Stock Purchase Agreement - Rock Bottom Restaurants Inc. and Trolley Barn Brewery Inc.
JUNE 4, 1996; 3:00 A.M.
STOCK PURCHASE AGREEMENT
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This Stock Purchase Agreement is made and entered into as of this
4th day of June , 1996, by and among Rock Bottom Restaurants,
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Inc., a Delaware corporation ("ROCK BOTTOM"); TBB Acquisition Group,
Inc., a Tennessee corporation ("TBB ACQUISITION"), Trolley Barn
Brewery, Inc., a Tennessee corporation ("TROLLEY"), TBB Holding
Company, a Tennessee corporation ("TBB HOLDING"), and Tim P. Hennen,
Robert A. Gentry, John F. Hennen, James M. Hennen, Nelson E. Bowers,
II, H. Allen Corey, Frank F. Fowler, John N. Foy, Kenneth S. Hays,
Jr., Jon M. Kinsey, Frank W. McDonald, Jamie Bradford, Raun V. Smith
and Benjamin R. Probasco (hereinafter collectively referred to as the
"SHAREHOLDERS" and sometimes individually referred to as
"SHAREHOLDER").
RECITALS
Shareholders, now, and as of the Closing, own, free and clear of
all adverse claims, all of the issued and outstanding shares of
capital stock of TBB Acquisition (the "SHARES"), each Shareholder as
of the date hereof and as of the Closing owning at least the number of
Shares as set forth in Section 2.1 hereof;
Shareholders also own all of the capital stock of TBB Holding
which is the owner of 50% of the issued and outstanding shares of
common stock of Trolley;
Rock Bottom desires to acquire all of the issued and outstanding
Shares of TBB Acquisition;
TBB Acquisition is the owner of 50% of the issued and outstanding
shares of common stock of Trolley, which in turn owns 100% of the
issued and outstanding shares of capital stock of Big River Breweries,
Inc., a Tennessee corporation ("BIG BREWERIES") and Big River
Properties, Inc., a Tennessee corporation ("BIG PROPERTIES") (Big
Properties and Big Breweries being sometimes referred to as a
"SUBSIDIARY" or the "SUBSIDIARIES");
Trolley, TBB Acquisition, TBB Holding and the Subsidiaries are
sometimes collectively and individually referred to as the
"CORPORATIONS."
Each of the parties desires to make certain representations,
warranties and agreements in connection with the transactions
contemplated hereby and also to prescribe various conditions thereto;
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Concurrently with the "CLOSING" (as defined below) of this
Agreement: (i) Rock Bottom and the Shareholders will enter into a
Registration Rights Agreement with respect to the shares of Rock
Bottom common stock to be issued under the terms set forth below; (ii)
a Shareholder Agreement will be entered into among and between Rock
Bottom, Trolley, TBB Acquisition, Shareholders, and TBB Holding and
TBB Holding Shareholders concerning the purchase and sale of shares of
certain of the Corporations and the guarantee of debt requirements of
Trolley and the Subsidiaries; (iii) an Operation Agreement will be
entered into between Rock Bottom and Trolley concerning the operation
of brew pubs and other restaurant concepts within certain territories;
(iv) an Option Agreement will be entered into among Rock Bottom, the
Shareholders, Trolley and TBB Holding with respect to the shares of
Trolley held by TBB Holding and the shares of capital stock of TBB
Holding; (v) certain principals, Tim P. Hennen and Robert A. Gentry,
of Trolley will enter into non-compete agreements; (vi) a Licensing
and Development Agreement between Rock Bottom and Trolley concerning
the development of the brew pubs and restaurant concepts, the timing
of the opening of future brew pubs and restaurants, and the licensing
of certain marks owned by Rock Bottom under certain conditions set
forth therein; and (vii) Rock Bottom, TBB Acquisition, Trolley, TBB
Holding, the Shareholders and an escrow agent for the escrow of
certain shares of rock Bottom stock will enter into an Escrow
Agreement. Each of those agreements shall become effective only upon
the Closing; and each of those documents and the other documents to be
executed and delivered in connection herewith is referred to as a
"DOCUMENT" or the "DOCUMENTS."
AGREEMENT
ARTICLE I
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SALE AND CLOSING
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1.1 Acquisition and Transfer of Stock. Each of the Shareholders
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will, on the Closing date, sell, assign, convey, transfer and deliver
to Rock Bottom all right, title and interest in and to the Shares
owned by such Shareholder, free and clear of all liens, security
interests, claims, charges and encumbrances of any nature whatsoever,
together with any other documents necessary or reasonably requested by
Rock Bottom to transfer to Rock Bottom good and marketable title to
such Shares. The Shares sold to Rock Bottom hereunder, shall
constitute all of the issued and outstanding shares of capital stock
of TBB Acquisition. The exact number of shares to be sold hereunder
is 750 shares of TBB Acquisition Class A common stock plus all of the
shares of Class A common stock constituting the net exercised portion
of the 183 shares of Class A common stock subject on the date hereof
to option agreements, and the unexercised options will be terminated.
All option holders are Shareholders. If between the date hereof and
the Closing any additional shares are issued pursuant to existing
stock options: (i) TBB Acquisition will immediately inform Rock
Bottom; (ii) such new stockholder, if not a shareholder, shall become
a party hereto and therefore a "Shareholder;" and (iii) the total
consideration payable by Rock Bottom hereunder shall not change. Rock
Bottom shall not be required to carry out the transactions
contemplated hereby if any new stockholder is not made a party hereto
or additional Shares issued pursuant to outstanding options are not
included hereunder. At the Closing, each Shareholder shall deliver to
Rock Bottom certificates
2<PAGE>
evidencing the Shares owned by such Shareholder duly endorsed in blank
or with stock powers duly executed by such Shareholder.
1.2 Purchase Price. In exchange for the Shares, Rock Bottom
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will issue to Shareholders a total number of shares of Rock Bottom
common stock $0.01 par value per share valued at $5,000,000 ("ROCK
BOTTOM STOCK"). The Rock Bottom Stock will be valued at $11.06 for a
total of 452,080 shares. The Rock Bottom Stock issued under this
Section is referred to as the "PURCHASE PRICE." The Purchase Price
shall be allocated and delivered to each of the Shareholders in
proportion to his or her pro rata ownership of the Shares.
1.3 Rock Bottom Stock. The Rock Bottom Stock will be restricted
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stock subject to the restrictions on transfer contained in the
Registration Rights Agreement and Shareholders Agreement between the
Shareholders and Rock Bottom executed and effective concurrent with
the Closing. The Rock Bottom Stock to be issued will not have been
registered under the Securities Act of 1933, as amended, or qualified
under applicable Blue Sky laws. As further set forth in the
Registration Rights Agreement and herein, the Rock Bottom Stock may
not be sold or transferred in the absence of an effective registration
statement for the Rock Bottom Stock or an opinion of counsel,
acceptable to Rock Bottom and presented to Rock Bottom prior to the
proposed transaction, that registration or qualification is not
required under Federal law or applicable state law.
1.4 Closing. The Closing of the transaction contemplated hereby
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(the "CLOSING") shall be held at the office of Chrisman, Bynum &
Johnson, P.C., 1900 15th Street, Boulder, CO 80302, commencing at
10:00 a.m., local time, on July 2, 1996 effective 12:01 a.m. on July
1, 1996, or at such other place, date or time as the parties may
mutually agree.
1.5 Fractional Shares. No certificates or scrip representing
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fractional shares of Rock Bottom Stock shall be issued to
Shareholders, but rather cash in an amount equal to the fraction of a
share not delivered, multiplied by $11.06 shall be delivered.
1.6 Tax-Free Reorganization. The purchase of the Shares is
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intended to be a tax-free reorganization pursuant to Code (as defined
below) Section 368 (a)(1)(B) and will be treated and reported as such
by the parties hereto. Each party agrees to render to the other
parties reasonable assistance to preserve the tax free reorganization
nature of the transactions described herein.
1.7 Escrow Shares. As security for the indemnity provisions of
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this Agreement from Shareholders to Rock Bottom certificates
representing 10% of the shares of Rock Bottom Stock delivered at
Closing shall be physically held by Miller & Martin, Chattanooga,
Tennessee, or other escrow agent selected by the Shareholders and
approved by Rock Bottom, in escrow, but issued in the names of the
Shareholders in the same ratio as the Shareholders own of TBB
Acquisition as of the Closing. The parties specifically understand
that this is not an "earn out" or similar provision. The Escrow
Agreement shall be in substantially the form of Exhibit ___ attached
hereto.
3<PAGE>
1.8 Transaction Costs. The amount of all fees and costs of or
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related to the negotiation, structuring or documentation of the
transactions described herein, including all professional fees, paid,
incurred or accrued by Trolley, a Subsidiary, or TBB Acquisition
("TRANSACTION COSTS"), to any person representing Trolley, a
Subsidiary, or TBB Acquisition or Holding Shareholders, through the
Closing shall not exceed $50,000. Trolley shall fully pay all
Transaction Costs at Closing.
ARTICLE II
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REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
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TBB Holding jointly and severally, TBB Acquisition jointly and
severally, Trolley jointly and severally, and the Shareholders jointly
and severally (provided, that the Shareholders represent and warrant
only Sections 2.1, 2.3, 2.8, 2.9, 2.10, 2.11, 2.29, 2.32, 2.36 and
2.37 and only those portions of such representations which pertain to
such Shareholder's) (and provided that Shareholders who are officers
or directors of Trolley represent and warrant as to Section 2.21)
(collectively and singly, the "REPRESENTING PARTY"), represents and
warrants to Rock Bottom and TBB Acquisition as follows as of the date
hereof and as of the Closing:
2.1 Authorization Capitalization; Outstanding Shares; Title of
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TBB Acquisition. The authorized capital stock of TBB Acquisition
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consists of 50,000 shares of Class A common stock and 50,000 shares of
Class B common stock. TBB Acquisition has 750 shares of Class A
common Stock issued and outstanding. There are no shares of Class B
common stock issued and outstanding, nor are there any options to
purchase any Class B common shares. No shares of stock are held in
TBB Acquisition's treasury. All of the issued and outstanding shares
of common stock are duly authorized, fully paid, validly issued and
non-assessable, with no personal liability attaching to the ownership
hereof. There are options outstanding as of the Date hereof pursuant
to which up to 183 shares of Class A common stock (the "RESERVED
SHARES") may be issued. When issued, the Reserved Shares will be duly
authorized, validly issued, and will be fully paid and non-assessable,
with no personal liability attaching to the ownership thereof. Each
Shareholder is the record and beneficial owner of, and has marketable,
legal and valid title to, the Shares of common stock set forth as
follows and options for the Reserved Shares as set forth on Schedule
2.5:
4<PAGE>
Shareholder Number of Outstanding Shares/Class
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Tim P. Hennen 325 A
Robert A. Gentry 125 A
John F. Hennen 62.5 A
James M. Hennen 62.5 A
Nelson E. Bowers, II 25 A
Allen Corey 12.5 A
Frank E. Fowler 25 A
John F. Foy 25 A
Kenneth S. Hays, Jr. 5 A
Jon M. Kinsey 25 A
Frank W. McDonald 7.5 A
Jamie Bradford 12.5 A
Raun V. Smith 25 A
Benjamin R. Probasco 12.5 A
free and clear of liens, pledges, charges, claims and other
encumbrances, actual or alleged. Delivery of the Shares (including
the Reserved Shares) to Rock Bottom at the Closing, pursuant to this
Agreement, will transfer to Rock Bottom legal and valid title to the
Shares (including the Reserved Shares) free and clear of any liens,
pledges, charges, claims and other encumbrances. There are no options
or other rights to buy equity securities (including convertible
securities) of TBB Acquisition except as described above and the
unexercised portion of the described options shall be cancelled prior
to Closing.
2.2 Capitalization of Trolley. The authorized capital stock of
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Trolley consists of 50,000 shares of Class A common stock and 50,000
shares of Class B common stock. Trolley has 1500 shares of Class A
common stock issued and outstanding and there are no shares of Class B
common stock issued and outstanding. No shares are held in Trolley's
treasury. All of the issued and outstanding shares of common stock
are duly authorized, fully paid, validly issued and non-assessable,
with no personal liability attaching to the ownership thereof. The
shares of common stock are held as follows:
Shareholder Number of Shares Class
TBB Acquisition 750 A
TBB Holding 750 A
free and clear of liens, pledges, charges, claims and other
encumbrances, actual or alleged. In all respects the interests of TBB
Holding and TBB Acquisition in Trolley are precisely the same. There
are no options or other rights to buy equity securities (including
convertible securities) of Trolley.
5<PAGE>
2.3 Capitalization of TBB Holding. The authorized capital stock
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of TBB Holding consists of 50,000 shares of Class A common stock and
50,000 shares of Class B common stock. TBB Holding has 750 shares of
Class A common stock issued and outstanding and there are no shares of
Class B common stock issued and outstanding, nor are any options to
purchase any Class B common shares. An additional 727.5 shares of
Class A are reserved for issuance pursuant to certain options. All of
the issued and outstanding shares of common stock are duly authorized,
fully paid, validly issued and non-assessable, with no personal
liability attaching to the ownership thereof. The shareholders of TBB
Holding and their respective holdings of the outstanding stock of TBB
Holding are as listed in Section 2.1 above. All of the options to
acquire securities of TBB Holding are held by Shareholders as set
forth in Schedule 2.5.
2.4 Organization; Good Standing; Power; Etc.. Each Corporation:
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(i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Tennessee; (ii) is authorized
or licensed to do business as a foreign corporation and is in good
standing in the jurisdictions listed in Schedule 2.4; (iii) is not
required to be authorized or licensed to do business as a foreign
corporation in any other jurisdiction (within or without the United
States) by reason of the nature of the business conducted by it or the
properties owned or leased or operated by it; and (iv) has the
requisite power and authority to own, lease and operate its properties
and to carry on its business as currently conducted.
