monetary obligations which do not require possession of the Premises, and (D) after gaining possession of the Premises the Lender performs all other obligations of Lessee hereunder as and when the same are due. | |||
12.3.6 | If a Lender is prohibited by any process or injunction issued by any court or by reason of any action by any court having jurisdiction of any bankruptcy or insolvency proceeding involving Lessee from commencing or prosecuting or foreclosure or other appropriate proceedings in the nature thereof, the times specified in Subparagraphs 12.3.4 and 12.3.5 above for commencing or prosecuting such foreclosure or other proceedings shall be extended for the period of such prohibition; provided that the Lender shall have fully cured any default in the payment of any monetary obligations of Lessee under this Lease and shall continue to pay currently such monetary obligations as and when the same fall due. | ||
12.3.7 | Lessor shall mail or deliver to any Lender a duplicate copy of any and all notices which Lessor may from time to time give to or serve upon Lessee pursuant to the provisions of this Lease, and such copy shall be mailed or delivered to such Lender simultaneously with the mailing or delivery of the same to Lessee. No notice by Lessor to Lessee hereunder shall be deemed to have been given unless and until a copy thereof shall have been mailed or delivered to all Lenders as herein set forth. | ||
12.3.8 | Notwithstanding any restriction on the Lessees right to assign this Lease under Subparagraph 11.1 above, foreclosure of a Leasehold Mortgage, or any sale thereunder, whether by judicial proceedings or by virtue of any power contained in the Leasehold Mortgage, or any conveyance of the leasehold estate created hereby from Lessee to a Lender through, or in lieu of, foreclosure or other appropriate proceedings in the nature thereof shall not require the consent or approval of Lessor or constitute a breach of any provision of or a default under this Lease, and upon such foreclosure, sale or conveyance Lessor shall recognize the Lender, or any other foreclosure sale purchaser, as Lessee hereunder. In the event the Lender becomes Lessee under this Lease or any new lease obtained pursuant to Subparagraph 12.3.9 below, or in the event the leasehold estate hereunder is purchased by any other party at a foreclosure sale, the Lender, or such other foreclosure sale purchaser, shall be personally liable for the obligations of Lessee under this Lease or such new lease only for the period of time that the Lender or such other foreclosure sale purchaser remains lessee thereunder, and the lenders or such foreclosure sale purchasers right thereafter to assign this Lease or such new lease shall not be subject to any restriction. In the event the Lender subsequently assigns or transfers its interest under this Lease after acquiring the same by foreclosure or deed in lieu of foreclosure or subsequently assigns or |
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transfers its interest under any new lease obtained pursuant to Subparagraph 12.3.9, and in connection with any such assignment or transfer the Lender takes back a mortgage or deed of trust encumbering such leasehold interest to secure a portion of the purchase price given to the Lender for such assignment of transfer, then such mortgage or deed or trust shall be considered a Leasehold Mortgage as contemplated under this Paragraph and the Lender shall be entitled to receive the benefit of and enforce the provisions of this Paragraph and any other provisions of this Lease intended for. the benefit of the holder of a Leasehold Mortgage. | |||
12.3.9 | Should Lessor terminate this Lease by reason of any default by Lease hereunder, Lessor shall, upon written request by any Lender given within sixty (60) days after such termination, immediately execute and deliver a new lease of the Premises to such Lender, or its nominee, purchaser, assignee or transferee, for the remainder of the term of this Lease with the same agreements, covenants and conditions (except for any requirements which have been fulfilled by Lease prior to termination) as are contained herein and with priority equal to that hereof; provided, however, that the Lender shall promptly cure any default of Lessee susceptible to cure by Lender, and provided further that if more than one Lender requests such new lease, the Lender holding the most senior Leasehold Mortgage shall prevail. Upon execution and delivery of such new lease, Lessor, at the expense of the new lessee, shall take such action as shall be necessary to cancel and discharge this Lease and to remove Lessee named herein from the Premises. |
12.4 | At all times herein stated Lessors fee title to the Premises shall not be encumbered or affected in any manner directly or indirectly by Lessees encumbrancing of the leasehold estate created by this Lease, and the rights of any Lender of Lessee hereunder in and to the Premises, including without limitation, any right to receive rents, issues and profits therefrom, shall at no time be greater than the rights of Lessee hereunder. |
13. | Fire and Extended Coverage and Liability Insurance . |
13.1 | Lessee agrees, at Lessees sole cost and expense, to keep all buildings and improvements on the Premises insured at all times throughout the term of this Lease (including any period or periods of time during which any building is in the course of demolition, remodeling, or construction) against loss or damage by fire and such other hazards as are embraced by the standard extended coverage endorsement all risks approved for use in the State of Oregon in an amount not less than ninety percent (90%) (excluding foundations) of the actual replacement cost of the buildings or improvements, provided such insurance is ordinarily and customarily available. | ||
13.2 | Lessee agrees to and shall at its own cost and expense procure and maintain during the entire term of the Lease comprehensive general liability insurance |
