Document:

Filed by Bowne Pure Compliance

 

Exhibit 10.17

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of November 1, 2007, by and
among Kona Grill, Inc., a Delaware corporation with headquarters located at 7150 East Camelback
Road, Suite 220, Scottsdale, Arizona 85251 (the “Company”), and the investors listed on the
Schedule of Investors attached hereto as Exhibit A (individually, an “Investor” and collectively,
the “Investors”).

BACKGROUND

A. The Company and each Investor are executing and delivering this Agreement in reliance upon
the exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended
(the “1933 Act”), and Rule 506 of Regulation D (“Regulation D”) as promulgated by the United States
Securities and Exchange Commission (the “SEC”) under the 1933 Act.

B. Each Investor, severally and not jointly, wishes to purchase, and the Company wishes to
sell, upon the terms and conditions stated in this Agreement, (i) that aggregate number of shares
of the Common Stock, par value $0.01 per share, of the Company (the “Common Stock”), set forth
opposite such Investor’s name in column two (2) on the Schedule of Investors in Exhibit A
(which aggregate amount for all Investors together shall be 650,000 shares of Common Stock and
shall collectively be referred to herein as the “Common Shares”).

C. The Common Shares issued pursuant to this Agreement are collectively referred to herein as
the “Securities.”

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for
other good and valuable consideration the receipt and adequacy of which are hereby acknowledged,
the Company and the Investors agree as follows:

ARTICLE I

DEFINITIONS

1.1 Definitions. In addition to the terms defined elsewhere in this Agreement, the
following terms have the meanings indicated:

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with a Person, as such terms are used in
and construed under Rule 144 under the Securities Act.

“Agent” has the meaning set forth in Section 3.1(l).

“Agreement” has the meaning set forth in the Preamble.

“Best Efforts” means the efforts that a prudent person desirous of achieving a result would
use in similar circumstances to ensure that such result is achieved as expeditiously as practical;
provided, however, that an obligation to use Best Efforts under this Agreement does
not require the Company to dispose of or make any change to its business, expend any material
funds or incur any other material burden.

 

 

 

“Business Day” means any day other than Saturday, Sunday or other day on which commercial
banks in the City of New York are authorized or required by law to remain closed.

“Closing” means the closing of the purchase and sale of the Securities pursuant to Section
2.1.

“Closing Date” means the date and time of the Closing and shall be on such date and time as is
mutually agreed to by the Company and each Investor).

“Closing Price” means, for any date, the closing price per share of the Common Stock for such
date (or the nearest preceding date) on the primary Eligible Market or exchange or quotation system
on which the Common Stock is then listed or quoted.

“Company” has the meaning set forth in the Preamble.

“Company Counsel” means Greenberg Traurig, LLP, counsel to the Company.

“Common
Shares” means an aggregate of 650,000 shares of Common Stock, which are being issued
and sold by the Company to the Investors at the Closing.

“Common Stock” means the common stock of the Company, par value $0.01 per share.

“Common Stock Equivalents” means, collectively, Options and Convertible Securities.

“Contingent
Obligation” has the meaning set forth in
Section 3.1(bb).

“Convertible Securities” means any stock or securities (other than Options) convertible into
or exercisable or exchangeable for Common Stock.

“Disclosure Materials” has the meaning set forth in Section 3.1(g).

“Effective Date” means the date that the Registration Statement is first declared effective by
the SEC.

“Effectiveness Period” has the meaning set forth in Section 6.1(b).

“8-K Filing” has the meaning set forth in Section 4.5.

“Eligible Market” means any of the New York Stock Exchange, the American Stock Exchange, The
Nasdaq Global Select Market or The Nasdaq Capital Market.

“Environmental
Laws” has the meaning set forth in Section 3.1(ee).

“Event” has the meaning set forth in Section 6.1(d).

“Event Payments” has the meaning set forth in Section 6.1(d).

 

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“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Excluded Events” has the meaning set forth in Section 6.1(d)(ii).

“Excluded Investors” means Cowen and Company, LLC and its Affiliates.

“Filing Date” means 30 days after the Closing Date.

“FINRA” means Financial Industry Regulatory Authority.

“GAAP” has the meaning set forth in Section 3.1(g).

“Hazardous
Materials” has the meaning set forth in
Section 3.1(ee).

“Indebtedness”
has the meaning set forth in Section 3.1(bb).

“Indemnified Party” has the meaning set forth in Section 6.4(c).

“Indemnifying Party” has the meaning set forth in Section 6.4(c).

“Insolvent” has the meaning set forth in Section 3.1(h).

“Intellectual Property Rights” has the meaning set forth in Section 3.1(t).

“Investor” has the meaning set forth in the Preamble.

“Lien” means any lien, charge, claim, security interest, encumbrance, right of first refusal
or other restriction.

“Losses” means any and all losses, claims, damages, liabilities, settlement costs and
expenses, including, without limitation and reasonable attorneys’ fees.

“Material Adverse Effect” means (i) a material adverse effect on the results of operations,
assets, business or financial condition of the Company and the Subsidiaries, taken as a whole on a
consolidated basis, or (ii) materially and adversely impair the Company’s ability to perform its
obligations under any of the Transaction Documents, provided, that none of the following alone
shall be deemed, in and of itself, to constitute a Material Adverse Effect for purposes of (i)
above: (a) a change in the market price or trading volume of the Common Stock (unrelated to (i) or
(ii) above), or (b) changes in general economic conditions or changes affecting the industry in
which the Company operates generally (as opposed to Company-specific changes) so long as such
changes do not have a disproportionate effect on the Company and its Subsidiaries taken as a whole.

“Material Permits” has the meaning set forth in Section 3.1(v).

“Options” means any outstanding rights, warrants or options to subscribe for or purchase
Common Stock or Convertible Securities.

 

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“Person” means any individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability company, or joint stock company.

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without
limitation, or a partial proceeding, such as a deposition), whether commenced or threatened in
writing.

“Prospectus” means the prospectus included in the Registration Statement (including, without
limitation, a prospectus that includes any information previously omitted from a prospectus filed
as part of an effective registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms
of the offering of any portion of the Registrable Securities covered by the Registration Statement,
and all other amendments and supplements to the Prospectus including post-effective amendments, and
all material incorporated by reference or deemed to be incorporated by reference in such
Prospectus.

“Registrable Securities” means the Common Shares issued or issuable pursuant to the
Transaction Documents, together with any securities issued or issuable upon any stock split,
dividend or other distribution, recapitalization or similar event with respect to the foregoing.

“Registration Statement” means each registration statement required to be filed under Article
VI, including (in each case) the Prospectus, amendments and supplements to such registration
statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and
all material incorporated by reference or deemed to be incorporated by reference in such
registration statement.

“Regulation D” has the meaning set forth in the Preamble.

“Related Person” has the meaning set forth in Section 4.6.

“Repurchase Notice” has the meaning set forth in Section 6.1.

“Repurchase Price” has the meaning set forth in Section 6.1.

“Required Effectiveness Date” means the date which is the earliest of (i) if the Registration
Statement does not become subject to review by the SEC, (a) ninety (90) days after the Closing Date
or (b) five (5) Trading Days after the Company receives notification from the SEC that the
Registration Statement will not become subject to review and the Company fails to request to
accelerate the effectiveness of the Registration Statement, or (ii) if the Registration Statement
becomes subject to review by the SEC, (x) one hundred and twenty (120) days after the Closing Date
or (y) five (5) Trading Days after the Company receives notification from the SEC that the
Registration Statement is not longer subject to further review or comment and the Company fails to
request to accelerate the effectiveness of the Registration Statement.

“Rule 144,” “Rule 415,” and “Rule 424” means Rule 144, Rule 415 and Rule 424, respectively,
promulgated by the SEC pursuant to the Securities Act, as such Rules may be amended from time to
time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same
effect as such Rule.

 

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“SEC” has the meaning set forth in the Preamble.

“SEC Reports” has the meaning set forth in Section 3.1(g).

“Securities” has the meaning set forth in the Preamble.

“Securities Act” has the meaning set forth in the Preamble.

“Shares” means shares of the Company’s Common Stock.

“Short Sales” has the meaning set forth in Section 3.2(h).

“Subsidiary” means any direct or indirect subsidiary of the Company.

“Trading Day” means (a) any day on which the Common Stock is listed or quoted and traded on
its primary Trading Market, (b) if the Common Stock is not then listed or quoted and traded on any
Eligible Market, then a day on which trading occurs on the The Nasdaq Global Select Market (or any
successor thereto), or (c) if trading ceases to occur on the The Nasdaq National Market (or any
successor thereto), any Business Day.

“Trading Market” means the The Nasdaq Global Market or any other Eligible Market, or any
national securities exchange, market or trading or quotation facility on which the Common Stock is
then listed or quoted.

“Transaction Documents” means this Agreement, the schedules and exhibits attached hereto, and
the Transfer Agent Instructions.

“Transfer Agent” means Continental Stock Transfer & Trust Company, or any successor transfer
agent for the Company.

“Transfer Agent Instructions” means, with respect to the Company, the Irrevocable Transfer
Agent Instructions, in the form of Exhibit D, executed by the Company and delivered to and
acknowledged in writing by the Transfer Agent.

ARTICLE II

PURCHASE AND SALE

2.1 Closing. Subject to the terms and conditions set forth in this Agreement, at the
Closing the Company shall issue and sell to each Investor, and each Investor shall, severally and
not jointly, purchase from the Company, such number of Common Shares for the price set forth
opposite such Investor’s name on Exhibit A hereto under the headings “Common Shares” . The
date and time of the Closing and shall be 11:00 a.m., New York City Time, on the Closing Date. The
Closing shall take place at the offices of the Company’s Counsel, 2375 E. Camelback Road, Suite
700, Phoenix, Arizona.

 

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2.2 Closing Deliveries.

(a) At the Closing, the Company shall deliver or cause to be delivered to each Investor the
following:

(i) one or more stock certificates (or copies thereof provided by the Transfer Agent), free
and clear of all restrictive and other legends (except as expressly provided in Section
4.1(b) hereof), evidencing such number of Common Shares set forth opposite such Investor’s name
on Exhibit A hereto under the heading “Common Shares,” registered in the name of such
Investor;

(ii) a legal opinion of Company Counsel, in the form of Exhibit C, executed by such
counsel and delivered to the Investors and the Agent;

(iii) duly executed Transfer Agent Instructions acknowledged by the Company’s transfer agent;
and

approval by each applicable Trading Market of an additional shares listing application covering all
of the Registrable Securities.

(b) At the Closing, each Investor shall deliver or cause to be delivered to the Company the
purchase price set forth opposite such Investor’s name on Exhibit A hereto under the
heading “Purchase Price” in United States dollars and in immediately available funds, by wire
transfer to an account designated in writing to such Investor by the Company for such purpose.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Company. The Company hereby represents and
warrants to the Investors and the Agent as follows (which representations and warranties shall be
deemed to apply, where appropriate, to each Subsidiary of the Company):

(a) Subsidiaries. The Company has no Subsidiaries other than as specified in the SEC
Reports. Except as specified in the SEC Reports, the Company owns, directly or indirectly, all of
the capital stock or comparable equity interests of each Subsidiary free and clear of any Lien and
all the issued and outstanding shares of capital stock or comparable equity interest of each
Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar
rights.

(b) Organization and Qualification. Each of the Company and the Subsidiaries is an
entity duly organized, validly existing and in good standing under the laws of the jurisdiction of
its incorporation or organization (as applicable), with the requisite legal authority to own and
use its properties and assets and to carry on its business as currently conducted. Neither the
Company nor any Subsidiary is in violation of any of the provisions of its respective certificate
or articles of incorporation, bylaws or other organizational or charter documents. Each of the
Company and the Subsidiaries is duly qualified to do business and is in good standing as a foreign
corporation or other entity in each jurisdiction in which the nature of the business conducted or
property owned by it makes such qualification necessary, except where the failure to be so
qualified or in good standing, as the case may be, would not,
individually or in the aggregate, have or reasonably be expected to result in a Material
Adverse Effect.

 

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(c) Authorization; Enforcement. The Company has the requisite corporate authority to
enter into and to consummate the transactions contemplated by each of the Transaction Documents to
which it is a party and otherwise to carry out its obligations hereunder and thereunder. The
execution and delivery of each of the Transaction Documents to which it is a party by the Company
and the consummation by it of the transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action on the part of the Company and no further consent or
action is required by the Company, its Board of Directors or its stockholders. Each of the
Transaction Documents to which it is a party has been (or upon delivery will be) duly executed by
the Company and is, or when delivered in accordance with the terms hereof, will constitute, the
valid and binding obligation of the Company enforceable against the Company in accordance with its
terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization or other
laws of general application relating to or affecting the enforcement of creditors rights generally,
and (ii) the effect of rules of law governing the availability of specific performance and other
equitable remedies.

(d) No Conflicts. The execution, delivery and performance of the Transaction
Documents to which it is a party by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby do not, and will not, (i) conflict with or violate any
provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or
other organizational or charter documents, (ii) conflict with, or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of
time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or
Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a
party or by which any property or asset of the Company or any Subsidiary is bound, or affected, or
(iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or
other restriction of any court or governmental authority to which the Company or a Subsidiary is
subject (including, assuming the accuracy of the representations and warranties of the Investors
set forth in Section 3.2 hereof, federal and state securities laws and regulations and the rules
and regulations of any self-regulatory organization to which the Company or its securities are
subject, including all applicable Trading Markets), or by which any property or asset of the
Company or a Subsidiary is bound or affected, except to the extent that such violation would not
reasonably be expected to have a Material Adverse Effect.

(e) The Securities. The Securities are duly authorized and, when issued and paid for
in accordance with the Transaction Documents, will be duly and validly issued, fully paid and
nonassessable, free and clear of all Liens and will not be subject to preemptive or similar rights
of stockholders (other than those imposed by the Investors). Assuming the truth and accuracy of
the representations and warranties of the Investors contained herein, the offer and sale of the
Shares to the Investors pursuant to the Agreement, will not require registration under the
Securities Act by reason of the exemption provided by Section 4(2) of the Securities Act.

 

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(f) Capitalization. The aggregate number of shares and type of all authorized, issued
and outstanding classes of capital stock, options and other securities of the Company (whether or
not presently convertible into or exercisable or exchangeable for shares of capital stock of the
Company) is set forth in Schedule 3.1(f). All outstanding shares of capital stock are duly
authorized, validly issued, fully paid and nonassessable and have been issued in compliance in all
material respects with all applicable securities laws. Except as disclosed in Schedule
3.1(f), the Company did not have outstanding at June 30, 2007 any other options, warrants,
script rights to subscribe to, calls or commitments of any character whatsoever relating to, or
securities, rights or obligations convertible into or exercisable or exchangeable for, or entered
into any agreement giving any Person any right to subscribe for or acquire, any shares of Common
Stock, or securities or rights convertible or exchangeable into shares of Common Stock. Except for
customary adjustments as a result of stock dividends, stock splits, combinations of shares,
reorganizations, recapitalizations, reclassifications or other similar events, there are no
anti-dilution or price adjustment provisions contained in any security issued by the Company (or in
any agreement providing rights to security holders) and the issuance and sale of the Securities
will not obligate the Company to issue shares of Common Stock or other securities to any Person
(other than the Investors) and will not result in a right of any holder of securities to adjust the
exercise, conversion, exchange or reset price under such securities. To the knowledge of the
Company, except as disclosed in the SEC Reports and any Schedules filed with the SEC pursuant to
Rule 13d-1 of the Exchange Act by reporting persons, no Person or group of related Persons
beneficially owns (as determined pursuant to Rule 13d-3 under the Exchange Act), or has the right
to acquire, by agreement with or by obligation binding upon the Company, beneficial ownership of in
excess of 5% of the outstanding Common Stock.

(g) SEC Reports; Financial Statements. The Company has filed all reports required to
be filed by it under the Exchange Act, including pursuant to Section 13(a) or 15(d)
thereof, for the 12 months preceding the date hereof on a timely basis or has received a valid
extension of such time of filing and has filed any such SEC Reports prior to the expiration of any
such extension and has filed all reports required to be filed by it under the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding
the date hereof. Such reports required to be filed by the Company under the Exchange Act,
including pursuant to Section 13(a) or 15(d) thereof, together with any materials
filed or furnished by the Company under the Exchange Act, whether or not any such reports were
required being collectively referred to herein as the “SEC Reports” and, together with this
Agreement and the Schedules to this Agreement, the “Disclosure Materials”. As of their respective
dates, the SEC Reports filed by the Company complied in all material respects with the requirements
of the Securities Act and the Exchange Act and the rules and regulations of the SEC promulgated
thereunder, and none of the SEC Reports, when filed by the Company, contained any untrue statement
of a material fact or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under which they were
made, not misleading. The financial statements of the Company included in the SEC Reports comply
in all material respects with applicable accounting requirements and the rules and regulations of
the SEC with respect thereto as in effect at the time of filing. Such financial statements have
been prepared in accordance with United States generally accepted accounting principles applied on
a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in
such financial statements, the notes thereto and except that unaudited financial statements may not
contain all footnotes required by GAAP or may be condensed or summary statements, and
fairly present in all material respects the consolidated financial position of the Company and
its consolidated Subsidiaries as of and for the dates thereof and the results of operations and
cash flows for the periods then ended, subject, in the case of unaudited statements, to normal,
year-end audit adjustments. All material agreements to which the Company or any Subsidiary is a
party or to which the property or assets of the Company or any Subsidiary are subject are included
as part of or identified in the SEC Reports, to the extent such agreements are required to be
included or identified pursuant to the rules and regulations of the SEC.

 

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(h) Since the date of the latest audited financial statements included within the SEC Reports,
except as disclosed in the SEC Reports, (i) there has been no event, occurrence or development
that, individually or in the aggregate, has had or that would result in a Material Adverse Effect,
(ii) the Company has not incurred any material liabilities other than (A) trade payables and
accrued expenses incurred in the ordinary course of business consistent with past practice and (B)
liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or
required to be disclosed in filings made with the SEC, (iii) the Company has not altered its method
of accounting or changed its auditors, except as disclosed in its SEC Reports, (iv) the Company
has not declared or made any dividend or distribution of cash or other property to its
stockholders, in their capacities as such, or purchased, redeemed or made any agreements to
purchase or redeem any shares of its capital stock (except for repurchases by the Company of shares
of capital stock held by employees, officers, directors, or consultants pursuant to an option of
the Company to repurchase such shares upon the termination of employment or services), and (v) the
Company has not issued any equity securities to any officer, director or Affiliate, except pursuant
to existing Company stock-based plans. The Company has not taken any steps to seek protection
pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that
its creditors intend to initiate involuntary bankruptcy proceedings or any actual knowledge of any
fact which would reasonably lead a creditor to do so. The Company is not as of the date hereof,
and after giving effect to the transactions contemplated hereby to occur at the applicable Closing,
will not be Insolvent (as defined below). For purposes of this Section 3.1(h), “Insolvent”
means (i) the present fair saleable value of the Company’s assets is less than the amount required
to pay the Company’s total Indebtedness (as defined in
Section 3.1(bb)), (ii) the Company
is unable to pay its debts and liabilities, subordinated, contingent or otherwise, as such debts
and liabilities become absolute and matured, (iii) the Company intends to incur or believes that it
will incur debts that would be beyond its ability to pay as such debts mature or (iv) the Company
has unreasonably small capital with which to conduct the business in which it is engaged as such
business is now conducted and is proposed to be conducted.

(i) Absence of Litigation. Except as disclosed in Schedule 3.1(i), there is
no action, suit, claim, or Proceeding, or, to the Company’s knowledge, inquiry or investigation,
before or by any court, public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries that could, individually or in the aggregate, have a Material Adverse Effect.

(j) Compliance. Except as described in the SEC Reports, neither the Company nor any
Subsidiary, except in each case as would not, individually or in the aggregate, reasonably be
expected to have or result in a Material Adverse Effect, (i) is in default under or in
violation of (and no event has occurred that has not been waived that, with notice or lapse of
time or both, would result in a default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received written notice of a claim that it is in default under or that it
is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound (whether or not such default
or violation has been waived), (ii) is in violation of any order of any court, arbitrator or
governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any
governmental authority.

 

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(k) Title to Assets. The Company and the Subsidiaries have good and marketable title
to all real property owned by them that is material to the business of the Company and the
Subsidiaries and good and marketable title in all personal property owned by them that is material
to the business of the Company and the Subsidiaries, in each case free and clear of all Liens,
except for Liens that do not, individually or in the aggregate, have or result in a Material
Adverse Effect. Any real property and facilities held under lease by the Company and the
Subsidiaries are held by them under valid, subsisting and enforceable leases of which the Company
and the Subsidiaries are in material compliance.

(l) No General Solicitation; Placement Agent’s Fees. Neither the Company, nor any of
its Affiliates, nor any Person acting on its or their behalf, has engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in connection with the
offer or sale of the Securities. The Company shall be responsible for the payment of any placement
agent’s fees, financial advisory fees, or brokers’ commission (other than for persons engaged by
any Investor or its investment advisor) relating to or arising out of the issuance of the
Securities pursuant to this Agreement. The Company shall pay, and hold each Investor harmless
against, any liability, loss or expense (including, without limitation, reasonable attorney’s fees
and out-of-pocket expenses) arising in connection with any such claim for fees arising out of the
issuance of the Securities pursuant to this Agreement. The Company acknowledges that it has
engaged Cowen and Company, LLC as its exclusive placement agent (the “Agent”) in connection with
the sale of the Securities. Other than the Agent, the Company has not engaged any placement agent
or other agent in connection with the sale of the Securities.

(m) Private Placement. Neither the Company nor any of its Affiliates nor, any Person
acting on the Company’s behalf has, directly or indirectly, at any time within the past six months,
made any offer or sale of any security or solicitation of any offer to buy any security under
circumstances that would (i) eliminate the availability of the exemption from registration under
Regulation D under the Securities Act in connection with the offer and sale by the Company of the
Securities as contemplated hereby or (ii) cause the offering of the Securities pursuant to the
Transaction Documents to be integrated with prior offerings by the Company for purposes of any
applicable law, regulation or stockholder approval provisions, including, without limitation, under
the rules and regulations of any Trading Market. The Company is not required to be registered as,
and is not an Affiliate of, an “investment company” within the meaning of the Investment Company
Act of 1940, as amended. The Company is not required to be registered as, a United States real
property holding corporation within the meaning of the Foreign Investment in Real Property Tax Act
of 1980.

(n) Form S-3 Eligibility. The Company is eligible to register the Common Shares for
resale by the Investors using Form S-3 promulgated under the Securities Act.

 

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(o) Listing and Maintenance Requirements. Other than as disclosed in the SEC Reports,
the Company has not, in the twelve months preceding the date hereof, received notice (written or
oral) from any Trading Market on which the Common Stock is or has been listed or quoted to the
effect that the Company is not in compliance with the listing or maintenance requirements of such
Trading Market. The Company is in compliance with all such listing and maintenance requirements.

(p) Registration Rights. Except as disclosed in Schedule 3.1(p), the Company
has not granted or agreed to grant to any Person any rights (including “piggy-back” registration
rights) to have any securities of the Company registered with the SEC or any other governmental
authority that have not been satisfied or waived.

(q) Application of Takeover Protections. Except as described in the SEC Reports,
there is no control share acquisition, business combination, poison pill (including any
distribution under a rights agreement) or other similar anti-takeover provision under the Company’s
charter documents or the laws of its state of incorporation that is or could become applicable to
any of the Investors as a result of the Investors and the Company fulfilling their obligations or
exercising their rights under the Transaction Documents, including, without limitation, as a result
of the Company’s issuance of the Securities and the Investors’ ownership of the Securities.

(r) Disclosure. The Company confirms that neither it nor any officers, directors or
Affiliates, has provided any of the Investors (other than Excluded Investors) or their agents or
counsel with any information that constitutes or might constitute material, nonpublic information
(other than the existence and terms of the issuance of Securities, as contemplated by this
Agreement). The Company understands and confirms that each of the Investors will rely on the
foregoing representations in effecting transactions in securities of the Company (other than
Excluded Investors). All disclosure provided by the Company to the Investors regarding the
Company, its business and the transactions contemplated hereby, including the Schedules to this
Agreement, furnished by or on the behalf of the Company are true and correct in all material
respects and do not contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. To the Company’s knowledge, except for the
transactions contemplated by this Agreement, no event or circumstance has occurred with respect to
the Company or any of its Subsidiaries or its or their business, properties, operations or
financial condition, which, under applicable law, rule or regulation, requires public disclosure or
announcement by the Company but which has not been so publicly announced or disclosed. The Company
acknowledges and agrees that no Investor (other than Excluded Investors) makes or has made any
representations or warranties with respect to the transactions contemplated hereby other than those
set forth in the Transaction Documents.

(s) Acknowledgment Regarding Investors’ Purchase of Securities. Based upon the
assumption that the transactions contemplated by this Agreement are consummated in all material
respects in conformity with the Transaction Documents, the Company acknowledges
and agrees that each of the Investors (other than Excluded Investors) is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents and the
transactions contemplated hereby and thereby. The Company further acknowledges that no Investor
(other than Excluded Investors) is acting as a financial advisor or fiduciary of the Company (or in
any similar capacity) with respect to this Agreement and the transactions contemplated hereby and
any advice given by any Investor (other than Excluded Investors) or any of their respective
representatives or agents in connection with the Transaction Documents and the transactions
contemplated hereby and thereby is merely incidental to the Investors’ purchase of the Securities.
The Company further represents to each Investor that the Company’s decision to enter into this
Agreement has been based solely on the independent evaluation of the transactions contemplated
hereby by the Company and its representatives.

 

11

 

(t) Patents and Trademarks. The Company and its Subsidiaries own, or possess adequate
rights or licenses to use, all trademarks, trade names, service marks, service mark registrations,
service names, patents, patent rights, copyrights, inventions, licenses, approvals, governmental
authorizations, trade secrets and other intellectual property rights (“Intellectual Property
Rights”) necessary to conduct their respective businesses now conducted. Except as set forth in
the SEC Reports, none of the Company’s Intellectual Property Rights have expired or terminated, or
are expected to expire or terminate, within three years from the date of this Agreement. The
Company does not have any knowledge of any infringement by the Company or its Subsidiaries of
Intellectual Property Rights of others, except in each case as would not, individually or in the
aggregate, reasonably be expected to have or result in a Material Adverse Effect. Except as
disclosed in the SEC Reports, there is no claim, action or proceeding being made or brought, or to
the knowledge of the Company, being threatened, against the Company or its Subsidiaries regarding
its Intellectual Property Rights, except in each case as would not, individually or in the
aggregate, reasonably be expected to have or result in a Material Adverse Effect.

(u) Insurance. The Company and the Subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such amounts as are prudent and
customary in the businesses and location in which the Company and the Subsidiaries are engaged.

(v) Regulatory Permits. The Company and the Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state, local or foreign regulatory
authorities necessary to conduct their respective businesses as described in the SEC Reports
(“Material Permits”), except where the failure to possess such permits does not, individually or in
the aggregate, have or reasonably be expected to result in a Material Adverse Effect, and neither
the Company nor any Subsidiary has received any written notice of proceedings relating to the
revocation or modification of any Material Permit.

(w) Transactions With Affiliates and Employees. Except as set forth or incorporated
by reference in the Company’s SEC Reports, none of the officers, directors or employees of the
Company is presently a party to any transaction that would be required to be reported on Form 10-K
with the Company or any of its Subsidiaries (other than for ordinary course services as employees,
officers or directors), including any contract, agreement or other arrangement providing for the
furnishing of services to or by, providing for rental of real or
personal property to or from, or otherwise requiring payments to or from any such officer,
director or employee or, to the Company’s knowledge, any corporation, partnership, trust or other
entity in which any such officer, director, or employee has a substantial interest or is an
officer, director, trustee or partner.

 

12

 

(x) Internal Accounting Controls. The Company and the Subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable assurance that (i) transactions
are executed in accordance with management’s general or specific authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset accountability, (iii) access to
assets is permitted only in accordance with management’s general or specific authorization, and
(iv) the recorded accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

(y) Disclosure Controls and Procedures. The Company maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15 of the General Rules and Regulations under the
Exchange Act) that comply with the requirements of the Exchange Act; such disclosure controls and
procedures have been designed to ensure that information required to be disclosed by the Company
and its Subsidiaries is accumulated and communicated to the Company’s management, including the
Company’s principal executive officer and principal financial officer by others within those
entities, such disclosure controls and procedures are effective.

(z) Sarbanes-Oxley Act. The Company is in compliance in all material respects with
applicable requirements of the Sarbanes-Oxley Act of 2002 and applicable rules and regulations
promulgated by the SEC thereunder.

(aa) Foreign Corrupt Practices. Neither the Company nor any of its Subsidiaries nor,
to the knowledge of the Company, any director, officer, agent, employee or other Person acting on
behalf of the Company or any of its Subsidiaries has, in the course of its actions for, or on
behalf of, the Company (i) used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expenses relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government official or employee from corporate
funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act
of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback
or other unlawful payment to any foreign or domestic government official or employee.