2.5 Agreements Relating to Stock; Options; Warrants;
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Restrictions on Shares; Etc.. Except as set forth in Schedule 2.5,
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none of the Corporations, nor any Shareholder, is a party to any
written or oral agreement, understanding, arrangement or commitment or
bound by any certificate of incorporation, bylaw or instrument
(including options, warrants or convertible securities) which creates
any rights in any person with respect to shares of the capital stock
or any other securities of any Corporation or which relates to the
voting of, restricts the transfer of, requires any Corporation or the
Shareholders to issue or sell, or creates rights in any person with
respect to the capital stock or other securities of any Corporation
(or warrants or rights with respect thereto). Except as set forth in
Schedule 2.5, there exist no options or other rights to purchase, or
rights to convert any securities or obligations into, any shares of
the capital stock or other securities of any Corporation.
2.6 Charter and Bylaws; Officers and Directors. Complete and
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correct copies of: (i) each Corporation's corporate Charter, as
amended to date ("CHARTER"), certified by the appropriate officials of
the jurisdiction of incorporation; and (ii) each Corporation's Bylaws,
as amended to date ("BYLAWS"), certified by a Secretary or an
Assistant Secretary of the respective Corporation, are attached as
Schedule 2.6. Such Charter and Bylaws are fully in force and effect,
and no Corporation is in violation of any of the provisions thereof.
A complete and correct list of all officers and directors of each
Corporation is set forth in Schedule 2.6.A.
2.7 No Subsidiaries. No Corporation owns any interest, directly
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or indirectly, in any other corporation, company, limited liability
company, business, trust, partnership, limited partnership, joint
venture, or other entity or association, except: (i) TBB Acquisition's
ownership of 50% of the Capital Stock of Trolley; (ii) TBB Holding's
ownership of 50% of the Capital
6<PAGE>
Stock of Trolley; (iii) Trolley's ownership of 100% of the Capital
Stock of the Subsidiaries; and (iv) 111 Broadway Partners, L.P. (Big
River is the sole general partner and holds a 51% interest in 111
Broadway Partners, L.P. and Big Properties is the sole limited partner
and holds a 49% interest). All representations and warranties herein
concerning any Corporation include the effect of Big River being the
general partner, and Big Properties being the limited partner, of 111
Broadway Partners.
2.8 Authorizations and Enforceability. Each Shareholder and
---------------------------------
each Corporation has all requisite power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly
authorized, executed and delivered by each Shareholder and each
Corporation and constitutes the valid and binding obligation of each
Shareholder and each Corporation fully enforceable in accordance with
its terms.
2.9 Effect of Agreement, Etc.. The execution, delivery and
-------------------------
performance of this Agreement by each Shareholder and each Corporation
and the consummation of the transactions contemplated hereby will not,
with or without the giving of notice of the lapse of time, or both:
(i) violate any provision of law, statute, rule or regulation to which
any Corporation or any Shareholder is subject; (ii) violate any
judgment, order, writ or decree of any court, arbitrator or
governmental agency applicable to any Corporation or any Shareholder;
(iii) have any effect on any of the permits, licenses, orders or
approvals or the ability of any Corporation to make use of such
permits, licenses, orders or approvals, except as set forth in
Schedule 2.11; or (iv) result in the breach of or conflict with any
term, covenant, condition or provision of, result in the modification
or termination of, constitute a default under, or result in the
creation or imposition of, any lien, security interest, charge or
encumbrance upon any of the properties or assets of any Corporation
pursuant to any charter, bylaw, commitment, contract or other
agreement or instrument, including any of the Commitments (as defined
in Section 2.18) to which any Corporation is a party or by which any
of its assets or properties are or may be bound or affected or from
which any Corporation derives benefit.
2.10 Restrictions; Burdensome Agreements. Neither any
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Corporation nor any of the Shareholders is a party to any contract,
commitment or agreement, and neither any Corporation nor any of the
Shareholders or any of their respective properties and assets are
subject to or bound or affected, by any charter, bylaw or other
corporate restriction, or any order, judgment, decree, law, statute,
ordinance, rule, regulation or other restriction of any kind or
character, which would: (i) prevent any Shareholder or any Corporation
from entering into this Agreement or from consummating the
transactions contemplated hereby; or (ii) materially and adversely
affect the business, properties, prospects or the condition, financial
or otherwise, of any Corporation.
2.11 Government and Other Consents. Except as set forth in
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Schedule 2.11, no consent, authorization or approval of, or exemption
by, or filing with any governmental, public or self-regulating body or
authority (including, but not limited to, any licensing authority with
jurisdiction over the manufacturing, storing, serving, transporting or
distributing, of beer, wine
7<PAGE>
or liquor) is required by any Shareholder or any Corporation for
consummation of this Agreement or any of the instruments or agreements
herein referred to, or the taking of any action herein contemplated.
2.12 Permits; Licenses; Compliance with Applicable Laws and
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Court Orders. Each Corporation has all requisite corporate power and
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authority, and all permits, licenses, orders and approvals of
governmental and administrative authorities which are material, to
own, lease and operate its properties and to carry on its business as
presently conducted; all such permits, licenses, orders and approvals
material to the conduct of the business of any Corporation are listed
in Schedule 2.12, are in full force and effect, and no suspension or
cancellation of any of them is pending or, to the knowledge of any
Representing Party, threatened. Each Corporation's conduct of its
business does not violate or infringe any domestic or foreign law,
statute, order, ordinance or regulation currently in effect, scheduled
to come into effect or, to the knowledge of any Representing Party,
proposed to be adopted, the enforcement of which would materially
adversely affect the financial condition, results of operations,
properties or business of any Corporation, and no Corporation is in
default in any respect under any executive, legislative, judicial,
administrative, private (such as arbitration) ruling, order, writ,
injunction or decree.
2.13 Financial Statements; Absence of Undisclosed Liabilities.
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2.13.1 Each Corporation's fiscal year ends December 31.
2.13.2 INTENTIONALLY LEFT BLANK
2.13.3 Balance sheets for Trolley, consolidated with the
Subsidiaries, for the periods ending December 31, 1995 and
December 31, 1994, including the related statements of operations
and cash flows for the periods then ended and the accompanying
notes to financial statements, audited by Henderson, Hutcherson,
Walker and McCullough, and the unaudited balance sheet, related
statements of operations and cash flows for the period from
December 31, 1995 to April 21, 1996, are set forth as Schedule
2.13.3.
2.13.4 Trolley has previously delivered to Rock Bottom
separate financial statements and information, (including the
most recent such information) as to each Subsidiary and as to
each restaurant/brew pub ("RESTAURANT") owned or operated by
Trolley or a Corporation in the format used by Trolley for its
internal purposes, and such financial statements and information
are substantially true, complete and fairly state the assets and
results of operations of the Subsidiary or Restaurant.
2.13.5 Except as set forth in Schedule 2.13.5, the
financial statements described in Section 2.13.3. have been
prepared in accordance with generally accepted accounting
principles applied on a basis consistent with that of prior years
or periods, are correct and complete and fairly present the
financial position and results of operations of the reporting
entity as of said dates and for the periods indicated, in
accordance with
8<PAGE>
generally accepted accounting principles, and no event has
occurred since the preparation of these statements which would
render any of them misleading in any respect. Consolidated
financial statements of Trolley for the period ended April 21,
1996, referred to above, are referred to herein as the "FINANCIAL
STATEMENTS," and the consolidated balance sheet of Trolley
included therein is referred to herein as the "BALANCE SHEET."
April 21, 1996 is referred to as the "BALANCE SHEET DATE."
2.13.6 Except as set forth in Schedule 2.13.6, there have
been no letters from any Corporation's accountants to management
with respect to any Corporation's financial condition, financial
statements, accounting or other record keeping practices, or
other business practices.
2.13.7 Except to the extent reflected or reserved against
or otherwise disclosed in the Financial Statements or in Schedule
2.13.7, as of the Balance Sheet Date, neither Trolley nor any
Subsidiary had any liabilities, debts or other obligations of any
nature, whether absolute, accrued, contingent or otherwise, or
whether due or to become due, including, without limitation,
liabilities for taxes, in excess of $25,000 in any one case or in
excess of $50,000 in the aggregate. Subsequent to the Balance
Sheet Date, neither Trolley nor any Subsidiary has incurred any
liabilities, debts or obligations other than in the ordinary
course of business (and such ordinary course items do not in the
aggregate exceed $200,000), except as listed in Schedule 2.13.7,
or otherwise disclosed in the Schedules hereto, and has properly
recorded in its books of account all items of income and expense
and all other proper charges and accruals required to be made in
accordance with generally accepted accounting principles and
practice. Since the Balance Sheet Date, no debts or liabilities
of Trolley or the Subsidiaries have been forgiven, settled or
compromised, except for full consideration or except in the
ordinary course of business.
2.13.8 TBB Acquisition has no claims, debts, obligations or
liabilities whatsoever, and has no assets other than Capital
Stock of Trolley.
2.13.9 TBB Holding has no claims, debts, obligations or
liabilities whatsoever, and has no assets other than Capital
Stock of Trolley.
2.14 Tax Matters.
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2.14.1 Each Corporation's fiscal year for income tax
reporting purposes ends December 31.
2.14.2 Except as set forth in Schedule 2.14.2, each
Corporation has prepared and filed, with the appropriate United
States, state and local governmental agencies and foreign
governmental agencies, all tax returns required to be filed and
has paid all taxes shown on such tax returns to be payable or
which have become due pursuant to any assessment, deficiency
notice, 30-day letter or similar notice received by it. The
Internal Revenue Services and other tax authorities have not
audited any of the tax returns of any
9<PAGE>
Corporation for any of its taxable years. Except for the fiscal
year 1995 income tax returns of the Corporations, for which
appropriate extensions have been filed, no Corporation has
executed or filed with the Internal Revenue Service or any other
domestic or foreign taxing authority any agreement extending the
period for assessment or collection of any taxes and is not a
party to any pending action or proceeding by any governmental
authority for assessment or collection of taxes, and no claim for
assessment or collection of taxes has been asserted or threatened
against any Corporation for which provision has not been made in
the Financial Statements. No Corporation has consented to have
the provisions of section 341(f) of the Internal Revenue Code of
1986, as amended (the "CODE") apply to it. Complete and correct
copies of the income tax returns of Trolley and each Subsidiary
for fiscal years ending in 1993 and 1994, as filed with the
Internal Revenue Service and all state taxing authorities,
together with all related correspondence and notices, have
previously been delivered to Rock Bottom.
2.14.3 Trolley was taxed pursuant to Subchapter S of the
Code until December 31, 1993.
2.15 Title to Properties; Absence of Liens and Encumbrances;
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Etc.. Except as disclosed on Schedule 2.15 Corporations do not own
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any real property. Except as set forth in Schedule 2.15, Trolley and
its Subsidiaries own good and marketable title to the properties and
assets used in its business (including, without limitation, the assets
reflected in the Financial Statements, except as since sold or
otherwise disposed of in the ordinary course of business), free and
clear of all mortgages, security interests, claims, liens, charges,
encumbrances, restrictions on use or transfer or other defects in
title. The fixed assets of Trolley or the Subsidiaries reflected in
the Financial Statements are all located on real property owned or
leased by Trolley or the Subsidiaries and all personal property
located at or on such real property is owned or leased (as disclosed
in the Schedules) by Trolley or a Subsidiary. None of the
Corporations is a bailee for any other entity, except as set forth on
Schedule 2.15. The leases and other agreements or instruments under
which any of the Corporations holds, leases or is entitled to the use
of any real property or personal property involving lease payments of
over $2,000 per year, are set forth in Schedule 2.15, and are in full
force and effect, and all rentals, royalties or other payments payable
thereunder prior to the date hereof have been duly paid. All "buy-
out" prices under operating or capital leases are shown on Schedule
2.15 if such payout price is in excess of $2,000 under any one lease,
regardless as to whether the lessee has any obligation to purchase
such property. No material default or event of default exists, and no
event which, with notice or lapse of time or both, would constitute a
default, has occurred and is continuing, under the terms or
provisions, express or implied, of any of such lease, agreement or
other instrument or under the terms or provisions of any agreement to
which any of such properties is subject, nor has any Corporation
received notice of any claim of such default (whether material or
not), nor, has any Corporation failed to comply in any respect with
any provision or condition of any such lease, agreement or other
instrument. No Corporation has received a notice of violation of any
applicable law, ordinance, regulation, order or requirement relating
to its operations or its owned or leased properties.
10<PAGE>
2.16 Facilities; Equipment and Condition. Schedule 2.16 sets
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forth a correct and complete list of all of the equipment having a
book value, before accumulated depreciation or amortization, of more
than $20,000 (or, in the case of any such equipment which is leased,
having a fair market value in excess of $20,000), buildings, plants,
warehouses and other real estate owned or used by Trolley or a
Subsidiary in the conduct of their respective businesses ("FIXED
ASSETS"), indicating whether such property is owned or leased and
complete legal descriptions of all real property. The Fixed Assets
owned, operated or leased by Trolley or a Subsidiary are in good
condition and repair (ordinary wear and tear excepted) and suitable
for the uses for which intended. All such Fixed Assets are operated
in conformity which all applicable laws (including the Americans With
Disabilities Act), ordinances, regulations, orders and other
requirements relating thereto currently in effect, scheduled to come
into effect or, to the best of knowledge of a Representing Party are
proposed.
2.17 Insurance. Schedule 2.17 sets forth a correct and complete
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list and description (including amounts, scope and coverage) of all of
the policies of insurance and fidelity or surety bonds carried by
Trolley or a Subsidiary. Neither Trolley nor any Subsidiary has
failed to give any notice or present any claim under any insurance
policy in due and timely fashion. There are no outstanding
requirements or recommendations by any insurance company that issued a
policy with respect to any of the properties and assets owned or
leased by Trolley or a Subsidiary, by any Board of Fire Underwriters
or other body exercising similar functions or by any governmental
authority requiring or recommending any repairs or other work to be
done on or with respect to any of the properties and assets owned or
leased by Trolley or a Subsidiary or requiring or recommending any
equipment or facilities to be installed on or in connection with any
of the properties or assets owned or leased by Trolley or a
Subsidiary. The workmen's compensation and unemployment insurance
ratings of Trolley and each Subsidiary have been made available to
Rock Bottom. No Representing Party has any knowledge of any proposed
increase therein and knows of no conditions or circumstances
applicable to the business of either Trolley or any Subsidiary which
might result in such increase.