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covering the Premises with combined single limits of not less than Five Million Dollars ($5,000,000.00) for bodily injury and property damage liability. | |||
13.3 | Lessee hereby expressly waives on behalf of its insurers hereunder any right of subrogation against Lessor, and Lessor likewise waives on behalf of its insurers any right of subrogation against Lessee, which any such insurers may have against Lessor or Lessee by reason of any claim, liability, loss, or expense arising under this Lease. The foregoing mutual waivers of subrogation are conditioned upon such waivers being available from the insurers of each party without the payment of additional insurance premiums. | ||
13.4 | All insurance provided for in this paragraph shall be effected under valid and enforceable policies issued by insurers of recognized responsibility authorized to do business in the State of Oregon and shall name Lessor as an additional insured. A certificate of each insurance policy shall be provided to Lessor upon commencement of the term of this Lease, upon request, and upon the renewal of each policy. Insurance required hereunder shall be in companies holding a General Policyholders rating of B Plus or better as set forth in the most current issue of Best Insurance Guide. | ||
13.5 | All policies of fire and hazard insurance required hereunder shall also be payable to any Lender as the interest of such lender may appear, pursuant to a standard mortgage clause, and the Lender shall be entitled to participate in the settlement or adjustment of any losses covered by such policies of insurance. Provided, however, that the Lenders rights hereunder shall in no event be greater than Lessees rights hereunder. All such policies issued by the respective insurers shall contain an agreement by the insurers that such policies shall not be canceled or modified to reduce or eliminate coverage or insured risks without at least thirty (30) days prior written notice to Lessor and Lender. | ||
13.6 | Nothing in this Lease shall prevent Lessee from taking out insurance of the kind and in the amount provided for in this Paragraph under a blanket insurance policy or policies which can cover other properties as well as the Premises. | ||
13.7 | All amounts that shall be received under any insurance policy specified in Subparagraph 13.1 shall, if the Premises are to be repaired or reconstructed pursuant to the provisions of Paragraph 10 hereof, be first applied to the payment of the cost of repair, reconstruction or replacement of any buildings or improvements, or furniture, fixtures, equipment and machinery, that is damaged or destroyed. Any amount remaining from the proceeds of any such insurance funds, after the repairing, reconstructing and replacing of any buildings or improvements, or furniture, fixtures, equipment and machinery, as herein required, shall be immediately paid to and be the sole property of Lessee. | ||
If said insurance proceeds shall be insufficient in amount to cover the cost of repairing, reconstructing or replacing any buildings or improvements, or furniture, fixtures, equipment and machinery, as herein required, and if this Lease is not |
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terminated pursuant to Paragraph 10 above, then Lessee shall promptly pay any deficiency. |
14. | Construction and Other Liens . Lessee hereby covenants to keep the Premises free and clear of any and all construction and other liens for work or labor done, services performed or materials used in or about the Premises for or in connection with any operations of Lessee, any alterations, improvements, repairs or additions which Lessee may make or permit or cause to be made, or any work or construction by, for or permitted by Lessee on or about the Premises. | |
15. | Right to Contest; Indemnity . |
15.1 | Lessee shall have the right to contest the amount or validity of any lien of the nature of any tax, assessment, charge or other item to be paid by Lessee under Paragraph 4 hereof by giving Lessor written notice of Lessees intention to do so within twenty (20) days after the recording of such lien or at least ten (10) days prior to the delinquency of such tax, assessment, charge or other item, as the case may be. In any such case Lessee shall not be in default hereunder, and Lessor shall not satisfy and discharge such lien nor pay such tax, assessment, charge or other item, as the case may be, until ten (10) days after the final determination of the amount of validity thereof, within which time Lessee shall satisfy and discharge such lien or pay such tax, assessment, charge or other item to the extent held valid and all penalties, interest and costs in connection therewith; provided, however, that the satisfaction and discharge or any such lien shall not, in any case be delayed until execution is had upon any judgment rendered thereon, nor shall the payment of any such tax, assessment, charge or other item, together with penalties, interest and costs, in any case be delayed until sale is made or threatened to be made of the whole or any part of the Premises on account thereof. In the event of any such contest, Lessee shall protect and indemnify Lessor against all loss, cost, expense and damage resulting therefrom. Lessor shall not be required to join in any proceeding to contest the amount or validity of any such lien, tax, assessment, charge or other item, except that if any law shall require that such proceeding be brought by or in the name of Lessor, Lessor agrees to join in any such proceeding, or permit the same to be brought in its name; and Lessee covenants to indemnify and hold harmless Lessor from any costs or expenses in connection therewith. Provided the same shall be without cost or expense to Lessor, Lessor agrees that it will cooperate with Lessee in any such proceeding. Lessee shall be entitled to any refund or any tax, assessment, charge or other item, and any penalties or interest thereon, which shall have been paid by Lessee, or paid by Lessor and reimbursed by Lessee. | ||