(bb) Indebtedness. Except as disclosed in the SEC Reports, neither the Company nor
any of its Subsidiaries (i) has any outstanding Indebtedness (as defined below), (ii) is in
violation of any term of or in default under any contract, agreement or instrument relating to any
Indebtedness, except where such violations and defaults would not result, individually or in the
aggregate, in a Material Adverse Effect, or (iii) is a party to any contract, agreement or
instrument relating to any Indebtedness, the performance of which, in the judgment of the Company’s
officers, has or is expected to have a Material Adverse Effect. The SEC Reports provide a detailed
description of the material terms of any such outstanding Indebtedness.

 

13

 

For purposes of this Agreement: (x) “Indebtedness” of any Person means, without duplication (A)
all indebtedness for borrowed money, (B) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services (other than trade payables entered into in the
ordinary course of business), (C) all reimbursement or payment obligations with respect to letters
of credit, surety bonds and other similar instruments, (D) all obligations evidenced by notes,
bonds, debentures or similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses, (E) all indebtedness created or arising
under any conditional sale or other title retention agreement, or incurred as financing, in either
case with respect to any property or assets acquired with the proceeds of such indebtedness (even
though the rights and remedies of the seller or bank under such agreement in the event of default
are limited to repossession or sale of such property), (F) all monetary obligations under any
leasing or similar arrangement which, in connection with generally accepted accounting principles,
consistently applied for the periods covered thereby, is classified as a capital lease, (G) all
indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured by) any mortgage,
lien, pledge, charge, security interest or other encumbrance upon or in any property or assets
(including accounts and contract rights) owned by any Person, even though the Person which owns
such assets or property has not assumed or become liable for the payment of such indebtedness, and
(H) all Contingent Obligations in respect of indebtedness or obligations of others of the kinds
referred to in clauses (A) through (G) above; (y) “Contingent Obligation” means, as to any Person,
any direct or indirect liability, contingent or otherwise, of that Person with respect to any
indebtedness, lease, dividend or other obligation of another Person if the primary purpose or
intent of the Person incurring such liability, or the primary effect thereof, is to provide
assurance to the obligee of such liability that such liability will be paid or discharged, or that
any agreements relating thereto will be complied with, or that the holders of such liability will
be protected (in whole or in part) against loss with respect thereto; and (z) “Person” means an
individual, a limited liability company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a government or any department or agency thereof.

(cc) Employee Relations. Neither the Company nor any of its Subsidiaries is a party
to any collective bargaining agreement or employs any member of a union. The Company believes that
its relations with its employees are as disclosed in the SEC Reports. Except as disclosed in the
SEC Reports, during the period covered by the SEC Reports, no executive officer of the Company or
any of its Subsidiaries (as defined in Rule 501(f) of the Securities Act) has notified the Company
or any such Subsidiary that such officer intends to leave the Company or any such Subsidiary or
otherwise terminate such officer’s employment with the Company or any such Subsidiary. To the
knowledge of the Company or any such Subsidiary, no executive officer of the Company or any of its
Subsidiaries is in violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement, non-competition agreement, or any other contract
or agreement or any restrictive covenant, and the continued employment of each such executive
officer does not subject the Company or any such Subsidiary to any liability with respect to any of
the foregoing matters.

(dd) Labor Matters. The Company and its Subsidiaries are in compliance in all
material respects with all federal, state, local and foreign laws and regulations respecting labor,
employment and employment practices and benefits, terms and conditions of employment and wages and
hours, except where failure to be in compliance would not, either individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect.

 

14

 

(ee) Environmental Laws. The Company and its Subsidiaries (i) are in compliance in
all material respects with any and all Environmental Laws (as hereinafter defined), (ii) have
received all permits, licenses or other approvals required of them under applicable Environmental
Laws to conduct their respective businesses and (iii) are in compliance in all material respects
with all terms and conditions of any such permit, license or approval where, in each of the
foregoing clauses (i), (ii) and (iii), the failure to so comply would be reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect. The term “Environmental Laws”
means all federal, state, local or foreign laws relating to pollution or protection of human health
or the environment (including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata), including, without limitation, laws relating to emissions,
discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or
hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or
otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees,
demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders,
permits, plans or regulations issued, entered, promulgated or approved thereunder.

(ff) Subsidiary Rights. Except as set forth in the SEC Reports, the Company or one of
its Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by
applicable law) to receive dividends and distributions on, all capital securities of its
Subsidiaries as owned by the Company or such Subsidiary.

(gg) Tax Status. The Company and each of its Subsidiaries (i) has made or filed all
foreign, federal and state income and all other tax returns, reports and declarations required by
any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments
and charges that are material in amount, shown or determined to be due on such returns, reports and
declarations, except those being contested in good faith and (iii) has set aside on its books
provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to
which such returns, reports or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the
Company know of no basis for any such claim.

3.2 Representations, Warranties and Covenants of the Investors. Each Investor hereby,
as to itself only and for no other Investor, represents, warrants and covenants to the Company and
the Agent as follows:

(a) Organization; Authority. Such Investor is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its organization with the
requisite corporate, partnership or other power and authority to enter into and to consummate the
transactions contemplated by the Transaction Documents and otherwise to carry out its obligations
hereunder and thereunder. The purchase by such Investor of the Securities hereunder has been duly
authorized by all necessary corporate, partnership or other action on the part of such Investor.
This Agreement has been duly executed and delivered by such Investor and constitutes the valid and
binding obligation of such Investor, enforceable against it in accordance with its terms, except as
may be limited by (i) applicable bankruptcy, insolvency, reorganization or other laws of general
application relating to or affecting the enforcement of creditors rights
generally, and (ii) the effect of rules of law governing the availability of specific
performance and other equitable remedies.

 

15

 

(b) No Public Sale or Distribution. Such Investor is (i) acquiring the Common Shares
in the ordinary course of business for its own account and not with a view towards, or for resale
in connection with, the public sale or distribution thereof, except pursuant to sales registered
under the Securities Act or under an exemption from such registration and in compliance with
applicable federal and state securities laws, and such Investor does not have a present arrangement
to effect any distribution of the Securities to or through any person or entity; provided, however,
that by making the representations herein, such Investor does not agree to hold any of the
Securities for any minimum or other specific term and reserves the right to dispose of the
Securities at any time in accordance with or pursuant to a registration statement or an exemption
under the Securities Act.

(c) Investor Status. At the time such Investor was offered the Securities, it was,
and at the date hereof it is, either (A) a “qualified institutional buyer” as defined in Rule
144A(a) under the Securities Act or (B) an “accredited investor” as defined in Rule 501(a)(1), (2)
or (3) under the Securities Act. At the date hereof, such Investor has that dollar amount of
securities invested in its portfolio or under management (including investments held by its wholly
owned subsidiaries) as set forth on the Investor Signature Page. Such Investor is not a registered
broker dealer registered under Section 15(a) of the Exchange Act, or a member of FINRA or an entity
engaged in the business of being a broker dealer. Except as otherwise disclosed in writing to the
Company on Exhibit B-2 (attached hereto) on or prior to the date of this Agreement, such Investor
is not affiliated with any broker dealer registered under Section 15(a) of the Exchange Act, or a
member of FINRA or an entity engaged in the business of being a broker dealer.

(d) Experience of Such Investor. Such Investor, either alone or together with its
representatives has such knowledge, sophistication and experience in business and financial matters
so as to be capable of evaluating the merits and risks of the prospective investment in the
Securities, and has so evaluated the merits and risks of such investment. Such Investor
understands that it must bear the economic risk of this investment in the Securities indefinitely,
and is able to bear such risk and is able to afford a complete loss of such investment.

(e) Access to Information. Such Investor acknowledges that it has reviewed the
Disclosure Materials and has been afforded: (i) the opportunity to ask such questions as it has
deemed necessary of, and to receive answers from, representatives of the Company concerning the
terms and conditions of the offering of the Securities and the merits and risks of investing in the
Securities; (ii) access to information (other than material non-public information) about the
Company and the Subsidiaries and their respective financial condition, results of operations,
business, properties, management and prospects sufficient to enable it to evaluate its investment;
and (iii) the opportunity to obtain such additional information that the Company possesses or can
acquire without unreasonable effort or expense that is necessary to make an informed investment
decision with respect to the investment. Neither such inquiries nor any other investigation
conducted by or on behalf of such Investor or its representatives or counsel shall modify, amend or
affect such Investor’s right to rely on the truth, accuracy and completeness of the Disclosure
Materials and the Company’s representations and warranties
contained in the Transaction Documents. Such Investor acknowledges receipt of copies of the
SEC Reports.

 

16

 

(f) No Governmental Review. Such Investor understands that no United States federal
or state agency or any other government or governmental agency has passed on or made any
recommendation or endorsement of the Securities or the fairness or suitability of the investment in
the Securities nor have such authorities passed upon or endorsed the merits of the offering of the
Securities.

(g) No Conflicts. The execution, delivery and performance by such Investor of this
Agreement and the consummation by such Investor of the transactions contemplated hereby will not
(i) result in a violation of the organizational documents of such Investor or (ii) conflict with,
or constitute a default (or an event which with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment, acceleration or
cancellation of, any agreement, indenture or instrument to which such Investor is a party, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree (including federal
and state securities laws) applicable to such Investor, except in the case of clauses (ii) and
(iii) above, for such that are not material and do not otherwise affect the ability of such
Investor to consummate the transactions contemplated hereby.

(h) Prohibited Transactions. No Investor, directly or indirectly, and no Person
acting on behalf of or pursuant to any understanding with any Investor, has engaged in any
purchases or sales of any securities, including any derivatives, of the Company (including, without
limitation, any Short Sales involving any of the Company’s securities) (a “Transaction”) since the
time that such Investor was first contacted by the Company, the Agent or any other Person regarding
the transactions contemplated hereby. Such Investor covenants that neither it nor any Person
acting on its behalf or pursuant to any understanding with such Investor will engage, directly or
indirectly, in any Transactions prior to the time the transactions contemplated by this Agreement
are publicly disclosed. “Short Sales” include, without limitation, all “short sales” as defined in
Rule 200 promulgated under Regulation SHO under the Exchange Act and all types of direct and
indirect stock pledges, forward sale contracts, options, puts, calls, short sales, swaps,
derivatives and similar arrangements (including on a total return basis), and sales and other
transactions through non-U.S. broker-dealers or foreign regulated brokers.

(i) Restricted Securities. The Investors understand that the Securities are
characterized as “restricted securities” under the U.S. federal securities laws inasmuch as they
are being acquired from the Company in a transaction not involving a public offering and that under
such laws and applicable regulations such securities may be resold without registration under the
Securities Act only in certain limited circumstances.

(j) Legends. It is understood that, except as provided in Section 4.1(b) of this
Agreement, certificates evidencing such Securities may bear the legend set forth in Section 4.1(b).

 

17

 

(k) No Legal, Tax or Investment Advice. Such Investor understands that nothing in
this Agreement or any other materials presented by or on behalf of the Company to
the Investor in connection with the purchase of the Securities constitutes legal, tax or
investment advice. Such Investor has consulted such legal, tax and investment advisors as it, in
its sole discretion, has deemed necessary or appropriate in connection with its purchase of the
Securities. Such Investor understands that the Agent has acted solely as the agent of the Company
in this placement of the Securities, and that the Agent makes no representation or warranty with
regard to the merits of this transaction or as to the accuracy of any information such Investor may
have received in connection therewith. Such Investor acknowledges that he has not relied on any
information or advice furnished by or on behalf of the Agent.

ARTICLE IV

OTHER AGREEMENTS OF THE PARTIES

4.1 Transfer Restrictions.

(a) The Investors covenant that the Securities will only be disposed of pursuant to an
effective registration statement under, and in compliance with the requirements of, the Securities
Act or pursuant to an available exemption from the registration requirements of the Securities Act,
and in compliance with any applicable state securities laws. In connection with any transfer of
Securities other than pursuant to an effective registration statement or to the Company, or
pursuant to Rule 144(k), the Company may require the transferor to provide to the Company an
opinion of counsel selected by the transferor, the form and substance of which opinion shall be
reasonably satisfactory to the Company, to the effect that such transfer does not require
registration under the Securities Act. Notwithstanding the foregoing, the Company hereby consents
to and agrees to register on the books of the Company and with its Transfer Agent, without any such
legal opinion, except to the extent that the Transfer Agent requests such legal opinion, any
transfer of Securities by an Investor to an Affiliate of such Investor, provided that the
transferee certifies to the Company that it is an “accredited investor” as defined in Rule 501(a)
under the Securities Act and provided that such Affiliate does not request any removal of any
existing legends on any certificate evidencing the Securities.

(b) The Investors agree to the imprinting, so long as is required by this Section
4.1(b), of the following legend on any certificate evidencing any of the Securities:

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE
COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY APPLICABLE STATE SECURITIES LAWS AND, ACCORDINGLY, MAY NOT BE OFFERED
OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN COMPLIANCE WITH
APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.

 

18

 

Certificates evidencing Securities shall not be required to contain such legend or any other legend
(i) while a registration statement (including the Registration Statement) covering the resale of
the Securities is effective under the Securities Act, (ii) following any sale of such Securities
pursuant to Rule 144 if the holder provides the Company with a legal opinion (and the documents
upon which the legal opinion is based) reasonable acceptance to the Company to the effect that the
Securities can be sold under Rule 144, (iii) if the holder provides the Company with a legal
opinion (and the documents upon which the legal opinion is based) reasonably acceptable to the
Company to the effect that the Securities are eligible for sale under Rule 144(k), or (iv) if the
holder provides the Company with a legal opinion (and the documents upon which the legal opinion is
based) reasonably acceptable to the Company to the effect that the legend is not required under
applicable requirements of the Securities Act (including controlling judicial interpretations and
pronouncements issued by the Staff of the SEC). The Company shall cause its counsel to issue the
legal opinion included in the Transfer Agent Instructions to the Transfer Agent on the Effective
Date. Following the Effective Date or at such earlier time as a legend is no longer required for
certain Securities, the Company will no later than three Trading Days following the delivery by an
Investor to the Company or the Transfer Agent of (i) a legended certificate representing such
Securities, and (ii) an opinion of counsel to the extent required by Section 4.1(a),
deliver or cause to be delivered to such Investor a certificate representing such Securities that
is free from all restrictive and other legends. The Company may not make any notation on its
records or give instructions to the Transfer Agent that enlarge the restrictions on transfer set
forth in this Section.

(c) The Company will not object to and shall permit (except as prohibited by law) an Investor
to pledge or grant a security interest in some or all of the Securities in connection with a bona
fide margin agreement or other loan or financing arrangement secured by the Securities, and if
required under the terms of such agreement, loan or arrangement, the Company will not object to and
shall permit (except as prohibited by law) such Investor to transfer pledged or secured Securities
to the pledges or secured parties. Except as required by law, or as required by the Transfer
Agent, such a pledge or transfer would not be subject to approval of the Company, no legal opinion
of the pledgee, secured party or pledgor shall be required by the Company in connection therewith,
and no notice shall be required of such pledge. Each Investor acknowledges that the Company shall
not be responsible for any pledges relating to, or the grant of any security interest in, any of
the Securities or for any agreement, understanding or arrangement between any Investor and its
pledgee or secured party. At the appropriate Investor’s expense, the Company will execute and
deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably
request in connection with a pledge or transfer of the Securities, including the preparation and
filing of any required prospectus supplement under Rule 424(b)(3) of the Securities Act or other
applicable provision of the Securities Act to appropriately amend the list of Selling Stockholders
thereunder. Provided that the Company is in compliance with the terms of this Section
4.1(c), the Company’s indemnification obligations pursuant to Section 6.4 shall not
extend to any Proceeding or Losses arising out of or related to this Section 4.1(c).

4.2 Furnishing of Information. Until the date that any Investor owning Shares may
sell all of such Shares under Rule 144(k) of the Securities Act (or any successor provision), the
Company covenants to use its commercially reasonable efforts to timely file (or obtain extensions
in respect thereof and file within the applicable grace period) all reports required to be
filed by the Company after the date hereof pursuant to the Exchange Act. The Company further
covenants that it will take such further action as any holder of Securities may reasonably request
to satisfy the provisions of this Section 4.2.

 

19

 

4.3 Integration. The Company shall not, and shall use its commercially reasonably
efforts to ensure that no Affiliate thereof shall, sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that
would be integrated with the offer or sale of the Securities in a manner that would require the
registration under the Securities Act of the sale of the Securities to the Investors or that would
be integrated with the offer or sale of the Securities for purposes of the rules and regulations of
any Trading Market.

4.4 Reservation of Securities. The Company shall maintain a reserve from its duly
authorized shares of Common Stock for issuance pursuant to the Transaction Documents in such amount
as may be required to fulfill its obligations to issue such Shares under the Transaction Documents.
In the event that at any time prior to Closing the then authorized shares of Common Stock are
insufficient for the Company to satisfy its obligations to issue such Shares under the Transaction
Documents, the Company shall promptly take such actions as may be required to increase the number
of authorized shares.

4.5 Securities Laws Disclosure; Publicity. The Company shall, on or before 8:30 a.m.,
New York time, on the first Trading Day following execution of this Agreement, issue a press
release reasonably acceptable to the Investors and in compliance with applicable securities laws
disclosing all material terms of the transactions contemplated hereby. On the later of the Closing
Date or the date required by applicable securities laws, the Company shall file a Current Report on
Form 8-K with the SEC (the “8-K Filing”) describing the terms of the transactions contemplated by
the Transaction Documents and including as exhibits to such Current Report on Form 8-K the
Transaction Documents (including the schedules and the names, and addresses of the Investors and
the amount(s) of Securities respectively purchased), in the form required by the Exchange Act.
Thereafter, the Company shall timely file any filings and notices required by the SEC or applicable
law with respect to the transactions contemplated hereby and provide copies thereof to the
Investors promptly after filing. Except as herein provided, the Company shall not publicly
disclose the name of any Investor, or include the name of any Investor in any press release without
the prior written consent of such Investor, unless otherwise required by law. The Company shall
not, and shall cause each of its Subsidiaries and its and each of their respective officers,
directors, employees and agents not to, provide any Investor with any material nonpublic
information regarding the Company or any of its Subsidiaries from and after the issuance of the
above referenced press release without the express written consent of such Investor.

4.6 Use of Proceeds. The Company intends to use the net proceeds from the sale of the
Securities for working capital and general corporate purposes. The Company also may use a portion
of the net proceeds, currently intended for general corporate purposes, to acquire or invest in new
restaurant construction, products or services that complement its business, although the Company
has no present plans or commitments and is not currently engaged in any material negotiations with
respect to these types of transactions. Pending these uses, the Company
intends to invest the net proceeds from this offering in short-term, interest-bearing,
investment-grade securities, or as otherwise pursuant to the Company’s customary investment
policies.

 

20

 

4.7 Subsequent Private Offerings. During the period commencing on the Closing Date
and ending on 30 days following the Effective Date, the Company shall not sell any of its
securities (or equity-linked securities) for cash in a private placement or offering substantially
similar to the transactions contemplated by this Agreement.

ARTICLE V

CONDITIONS

5.1 Conditions Precedent to the Obligations of the Investors. The obligation of each
Investor to acquire Securities at the Closing is subject to the satisfaction or waiver by such
Investor, at or before the Closing, of each of the following conditions:

(a) Representations and Warranties. The representations and warranties of the Company
contained herein shall be true and correct as of the date when made and as of the Closing as though
made on and as of such date; and

(b) Performance. The Company and each other Investor shall have performed, satisfied
and complied in all material respects with all covenants, agreements and conditions required by the
Transaction Documents to be performed, satisfied or complied with by it at or prior to the Closing.

5.2 Conditions Precedent to the Obligations of the Company. The obligation of the
Company to sell the Securities at the Closing is subject to the satisfaction or waiver by the
Company, at or before the Closing, of each of the following conditions:

(a) Representations and Warranties. The representations and warranties of the
Investors contained herein shall be true and correct as of the date when made and as of the Closing
Date as though made on and as of such date; and

(b) Performance. The Investors shall have performed, satisfied and complied in all
material respects with all covenants, agreements and conditions required by the Transaction
Documents to be performed, satisfied or complied with by the Investors at or prior to the Closing.

ARTICLE VI

REGISTRATION RIGHTS

6.1 Registration Statement.

(a) As promptly as possible, and in any event on or prior to the Filing Date, the Company
shall prepare and file with the SEC a Registration Statement covering the resale of all Registrable
Securities for an offering to be made on a continuous basis pursuant to Rule 415. The Registration
Statement shall be on Form S-3 (except if the Company is not then eligible to register for resale
the Registrable Securities on Form S-3, in which case such registration shall be on another
appropriate form in accordance with the Securities Act and the Exchange Act) and
shall contain (except if otherwise directed by the Investors or requested by the SEC) the
“Plan of Distribution” in substantially the form attached hereto as Exhibit D.

 

21

 

(b) The Company shall use its commercially reasonable efforts to cause the Registration
Statement to be declared effective by the SEC as promptly as possible after the filing thereof, but
in any event prior to the Required Effectiveness Date, and shall use its commercially reasonable
efforts to keep the Registration Statement continuously effective under the Securities Act until
the earlier of the date that all Shares covered by such Registration Statement have been sold or
can be sold publicly under Rule 144(k) (the “Effectiveness Period”); provided that, upon
notification by the SEC that a Registration Statement will not be reviewed or is no longer subject
to further review and comments, the Company shall request acceleration of the effectiveness of such
Registration Statement so as to cause the Registration Statement to be declared effective within
five (5) Trading Days after receipt of such notice and request that it becomes effective at 4:00
p.m. New York City time on the Effective Dave and file a prospectus supplement for any Registration
Statement, whether or not required under Rule 424 (or otherwise), by 9:00 a.m. New York City time
the day after the Effective Date; provided, however, that any such request for acceleration will be
deemed made timely pursuant to this Section 6.2(b) so long as the Company is using its
commercially reasonable best efforts to pursue such effectiveness but is delayed by any requirement
of its independent registered public accountants to obtain any necessary consents or approvals
required under the Securities Act.

(c) The Company shall notify the Investors in writing promptly (and in any event within one
Trading Day) after receiving notification from the SEC that the Registration Statement has been
declared effective.

(d) Should an Event (as defined below) occur, then upon the occurrence of such Event, and on
every monthly anniversary thereof until the applicable Event is cured, the Company shall pay to
each Investor an amount in cash, as liquidated damages and not as a penalty, equal to one percent
(1.0%) of (i) the number of Common Shares held by such Investor as of the date of such Event,
multiplied by (ii) the purchase price paid by such Investor for such Common Shares then held;
provided, however, that the total amount of payments pursuant to this Section 6.1(d) shall
not exceed, when aggregated with all such payments paid to all Investors pursuant to this
Section 6.1(d), ten percent (10%) of the aggregate purchase price. The payments to which
an Investor shall be entitled pursuant to this Section 6.1(d) are referred to herein as
"Event Payments.” Any Event Payments payable pursuant to the terms hereof shall apply on a pro
rated basis for any portion of a month prior to the cure of an Event. In the event the Company
fails to make Event Payments in a timely manner, such Event Payments shall bear interest at the
rate of one percent (1.0%) per month (prorated for partial months) until paid in full. All pro
rated calculations made pursuant to this paragraph shall be based upon the actual number of days in
such pro rated month.

For such purposes, each of the following shall constitute an “Event”:

(i) the Registration Statement is not filed on or prior to the Filing Date or is not declared
effective on or prior to the Required Effectiveness Date;

 

22

 

(ii) except as provided for in Section 6.1(e) (the “Excluded Events”), after the
Effective Date, an Investor is not permitted to sell Registrable Securities under the Registration
Statement (or a subsequent Registration Statement filed in replacement thereof) for any reason
(other than the fault of such Investor) for five or more Trading Days (whether or not consecutive);

(iii) the Common Stock is not listed or quoted, or is suspended from trading, on an Eligible
Market for a period of three Trading Days (which need not be consecutive Trading Days) during the
Effectiveness Period; or

(iv) with respect to an Investor, the Company fails for any reason to deliver a certificate
evidencing any Securities to such Investor within five Trading Days after delivery of such
certificate is required pursuant to any Transaction Document.

(e) Notwithstanding anything in this Agreement to the contrary, after 60 consecutive Trading
Days of continuous effectiveness of the initial Registration Statement filed and declared effective
pursuant to this Agreement, the Company may, by written notice to the Investors, suspend sales
under a Registration Statement after the Effective Date thereof and/or require that the Investors
immediately cease the sale of shares of Common Stock pursuant thereto and/or defer the filing of
any subsequent Registration Statement if the Company is engaged in a material merger, acquisition
or sale and the Board of Directors determines in good faith, by appropriate resolutions, that, as a
result of such activity it would be materially detrimental to the Company (other than as relating
solely to the price of the Common Stock) to maintain a Registration Statement at such time. Upon
receipt of such notice, each Investor shall immediately discontinue any sales of Registrable
Securities pursuant to such registration until such Investor is advised in writing by the Company
that the current Prospectus or amended Prospectus, as applicable, may be used. In no event,
however, shall this right be exercised to suspend sales beyond the period during which (in the good
faith determination of the Company’s Board of Directors) the failure to require such suspension
would be materially detrimental to the Company. The Company’s rights under this Section
6(e) may be exercised for a period of no more than 20 Trading Days at a time and not more than
two times in any twelve-month period, without such suspension being considered as part of an Event
Payment determination. Immediately after the end of any suspension period under this Section
6(e), the Company shall take all necessary actions (including filing any required supplemental
prospectus) to restore the effectiveness of the applicable Registration Statement and the ability
of the Investors to publicly resell their Registrable Securities pursuant to such effective
Registration Statement.

(f) The Company shall not, from the date hereof until the Effective Date of the Registration
Statement covering all Registrable Securities, prepare and file with the SEC a registration
statement relating to an offering for its own account or the account of others under the Securities
Act of any of its equity securities, other than any registration statement or post-effective
amendment to a registration statement (or supplement thereto) relating to the Company’s employee
benefit plans registered on Form S-8.

 

23

 

6.2 Registration Procedures. In connection with the Company’s registration
obligations hereunder, the Company shall:

(a) Not less than three Trading Days prior to the filing of a Registration Statement or any
related Prospectus or any amendment or supplement thereto, furnish via email to those Investors who
have supplied the Company with email addresses copies of all such documents proposed to be filed,
which documents (other than any document that is incorporated or deemed to be incorporated by
reference therein) will be subject to the review of such Investors. The Company shall reflect in
each such document when so filed with the SEC such comments regarding the Investors and the plan of
distribution as the Investors may reasonably and promptly propose no later than two Trading Days
after the Investors have been so furnished with copies of such documents as aforesaid.

(b) (i) Subject to Section 6.1(e), prepare and file with the SEC such amendments,
including post-effective amendments, to each Registration Statement and the Prospectus used in
connection therewith as may be necessary to keep the Registration Statement continuously effective,
as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with
the SEC such additional Registration Statements in order to register for resale under the
Securities Act all of the Registrable Securities; (ii) cause the related Prospectus to be amended
or supplemented by any required Prospectus supplement, and as so supplemented or amended to be
filed pursuant to Rule 424; (iii) respond as promptly as reasonably possible, and in any event
within 12 Trading Days (except to the extent that the Company reasonably requires additional time
to respond to accounting comments), to any comments received from the SEC with respect to the
Registration Statement or any amendment thereto; and (iv) comply in all material respects with the
provisions of the Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the applicable period in
accordance with the intended methods of disposition by the Investors thereof set forth in the
Registration Statement as so amended or in such Prospectus as so supplemented.

(c) Notify the Investors as promptly as reasonably possible, and (if requested by the
Investors confirm such notice in writing no later than two Trading Days thereafter, of any of the
following events: (i) the SEC notifies the Company whether there will be a “review” of any
Registration Statement; (ii) the SEC comments in writing on any Registration Statement; (iii) any
Registration Statement or any post-effective amendment is declared effective; (iv) the SEC or any
other federal or state governmental authority requests any amendment or supplement to any
Registration Statement or Prospectus or requests additional information related thereto; (v) the
SEC issues any stop order suspending the effectiveness of any Registration Statement or initiates
any Proceedings for that purpose; (vi) the Company receives notice of any suspension of the
qualification or exemption from qualification of any Registrable Securities for sale in any
jurisdiction, or the initiation or threat of any Proceeding for such purpose; or (vii) the
financial statements included in any Registration Statement become ineligible for inclusion therein
or any Registration Statement or Prospectus or other document contains any untrue statement of a
material fact or omits to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they were made, not
misleading.

(d) Use its reasonable Best Efforts to avoid the issuance of or, if issued, obtain the
withdrawal of (i) any order suspending the effectiveness of any Registration Statement, or (ii) any
suspension of the qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction, as soon as possible.