2.18 Agreements; Plans; Arrangements; Etc.. Except as set forth
-------------------------------------
in Schedule 2.18 or any other Schedule hereto, no Corporation is a
party to, nor are any of their respective properties and assets bound
or affected by, any oral or written:
2.18.1 lease agreement (whether as lessor or lessee)
involving lease payments of $10,000 or more per year, relating to
real or personal property;
2.18.2 license agreement, assignment or other contract
(whether as licensor or licensee, assignor or assignee) relating
to trademarks, service marks, trade names, patents, copyrights
(or applications therefor), unpatented designs or styles, know-
how or technical assistance;
2.18.3 employment or consulting agreements other than those
which are terminable without liability to the Corporation upon
notice to the employee or consultant of less than 30 days, or
employment or consulting agreement which provides for
11<PAGE>
compensation at the rate of more than $30,000 per year (including
all salary, benefits, bonuses and commissions) to any employee or
consultant or any agreement for any compensation (other than
expense reimbursement) for any director for services as a
director;
2.18.4 employment or consultant policies or agreements,
express or implied, placing any limits (other than a notice
period not exceeding 30 days) on the Corporation's right to
terminate at will the employment or retention of any employee or
consultant;
2.18.5 agreement for the purchase or sale of goods,
materials, supplies, machinery, capital assets or services
(excluding employee- or consultant-provided services) in excess
of $10,000 in any one case or in excess of $100,000 in the
aggregate;
2.18.6 agreement with any labor union;
2.18.7 agreement with any supplier, distributor,
franchisor, franchisee, dealer, sales agent or representative
(except orders placed in the ordinary course of business);
2.18.8 agreement with any manufacturer, supplier or
customer with respect to discounts or allowances granted by the
Corporation;
2.18.9 joint venture or partnership agreement with any
other person;
2.18.10 agreement for the borrowing or lending of money, or
guaranteeing, indemnifying or otherwise becoming liable for the
obligations or liabilities of another, or providing compensating
balances or agreeing to assure another person meets any financial
covenant;
2.18.11 agreement with any bank, factor, finance company or
other person regarding the financing of accounts receivable or
other extensions of credit;
2.18.12 agreement granting any lien, security interest or
mortgage, or any conditional sale contract or capital lease on
any property or asset, including, without limitation, any
factoring agreement for the assignment of accounts receivable;
2.18.13 agreement with a governmental entity;
2.18.14 agreement which restricts the conduct of business
anywhere in the world;
2.18.15 agreement, statute or regulation giving any party
the right to renegotiate or require a reduction in prices or the
repayment of any amount previously paid;
12<PAGE>
2.18.16 any other agreement involving the payment or
receipt in any period of twelve consecutive months of more than
$100,000, or having a term of more than six (6) months;
2.18.17 any agreement to defend, indemnify and/or hold
harmless any person; or
2.18.18 any licenses, permits, agreements or orders with
any governmental or quasi-governmental body concerning beer, wine
or other alcoholic beverages.
Correct and complete copies of all such agreements, plans, policies
and arrangements (or, where they are oral, true and complete written
summaries thereof) (collectively referred to herein as the
"COMMITMENTS") have been delivered to Rock Bottom or made available
for Rock Bottom's inspection prior to the date hereof. Each of the
Commitments is valid, binding, in full force and effect and
enforceable in accordance with its terms. There has not occurred any
material default by any Corporation or any event which, with the lapse
of time or the election of any person, or any combination thereof,
will become a material default, nor, to the best of the Corporations'
knowledge, has there occurred any default by others under such
Commitments. There are no existing agreements, commitments, laws,
regulations, nor to the knowledge of the Representing Parties,
judgments, orders or decrees, or proposed laws or regulations, which
adversely affect rights under any of the Commitments by reason of the
transactions contemplated by this Agreement.
2.19 Litigation. Except as set forth in Schedule 2.19, there is
----------
no claim, action, suit, proceeding, arbitration, investigation or
inquiry pending before any Federal, state, municipal, foreign or other
court or any governmental, administrative or self-regulatory body or
agency, or any private arbitration tribunal, (or, to the best of any
Corporation's knowledge, threatened against), relating to or
materially affecting any Corporation or any of the material assets,
properties or businesses of any Corporation, or the transactions
contemplated by this Agreement, nor, to the best of the Corporation's
knowledge, is there any basis for any such claim, action, suit,
proceeding, arbitration, investigation or inquiry which may have any
material adverse effect upon the assets, properties or business of any
Corporation or the transactions contemplated by this Agreement. None
of the Corporations, nor any officer, director, partner, agent or
employee of any Corporation has been permanently or temporarily
enjoined or barred by order, judgment or decree of any court or other
tribunal or any agency or self-regulatory body from engaging in or
continuing any conduct or practice in connection with the business
engaged in by any Corporation. There is not in existence at present
any order, judgment or decree of any court or other tribunal or any
agency or self-regulatory body to which any Corporation or the
business, properties or assets of any Corporation are subject or by
which they are bound. No Corporation is in material default under any
order, license, regulation or demand of any Federal, state or
municipal or other governmental agency or self-regulatory body or with
respect to any order, writ, injunction or decree of any court.
13<PAGE>
2.20 Intangible Property.
-------------------
2.20.1 Trolley and its Subsidiaries own, or will own by the
Closing, all of the rights in and to all trademarks, service
marks, tradenames, menus, logos, recipes, formulae, processes,
systems, inventions, writings, or methods, whether or not
patentable or copyrightable ("INTELLECTUAL PROPERTY"), which
Intellectual Property is set forth on Schedule 2.20 (including
the name "Big River Grille and Brewing Works" and related marks),
free of any obligations to any third parties, free from any
security interest or other lien or encumbrance, and free of the
rightful claims of any third party by way of infringement.
2.20.2 The Intellectual Property was either created,
written, and invented by common law employees of Trolley or the
Subsidiaries operating within the scope of their employment, or
by independent third parties who will have assigned their rights,
if any, thereto to Trolley prior to Closing.
2.20.3 Trolley and the Subsidiaries shall have a written
agreement with each of its employees who has worked on,
participated in the creation, writing or inventing of the
Intellectual Property, assigning all Intellectual Property rights
to Trolley or one of its subsidiaries without any restrictions,
and to the extent permitted by law, waiving any moral rights they
may have in their work.
2.20.4 No Corporation is now or ever has been party to any
agreement affecting any of the Intellectual Property rights
described above or granting any rights to third parties in the
Intellectual Property, except as described in Schedule 2.20.4.
2.20.5 Except as set forth on Schedule 2.20.5, neither the
Corporations nor any Shareholder has any knowledge of any facts
which negatively impacts the ability of Trolley and its
Subsidiaries from obtaining United States or foreign copyrights
or trademarks on all otherwise copyrightable material or the
ability of Trolley or its Subsidiaries to obtain worldwide
trademark rights in its products.
2.20.6 The conduct of the businesses of the Corporations as
now conducted does not and will not conflict with patents, patent
rights, licenses, trademarks, trademark rights, trade names,
trade name rights, service marks, service mark rights, copyrights
or trade dress of others in any way likely to affect materially
adversely the businesses, assets or condition, financial or
otherwise of a Corporation. To the best knowledge of the
Corporations, no other person or entity has heretofore used or
now uses any trademark, trade name or other intangible property
owned by or licensed to the Corporations except as duly licensed
by the Corporations under an agreement disclosed in Schedule
2.20.6. No material infringement of any proprietary right owned
by or licensed by or to any Corporation is known to any
Representing Party.
14<PAGE>
2.20.7 Schedule 2.20.7 lists all patent, trademark, service
mark or copyright applications, pending or issued, of Trolley or
a Subsidiary.
2.21 No Interest in Competitors; Etc.. Except as set forth in
--------------------------------
Schedule 2.21, no officer or director of any Corporation or any
immediate family member or spouse of any such person, or trust for
their benefit, directly or indirectly, owns any interest in (excluding
the ownership of securities representing less than 1% of any class of
publicly traded securities) or controls or is an employee, officer,
director or partner of, or participant in or consultant to, any
corporation, partnership, limited liability company, limited
partnership, joint venture, association or other entity which is a
brew pub or pizza restaurant, or a creditor, debtor, supplier,
customer, landlord, tenant, lessor or lessee, of TBB Acquisition,
Trolley or any Subsidiary, or has any type of business, commercial,
consulting or professional relationship with Trolley or any
Subsidiary.
2.22 Books and Records. The books and records of TBB
-----------------
Acquisition, Trolley and the Subsidiaries are located at Miller &
Martin, in Chattanooga, Tennessee. The books of account and other
financial and corporate records of each are in all material respects
complete and correct, are maintained in accordance with good business
practices, and are accurately reflected in the Financial Statements.
The minute books of each of TBB Acquisition, TBB Holding, Trolley and
the Subsidiaries, as previously made available to Rock Bottom and its
counsel, contain substantially complete and accurate records of all
meetings and accurately reflect all other corporate action of the
stockholders and directors (and committees thereof) of all such
companies through the date hereof.
2.23 Insider Transactions. Schedule 2.23 sets forth: (i) the
--------------------
amounts and other essential terms of indebtedness or other
obligations, liabilities or commitments (contingent or otherwise) of
any Corporation to or from any past or present officer, director, or
stockholder or any person related to, controlling, controlled by or
under common control with any of the foregoing (other than for usual
services performed within the past two months, the payment for which
is not yet due); and (ii) all proposed transactions with such persons,
together with the essential terms thereof if the amount payable
thereunder will exceed $10,000 in any year.
2.24 Employees. No Representing Party is aware of any key
---------
employee of Trolley or a Subsidiary who is considering: (i)
terminating her or his employment status; or (ii) seeking a
substantial increase in compensation or benefit.
2.25 Union Contracts; Labor Relations; Etc.. No Corporation is
--------------------------------------
presently and has not been party to any union or collective bargaining
agreement. Each Corporation is in compliance in all material respects
with all applicable laws, rules and regulations respecting employment
conditions and practices, has withheld all material amounts required
by law or agreement to be withheld from the wages or salaries of their
respective employees and no Corporation is liable for any material
arrears of wages or any material taxes or penalties for failure to
comply with any of the foregoing. No Corporation has engaged in any
unfair labor practice, nor has any Corporation discriminated on the
basis of race, religion, age or sex, or
15<PAGE>
other protected category in their respective employment conditions or
practices, nor has any Corporation taken any material adverse action
against any employee or consultant in breach of any agreement or
policy, express or implied, oral or written, nor has either taken any
material adverse action against any employee or consultant in
violation of public policy. Except as set forth in Schedule 2.25 or
in any other Schedule to this Agreement, there are no: (i) charges or
complaints of unfair labor practices, race, religion, age, sex or
other discrimination, breach of employment or consultant agreement or
policy, or breach of public policy pending or threatened against any
Corporation before any board, department, commission, agency or court,
nor does any basis therefor exist; (ii) existing or, to the best of
each Corporation's knowledge, threatened labor strikes, disputes,
grievances, controversies or other labor troubles affecting any
Corporation; or (iii) pending or, to the best of each Corporation's
knowledge, threatened union representation questions respecting the
employees of any Corporation. Schedule 2.25 describes all labor
strikes, disputes, grievances, controversies or other labor troubles
which have affected any Corporation.
2.26 Employee Benefit Plans; Etc.. Except as listed on Schedule
----------------------------
2.26 there are no stock option, stock purchase, stock appreciation
right, bonus, deferred compensation, excess benefits, profit sharing,
thrift, savings, retirement, medical, disability, hospitalization,
insurance, severance, pension, health, welfare or other plan,
arrangement, commitment or practice of any Corporation, including
without limitation, all ERISA plans, providing employee or executive
benefits or benefits to any person, including, but not limited to,
plans administered by trade associations, area wide plans, plans
resulting from collective bargaining, multi-employer plans, and plans
covering foreign employees, (collectively "PLANS"). There are no
pension plans or employee benefit plans qualified under Section 401(a)
of the Code to which any Corporation is required to contribute. All
accrued obligations of any Corporation, whether arising by operation
of law, by contract or by past custom or practice, for payments to
trusts or other funds or to any governmental agency, with respect to
pension benefits, unemployment compensation benefits, disability
benefits, social security benefits or any other benefits for employees
of any Corporation or any other person as of the Balance Sheet Date,
have been and will be as of the Closing, paid as of such date or
adequate accruals therefor have been made in the Financial Statements.
All reasonably anticipated obligations of any Corporation, whether
arising by operation of law, by contract, by past custom or practice
or otherwise, for salaries, vacation and holiday pay, bonuses and
other forms of compensation which were payable to their respective
officers, directors or other employees as at the Balance Sheet Date,
or properly accruable as at such date have been paid as of such date
or adequate accruals therefor have been made in the Financial
Statements. No Corporation has any liability to any other person
(excluding Trolley and a Subsidiary as to each other) in respect of
any Plan which is a Plan of such other person.
2.27 Bank Accounts and Safe Deposit Arrangements. Schedule 2.27
-------------------------------------------
sets forth a correct and complete list of each bank account, brokerage
account, similar account and safe deposit box maintained by TBB
Acquisition, Trolley or a Subsidiary, and the names of all persons
authorized to deal with such matters.
16<PAGE>
2.28 Powers of Attorney. No person has any power of attorney to
------------------
act on behalf of TBB Acquisition, Trolley or a Subsidiary in
connection with any of the properties or business affairs of any such
company.
2.29 No Finder. None of the Corporations or the Shareholders
---------
has taken any action which would give to any person a right to a
consultant's or finder's fee or any type of brokerage commission in
relation to or in connection with the transactions contemplated by
this Agreement.