15.2 | Lessor shall not be liable, responsible or in any wise accountable for any loss, injury, death or carnage to persons or property from whatever cause, whether in or on the Premises, or in any way connected with the premises or with the buildings and improvements or personal property therein or thereon, including any liability for injury or death to the person or damage to or loss of property of Lessee, its agents, officers, servants, or employees. Lessee agrees to indemnify Lessor, its |
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officers, employees, and agents, and hold them harmless from any and all liability, loss, costs, or obligations on account of, or arising out of, any such loss, injury, death or damage, however occurring. Lessee, its agent, officers, servants, and employees shall assume all risks of injury or death of person or persons, or damage to or loss of any and all property of Lessee and any and all property under the control or custody of the Lessee while upon the Premises or damage to or loss of any and all property stored on the Premises, and Lessee hereby agrees that Lessor shall not be liable for injury to Lessees business, or any loss of income therefrom, or for damage to the goods, wares, merchandise, or other property of Lessee, Lessees employees, invitees, customers, or any other person in or about the Premises. |
16. | Eminent Domain . |
16.1 | If, during the term of this Lease, the entire Premises shall be taken as a result of the exercise of the right of eminent domain, or if less than the entire Premises shall be taken, but it shall have been agreed, or determined by arbitration pursuant to Paragraph 30, that the buildings and improvements on the Premises cannot at a reasonable expense be repaired, restored, or replaced to an economically profitable unit, this Lease may at the option of Lessee be terminated on the date of such taking, and the rights of the Lessor and Lessee in and to the award or awards upon any such taking shall be determined in accordance with Subparagraph 16.3 hereof. As used in this Paragraph 16, the terms taken or taking shall mean an acquisition and/or damaging, including severance damage, by eminent domain, or by inverse condemnation, or by deed or transfer in lieu thereof, or for any public or quasi-public use under any statute or law; and the taking shall be considered to take place as of the earlier of (i) the date actual physical possession is taken by the condemnor; or (ii) the date on which title vests in the condemnor. | ||
16.2 | If less than the entire Premises shall be taken and it shall have been agreed, or determined by arbitration pursuant to Paragraph 30, that the buildings and improvements can be repaired, restored, or replaced to an economically profitable unit, this Lease shall not terminate but shall continue in full force and effect for the remainder of the term, subject to the provisions hereof. The rights of the Lessor and Lessee in and to the award or awards upon any such taking shall be determined in accordance with Subparagraph 16.23 hereof. Lessee shall restore, repair, and replace that portion of the Premises not so taken. For the balance of the term of this Lease, the rent payable by Lessee shall be equitably reduced by agreement of Lessor and Lessee in accordance with the reduced economic return to Lessee, if any, which will occur by reason of such taking and if the parties are unable to agree on the amount, if any, by which the rent should be reduced, such amount, if any, shall be determined by arbitration pursuant to Paragraph 30 | ||
16.3 | The rights of Lessor and Lessee in and to any award or awards upon any such taking shall be determined as follows: |
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16.3.1 | Entire taking: In the event of any taking of the nature covered by Subparagraph 16.1 above, all compensation and damages for the taking shall be paid in accordance with the following priorities: | ||
(A) Lessee shall receive the value of the leasehold estate under this Lease plus the unamortized value of any improvements or alterations made by Lessee upon the Premises; and | |||
(B) Lessor shall receive the balance of such compensation or damages. | |||
16.3.2 | Partial taking: In the event of any taking of the nature covered by Subparagraph 16.2 above, all compensation and damages therefor shall be applied first to the restoration, repair and replacement of the Premises by Lessee pursuant to this Paragraph 16, and the remainder thereof shall be divided between Lessor and Lessee in the manner provided by Subparagraph 16.3.1 above. |
16.4 | If the Premises or any portion thereof or any buildings or improvements thereon should be taken for governmental occupancy for a limited period, this Lease shall not terminate and Lessee shall continue to perform and observe all of its obligations hereunder as though such taking had not occurred including covenants for payment of rent and other charges, except only to the extent that it may be prevented from performing such obligations by reason of such taking. In such event, Lessee shall be entitled to receive the entire amount of any awards, compensation and damages made for such taking, and Lessor hereby assigns such awards, compensation and damages to Lessee to the extent that the governmental occupancy does not extend beyond the expiration of the term hereof. | ||
16.5 | Lessor, Lessee and any Lender shall all have the right to participate in any settlement of awards, compensation and damages and may contest any such awards, compensation and damages and prosecute appeals therefrom. Any Lender shall be entitled to notice form both Lessee and Lessor with regard to any condemnation action, threat thereof, or settlement proceedings. | ||
16.6 | Notwithstanding the foregoing, in the event of any taking of the nature covered by Subparagraph 16.1 or 16.2 above during the term hereof Lessee shall have the right exercisable by written notice given not less than thirty (30) days prior to the time when title to the Premises vests in the condemning authority to exercise the option to purchase pursuant to Paragraph 28 below and, provided said purchase is pursued diligently to completion, any and all awards; compensation and damages payable for or on account of the Premises shall be payable to and by the sole property of Lessee. |