 

24

 

(e) If requested by an Investor, provide such Investor, without charge, at least one conformed
copy of each Registration Statement and each amendment thereto, including financial statements and
schedules, and all exhibits to the extent requested by such Person (including those previously
furnished or incorporated by reference) promptly after the filing of such documents with the SEC.

(f) Promptly deliver to each Investor, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or supplement thereto as such
Persons may reasonably request. The Company hereby consents to the use of such Prospectus and each
amendment or supplement thereto by each of the selling Investors in connection with the offering
and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement
thereto to the extent permitted by federal and state securities laws and regulations.

(g) (i) In the time and manner required by each Trading Market, prepare and file with such
Trading Market an additional shares listing application covering all of the Registrable Securities;
(ii) take all steps necessary to cause such Common Shares to be approved for listing on each
Trading Market as soon as possible thereafter; (iii) provide to Investor Counsel evidence of such
listing; and (iv) except as a result of the Excluded Events, during the Effectiveness Period,
maintain the listing of such Common Shares on each such Trading Market or another Eligible Market.

(h) Prior to any public offering of Registrable Securities, use its reasonable Best Efforts to
register or qualify or cooperate with the selling Investors in connection with the registration or
qualification (or exemption from such registration or qualification) of such Registrable Securities
for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United
States as any Investor requests in writing, to keep each such registration or qualification (or
exemption therefrom) effective for so long as required, but not to exceed the duration of the
Effectiveness Period, and to do any and all other acts or things reasonably necessary or advisable
to enable the disposition in such jurisdictions of the Registrable Securities covered by a
Registration Statement; provided, however, that the Company shall not be obligated to file any
general consent to service of process or to qualify as a foreign corporation or as a dealer in
securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise so subject.

(i) Cooperate with the Investors to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be delivered to a transferee pursuant to a
Registration Statement, which certificates shall be free, to the extent permitted by this Agreement
and under law, of all restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such Investors may reasonably request.

(j) Upon the occurrence of any event described in Section 6.2(c)(vii), as promptly as
reasonably possible, prepare a supplement or amendment, including a post-effective amendment, to
the Registration Statement or a supplement to the related Prospectus or any document incorporated
or deemed to be incorporated therein by reference, and file any other
required document so that, as thereafter delivered, neither the Registration Statement nor
such Prospectus will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.

 

25

 

(k) Cooperate with any reasonable due diligence investigation undertaken by the Investors in
connection with the sale of Registrable Securities, including, without limitation, by making
available documents and information; provided that the Company will not deliver or make available
to any Investor material, nonpublic information unless such Investor requests in advance in writing
to receive material, nonpublic information and agrees to keep such information confidential.

(l) Comply with all rules and regulations of the SEC applicable to the registration of the
Securities.

(m) It shall be a condition precedent to the obligations of the Company to complete the
registration pursuant to this Agreement with respect to the Registrable Securities of any
particular Investor or to make any Event Payments set forth in Section 6.1(c) to such
Investor that such Investor furnish to the Company the information specified in Exhibits B-1, B-2
and B-3 hereto and such other information regarding itself, the Registrable Securities and other
shares of Common Stock held by it and the intended method of disposition of the Registrable
Securities held by it (if different from the Plan of Distribution set forth on Exhibit D
hereto) as shall be reasonably required to effect the registration of such Registrable Securities
and shall complete and execute such documents in connection with such registration as the Company
may reasonably request.

(n) The Company shall comply with all applicable rules and regulations of the SEC under the
Securities Act and the Exchange Act, including, without limitation, Rule 172 under the Securities
Act, file any final Prospectus, including any supplement or amendment thereof, with the SEC
pursuant to Rule 424 under the Securities Act, promptly inform the Holders in writing if, at any
time during the Effectiveness Period, the Company does not satisfy the conditions specified in Rule
172 and, as a result thereof, the Holders are required to make available a Prospectus in connection
with any disposition of Registrable Securities and take such other actions as may be reasonably
necessary to facilitate the registration of the Registrable Securities hereunder.

6.3 Registration Expenses. The Company shall pay all fees and expenses incident to
the performance of or compliance with Article VI of this Agreement by the Company, including
without limitation (a) all registration and filing fees and expenses, including without limitation
those related to filings with the SEC, any Trading Market and in connection with applicable state
securities or Blue Sky laws, (b) printing expenses (including without limitation expenses of
printing certificates for Registrable Securities), (c) messenger, telephone and delivery expenses,
(d) fees and disbursements of counsel for the Company, (e) fees and expenses of all other Persons
retained by the Company in connection with the consummation of the transactions contemplated by
this Agreement, and (f) all listing fees to be paid by the Company to the Trading Market.
Notwithstanding the foregoing or anything in this Agreement to the contrary, each holder of the
Registrable Securities being registered shall pay all commissions, placement
agent fees, and underwriting discounts and commissions with respect to any Registrable
Securities sold by it and the fees and disbursements of any counsel or other advisors or experts
retained by such holders (severally or jointly).

 

26

 

6.4 Indemnification

(a) Indemnification by the Company. The Company shall, notwithstanding any
termination of this Agreement, indemnify and hold harmless each Investor, the officers, directors,
partners, members, agents and employees of each of them, each Person who controls any such Investor
(within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act) and the officers, directors, partners, members, agents and employees of each such
controlling Person, to the fullest extent permitted by applicable law, from and against any and all
Losses, as incurred, arising out of or relating to (i) any misrepresentation or breach of any
representation or warranty made by the Company in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (ii) any breach of any
covenant, agreement or obligation of the Company contained in the Transaction Documents or any
other certificate, instrument or document contemplated hereby or thereby, (iii) any cause of
action, suit or claim brought or made against such Indemnified Party (as defined in Section
6.4(c) below) by a third party (including for these purposes a derivative action brought on
behalf of the Company), arising out of or resulting from (x) execution, delivery, performance or
enforcement of the Transaction Documents or any other certificate, instrument or document
contemplated hereby or thereby, (y) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of the issuance of the Securities, or (z) the status of
Indemnified Party as holder of the Securities or (iv) any untrue or alleged untrue statement of a
material fact contained in the Registration Statement, any Prospectus or any form of Company
prospectus or in any amendment or supplement thereto or in any Company preliminary prospectus, or
arising out of or relating to any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in the light of the circumstances under which they were made)
not misleading, except to the extent, but only to the extent, that (A) such untrue statements,
alleged untrue statements, omissions or alleged omissions are based solely upon information
regarding such Investor furnished in writing to the Company by such Investor for use therein, or
to the extent that such information relates to such Investor or such Investor’s proposed method of
distribution of Registrable Securities and was reviewed and expressly approved by such Investor
expressly for use in the Registration Statement, or (B) with respect to any prospectus, if the
untrue statement or omission of material fact contained in such prospectus was corrected on a
timely basis in the prospectus, as then amended or supplemented, if such corrected prospectus was
timely made available by the Company to the Holder, and the Holder seeking indemnity hereunder was
advised in writing not to use the incorrect prospectus prior to the use giving rise to Losses.

(b) Indemnification by Investors. Each Investor shall, severally and not jointly,
indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person
who controls the Company (within the meaning of Section 15 of the Securities Act and
Section 20 of the Exchange Act), and the directors, officers, agents or employees of such
controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses
(as determined by a court of competent jurisdiction in a final judgment not subject to appeal or
review) arising solely out of any untrue statement of a material fact contained in the
Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or
supplement thereto, or arising out of or relating to any omission of a material fact required to be
stated therein or necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, in the light of the circumstances under which they were made)
not misleading, but only to the extent that such untrue statement or omission is contained in any
information so furnished by such Investor in writing to the Company specifically for inclusion in
such Registration Statement or such Prospectus. In no event shall the liability of any selling
Investor hereunder be greater in amount than the dollar amount of the net proceeds received by such
Investor upon the sale of the Registrable Securities giving rise to such indemnification
obligation.

 

27

 

(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or
asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such
Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying
Party”) in writing, and the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees
and expenses incurred in connection with defense thereof; provided, that the failure of any
Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations
or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally
determined by a court of competent jurisdiction (which determination is not subject to appeal or
further review) that such failure shall have proximately and materially adversely prejudiced the
Indemnifying Party.

An Indemnified Party shall have the right to employ separate counsel in any such Proceeding
and to participate in the defense thereof, but the fees and expenses of such counsel shall be at
the expense of such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have failed promptly to
assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such
Indemnified Party in any such Proceeding; or (iii) the named parties to any such Proceeding
(including any impleaded parties) include both such Indemnified Party and the Indemnifying Party,
and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party
(in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall
not have the right to assume the defense thereof and the reasonable fees and expenses of separate
counsel shall be at the expense of the Indemnifying Party). It being understood, however, that the
Indemnifying Party shall not, in connection with any one such Proceeding (including separate
Proceedings that have been or will be consolidated before a single judge) be liable for the fees
and expenses of more than one separate firm of attorneys at any time for all Indemnified Parties,
which firm shall be appointed by a majority of the Indemnified Parties. The Indemnifying Party
shall not be liable for any settlement of any such Proceeding effected without its written consent,
which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending Proceeding in
respect of which any Indemnified Party is a party, unless such settlement includes an unconditional
release of such Indemnified Party from all liability on claims that are the subject matter of such
Proceeding.

 

28

 

All reasonable fees and expenses of the Indemnified Party (including reasonable fees and
expenses to the extent incurred in connection with investigating or preparing to defend such
Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party,
as incurred, within 20 Trading Days of written notice thereof to the Indemnifying Party (regardless
of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification
hereunder; provided, that the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially determined that such
Indemnified Party is not entitled to indemnification hereunder).

(d) Contribution. If a claim for indemnification under Section 6.4(a) or
(b) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then
each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as
is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in
connection with the actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying Party and
Indemnified Party shall be determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a material fact or omission or
alleged omission of a material fact, has been taken or made by, or relates to information supplied
by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge,
access to information and opportunity to correct or prevent such action, statement or omission.
The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 6.4(c), any reasonable attorneys’ or other
reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent
such party would have been indemnified for such fees or expenses if the indemnification provided
for in this Section was available to such party in accordance with its terms.

The parties hereto agree that it would not be just and equitable if contribution pursuant to
this Section 6.4(d) were determined by pro rata allocation or by any other method of
allocation that does not take into account the equitable considerations referred to in the
immediately preceding paragraph. Notwithstanding the provisions of this Section 6.4(d), no
Investor shall be required to contribute, in the aggregate, any amount in excess of the amount by
which the proceeds actually received by such Investor from the sale of the Registrable Securities
subject to the Proceeding exceeds the amount of any damages that such Investor has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.

The indemnity and contribution agreements contained in this Section are in addition to any
liability that the Indemnifying Parties may have to the Indemnified Parties.

6.5 Dispositions. Each Investor agrees that it will comply with the prospectus
delivery requirements of the Securities Act as applicable to it in connection with sales of
Registrable Securities pursuant to the Registration Statement and shall sell its Registrable
Securities in accordance with the Plan of Distribution set forth in the Prospectus. Each Investor
further agrees that, upon receipt of a notice from the Company of the occurrence of any event of
the kind described in Sections 6.2(c)(v), (vi) or (vii), such Investor
will discontinue disposition of such Registrable Securities under the Registration Statement until
such Investor is advised in writing by the Company that the use of the Prospectus, or amended
Prospectus, as applicable, may be used. The Company may provide appropriate stop orders to enforce
the provisions of this paragraph.

 

29

 

6.6 No Piggyback on Registrations. Except for up to 300,000 shares held by William
Blair & Company, L.L.C. or its affiliates, neither the Company nor any of its security holders
(other than the Investors in such capacity pursuant hereto may include securities of the Company in
the Registration Statement other than the Registrable Securities.

6.7 Piggy-Back Registrations. If at any time during the Effectiveness Period there is
not an effective Registration Statement covering all of the Registrable Securities and the Company
shall determine to prepare and file with the SEC a registration statement relating to an offering
for its own account or the account of others under the Securities Act of any of its equity
securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or
their then equivalents relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in connection with stock option
or other employee benefit plans, then the Company shall send to each Investor not then eligible to
sell all of their Registrable Securities under Rule 144 in a three-month period, written notice of
such determination and if, within ten days after receipt of such notice, any such Investor shall so
request in writing, the Company shall include in such registration statement all or any part of
such Registrable Securities such Investor requests to be registered. Notwithstanding the
foregoing, in the event that, in connection with any underwritten public offering, the managing
underwriter(s) thereof shall impose a limitation on the number of shares of Common Stock which may
be included in the Registration Statement because, in such underwriter(s)’ judgment, marketing or
other factors dictate such limitation is necessary to facilitate public distribution, then the
Company shall be obligated to include in such Registration Statement only such limited portion of
the Registrable Securities with respect to which such Investor has requested inclusion hereunder as
the underwriter shall permit; provided, however, that (i) the Company shall not exclude any
Registrable Securities unless the Company has first excluded all outstanding securities, the
holders of which are not contractually entitled to inclusion of such securities in such
Registration Statement or are not contractually entitled to pro rata inclusion with the Registrable
Securities and (ii) after giving effect to the immediately preceding proviso, any such exclusion of
Registrable Securities shall be made pro rata among the Investors seeking to include Registrable
Securities and the holders of other securities having the contractual right to inclusion of their
securities in such Registration Statement by reason of demand registration rights, in proportion to
the number of Registrable Securities or other securities, as applicable, sought to be included by
each such Investor or other holder. If an offering in connection with which an Investor is
entitled to registration under this Section 6.7 is an underwritten offering, then each
Investor whose Registrable Securities are included in such Registration Statement shall, unless
otherwise agreed by the Company, offer and sell such Registrable Securities in an underwritten
offering using the same underwriter or underwriters and, subject to the provisions of this
Agreement, on the same terms and conditions as other shares of Common Stock included in such
underwritten offering and shall enter into an underwriting agreement in a form and substance
reasonably satisfactory to the Company and the underwriter or underwriters. Upon the effectiveness
the registration statement for which piggy-back registration has been provided in
this Section 6.7, any Event Payments payable to an Investor whose Securities are
included in such registration statement shall terminate.

 

30

 

6.8 Regarding Rule 415. Notwithstanding anything to the contrary contained in this
Agreement, in the event the SEC seeks to characterize any offering pursuant to a Registration
Statement filed pursuant to this Agreement as constituting an offering of securities by or on
behalf of the Company, or in any other manner, such that the SEC does not permit such Registration
Statement to become effective and used for resales in a manner that does not constitute such an
offering and that permits the continuous resale at the market by the Investors participating
therein (or as otherwise may be acceptable to each Investor) without being named therein as an
“underwriter,” then the Company shall reduce the number of shares to be included in such
Registration Statement by all Investors (subject to the priorities set forth in the remainder of
this paragraph) until such time as the SEC shall so permit such Registration Statement to become
effective as aforesaid. In making such reduction, the Company shall first reduce or eliminate the
shares to be included by persons, if any, other than the Investors under the Purchase Agreement.
If, following such reduction, such characterization still exists, the Company shall then reduce the
number of shares to be included by all other Investors on a pro rata basis (based upon the number
of Registrable Securities otherwise required to be included for each such Investor) unless the
inclusion of shares by a particular Investor or a particular set of Investors are resulting in the
SEC’s “by or on behalf of the Company” offering position, in which event the shares held by such
Investor or set of Investors shall be the only shares subject to reduction (and if by a set of
Investors on a pro rata basis by such Investors or on such other basis as would result in the
exclusion of the least number of shares by all such Investors). In addition, in the event that the
SEC requires any Investor seeking to sell securities under a Registration Statement filed pursuant
to this Agreement to be specifically identified as an “underwriter” in order to permit such
Registration Statement to become effective, and such Investor does not consent to being so named as
an underwriter in such Registration Statement, then, in each such case, the Company shall reduce
the total number of Registrable Securities to be registered on behalf of such Investor, until such
time as the SEC does not require such identification or until such Investor accepts such
identification and the manner thereof. In the event of any reduction in Registrable Securities
pursuant to this paragraph, an affected Investor shall have the right to require, upon delivery of
a written request to the Company signed by such Investor, the Company to file a registration
statement within 30 days of such request (subject to any restrictions imposed by Rule 415 or
required by the SEC) for resale by such Investor in a manner acceptable to such Investor, and the
Company shall following such request cause to be and keep effective such registration statement in
the same manner as otherwise contemplated in this Agreement for a Registration Statement hereunder,
in each case until such time as: (i) all Registrable Securities held by such Investor have been
registered pursuant to an effective Registration Statement in a manner acceptable to such Investor
and disposed of thereunder or (ii) the Registrable Securities may be resold by such Investor
without restriction (including volume limitations) pursuant to Rule 144(k) of the Securities Act
(taking account of any SEC position with respect to “affiliate” status) or (iii) such Investor
agrees to be named as an underwriter in any such Registration Statement in a manner acceptable to
such Investor as to all Registrable Securities held by such Investor and that have not theretofore
been included in a Registration Statement under this Agreement and have been disposed of thereunder
(it being understood that the special demand right under this sentence may be exercised by a
Investor multiple times and with respect to limited amounts of Registrable Securities in order to permit the resale thereof by such
Investor as contemplated above).

 

31

 

ARTICLE VII

MISCELLANEOUS

7.1 Termination. This Agreement may be terminated by the Company or any Investor, by
written notice to the other parties, if the Closing has not been consummated by the third Business
Day following the date of this Agreement; provided that no such termination will affect the right
of any party to sue for any breach by the other party (or parties).

7.2 Fees and Expenses. Except as expressly set forth in the Transaction Documents to
the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and
other experts, if any, and all other expenses incurred by such party incident to the negotiation,
preparation, execution, delivery and performance of this Agreement. The Company shall pay all
Transfer Agent fees, stamp taxes and other taxes and duties levied in connection with the sale and
issuance of their applicable Securities.

7.3 Entire Agreement. The Transaction Documents, together with the Exhibits and
Schedules thereto, contain the entire understanding of the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, oral or written, with respect
to such matters, which the parties acknowledge have been merged into such documents, exhibits and
schedules. At or after the Closing, and without further consideration, the Company will execute
and deliver to the Investors such further documents as may be reasonably requested in order to give
practical effect to the intention of the parties under the Transaction Documents.

7.4 Notices. Any and all notices or other communications or deliveries required or
permitted to be provided hereunder shall be in writing and shall be deemed given and effective on
the earliest of (a) the date of transmission, if such notice or communication is delivered via
facsimile or email at the facsimile number or email address specified in this Section prior to
6:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of
transmission, if such notice or communication is delivered via facsimile or email at the facsimile
number or email address specified in this Section on a day that is not a Trading Day or later than
6:30 p.m. (New York City time) on any Trading Day, (c) the Trading Day following the date of
deposit with a nationally recognized overnight courier service, or (d) upon actual receipt by the
party to whom such notice is required to be given. The addresses, facsimile numbers and email
addresses for such notices and communications are those set forth on the signature pages hereof, or
such other address or facsimile number as may be designated in writing hereafter, in the same
manner, by any such Person.

7.5 Amendments; Waivers. No provision of this Agreement may be waived or amended
except in a written instrument signed, in the case of an amendment, by the Company and each of the
Investors or, in the case of a waiver, by the party against whom enforcement of any such waiver is
sought. No waiver of any default with respect to any provision, condition or requirement of this
Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent
default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any
manner impair the exercise of any such right. Notwithstanding the foregoing, a waiver or
consent to depart from the provisions hereof with respect to a matter that relates exclusively to
the rights of Investors under Article VI may be given by Investors holding at least a
majority of the Registrable Securities to which such waiver or consent relates.

 

32

 

7.6 Construction. The headings herein are for convenience only, do not constitute a
part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.
The language used in this Agreement will be deemed to be the language chosen by the parties to
express their mutual intent, and no rules of strict construction will be applied against any party.

7.7 Successors and Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties and their successors and permitted assigns. The Company may not assign this
Agreement or any rights or obligations hereunder without the prior written consent of the
Investors. Any Investor may assign its rights under this Agreement to any Person to whom such
Investor assigns or transfers any Securities, provided (i) such transferor agrees in writing with
the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the
Company after such assignment, (ii) the Company is furnished with written notice of (x) the name
and address of such transferee or assignee and (y) the Registrable Securities with respect to which
such registration rights are being transferred or assigned, (iii) following such transfer or
assignment, the further disposition of such securities by the transferee or assignee is restricted
under the Securities Act and applicable state securities laws, (iv) such transferee agrees in
writing to be bound, with respect to the transferred Securities, by the provisions hereof that
apply to the “Investors” and (v) such transfer shall have been made in accordance with the
applicable requirements of this Agreement and with all laws applicable thereto.

7.8 Persons Entitled to Benefit of Agreement. This Agreement shall inure to the
benefit of and be binding upon the Company and each Investor and their respective successors and
permitted assigns. Nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any person, other than those persons mentioned in the preceding sentence or
otherwise explicitly mentioned in this Agreement, any legal or equitable right, remedy or claim
under or in respect of this Agreement, or any provisions herein contained, this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and exclusive benefit
of such persons and for the benefit of no other person; except that each Indemnified Party is an
intended third party beneficiary of Section 6.4 and (in each case) may enforce the provisions of
such Sections directly against the parties with obligations thereunder.

7.9 Governing Law; Venue; Waiver of Jury Trial. THE CORPORATE LAWS OF THE STATE OF
DELAWARE SHALL GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS
STOCKHOLDERS. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION
OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK. THE COMPANY AND INVESTORS HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF
THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE
ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY OR ANY INVESTOR HEREUNDER, IN CONNECTION
HEREWITH OR WITH ANY TRANSACTION CONTEMPLATED HEREBY
OR DISCUSSED HEREIN (INCLUDING WITH RESPECT TO THE ENFORCEMENT OF ANY OF THE TRANSACTION
DOCUMENTS), AND HEREBY IRREVOCABLY WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING
BROUGHT BY THE COMPANY OR ANY INVESTOR, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE
JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. EACH PARTY
HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO PROCESS BEING SERVED IN ANY
SUCH SUIT, ACTION OR PROCEEDING BY MAILING A COPY THEREOF VIA REGISTERED OR CERTIFIED MAIL OR
OVERNIGHT DELIVERY (WITH EVIDENCE OF DELIVERY) TO SUCH PARTY AT THE ADDRESS IN EFFECT FOR NOTICES
TO IT UNDER THIS AGREEMENT AND AGREES THAT SUCH SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT
SERVICE OF PROCESS AND NOTICE THEREOF. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY
WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW. THE COMPANY AND INVESTORS HEREBY
WAIVE ALL RIGHTS TO A TRIAL BY JURY.

 

33

 

7.10 Survival. The representations and warranties, agreements and covenants contained
herein shall survive the Closing.

7.11 Execution. This Agreement may be executed in two or more counterparts, all of
which when taken together shall be considered one and the same agreement and shall become effective
when counterparts have been signed by each party and delivered to the other party, it being
understood that both parties need not sign the same counterpart. In the event that any signature
is delivered by facsimile transmission or email attachment, such signature shall create a valid and
binding obligation of the party executing (or on whose behalf such signature is executed) with the
same force and effect as if such facsimile or email-attached signature page were an original
thereof.

7.12 Severability. If any provision of this Agreement is held to be invalid or
unenforceable in any respect, the validity and enforceability of the remaining terms and provisions
of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt
to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon
so agreeing, shall incorporate such substitute provision in this Agreement.

7.13 Rescission and Withdrawal Right. Notwithstanding anything to the contrary
contained in (and without limiting any similar provisions of) the Transaction Documents, whenever
any Investor exercises a right, election, demand or option owed to such Investor by the Company
under a Transaction Document and the Company does not timely perform its related obligations within
the periods therein provided, then, prior to the performance by the Company of the Company’s
related obligation, such Investor may rescind or withdraw, in its sole discretion from time to time
upon written notice to the Company, any relevant notice, demand or election in whole or in part
without prejudice to its future actions and rights.

7.14 Replacement of Securities. If any certificate or instrument evidencing any
Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued
in exchange and substitution for and upon cancellation thereof, or in lieu of and substitution
therefor, a new certificate or instrument, but only upon receipt of evidence reasonably
satisfactory to the Company of such loss, theft or destruction and the execution by the holder
thereof of a customary lost certificate affidavit of that fact and an agreement to indemnify and
hold harmless the Company for any losses in connection therewith. The applicants for a new
certificate or instrument under such circumstances shall also pay any reasonable third-party costs
associated with the issuance of such replacement Securities.

 

34

 

7.15 Remedies. In addition to being entitled to exercise all rights provided herein
or granted by law, including recovery of damages, each of the Investors and the Company will be
entitled to seek specific performance under the Transaction Documents. The parties agree that
monetary damages may not be adequate compensation for any loss incurred by reason of any breach of
obligations described in the foregoing sentence and hereby agrees to waive in any action for
specific performance of any such obligation (other than in connection with any action for temporary
restraining order) the defense that a remedy at law would be adequate.

7.16 Payment Set Aside. To the extent that the Company makes a payment or payments to
any Investor hereunder or any Investor enforces or exercises its rights hereunder or thereunder,
and such payment or payments or the proceeds of such enforcement or exercise or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set aside, recovered from,
disgorged by or are required to be refunded, repaid or otherwise restored to the Company by a
trustee, receiver or any other person under any law (including, without limitation, any bankruptcy
law, state or federal law, common law or equitable cause of action), then to the extent of any such
restoration the obligation or part thereof originally intended to be satisfied shall be revived and
continued in full force and effect as if such payment had not been made or such enforcement or
setoff had not occurred.

7.17 Adjustments in Share Numbers and Prices. In the event of any stock split,
subdivision, dividend or distribution payable in shares of Common Stock (or other securities or
rights convertible into, or entitling the holder thereof to receive directly or indirectly shares
of Common Stock), combination or other similar recapitalization or event occurring after the date
hereof and prior to the Closing, each reference in any Transaction Document to a number of shares
or a price per share shall be amended to appropriately account for such event.

7.18 Independent Nature of Investors’ Obligations and Rights. The obligations of each
Investor under any Transaction Document are several and not joint with the obligations of any other
Investor, and no Investor shall be responsible in any way for the performance of the obligations of
any other Investor under any Transaction Document. The decision of each Investor to purchase
Securities pursuant to this Agreement has been made by such Investor independently of any other
Investor and independently of any information, materials, statements or opinions as to the
business, affairs, operations, assets, properties, liabilities, results of operations, condition
(financial or otherwise) or prospects of the Company which may have been made or given by any other
Investor or by any agent or employee of any other Investor, and no Investor or any of its agents or
employees shall have any liability to any other Investor (or any other person) relating to or
arising from any such information, materials, statements or opinions. Nothing contained herein or
in any Transaction Document, and no action taken by any Investor pursuant thereto, shall be deemed
to constitute the Investors as a partnership, an association, a joint venture or any other kind of
entity, or create a presumption that the Investors are in any way acting in concert or as a group
with respect to such obligations or the transactions contemplated
by the Transaction Document. Each Investor acknowledges that no other Investor has acted as
agent for such Investor in connection with making its investment hereunder and that no other
Investor will be acting as agent of such Investor in connection with monitoring its investment
hereunder. Each Investor shall be entitled to independently protect and enforce its rights,
including without limitation the rights arising out of this Agreement or out of the other
Transaction Documents, and it shall not be necessary for any other Investor to be joined as an
additional party in any proceeding for such purpose.

[SIGNATURE PAGES TO FOLLOW]

 

35

 

IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be
duly executed by their respective authorized signatories as of the date first indicated above.

	 	 	 	 	 
	 	KONA GRILL, INC.

 	 
	 	By:  	 	 
	 	 	Mark S. Robinow, Chief Financial Officer 	 
	 	 	 	 
	 

Address for Notice:

7150 E. Camelback Road, Suite 220

Scottsdale, AZ 85251

Facsimile No.: (480) 991-6811

Telephone No.: (952) 646-2245

Attn: Mark S. Robinow

With a copy to:

Greenberg Traurig, LLP

2375 E. Camelback Road, Suite 700

Phoenix, AZ 85016

Facsimile No.: (602) 445-8632

Telephone No.: (602) 445-8318

Attn: Scott K. Weiss

COMPANY SIGNATURE PAGE

 

 

 

Investor Signature Page

By its execution and delivery of this signature page, the undersigned Investor hereby joins in
and agrees to be bound by the terms and conditions of the Securities Purchase Agreement dated as of
                    , 2007 (the “Purchase Agreement”) by and among Kona Grill, Inc. and the Investors (as
defined therein), as to the number of shares of Common Stock set forth below, and authorizes this
signature page to be attached to the Purchase Agreement or counterparts thereof.