2.30 Absence of Certain Changes or Events. Except as set forth
------------------------------------
in Schedule 2.30, or another Schedule hereto, since the Balance Sheet
Date, no Corporation has:
2.30.1 incurred any obligation or liability (fixed or
contingent) except: (i) trade or business obligations incurred in
the ordinary course of business, as such business was conducted
prior to the Balance Sheet Date, none of which were entered into
for an inadequate consideration; and (ii) obligations and
liabilities under the Commitments except to the extent permitted
thereby;
2.30.2 suffered the occurrence of any events which,
individually or in the aggregate, have had, or might reasonably
be expected to have, a material adverse effect on their
respective financial condition, results of operations,
properties, business or prospects;
2.30.3 incurred damage to or destruction of any of its
assets, in any material amount, by fire, storm or other casualty,
whether or not covered by insurance;
2.30.4 discharged or satisfied any lien or encumbrance or
incurred or paid any obligation or liability (fixed or
contingent), except: (i) current obligations and liabilities
included in the Financial Statements; and (ii) current
obligations and liabilities incurred since the Balance Sheet
Date, in the ordinary course of business, as such business was
conducted prior to the Balance Sheet Date;
2.30.5 mortgaged, pledged or subjected to lien or any other
encumbrance any of their respective assets or properties, except
to NationsBank of Tennessee, N.A.;
2.30.6 sold, transferred or leased any of their respective
assets or properties, except for the sale of inventory, or
obsolete Fixed Assets of an immaterial amount, in the ordinary
course of business;
2.30.7 cancelled or compromised any debts or claims in the
aggregate in excess of $25,000, except for adjustments made with
respect to contracts for the purchase of supplies or services or
for the sale of products or services in the ordinary course of
business which in the aggregate are not material;
2.30.8 waived or released any rights of any material value;
17<PAGE>
2.30.9 transferred or granted any rights under any
licenses, agreements, patents, inventions, trade secrets,
trademarks, trade names, service marks, copyrights, or with
respect to other Intellectual Property;
2.30.10 made or granted any employee bonus, or any general
or specific wage or salary increase, or engaged any new officer
or employee, in a fashion not consistent with past practices;
2.30.11 made any increase in or commitment to increase any
employee benefits or adopted or made any commitments to adopt any
additional employee benefit plan, in a fashion not consistent
with past practices;
2.30.12 made or entered into any contract or commitment to
make any capital expenditures outside the ordinary course of
business or in excess of $200,000 in the aggregate, except for
improvements at the Disney-Orlando facility, in establishing the
Greenville Facility, and in expanding the Chattanooga Facility.
2.30.13 declared or paid any distribution to its
Shareholders, whether in the nature of dividends or otherwise or
purchased or redeemed any of its outstanding shares of capital
stock or other securities, or paid any debt for borrowed money to
any Shareholder or any affiliate of a Shareholder; or
2.30.14 issued or sold any shares of its capital stock or
any other securities, or granted any options for the purchase of
any shares of its capital stock or other securities.
2.31 Special Liquor Licensing Issues. Any and all disclosures
-------------------------------
made to any beer, wine or liquor licensing authority or any state or
federal department of alcohol and tobacco (or similar agency)
empowered to control the manufacture, storage, sale, transportation,
or distribution of beer, wine or liquor (an "AUTHORITY") are true and
accurate as of the date of such disclosure and all required
disclosures with respect thereto have been made. No Representing
Party is aware of any fact concerning any Shareholder, any
Corporation, or any officer or director of a Corporation, which would
or may cause any Authority at any time, now or in the future to deny
any Corporation or Rock Bottom any license, permit, waiver, order or
authority or to reduce or otherwise limit the privileges or scope of
any such license, permit, waiver, order or authority, or which could
give rise to an investigation, suspension or revocation with respect
to such license, permit, waiver, order or authority. Neither Trolley
nor the Subsidiaries have been denied a license, permit, waiver, order
or authority applied for, nor has any license, permit, waiver, order
or authority once issued, been revoked.
2.32 Investment Representations. Each Shareholder individually
--------------------------
represents and warrants to Rock Bottom that:
18<PAGE>
2.32.1 he or she is acquiring the Rock Bottom stock for his
or her own account for investment, not for the interest of any
other person, not for resale to any other person and not with a
view to or in connection with a sale or distribution;
2.32.2 he or she has provided the information requested in
the Purchaser Questionnaire provided by Rock Bottom and that the
information provided by such Shareholder is true and correct in
all respects;
2.32.3 he or she is an "accredited investor" as to the
receipt of securities of Rock Bottom, as that term is defined in
Regulation D of the Securities Act of 1933, as amended;
2.32.4 he or she has had an opportunity to ask questions of
and receive answers from representatives of Rock Bottom with
respect to the acquisition of the Rock Bottom Stock. Rock Bottom
has made available to the Shareholder all documents requested and
has provided answers to all questions relating to receipt of the
Rock Bottom Stock; and
2.32.5 he or she acknowledges that because the shares will
not have been registered under the Securities Act of 1933, as
amended, or applicable state securities laws, any resale
inconsistent with the Securities Act of 1933, as amended, may
create liability on the Shareholder's part and/or the part of
Rock Bottom, and agrees not to assign, sell, pledge, transfer or
otherwise dispose of or transfer any of the shares of Rock Bottom
stock unless registered under the Securities Act and applicable
state securities laws, or an opinion of counsel satisfactory to
Rock Bottom that such registration is not required or as
permitted in the Shareholders Agreement.
The parties hereto covenant and agree that all certificates of
Rock Bottom Stock issued pursuant hereto shall contain the following
legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"). THEY MAY NOT BE OFFERED OR TRANSFERRED
BY SALE, ASSIGNMENT, PLEDGE OR OTHERWISE UNLESS (I) A
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE
SECURITIES ACT IS IN EFFECT OR (II) THE CORPORATION HAS
RECEIVED AN OPINION OF COUNSEL, WHICH OPINION IS
SATISFACTORY TO THE CORPORATION, TO THE EFFECT THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT."
2.33 Environmental Matters.
---------------------
2.33.1 For the purposes of this Agreement, the term
"ENVIRONMENTAL LAWS" shall mean all federal, state, local and
non-U.S. environmental protection, occupational, health and
safety or similar laws, ordinances, restrictions, licenses,
rules, regulations and
19<PAGE>
permit conditions, including, but not limited to, the Federal
Water Pollution Control Act, Resource Conservation & Recovery
Act, Clean Air Act, Comprehensive Environmental Response,
Compensation and Liability Act, Emergency Planning and Community
Right to Know, Occupational Safety and Health Act and other
federal, state, local or non-U.S. laws of similar effect, each as
amended, and the term "HAZARDOUS MATERIALS" shall mean any
hazardous or toxic substances, wastes or materials, defined as
such or governed by any applicable environmental law.
2.33.2 Except as set forth in Schedule 2.33.2, (i) no
Corporation has received any notices, directives, violation
reports, actions or claims from or by (1) any federal, state,
local or non-U.S. governmental agency concerning violations of
Environmental Laws or (2) any person alleging that, in connection
with Hazardous Materials, conditions at brew pubs, restaurants,
facilities, offices, warehouses, manufacturing or storage
facilities or any other real property, improved or unimproved,
owned or leased by any Corporation (collectively, "ENVIRONMENTAL
FACILITIES") or any Corporation's acts or omissions have resulted
in or caused or threatened to result in or cause injury or death
to any person or damage to any property, including without
limitation, damage to natural resources, no such notices,
directives, violation reports, actions, claims, assessments or
allegations exist; (ii) no Corporation (previously or currently),
leases, operates or owns any Environmental Facilities with
respect to which there are any pending proceedings or, to its
knowledge, investigations under any Environmental law, and, to
Representing Party's knowledge, no such proceeding or
investigation is threatened; (iii) throughout the period of any
Corporation's ownership and/or operation of any of the
Environmental Facilities, the Corporation has operated and
continues to operate the Environmental Facilities in compliance
in all material respects with all Environmental Laws; (iv) no
underground storage tanks either are or have been located at any
of the Environmental Facilities; (v) there has been no spill,
discharge, release, contamination or cleanup of or by any
Hazardous Materials used, generated, treated, stored, disposed of
or handled by the Corporation at the Environmental Facilities or
otherwise and no spill, discharge or release or contamination or
cleanup of or by Hazardous Materials has occurred on or to the
Environmental Facilities by any third party; (vi) no Corporation
has used, generated, treated, stored, disposed of, handed,
transported or released any Hazardous Material in a manner which
would give rise to any material liability under any Environmental
Laws; (vii) no Representing Party is aware of any facts, events,
or conditions (including without limitation the generation,
treatment, transport, storage, emission, disposal, release or
other placement, deposit or location of any substance) which
materially interferes with or prevents continued compliance by
any Corporation with, or give rise to any present or potential
material liability (including with respect to past activities)
under any Environmental Laws; and (viii) no Corporation has
released any other person from any claim under any Environmental
Law or waived any rights or defenses concerning any environmental
conditions at any Environmental Facilities or in connection with
any Corporation's use, ownership and/or operation of their
respective assets and properties.
20<PAGE>
Copies of each Corporation's last inspection reports from each
applicable authority with respect to any Environmental Laws and
relating to the Environmental Facilities, or any of their respective
properties, assets, personnel or business activities have been
delivered to Rock Bottom.
2.34 Suppliers and Customers. There are no material agreements
-----------------------
which commit any Corporation to carry on business at fixed prices or
prices determined by an established formula. Except as set forth in
Schedule 2.34, no supplier or customer accounted for more than five
percent of Trolley and the Subsidiaries consolidated sales or
purchases in either of the past two years and no other supplier or
customer material to Trolley and the Subsidiaries' business has
terminated its relationship with Trolley and the Subsidiaries, has
during the past year decreased or delayed materially, or, to any
Representative Person's knowledge, threatened to decrease or delay
materially its services or supplies to Trolley and the Subsidiaries.
2.35 Debts to NationsBank. As of the date hereof and as of the
--------------------
Closing the indebtedness to NationsBank of Tennessee, N.A. consists
of not more than $2,000,000 (principal amount plus accrued interest
and other charges) of term debt and a working line of credit of
$6,000,000 (the "NATIONSBANK LOANS") with indebtedness thereunder not
in excess of $1,500,000, and all $1,500,000 of such indebtedness shall
have been incurred for the development of new restaurants. Only the
working line of credit is guaranteed by the Shareholders (the
"GUARANTEED BANK DEBT").
2.36 Tim P. Hennen. Tim P. Hennen separately represents and
-------------
warrants that no disclosure would be required concerning him pursuant
to Item 401(f) of Regulation S-K promulgated under the Securities Act
of 1933.
2.37 Material Misstatements or Omissions. No representations or
-----------------------------------
warranties by any Representing Party in this Agreement, or any
document, exhibit, statement, certificate or schedule furnished to
Rock Bottom pursuant hereto, or in connection with the transactions
contemplated hereby, contain any untrue statement of a material fact,
or omit to state any material fact necessary to make the statements or
facts contained herein or therein in the context in which they were
made not misleading. Each such document, statement, certificate or
schedule furnished to Rock Bottom pursuant hereto, or in connection
with the transactions contemplated hereby, fully and fairly presents
in all material respects the information called for thereby and set
forth therein. In such Representing Party's opinion, the Representing
Party has disclosed all events, conditions and facts materially
affecting the business, prospects and financial condition of the
Corporations.
ARTICLE III
-----------
REPRESENTATIONS AND WARRANTIES OF ROCK BOTTOM
---------------------------------------------
Rock Bottom represents and warrants to the Shareholders as
follows as of the date hereof and as of the Closing:
21<PAGE>
3.1 Existence; Good Standing; Corporate Authority; Compliance
---------------------------------------------------------
with Law. Rock Bottom is a corporation duly incorporated, validly
--------
existing and in good standing under the laws of the State of Delaware.
Rock Bottom is duly licensed or qualified to do business as a foreign
corporation and is in good standing under the laws of all other
jurisdictions in which the character of the properties owned or leased
by it therein or in which the transaction of its business makes such
qualification necessary. Rock Bottom has all requisite corporate
power and authority to own its properties and carry on its business as
now conducted. Rock Bottom is not in default in any material respect
with respect to any material order of any court, governmental
authority or arbitration board or tribunal to which Rock Bottom is a
party or is subject, and Rock Bottom is not in violation in any
material respect of any material laws, ordinances, governmental rules
or regulations to which it is subject.
3.2 Authorization; Validity and Effect of Agreements. The
------------------------------------------------
execution and delivery of this Agreement and all agreements and
documents contemplated hereby by Rock Bottom, and the consummation by
it of the transactions contemplated hereby, have been duly authorized
by all requisite corporation action. This Agreement constitutes, and
all agreements and documents contemplated hereby when executed and
delivered pursuant hereto for value received, will constitute the
valid and legally binding obligations of Rock Bottom enforceable in
accordance with their terms.
3.3 Capitalization. The authorized capital stock of Rock Bottom
--------------
consists of 15,000,000 shares of common stock, $0.01 par value per
share, and 5,000,000 shares of preferred stock, $0.01 par value per
share. As of March 31, 1996, 7,372,815 shares of common stock are
duly and validly issued and outstanding and fully paid and non-
assessable, and no shares of preferred stock are issued and
outstanding. The Rock Bottom Stock, upon issuance and delivery and
payment therefor as contemplated herein, will be duly authorized,
validly issued, fully paid and non-assessable and free of all liens,
claims and encumbrances except those either imposed by law or created
pursuant to this Agreement. Rock Bottom's outstanding common stock is
registered under the Securities Exchange Act of 1934, as amended,
("EXCHANGE ACT") and is presently traded on the NASDAQ national market
under the symbol BREW.
3.4 Absence of Conflict. Upon the receipt of any consents
-------------------
required from third parties (which foregoing qualifying language shall
not be operative as of the Closing), neither the execution and
delivery by Rock Bottom of this Agreement or the other documents
executed or required to be executed by it, nor the consummation by
Rock Bottom of the transactions contemplated hereby and thereby, will,
with or without the giving of notice or passage of time, or both, be
contrary to any provision of the Charter or Bylaws of Rock Bottom or
violate, breach, or constitute a default under, or permit the
termination or acceleration of maturity of, or result in the
imposition of any lien, claim or encumbrance upon any property or
asset of Rock Bottom pursuant to any provision of, any agreement,
instrument, judgment, order, injunction, or decree by which Rock
Bottom is bound, to which Rock Bottom is a party, or to which the
assets of Rock Bottom are subject.