17. | Lessors Right of Inspection . Lessor may, at any reasonable time and from time to time during the term hereof, enter upon the Premises for the purpose of inspecting the buildings or improvements hereafter located thereon and for such other purposes as may be necessary or proper for the reasonable protection of its interests, subject, however, to |
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Lessees reasonable requirements regarding security on the Premises and the confidentiality or the business affairs of Lessee and its subtenants and other occupants of the Premises. | ||
18. | Lessees Defaults and Lessors Remedies . If (a) default shall be made by Lessee in the payment when due of any rent or other moneys due hereunder and shall continue for a period of ten (10) days after written notice thereof to Lessee; (b) default shall be made by Lessee in the performance or observance of any of the other agreements, covenants or conditions of this Lease on the part of Lessee to be performed and observed and such default shall continue for a period of thirty (30) days after written notice thereof to Lessee, or, in the case of a default which cannot be cured by the payment of money and cannot reasonably be cured within thirty (30) days, Lessee shall fail to commence curing thereof within said 30-day period and thereafter shall fail diligently to prosecute such cure to Completion; (c) Lessee shall admit in writing its inability to pay its debts generally as they become due, file a petition in bankruptcy, insolvency, reorganization, readjustment of debt, dissolution or liquidation under any law or statute of the Federal government or any state government or any subdivision of either now or hereafter in effect, make an assignment for the benefit of its creditors, consent to or acquiesce in the appointment of a receiver of itself or of the whole or any substantial part of the Premises; (d) a court of competent jurisdiction shall enter an order, judgment or decree appointing a receiver of Lessee or of the whole or any substantial part of the Premises, and such order, judgment or decree shall not be vacated, set aside or stayed within ninety (90) days from the date of entry of such order, judgment or decree, or a stay thereof be thereafter set aside; or (e) a court of competent jurisdiction shall enter an order, judgment or decree approving a petition filed against Lessee under any bankruptcy, insolvency, reorganization, readjustment of debt, dissolution or liquidation law or statute of the Federal government or any state government or any subdivision of either now or hereafter in effect, and such order judgment or decree shall not be vacated, set aside or stayed within ninety (90) days from the date of entry of such order, judgment or decree, or a stay thereof be thereafter set aside; then any such event shall constitute an event of default by Lessee. Upon the occurrence of any such event of default by Lessee, Lessor shall have the following rights and remedies, in addition to all other rights and remedies of Lesson provided hereunder or by law: |
18.1 | The right to terminate this Lease, in which event Lessee shall immediately surrender possession of the Premises, assign to Lessor its interest in any construction, architectural and other contracts relating to the Premises, and pay to Lessor all rent and all other amounts payable by Lessee hereunder to the date of such termination; | ||
18.2 | The right to recover the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss for the same period that Lessee proves could be reasonably avoided; | ||
18.3 | The right to collect, by suit or otherwise, each installment of rent or other sums that become due hereunder, or to enforce, by suit or otherwise, performance or |
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observance of any agreement, covenant or condition hereof on the part of Lessee to be performed or observed; or | |||
18.4 | The right to cause a receiver to be appointed in any action against Lessee to take possession of the Premises or to collect the rents or profits therefrom. Neither appointment of such receiver nor any other action taken by Lessor shall constitute an election on they part or Lessor to terminate this Lease unless written notice of termination is given to Lessee. |
19. | Failure of Lessee to Perform Required Acts . Subject to Lessees right of contest under this Restated Lease, if at any time during the term of this Lease, Lessee fails or neglects to do any of the things herein required to be done by Lessee, Lessor shall have the right, but not the obligation, to do the same, but at the cost of and for the account of Lessee. Provided, however, Lessor shall in no case take such action sooner than thirty (30) days after giving Lessee written notice of such failure, refusal, or neglect and allowing said period within which Lessee may commence a bona fide effort to cure the same. The amount of any money so expended by Lessor together with interest thereon at the rate of twelve percent (12%) per annum shall be repaid to Lessor immediately upon demand therefor and unless so paid shall be added to the next rental payment coming due hereunder. | |
20. | Nonwaiver . No waiver of any default under this Lease shall constitute or operate as a waiver of any subsequent default hereunder, and no delay, failure or omission in exercising or enforcing any right, privilege, or option under this Lease shall constitute a waiver, abandonment or relinquishment thereof or prohibit or prevent any election under or enforcement or exercise of any right, privilege or option hereunder. No waiver of any provision hereof by Lessor or Lessee shall be deemed to have been made unless and until such waiver shall have been reduced to writing and signed by Lessor or Lessee, as the case may be. The receipt by Lessor of rent with knowledge of any default under this Lease shall not constitute or operate as a waiver of such default. | |