	 	 	 	 	 
	 	 	Name of Investor:
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	 
	 	 	 	 	 
	 

	 	Name:
	 	 
	 	 	 	 	 
	 

	 	Title:
	 	 
	 	 	 	 	 

	 	 	 	 	 
	 

	 	Address:
	 	 
	 	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 
	 
	 	 	 	 
	 	 	 	 	 

	 	 	 	 	 
	 

	 	Telephone No.:
	 	 
	 

	 	 	 	 
	 

	 	Facsimile No.:
	 	 
	 

	 	 	 	 
	 

	 	Email Address:
	 	 
	 

	 	 	 	 
	 

	 	Number of Shares:
	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 	 	Aggregate Purchase Price: $

 

 

 

Exhibits:

	 	 	 
	A

	 	Schedule of Investors
	B

	 	Instruction Sheet for Investors
	C

	 	Opinion of Company Corporate Counsel
	D

	 	Plan of Distribution
	E

	 	Company Transfer Agent Instructions

 

 

 

Exhibit A

Schedule of Investors

	 	 	 	 	 	 	 	 	 
	Investor	 	Common Shares	 	 	Purchase Price	 
	 
	 	 	 	 	 	 	 	 
	Capital Ventures International

101 California Street

Suite 3250

San Francisco, CA 94111
	 	 	200,000	 	 	$	3,250,000.00	 
	 
	 	 	 	 	 	 	 	 
	Wellington Trust Company, National

Association Multiple Common Trust Funds

Trust, Micro Cap Equity Portfolio

75 State Street

Boston, MA 02109
	 	 	97,000	 	 	 	1,576,250.00	 
	 
	 	 	 	 	 	 	 	 
	Blackwell Partners, LLC 

324 Blackwell Street, Suite 520

Durham, North Carolina 27701
	 	 	77,000	 	 	 	1,251,250.00	 
	 
	 	 	 	 	 	 	 	 
	Outpoint Offshore Fund, Ltd.

237 Park Avenue

Suite 900

New York, NY 10017
	 	 	60,000	 	 	 	975,000.00	 
	 
	 	 	 	 	 	 	 	 
	DCM1-Allocation Account

4350 Von Karman Ave.

4th Floor

Newport Beach, CA 92660
	 	 	50,000	 	 	 	812,500.00	 
	 
	 	 	 	 	 	 	 	 
	Eagle Select Fund Limited

c/o Natixis Bleichroeder Inc.

1345 Avenue of the Americas

New York, NY 10105
	 	 	40,498	 	 	 	658,092.50	 
	 
	 	 	 	 	 	 	 	 
	Hudson Bay Overseas Fund Ltd.

120 Broadway, 40th Floor

New York, NY 10271
	 	 	28,500	 	 	 	463,125.00	 
	 
	 	 	 	 	 	 	 	 
	Brightleaf Partners L.P.

324 Blackwell St., Suite 520

Durham, NC 27701
	 	 	23,000	 	 	 	373,750.00	 
	 
	 	 	 	 	 	 	 	 
	Global Growth Partners LP

c/o Natixis Bleichroeder Inc.

1345 Avenue of the Americas

New York, NY 10105
	 	 	22,227	 	 	 	361,188.75	 
	 
	 	 	 	 	 	 	 	 
	Hudson Bay Fund LP

120 Broadway, 40th Floor

New York, NY 10271
	 	 	21,500	 	 	 	349,375.00	 
	 
	 	 	 	 	 	 	 	 
	Wellington Trust Company, National

Association Multiple Collective Investment

Funds Trust, Micro Cap Equity Portfolio

75 State Street

Boston, MA 02109
	 	 	13,000	 	 	 	211,250.00	 
	 
	 	 	 	 	 	 	 	 
	Robert Birch

c/o Natixis Bleichroeder Inc.

1345 Avenue of the Americas

New York, NY 10105
	 	 	9,038	 	 	 	146,867.50	 
	 
	 	 	 	 	 	 	 	 
	Alternative Investment Management

c/o Natixis Bleichroeder Inc.

1345 Avenue of the Americas

New York, NY 10105
	 	 	6,289	 	 	 	102,196.25	 
	 
	 	 	 	 	 	 	 	 
	Glen Tomlinson

c/o Natixis Bleichroeder Inc.

1345 Avenue of the Americas

New York, NY 10105
	 	 	1,948	 	 	 	31,655.00	 
	 
	 	 	 	 	 	 	 	 
	TOTAL
	 	 	650,000	 	 	$	10,562,500Filed by Bowne Pure Compliance

 

EXHIBIT 10.58

[ * ] DENOTES EXPURGATED INFORMATION

CONTRACT OF SALE

Between

DIAGEO NORTH AMERICA, INC.,

as Seller

and

BOSTON BEER CORPORATION,

as Buyer

Dated: August 1, 2007

Premises:

7880 Penn Drive

Breinigsville, PA

 

 

 

	 	 	 	 	 
	ARTICLE 1 Description of Premises
	 	 	5	 
	Section 1.1 Description of Premises
	 	 	5	 
	ARTICLE 2 Purchase Price, Acceptable Funds and Escrow of Deposit
	 	 	7	 
	Section 2.1 Purchase Price
	 	 	7	 
	Section 2.2 Adjustment of Cash
	 	 	7	 
	Section 2.3 Acceptable Funds
	 	 	7	 
	Section 2.4 Escrow of Deposit
	 	 	8	 
	Section 2.5 Interest on the Deposit
	 	 	9	 
	Section 2.6 Allocation
	 	 	9	 
	ARTICLE 3 Due Diligence; the Closing
	 	 	11	 
	Section 3.1 Due Diligence Period
	 	 	11	 
	Section 3.2 Date, Place and Time of Closing
	 	 	18	 
	Section 3.3 Seller’s Obligations Prior to Closing
	 	 	18	 
	ARTICLE 4 Acceptable Title and Clearing Title
	 	 	20	 
	Section 4.1 Acceptable Title
	 	 	20	 
	Section 4.2 Clearing Title
	 	 	21	 
	ARTICLE 5 Representations, Warranties, Covenants, and Operation of Premises
	 	 	23	 
	Section 5.1 Power, Authority, Execution and Delivery
	 	 	23	 
	Section 5.2 Leases and Agreements
	 	 	25	 
	Section 5.3 Inspection
	 	 	26	 
	Section 5.4 Operation of Premises
	 	 	26	 
	Section 5.5 Wastewater Cooperation
	 	 	27	 
	ARTICLE 6 Condemnation and Damage by Fire or Other Hazard
	 	 	28	 
	Section 6.1 Immaterial Damage or Taking
	 	 	28	 
	Section 6.2 Material Damage or Taking
	 	 	28	 
	Section 6.3 Definitions of Material and Immaterial
	 	 	29	 
	ARTICLE 7 Closing Obligations
	 	 	29	 
	Section 7.1 Seller’s Deliveries
	 	 	29	 
	Section 7.2 Buyer’s Deliveries
	 	 	31	 
	ARTICLE 8 Apportionments at Closing
	 	 	32	 
	Section 8.1 Items of Apportionment
	 	 	32	 
	Section 8.2 Mistakes in Apportionments
	 	 	32	 
	Section 8.3 Other Fees
	 	 	32	 

 

1

 

	 	 	 	 	 
	ARTICLE 9 Broker
	 	 	33	 
	Section 9.1 Indemnity
	 	 	33	 
	ARTICLE 10 Repairs; Equipment Replacement, Spare Parts and Supplies
	 	 	33	 
	Section 10.1 Repairs
	 	 	33	 
	Section 10.2 Equipment Replacement
	 	 	34	 
	Section 10.3 Spare Parts and Supplies
	 	 	34	 
	ARTICLE 11 Defaults
	 	 	34	 
	Section 11.1 Liquidated Damages
	 	 	34	 
	Section 11.2 Specific Performance
	 	 	35	 
	Section 11.3 Right to Reject Packaging Services Agreement
	 	 	36	 
	ARTICLE 12 Notices; Assignment; Access
	 	 	36	 
	Section 12.1 Methods and Delivery
	 	 	36	 
	Section 12.2 Assignment
	 	 	37	 
	Section 12.3 Designation
	 	 	38	 
	ARTICLE 13 Survival and Delivery of Deed
	 	 	38	 
	Section 13.1 Survival
	 	 	38	 
	Section 13.2 Delivery of Deed
	 	 	38	 
	ARTICLE 14 Miscellaneous Provisions
	 	 	38	 
	Section 14.1 Packaging Services Agreement; Entire Understanding
	 	 	38	 
	Section 14.2 Tax Cooperation
	 	 	39	 
	Section 14.3 Certain Employee Matters
	 	 	39	 
	Section 14.4 Governing Law
	 	 	39	 
	Section 14.5 Captions
	 	 	39	 
	Section 14.6 Successors and Assigns
	 	 	39	 
	Section 14.7 Liability
	 	 	40	 
	Section 14.8 Construction
	 	 	40	 
	Section 14.9 Execution and Delivery
	 	 	40	 
	Section 14.10 Exhibits
	 	 	40	 
	Section 14.11 Litigation Expenses
	 	 	41	 
	Section 14.12 Confidentiality.
	 	 	41	 
	Section 14.13 Announcement; Memorandum of Agreement
	 	 	41	 
	Section 14.14 No Partnership
	 	 	41	 
	Section 14.15 Seller’s and Buyer’s Liability under this Agreement
	 	 	41	 

 

2

 

	 	 	 	 	 
	Section 14.16 General Release
	 	 	42	 
	Section 14.17 No Third-Party Beneficiaries
	 	 	43	 
	Section 14.18 Forwarding of Materials
	 	 	43	 
	Section 14.19 Assumed Contracts
	 	 	43	 
	Section 14.20 Pennsylvania Bulk Clearance
	 	 	43	 
	Section 14.21 Counterparts
	 	 	44	 
	ARTICLE 15 Employee Matters
	 	 	45	 
	Section 15.1 Offers of Employment
	 	 	45	 
	Section 15.2 Benefit Plans
	 	 	45	 
	Section 15.3 Allocation of Employment-Related Liability
	 	 	45	 

 

3

 

EXHIBITS

A – Description of the Land and Exceptions to Title

B – Survey

C – Excluded Equipment and Property

D – Operating Agreements

E – Transition Plan

F – [Intentionally Omitted]

G – Form of Bill of Sale

H – Packaging Services Agreement

I – Confidentiality Agreement

J – Solicitation of Key Employees

K – Asset Listing

L – Form of Deed

M – Form of Assignment and Assumption of Contracts

 

4

 

THIS AGREEMENT (the “Agreement”) dated August 1, 2007 (the “Effective Date”),
between DIAGEO NORTH AMERICA, INC., f/k/a Guinness UDV North America, Inc. (“Seller”), a
Connecticut corporation having an office at 801 Main Avenue, Norwalk, CT 06851, and BOSTON BEER
CORPORATION (“Buyer”), a Massachusetts corporation having an office at One Design Center
Place, Suite 850, Boston, MA 02210.

WITNESSETH:

Seller and Buyer, in consideration of the mutual covenants herein contained, intending to be
legally bound, hereby covenant and agree as follows:

ARTICLE 1

Description of Premises.

Section 1.1 Description of Premises Seller shall sell to Buyer, and Buyer shall
purchase from Seller, at the price and upon the terms and conditions set forth in this Agreement:

(a) the
parcel of land (herein called the “Land”) located at 7880 Penn Drive in the
Town of Breinigsville, County of Lehigh and Commonwealth of Pennsylvania, described on Exhibit
A hereto. The Land is more particularly shown on a survey entitled “BOUNDARY SURVEY PLAN
SHOWING LANDS OF PABST BREWING COMPANY, A DELAWARE CORPORATION LOCATED IN UPPER MACUNGIE TOWNSHIP,
LEHIGH COUNTY, PA PREPARED FOR GUINNESS UDV NORTH AMERICA, INC.,” dated December 4, 2001 and
prepared by The Pidcock Company, Allentown, PA. A copy of said survey is attached hereto as
Exhibit B, and same shall be herein called the “2001 Survey”;  

(b) all buildings and improvements situated on the Land (collectively, the
“Building”);

(c) the
freestanding monument sign (the “Sign”) located on a parcel of land adjacent
to the Land;

(d) all fixtures, furniture, machinery, equipment and personal property, including spare
parts and supplies, located in the Building or on the Land as are, or at Closing will be, owned by
Seller, including all assets listed on the Asset Listing (attached hereto as
Exhibit K) as
of the Effective Date and any assets purchased prior to Closing (collectively, the
“Equipment”), except as specified on the list of Excluded Equipment and Property attached
hereto as Exhibit C (collectively, the “Excluded Equipment”);

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

5

 

(e) all right, title and interest of Seller, if any, in and to any easements or rights of way
appurtenant to the Land and the land lying in the bed of any railway, street, or highway in front
of or adjoining the Land and all other appurtenances to the Land and Building (collectively, the
“Appurtenances”);

(f) all right, title and interest of Seller in and to the Operating Agreements (as
hereinafter defined), to the extent assignable;

(g) all right, title and interest of Seller in and to all warranties, guaranties, permits and
licenses relating to the Appurtenances and Equipment, to the extent assignable; and

(h) all assets from any Seller Employee Benefit Plan attributable to Transferred Employees
(as hereinafter defined) that is a flexible spending plan governed by section 125 of the Code.

The Land, the Building, the Equipment, the Appurtenances, the Operating Agreements, and the other
items described in Section 1.1 are hereinafter collectively referred to as the
“Premises”. For the avoidance of doubt, the Premises do not include any intellectual
property owned by the Seller or any of its affiliates, and except as expressly provided in
Section 9.1 of the Packaging Services Agreement (as hereinafter defined), nothing in this
Agreement shall transfer any right, title or interest in or to any intellectual property owned by
the Seller or any of its affiliates to the Buyer, but shall specifically include the right to use
and to operate the Premises as configured and delivered to Buyer on the Closing Date.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

6

 

ARTICLE 2

Purchase Price, Acceptable Funds and Escrow of Deposit.

Section 2.1 Purchase Price. The purchase price (the “Purchase Price”) to be
paid by Buyer to Seller for the Premises is Fifty-Five Million Dollars ($55,000,000), payable in
accordance with the provisions herein as follows:

(a) One Million Dollars ($1,000,000) (the “Initial Deposit”) by wire transfer or by
check, subject to collection, to be held in an interest-bearing account (the “Escrow
Account”) by First American Title Insurance Company (the “Escrow Agent”) pursuant to
the provisions of Section 2.4 herein, delivered simultaneously with the execution of this
Agreement;

(b) Nine Million Dollars ($9,000,000) (the “Additional Deposit”) shall be paid to
the Escrow Agent not later than 5:00 p.m. local time at the Premises on the last day of the Due
Diligence Period (as hereinafter defined) to be held in the Escrow Account pursuant to the
provisions of Section 2.4 herein, unless Buyer has previously terminated this Agreement
pursuant to and in accordance with the provisions below; and

(c) The balance of the Purchase Price shall be paid at the Closing (as hereinafter defined),
which shall not take into account any Accrued Interest paid to Seller at the Closing pursuant to
Section 2.5.

Section 2.2 Adjustment of Cash. The cash payment required at the Closing pursuant to
Section 2.1(c) will be increased or decreased, as the case may be, to account for all items
to be apportioned.

Section 2.3 Acceptable Funds. All monies payable under this Agreement, unless
otherwise specified herein, shall be paid by immediately available funds, either wired to an
account designated by Seller or as otherwise
specified by Seller, in either case not less than three (3) business days prior to the date of
payment.

			
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Section 2.4 Escrow of Deposit. The Initial Deposit and the Additional Deposit
(collectively, the “Deposit”) shall be delivered to the Escrow Agent and, if paid by check
or checks, shall be subject to collection. The Escrow Agent shall hold the proceeds thereof in
escrow until the Closing or earlier termination of this Agreement and shall pay over or apply the
Deposit in accordance with the terms of this Agreement.

(a) Except as otherwise provided herein, if for any reason the Closing does not occur and
either party makes a written demand upon the Escrow Agent for payment of such amounts, the Escrow
Agent shall give written notice to the other party of such demand. If the Escrow Agent does not
receive a written objection from the other party to the proposed payment within five (5) business
days after the receipt of such notice by the other party, the Escrow Agent is hereby authorized to
make such payment. If the Escrow Agent does receive such written objection within such five (5)
business day period, the Escrow Agent shall continue to hold the Deposit and the Accrued Interest
(as hereinafter defined) until otherwise directed by joint written instructions from Seller and
Buyer or a final judgment of a court of competent jurisdiction.

(b) The parties acknowledge that the Escrow Agent is acting solely as a stakeholder at their
request and for their convenience, and that the Escrow Agent shall not be liable to either of the
parties for any act or omission on its part unless taken or suffered in bad faith, in willful
disregard of this Agreement or involving negligence. Seller and Buyer shall jointly and severally
indemnify, defend and hold the Escrow Agent harmless from and against all costs, claims and
expenses, including reasonable counsel fees, incurred in connection with performance of the Escrow
Agent’s duties hereunder, except with respect to actions or omissions taken or suffered by the
Escrow Agent in bad faith or negligently, in willful disregard of this Agreement or involving
gross negligence on its part.

(c) The Escrow Agent has acknowledged acceptance of these provisions by signing in the place
indicated on the signature page of this Agreement.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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Section 2.5 Interest on the Deposit. Except as otherwise expressly provided herein,
the interest earned on the Deposit (the “Accrued Interest”) shall be divided evenly between
the Buyer and Seller at the Closing, or at such other time that the Deposit is paid pursuant to
this Agreement, to the party receiving the Deposit. For all tax purposes, the Deposit shall be
treated as equally owned by the Buyer and Seller (and their successors), so that all interest or
other income earned from the investment of the Deposit before release to the party receiving the
Deposit shall be considered for tax purposes to be income in equal parts of the Buyer and Seller
(or their successors) and the Escrow Agent shall report such interest or other income consistently
therewith.

Section 2.6 Allocation.

(a) Buyer shall have an appraisal of the Land and the Building prepared by an independent
appraiser of its choice (at Buyer’s sole cost and expense) and shall deliver such appraisal to
Seller within sixty (60) days after the Effective Date. Seller shall have thirty (30) days after
receipt thereof to review and deliver comments to Buyer regarding such proposed appraisal. If
Seller objects in writing to the proposed appraisal prior to the end of such 30-day period, then
Buyer and Seller shall negotiate in good faith to resolve such differences. In the event
agreement cannot be reached within thirty (30) days after the date on which Seller objects in
writing to Buyer’s proposed appraisal, then the amount of the Purchase Price to be allocated to
the Land and the Building shall be determined by an independent appraiser mutually acceptable to
both Buyer and Seller, the fees and expenses of which shall be shared equally by Buyer and Seller,
and such determination shall be final and binding on both Buyer and Seller. The amount of the
Purchase Price to be allocated to the Land and the Building as finally determined pursuant to this
Section 2.6(a) shall be referred to herein as the “Final Fixture Allocation” and the date
on which such amount is finalized is referred to as the “Final Fixture Allocation Date.”

			
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(b) The Parties agree to determine in good faith whether an allocation of the Purchase Price
is necessary for tax or other purposes in good faith. If it is determined that such allocation is
necessary, then Seller shall prepare and deliver to Buyer a proposed allocation of the Purchase
Price (and all other capitalized costs) among the acquired assets in accordance with Section 1060
of the Internal Revenue Code of 1986, as amended, and the Treasury regulations thereunder (and any
similar provision of state, local or foreign law, as appropriate), within twenty (20) days after
the Final Fixture Allocation Date, which allocation shall reflect the Final Fixture Allocation.
Buyer shall have forty-five (45) days after receipt to review and comment upon the allocation.
If Buyer objects in writing to Seller’s proposed allocation prior to the end of such 45-day period
(which objection may not be to the Final Fixture Allocation), then Buyer and Seller shall
negotiate in good faith to resolve such differences. If Buyer does not object to Seller’s
proposed allocation or, following any objection by Buyer, Buyer and Seller are able to agree on an
allocation, then Seller and Buyer and their respective affiliates shall report, act, and file tax
returns (including, but not limited to Internal Revenue Service Form 8594) in all respects and for
all purposes consistent with such agreed allocation, and in any case Buyer and Seller shall
report, act and file tax returns in all respects and for all purposes consistent with the Final
Fixture Allocation. No more than thirty (30) days prior to the Closing, Buyer shall have the
right to perform a bring-down of the appraisal of the Land and the Building (at Buyer’s sole cost
and expense) to be performed by the independent appraiser that prepared the appraisal that was the
basis for the Final Fixture Allocation. If such bring-down appraisal indicates that the value of
the Land and the Building has changed from the Final Fixture Allocation, then such updated amounts
shall become the Final Fixture Allocation for all purposes hereof. The Seller, in consultation
with Buyer, shall make any necessary revisions to the allocation between the Effective Date and
the Closing Date, including any revisions to the allocation required by a change in the Final
Fixture Allocation as provided above. Neither Seller nor Buyer shall take any tax position
(whether in tax audits or tax returns) that is inconsistent with such allocation unless required
to do so by applicable law; however, in the event that Buyer and Seller are unable to agree on an
allocation of the Purchase Price, then Buyer and Seller can proceed to prepare their own
allocations and this Agreement
will not be construed as requiring Buyer and Seller to use a single agreed allocation except
with respect to the Final Fixture Allocation. This Section 2.6 shall survive the Closing.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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ARTICLE 3

Due Diligence; the Closing.

Section 3.1 Due Diligence Period.

(a) Commencing prior to or promptly after the Effective Date and proceeding diligently
thereafter, Buyer shall complete its due diligence with respect to the Seller’s ownership,
operation, and maintenance of the Premises, including, without limitation, engineering studies,
structural testing and studies, equipment condition evaluations including bacterial testing of
pipes and tanks, evaluation and resolution of any water and wastewater treatment issues, review of
Operating Agreements and permits, and environmental site tests and similar inspections (other than
title examination which shall be governed by Article 4 of this Agreement), which studies,
inspections and tests may include, without limitation, structural testing, environmental, health
and safety compliance assessment, and a Phase I Environmental Site Assessment in accordance with
ASTM Standards E1527-05 (“Phase I”). If Buyer determines in good faith that environmental
sampling or analysis of the Premises, including, without limitation, any sampling or analysis of
soil, groundwater, surface water, emissions or waste streams, indoor or outdoor air or building
materials (“Phase II”), is necessary, Buyer shall provide Seller with a detailed scope of
work for such environmental sampling or analysis. Within five (5) business days of receipt of
such scope of work, Seller shall inform Buyer whether Seller will consent to such sampling or
analysis or any part thereof to occur at the Premises, such consent not to be unreasonably
withheld. If Buyer performs either a Phase I or Phase II, Buyer shall obtain insurance in
accordance with Section 3.1(b). Buyer shall give reasonable prior notice to Seller of any
tests, inspections or other studies that will be done at the Premises in connection with Buyer’s
due diligence and Seller shall have the right to have a representative present during such tests,
inspections or other studies. All
inspection fees, appraisal fees, engineering fees, legal costs, and other expenses of any
kind incurred by Buyer relating to such due diligence will be solely Buyer’s expense. Other than
as stated above, Buyer will not perform inspections, examinations or testing that is destructive
or invasive of the Premises. In conducting any due diligence hereunder, except as may be required
by applicable law, Buyer will treat, and will require any representative of Buyer to

			
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treat, all
information obtained by Buyer or Buyer’s representatives pursuant to the terms of this Agreement
as strictly confidential and will not use such information for any purpose other than the
evaluation of the Premises, except as may be required by law. Although Buyer may search the
applicable public records in connection with the inspections and examinations referred to above,
or in order to ascertain or confirm the quality of title to the Premises, Buyer shall not under
any circumstances cause the Premises to be inspected by any governmental authority prior to
Closing, except as may be required by law. Buyer agrees to indemnify, defend and save and hold
harmless Seller, and Seller’s representatives, contractors, directors, officers, agents and
employees (collectively, the “Seller Indemnitees”) of, from and against any and all
injuries, losses, liens, claims, judgments, liabilities, costs, expenses or damages (including
without limitation reasonable attorneys’ fees and court costs) incurred by, sustained by or
threatened against the Seller Indemnitees, or any one or more of them, which result from or arise
out of any due diligence performed by or at the direction or for the account of Buyer or Buyer’s
representatives, except to the extent of Seller’s negligence or willful misconduct, and except
that this indemnity shall not apply to the cost of remediation or other action to correct any
problem discovered in the course of such diligence, if Buyer elects to terminate this Agreement
pursuant to Section 3.1(c). This indemnity shall survive the Closing or any termination of the
Agreement.

(b) Buyer’s inspections and examinations of the Premises and any entrance onto the Premises
must be coordinated with and reasonably approved by Seller. Buyer shall cause minimum disturbance
to the Premises, shall return the Premises to the same condition that existed prior to such entry
and shall indemnify, defend and save and hold harmless the Seller Indemnitees of, from and against
any and all injuries, losses, liens, claims, judgments, liabilities, costs, expenses or damages
(including without limitation reasonable attorneys’ fees and court costs) incurred by, sustained
by or threatened against the Seller Indemnitees, or any
one or more of them, which result from or arise out of such entry, excepting only damage
resulting from Seller’s negligence or willful misconduct, casualty, and ordinary wear and tear.
Notwithstanding the foregoing, prior to entry upon the Premises, Buyer shall obtain and shall
cause its contractors to obtain (and shall deliver certificates evidencing such insurance to
Seller), public liability and property damage insurance reasonably
satisfactory to Seller insuring
Buyer and Seller against any liability, arising out of any entry or inspections of the Premises
pursuant to the provisions hereof. Buyer shall repair any damage to the Premises caused by Buyer,
its employees, agents and contractors with respect to such inspections and examinations, excepting
only damage resulting from Seller’s negligence or willful misconduct, casualty, and ordinary wear
and tear. The foregoing indemnity shall survive the Closing or any termination of the Agreement.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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(c) If Buyer shall not be satisfied, in its sole and absolute discretion, with the results of
such due diligence or for any other reason or for no reason, then Buyer, in its sole and absolute
discretion, may terminate this Agreement by notice to Seller on or before 5:00 p.m. local time at
the Premises on the ninetieth (90th) day after the Effective Date or on such later date
pursuant to Section 3.1(f) (the “Due Diligence Period”). If Buyer fails to
terminate this Agreement by written notice on or before the expiration of the Due Diligence Period
as may be extended pursuant to Section 3.1(f), then this Agreement shall remain in effect
and the Closing shall occur as provided for in Section 3.2 hereof unless this Agreement is
earlier terminated pursuant to the terms hereof. Notwithstanding the foregoing, the Buyer shall
have the right, at Buyer’s sole cost and expense, to obtain a title bring-down and update the
survey Buyer obtains during the Due Diligence Period for the Premises at any time between sixty
(60) and thirty (30) days prior to the Closing Date in order to determine the existence of any new
title exceptions, excepting those customarily removed by a title company at Closing, those
specified in Section 4.1, or those previously raised, consented to or approved by Buyer,
created from and after the expiration of the Due Diligence Period. In the event that title to the
Premises includes any new title exceptions, excepting those customarily removed by a title company
at Closing, those specified in Section 4.1 or those previously raised, consented to or
approved by Buyer, created from and after the expiration of the Due Diligence Period, Buyer shall
have the option to give Seller written notice of its objections on or prior to thirty (30)
days prior to the Closing Date. If Buyer does so notify Seller of such objections, Seller
shall have until the Closing Date to cure such objections or to locate a title insurance company
licensed to do business in Pennsylvania, which shall insure over such objections for and at the
commercially reasonable expense of Seller. If Seller shall accomplish same on or prior to the
Closing Date and shall be able to convey title in accordance with the terms of this Agreement,

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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the
Closing shall then occur so long as this Agreement is not otherwise terminated pursuant to the
terms hereof. If Seller shall not accomplish same within such period, no later than the business
day immediately prior to the Closing Date, Buyer shall elect either (x) to accept a deed to the
Premises conveying such title as Seller can give in accordance with all of the other provisions of
this Agreement upon payment of the Purchase Price without reduction; or (y) to terminate this
Agreement, effective as of the Closing Date. If Buyer shall not make an election to terminate this
Agreement pursuant to Section 3.1(c)(y) above, then Buyer shall be deemed to have elected
alternative (x) above. Upon termination of this Agreement pursuant to Section 3.1(c)(y)
above, Escrow Agent shall promptly return the Deposit and Accrued Interest to Buyer pursuant to
Section 2.4 and neither party shall have any further liability to the other hereunder
except that which expressly survives the early termination hereof.