22<PAGE>
3.5 Reports and Financial Statements. Rock Bottom has delivered
--------------------------------
to Shareholders true, accurate and complete copies of its Annual
Report and Form 10-K for the fiscal years December 31, 1995 and
December 31, 1994, its Notice to Stockholders and Proxy Statement for
its Annual Meeting to be held on June 24, 1996, and its Quarterly
Report on Form 10-Q for the quarter ended March 31, 1996, No Forms 8-K
have been filed since the date of the above-referenced Form 10-K and
the date hereof. The foregoing documents and any subsequent filings
by Rock Bottom pursuant to The Exchange Act are referred to herein
collectively as the "REPORTS." On their respective dates of filing,
the Reports complied as to form in all material respects with the
requirements of the Exchange Act, and the published rules and
regulations of the Commission promulgated thereunder. On their
respective dates of filing, the Reports were timely filed and did not
include any untrue statement of a material fact, or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were
made, not misleading. All financial statements contained in the
Reports fairly present the consolidated financial position of Rock
Bottom on the dates of such statements and consolidated results of its
operations for the periods covered thereby in accordance with General
Accepted Accounting Principles ("GAAP") consistently applied
throughout the periods involved.
3.6 No Material Change. Since the date of its last Form 10-Q,
------------------
except as disclosed in a subsequent Report, there has not been any
material adverse change in the business, properties, condition,
(financial or otherwise), results of operation, management or
prospects of Rock Bottom or any of its subsidiaries, whether or not
occurring in the ordinary course of business.
3.7 Absence of Litigation. Except as described in the Reports,
---------------------
there is no action, litigation or governmental proceeding or
investigation pending against Rock Bottom or any of its subsidiaries,
or to which any property of Rock Bottom or any of its subsidiaries is
subject or, to the knowledge of Rock Bottom, threatened against Rock
Bottom or any of its subsidiaries which might result in any material
adverse change in the financial condition, results of operations,
business or prospects of Rock Bottom or which is required to be
disclosed in the Reports.
3.8 Negative Representation. Rock Bottom does not represent or
-----------------------
warrant that this transaction is a tax-free reorganization and neither
Rock Bottom nor its officers, directors or advisors shall be held
liable if the transaction is found not to be a tax-free reorganization
by any person.
3.9 Material Misstatements or Omissions. No representations or
-----------------------------------
warranties by Rock Bottom in this Agreement, or any document, exhibit,
statement, certificate or schedule furnished to a Shareholder or
Trolley pursuant hereto, or in connection with the transactions
contemplated hereby, contain or will contain any untrue statement of a
material fact, or omit or will omit to state any material fact
necessary to make the statements or facts contained herein or therein
in the context in which they were made not misleading. Each such
document, statement, certificate or schedule furnished to a
Shareholder or Trolley pursuant hereto, or in connection with the
23<PAGE>
transactions contemplated hereby, fully and fairly presents in all
material respects the information called for thereby and set forth
therein. In Rock Bottom's opinion, Rock Bottom has disclosed all
events, conditions and facts materially affecting the business,
prospects and financial condition of Rock Bottom.
3.10 Absence of Certain Changes, Events or Conditions. Since
------------------------------------------------
March 31, 1996, there has not been any material change in Rock
Bottom's financial position, results of operations, assets,
liabilities, net worth or business, other than changes which have not
been materially adverse. Since March 31, 1996, Rock Bottom has not
experienced any event or condition of any character (whether or not
covered by insurance) which has materially adversely affected or will
so affect its properties, business, financial position, results of
operations, or net worth.
3.11 Compliance. To the best of its knowledge, Rock Bottom has
----------
all material licenses, permits, approvals and other authorizations,
and has made all necessary material filings and registrations, which
are necessary in order to enable it to conduct its business in all
material respects. To the best of its knowledge, Rock Bottom is in
compliance in all material respects with all applicable laws,
regulations and ordinances which are material to the business of Rock
Bottom.
3.12 No Conflict With Other Documents. Neither the execution
--------------------------------
and delivery of this Agreement nor the carrying out of the
transactions contemplated hereby will result in any violation,
termination or modification of, or be in conflict with, the Rock
Bottom's Certificate of Incorporation or Bylaws, to the best of its
knowledge, any terms of any material contract or other instrument to
which Rock Bottom is a party, or any material judgment, decree or
order applicable to Rock Bottom or result in the creation of any
material lien, charge or encumbrance upon any of its properties or
assets.
3.13 No Pending Transactions. Except for the transactions
-----------------------
contemplated by this Agreement, Rock Bottom is not a party to or bound
by or the subject of any agreement, undertaking or commitment (i) to
merge or consolidate with, or acquire all or substantially all of the
property and assets of, any other corporation or person or (ii) to
sell, lease or exchange all or substantially all of its property and
assets to any other corporation or person.
ARTICLE IV
----------
OTHER COVENANTS AND AGREEMENT
-----------------------------
The Corporations, Shareholders and Rock Bottom covenant that from
the date of this Agreement until the Closing: (and continuing after
the Closing as to the parties named in and covenants contained in
Sections 4.1, 4.5, 4.7, 4.9, 4.10, 4.11, 4.16.2, 4.21, 4.23, 4.25, and
4.28.
4.1 Access to Information. Rock Bottom and its counsel,
---------------------
accountants, and other representatives shall have full access during
normal business hours to all properties, employees,
24<PAGE>
documents, books and records relating to the operation of the business
of the Corporations. The Corporations and Shareholders shall furnish
to Rock Bottom and its representatives all data and information
concerning operations of the businesses that may reasonably be
requested. Rock Bottom will give Corporations and Shareholders
reasonable notice of times it wishes to review documents or otherwise
conduct its due diligence and attempt to minimize any disruption
caused by such matters.
4.2 Business Relationships. Each Corporation shall use all
----------------------
reasonable efforts to preserve present relationships with suppliers,
customers, employees, vendors, and others having relationships with
the businesses of the Corporations. Each Corporation will conduct its
operations and business only in the normal course of business
consistent with past practices and in compliance with all applicable
laws, statutes, rules, regulations, ordinances and orders.
4.3 Delivery of Records. At Closing, TBB Acquisition will cause
-------------------
to be delivered to Rock Bottom all books, records, stock transfer
ledgers, unissued stock certificates, minutes of shareholders and
directors meetings, certificates of authority to conduct business in
all other jurisdictions, tax records and all other documents, files,
notes, records of TBB Acquisition and the stock of Trolley held by TBB
Acquisition.
4.4 No Shop. Between the date of this Agreement and Closing,
-------
none of the Shareholders and none of the Corporations or any of their
respective agents shall, directly or indirectly, (a) engage in any
negotiations or discussions with any person in regard to, or solicit,
initiate, encourage or entertain, any offer or proposal for, or
indication of interest in, a merger or other business combination
involving any of the Corporations or the acquisition or sale of any
equity interests in, or a significant portion of the assets of, any of
such entities, or (b) sell or agree to sell, transfer, assign or
otherwise dispose of any of the material assets or shares of stock, or
other securities of any of the Corporations, except for the
transactions with Rock Bottom contemplated hereby.
4.5 Option to Acquire Stock Upon Default. In the event that one
------------------------------------
or more of the Shareholders in violation of this Agreement fails to
sell their respective shares of TBB Acquisition to Rock Bottom
pursuant to the terms of this Agreement, or option holders of TBB
Acquisition fail to cancel such options, the other Shareholders and
TBB Acquisition hereby agree to sell a proportionate number of shares
of the common stock of TBB Holding held by them on a pro rata basis in
order to ensure that Rock Bottom beneficially owns 50% of the voting
stock of Trolley. The parties recognize that this is not the sole
remedy of Rock Bottom for a default under Section 4.5 by a
Shareholder, that the receipt of the stock of TBB Holding is not the
desired performance sought by Rock Bottom and that Rock Bottom has no
obligation to accept any such stock or exercise such right. TBB
Acquisition, Trolley and the Shareholders will deliver agreements
executed by the option holder confirming the cancellation of all past
or current options of TBB Acquisition, Trolley and any Subsidiary, on
the sooner of 10 days after the date hereof or the Closing.
25<PAGE>
For example, if two Shareholders whose shares of TBB Acquisitions
comprise a 10% ownership interest fail to sell their Shares hereunder,
the remaining twelve Shareholders, on a pro rata basis, hereby agree
to sell to Rock Bottom and deliver at Closing, a like percentage (10%)
of TBB Holding shares.
If, at a date after the Closing, Rock Bottom acquires the Shares
from the non-participating Shareholders, Rock Bottom agrees to return
the shares of TBB Holding in exchange for the refund of the full
purchase price for such shares.
Nothing contained herein shall be construed as a waiver by Rock
Bottom of any of its rights of enforcement, entitlement to damages or
other remedies available in law or in equity in the event of a breach
of this Agreement by any of the Shareholders.
The election by Rock Bottom to acquire shares from TBB Holding
Shareholders under the provisions of this Section shall not be deemed
to be an exclusive remedy.
4.6 Shareholder Representative. Each Shareholder confirms the
--------------------------
effectiveness of the appointment of Tim P. Hennen, Jon M. Kinsey and
H. Allen Corey as the "REPRESENTATIVE" as that term is described
herein. Any one such person may act alone.
4.7 Nashville Real Estate.
---------------------
4.7.1 Representations. The Representing Parties represent
---------------
and warrant to Rock Bottom the following:
Big Properties is the owner of the land and building on
which the Nashville brew pub is located. It leases the land and
building to Derryberry Building Association, an unaffiliated company
("DERRYBERRY"). 111 Broadway Partners, L.P., a Tennessee limited
partnership in which Big Properties is the sole limited partner (49%)
and Big Breweries is the sole general partner (51%), subleases the
entire building in which the brew pub is located. In turn, 111
Broadway Partners sub-subleases the portion of the building used for
the brew pub and certain office/storage space to Big Breweries. The
Partnership documents of 111 Broadway Partners, L.P., including the
agreements and documents which are at issue in the Nashville
litigation, have previously been delivered to Rock Bottom. 111
Broadway Partners has a right to purchase Derryberry's interest after
10 years, but Derryberry has a right to "put" their interest to 111
Broadway beginning October, 1996. The purchase price is $1,250,000,
plus a CPI increase as of April, 1994.
4.7.2 In the event that any of the Shareholders named in
the Nashville litigation is either found guilty of or admits to RICO
or fraud violation related to such litigation such that it impairs
Trolley's ability to maintain or obtain any permits, licenses, order
or authority related to beer, wine or liquor, in any Territory listed
in the License and Development Agreement dated _____________, 1996,
then the parties hereto, including such Shareholder, shall take such
actions as are necessary to remove such impairment.
26<PAGE>
4.7.3 Lease of Nashville. The lease of the Nashville
------------------
property does not allow for the termination or modification of the
lease in the event of an exercise of an option to purchase by
Derryberry or his successors and assigns, and shall continue in full
force and effect.
4.8 Chattanooga Real Estate.
-----------------------
4.8.1 Sale of Property. The Trolley operations in
----------------
Chattanooga are housed in former trolley car "barns" which are leased
from Broad Street Land Company, L.L.C., a Tennessee Limited Liability
Company (the "LLC"), said lease dated June 1, 1993, a memorandum of
which was recorded in Deed Book 4619, Page 724, in the Register's
Office of Hamilton County, Tennessee, on or about November 22, 1995.
LLC acquired the property in a transaction wherein LLC assumed certain
obligations with respect to the purchase and executed a promissory
note to the order of Big Properties in the principal amount of
$114,056, for a term of twelve months and calling for an annual
interest rate of 8% per annum. When paid, the net result of the
transaction shall be that none of the Corporations shall have incurred
any loss in excess of $5,000, disregarding interest paid on the LLC
note to Big Properties.
4.8.2 Chattanooga Lease. The lease for Chattanooga shall
-----------------
be modified so that the term shall be fifteen (15) years from the date
of Closing, with three five-year options to extend. The base rent
shall be $120,000 per annum, payable in equal monthly installments of
$10,000 in advance on the first day of each month. In addition to the
base rent, additional rent (percentage rent) equalling 4% of annual
gross sales in excess of $3,400,000 shall be payable on January 31 of
each year of the lease term. The lease shall be modified to provide
typical tenant responsibility for environmental matters while at the
same time preserving claims against River Valley Partners, Inc., the
seller of the property.
4.9 Disney. INTENTIONALLY LEFT BLANK
------
4.10 Business of TBB Holding. TBB Holding covenants and agrees
-----------------------
that prior to and after the Closing its entire business activity shall
consist of owning the stock of Trolley currently held by it, paying
any accounts payable as and when they become due and will not allow
any liens, claims or encumbrances to be filed, foreclosed, attached,
levied or otherwise impact the assets of TBB Holding.
4.11 Amendments. The Corporations agree not to amend, revoke or
----------
suspend any provision in their respective charters or by-laws except
as requested by Rock Bottom in connection herewith. The Corporations
shall adopt the amendments set forth in Exhibit 4.11 attached hereto
prior to Closing.
4.12 Resignations and Closing Date Boards. The Shareholders and
------------------------------------
the Corporations will cause the resignation of all necessary
directors, and the election of directors, so that immediately after
the Closing the Board of Directors of Trolley and each Subsidiary
shall consist of Tim P. Hennen, Jon M. Kinsey, H. Allen Corey, Frank
B. Day, Thomas A. Moxcey and Bill Edmiston. The officers and
directors of TBB Acquisition shall resign as of the Closing.
27<PAGE>
4.13 Signature Cards. TBB Acquisition shall prepare new
---------------
signature cards for each bank, depository, savings, brokerage or
similar account, for TBB Acquisition effective as of the date of
Closing.
4.14 Documents. At or before the Closing, the designated
---------
signatories thereto shall execute and deliver all Documents and other
things to be delivered at or before Closing in the form of Exhibits
4.14A-H attached hereto. The Operations Agreement is not an Exhibit
hereto but is a Document.
4.15 Terminate Options Prior to Closing, TBB Acquisition and
-----------------
Trolley shall take all corporate action necessary to terminate any and
all outstanding option agreements, stock options, warrants, or other
convertible instruments and shall deliver agreements of the holders of
those rights agreeing to such termination.
4.16 Additional Financial Statements.
-------------------------------
4.16.1 Rock Bottom. In the event the Closing is extended
-----------
beyond June 30, 1996, the Corporations shall deliver to Rock Bottom
monthly financial statements of the Corporations, prepared in the
ordinary course of business, but in no event shall any such monthly
statements be delivered later than twenty days after the end of the
applicable period. Such financial statements shall include a balance
sheet, statement of operations and statement of cash flow as of the
periods then ended, shall be prepared in accordance with the internal
management reports of the company and shall fairly and fully set forth
the financial condition of the company as of the dates indicated, and
the results of its operations for the periods indicated.