21. | No Merger . |
21.1 | There shall be no merger of the leasehold estate created by this Lease with the fee estate in the Premises by reason of the fact that the same person may on or hold (i) the leasehold estate created by this Lease or any interest in such leasehold estate and (ii) the fee estate in the Premises or any interest in such fee estate; and no merger shall occur unless and until Lessor, Lessee and any Lender shall join in a written instrument effecting such merger and shall duly record the same. | ||
21.2 | No termination of this Lease shall cause a merger of the estates of Lessor and Lessee, unless Lessor so elects, and any such termination shall, at the option of Lessor, either work a termination of any sublease in effect or act as an assignment to Lessor of Lessees interest in any such sublease. |
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22. | No Partnership . Nothing herein contained shall make or constitute Lessor, in any way or for any purpose, a partner of Lessee in the conduct of Lessees business, or otherwise, or a joint venturer or a member of a joint enterprise with Lessee. | |
23. | Covenants Run with Land . |
23.1 | The agreements, covenants and conditions contained herein are and shall be deemed to be covenants running with the land and the reversion and shall be binding upon and shall inure to the benefit of Lessor and Lessee and their respective successors and assigns and all subsequent Lessors and Lessees respectively hereunder. | ||
23.2 | All references in this Lease to Lessee or Lessor shall be deemed to refer to and include successors and assigns of Lessee or Lessor, respectively, without specific mention of such successors or assigns. |
24. | Notices . Any notice or communication hereunder to Lessor, Lessee or any Lender shall be in writing and be mailed by first-class, certified mail, postage prepaid. Notices or communications shall be addressed as follows: | |
To Lessor:
5940 S.W. Terwilliger Blvd. Portland, OR 97201-2880 |
||
or such other address or addresses as Lessor shall from time to time designate by notice in writing to Lessee. | ||
To Lessee:
Kurt Widmer President Widmer Brothers Brewing Company 929 N. Russell Avenue Portland, Oregon 97227 |
||
or such other address or addresses as Lessee shall from time to time designate by notice in writing to Lessor. | ||
Notices or Communications to any Lender shall be addressed to such Lender at such address as such Lender shall from time to time designate by notice in writing to Lessor. Any notice mailed in the manner above set forth shall be deemed to have been received on the third day after the date of mailing, unless returned to the sender by the post office. |
25. | Limitation of Lessors Liability . The term Lessor, as used in this Lease, so far as covenants or obligations on the part of Lessor are concerned, shall be limited to mean and include only the owner or owners at the time in question of the fee or any lesser estate in the Premises, and in the event of any transfer of the title to such fee or lesser estate the Lessor herein named (and in the case of any subsequent transfer, the then transferor) shall |
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be automatically freed and relieved from and after the date of such transfer of all personal liability for the performance of any covenants or obligations on the part of Lessor contained in this Lease thereafter to be performed; provided, however, that any funds in the hands of Lessor of the then transferor at the time of such transfer, in which Lessee has an interest, shall be turned over to the transferee and any amount then due and payable to Lessee by Lessor or the then transferor under any provision of this Lease shall be paid to Lessee; and provided, further, that upon any such transfer, the transferee shall expressly assume, subject to the limitations of this paragraph, all of the agreements, covenants and conditions in this Lease to be performed on the part of Lessor, it being intended hereby that the covenants and obligations contained in this Lease on the part of Lessor shall, subject as aforesaid, be binding on each Lessor, its successors and assigns, only during its period of ownership. | ||
26. | Estoppel Certificates . Lessee or Lessor, as the case may be, shall execute, acknowledge and deliver to the other and/or to any Lender, promptly upon request, its certificate certifying (a) that this Lease is unmodified and in full force and effect (or, if there have been modifications, that this Lease is in full force and effect, as modified, and stating the modifications), (b) the dates, if any, to which all rental due hereunder has been paid, (c) whether there are then existing any charges, offsets or defenses against the enforcement by Lessor of any agreement, covenant or condition hereof on the part of Lessee to be performed or observed (and, if so, specifying the same), and (d) whether there are then existing any defaults by Lessee in the performance or observance by Lessee of any agreement, covenant or condition hereof on the part of Lessee to be performed or observed and whether any notice has been given to Lessee of any default which has not been cured (and, if so, specifying the same). Any such certificate may be relied upon by a prospective purchaser, mortgagee or trustee or beneficiary under a deed of trust of the Premises or any part thereof. | |
27. | Holding Over . This Lease shall terminate without further notice upon the expiration of the term specified, and any holding over by Lessee after the expiration of said term shall not constitute a renewal hereof or give Lessee any rights hereunder or in or to the Premises. | |
28. | Lessees Option to Purchase the Premises . |