(d) If Buyer shall terminate this Agreement on or before the expiration of the Due Diligence
Period for one or more of the following reasons:

i. Despite its commercially reasonable efforts, Buyer is not able to reach an agreement in
principle for the long-term provision of potable water from the Lehigh County Authority to support
Buyer’s requirements for its brewery operations;

ii. Despite its commercially reasonable efforts, Buyer is not able to reach an agreement in
principle for the long-term provision of wastewater treatment with economics reasonably acceptable
to Buyer to support Buyer’s requirements for its brewery operations;

iii. The results of the environmental site inspections are not reasonably acceptable to
Buyer;

iv. The results of the bacterial tests and results of the inspections of the piping and tanks
on the Premises are not reasonably acceptable to Buyer;

v. Existing Operating Agreements material to the operation of the brewery in its current
condition are not assignable to Buyer, and Buyer is unable to secure reasonable replacement
agreements suitable for the operation of the facility;

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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vi. If, after the receipt of an independent estimate for the replacement or repair of the roof
on the brewhouse section of the Building, Buyer reasonably determines that the cost of such
replacement or repair of the roof will exceed [ * ];

vii. The results of the structural engineering inspection (excluding the condition of the
brewhouse roof referenced in Section 3.1(d)(vi) above) are not reasonably acceptable to
Buyer; or

viii. If, after review of information pertaining to employment-related claims against Seller
by Seller’s employees working at the Premises, Buyer reasonably determines that its financial
exposure after the Closing (excluding any severance and indemnification costs described in Section
15.3 herein) with respect to such claims will exceed [ * ], then, notwithstanding anything to the
contrary herein contained, upon Escrow Agent’s receipt of written notice from Buyer stating the
reasons for such termination, the Escrow Agent shall, in accordance with Section 2.4,
return the Initial Deposit plus Accrued Interest to Buyer. If Buyer shall terminate the Agreement
for any other reason, then the Escrow Agent shall, in accordance with Section 2.4, pay the
Initial Deposit plus Accrued Interest to Seller. Upon the return or payment of the Initial
Deposit and Accrued Interest, this Agreement shall be terminated and neither party shall have any
further liability to the other hereunder except with respect to those provisions which expressly
survive the termination of this Agreement. Notwithstanding anything to the contrary herein, if
Buyer shall not have entered into an agreement in principle for the long-term provision of
wastewater treatment with economics reasonably acceptable to Buyer to support Buyer’s requirements
for its brewing operations on or prior to [ * ], despite using its commercially reasonable efforts
to do so, then Buyer may terminate this Agreement on or prior to [ * ] by delivering notice
thereof to Seller upon which
the Escrow Agent shall, in accordance with Section 2.4, deliver to Seller (X) the
Initial Deposit with the Accrued Interest thereon plus (Y) either (a) [ * ] if this
Agreement is terminated by Buyer between the date of expiration of the Due Diligence Period and [
* ], (b) [ * ] if this Agreement is terminated by Buyer between [ * ] and [ * ], or (c) [ * ] if
this Agreement is terminated by Buyer from and after [ * ], together with Accrued Interest on such
amount determined under clause (Y) above (the “Wastewater Termination Fee”), and return to
Buyer the Deposit with the Accrued Interest thereon less the Wastewater Termination Fee, and
neither party shall have any further liability to the other hereunder except with respect to those
provisions which expressly survive the termination of this Agreement.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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(e) Buyer shall have the right to conduct a final “walk through” inspection of the Premises
no less than 10 business days prior to the Closing to confirm that the condition of the Premises
is substantially the same as it was as of the end of the Due Diligence Period, ordinary wear and
tear and casualty excepted. If during the course of such inspection Buyer discovers that the
condition of the Premises is not substantially the same as it was as of the end of the Due
Diligence Period, ordinary wear and tear and casualty excepted, Buyer shall promptly provide
notice of such deficiencies (an “Inspection Notice”) to Seller, and, subject to Seller
making the election in the following sentence, Seller shall, at its expense, make any repairs
reasonably necessary to restore the Premises to the required condition and, to the extent
necessary, the Closing shall be deferred until such restoration is completed. Notwithstanding the
foregoing, if the amount of capital investment required to be made in order to repair any
deficiencies set forth in an Inspection Notice is in excess of [ * ] per project (other than as
may be necessary to keep the Equipment and Building operating at the same capacity and efficiency
levels as prevailed on the Effective Date, to maintain spare parts, to maintain or prevent
decrease in the operational useful life of the Premises subject to casualty and ordinary wear and
tear, or as may be necessary for Seller to ensure its production of its products), then Seller
shall have the option to make such repairs, but if Seller opts not to make such repairs then
Seller shall not be required to make such repairs and Buyer may either (i) proceed to Closing, in
such case Buyer shall be deemed to have accepted the Premises with such unrepaired deficiencies
and there shall be no reduction in the Purchase Price or (ii) terminate this Agreement (except
for such provisions herein that expressly survive termination hereof) and the Escrow Agent
shall, in accordance with Section 2.4, return the Deposit plus the Accrued Interest to
Buyer.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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 (f) Buyer’s requests for due diligence materials shall be handled as follows:

(1) As soon as reasonably practicable following the Effective Date, but in no event later than
the fifth (5th) business day following the Effective Date, Buyer
shall provide Seller with a
reasonable request list of due diligence materials (the “Due Diligence Request”), which may
include requests for (i) materials, books, records, leases, contracts, easements, financial
statements, Operating Agreements, actual utility bills, surveys, floor plans, warranties, documents
relating to pending lawsuits, permits, licenses, documents relating to the water treatment plant,
and all other documents in Seller’s files or Seller’s agents or contractor’s files, in each case
relating solely to Seller’s ownership, operation, and maintenance of the Premises and (ii) subject
to applicable legal restrictions relating to privacy and confidentiality, any and all agreements,
policies, employee benefit plans, description of Seller’s employment practices, employee handbooks,
employee census data, pending or threatened claims asserted by or on behalf of any of Seller’s
employees, employment and medical records and any other employment-related information reasonably
requested by Buyer, all concerning Seller’s employees working exclusively at the Premises. Seller
shall provide (in hard copy or electronically via email) all materials reasonably responsive to the
Due Diligence Request on or prior to the twentieth (20th) business day following receipt of the Due
Diligence Request by Seller (the “Response Period”).

(2) If following the expiration of the Response Period Seller discovers that there are
additional materials that are reasonably responsive to the Due Diligence Request but were not
provided to Buyer during the Response Period, then Seller shall provide such materials to Buyer as
promptly as reasonably practicable following the discovery thereof. If additional materials, the
content of which is material to Buyer’s operation of the Premises following the Closing, are
provided to Buyer pursuant to the immediately preceding sentence, then the Due Diligence Period
shall be extended by a number of days, if any, such that the Due
Diligence Period shall expire no earlier than the twentieth (20th) business day following the
date such material information is provided by Seller to Buyer.

			
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(3) Buyer shall have the right to make “follow-up” due diligence requests from time to time
during the Due Diligence Period and Seller shall provide all materials reasonably responsive to
such follow-up requests as soon as is reasonably practicable following receipt of such request,
provided that, except as set forth in the following sentence, the Due Diligence Period shall not be
extended for any reason as a result of any such follow-up diligence request or the period of time
taken by Seller to respond thereto. Notwithstanding the proviso at the end of the previous
sentence, if the materials that are the subject of any follow-up due diligence request are other
documents or materials, the content of which is material to Buyer’s operation of the Premises
following the Closing (“Additional Referenced Documents”), referenced in any materials
previously provided by Seller to Buyer pursuant to this Section 3.1 (“Initially Provided
Documents”), and it is reasonable that Seller should have such Additional Referenced Documents
in its possession, then the Due Diligence Period shall be extended by a number of days, if any,
such that the Due Diligence Period shall expire no earlier than the thirty-fifth (35th) business
day following the date on which the Initially Provided Document that references the Additional
Referenced Documents was provided to Seller, such number of days to be increased on a day-for-day
basis for each day past the fifth (5th) business day following the receipt by Seller of Buyer’s
follow-up diligence request for such Additional Referenced Document(s) that Seller provides such
requested documents to Buyer.

Section 3.2 Date, Place and Time of Closing. Except as otherwise provided in this
Agreement, unless this Agreement is terminated pursuant to the terms hereof, the transfer of title
to the Premises pursuant to this Agreement (the “Closing”) shall occur on June 2, 2008 or
such other date on which the Closing is to occur as expressly provided for in this Agreement (the
“Closing Date”). The Closing shall be held at the offices of Seller’s counsel, Morgan,
Lewis & Bockius LLP, located at 1701 Market Street, Philadelphia, PA 19103, commencing at 10:00
A.M. on the Closing Date, or at such other place and/or earlier date as the parties may hereafter
agree. Counsels for Seller and
Buyer are hereby respectively authorized to execute an agreement or agreements on behalf of
the parties confirming or adjourning the Closing Date.

Section 3.3 Seller’s Obligations Prior to Closing. Seller covenants that during the
Applicable Period (as defined below), Seller shall:

(a) Operate the Premises in substantially the same manner as Seller has previously been
operating the Premises, including payment of all utility, tax, service, payroll and other bills
received that are due and payable prior to the Closing Date in connection with the operation of
the Premises and maintain and keep the Premises in good repair and working
condition, ordinary
wear and tear and casualty excepted subject to the provisions of Section 10.1;

			
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(b) Maintain until the Closing Date the property and general liability insurance policy or
policies presently in force with respect to the Premises, including workmen’s compensation
insurance, or the insurance equivalent in amount and coverage;

(c) Not enter into or renew any contract which would become the obligation of Buyer after the
Closing, or grant any title encumbrance on the Land, without the prior written consent of Buyer;

(d) Not remove any Equipment from the Premises except as provided in Section 10.2
hereof;

(e) Not terminate any material Operating Agreement unless Buyer has either (i) consented to
such termination, or (ii) failed to give written notice of Buyer’s refusal so to consent within
five (5) days after Seller gives Buyer written notice of Seller’s intention to terminate such
agreement. Buyer agrees not to unreasonably withhold, condition or delay such consent;

(f) (1) Not enter any new lease or (2) occupancy agreement of any kind relating to any
portion of the Building which is vacant on the Effective Date or which may
hereafter become vacant, unless in each case Buyer has either (i) approved such lease in
writing, or (ii) failed to give written notice of Buyer’s election not to approve such lease
within five (5) days after Seller gives Buyer (x) written notice of the identity of the proposed
tenant, together with such financial and other information about the proposed tenant as Buyer may
reasonably require, and (y) written notice of the general terms of the proposed lease; and

(g) Promptly notify Buyer of the receipt by Seller of, and deliver to Buyer a copy of, any
written (i) notice from any federal, state or local government, agency, authority, board,
commission, department or instrumentality relating to the compliance of the Premises with any
applicable law, code, ordinance, rule or regulation or (ii) alleged violation of any law or
regulation relating to, or claim asserted by, any employee of the Seller.

			
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For the purposes of this Section 3.3, “Applicable Period” shall mean (i) in the case of
Sections 3.3(a), (b), (d) and (g), the period beginning on the Effective Date and ending on
the Closing Date and (ii) in the case of Sections 3.3(c), (e) and (f), the period beginning
on the date following the date of expiration of the Due Diligence Period and ending on the Closing
Date. Notwithstanding the foregoing, Seller shall not be in breach of this Section 3.3 to the
extent that such failure to be in compliance is as a result of any actions, activities or omissions
by Buyer or on behalf of Buyer.

ARTICLE 4

Acceptable Title and Clearing Title.

Section 4.1 Acceptable Title. Seller shall convey to Buyer at Closing good and
marketable title to the Premises free from all encumbrances, subject only to the exceptions
specified in Exhibit A and to the following:

(a) any restrictions or limitations imposed or to be imposed by governmental authority,
including the zoning and planning rules and regulations of Upper Macungie Township, PA;

(b) real estate, or school or other taxes in the nature of a property tax, which become due
and payable after the date of the Closing, which taxes Buyer will assume and agree to pay as part
of the consideration for the Deed (as hereinafter defined);

(c) encroachments of ledges, fences, hedges, stone walls and retaining walls projecting from
the Premises over any street or highway or over any adjoining property and encroachments of
similar elements projecting from adjoining property over the Premises, or other matters shown on
the 2001 Survey, provided same do not interfere with the use as of the Effective Date and
enjoyment of the Building and provided the same are shown on an accurate ALTA/ACSM survey of the
Premises;

(d) public improvement assessments and sewer connection charges, or other assessments and/or
any unpaid installments thereof, which assessments and/or installments become due and payable
after the date of the Closing, which assessments and/or installments
Buyer will assume and agree
to pay as part of the consideration for the Deed, subject to the provisions of this Agreement;

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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(e) state of facts shown by accurate survey of the Premises, provided same does not
reasonably interfere with the existing use and enjoyment of the Premises;

(f) all rights of utility companies for the erection and/or maintenance of water, gas,
electric, telephone, sewer or other utility pipes, line, poles, wires, conduits or other like
facilities, and appurtenances thereto, over, across and under the Premises, provided same do not
reasonably interfere with the existing use and enjoyment of the Premises;

(g) restrictions and other matters appearing on any applicable plat or otherwise common to
the applicable subdivision, if any;

(h) all easements, restrictions, agreements and other matters of record provided same do not
reasonably interfere with the existing use and enjoyment of the Premises; and

(i) the rights of others in and to the coal underneath the surface of the Land, their rights
to remove all of such coal and their right of support underneath the surface of the Land.

Section 4.2 Clearing Title.

(a) Seller shall convey and Buyer shall accept fee simple title to the Premises in accordance
with the terms of this Agreement, subject only to (i) the exceptions referred to in Section
4.1 herein; (ii) the standard printed exceptions in the ALTA form of policy in use in the
Commonwealth of Pennsylvania; and (iii) such other matters as any reputable title insurance
company qualified to do business in the Commonwealth of Pennsylvania shall be willing to omit as
exceptions to coverage or to except with insurance against collection out of or enforcement
against the Premises. Seller shall not be required to bring any action or proceeding or to incur
any expense to cure any title defect, except as herein provided.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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(b) If examination of the title to or survey of the Premises shall reveal one or more defects
which prevent Seller from conveying title in accordance with the terms of this Agreement
(“Title Defects”), Buyer shall, within thirty (30) days from the Effective Date, give
Seller written notice of same, as to which notice time shall be of the essence (“Title Defect
Notice”). If Buyer fails to so notify Seller of such defects within said 30-day period, Buyer
shall be deemed to have accepted the state of title to the Premises as of said 30th
day. If Buyer does deliver the Title Defect Notice, Seller shall have until the end of the Due
Diligence Period to cure such defects or to locate a title insurance company licensed to do
business in Pennsylvania which shall insure title to the Premises as aforesaid for the benefit of
Buyer, but at the reasonable expense of Seller. In addition, Seller shall use commercially
reasonable efforts to cure any title defect which is the subject of the Title Defect Notice.
Seller shall at all times be obligated to cure monetary encumbrances by paying off or bonding off
all of such liens or encumbrances, excepting however those arising out of or relating to the
actions or omissions of or on behalf of Buyer, by or at the Closing. If Seller shall accomplish
same within the Due Diligence Period and shall be able to convey title in accordance with the
terms
of Section 4.2(a), the Closing shall then occur so long as this Agreement is not
otherwise terminated pursuant to the terms hereof. If Seller shall not accomplish same within
such period, Buyer, on or prior to the expiration of the Due Diligence Period, shall elect either
(i) to accept a deed to the Premises conveying such title as Seller can give at Closing in
accordance with all of the other provisions of this Agreement upon payment of the Purchase Price
without reduction; or (ii) to cancel and terminate this Agreement, in which event the Escrow Agent
shall pay to Buyer the Initial Deposit and Accrued Interest and Seller shall pay to Buyer any
expenses actually incurred by Buyer in connection with this Agreement, not to exceed [ * ]. If
Buyer shall not make an election on or prior to the expiration of the Due Diligence Period, then
Buyer shall be deemed to have elected alternative (i) above. Upon Buyer’s receipt of the Deposit
and Accrued Interest, this Agreement shall be terminated, and neither party shall have any further
liability to the other hereunder except those which expressly survive the early termination
hereof.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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ARTICLE 5

Representations, Warranties, Covenants, and Operation of Premises.

Section 5.1 Power, Authority, Execution and Delivery. Buyer and Seller each
represents, covenants, and warrants to the other the following:

(a) each party is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation;

(b) each party has sole power and authority, respectively, to acquire and own or convey, as
the case may be, the Premises;

(c) (i) the execution and delivery of this Agreement by the persons so acting on Buyer’s or
Seller’s behalf, respectively, have been authorized by all necessary formal action of each party,
and this Agreement is the legal, valid and binding obligation of each party respectively,
enforceable in accordance with its terms and (ii) each party has obtained all
requisite consents and approvals, whether required by internal operating procedures or
otherwise, for entering into this Agreement and closing the transaction contemplated hereby;

(d) To Seller’s actual knowledge, Seller has not received notice that any actions, suits or
proceedings of any third party are pending or threatened against or affecting Seller in any court
or before or by any governmental agency, commission, board, or department or other instrumentality
which would affect Seller’s ability to perform timely and fully its obligations under this
Agreement;

(e) To Seller’s actual knowledge, there are no public improvement assessments and sewer
connection charges, or other assessments and/or any unpaid installments thereof, which assessments
and/or installments are due and payable, and have not been paid, or will be due and payable after
the Closing;

(f) Seller has no trade names or trademarks consisting of or incorporating the name of the
Premises;

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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(g) Seller is not a “foreign person” within the meaning of Section 1445 of the Internal
Revenue Code of 1986, as amended;

(h) As of the Effective Date, Seller has received no notices, within the last twelve (12)
months, of any violation of any building, fire, environmental or health law, or ordinance or
regulation of any federal, state or municipal governmental department, agency, board, or
authority, relating to the Premises that have not been remedied or cured;

(i) To Seller’s actual knowledge, no eminent domain, condemnation, or other action or
proceeding is pending against the Premises;

(j) no person has an unrecorded right of first refusal, option to purchase, or other right to
purchase the Land or Premises pursuant to a written agreement to which Seller is a party; and

(k) to Seller’s actual knowledge without additional inquiry or investigation, there have been
no releases of Hazardous Substances (as hereinafter defined) on the Premises
that could reasonably require investigation or remediation pursuant to applicable law, and,
to the best of Seller’s knowledge, Seller has not received any Notices of Responsibility or
Notices of Potential Responsibility issued pursuant to local laws and/or the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Sections
9601 et seq.) (“CERCLA”) with respect to the Premises. As used in this
Agreement, the term “Hazardous Substances” shall mean any chemical, substance, waste,
material, gas, or emission which is deemed hazardous, toxic, a pollutant or a contaminant under
any federal, state or local statues, ordinances, by-laws and rules and regulations.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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Each party’s representations and warranties contained in this Section 5.1 shall (i) be
true in all material respects upon the Effective Date and shall be true in all material respects
as of the Closing, taking into account any exceptions to such representations and warranties
delivered by a party to the other in writing at the Closing, and (ii) terminate as of the Closing
except that the representation and warranty set forth in Section 5.1(g) shall survive the
Closing indefinitely. For purposes of clarity, the termination of the representation and warranty
in Section 5.1(k) shall in no way affect the provisions of Section 14.16. If
Seller delivers written exceptions to its representations and warranties pursuant to clause (i) of
the immediately preceding sentence and such exceptions, in the aggregate, would have a material
adverse effect on Buyer’s operation of the Premises following the Closing, then Buyer shall have
the right to (A) proceed to Closing, in which case Buyer shall be deemed to have accepted the
exceptions delivered by Seller and shall have no remedy against Seller with respect thereto or (B)
terminate this Agreement (except for such provisions herein that expressly survive termination
hereof) and the Escrow Agent shall, in accordance with Section 2.4, return the Deposit
plus the Accrued Interest to Buyer.

When the phrase “to Seller’s actual knowledge” or similar phrase is used in this Agreement with
respect to Seller, it shall (i) be limited to the actual knowledge of only [ * ], (ii) be deemed
to the current actual, not implied, constructive or imputed, knowledge of such person, as of the
times expressly indicated only, and without any obligation to make any independent investigation
of, or any implied duty to investigate, such matters, or to make any inquiry of any other persons,
or to search or to examine any files, records books, correspondence and the like,
and (iii) not be construed to refer to the knowledge of any other beneficial owner, officer,
member, manager, director, employee, shareholder or agent of Seller. There shall be no personal
liability on the part of any of the individuals named above arising out of this Agreement.

Section 5.2 Leases and Agreements. Seller represents to Buyer that there are no
leases in effect with respect to the Premises and no written agreements with respect to the
maintenance or operation of the Premises which will survive the Closing, except as specified on
Exhibit D attached hereto (collectively “Operating Agreements”). At the Closing,
Seller shall assign and otherwise convey to Buyer all of Seller’s rights, title and interests in
the Operating Agreements pursuant to the Assignment and Assumption of Contracts (as hereinafter
defined) and Buyer shall assume all obligations thereunder, whether arising before or after the
Closing other than any obligation arising out of Seller’s breach of the terms of a Operating
Agreement prior to the Closing.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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Section 5.3 Inspection. Buyer acknowledges and agrees that, except as expressly stated
herein, neither Seller nor any agent, employee, attorney or representative of Seller has made any
statements, agreements, promises, assurances, representations or warranties, whether expressed,
implied, or otherwise regarding the condition of the Premises, the suitability of the Premises for
any uses or purposes contemplated by Buyer, the zoning of the Premises, the right to occupy the
Premises, the environmental condition of the Premises and/or any other aspect of or matter
pertaining to the Premises or any other fact or matter whatsoever, whether pertaining to Seller,
the Premises or otherwise. Buyer acknowledges that (i) it is acquiring the Premises in an “as is,
where is” condition as of the Closing Date, with the understanding that nothing in this Section
5.3(i) shall limit Buyer’s rights under Section 3.1(e) prior to the Closing;
(ii) Seller shall not be responsible for making (or contributing in any way to the cost of making)
changes or improvements to the Premises, or any other aspect of or matter pertaining to the
Premises; and (iii) in executing, delivering and performing its obligations under this Agreement,
Buyer has not relied upon any statement, promise, representation or warranty to whomsoever made or
given, directly or indirectly, orally or in writing, by any person or entity, except as specified
herein.

Section 5.4 Operation of Premises. In addition to the requirements of Section
3.3 and the Transition Plan (as defined below), between the Effective Date and the Closing (the
“Transition Period”), Seller shall use commercially reasonable efforts to operate and
maintain the Premises in the ordinary course of business consistent with past practice, including
maintaining all permits and licenses for the operation of the Premises, maintaining the Premises in
good condition and repair, subject to casualty (subject to the provisions of Article 6) and
ordinary wear and tear, and retaining the full-time employment of all current employees at the
Premises. For the avoidance of doubt, any actions taken between the Effective Date and the
expiration of the Due Diligence Period that are not in violation of Section 3.3 shall not
be considered in violation of this Section 5.4. The Seller and Buyer shall work
cooperatively during the Transition Period for a smooth transition of the operation of the Premises
in accordance with the transition plan set forth in Exhibit E attached hereto (the
“Transition Plan”), and shall use commercially reasonable efforts to implement the
Transition Plan. Except as provided in Exhibit J, Seller shall not solicit any
employees of the facility to continue employment with Seller after the Closing and for a
period of 24 months thereafter other than (a)

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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through general advertising or other general
solicitation not targeted to the employees of the facility or (b) with respect to a person who is
no longer employed at the facility. In addition, except as provided in Exhibit J, Buyer
shall not solicit the Key Employees (as defined in Exhibit J) after the Closing and for a
period of 24 months thereafter. To the extent Buyer during the Transition Period makes any
improvements to the Premises that are not reasonably removable and this Agreement is terminated,
Seller shall have the right to (a) retain such improvements without cost to Seller or (b) cause
Buyer to remove such improvements within ten (10) business days after the date this Agreement is
terminated and within such ten (10) business day period restore to Seller’s satisfaction the
Premises to the condition in which it existed before such improvements were made or installed. To
the extent, however, any of such improvements are reasonably removable and this Agreement is
terminated, Buyer shall remove such removable improvements within ten (10) business days after the
date the Agreement is terminated and within such ten (10) business day period restore to Seller’s
satisfaction the Premises to the condition in which it existed before such removable improvements
were made or installed. During any period of restoration under this Section 5.4, Buyer
shall maintain in force and effect the insurance required under Section 3.1(b), shall
indemnify Seller for any liability arising out of Buyer’s restoration of the Premises, and shall
use commercially reasonable efforts not to interfere with Seller’s business operations at the
Premises. The provisions of this Section 5.4 shall survive the Closing or termination of
this Agreement.

Section 5.5 Wastewater Cooperation. From and after the Effective Date until the
Closing or the earlier termination hereof, Seller shall cooperate with Buyer in all reasonable
respects in Buyer’s efforts to secure an agreement for the long-term provision of wastewater
treatment to support Buyer’s requirements for its brewery operations to be conducted at the
Premises following the Closing, which cooperation shall include meeting with the Lehigh County
Authority as soon as reasonably practicable following the Effective Date, for the purpose of
seeking an extension or other modification of the Wastewater Agreement (as hereinafter defined).
Buyer shall reimburse Seller for any reasonable out-of-pockets costs and expenses (including legal
fees) incurred in
providing the cooperation required by the previous sentence. Notwithstanding anything
contained herein, nothing in this Section 5.5 shall require Seller to pay any
consideration, incur any costs or expenses, grant any financial accommodation or other benefit or
enter into, amend or modify any agreement in connection with such cooperation.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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ARTICLE 6

Condemnation and Damage by Fire or Other Hazard.

Section 6.1 Immaterial Damage or Taking. If prior to the Closing Date an immaterial
part of the Premises is damaged by fire or other casualty or is taken by eminent domain, this
Agreement shall not be affected thereby and there shall be no reduction in the Purchase Price.
Seller shall assign to Buyer at the Closing and Buyer shall accept an assignment of all of Seller’s
claims or rights under Seller’s insurance policy or policies on the Premises and/or all of Seller’s
claims or rights to receive any condemnation awards. If and to the extent that Seller shall have
received the proceeds of any such claim or awards prior to the Closing Date, Seller shall pay over
to Buyer on the Closing Date (less the reasonable costs and expenses (including legal fees)
incurred in the collection thereof): (a) the actual amount of insurance monies collected by Seller
with respect to such loss in case of destruction by fire or other casualty; or (b) the net amount
received by Seller, in the case of a taking by eminent domain. In any event, the assignment or
the proceeds shall be reduced by the costs incurred by Seller as a result of the damage or
condemnation, including, without limitation, counsel fees and costs of interim protection,
appraisals, repair and restoration.

Section 6.2 Material Damage or Taking. If all or a material part of the Premises is
damaged by fire or other casualty, or is taken by eminent domain, Buyer may either (i) cancel this
Agreement by notice to Seller given not later than thirty (30) days after receipt of notice of such
damage or of such taking (as the case may be), and in such event, this Agreement shall be cancelled
and terminated, neither
party shall have any further rights against the other except those which expressly survive and
the Escrow Agent shall refund to Buyer the Deposit and any Accrued Interest subject to Section
2.4 or (ii) elect to have Seller pay over to Buyer on the Closing Date all proceeds or awards
(less the reasonable costs and expenses (including legal fees) incurred in the collection thereof)
received prior to such date and assign (to the extent not previously collected or received) all of
Seller’s claims or rights under Seller’s insurance policy

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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or policies on the Premises and/or all of
Seller’s claims or rights to receive any condemnation awards and proceed to Closing, and in such
event, the Closing shall occur on the earlier of (a) the forty-fifth (45th) day after receipt of
notice of such damage or of such taking by Buyer (as the case may be) or (b) June 2, 2008 or such
other date on which the Closing is to occur as expressly provided for herein; provided that if the
30th day following receipt of notice by Buyer of such damage or such taking (as the case may be) is
a date later than June 2, 2008 or such other date on which the Closing is to occur as expressly
provided for herein, then the Closing shall occur pursuant to clause (a) of this sentence. In any
event, the assignment or the proceeds shall be reduced by the costs incurred by Seller as a result
of the damage or condemnation, including, without limitation, counsel fees and costs of interim
protection, appraisals, repair and restoration. If Buyer does not cancel this Agreement as
provided in this Section, the Closing shall occur as scheduled, and the provisions of Section
6.1 herein shall control.

Section 6.3 Definitions of Material and Immaterial. For purposes of this Article
6, a material part of the Premises shall be deemed to have been damaged if the estimated cost
to repair the damage shall be greater than [ * ]; otherwise, the damage shall be deemed to be
immaterial. For purposes of this Section, a material part of the Premises shall be deemed to have
been taken by eminent domain if (a) more than 10% of the Premises shall be taken by eminent domain;
or (b) ingress or egress to the Premises shall be materially impaired; otherwise, the taking shall
be deemed to be immaterial. Seller shall give Buyer prompt written notice of Seller’s receipt of
any damage or proceedings for condemnation or taking by eminent domain.

ARTICLE 7

Closing Obligations.