4.16.2 Trolley. After the Closing Trolley shall provide
-------
consolidated monthly financial statements within 20 days after month
end, consolidated and consolidating quarterly financial statements
within 30 days of quarter end and an annual audited financial
statement within 60 days of fiscal year end. Quarterly and annual
statements shall be in a form and substance acceptable for Rock
Bottom's Securities and Exchange Commission ("SEC") reporting
purposes.
4.17 Satisfaction of Conditions. The parties hereto each shall
--------------------------
use their best efforts to satisfy the conditions of Closing set forth
herein or in any document.
4.18 Tax Elections. No new elections with respect to taxes or
-------------
any changes in current elections with respect to taxes affecting a
Corporation shall be made after the date of this Agreement and prior
to Closing without the prior written consent of Rock Bottom.
4.19 Notification. Each Corporation and Shareholder shall give
------------
prompt notice to Rock Bottom of the occurrence, or failure to occur,
of any event which occurrence or failure would be likely to cause any
representation or warranty contained herein to be untrue or inaccurate
in any material respect any time from the date hereof to the Closing
or the failure or
28<PAGE>
anticipated failure of the conditions of closing set forth herein or
in any document. Rock Bottom shall give prompt notice to the
Shareholder Representative of the occurrence, or failure to occur, of
any event which occurrence or failure would be likely to cause any
representation or warranty contained herein to be untrue or inaccurate
in any material respect any time from the date hereof to the Closing
or the failure or anticipated failure of the conditions of closing set
forth herein or in any Document.
4.20 Shareholder Meetings; Agreement to Vote. Each Corporation
---------------------------------------
shall hold its respective shareholders' meeting to approve the matters
herein within 15 days of the date hereof unless the Corporation has
received the unanimous written consent of its shareholders prior to
such date. Each Corporation will endeavor to obtain such consent at
the earliest practical date. Each Shareholder hereby agrees with Rock
Bottom that each of them will vote all their respective shares of
every Corporation's capital stock in favor of the transactions
contemplated hereby.
4.21 Rock Bottom Guaranty. At the Closing Rock Bottom will
--------------------
deliver its unconditional guaranty (joint, not several) of one half of
the Bank Guaranteed Debt. Trolley and the Subsidiaries covenant to
observe and fully comply, at all times in which the Big River debt is
outstanding, with its obligations to maintain the collateral pledged
under the loan agreements pertaining to the Bank Guaranteed Debt.
4.22 Title Insurance, UCC Reports. If requested by Rock Bottom,
----------------------------
within five days prior to the Closing the Corporations shall deliver
UCC reports certified by the appropriate state authorities in each
state in which the Corporation has assets, and a title insurance
commitment on all real estate leased or owned by a Corporation.
4.23 INTENTIONALLY LEFT BLANK
4.24 Key Employee Agreements. Tim P. Hennen shall sign an
-----------------------
invention assignment and confidentiality agreement in the form of
Exhibit 4.24A, as attached hereto, and Robert A. Gentry shall sign a
non-compete, invention assignment and confidentiality agreement in the
form attached hereto as Exhibit 4.24B.
4.25 Accounting Methods and Accountants. After the Closing,
----------------------------------
Trolley and the Subsidiaries shall adopt record keeping and accounting
principles and practices which conform with GAAP and SEC requirements,
as in effect from time to time, in recognition of the fact that Rock
Bottom, as an SEC reporting company, must report financial matters in
a consistent fashion. However, the Board of Trolley shall select the
outside auditors/accounts for Trolley and the Subsidiaries (which may
be Rock Bottom's accountants) so long as such accountants are of
national or regional standing.
4.26 Stock Reservation. Between the date hereof and the date of
-----------------
the Closing, Rock Bottom will keep available and reserve a sufficient
number of shares of Rock Bottom Common
29<PAGE>
Stock for issuance and delivery to the Shareholders as contemplated in
this Agreement and in the Option Agreement.
4.27 Information. From and after the date of this Agreement
-----------
through the date of the Closing, Rock Bottom will furnish to the
Shareholder, when and as the same become publicly available, copies of
all reports filed by Rock Bottom with the SEC under the provisions of
the Exchange Act. In addition, Rock Bottom on a confidential basis
will furnish to the Shareholders throughout the period prior to the
Closing all such information concerning Rock Bottom and its business
and properties as the Shareholders may reasonably request in order to
verify the accuracy of the warranties of Rock Bottom contained herein
and otherwise evaluate the exchange of TBB Acquisition Stock and other
transactions contemplated hereby.
4.28 Reports; Compliance. Rock Bottom shall maintain
-------------------
registration of its common stock under the Exchange Act and timely
file all reports required to be filed with the SEC and the National
Association of Securities Dealers, Inc. by Rock Bottom between the
date hereof and the Termination Date as defined in the Registration
Rights Agreement. If financial statements are contained in any such
reports such financial statements will fairly present the financial
position of Rock Bottom as of the date indicated and the results of
operations and changes in financial position for the periods then
ended in accordance with GAAP applied on a consistent basis except as
disclosed therein (subject in the case of interim financial statements
to normal recurring year-end adjustments). Any financial statements
contained in any such reports to any other agency or authority shall
be presented in accordance with applicable rules, regulations or
standards applicable to such reports.
4.29 No Transfer. No Shareholder will transfer any Shares
-----------
between the date hereof and Closing.
4.30 Greenville Lease Back. It is the understanding of the
---------------------
parties that Trolley may sell the Greenville, South Carolina property
and lease the property back. Such sale and leaseback shall be on
terms consistent with prevailing market conditions at the time of the
sale, and shall require the approval of Trolley's Board of Directors
as constitute after the Closing. No contract for sale or agreement
setting forth any terms for sale have been executed. No sale will be
made to any Corporation, Rock Bottom or Shareholder, or any affiliate
or associate of any such person, unless Rock Bottom and Shareholders
are all given the right to participate in the purchase in proportion
to their beneficial ownership in Trolley.
30<PAGE>
ARTICLE V
---------
CONDITIONS OF CLOSING
---------------------
5.1 Rock Bottom's Conditions of Closing. The obligation of Rock
-----------------------------------
Bottom to purchase and pay for the Shares and perform its other
obligations hereunder or related hereto or another document shall be
subject to and conditioned upon the satisfaction at the Closing of
each of the following conditions:
5.1.1 All representations and warranties of each
Representing Party contained in this Agreement, including the
Schedules hereto or any Document, shall be true and correct at
and as of the Closing in all material respects. Shareholders and
each Corporation shall have performed in all material respects
all agreements and covenants and satisfied in all material
respects all conditions on their part to be performed or
satisfied by the Closing pursuant to the terms of this Agreement,
and Rock Bottom shall have received a certificate of
Shareholders, TBB Acquisition and Trolley dated the Closing date
to such effect.
5.1.2 There shall have been no material adverse change
since the Balance Sheet Date in the financial condition, business
or affairs of any Corporation, and no Corporation shall have
suffered any material loss (whether or not insured) by reason of
physical damage caused by fire, earthquake, accident or other
calamity which substantially affects the value of their
respective assets, properties or business.
5.1.3 Shareholders shall have delivered to Rock Bottom
Certificates of the Secretary of State (or other authorized
officer) of the State of Tennessee certifying as of a date within
30 days before the Closing that each Corporation is, as of such
date, in good standing and authorized to transact business as a
domestic corporation.
5.1.4 Shareholders shall have delivered to Rock Bottom
Certificates of the Secretary of State (or other authorized
officer) of each jurisdiction in which any Corporation is
qualified to do business as a foreign corporation certifying as
of a date within 30 days before the Closing that each such
Corporation is, as of such date, in good standing and authorized
to transact business as a foreign corporation in such
jurisdiction.
5.1.5 Shareholders shall have delivered the written
resignations, effective on the Closing date, of all members of
the Board of Directors of Trolley and the Subsidiaries, except
those persons to remain as directors hereunder, as well as all
employees, officers and directors of TBB Acquisition.
5.1.6 Shareholders shall have delivered to Rock Bottom
certificates and other instruments representing all Shares, duly
endorsed for transfer or accompanied by appropriate stock powers
(in either case executed in blank or in favor of Rock Bottom),
together with all other documents necessary or appropriate to
validly transfer the Shares
31<PAGE>
to Rock Bottom free and clear of all security interests, liens,
encumbrances and adverse claims.
5.1.7 All parties thereto, other than Rock Bottom, shall
have executed and delivered the Documents to the other parties
thereto.
5.1.8 The approvals and all consents from third parties and
governmental agencies required by Rock Bottom, a Corporation, or
a Shareholder (other than approvals or consents required by a
Corporation the absence of which would not have a material
adverse effect on the ability of Rock Bottom or a Corporation to
operate their respective business after the Closing) required to
consummate the transactions contemplated hereby and any
additional regulatory consents shall have been obtained, and any
governmental approvals or consents shall have become final and
not subject to appeal.
5.1.9 No suit, action, investigation, inquiry or other
proceeding by any governmental body or other person or legal or
administrative proceeding shall have been instituted or
threatened which questions the validity or legality of the
transactions contemplated hereby.
5.1.10 As of the Closing, there shall be no effective
injunction, writ, preliminary restraining order or any order of
any nature issued by a court of competent jurisdiction directing
that the transactions provided for herein or any of them not be
consummated as so provided or imposing any conditions on the
consummation of the transactions contemplated hereby which is
unduly burdensome on the Corporations or Rock Bottom.
5.1.11 Rock Bottom shall have received from Miller &
Martin, counsel to Shareholders, TBB Acquisition and Trolley, an
opinion dated the Closing date in the form attached hereto as
Exhibit 5.1.11.
5.1.12 Rock Bottom shall be satisfied in the results of its
due diligence investigations concerning the Corporations.
5.1.13 If requested, Rock Bottom shall have received from
all of the officers and directors of Trolley a completed officer
and director questionnaire in form typical for SEC purposes
and/or liquor, beer or wine licensing purposes.
5.1.14 Rock Bottom shall have received from the accountants
for Trolley and the Subsidiaries a "cold comfort" letter
containing representations that they have performed a reading of
the books and records of Trolley and the Subsidiaries as of a
date within 30 days before Closing and of the then most current
unaudited consolidated financial statements of Trolley (which
shall be of a date not later than 60 days prior to Closing), and
that based upon such examination nothing came to their attention
that would lead them to believe that such unaudited financial
statements are inaccurate or do
32<PAGE>
not fairly portray the financial condition and results for the
period and dates set forth in such financial statements. Within
ten (10) days prior to Closing, Rock Bottom shall provide the
form for such "cold comfort" letter.
5.1.15 Except to the extent contemplated herein, the
Corporations shall not have authorized the reservation, the
issuance or accepted the subscription for, any additional capital
stock of any of the Corporations, nor shall they have amended any
provisions of any of the Charters or By-Laws except as requested
by Rock Bottom.
5.1.16 Rock Bottom shall have received all resignation,
powers of attorney, stock certificates, questionnaires and all
other documents required by this Agreement.
5.1.17 Based upon the initial ownership of Trolley and
Subsidiary Board seats allocated to Rock Bottom hereunder, and
under the Documents, Rock Bottom shall not be required to
consolidate the financial statements of Trolley or the
Subsidiaries with those of Rock Bottom under generally accepted
accounting principles, accounting principles utilized or
promulgated by the Securities and Exchange Commission, or Rock
Bottom's principal lending arrangements; provided, however, that
this condition shall not survive past June 8, 1996, unless Rock
Bottom notifies the Shareholder Representatives prior to or on
that date that this condition has not been satisfied.
5.1.18 Tim P. Hennen shall be the Chief Executive Officer
and a director of Trolley, and shall be devoting and shall intend
to devote, his full time and attention to the business of
Trolley, and shall be in good health.
5.1.19 On or before the Closing, Trolley will deliver to
Rock Bottom an executed, effective agreement which may be in
letter form (the "DISNEY LETTER" from Disney Vacation
Development, Inc. ("DISNEY")) regarding the Lease Agreement
between Disney and Big Breweries, dated July 17, 1995, for the
brew pub at Disney World (the "DISNEY LEASE") in form and
substance acceptable to Rock Bottom.
5.1.20 1995 Audit. The 1995 audited financial statements
----------
of Trolley shall have been delivered to Rock Bottom.
5.1.21 Original Signatures. Within ten days after the Date
-------------------
hereof Rock Bottom shall be delivered counterparts of this Agreement
signed by each Shareholder, and not a person on their behalf.
5.1.22 Kinsey Relationship. On or before Closing, Trolley
-------------------
shall deliver to Rock Bottom an agreement in form and substance
acceptable to Rock Bottom which sets forth the arrangements which
exist between Jon M. Kinsey and Kinsey & Associates and Trolley and
the Subsidiaries.
33<PAGE>
5.1.23 Chattanooga Lease. At or prior to Closing, Trolley
-----------------
shall deliver to Rock Bottom modifications to the Chattanooga lease in
accordance with Section 4.8.2.
5.2 Shareholders' and the Corporations' Conditions of Closing.
---------------------------------------------------------
The obligation of Shareholders to sell the Shares for the Purchase
Price and of the Corporations to perform the transactions contemplated
herein shall be subject to and conditioned upon the satisfaction at
the Closing of each of the following conditions:
5.2.1 All representations and warranties of Rock Bottom
contained in this Agreement shall be true and correct in all
material respects at and as of the Closing and Rock Bottom shall
have performed in all material respects all agreements and
covenants and satisfied in all material respects all conditions
on its part to be performed or satisfied by the Closing pursuant
to the terms of this Agreement, and Shareholders and the
Corporations shall have received a certificate of Rock Bottom
dated the Closing date to such effect.
5.2.2 There shall have been no material adverse change
since the date hereof, in the financial condition, business or
affairs of Rock Bottom and its subsidiaries, taken as a whole,
(whether or not insured) by reason of physical damage caused by
fire, earthquake, accident or other calamity which substantially
affects the value of its assets, properties or business, taken as
a whole; provided, however, that a decrease in the market price
of Rock Bottom Common Stock shall not by itself be a material
adverse change.
5.2.3 On the Closing date, no suit, action or other
proceeding, or injunction or final judgment relating thereto,
shall be threatened or pending before any court or governmental
or regulatory official or agency, in which it is sought to
restrain or prohibit or to obtain damages or other relief in
connection with this Agreement or the consummation of the
transactions contemplated hereby, and no investigation that might
result in any such suit, action or proceeding shall be pending.