28.1 | Lessor hereby grants to Lessee an exclusive and irrevocable option (the Option) to purchase the Premises, for the price and upon the terms and conditions specified herein, at any time during the term hereof, except the last twelve (12) months of the lease term or extension thereof. Lessee may exercise the Option by giving Lessor six (6) months written notice of exercise of the Option. Upon exercise of the Option and provided Lessee is not in default of any monetary obligation hereunder or otherwise in material default hereunder, Lessor shall be obligated to sell and convey to Lessee and Lessee shall be obligated to purchase from Lessor the Premises for a purchase price as determined by the method in Exhibit C attached hereto and incorporated herein, except the last twelve (12) months of the lease term or extension thereof. |
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28.2 | The purchase and sale of the Premises shall be closed on or before 180 days after the date of the notice of intent to exercise the Option (Closing Date) regardless of whether the price is established. If the appraisal process is not complete within said time, the purchase price shall bear interest at the rate of twelve percent (12%) per annum from the Closing Date until paid. The Closing shall be through an escrow opened by Lessee with a title insurance company (Title Company) qualified to do business in the State of Oregon and located in the City of Portland and County of Multnomah. Prior to the Closing Date, Lessor and Lessee shall deposit in escrow with Title Company all documents and funds necessary to close the purchase and sale hereunder, together with escrow instructions consistent herewith. Lessor shall convey to Lessee, by statutory general warranty deed, fee simple title to the Premises (or such portion thereof as shall not have been taken by eminent domain in the event of such taking prior to the Closing Date), subject only to the lien of taxes, assessments or other charges payable by Lessee under this Lease, such matters as are set forth in Exhibit B hereto and such other matters as may be created, suffered to be created or consented to by Lessee (including without limitation, any subleases of space then in effect covering space in the building on the Premises), or by Lessor at Lessees request (evidence of such title to be an ALTA owners policy of title insurance), and shall assign to Lessee any eminent domain award with respect to the Premises or proceeds of insurance resulting from damage or destruction to the Premises which have not been previously paid to Lessor and to which Lessee is entitled under the provisions of this Lease. | ||
28.3 | The cost of the premium for the title insurance policy issued to Lessee on the Closing Date shall be paid by Lessee. Any transfer taxes payable with respect to the conveyance shall be paid by Lessor. Escrow fees shall be paid one-half (1/2) by Lessor and one-half (1/2) by Lessee. All other costs of closing escrow shall be borne in accordance with the custom then prevailing in the County of Multnomah. Lessee shall continue to pay rent and other charges as may be due hereunder to and including the date of the closing of escrow. | ||
28.4 | The option to purchase contained in this Paragraph 28 is personal to Lessee and may not be assigned separate and apart from the Lessees leasehold interest under this Lease. |
29. | Lessees Right of First Refusal . |
29.1 | If at any time during the term of this Lease: (i) Lessor receives an offer from a third party to purchase its fee title to the Premises or any part thereof or interest therein, and Lessor desires to accept it; or (ii) if Lessor makes an offer to sell, transfer, or assign its fee title to the Premises or any part thereof or interest therein, then Lessor shall deliver to Lessee immediate notice of such offer, setting forth the name and address of the proposed purchaser or transferee, an amount of the proposed purchase price, and all other terms and conditions of such offer, and Lessee shall have the right of first refusal to purchase such fee title to the Premises or such part thereof or interest therein which is the subject of the offer |
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by giving written notice to the Lessor, within thirty (30) days after receiving Lessors notice, except notice must be given no later than twelve (12) months before expiration of the lease term or any extension thereof, of Lessees intention to purchase said title at the same price and on the same terms of any such offer (Lessee shall pay the fair market cash value of any noncash terms of such an offer, and the purchase price to Lessee shall have deducted therefrom the amount of any brokerage commissions included in such offer). In the event that Lessee fails to notify Lessor within said thirty (30) day period of Lessees election to exercise its right of first refusal, or in the event Lessee notifies Lessor within said period that Lessee will not exercise its right of first refusal, Lessor may proceed to sell, transfer or assign its fee title or part thereof or interest therein to the third party within ninety (90) days after the expiration of such thirty (30) day period, but only on the same terms and conditions as were offered to Lessee, and any change in such terms and conditions shall be deemed to be a new offer and Lessee shall in such event not consummate any sale, assignment or other transfer to any third party but shall first submit the changed terms and conditions to Lessee for determination by Lessee in the manner provided above as to whether it will elect to exercise its right of first refusal on the changed terms and conditions. In the event that Lessee has elected not to exercise its right of first refusal and the sale or transfer of the Lessors interest in the Premises as described in the offer is not completed for any reason within the aforesaid ninety (90) day period, the Lessee shall have, upon the same conditions and notice, the continuing right of first refusal to purchase Lessors interest in the Premises upon the terms of any subsequent offer or offers, even though Lessee declined to exercise its right of first refusal with respect to any prior transaction. In the event that Lessee acquires Lessors interest in the Premises pursuant to the foregoing provisions, Lessor shall convey title to Lessee by a grant deed or instrument of assignment, as the case may be, in form for recording, the form of which shall be subject to reasonable approval by Lessees counsel. If the Lessee exercises said right of first refusal, all funds and documents shall be placed in escrow, and the transaction shall be consummated through said escrow within ninety (90) days after Lessee gives Lessor notice of the exercise of the right of first refusal. The parties agree that there will be no right of first refusal during the last twelve (12) months of any lease term. | |||