Section 7.1 Seller’s Deliveries. At the Closing, Seller shall deliver the following
to Buyer:

(a) A Special Warranty Deed, executed in proper form for recording so as to convey the title
required by this Agreement, substantially in the form of Exhibit L hereto (the
“Deed”), together with the necessary transfer tax forms;

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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(b) Bill of Sale substantially in the form of Exhibit G hereto with respect to the
Equipment and the Sign (the “Bill of Sale”);

(c) An Assignment and Assumption of Contracts substantially in the form of Exhibit M
hereto pursuant to which Seller assigns and Buyer assumes all of Seller’s right, title, interest
and obligations in and under the Operating Agreements to the extent provided in Section 5.2 (the
“Assignment and Assumption of Contracts”);

(d) Such affidavits as Buyer’s title insurance company shall reasonably require in order to
omit from its title insurance policy all exceptions for tenants and for unrecorded mechanics’
liens, together with a certification that Seller is not a “foreign person” pursuant to Section
1445 of the Internal Revenue Code;

(e) Schedules certified correct by Seller containing the information required to calculate
the apportionments described in Article 8 herein;

(f) An Assignment and Assumption of the Wastewater Capacity and Treatment Agreement by and
between Seller and Lehigh County Authority dated as of [ * ], as the same may be
amended (the “Wastewater Agreement”), pursuant to which Seller assigns all of Seller’s
rights, title and interest under the Wastewater Agreement to
Buyer and Buyer assumes all of Seller’s rights, title and interest and obligations under the
Wastewater Agreement;

(g) All other documents required by this Agreement to be delivered by Seller;

(h) All documents relating to licenses and permits for the Building to the extent same are in
Seller’s possession;

(i) All operational documents (including, but not limited to, safety manuals, procedures,
safety records, quality records, employment records (solely with respect to Transferred Employees
and subject to applicable law)), material records, and originals of maintenance and service
contracts relating solely to the operation of the Premises; and

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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(j) A good standing certificate of Seller, resolutions of Seller and incumbency certificates
of Seller.

Section 7.2 Buyer’s Deliveries. At the Closing, Buyer shall deliver the following to
Seller:

(a) The funds, complying with Section 2.3 herein, in payment of the portion of the
Purchase Price payable at the Closing and items apportioned pursuant to Article 8 herein;

(b) All other documents required by this Agreement to be delivered by Buyer;

(c) A fully and properly executed counterpart of the Assignment and Assumption of Contracts;

(d) A fully and properly executed counterpart of the Bill of Sale;

(e) A fully and properly executed counterpart of the Deed;

(f) A fully and properly executed counterpart of the Assignment and Assumption of the
Wastewater Capacity and Treatment Agreement; and

(g) A good standing certificate of Buyer, resolutions of Buyer and incumbency certificates of
Buyer.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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 ARTICLE 8

Apportionments at Closing.

Section 8.1 Items of Apportionment. The following items shall be apportioned between
the parties as of 11:59 P.M. the day immediately preceding the Closing Date and paid at the
Closing:

(a) Real estate and all other taxes and assessments and water and sewer rents and charges (if
any) levied against or with respect to the Premises, the operation of the Premises and the
Equipment. The amount of such taxes shall be apportioned between the portion of the period before
the Closing Date and on and after the Closing Date on a pro rata basis: the amount of such tax
for the entire taxable period multiplied by a fraction, the numerator of which is the number of
days in the taxable period ending on the Closing Date and the denominator of which is the number
of days in the entire taxable period. If bills for real estate taxes on the Premises have not
been issued as of the Closing Date, and if the amount of real estate taxes for the current tax
fiscal year is not then known, the apportionment of real estate taxes shall be made at Closing on
the basis of the prior year’s real estate taxes;

(b) Fuel oil in tanks based on the then-current price charged to Seller, and other utilities;
and

(c) Operating Agreements that survive the Closing.

Section 8.2 Mistakes in Apportionments. Any error in calculation or payment of the
items apportioned at
Closing shall be corrected promptly upon discovery of the error. The foregoing obligation of
the parties hereto shall survive for a period of six (6) months subsequent to the Closing.

Section 8.3 Other Fees. Seller and Buyer shall divide equally all real estate
transfer taxes applicable to the conveyance affected by the Deed. All costs and expenses to be
paid by Seller at Closing shall be disbursed from the balance of the Purchase Price payable by
Buyer at Closing and shall reduce the net cash payable to Seller. Buyer shall also pay at or prior
to Closing (i) all recording fees due on the Deed, (ii) all title examination fees, title insurance
premiums (including without limitation any premiums for endorsements) and survey costs for the
title commitment and any survey required by this Agreement or otherwise obtained by Buyer and (iii)
all costs and expenses of any financing of Buyer ‘s acquisition of the Premises (including, without
limitation, all intangible taxes, documentary stamp taxes and recording and filing fees due on any
financing document, and lender’s attorneys’ fees and expenses). Each party shall be responsible
for the fees and costs of its legal counsel.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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ARTICLE 9

Broker.

Section 9.1 Indemnity. This Agreement is consummated by Seller in reliance upon the
representation of Buyer that no broker or agent brought the Premises to Buyer’s attention or was,
in any way, the procuring cause of this sale and purchase. Seller represents to Buyer that no
broker or agent has any exclusive sale or exclusive agency listing on the Premises. Buyer shall
indemnify and hold harmless Seller against any liability by reason of the claim of any broker or
agent for a commission on account of this sale, provided that it is alleged that a commission is
due by reason of such broker or agent calling the Premises to Buyer’s attention or interesting
Buyer therein, said indemnity to include all costs of defending any such claim, including
reasonable counsel fees. The provisions of this Section shall survive the Closing or termination
of this Agreement.

ARTICLE 10

Repairs; Equipment Replacement; Spare Parts and Supplies.

Section 10.1 Repairs. During the Transition Period, Seller shall maintain its
preventative maintenance practices and shall make such repairs to the Premises as may be
appropriate in order to maintain the Premises in substantially the same condition as it is in as of
the Effective Date, ordinary wear and tear and casualty excepted. Notwithstanding the foregoing,
Seller shall not be required to make any individual capital investments in the Premises in excess
of [ * ] per project (“Major Capital Investment”) during the Transition Period, except as
may be necessary to keep the Equipment and Building operating at the same capacity and efficiency
levels as prevailed on the Effective Date, to maintain spare parts, to maintain or prevent decrease
in the operational useful life of the Premises subject to casualty and ordinary wear and tear, or
as may be necessary for Seller to ensure its production of its products. Any other Major Capital
Investments shall be handled in the manner set forth in the Transition Plan. Notwithstanding
anything contained herein, the provisions of this Section 10.1 shall not apply to any
repairs required in connection with any damage to the Premises addressed by the provisions of
Article 6.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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Section 10.2 Equipment Replacement. Subject to other provisions of this Agreement,
Seller shall have the right to replace any of the Equipment included as part of the Premises,
provided that Seller notifies Buyer in writing prior to replacing any of the Equipment and the same
is replaced with Equipment of at least equal quality and capability.

Section 10.3 Spare Parts and Supplies. During the Transition Period, Seller shall
retain substantially the same level of spare parts and supplies necessary to operate the Premises
at the Premises as are on site at the Premises as of the Effective Date and shall deliver such
spare parts and supplies to Buyer at the Closing, as required by Section 1.1(c).

ARTICLE 11

Defaults.

Section 11.1 Liquidated Damages.

(a) If Seller is not in default following applicable notice and cure periods and Buyer fails
to perform any of its obligations set forth in this Agreement, Seller shall have the right either
to (i) terminate this Agreement or (ii) seek specific performance and penalties under Section
11.2 by giving a ten-business day notice to Buyer. If Seller elects to terminate this
Agreement, provided Buyer has not satisfied its obligations within such ten business days, Buyer
shall forfeit all claims to the Premises described herein, the Deposit and any Accrued Interest
which shall be construed as liquidated damages paid by Buyer to and retained by Seller in
accordance with Section 2.4, whereupon this Agreement shall be deemed to be of no further
force and effect and neither Buyer nor Seller shall have any further rights, obligations or
liabilities hereunder, except those which expressly survive termination of this Agreement. The
actual tender of the deed shall not be necessary if Buyer has clearly indicated, prior to the date
of Closing, that it will not or cannot make the payments agreed upon. In the event of such
default, Buyer waives any right to claim the return of any portion of the Deposit or any Accrued
Interest, despite the reason for the default and/or the amount of actual damages incurred by
Seller. Seller’s retention of the Deposit and Accrued Interest following Seller’s termination of
this Agreement for Buyer’s default shall be Seller’s sole and exclusive remedy in such
circumstances under the Agreement, at law or in equity, for a Buyer default.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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(b) If Buyer is not in default following applicable notice and cure periods and Seller fails
to perform any of its obligations set forth in this Agreement, Buyer shall have the right either
to (i) terminate this Agreement by giving a ten (10) business day notice to Seller and, provided
Seller has not satisfied its obligations within such ten business days, receive a return of the
Deposit and Accrued Interest in accordance with Section 2.4, and thereafter the parties
shall have no further obligations hereunder, except as otherwise expressly provided in this
Agreement, or (ii) within ten (10) business days after default by Seller, to seek
specific performance of this Agreement and penalties under Section 11.2. Buyer’s
retention of the Deposit and Accrued Interest following Buyer’s termination of this Agreement for
Seller’s default shall be Buyer’s sole and exclusive remedy in such circumstances, at law or in
equity, for a Seller Default.

(c) Except as provided herein, each party expressly waives its rights to seek any damages
hereunder in the event of the other party’s default hereunder.

Section 11.2 Specific Performance.

Buyer and Seller shall each have the right to specific performance of this Agreement if it
complies with all of its obligations under this Agreement and the other party (the “Defaulting
Party”) fails to perform any of its obligations set forth in this Agreement. In such event,
the party seeking specific performance (the “Non-defaulting Party”) shall also be entitled
to the penalties specified in the following paragraphs of this Section 11.2.

In the event the Closing does not occur on June 2, 2008 (or such other date on which the
Closing is to occur as expressly provided for herein) due to a direct or indirect act or omission
of Buyer and provided that Seller is not in default following applicable notice and cure periods
hereunder, Buyer shall pay Seller a penalty equal to [ * ]. Buyer shall pay such penalty to Seller
at Closing.

Similarly, in the event the Closing does not occur on June 2, 2008 (or such other date on
which the Closing is to occur as expressly provided for herein) due to a direct or indirect act or
omission of Seller and provided that Buyer is not in default hereunder following applicable notice
and cure periods. Seller shall pay Buyer a penalty equal to [ * ]. Seller shall pay such penalty
to Buyer at Closing.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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Section 11.3 Right to Reject Packaging Services Agreement. In the event that the
Non-defaulting Party elects to require specific performance of this Agreement pursuant to
Section 11.2, the Non-defaulting Party, while required to purchase or sell the Premises, as
applicable, shall be entitled to terminate the Packaging Services Agreement (as hereinafter
defined) within ten (10) days
after Closing by written notice to the Defaulting Party. The terms of this Section
11.3 shall survive Closing.

ARTICLE 12

Notices; Assignment; Access.

Section 12.1 Methods and Delivery. Any notice, demand, consent, approval, direction,
agreement or other communication required or permitted hereunder or under any other documents in
connection herewith shall be in writing and shall be directed as follows:

If to Seller:

Diageo North America, Inc.

801 Main Street

Norwalk, CT 06851

Attention: Thomas Deskin

Facsimile: (203) 229-4999

with copies to:

Diageo North America, Inc.

801 Main Street

Norwalk, CT 06851

Attention: Joseph Barry, Assistant General Counsel

Facsimile: (203) 229-8925

Morgan, Lewis & Bockius LLP

1701 Market Street

Philadelphia, PA 19103

Attention: Tracy L. Steele, Esquire

Facsimile: (215) 963-5001

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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If to Buyer:

Boston Beer Corporation

One Design Center Place, Suite 850

Boston, MA 02210

Attention: Legal Department

Facsimile: (617) 368-5553

with a copy to:

Nixon Peabody LLP

100 Summer Street

Boston, MA 02110

Attention: Frederick H. Grein, Jr., Esquire

Facsimile: (866) 369-4741

or to such changed address or facsimile number as a party hereto shall designate to the other
parties hereto from time to time in writing. Notices shall be (i) personally delivered (including
delivery by Federal Express, United Parcel Service or other comparable nation-wide overnight
courier service) to the offices set forth above, in which case they shall be deemed delivered on
the date of delivery (or first business day thereafter if delivered other than on a business day or
after 5:00 p.m.); (ii) sent by certified mail, return receipt requested, in which case they shall
be deemed delivered on the date shown on the receipt unless delivery is refused or delayed by the
addressee in which event they shall be deemed delivered on the third day after the date of deposit
in the U.S. Mail; or (iii) sent by means of a facsimile transmittal machine, in which case they
shall be deemed delivered at the time and on the date of receipt thereof or first business day
thereafter if receipted other than on a business day or after 5:00 p.m. EST.

Section 12.2 Assignment. Buyer shall not assign this Agreement without the prior
written consent of Seller, and any assignment in violation of this Agreement shall be null and
void. Notwithstanding anything to the contrary herein contained, the transfer of the rights and
obligations of Buyer to a parent, subsidiary, or other affiliate of Buyer, or to any successor in
interest or entity acquiring fifty-one percent (51%) or more of Buyer’s stock or assets, shall not
be deemed an assignment (but Buyer shall give notice to Seller of such transfer of rights). No
assignment or transfer of rights of this Agreement shall release Buyer of its obligations
hereunder. As used in this Agreement, the
term “affiliate” shall mean any entity controlling, controlled by or under common control with
Buyer.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

37

 

Section 12.3 Designation. Buyer shall have the right to designate one or more
affiliated entities into which title to any portion of the Premises shall vest and Buyer shall
notify Seller of the exercise of such right and the name of the designated entities at least three
(3) business days prior to the Closing together with evidence reasonably satisfactory to Seller
that the designee(s) each are properly an affiliated entity. In the event of any such designation,
the Deed(s) evidencing the transfer of the Premises shall name such designee(s) as grantee who
shall have the right to enforce all rights of Buyer hereunder. Notwithstanding the foregoing, the
Buyer shall be solely responsible for all obligations of Buyer hereunder.

ARTICLE 13

Survival and Delivery of Deed.

Section 13.1 Survival. Except for (i) the provisions of Article 14 and
Article 15 and (ii) as otherwise provided in this Agreement, no representations,
warranties, covenants or other obligations of Seller or Buyer set forth in this Agreement shall
survive the Closing, and no action based thereon shall be commenced after the Closing.

Section 13.2 Delivery of Deed. The delivery of the Deed by Seller, and the acceptance
thereof by Buyer, shall be deemed the full performance and discharge of every obligation on the
part of Seller or Buyer to be performed hereunder, except those obligations of Seller or Buyer
which are expressly stated in this Agreement to survive the Closing.

ARTICLE 14

Miscellaneous Provisions.

Section 14.1 Packaging Services Agreement; Entire Understanding. Subject to the
provisions of Section 11.3, Seller and Buyer shall enter into a Packaging Services
Agreement in the form and substance as Exhibit H attached hereto (the “Packaging
Services Agreement”) on or before the date of execution and delivery of this Agreement. This
Agreement, together with the Packaging Services Agreement, embodies and constitutes the entire
understanding
between  the parties with respect to the transactions contemplated herein, and all
prior agreements, understandings, representations and statements, oral or written, are merged into
this Agreement. Neither this Agreement nor any provision hereof may be waived, modified, amended,
discharged or terminated except by an instrument signed by the party against whom the enforcement
of such waiver, modification, amendment, discharge or termination is sought, and then only to the
extent set forth in such instrument.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

38

 

Section 14.2 Tax Cooperation. After the Closing Date, Buyer and Seller shall (i)
provide, or cause to be provided, to each other’s respective subsidiaries, officers, employees,
representatives and affiliates, such assistance as may reasonably be requested by any of them in
connection with the preparation of any tax return or any audit which relates to any taxes in
respect of the Premises for which the Buyer and Seller are responsible hereunder and (ii) retain,
or cause to be retained, for so long as any such taxable years or audits shall remain open for
adjustments, any records or information which may be relevant to any such tax returns or audits.

Section 14.3 Certain Employee Matters. Both Buyer and Seller agree to comply with
applicable withholding requirements with respect to wages paid in the taxable year that includes
the Closing Date. To the extent applicable, Buyer and Seller agree to use the alternate procedure
described in Internal Revenue
Service Revenue Procedure 2004-53, 2004-34 I.R.B. 320, Section 5, with respect to any
employees of Seller which become employees of Buyer.

Section 14.4 Governing Law. This Agreement shall be governed by, and construed in
accordance with, the law of the Commonwealth of Pennsylvania.

Section 14.5 Captions. The captions in this Agreement are inserted for convenience of
reference only and in no way define, describe or limit the scope or intent of this Agreement or any
of the provisions hereof.

Section 14.6 Successors and Assigns. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective heirs or successors and permitted
assigns.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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Section 14.7 Liability. If there shall be more than one person, firm or corporation
comprising Buyer, such persons and entities shall be jointly and severally liable hereunder.

Section 14.8 Construction. As used in this Agreement, the singular shall include the
plural and the plural shall include the singular, as the context may require. Each and every
provision of this Agreement has been mutually negotiated, prepared and drafted, each party has been
represented by legal counsel, and, in connection with the construction of any provision hereof or
deletions herefrom, no consideration shall be given to the issue of which party actually
negotiated, prepared, drafted or requested any provision or deletion. If any term, covenant,
condition, or provision of this Agreement or the application thereof to any person or circumstance
shall, at any time or to any extent, be invalid or unenforceable, the remainder of this Agreement,
or the application of such term or provision to persons or circumstances other than those to which
it is held invalid or unenforceable, shall not be affected thereby, and each term or provision of
this Agreement shall be valid and shall be enforced to the fullest extent permitted by law. If the
time period by which any right, option or election provided under this Agreement must be exercised,
or by which any act required
hereunder must be performed, or by which the Closing must be held, expires on a day which is a
Saturday, Sunday, or official federal or Commonwealth of Pennsylvania holiday, then such time
period shall be automatically extended through the close of business on the next business day.

Section 14.9 Execution and Delivery. Delivery of this Agreement for inspection or
otherwise by Seller to Buyer and/or its attorneys shall not constitute an offer or create any
rights in favor of Buyer or others and shall in no way obligate or be binding upon Seller, and this
Agreement shall have no force or effect unless and until the same is fully executed and delivered
by the parties and fully executed copies exchanged by the parties hereto.

Section 14.10 Exhibits. If the provisions of any Exhibit to this Agreement are
inconsistent with the provisions of this Agreement, the provisions of such Exhibit shall prevail.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

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Section 14.11 Litigation Expenses. In the event of any litigation regarding the
rights and obligations of the parties under this Agreement, the prevailing party shall be entitled
to recover reasonable and documented counsel fees, court costs and other direct litigation
expenses, including expert witness fees and expenses.

Section 14.12 Confidentiality. Buyer and Seller acknowledge that they have entered
into a separate confidentiality agreement dated [ * ], a copy of which is attached hereto
and made a part hereof as Exhibit I, and that except as noted in Section 14.13
below, the contents of this Agreement are subject to the terms thereof.

Section 14.13 Announcement; Memorandum of Agreement Seller acknowledges that, as a
publicly-held company, Buyer may have the obligation to announce publicly the existence of this
Agreement as a material contract and file a report with the Securities and Exchange Commission
disclosing the material terms hereof as required by the instructions to Form 8-K. If Buyer
determines in good faith, after consultation with its outside legal counsel, that such filing
is required, then Seller shall have the opportunity to review and comment on such disclosures
in advance of their release or filing. Buyer and Seller shall work cooperatively in developing
appropriate public statements with respect to such announcement. In addition, Buyer may, at
Buyer’s sole cost and expense, record a Memorandum of this Agreement, in form prepared by Buyer and
reasonably acceptable to Seller, satisfying applicable statutory and recording requirements, in the
Recorder’s Office of Lehigh County. If this Agreement is terminated prior to Closing, Buyer shall
promptly sign and deliver to Seller a termination of the Memorandum of Agreement in form
satisfactory to Seller for Seller to record at Seller’s sole cost and expense, which covenant shall
survive termination of this Agreement.

Section 14.14 No Partnership. Nothing contained in this Agreement shall be construed
to create a partnership or joint venture between the parties or their successors in interest.

Section 14.15 Seller’s and Buyer’s Liability under this Agreement. It is hereby
expressly agreed that any liability of the Parties arising hereunder, except as provided in
Article 11 hereof, for any reason whatsoever, shall in no event exceed [ * ]. It is
further hereby expressly agreed that in no event shall any member, manager, officer, trustee,
director, shareholder, employee, agent or representative of Seller have any personal liability in
connection with this Agreement or the transaction envisioned herein.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

41

 

Section 14.16 General Release. TO THE FULLEST EXTENT PERMITTED BY LAW, BUYER HEREBY
UNCONDITIONALLY AND IRREVOCABLY RELEASES AND FOREVER DISCHARGES SELLER, SELLER’S OFFICERS, MEMBERS,
MANAGERS, TRUSTEES, DIRECTORS, PARTNERS, SHAREHOLDERS, EMPLOYEES, REPRESENTATIVES AND AGENTS, AND
EACH OF THEIR RESPECTIVE AFFILIATES, OFFICERS, MEMBERS, MANAGERS, TRUSTEES, DIRECTORS, PARTNERS,
SHAREHOLDERS, EMPLOYEES, REPRESENTATIVES AND AGENTS (EACH A “SELLER PARTY” AND COLLECTIVELY
THE “SELLER PARTIES”) FROM ANY AND ALL LIABILITY OR RESPONSIBILITY FOR CLAIMS,
LOSSES AND DEMANDS, INCLUDING WITHOUT LIMITATION THOSE ARISING FROM PERSONAL INJURY OR DEATH,
AND ALL CONSEQUENCES THEREOF (INCLUDING WITHOUT LIMITATION ANY INTERRUPTION OR INTERFERENCE WITH
ANY BUSINESS OR ACTIVITIES BEING CONDUCTED ON THE PREMISES AND ANY LOSS OF OPPORTUNITY), WHETHER
NOW KNOWN OR NOT, WHICH MAY ARISE FROM (1) ANY LATENT OR PATENT DEFECTS, ANY HIDDEN OR CONCEALED
CONDITIONS, OR ANY SUBSOIL, GROUNDWATER OR GEOLOGICAL CONDITIONS, (2) THE CONDITION, STRUCTURAL
INTEGRITY, OPERABILITY, MAINTENANCE OR REPAIR OF ANY BUILDINGS, EQUIPMENT, FURNITURE, FURNISHINGS
OR IMPROVEMENTS, (3) THE PRESENCE OF ANY HAZARDOUS OR TOXIC MATERIALS OR SUBSTANCES, (4) THE
COMPLIANCE OF THE PREMISES WITH, OR VIOLATION OF, ANY LAW, STATUTE, ORDINANCE, RULE OR REGULATION
OF ANY GOVERNMENTAL ENTITY, INCLUDING WITHOUT LIMITATION APPLICABLE ENVIRONMENTAL LAWS, ZONING
ORDINANCES, AND BUILDING AND HEALTH CODES, OR (5) ANY OTHER MATTER OR THING AFFECTING OR RELATED TO
THE PREMISES, IN EACH CASE, EXCEPT FOR CLAIMS, LOSSES OR DEMANDS ARISING FROM (A) WILLFUL
MISREPRESENTATION OR FRAUD BY SELLER OR (B) THE PRESENCE, RELEASE OR EXPOSURE OF ANY PERSON TO ANY
HAZARDOUS SUBSTANCES AT OR ON THE PREMISES FIRST EXISTING OR FIRST OCCURRING DURING THE PERIOD
BEGINNING ON THE DATE THAT THE DUE DILIGENCE PERIOD EXPIRES AND ENDING ON THE CLOSING DATE, BUT
ONLY TO THE EXTENT THAT SUCH PRESENCE, RELEASE OR EXPOSURE WAS NOT CAUSED, DIRECTLY OR INDIRECTLY,
BY BUYER OR ANY OF ITS AFFILIATES, CONTRACTORS, AGENTS OR EMPLOYEES.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

42

 

Section 14.17 No Third-Party Beneficiaries. This Agreement will not confer any rights
or remedies upon any individual, corporation, partnership, limited liability company, trust,
unincorporated association, governmental entity or any agency, instrumentality or political
subdivision of a governmental entity, or any other entity or body (each a “Person”) other
than the parties hereto and their
respective successors and permitted assigns, other than Article 15, which will be for
the benefit of the Persons set forth therein, and any such Person will have the independent right
to enforce its rights under such Section.

Section 14.18 Forwarding of Materials For a period of thirty-six (36) months
following the Closing Date, Buyer shall forward all mail, remittance, receipts or other mailings
received relating to the operations of Seller conducted at the Premises prior to the Closing.

Section 14.19 Assumed Contracts. From and after the Closing, Buyer shall assume all
of the debts, liabilities and obligations of the Seller and its affiliates (as defined herein)
under the Operating Agreements and the Wastewater Agreement, and Buyer agrees to pay, perform and
discharge such debts, liabilities and obligations when due pursuant to the terms of such agreements
and as otherwise agreed between the parties in accordance with the terms of the Assignment and
Assumption Contracts.

Section 14.20 Pennsylvania “Bulk Clearance”.

(a) At or about the time of Closing, the Premises may constitute fifty-one percent (51%) or
more of the real property of Seller in the Commonwealth of Pennsylvania (the
“Commonwealth”) thereby requiring the Seller to comply with one or more of Pennsylvania’s
“bulk sales clearance” statues (42 P.S. §788.3; 69 P.S. §529; 72 P.S. §1403; 72 P.S. §7240; and/or
72 P.S. §7321.1) (the “Bulk Sales Laws”).

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

43

 

(b) If and to the extent the sale of the Premises requires Seller to comply with the notice
requirements under the Bulk Sales Laws or to obtain a clearance certificate in order to prevent
Buyer from being liable for any taxes imposed upon Seller, Seller shall so comply (although with
respect to any requirement to obtain a clearance certificate, Seller shall not be obligated to
actually have obtained a clearance certificate as of Closing, but shall be obligated to diligently
proceed to obtain a clearance certificate following Closing to the extent the Bulk Sales Laws
require Seller to obtain such a certificate in connection with this
transaction). Seller shall indemnify Buyer against any losses, claims, damages, fees, fines,
penalties and unpaid tax liabilities Buyer may incur due solely to any unsettled taxes and other
payments due the Commonwealth by Seller under the Bulk Sales Laws (collectively, the
“Indemnified Claim”). Neither Buyer nor its title insurance company will hold back or
escrow purchase monies towards assurance of compliance by Seller with the Bulk Sales Laws. If
Buyer receives a demand from the Commonwealth regarding an Indemnified Claim, Buyer shall provided
prompt written notice thereof to Seller. Seller shall thereafter take all steps necessary to pay
the Indemnified Claim to the Commonwealth or, if a dispute exists as to any sums owed the
Commonwealth by Seller, Seller shall prosecute its dispute during which time Buyer shall not pay
any disputed sums to the Commonwealth so long as Seller confirms its indemnification obligations
set forth above and causes any lien filed by the Commonwealth to be released from the Premises or
otherwise bonded so as not to constitute a lien on the Premises under applicable law.

(c) If and to the extend Buyer’s title insurance company shall raise the Bulk Sales Laws as
an exception to title insurance, such an exception shall be deemed a permitted exception;
provided, however, that Seller shall provide Buyer’s title company with such indemnities as it may
request (so long as no escrow is required by such title company) in order to provide Buyer with
affirmative insurance with respect to Bulk Sales Laws and shall otherwise cooperate with providing
relevant information to such title company with respect to Buyer’s exposure to Seller’s tax
liability under Bulk Sales Laws.

Section 14.21 Counterparts. This Agreement may be executed in several counterparts,
each of which shall constitute an original and all of which, when taken together, shall constitute
one agreement.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

44

 

ARTICLE 15

Employee Matters.

Section 15.1 Offers of Employment. No later than seven (7) days prior to the Closing,
Buyer shall make offers of employment to [ * ].

Section 15.2 Benefit Plans. [ * ].

Section 15.3 Allocation of Employment-Related Liability. [ * ].

IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement under seal as of the date
first above written.

	 	 	 	 	 
	 	 	SELLER:
	 
	 	 	 	 
	 	 	DIAGEO NORTH AMERICA, INC.
	 
	 	 	 	 
	 

	 	By:
	 	/s/ JOSEPH BARRY
	 

	 	 	 	 
	 	 	Name: Joseph Barry
	 	 	Title: Vice President & Secretary
	 
	 	 	 	 
	 	 	BUYER:
	 
	 	 	 	 
	 	 	BOSTON BEER CORPORATION
	 
	 	 	 	 
	 

	 	By:
	 	/s/ MARTIN F. ROPER
	 

	 	 	 	 
	 	 	Name: Martin F. Roper

	 	 	Title: President & CEO

As to the escrow provisions only:

ESCROW AGENT:

FIRST AMERICAN TITLE INSURANCE COMPANY

	 	 	 	 	 
	By:

	 	/s/ JO-ANN ALLAN
	 	 
	 

	 	 	 	 
	Name: Jo-Ann Allan	 	 
	Title: Underwriting Counsel	 	 

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and Exchange Commission pursuant to a request for confidentiality treatment.