5.2.4 Shareholders, TBB Acquisition and Trolley shall have
received from Chrisman, Bynum & Johnson, P.C., counsel for Rock
Bottom, an opinion, dated the Closing date, in the form attached
hereto as Exhibit 5.2.4.
5.2.5 Rock Bottom shall have executed and delivered the
documents to the other parties thereto.
5.2.6 Rock Bottom shall have delivered to Shareholders
legended certificates representing the Rock Bottom Stock to be
issued pursuant to Section 1.2 of this Agreement.
5.2.7 Rock Bottom shall have delivered to Shareholders a
certificate of its corporate secretary or assistant secretary
certifying:
34<PAGE>
5.2.7.1 Resolutions of its Board of Directors
authorizing the execution of this Agreement and the execution,
performance and delivery of all agreements, documents and
transactions contemplated hereby and thereby; and
5.2.7.2 The incumbency of its officers executing this
Agreement and all agreements and documents contemplated hereby
and thereby.
5.2.8 The approvals and all consents from third parties and
governmental agencies required by Rock Bottom, a Corporation or a
shareholder (other than approvals or consents the absence of
which would not have a material adverse effect on the ability of
Rock Bottom or a Corporation to operate its business after the
Closing), required to consummate the transactions contemplated
hereby and any additional regulatory consents shall have been
obtained, and any governmental approvals or consents shall have
become final and not subject to appeal.
5.2.9 As of the Closing, there shall be no effective
injunction, writ, preliminary restraining order or any order of
any nature issued by a court of competent jurisdiction directing
that the transactions provided for herein or any of them not be
consummated as so provided or imposing any conditions on the
consummation of the transactions contemplated hereby which is
unduly burdensome on Shareholders.
5.2.10 Trolley shall have approved in all material respects
the contents of the exhibits to the Operations Agreement;
provided, however that this condition shall not survive past June
16, 1996, unless Trolley notifies Rock Bottom prior to or on that
date that this condition has not been satisfied.
ARTICLE VI
----------
TERMINATION AND ABANDONMENT
---------------------------
6.1 Methods of Termination. The transactions contemplated
----------------------
herein may be terminated and/or abandoned:
6.1.1 By written consent of Rock Bottom and holders of a
majority of the outstanding capital stock of TBB Acquisition; or
6.1.2 By either Rock Bottom or the Shareholders if: (i) the
Closing shall not have occurred on or before July 15, 1996 (the
"TERMINATION DATE"); or (ii) any court of competent jurisdiction
of the United States or any State shall have issued an order,
judgment or decree (other than temporary restraining order)
restraining, enjoining or otherwise prohibiting the consummation
of the transaction contemplated hereby and such order, judgment
or decree shall have become final and nonappealable.
6.2 Effect of Termination. In the event of termination of this
---------------------
Agreement pursuant to the provisions of Section 6.1, this Agreement
(except for Sections 8.1, 8.5, 8.6, 8.7 and 8.16,
35<PAGE>
which shall continue) shall become void and of no effect, without any
liability on the part of the parties, unless the termination was the
result of the representations and warranties of a party being
materially incorrect when made or the material breach by a party of a
covenant herein contained, in which event the party whose
representations and warranties were materially incorrect or which
breached such covenants shall be liable to the other party for damages
suffered by the other party.
6.3 Procedure Upon Termination. In the event of termination
--------------------------
and/or abandonment by any party pursuant to Section 6.1 hereof,
written notice thereof shall forthwith be given to the other party and
the transactions contemplated by this Agreement shall be terminated
and/or abandoned, without further action by any person. If the
transactions contemplated by this Agreement are terminated and/or
abandoned as provided herein, each party will redeliver all documents,
work papers and other material of any other party relating to the
transactions contemplated hereby, whether so obtained before or after
the execution of this Agreement, to the party furnishing the same,
except that such party may keep one copy thereof for its legal files.
ARTICLE VII
-----------
INDEMNIFICATION
---------------
7.1 Shareholder General Indemnification Covenants. Subject to
---------------------------------------------
the provisions of Sections 7.2, 7.8 and 7.9, Shareholders severally
and TBB Holding (collectively, the "TBB PARTIES") jointly and
severally shall indemnify, defend, save and keep Rock Bottom and its
affiliates, officers, directors, successors and assigns (including TBB
Acquisition) (the "ROCK BOTTOM INDEMNITEES"), harmless against and
from all liability, demands, claims, actions or causes of action,
assessments, losses, fines, penalties, costs, damages and expenses,
including without limitation, reasonable attorneys' fees,
disbursements and expenses including any diminution in the value of
TBB Acquisition, the Trolley stock held by TBB Acquisition or the TBB
Acquisition stock held by Rock Bottom (collectively "DAMAGES"),
sustained or incurred by any of the Rock Bottom Indemnitees as a
result of, arising out or by virtue of any misrepresentations, breach
of any warranty or representation, or non-fulfillment of any agreement
or covenant on the part of the Shareholders or a Corporation, whether
contained in this Agreement, any Document or any exhibit or schedule
hereto or thereto or any written statement or certificate furnished or
to be furnished to Rock Bottom pursuant hereto or in any closing
document delivered by a Corporation or Shareholders to Rock Bottom in
connection herewith;
7.2 Conditions of Indemnification Pursuant to Section 7.1.
-----------------------------------------------------
7.2.1 Promptly following the receipt by a Rock Bottom
Indemnitee of notice of a demand, claim, action, assessment or
proceeding made or brought by a third party, including a
governmental agency (a "THIRD PARTY CLAIM"), the Rock Bottom
Indemnitee receiving the notice of the Third Party Claim:
(i) shall notify TBB Parties of its existence, setting forth the
facts and circumstances of which such Rock Bottom
36<PAGE>
Indemnitee has received notice; and (ii) if the Rock Bottom
Indemnitee giving such notice is a person entitled to
indemnification under this Section 7 (an "INDEMNIFIED PARTY"),
specifying the basis hereunder upon which the Indemnified Party's
claim for indemnification is asserted.
7.2.2 The Indemnified Party shall, upon reasonable notice
by the Shareholder Representative, tender the defense of a Third
Party Claim to the TBB Parties. If the TBB Parties accept
responsibility for the defense of a Third Party Claim, then the
Shareholders shall have the exclusive right to contest, defend
and litigate the Third Party Claim and shall have the exclusive
right, in their discretion exercised in good faith and upon the
advice of counsel, to settle any such matter, either before or
after the initiation of litigation, at such time and upon such
terms as they deem fair and reasonable, provided that at least
ten (10) days prior to any such settlement, they shall give
written notice of their intention to settle to the Indemnified
Party. The Indemnified Party shall have the right to be
represented by counsel at its own expense in any defense
conducted by the TBB Parties.
7.2.3 Notwithstanding the foregoing, in connection with any
settlement negotiated by the TBB Parties, no Indemnified Party
shall be required to: (i) enter into any settlement (a) that does
not include the delivery by the claimant or plaintiff to the
Indemnified Party of a release from all liability in respect of
such claim or litigation, (b) if the Indemnified Party shall, in
writing to the TBB Parties within the ten (10) day period prior
to such proposed settlement, disapprove of such settlement
proposal and desire to have the TBB Parties tender the defense of
such matter back to the Indemnified Party, or (c) that requires
an Indemnified Party to take any unreasonable affirmative actions
as a condition of such settlement; or (ii) consent to the entry
of any judgment that does not include a full dismissal of the
litigation or proceeding against the Indemnified Party with
prejudice; provided, however, that should the Indemnified Party
disapprove of a settlement proposal pursuant to Clause (b) above,
the Indemnified Party shall thereafter have all of the
responsibility for defending, contesting and settling such Third
Party Claim but shall not be entitled to indemnification by the
TBB Parties to the extent that, upon final resolution of such
Third Party Claim, the TBB Parties' liability to the Indemnified
Party but for this proviso exceeds what the TBB Parties'
liability to the Indemnified Party would have been if the TBB
Parties were permitted to settle such Third Party Claim in the
absence of the Indemnified Party exercising its right under
Clause (b) above.
7.2.4 If, in accordance with the foregoing provisions of
this Section 7.2, an Indemnified Party shall be entitled to
indemnification against a Third Party Claim, and if the TBB
Parties shall fail to accept the defense of a Third Party Claim
which has been tendered in accordance with this Section 7.2, the
Indemnified Party shall have the right, without prejudice to its
rights of indemnification hereunder, in its discretion exercised
in good faith and upon the advice of counsel, to contest, defense
and litigate such Third Party Claim, and may settle such Third
Party Claim, either before or after the initiation
37<PAGE>
of litigation, at such time and upon such terms as the
Indemnified Party deems fair and reasonable, provided at least
ten (10) days prior to any such settlement, written notice of its
intention to settle is given to the Shareholders. If, pursuant
to this Section 7.2, the Indemnified Party so defends or settles
a Third Party Claim for which it is entitled to indemnification
hereunder, as hereinabove provided, the Indemnified Party shall
be reimbursed by the TBB Parties for the reasonable attorneys'
fees and other expenses of defending the Third Party Claim which
are incurred from time to time, forthwith following the
presentation to Shareholders of itemized bills for said
attorneys' fees and other expenses. No failure by the TBB
Parties to acknowledge in writing their indemnification
obligations under this Article VII shall relieve them of such
obligations to the extent they exist.
7.2.5 Trolley shall have no input into decisions made by
the TBB Parties concerning the matters described in this Section
7.2 at any time Rock Bottom appointees constitute a majority of
the Board of Directors.
7.3 Certain Information. The parties hereto shall furnish or
-------------------
cause to be furnished to each other (at reasonable times and at no
charge) upon request as promptly as practicable such information
(including access to books and records) pertinent to a Corporation and
assistance relating to a Corporation as is reasonably necessary for
the preparation, review and audit of financial statements, the
preparation, review, audit and filing of any tax return, the
preparation for any audit or the prosecution or defense of any claim,
suit or proceeding relating to any proposed adjustment or which may
result in Shareholders being liable under the indemnification
provisions of this Article VII; provided, that access shall be limited
to items pertaining solely to the Corporations. Shareholders shall
grant to Rock Bottom access to all tax returns filed by them with
respect to the Corporations.
7.4 Release by Shareholders. Shareholders and TBB Holding, as
-----------------------
of the Closing, hereby release and discharge Trolley, TBB Acquisition
and the Subsidiaries and each of their respective officers and
directors from, and agree and covenant that in no event will
Shareholders or TBB Holding commence any litigation or other legal or
administrative proceeding against, Trolley, TBB Acquisition and the
Subsidiaries or any of their respective officers or directors, either
in law or equity, relating to any and all claims and demands, known
and unknown, suspected and unsuspected, disclosed and undisclosed, for
damages, actual, consequential, or otherwise past, present and future,
arising out of or in any way connected with their ownership of the
Shares or equity securities of any Corporation prior to or at the
Closing.
7.5 Indemnification by Rock Bottom. Subject to the provisions
------------------------------
of Sections 7.2, 7.8 and 7.9 hereof, Rock Bottom agrees to indemnify
and hold Shareholders harmless against, and will reimburse
Shareholders on demand for, any Damages (as defined in Section 7.1)
sustained or incurred by any of the Shareholders as a result of,
arising out of or by virtue of any misrepresentation, breach of any
warranty or representation, or non-fulfillment of any agreement or
covenant on the part of Rock Bottom, whether contained in this
Agreement, any Document or any exhibit or schedule hereto or thereto
or any written statement or certificate furnished or
38<PAGE>
be to furnished to Rock Bottom pursuant hereto or in any closing
document delivered by Rock Bottom to Shareholders in connection
herewith. The procedures set forth in Section 7.2 shall be applied to
any claim under this Section by a Shareholder, and the Shareholder
shall be the "Rock Bottom Indemnitees" and "Indemnifying Party" for
such purposes and Rock Bottom shall be the "TBB Partner" or
"Shareholder Partner."
7.6 Exclusive Remedy. The remedies provided in this Article VII
----------------
are, to the extent permitted by law, the sole and exclusive remedies
related to representations, warranties or covenants made or to be
performed at or before the Closing, and there are no other remedies
otherwise available to any of the parties, for any claim by one party
against any other party under this Agreement or with respect to the
transactions contemplated by it related to representations, warranties
or covenants made or to be performed at or before the Closing, except
for equitable injunctive relief. No party shall make any claim under
any theory, in tort, contract, under statute or otherwise, which could
not be brought directly hereunder due to the dollar limitations set
forth in Sections 7.8 or 7.9.
7.7 No Rights of Shareholders or TBB Holding Against Trolley.
--------------------------------------------------------
No Shareholder or TBB Holding has any claim, cause of action,
directly, by contribution, by subrogation or otherwise, against
Trolley, a Subsidiary or TBB Acquisition, for any matter for which a
TBB Person must provide indemnification, defense or hold harmless
hereunder or under any other document or agreement.
7.8 Claim Minimum. As to any claim subject to Section 7.6,
-------------
only the amount in excess of $100,000 shall be recoverable (i.e., the
$100,000 constitutes a "deductible"). The $100,000 deductible does
not reduce the $500,000 or $5,000,000 amounts, as applicable,
recoverable under Section 7.9.
7.9 Limits on Each Person's Indemnification; Survival Periods.
---------------------------------------------------------
7.9.1 The indemnity, defense and hold harmless for breach
of any representation, warranty or covenant herein or in any Document
(as to representations and warranties made at Closing or covenants to
be performed at or before Closing) shall be limited in the case of TBB
Holding or the Shareholders to the 45,208 shares of Rock Bottom Stock
to be placed into escrow pursuant to the Escrow Agreement and in the
case of Rock Bottom to $500,000 in cash. Notwithstanding the price of
the Rock Bottom Stock at any given time following Closing, TBB
Holding's or the Shareholders' liability shall be limited in all cases
(except knowing misrepresentations which are addressed below) to
$500,000 and shall not exceed 45,208 shares of Rock Bottom Stock.
7.9.2 The indemnity, defense and hold harmless obligations
of the Shareholders hereunder shall be proportional to their share
ownership.