29.2 | Lessee shall continue to pay the rent and other charges, as required by the terms and provisions of this Lease to and including the date the escrow closes for the purchase of the real property. | ||
29.3 | Lessee agrees and acknowledges that if it elects to purchase the Premises pursuant to its right of first refusal, as herein provided, neither Lessor nor anyone acting for and on behalf of Lessor has made any representations, statements, or warranties concerning the physical condition of the Premises to be conveyed pursuant to the terms and conditions of this Paragraph 29. |
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30. | Arbitration . Whenever, under any provision of this Lease, arbitration is required, then: |
30.1 | Lessor and Lessee shall each appoint one (1) arbitrator within thirty (30) days after a written notice requesting arbitration shall have been given by one of them to the other, and written notice of appointment shall be given to the other party. | ||
30.2 | Said two (2) arbitrators shall, within thirty (30) days after the appointment of the last-appointed arbitrator, resolve the question or dispute before them in writing and notify Lessor and Lessee of the results thereof. | ||
30.3 | If said two (2) arbitrators cannot agree within said period, they shall, within a period of thirty (30) additional days, agree upon and appoint a third arbitrator. | ||
30.4 | Said three (3) arbitrators shall, within thirty (30) days after the appointment of the third arbitrator, remove the question or dispute before them in writing and notify Lessor and Lessee of the results thereof. | ||
30.5 | The decision of at least two (2) of said three (3) arbitrators, rendered in writing, shall be conclusive and binding upon Lessor and Lessee. | ||
30.6 | If either Lessor or Lessee fails to appoint an arbitrator within the time limited in Subparagraph 30.1 above, or if the two (2) arbitrators appointed by Lessor and Lessee fail to agree upon and appoint a third arbitrator, such second or third arbitrator (as the case maybe), shall be appointed by the presiding judge of the Circuit Court in and for the County of Multnomah upon application by either party. Except as provided hereunder, the arbitration shall proceed in accordance with the laws then in effect of the State of Oregon relating to arbitration. | ||
30.7 | Each of the parties hereto shall pay for the services of its appointees, attorneys and witnesses plus one-half (1/2) of the fee charged by the third arbitrator (if any) and one-half (1/2) of all other proper costs relating to arbitration. | ||
30.8 | All arbitrators appointed pursuant to this Paragraph 30 shall be real estate brokers of M.A.I. appraisers who are familiar with appraisal procedures and with commercial property values in the City of Portland and County of Multnomah. |
31. | Unavoidable Delays Force Majeure . If either party shall be delayed or prevented from the performance of any act required by this Lease by reason of acts of God, strikes, lockouts, labor troubles, inability to secure materials, restrictive governmental laws or regulations, or other cause, without fault and beyond the reasonable control of the party obligated (financial inability excepted), performance of such act shall be excused for the period of the delay; and the period for the performance of any such act shall be extended for a period equivalent to the period of such delay; provided, however, that nothing in this paragraph shall excuse Lessee from the obligation to pay when due all rental and other monetary charges required of Lessee. The party delayed or prevented from the performance of any act as above described shall notify the other of such delay or prevention within fifteen (15) days of the inception thereof, and shall thereafter keep said party regularly informed of the status of such delay or prevention. |
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32. | Exchange . In the event Lessee exercises its options to purchase the Premises pursuant to either the Option to Purchase or the Right of First Refusal at Paragraphs 28 or 29, Lessor may elect to effect an exchange of its interest in the Premises pursuant to Section 1031 of the Internal Revenue Code. In such event, Seller shall not less than twenty-one (21) days prior to the date on which escrow is to close for such purchase, designate certain other property (the Exchange Property) that it will take in exchange for the Premises. Upon Lessors designation of the Exchange Property, Lessee will cooperate with Lessor in entering into an agreement (the Exchange Agreement) whereby Lessee shall acquire the Exchange Property. The closing on the Exchange Agreement shall occur simultaneous with the close of escrow under Paragraphs 28 and 29 hereof. Lessee shall not be required to pay more cash to close the Exchange Property than the cash required to be paid by Lessee pursuant to Paragraphs 28 and 29 hereof, Lessor agrees to accept the Exchange Property in exchange of moneys paid by Lessee for the Exchange Property, and Lessee shall receive at the close of escrow a credit against the moneys owed by Lessee pursuant to Paragraphs 28 and 29 hereof, including without limitation the purchase price of the Exchange Property, all ancillary costs and expenses and reasonable attorneys fees, in acquiring the Exchange Property. Notwithstanding anything to the contrary contained herein, it is understood that Lessees obligation under this Paragraph 32 shall be limited to executing such documents to facilitate the purchase of the Exchange Property as may be provided to Lessee by Lessor. Any such documents submitted to Lessee by Lessor shall be in form and substance satisfactory to Lessee. | |