 

45

 

EXHIBIT A

Description of the Land

All that certain tract or piece of land, with the buildings and improvements thereon located in
Upper Macungie Township, Lehigh County, Pennsylvania, bounded and described as follows:

Beginning at an iron pin (found), a property corner in the southwesterly line of lands now or
formerly of Keystone Lodging ENT. L.P. (Deed recorded in Deed Book Volume 1692, at Page 920) and
also being a northwesterly property corner of lands now or formerly of Minnesota Mining and
Manufacturing Company (Deed recorded in Deed Book Volume 1468, at Page 834), and also being the
most northwesterly corner of a variable width access easement over lands now or formerly of
Minnesota Mining and Manufacturing Company, (easement recorded in Deed Book Volume 1455, at Page
1), said point being located the four following courses and distances from an iron pin (found) in
the southeasterly right-of-way line at the westerly terminus of Upper Macungie Township Road 907,
also known as Stroh Drive (100.00 feet wide) and being a northerly property corner of lands now or
formerly of Minnesota Mining and Manufacturing Company (Deed recorded in Deed Book Volume 1468, at
Page 834): (a) partially crossing the westerly terminus of Upper Macungie Township Road 907,
crossing the easterly terminus of the variable width access easement, and along the northerly
property line of the lands now or formerly of Minnesota Mining and Manufacturing Company, N 24° 26’
21” W 80.11 feet to a point on a curve in the northerly property line of the lands now or formerly
of Minnesota Mining and Manufacturing Company, and the northerly side of the variable width access
easement; thence along the northerly property line of the lands now or formerly of Minnesota Mining
and Manufacturing Company, and the northerly side of the variable width access easement, the three
following courses and distances: (b) on a curve to the right having a radius of 542.96 feet (delta
43° 29’ 37”, tangent 216.58 feet, chord S 86° 52’ 33” W 402.34 feet) for an arc distance of 412.16
feet to a point of tangency, (c) N 71° 22’ 38” W 239.75 feet to a point, and (d) N 59° 46’ 17” W
165.85 feet to the beginning point of this description; thence (1) along the lands now or formerly
of Minnesota Mining and Manufacturing Company, and crossing the westerly terminus of the variable
width access easement, S 18° 37’ 22” W 149.99 feet to an iron pin (found) on a curve; thence
continuing along the lands now or formerly of Minnesota Mining and Manufacturing Company the three
following courses and distances: (2) on a curve to the left having a radius of 344.00 feet (delta
47° 02’ 55”, tangent 149.75 feet, chord S 82° 38’ 08” W 274.61 feet) for an arc distance of 282.48
feet to an iron pin (found) at a point of tangency, (3) S 59° 06’ 42” W 965.07 feet to an iron pin
(found) at a point of curvature, and (4) on a curve to the right having a radius of 376.00 feet
(delta 64° 00’ 55”, tangent 235.02 feet, chord N 88° 52’ 49” W 398.58 feet) for an arc distance of
420.10 feet to an iron pin (found); thence (5) continuing along the lands now or formerly of
Minnesota Mining and Manufacturing Company and partially crossing former Upper Macungie Township
Road 523B, also known as Fogel Road (33.00 feet wide), vacated by Upper Macungie Township Ordinance
No. 1-95, S 59° 07’ 22” W 58.65 feet to a railroad spike (found) in line of lands now or formerly
of the Great Spring Waters of America, Inc. (Deed recorded in Deed Book Volume 1542, at Page 786);
thence (6) through former Upper Macungie Township Road 523B, as vacated by Township Ordinances No.
1-95 and No. 3-95, along the lands now or formerly of the Great Spring Waters of America, Inc.,
lands now or formerly of the PREFCO Fifteen Limited Partnership (Deed recorded in Deed Book Volume
1657, at Page 293), and partially crossing Pennsylvania State Route 0078, also known as Interstate
Route 78, U.S. Route

			
	[*]	 	 indicates that information has been omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

22, and formerly known as L.R. 443 (variable width), N 30° 52’ 38 W (passing over an iron pin
[found] in the southerly legal right-of-way line for limited access of Pennsylvania State Route
0078 at 1,900.00 feet) for a distance of 1,923.06 feet to a point in Pennsylvania State Route 0078;
thence through Pennsylvania State Route 0078 the three following courses and distances: (7) N 5°
52’ 22” E 47.85 feet to a point, (8) N 50° 12’ 22” E 7.35 feet to a point, and (9) N 75° 05’ 17” E
1,461.57 feet to a point; thence (10) partially crossing Pennsylvania State Route 0078, along lands
now or formerly of Lehigh County Industrial Development Authority (Deed recorded in Deed Book
Volume 1375, at Page 978), S 37° 00’ 43” E (passing through an iron pipe [found] in the southerly
legal right-of-way line for limited access of Pennsylvania State Route 0078 at 75.55 feet) for a
distance of 1,666.24 feet to an iron pipe (found) in line of the aforementioned lands now or
formerly of Keystone Lodging ENT. L.P.; thence (11) along the lands now or formerly of Keystone
Lodging ENT. L.P., S 71° 22’ 38” E 167.00 feet to the point or place of beginning.

Containing approximately 69 Acres.

All as shown on a plan entitled Boundary Survey Plan Showing Lands Of Pabst Brewing Company, a
Delaware Corporation, Located In Upper Macungie Township, Lehigh County, PA, Prepared For Guinness
UDV North America, Inc.”, dated December 4, 2001, bearing File Number #S-9870, (Sheets 1 and 2 of
2), as prepared by The Pidcock Company, Civil Engineers • Architects • Land Planners • Surveyors,
Allentown, Pennsylvania.

The above-described property is subject to the following:

	(a)	 	Encroachments, overlaps, boundary line disputes, and any other matters which would be
disclosed by an accurate survey and inspection of the premises.
	 
	(b)	 	Easements, or claims of easements, not shown by the public records
	 
	(c)	 	Modification of Easement Agreements and Consent to Use as in Misc. Book Vol. 842, page 1156.
	 
	(d)	 	Easements as set forth in Deed Book Vol. 1455, page 1.
	 
	(e)	 	Agreement of Easement between The F & M Schaefer Brewing Co. and Pennsylvania Power & Light
Company as in Misc. Book 350, page 452.
	 
	(f)	 	Rights granted to Pennsylvania Power & Light Company as in Misc. Book 348, page 339 and Misc.
Book 722, page 70.
	 
	(g)	 	Rights granted to The Bell Telephone Company of Pennsylvania as in Misc. Book 348, page 1155
and Misc. Book 357, page 297.
	 
	(h)	 	Rights granted to UGI Utilities, Inc. as in Misc. Book 736, page 903.
	 
	(i)	 	Easement Agreement and Assignment of Easement Reservation as in Misc. Book 715, page 711 and
additional Easement Agreement as in Misc. Book 805, page 442 and Consent and Modification of
Easement Agreement as in Misc. Book 815, page 218.

			
	[*]	 	 indicates that information has been omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

	(j)	 	Easement granted to Lehigh County Authority as in Misc. Book 462, page 633, Misc. Book 494,
page 1064, Misc. Book 558, page 175 and Misc. Book 715, page 767.
	 
	(k)	 	Easement granted to Upper Macungie Township Authority as in Misc. Book 502, page 783.
	 
	(l)	 	Easement Agreement and Consent as in Misc. Book 437, page 454, Amendment No. I thereto as in
Misc. Book 441, page 406 and Acknowledgement and Consent thereto as in Misc. Book 626, page
379.
	 
	(m)	 	Amendment between The Stroh Brewery Company and Lehigh County Authority to an agreement dated
June 12, 1970 as in Misc. Book 520, page 1106.
	 
	(n)	 	Consent Agreement as in Misc. Book 786, page 763.
	 
	(o)	 	Portions of Fogel Road (T-523B) vacated by Ordinance No. 3-93 and Ordinance No. 1-95 as shown
on Boundary Survey Plan showing lands of Pabst Brewing Company prepared for Guinness UDV North
America, Inc. by The Pidcock Company dated Dec. 4, 2001 #S-9870.
	 
	(p)	 	All other encumbrances appearing of record provided the same do not affect the marketability
of title to the property.

			
	[*]	 	 indicates that information has been omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

EXHIBIT B

Survey

			
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and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

			
	[*]	 	 indicates that information has been omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

EXHIBIT C

Excluded Equipment and Property

The following equipment shall not be included in the Equipment to be transferred from Seller to
Buyer pursuant to the Agreement:

[ * ]

			
	[*]	 	 indicates that information has been omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

EXHIBIT D

Operating Agreements

[ * ]

			
	[*]	 	 indicates that information has been omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

EXHIBIT E 

Transition Plan

Transition Plan

During the Transition Period, Seller and Buyer shall work cooperatively to assure a smooth
transition of control of the operations of the Premises from Seller to Buyer, to support Buyer’s
reasonable Due Diligence, and after Due Diligence, to support Buyer’s evaluation and testing of the
brewing process and any investment Buyer deems necessary to make at Buyer’s expense to startup up
the brewing process and prepare for the racking and bottling of Buyer’s products after the Closing
Date.

To that end, Seller and Buyer agree to proceed as outlined in this Transition Plan. Buyer
and Seller shall respond in a timely fashion to all reasonable requests of Buyer or Seller for
information, support, decisions, meetings, or resources, provided that any reasonable out of pocket
costs incurred by Seller in supporting Buyer’s request shall be reimbursed to Seller, and that
nothing in this agreement shall require Seller to take any action that would impair Seller’s
ability to produce its own products. Further, to the extent of any conflict between the terms of
this Transition Plan and the Agreement, the provisions of the Agreement shall govern. Terms used
but undefined in this Agreement shall have the definitions set forth for such terms in the
Agreement.

1. Representatives, Buyer Project Team. Seller and Buyer shall each appoint a lead
representative (respectively, “Seller’s Representative” and “Buyer’s Representative”, and
collectively the “Representatives”) to be its spokesperson for all matters arising during the
Transition Period. The initial Representatives are as follows:

Seller – [ * ]

Buyer – [ * ]

Each party may change its Representative in its discretion by providing written notice to the other
party. Each party shall also have discretion in determining its own transition team. All
communication between the parties will copy the Representatives. It is the intention that as soon
as practical the Representatives shall be based at the Premises on a full time basis during the
Transition Period; provided, however, that each of Buyer and Seller shall designate in writing to
the other an alternative Representative to act in the event the individuals identified in this
Paragraph 1 above are not on the Land or otherwise available.

Seller and Buyer authorize the Representatives to make written changes to this Transition Plan as
they jointly see fit and mutually agree so that the projects and operations contemplated herein
flow smoothly and efficiently.

Buyer shall be entitled to create a Project Team of Buyer’s employees and consultants that are
based on the Premises (see Office Space, paragraph 3, below). All
consultants will be required to execute and deliver confidentiality agreements covering both Buyer’s and Seller’s confidential
information.

			
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and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

2. Review Meetings. During the Transition Period, Buyer’s Representative shall meet
at least monthly with Seller’s Representative to review the status of transition issues and
projects and progress against any plans, as and to the extent reasonably requested by Buyer’s
Representative. Participation in such review meetings shall include such other Seller and Buyer
personnel, as either Seller’s Representative or Buyer’s Representative may deem appropriate.

3. Office Space. During the Transition Period, Seller shall provide Buyer’s personnel
with such office space on site at the Premises, as Buyer may reasonably request at no cost to
Buyer. Buyer shall provide its own phones, computers and other normal office equipment and
supplies. Seller shall facilitate Buyer obtaining access to internet and to external phone lines at
Buyers expense.

4. Access. Throughout the Transition Period, Seller shall afford Buyer with such
access to the Premises and to those of Seller’s personnel charged with management and oversight of
Seller’s operations at the Premises as Buyer may reasonably request, with the understanding that
such access shall be afforded in a manner so as to minimize potential disruption to Seller’s
continuing operations. Seller shall also provide Buyer with such information, records, and the
like, as Buyer may reasonably request. The Representatives shall work cooperatively to develop
access guidelines for the efficient and controlled access to the Premises, including but not
limited to safety, notice and permission process, confidentiality, training, supervision, and
permitted areas.

5. Cooperation during Due Diligence. In addition to any requirements contained in the
Agreement, including but not limited to Section 5.5, Seller shall, upon the reasonable
request of Buyer, join in meetings and negotiations with local governmental agencies and
authorities and with suppliers and service providers with respect to the assignment, extension or
other changes to water or wastewater agreements and Operating Agreements.

6. Post-Due Diligence Period Activities. Upon the expiration of the Due Diligence
Period and after the payment of the $10,000,000 total Deposit by Buyer, unless Buyer shall have
terminated the Agreement for the Premises:

(a) Buyer shall be entitled to commence, at its sole expense, testing and such capital
improvements to the Premises, as Buyer deems necessary or appropriate, in its sole discretion (but
potentially including the listing at Section 8 below);

i. Buyer shall develop detailed project plans for the entire Transition Period. Each project
plan and any changes or alterations to an approved plan that could affect Seller’s operations or
that require Seller resources, shall be submitted to Seller’s Representative for approval, which
approval will not to be unreasonably withheld or delayed. Seller’s Representative shall be allowed
reasonable time for the review and approval of the project plans.

			
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and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

ii. As part of the project planning process, Buyer shall develop schedules for testing of the
processes in the brewhouse and cellar area in coordination with Seller’s Representative. It is
understood that it may be necessary to engage the services of some of Seller’s employees in order to implement such testing. Seller will not unreasonably withhold
or delay its consent to providing, at a reasonable fee, such employees for this purpose. Buyer
shall provide Seller reasonable notice of schedules and intent to engage Seller’s employees for
this purpose, provided that Buyer shall provide Seller with reasonable notice of such testing
schedules and detailed information regarding the number of employees needed to implement such
testing, if any, and extent of such employees involvement.

iii. Projects that will have an unavoidable negative impact on Seller’s operations which
cannot be reasonably compensated for, shall be delayed in execution until after Closing Date. Such
projects requiring execution delay, may be detailed, designed and priced by Buyer during the
Transition Period.

(b) Buyer’s Representative shall be informed of and entitled to participate in all Seller
staff meetings that relate to the operations of the Premises, except as they relate to confidential
Seller business and/or product information.

(c) Seller agrees to maintain Preventative Maintenance practices, Building and Grounds
Maintenance, and general Premises upkeep at the same monthly spending level [ * ]. Seller will as soon as possible, provide details of such baseline spending level,
and will provide reports of monthly ongoing spending to Buyer. The parties acknowledge and agree
that capital investments made during this 12-month period are excluded.

(d) If Seller identifies a Major Capital Investment (as defined in Section 10.1 of the
Agreement) that Seller is not obligated to complete, Seller’s Representative will meet with Buyer’s
Representative to review the matters with Buyer and determine if Buyer would like to assume cost
responsibility for the Major Capital Investment at Buyer’s sole discretion.

Seller and Buyer will work cooperatively together on items required to be in place at Closing in
order for Buyer to perform the Packaging Services Agreement of even date herewith. The Seller
Representatives and Buyer Representatives will work cooperatively together with the Relationship
Managers (as defined in the Packaging Services Agreement) to develop and implement a project plan
to ensure smooth startup post Closing of the Packaging Services Agreement. For avoidance of doubt,
Boston Beer is not required to pay Seller’s out of pocket costs for Seller’s participation on items
covered by this paragraph.

7. Seller Personnel.

(a) Except to the extent otherwise provided in the Agreement, Seller shall use commercially
reasonable efforts to (i) maintain its work force at the Premises throughout the Transition Period
and (ii) assure that such work force will be available to become employees of Buyer or an affiliate
of Buyer upon the Closing.

(b) Buyer and Seller agree to develop employee communication plan that will present employees
with the appropriate details and impact of the transition, and be designed to retain such employees
and provide for smooth and efficient operation of the Premises prior and after Closing. Buyer and
Seller acknowledge that a potential impact of this transition is the distraction of employees away
from Seller’s products and processes towards the Buyer and the
brewhouse, and therefore Buyer and Seller agree to review this in each Review Meeting, and to establish
programs, communication and controls to attempt to minimize such impact. Seller’s Representative
shall be given a reasonable time to review each such project plan.

			
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and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

(c) Buyer acknowledges that it will not give instructions to Seller employees that incur costs
for Seller without obtaining the Seller’s Representatives prior approval. Seller agrees to provide,
at a reasonable fee, Seller’s employees to Buyer to reasonably assist Buyer during the Transition
Plan at Buyer’s reasonable request upon reasonable notice.

8. List of Projects contemplated by Buyer under Section 6(a) above (nothing in this
section will require Buyer to initiate these projects or prevent Buyer from adding projects)

[ * ]

			
	[*]	 	 indicates that information has been omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

EXHIBIT F

[Intentionally Omitted]

 

 

 

EXHIBIT G

Bill of Sale

For good and valuable consideration, the receipt of which is hereby acknowledged, DIAGEO NORTH
AMERICA, INC., a Connecticut corporation (“Seller”), does hereby sell, transfer, and convey
to BOSTON BEER CORPORATION, a Massachusetts corporation (“Buyer”), all of Seller’s rights,
title and interest in and to the Equipment and the Sign and all warranties, guaranties, permits and
licenses relating to the Appurtenances, Equipment and the Sign, to the extent assignable
(collectively, the “Property”). All capitalized terms used herein, but not defined herein,
shall have the meanings set forth in the Contract of Sale (as hereinafter defined).

Seller has executed this Bill of Sale and BARGAINED, SOLD, TRANSFERRED, CONVEYED and ASSIGNED the
Property and Buyer has accepted this Bill of Sale and purchased the Property AS IS AND WHEREVER
LOCATED, WITH ALL FAULTS AND WITHOUT ANY REPRESENTATIONS OR WARRANTIES OF WHATSOEVER NATURE,
EXPRESS, IMPLIED, OR STATUTORY, EXCEPT AS EXPRESSLY SET FORTH HEREIN AND IN THE CONTRACT OF SALE
BETWEEN SELLER AND BUYER, DATED AS OF                     , 2007 (the “CONTRACT OF SALE”), THE TERMS
OF WHICH ARE EXPRESSLY INCORPORATED HEREIN.

Dated
this                      day of                     , 200                    .

	 	 	 	 	 	 	 	 	 
	SELLER:	 	 	 	DIAGEO NORTH AMERICA, INC., a Connecticut corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	BUYER:	 	 	 	BOSTON BEER CORPORATION, a Massachusetts corporation	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	Title:	 	 	 	 

 

 

 

EXHIBIT H

Packaging Services Agreement

 

 

PACKAGING SERVICES AGREEMENT

BETWEEN

DIAGEO NORTH AMERICA, INC.

AND

BOSTON BEER CORPORATION

MADE AS OF

August 1, 2007

 

 

 

 

 

PACKAGING SERVICES AGREEMENT

THIS AGREEMENT is made as of August 1, 2007 between DIAGEO NORTH AMERICA, INC., a Connecticut
corporation (“Diageo”), and BOSTON BEER CORPORATION, a Massachusetts corporation (“Boston Beer”),

RECITALS

WHEREAS, Diageo and Boston Beer have entered into a contract of sale of even date herewith
(the “Contract of Sale”) pursuant to which Diageo has agreed to sell the production facility
located at 7880 Penn Drive, Breinigsville, PA (the “Lehigh Valley Brewery”) to Boston Beer;

WHEREAS, after the sale of the Lehigh Valley Brewery to Boston Beer, Diageo desires to
continue the production of the Products (as defined herein) at the Lehigh Valley Brewery according
to the terms and conditions set forth herein; and

WHEREAS, upon the purchase of the Lehigh Valley Brewery, Boston Beer shall be willing and able
to provide, or cause to be provided, blending, packaging, repackaging, warehouse and shipping
services according to the terms and conditions set forth herein.

AGREEMENT

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Parties hereto agree as follows:

ARTICLE 1

INTERPRETATION

Section 1.1 Specific Definitions

In this Agreement, the following terms have the respective meanings assigned to them:

“Affiliate” of a Person shall mean any other Person that directly or indirectly
controls, is controlled by, or is under common control with, such Person. “Control”
including, with correlative meaning the terms “controlled by” and “under common control
with” as used with respect to any Person means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and policies of such Person
whether through the ownership of voting securities, contract or otherwise.

“Agreement” means this Packaging Services Agreement, including its recitals and
schedules, as amended from time to time.

“Alternating Proprietorship” has the meaning set forth in 27 C.F.R. Part 25 and
Alcohol and Tobacco Tax and Trade Bureau Industry Circular 2005-2.

“Available Production Capacity” has the meaning as set forth in Schedule F.

			
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and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

“Bottling Fee” has the meaning set forth in Section 5.1 and Schedule D.

“Boston Beer” means Boston Beer Corporation, a Massachusetts corporation.

“Brand Technical Manual” has the meaning set forth on Schedule B.

“Business Day” means a day other than a Saturday, Sunday or statutory holiday in
Pennsylvania.

“C-TPAT” has the meaning set forth in Section 2.12(c).

“Case” means twenty-four bottles of either 11.2 ounces or 12 ounces, or 12 bottles
of 24 ounces.

“Case Unit” has the meaning set forth in Section 2.4(b).

“Code” means the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder.

“Contract of Sale” has the meaning set forth in the recitals to this Agreement.

“Diageo” means Diageo North America, Inc., a Connecticut corporation.

“Diageo Performance” shall mean the performance of the Lehigh Valley Brewery under
Diageo ownership as measured by KPIs, Brand Technical Manual and
other relevant measures [ * ].

“Disaster Recover Plan” shall mean crisis management, business continuity and
contingency plans.

“Effective Date” shall mean the effective date of this Agreement, which shall be the
date on which Boston Beer purchases the Lehigh Valley Brewery from Diageo in accordance with
the Contract of Sale.

“Force Majeure Events” has the meaning set forth in Section 7.2.

“Forecast” has the meaning set forth in Section 2.4(a).

“Government Authority” means any federal, national, state, municipal or local
government, administrative or legislative body, governmental or regulatory agency or
authority, bureau, commission, court or department.

“Indemnified Parties” has the meaning set forth in Section 8.5.

“Indemnifying Party” has the meaning set forth in Section 8.5.

			
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and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

“Ingredients” means any material (including chemicals but excluding water) used by
Diageo in the production of the Products, but excludes Packaging Supplies and Packaging
Materials.

“JAMS” has the meaning set forth in Section 13.11.

“Know-How” means the technical, manufacturing and processing knowledge, data,
specifications, recipes, drawings and information (whether or not known to the public) that
is proprietary to Diageo and is necessary to manufacture, bottle, and package the Products
in accordance with this Agreement.

“KPI” means Key Performance Indicators as specified in Schedule J.

“Laws” means any applicable federal, national, state, municipal or local law,
statute, ordinance, rule, regulation, code, order, judgment, injunction or decree.

“Lehigh Valley Brewery” has the meaning set forth in the recitals to this Agreement.

“Lehigh Valley Standard” has the meaning set forth in Section 2.7(c) of this
Agreement.

“Loss” shall mean any damage, claim, loss, charge, action, suit, proceeding,
deficiency, tax, interest, penalty and reasonable costs and expenses (including reasonable
attorneys’ fees).

“New Products” has the meaning set forth in Section 2.11.

“Occupation” has the meaning set forth in Section 2.1 of this Agreement.

“Other Products” means all products produced at the Lehigh Valley Brewery (whether
for Boston Beer or one of its Affiliates or for a third party) that are not included in the
Products.

“Packaging Fee” shall be collectively the Bottling Fee and the Repack Fee payable to
Boston Beer for its services hereunder as set forth in Section 5.1 and Schedule D.

“Packaging Materials” means all packaging and related materials necessary for the
packaging, storage and shipment of Products at the Lehigh Valley Brewery, including but not
limited to glass, crowns, labels and corrugated packaging, but excluding Packaging Supplies.

“Packaging Supplies” includes glues, hot melt, shrink wrap and paper shipping
labels, but excludes CO2, pallets, dunnage and other similar items.

“Parties” shall collectively mean Boston Beer and Diageo.

“Person” means an individual, a corporation, a partnership, a limited liability
company, an association, a trust or other entity or organization.

			
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and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

[ * ]

[ * ]

[ * ]

[ * ]

“Produced Products” shall be each days bottling or repack output and will include
the Products bottled, any repack Product bottled, and any Products repacked.

“Production Request” has the meaning set forth in Section 2.5(a).

“Products” has the meaning set forth in Schedule A.

“Production Order” has the meaning set forth in Section 2.4(a).

“Relationship Manager” shall have the meaning set forth in Section 2.3(e) of this
Agreement.

“Repack Fee” has the meaning set forth in Section 5.1 and Schedule D.

“Ship”, “Shipping”, “Shipped”, “Shipment” or other similar
terms as used with respect to the delivery of the Products or making Products available for
shipment at the Lehigh Valley Brewery.

“Taxes” means all federal, state, municipal or local taxes, including income, gross
receipts, value added, goods and services, severance, property, production, sales, use,
duty, license, excise, franchise, employment, withholding or similar taxes, together with
any interest, additions or penalties with respect thereto and any interest in respect of
such additions or penalties.

“Term” has the meaning set forth in Section 7.1.

“Trademarks” means the trademarks described on Schedule C.

“TTB” means the Alcohol and Tobacco Tax and Trade Bureau of the U.S. Department of
the Treasury or successor agency.

“Weekly Production Capacity” has the meaning set forth in Section 2.7(b).

“Weekly Production Capacity per Shift” means one-third of the Weekly Production
Capacity.

			
	[*]	 	 indicates that information has been omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

Section 1.2 Other Interpretation Provisions

(a) The words “hereof,” “herein” and “hereunder” and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not to any particular provision of
this Agreement.

(b) The terms defined in the singular shall have a comparable meaning when used in the plural,
and vice versa.

(c) The terms “Dollars” and “$” shall mean U.S. Dollars.

(d) References herein to a specific Article, Section or Schedule shall refer, respectively, to
Articles, Sections or Schedules of this Agreement, unless the express context otherwise requires.

(e) Wherever the word “include,” “includes” or “including” is used in this Agreement, it shall
be deemed to be followed by the words “without limitation”.

Section 1.3 Statutory References

Unless otherwise specifically herein provided, a reference in this Agreement to any statute is to
that statute as now enacted or as the same may from time to time be amended, re-enacted or replaced
and includes any regulations made thereunder.

Section 1.4 Schedules

The following are the Schedules to this Agreement:

	 	 	 	 	 
	Schedule A

	 	-
	 	Products
	Schedule B

	 	-
	 	Brand Technical Manual
	Schedule C

	 	-
	 	Trademarks
	Schedule D

	 	-
	 	Packaging Fee Schedule
	Schedule E

	 	-
	 	Available Packaging Capacity
	Schedule F

	 	-
	 	Available Warehouse Capacity
	Schedule G

	 	-
	 	Provision to Diageo of Production/Shipping Information
	Schedule H

	 	-
	 	Diageo KPIs
	Schedule I

	 	-
	 	Minimum Run Guidelines
	Schedule J

	 	-
	 	Material Incident Report Policy

			
	[*]	 	 indicates that information has been omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

ARTICLE 2

ALTERNATING PROPRIETORSHIP

Section 2.1 Intent to Alternate

It is the intent of the Parties to establish an Alternating Proprietorship relationship in
accordance with the rules and regulations established by the TTB, as amended from time to time,
whereby Diageo will function as the brewer when the Products are produced and packaged at the
Lehigh Valley Brewery (the “Occupation”). From immediately prior to the commencement of the
brewing process, and for all times thereafter, Diageo shall own all Ingredients, Packaging
Materials, work in progress, finished goods etc. and shall bear the full risk of loss.

If an Alternating Proprietorship is not established based on the terms of this Agreement, the
Parties agree to renegotiate this Agreement in good faith to establish an Alternating
Proprietorship, provided that Diageo shall reimburse Boston Beer for any agreed incremental costs
to Boston Beer due to change in the Agreement. If an Alternating Proprietorship is not established
as of the Effective Date, Diageo will reimburse Boston Beer for any excise tax or other Tax on the
production of the Products by Boston Beer, or any other cost increases that are incurred by Boston
Beer, due to the absence of such an Alternating Proprietorship arrangement

Section 2.2 Occupation of Brewery

(a) Boston Beer grants to Diageo the right to occupy the Lehigh Valley Brewery for the purpose
of storing Ingredients and Packaging Materials, manufacturing, processing, blending, packing,
repacking, and storing its Products as provided for in this Agreement. Nothing in this Agreement
shall in any way be construed to grant Diageo any property interest in the Lehigh Valley Brewery.

(b) During the course of an Occupation, upon at least 24-hours prior notice to Boston Beer’s
Plant Manager of the Lehigh Valley Brewery (except in the event of an emergency involving an injury
or actual or likely production stoppage, in which case Diageo shall provide notice as promptly as
practicable), Diageo shall be entitled to full supervised access to the Lehigh Valley Brewery,
including but not limited to the ability to review and monitor the practices and procedures
relating to the production, packaging, repacking, storage and shipment of Products and to take
routine line samples of the Products at any time; provided that Diageo will in no event have access
to Boston Beer’s records, packaging materials, or other proprietary information or materials.