7.9.3 The representations and warranties made herein or in
any Document (as to representations and warranties made at Closing)
shall continue for thirteen (13) months from
39<PAGE>
the date of Closing, except that the representations and warranties
made herein or in any Document (as to representations and warranties
made at Closing) and indemnity, defense and hold harmless regarding
the Nashville litigation shall continue until such litigation is
resolved as more fully provided in the Escrow Agreement.
7.9.4 Nashville Litigation. As provided in the Escrow
--------------------
Agreement, the Escrow Agreement shall not terminate after 13 months
with respect to the litigation styled Pacific Design Ventures, et al.
v. Big River Breweries, Inc., et al., in the Chancery Court for
Davidson County, Tennessee, Case No. 96-438-I, as outlined in Section
4(a) of the Escrow Agreement until such time as such litigation is
settled or otherwise disposed of.
7.9.5 Notwithstanding Section 7.9.1, the limitation on
liability for knowing misrepresentations made at Closing by TBB
Holding or Shareholders shall be $5,000,000, less the amount of
deductions made to the Escrow Account. The limitation on liability
for knowing misrepresentations made at Closing by Rock Bottom shall be
$5,000,000, less the amount of payments made under Section 7.9.1.
Notwithstanding Section 7.9.3, a claim for a knowing
misrepresentations made at Closing by a party hereto may be made at
any time up to two (2) years after the date of Closing. However, in
no event shall any Shareholder's liability exceed the lesser of (i)
100% of the particular Shareholder's Rock Bottom Stock received if
still in the Shareholder's possession at the time of the
indemnification notice and request by Rock Bottom; or (ii) the amount
of cash received by the Shareholder, if any, when shares of Rock
Bottom Stock were sold plus the value of any Rock Bottom Stock still
in the Shareholder's possession at the time of the indemnification
notice or request; or (iii) the Shareholder's proportional share of
$5,000,000. It is the intent of the parties that no Shareholder's
liability under this Section 7.9.5 shall exceed the value of the
consideration received in this transaction at the time of the
indemnification with a maximum limit equal to the Shareholder's pro
rata share of $5,000,000.
7.10 Registration Rights Agreement. The indemnification,
-----------------------------
defense and hold harmless provisions, procedures and limitations on
liability of the Registration Rights Agreement shall apply as to any
claim arising under the Registration Rights Agreement.
ARTICLE VIII
------------
MISCELLANEOUS
-------------
8.1 Notice. Any notice required or permitted hereunder shall be
------
in writing and shall be sufficiently given if (i) personally
delivered, (ii) mailed by certified or registered United States mail,
return receipt requested, or (iii) sent by recognized air express
courier for next business day delivery, addressed as follows:
If to Rock Bottom: Rock Bottom Restaurants, Inc.
1050 Walnut Street, Suite 402
Boulder, CO 80302
Attn: Thomas A. Moxcey
Telephone: (303) 417-4100
40<PAGE>
Copy to: Chrisman, Bynum & Johnson, P.C.
1900 15th Street
Boulder, CO 80302
Attn: Michael H. Bynum
Telephone: (303) 546-1300
If to Shareholders: Tim P. Hennen
100 East 10th Street, Suite 600
Chattanooga, TN 37402
Telephone: (402) 266-4323
Jon M. Kinsey
100 East 10th Street, Suite 600
Chattanooga, TN 37402
Telephone: (402) 266-4323
Copy to: Miller & Martin
1000 Volunteer Building
832 Georgia Avenue
Chattanooga, TN 37402-2289
Attn: H. Allen Corey
Telephone: (423) 756-6600
(or to such other address as any party shall specify by written notice
so given), and shall be deemed to have been delivered as of the date
so personally delivered, or two calendar days after mailed or as of
the date delivered to the air express courier.
8.2 Execution of Additional Documents. The parties hereto will
---------------------------------
at any time, and from time to time after the Closing date, upon
reasonable request of the other party, execute, acknowledge and
deliver all such further acts, deeds, assignments, transfers,
conveyances, powers of attorney and assurances as may be required to
carry out the intent of this Agreement, and to transfer and vest title
to any Shares being transferred hereunder, and to protect the right,
title and interest in and enjoyment of all of the Shares sold,
granted, assigned, transferred, delivered and conveyed pursuant to
this Agreement; provided, however, that this Agreement shall be
effective regardless of whether any such additional documents are
executed.
8.3 Binding Effect; Benefits. This Agreement shall be binding
------------------------
upon and shall inure to the benefit of the parties hereto and their
respective heirs, successors, executors, administrators and assigns.
Notwithstanding anything contained in this Agreement to the contrary,
nothing in this Agreement, expressed or implied, is intended to confer
on any person other than the parties hereto or their respective heirs,
successors, executors, administrators and assigns any rights,
remedies, obligations or liabilities under or by reason of this
Agreement.
41<PAGE>
8.4 Entire Agreement. This Agreement, together with the
----------------
exhibits, schedules and other documents contemplated hereby,
constitute the final written expression of all of the agreements
between the parties, and is a complete and exclusive statement of
those terms. It supersedes all understandings and negotiations
concerning the matters specified herein. Any representations,
promises, warranties or statements made by either party that differ in
any way from the terms of this Agreement and the exhibits, schedules
and other documents contemplated hereby, shall be given no force or
effect. The parties specifically represent, each to the other, that
there are no additional or supplemental agreements between them
related in any way to the matters herein contained unless specifically
included or referred to herein. No addition to or modification of any
provision of this Agreement shall be binding upon any party unless
made in writing and signed by all parties.
8.5 Governing Law; Consent to Jurisdiction. This Agreement
--------------------------------------
shall be governed by and construed in accordance with the laws of the
State of Colorado exclusive of the conflict of law provisions thereof.
8.6 Arbitration. Except as provided below in this Section, any
-----------
and all disputes arising under or related to this Agreement shall be
submitted to binding arbitration. The dispute shall be submitted to
arbitration by a single arbiter through J.A.M.S. ENDISPUTE of 235
Peachtree, N.E. of Atlanta, Georgia or, if J.A.M.S. ENDISPUTE is no
longer in existence, any similar arbitration provider who can provide
a former judge to conduct such arbitration, or an arbiter appointed by
the court. The arbiter shall be selected by the arbitration provider
or the court on the basis, if possible, of his or her expertise in the
subject matter(s) of the dispute. The decision of the arbiter shall
be final, nonappealable and binding upon the parties, and it may be
entered in any court of competent jurisdiction. The arbitration shall
take place in Atlanta, Georgia. The arbiter shall be bound by the
laws of the State of Georgia applicable to the issues involved in the
arbitration and all Georgia rules relating to the admissibility of
evidence, including, without limitation, all relevant privileges and
the attorney work product doctrine. All such discovery shall be
completed in accordance with the time limitations prescribed in the
Georgia Rules of Civil Procedure, unless otherwise agreed by the
parties or ordered by the arbiter on the basis of strict necessity
adequately demonstrated by the party requesting an extension or
reduction of time. The arbiter shall have the power to grant
equitable relief where applicable under Colorado law and shall not be
entitled to make an award of punitive damages. The arbiter shall
issue a written opinion setting forth her or his decision and the
reasons therefor within thirty (30) days after the arbitration
proceeding is concluded. The obligation of the parties to submit any
dispute arising under or related to this Agreement to arbitration as
provided in this Section shall survive the expiration or earlier
termination of this Agreement. Notwithstanding the foregoing, either
party may seek and obtain an injunction or other appropriate relief
from a court of competent jurisdiction to preserve or protect the
status quo with respect to any matter pending conclusion of the
arbitration proceeding, but no such application to a court shall in
any way be permitted to stay or otherwise impede the progress of the
arbitration proceeding.
42<PAGE>
Shareholders, Rock Bottom, and each Corporation hereby consent to
the jurisdiction of the courts of the State of Colorado and the United
States District Court for the District of Colorado, as well as to the
jurisdiction of all courts from which an appeal may be taken from such
courts, for the purpose of any suit, action or other proceeding
arising out of any of their obligations arising hereunder or with
respect to the transactions contemplated hereby and expressly waive
any and all objections they may have as to venue in any of such
courts.
8.7 Attorneys' Fees and Costs. In the event of any arbitration
-------------------------
or litigation being filed or instituted between two or more of the
parties concerning this Agreement, the Prevailing Party will be
entitled to receive from the other party or parties its attorneys'
fees, experts' fees, costs and expenses, whether or not such
controversy, claim or action is prosecuted to judgment or other form
of relief. The "PREVAILING PARTY" is that party which is awarded
judgment or other legal or equitable relief as a result of trial or
arbitration, or who receives or is entitled to receive a payment of
money from the other party in settlement of claims asserted by such
party. If both parties receive a judgment or other award of relief,
the court or the arbiter shall determine which party is the prevailing
party, taking into consideration the merits of the claims asserted by
each party, the relative values of the judgments or other forms of
relief received by each party, and the relative equities between the
parties.
8.8 Survival. All of the terms, covenants, conditions,
--------
warranties and representations contained in this Agreement and any
Document shall survive delivery by Rock Bottom of the consideration to
be given by it hereunder and delivery by Shareholders of the
consideration to be given by them hereunder, and shall survive the
execution hereof and the Closing hereunder.
8.9 Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which shall be deemed an original but all of
which shall constitute one and the same instrument.
8.10 Headings. Headings of the Sections of this Agreement are
---------
for the convenience of the parties only, and shall be given no
substantive or interpretive effect whatsoever.
8.11 Waivers. Either Rock Bottom or Shareholders may, by
-------
written notice to the other: (i) extend the time for the performance
of any of the obligations or other actions of the other under this
Agreement; (ii) waive any inaccuracies in the representations or
warranties of the other contained in this Agreement or in any document
delivered pursuant to this Agreement; (iii) waive compliance with any
of the conditions or covenants of the other contained in this
Agreement; or (iv) waive performance of any of the obligations of the
other under this Agreement. Except as provided in the preceding
sentence, no action taken pursuant to this Agreement, including
without limitation, any investigation by or on behalf of any party,
shall be deemed to constitute a waiver by the party taking such action
of compliance with any representations, warranties, covenants or
agreements contained in this Agreement. The waiver by any party
hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or
any other provision hereunder nor as a waiver of any claim for breach
of representation, warranty or covenant.
8.12 Merger of Documents. This Agreement and all agreements and
-------------------
documents contemplated hereby constitute one agreement and are
interdependent upon each other in all
43<PAGE>
respects. This Agreement does not supersede the existing binding
Confidentiality Agreement which shall continue to be in effect until
the Closing.
8.13 Incorporation of Exhibits and Schedules. All exhibits and
---------------------------------------
schedules attached hereto are by this reference incorporated herein
and made a part hereof for all purposes as if fully set forth herein.
8.14 Severability. If for any reason whatsoever, any one or
------------
more of the provisions of this Agreement shall be held or deemed to be
inoperative, unenforceable or invalid as applied to any particular
case or in all cases, such circumstances shall not have the effect of
rendering such provision invalid in any other case or of rendering any
of the other provisions of this Agreement inoperative, unenforceable
or invalid.
8.15 Assignability. Neither this Agreement nor any of the
-------------
parties' rights hereunder shall be assignable by any party hereto
without the prior written consent of the other parties hereto.
8.16 No Action for Failure to Deliver Opinions, Etc.. No party
-----------------------------------------------
shall have any claim or right of action against the legal counsel or
accountants of the other party for the failure or refusal of such
counsel or accountants to deliver at Closing any opinion or letter
requested hereunder.
8.17 Effectiveness of Agreement. This Agreement shall become
--------------------------
effective and binding on the parties hereto only when signed and
delivered by each of the parties hereto.
8.18 Good Faith. The parties shall act in good faith in
----------
connection with their obligations, responsibilities and covenants
contained in this Agreement.
8.19 Person. The term "PERSON" is to be broadly construed and
------
includes, without limitation, any entity, body, association,
governmental body or agency, natural person or trust.
ROCK BOTTOM RESTAURANTS, INC., TBB ACQUISITION GROUP, INC.
a Delaware corporation a Tennessee corporation
By: /s/ Thomas A. Moxcey By: Kenneth S. Hays, Jr.
----------------------------- -------------------------------
Its: President, C.E.O. Its: Vice-President
---------------------------- ------------------------------
TROLLEY BARN BREWERY, INC., TBB HOLDING, INC.
a Tennessee corporation a Tennessee corporation
By: Kenneth S. Hays, Jr. By: Kenneth S. Hays, Jr.
----------------------------- -------------------------------
Its: Vice-President Its: Vice-President
---------------------------- ------------------------------
44<PAGE>
SHAREHOLDERS:
H. Allen Corey H. Allen Corey
Attorney-in-Fact Attorney-in-Fact
-------------------------------- -----------------------------------
Tim P. Hennen Benjamin R. Probasco
________________________________ ___________________________________
________________________________ ___________________________________
Address Address
H. Allen Corey Jon M. Kinsey
Attorney-in-Fact Attorney-in-Fact
-------------------------------- -----------------------------------
Robert A. Gentry John F. Hennen
________________________________ ___________________________________
________________________________ ___________________________________
Address Address
Jon M. Kinsey Jon M. Kinsey
Attorney-in-Fact Attorney-in-Fact
-------------------------------- -----------------------------------
James M. Hennen Nelson E. Bowers, II,
________________________________ ___________________________________
________________________________ ___________________________________
Address Address
H. Allen Corey
H. Allen Corey Attorney-in-Fact
-------------------------------- -----------------------------------
H. Allen Corey Frank F. Fowler
________________________________ ___________________________________
________________________________ ___________________________________
Address Address
Jon M. Kinsey
Attorney-in-Fact Kenneth S. Hays, Jr.
-------------------------------- -----------------------------------
John N. Foy Kenneth S. Hays, Jr.
________________________________ ___________________________________
________________________________ ___________________________________
Address Address
Jon M. Kinsey
Jon M. Kinsey Attorney-in-Fact
-------------------------------- -----------------------------------
Jon M. Kinsey Frank W. McDonald
________________________________ ___________________________________
________________________________ ___________________________________
Address Address
Jon M. Kinsey Jon M. Kinsey
Attorney-in-Fact Attorney-in-Fact
-------------------------------- -----------------------------------
Jamie Bradford Raun V. Smith
________________________________ ___________________________________
________________________________ ___________________________________
Address Address
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