Lessor agrees to indemnify and save Lessee harmless against any and all liabilities, penalties, demands, claims, causes of action, suits, losses, damages, costs and expenses, arising out of or relating to Lessees purchase or contracting to purchase the Exchange Property. | ||
33. | General Provisions . |
33.1 | Each party hereby agrees to indemnify the other party from and against any real estate brokerage commissions or other such obligations incurred by the indemnifying party as a result of the negotiation or execution of this Lease. | ||
33.2 | In case any one or more of the provisions contained in this Lease shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Lease, but this Lease shall be construed as if such invalid, illegal or unenforceable provisions had not been contained herein. | ||
33.3 | Time is of the essence of each and all of the agreements, covenants and conditions of this Lease. | ||
33.4 | Whenever in this Lease the consent or approval of either Lessor or Lessee is required or permitted, the party requested to give such consent or approval shall act promptly and shall not unreasonably withhold its consent of approval. |
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33.5 | At the request of either party, Lessor and Lessee will execute, acknowledge and record in the Deed Records of the County of Multnomah a Short Form Lease. | ||
33.6 | The captions used herein are for convenience only and are not a part of this Lease and do not in any way limit or amplify the terms and provisions hereof. | ||
33.7 | In the event of any action or proceeding at law or in equity between Lessor and Lessee to enforce any provision of this Lease or to protect or establish any right or remedy of either party hereunder, the unsuccessful party to such litigation shall pay to the prevailing party all costs and expenses, including reasonable attorneys fees incurred therein by such prevailing party, and if such prevailing party shall recover judgment in any such action or proceeding, such costs, expenses and attorneys fees shall be included in and as a party of such judgment. | ||
33.8 | This Lease shall be interpreted in accordance with and governed by the laws of the State of Oregon. The language in all parts of this lease shall be, in all cases, construed according to its fair meaning and not strictly for or against Lessor or Lessee. | ||
33.9 | This instrument constitutes the entire agreement between Lessor and Lessee with respect to the subject matter hereof and supersedes all prior offers and negotiations, oral and written. This Lease may not be amended or modified in any respect whatsoever except by an instrument in writing signed by Lessor or Lessee. | ||
33.10 | No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity. | ||
33.11 | This Lease may be executed in counterparts and when so executed by each of the parties hereto all of such counterparts taken together shall constitute an entire agreement. | ||
33.12 | Lessor and Lessee understand and agree that this Lease is what is commonly known in the business as a ground lease which is also a net, net, net Lease. Lessee recognizes and acknowledges, without limiting the generality of any other terms or provisions of this Lease, that it is the intent of the parties hereto that any and all rentals in this Lease provided to be paid by Lessee to Lessor, shall be net to Lessor, and any and all expenses incurred in connection with the Premises, or in connection with the operations therein or thereon, including any and all taxes, assessments, general or special license fees, insurance premiums, general or special license fees, insurance premium, public utility bills, and costs of repair, maintenance and operation of the premises, including any and all buildings, structures, permanent fixtures and other improvements comprised therein, together with the appurtenances thereto, shall be paid by Lessee, in addition to the rentals herein provided for, as its sole and exclusive proper costs and expenses. |
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34. | Exhibits . The following Exhibits are attached hereto and made a part hereof: | |
EXHIBIT A Property Description
EXHIBIT B Title Report EXHIBIT C Purchase Price |
LESSOR: | LESSEE: | |||||||
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SMITHSON & MCKAY LIMITED LIABILITY COMPANY, an Oregon limited liability company |
WIDMER BROTHERS BREWING COMPANY,
an Oregon corporation |
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By:
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/s/ Kurt Widmer | By: | /s/ Kurt Widmer | |||||
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Kurt Widmer, Member | Kurt Widmer, President | ||||||
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By:
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/s/ Rob Widmer | |||||||
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Rob Widmer, Member | |||||||
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By:
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/s/ Kristen Maier-Lenz | |||||||
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Kristen Maier-Lenz, Member | |||||||
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Atty in Fact | ||||||||
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/s/ Kurt Widmer |
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Date:
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December 18, 2007 | |||
Between:
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Widmer Brothers LLC | (Landlord) | ||
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Portland, Oregon | |||
And:
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Widmer Brothers Brewing Company | (Tenant) |
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CORPORATE ADVISORY ASSOCIATES
INCORPORATED |
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By | /s/ T.S. Tony Leung | ||
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T.S. Tony Leung | |||
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CFA, ASA, CPA (Inactive) |