(c) Diageo shall keep books and records (using Boston Beer employees for record keeping as
appropriate) related to the production of the Products at the Lehigh Valley Brewery, separate and
apart from the books and records of Boston Beer. Upon at least 24 hours prior notice to Boston
Beer, Diageo shall have supervised 24-hour access to such books and records.

			
	[*]	 	 indicates that information has been omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

Section 2.3 Employees

(a) Boston Beer shall utilize its employees as necessary to produce Diageo’s Products in
accordance with this Agreement. Such employees shall at all times remain employees of Boston Beer.
Boston Beer shall at all times retain the sole authority to hire and fire employees, including but
not limited to those employees producing Products for Diageo.

(b) Boston Beer shall at all times be responsible for the payment of wages and benefits to its
employees, including those producing Products for Diageo. Diageo shall pay Boston Beer for the
services of such employees as part of the Packaging Fee in accordance with this Agreement. Diageo
shall have no obligations with respect to Boston Beer’s employees.

(c) Boston Beer will provide all employees necessary for the production of the Products at the
Lehigh Valley Brewery.

(d) During the Occupation, Boston Beer will use reasonable business efforts to ensure the
services performed pursuant to this Agreement are at a level consistent with Diageo Performance.

(e) At least one hundred and twenty (120) days prior to the Effective Date, Diageo and Boston
Beer shall each designate an employee (“Relationship Manager”) who shall serve as the primary
contact on behalf of their respective companies to work cooperatively together on startup and
continuity of production matters, to ensure good communication relating to business matters,
discussion and problem solving. At a mutually convenient time each calendar quarter during the
Term, the Relationship Managers will meet at the Lehigh Valley Brewery to review the Parties’
performance for the previous quarter and discuss operational and any other issues between the
Parties (“Quarterly Business Review Meeting”). At such Quarterly Business Review Meetings, the
Parties will identify and evaluate, any continuous improvement opportunities for the benefit of
both Parties.

Section 2.4 Forecasts

(a) At least twenty (20) Business Days prior to the commencement of each calendar month during
the Term, beginning three (3) months prior to the Effective Date, Diageo shall provide to Boston
Beer a good faith volume estimate of Diageo’s requirements for
the bottling or repack of Products [ * ].

			
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and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

(b) The Parties acknowledge that, except as they may otherwise agree, the Products shall
primarily be produced in “Case Units” consisting of (i) twenty-four 12 ounce bottles or twenty-four
11.2 ounce bottles, whether packaged as a twenty-four bottle loose Case, a four six-pack Case or a
two twelve-pack Case (each a “Case Unit”), and (ii) twelve twenty-four ounce bottles (each a “Case
Unit”). Diageo shall promptly notify Boston Beer in the event of a material change in Diageo’s
volume or Product mix estimate contained in any Forecast to facilitate Boston Beer’s planning.

(c) The Forecast shall be itemized by Product, by package configuration and by mix pack type,
and shall include the bottled Product required for planned repack production.

Section 2.5 Production Requests

(a)
 [ * ].

(b) The Parties acknowledge that a shift consists of forty (40) operating hours per week, and
Boston Beer will only be required to add shifts upon four weeks notice from Diageo, and if a shift
is added, it shall be for a minimum of eight weeks production for Diageo; provided that Boston Beer
will reasonably consider requests to add shifts on less than four weeks notice and/or for less than a minimum of eight weeks production on terms acceptable
to the Parties.

			
	[*]	 	 indicates that information has been omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

Section 2.6 No Minimum Volume Guarantees

Boston Beer acknowledges that there are no contractual minimum volume guarantees under this
Agreement, and Boston Beer hereby releases Diageo from any claim of any guaranteed or minimum
volume, except volume committed for Production Requests and/or Production Orders.

Section 2.7 Staffing; Allocation of Capacity; Lehigh Valley Standard

(a) Boston Beer shall maintain sufficient staffing and line capacity at the Lehigh Valley
Brewery to fulfill the Production Requests [ * ].

(b) The weekly production capacity (“Weekly Production Capacity”) of [ * ] shall be based on
five (5) days a week, eight (8) hours per shift, and(3) three shifts per day, and shall be
calculated based on [ * ], unless Boston Beer and Diageo mutually agree on an altered capacity, and
Diageo agrees to pay overtime charges pursuant to Section 2.5(b).

(c) [
* ].

Section 2.8 Sampling

Boston Beer shall submit and ship to Diageo, at Diageo’s cost, samples of each production run of
the Products to such locations as Diageo may reasonably request, at Diageo’s cost.

Section 2.9 Rejected Products

(a) If Diageo rejects any Products, or samples thereof, due to the fact that such Products, or
such samples thereof, fail to conform to the terms of this Agreement, Diageo will notify Boston
Beer in writing of such failure and will provide samples of such Products, if available, or such
samples thereof, to Boston Beer for its inspection. If Boston Beer disputes Diageo’s judgment as
to whether such Products, or such samples thereof, conform to the terms of this Agreement, Boston
Beer shall notify Diageo in writing thereof within five (5) Business Days of receipt of such notice
from Diageo. If such dispute cannot be promptly resolved by the parties, the matter in dispute
shall be resolved in the manner set forth in Section 13.11.

(b) If
(i)Boston Beer agrees with Diageo’s judgment as to whether such
Products, or such samples thereof, fail to conform, (ii) Boston Beer
fails to respond to Diageo’s notice within such five (5) Business Day period, or (iii) Boston Beer disagrees with Diageo’s
judgment but such Products or such samples thereof are determined pursuant to Section 13.11 to fail
to conform, then the Products shall be deemed rejected products (“Rejected Products”). Rejected
Products shall be handled or disposed in accordance with Diageo’s written instructions as given to
Boston Beer.

			
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and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

Section 2.10 Equipment and Parts 

(a) The Parties agree that no change parts or modifications to the Lehigh Valley Brewery are
necessary for the production of the current volume of Products in their current package
configurations and liquid specifications, as specified in Schedule A, in volumes consistent with
the volumes produced while the Lehigh Valley Brewery was operated entirely by Diageo [ * ].

(b) Diageo shall pay for all equipment, change parts and/or modifications to the Lehigh Valley
Brewery that are or become reasonably necessary for the production of New Products (as defined
below); for a material change in the recipe, formulation or specifications of a Product; or for new
package configurations, if any. Upon termination of this Agreement, if requested by Boston Beer,
Diageo shall remove such equipment, change parts and/or modifications at its expense and shall, if
needed, repair or reimburse Boston Beer for the reasonable and necessary cost of returning the
affected parts of the Lehigh Valley Brewery to their condition prior to their installation, normal
wear and tear excluded.

Section 2.11 New Products

Boston Beer shall support Diageo requests for new Products (“New Products”), and Schedule A
shall be amended to include such New Product, provided that

(a) New Products shall not be allowed when in Boston Beer’s reasonable opinion the New
Products would negatively impact the ability of Boston Beer to produce Other Products or will
reduce the capacity of the Lehigh Valley Brewery, or require a material change to the facility.

(b) Should Diageo wish to add a New Product, it shall provide Boston Beer with process details
and product specifications sufficient for Boston Beer to evaluate the cost, timing and equipment
requirements for the production of the New Product. Within two (2) weeks of the receipt of all of
such information, Boston Beer shall submit to Diageo in writing the increase in the Bottling Fee as
a result of the addition of such New Product, if any, which increase shall be calculated by Boston
Beer to produce similar operating margin dollars (Packaging Fee minus variable costs) per Case Unit
to the existing Products, where variable costs include but are not limited to costs for any
changeovers, complexity or other added costs associated with the New Product. If the production
of such New Product will require any capital investment or causes Boston Beer to incur any
significant implementation costs, Boston Beer shall, within a commercially reasonable period of
time, provide Diageo with detail of such costs and the time required for such implementation.
Boston Beer shall not proceed with the capital investments or incur such implementation costs
without the prior written consent of Diageo.

			
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and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

(c) Diageo shall pay all approved capital costs and implementation costs of introducing the
New Product, and provide technical support and assistance in the startup, testing and approving the
production process. Boston Beer shall not be liable for any failure or production default for New
Products until both Boston Beer and Diageo have witnessed and approved three successful production
runs.

Section 2.12 Security Procedures and Systems.

(a) Boston Beer shall operate and maintain the Lehigh Valley Brewery in a safe and secure
manner at all times. Boston Beer shall adopt and adhere to such security procedures and systems as
are required by applicable law and as are reasonably necessary or advisable to maintain the
integrity, security and restricted access to the Lehigh Valley Brewery and the Products, Packaging
Materials, Ingredients and Disaster Recovery Plan.

(b) Boston Beer shall ensure that it and its employees, agents and sub-contractors comply,
within the Lehigh Valley Standard, and co-operate with all security measures required by Diageo
from time to time, whether at the Lehigh Valley Brewery, during transit or otherwise for the
security of the Products, Packaging Materials, Ingredients, confidential information, records and
data and all other assets used in connection with this Agreement.

(c) Without limiting the foregoing, Boston Beer will comply with the U.S. Customs Trade
Partnership Against Terrorism security program (“C-TPAT”) at all times during the term of the
Agreement. Boston Beer will complete Diageo’s C-TPAT security survey and certify compliance with
C-TPAT to Diageo through written confirmation from time to time as reasonably requested by Diageo.

(d) Diageo shall provide to Boston Beer a copy of its Disaster Recovery Plan covering crisis
management planning, business continuity procedures and contingency plans for the Lehigh Valley
Brewery. As soon as practicable after the start of production under this Agreement, Boston Beer
shall provide to Diageo a copy of its Disaster Recovery Plan covering crisis management planning,
business continuity procedures and contingency plans. Diageo shall consider in good faith any such
plans and procedures and the Parties shall negotiate with a view to agreeing any amendments to such
plans or procedures which Diageo may from time to time suggest.

(e) In the event of a Force Majeure Event, Boston Beer shall use reasonable commercial efforts
to comply with any relevant provisions of Boston Beer’s Disaster Recovery Plan.

(f) Diageo may from time to time require Boston Beer to assist in the testing of the Disaster
Recovery Plan, and Boston Beer shall conduct such test on reasonable notice from Diageo provided
that Diageo shall pay any out of pocket costs incurred by Boston Beer in doing such test.

(g) Diageo shall pay for any changes in processes, security or systems that Diageo requires to
be implemented by Boston Beer at the Lehigh Valley Brewery under this
Section, if such was not previously installed or implemented by Diageo at Lehigh Valley Brewery prior
to the Effective Date.

			
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and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

Section 2.13 Compliance with Risk Management Standards

(a) Boston Beer shall at all times comply, within the Lehigh Valley Standard, (and, where
appropriate, shall ensure that each of its employees, agents and sub-contractors comply) with the
applicable sections of the Diageo Global Risk Management Standards, as amended or supplemented from
time to time.

(b) Boston Beer shall at the request of Diageo carry out an annual audit of its compliance
with the Diageo Global Risk Management Standards, and shall, at the request of Diageo, as soon as
reasonably practicable following such request, provide Diageo with a copy of any and all
documentation in its possession or control to the extent it relates to such annual audit. Boston
Beer shall allow Diageo to carry out an audit and inspection of the Lehigh Valley Brewery in order
to verify such compliance.

(c) If Boston Beer’s annual audit or any Diageo audit of Boston Beer’s compliance with the
Diageo Global Risk Management Standards reveals that Boston Beer does not comply with all or any of
the Diageo Global Risk Management Standards, Boston Beer shall in good faith discuss its failure to
comply with Diageo and use all reasonable efforts to rectify any specific identified failures.

Section 2.14 Compliance with Diageo Environmental Policy

Boston Beer will support compliance, within the Lehigh Valley Standard, with Diageo’s environmental
policy, as amended or supplemented from time to time.

ARTICLE 3

QUALITY CONTROL

Section 3.1 Brand Technical Manual

Diageo shall have ultimate responsibility for and authority over every detail of the production
process for the Products at the Lehigh Valley Brewery, with such responsibility and authority as to
those parameters affecting the malt beverage taste and quality to be the same as if Diageo were the
owner of the Lehigh Valley Brewery. Diageo’s current quality control specifications are included
in the Brand Technical Manual attached hereto (see Schedule B). Boston Beer shall ensure that its
employees will adhere, within the Lehigh Valley Standard, to such specifications and the procedures
and other specifications set forth in the Brand Technical Manual, as it may be amended from time to
time, provided that (a) such amendment does not adversely affect Other Product produced at the
Lehigh Valley Brewery; (b) Diageo shall reimburse Boston Beer for any agreed incremental costs due
to such amendment; and (c) Boston Beer need not exceed the Diageo Performance.

			
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and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

Section 3.2 Key Performance Indicators (“KPIs”)

Boston Beer agrees to maintain the performance of the Lehigh Valley Brewery against Diageo’s KPIs
to the level of the Diageo Performance. Diageo will provide Boston Beer with its KPIs on a regular
basis similar to its other copack relationships. If Diageo changes or requires a change to the
KPIs after the execution date of this Agreement, Boston Beer will use commercially reasonable
efforts to comply with the change, and Diageo shall reimburse Boston Beer for any agreed reasonable
costs incurred by Boston Beer in connection with such changes.

Section 3.3 Improvements

Diageo and Boston Beer agree to pursue further opportunities to reduce cost, drive value creation
and achieve other efficiencies associated with this Agreement.

ARTICLE 4

INGREDIENTS AND PACKAGING MATERIALS

Section 4.1 Ingredients

Diageo shall provide all Ingredients necessary for the production of the Products hereunder
including the clear malt base or equivalent. All such Ingredients used by Diageo must meet the
requirements set forth in the Brand Technical Manual.

Section 4.2 Packaging Materials

Diageo shall purchase and make available to Boston Beer at Diageo’s sole cost and expense all
Packaging Materials required for the packaging of the Products hereunder.

Section 4.3 Release of Ingredients and Packaging Materials from Suppliers

Boston Beer shall issue release instructions to Diageo’s suppliers for Diageo Ingredients,
Packaging Materials and any other Diageo supplied items. Boston Beer shall provide such releases
based on Forecasts and approved Production Requests. Boston Beer will monitor such deliveries to
the Lehigh Valley Brewery and to the extent Boston Beer becomes aware that a supplier appears
unable or unwilling to meet the releases, immediately notify Diageo (within one (1) Business Day).
Diageo is responsible for paying any costs incurred by Boston Beer due to Diageo supplier’s failure
to deliver in accordance with the releases unless such failure was caused by Boston Beer
negligence. Diageo is also responsible for paying any costs incurred by Boston Beer due to any
Ingredients or Packaging Materials not meeting the Brand Technical Manual or directly causing a
material degradation in the efficiency of the packaging line.

			
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and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

 Section 4.4 Unusable Ingredients and Packaging Materials

If any Ingredients or Packaging Materials provided by or on behalf of Diageo are substandard,
spoiled, unusable or fail to meet the specification set forth in the
Brand Technical Manual or the related bills of lading or are otherwise damaged, Boston Beer will notify Diageo immediately by
telephone and thereafter promptly (but in no event later than two (2) Business Days after receipt
thereof) notify Diageo of such matters in writing together with an appropriate quality report, and
segregate such Ingredients or Packaging Materials, for return to the appropriate supplier for full
credit to Diageo. Boston Beer shall comply, within the Lehigh Valley Standard, with Diageo’s
Material Incident Report Policy attached as Schedule J, as amended or supplemented from time to
time. Boston Beer will otherwise act upon Diageo’s written instructions with respect to such
Ingredients or Packaging Materials. For the avoidance of doubt, Diageo has the primary
relationship with the suppliers of the Ingredients and Packaging Materials and, accordingly, Diageo
shall be primarily responsible for requesting, negotiating and processing any and all back charges
to the suppliers, and any such back charges shall be for the benefit of Diageo.

Section 4.5 Ownership; Segregation

(a) Boston Beer hereby recognizes and acknowledges that Diageo shall continue to hold title
to, and ownership of, all of the Ingredients and Packaging Materials, as well as any change parts
or any other items owned or provided by Diageo in connection with this Agreement, and proceeds
thereof. Notwithstanding any other provision, or any law or judicial decision to the contrary, and
irrespective of whether Diageo has made any filing under any applicable Uniform Commercial Code or
otherwise provided public notice of its title to the ownership of the Ingredients and Packaging
Materials, Boston Beer and Diageo hereby agree not to contest, deny, seek to invalidate or
otherwise contravene Diageo’s title to and ownership of the Ingredients and Packaging Materials,
including without limitation, contesting or seeking to prevent Diageo’s possession, removal,
control or disposition of the Ingredients and Packaging Materials in any manner as Diageo may
choose in its sole discretion. Boston Beer acknowledges that it does not have and shall not have
any interest in or to any of the Ingredients and Packaging Materials.

(b) All Ingredients and Packaging Materials, and any other materials to the extent provided or
paid, or to be paid for, by Diageo, shall be used exclusively for the purposes of the production
and packing of the Products pursuant to this Agreement.

(c) Boston Beer warrants that all Ingredients and Packaging Materials, as well as the
Products, shall remain free and clear at all times of any lien, encumbrance, security interest or
financing arrangement of any type created by or through Boston Beer (or any of its Affiliates).

(d) Boston Beer shall keep all of the Ingredients and Packaging Materials, as well as the
Products and any change parts or any other items owned or provided by Diageo in connection with
this Agreement, clearly identified in its records as belonging to Diageo. Boston Beer further
agrees that it shall clearly label as property of Diageo, and shall keep separate and not
co-mingle, any of the Ingredients or Packaging Materials, or the Products, with any other
ingredients, packaging materials, products or finished materials.

			
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and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

ARTICLE 5

PRICE AND PAYMENT

Section 5.1 Packaging Fee 

Diageo shall pay Boston Beer, without deduction or offset, a bottling fee (the “Bottling Fee”) for
each Case Unit of the Products bottled or a repack fee (the “Repack Fee”) for each Case Unit
repacked under this Agreement as set forth in the Packaging Fee Schedule attached hereto as
Schedule D. If Diageo authorizes overtime in writing pursuant to Section 2.5(b), Diageo shall pay
an additional fee for such overtime as set forth in Schedule D.

Section 5.2 Invoicing; Payment

(a) [
* ].

(b) Boston Beer will invoice Diageo for any Fixed Payment due per Schedule D, [ * ].

(c) [ * ]

(d) [ * ]

			
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(e) Boston Beer and Diageo will work cooperatively to ensure that the Boston Beer invoice
process and the Diageo payment process will enable Diageo to make smooth and timely payments to
Boston Beer.

(f) Notwithstanding anything to the contrary contained herein, Boston Beer will not be
entitled to any Packaging Fees and will receive no compensation for Rejected Products and will
reimburse Diageo for the full cost of any Ingredients and Packaging Materials used to produce such
Products (without the ability to offset for Loss Tolerances), and any accrued or paid Packaging
Fees or other costs per Case of such Products and any freight with respect thereto, provided such
rejection is contributable to negligence or willful misconduct by Boston Beer.

ARTICLE 6

WAREHOUSING AND SHIPPING

Section 6.1 Warehousing

The Packaging Fee provided herein shall include storage of packaged Products up to the warehouse
limits as set forth in Schedule F. Boston Beer shall be entitled to charge Diageo an extra fee for
the storage of Products that exceed the warehousing limits, provided that such fee shall not exceed
[ * ] per Case Unit of Products per month or partial month of storage. The Packaging Fees include
storage of reasonable quantities of Packaging Materials and Ingredients necessary to produce the
Products as specified in Schedule F. Upon no less than five (5) Business Days notice to Diageo,
Boston Beer may request that Diageo remove any materials that exceed the allowable storage limits,
and in the event that Diageo fails to arrange to remove such excess materials within five (5)
Business Days, then Boston Beer may make arrangements to remove such excess materials and, no
earlier than twenty-four hours after informing Diageo of such arrangements, may remove such excess
materials in accordance with such arrangements and any costs incurred by Boston Beer related to
such removal shall be borne by Diageo, provided that Diageo has not given alternate instructions
that can be implemented within the same time frame. Boston Beer shall store the Products in an
orderly manner, in accordance with the Brand Technical Manual and using established good
warehousing practices. On the first Business Day of each month during the Term, Boston Beer shall
deliver to Diageo a report listing the quantity, date of production and type of Product for all
Products held in inventory as of the end of the preceding month.

			
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Section 6.2 Shipping

(a) Diageo shall provide Boston Beer with a weekly shipping forecast for the next four weeks
shipping. Boston Beer shall use the forecast to ensure adequate staffing is available for loading
the trucks.

(b) Boston Beer shall ship Products that meet the specifications set forth in the Brand
Technical Manual, [ * ], in accordance with shipping orders delivered by Diageo to Boston Beer.
Boston Beer shall only ship Products each day to the extent that the shipping orders for each
Product do not exceed the scheduled and agreed to Product to be produced plus the inventory of that
Product on hand net any reserved for open shipping orders not previously shipped. Dunnage or other
special requests shall be charged to Diageo as used [*]. Diageo (or its third party logistics
provider) shall deliver shipping orders (“Shipping Orders”) to Boston Beer at least three (3)
Business Days prior to the scheduled shipping date specified on such order for shipments in the
United States or to Canada and ten (10) Business Days for shipments to other countries. Shipping
Orders shall state the time of pick-up, designated carrier and Product to be shipped. Such time of
pick-up should be evenly distributed throughout the day. If Boston Beer receives a Shipping Order
less than three (3) Business Days for shipments in the United States or to Canada, or ten (10)
Business Days for shipments to other countries, prior to the scheduled shipping date specified on
such order, the parties agree that if Boston Beer cannot meet such specified scheduled shipping
date, Boston Beer shall promptly contact Diageo as to the length of any anticipated delay in
complying with such order and shall use its reasonable best efforts to comply with such order as
promptly as practicable, but in no event more than three (3) Business Days after receipt of a
Shipping Order for shipments in the United States or to Canada, or ten (10) Business Days for
shipments to other countries. Diageo shall provide Shipping Orders in a manner that each Business
Day’s shipping requirement does not exceed [ * ] of Diageo’s weekly load shipping requirement. In
the event that Diageo’s shipping requirement [ * ] of the weekly load shipping requirement and
overtime is necessary to load shipments or requires shipping on non Business Days, Diageo shall be
obligated to reimburse Boston Beer the overtime and double time up-charges defined in Schedule D
for those loads shipped.

(c) Boston Beer shall make shipment of Products in accordance with Shipping Orders. Diageo
shall not hold Boston Beer liable for carriers who do not show for load pickup and Diageo shall
deal directly with the carrier to remedy the issue. Boston Beer shall consolidate shipments of
Products with Diageo products from other locations in accordance with Diageo’s reasonable written
requests, and Diageo shall reimburse Boston Beer for any agreed incremental costs due to such
consolidation.

(d) Boston Beer shall process Shipping Orders and report shipping data to Diageo via SAP or
comparable means in accordance with Schedule G.

Section 6.3 Inventory Counts

At least once each six month period commencing July 1 and ending December 31, and commencing
January 1 and ending June 30, Boston Beer shall perform a physical inventory of all Ingredients,
Packaging Materials and finished Case goods of Products in order to
reconcile the book inventory to the physical inventory of such Ingredients, Packaging Materials and such
finished Case goods of Products. Boston Beer shall notify Diageo at least thirty (30) Business
Days prior to the date of such physical inventory and Diageo, at its option, may have Diageo’s
auditors and representatives present at such physical inventory. If Diageo or the TTB require more
frequent inventory counts, Diageo shall reimburse Boston Beer for any costs associated with the
additional inventory counts.

			
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and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

ARTICLE 7

TERM AND TERMINATION

Section 7.1 Term

The term of this Agreement (the “Term”) shall commence on the Effective Date, and shall continue
until [ * ], unless sooner terminated pursuant to Section 7.3 of this Agreement.

Section 7.2 Suspension Due to Force Majeure

In the event that performance by either Diageo or Boston Beer of its duties or obligations
hereunder (excluding Diageo’s payment obligations hereunder) is interrupted or interfered with by
reason of any cause beyond its reasonable control including, without limitation, fire, storm,
flood, earthquake, explosion, war, riot, strike, lockout or other labor dispute or disruption,
general interruption or delays in transportation or power supply, terrorist acts, act of God,
boycott, embargo, shortage or unavailability of supplies or materials, (including, without
limitation, water supplies and Ingredients) or governmental law, regulation or edict (collectively,
the “Force Majeure Events”), the Party affected by such Force Majeure Event shall not be deemed to
be in default of this Agreement by reason of its non-performance due to such Force Majeure Event,
but shall (i) give notice to the other Party of the Force Majeure Event and (ii) use commercially
reasonable efforts to resume performance of all its duties and obligations hereunder; provided,
that nothing in this Section 7.2 shall be construed to require Boston Beer to allocate a greater
proportion of its resources at the Lehigh Valley Brewery, including, without limitation, line
capacity and staffing, to production of the Products than was required prior to the occurrence of
such Force Majeure Event.

Section 7.3 Termination

(a) Diageo may terminate this Agreement for any reason whatsoever on not less than [ * ] prior
written notice, effective at any time [ * ] after the Effective Date.

(b) Diageo may terminate this Agreement effective upon [ * ] prior written notice to Boston
Beer in the event that Boston Beer is in default of any of its material obligations to provide
services to blend, bottle, package and Ship the Products, which default continues for a period of [
* ] following receipt by Boston Beer of written notice from Diageo regarding such default. Boston
Beer shall not be deemed to be in default of its obligations for purposes of this Section 7.3(b) if
(i) such default is caused by Diageo or Diageo’s suppliers or (ii) Boston Beer is in good faith
both seeking to correct the circumstances giving rise to its failure
to provide services to blend, bottle, package and Ship the Products and fulfilling its
obligations under Section 7.2 of this Agreement, to the extent applicable.

			
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(c) Boston Beer may terminate this Agreement upon [ * ] prior written notice to Diageo in the
event that Diageo fails to pay when due any material amounts due hereunder and such failure has
continued for [ * ] after written demand for payment was made by Boston Beer. If a payment dispute
is subject to arbitration in accordance to the provisions of Section 5.2(d) and so long as Diageo
pays any undisputed portion of such amounts and continues to pay other amounts owing under this
Agreement in a timely manner, then Boston Beer shall not have the right to terminate this Agreement
pursuant to this Section 7.3(c) until the dispute has been finally determined and Diageo has failed
to pay the amounts finally determined to be owing to Boston Beer within [ * ] after such
determination.

(d) Either Party may terminate this Agreement, effective immediately, in the event of the
bankruptcy of the other Party.

Section 7.4 Consequences of Termination

Upon termination or expiration of this Agreement, Diageo shall promptly pay Boston Beer all unpaid
invoices in full and all other unpaid amounts owing to Boston Beer pursuant to this Agreement. [ * ], Diageo shall take delivery of and promptly remove from the Lehigh
Valley Brewery all Products (whether complete or in process), Ingredients and Packaging Materials,
and purchase from Boston Beer any items that Boston Beer has reasonably procured for Diageo that
Boston Beer does not use for Other Products. Boston Beer may charge Diageo for any out of pocket
expenses or warehouse charges at the rates provided herein for Diageo’s failure to perform under
this paragraph, including any costs Boston Beer incurs transferring such materials to offsite
warehouses or storage facilities, and third party storage costs, provided that Boston Beer gives
Diageo at least twenty-four hours notice of any arrangement to remove Diageo materials from the
Lehigh Valley Brewery and Diageo has not given alternate instructions that can be implemented
within the same time frame. Boston Beer shall use commercially reasonable efforts to minimize such
costs upon termination. The termination rights described in this Article 7 shall be in addition to
all other rights and remedies of the Parties.

Section 7.5  Survival

The following provisions of the Agreement shall survive any termination of this Agreement for a
period of [ * ] thereafter: Article 8, Article 9, Article 10 and Article 13.

			
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ARTICLE 8

RISK OF LOSS AND INDEMNIFICATION

Section 8.1 Title and Risk of Loss

Title to and risk of loss of all Ingredients and Packaging Materials shall remain with Diageo at
all times. The risk of loss for the Products, in process and finished goods, shall be borne by
Diageo.

Section 8.2 Diageo

Diageo agrees to indemnify, defend and hold Boston Beer and its Affiliates and their respective
officers, directors, agents and representatives harmless from and against any Loss for bodily
injury, death or property damage where such injury, death or damage is caused by: (i) any formulas,
standards, specifications (including, without limitation, the Brand Technical Manual) or
instructions furnished by Diageo to Boston Beer, (ii)  any Packaging Materials and Ingredients
provided by or on behalf of Diageo, (iii) any sale, marketing or distribution of any Product,
(iv) any defects in any such Product, (v) any misuse or abuse of any Product by a consumer of such
Product, (vi) inherent properties and/or characteristics of the Products, including health and
intoxicating effects of the Products, (vii) any material breach of this Agreement by Diageo or
(viii) the willful misconduct or gross negligence of Diageo, its Affiliates, employees, agents or
representatives, in each case except to the extent Losses result from Boston Beer’s material breach
of its obligations pursuant to this Agreement.

Section 8.3 Boston Beer

Boston Beer agrees to indemnify and hold Diageo and its Affiliates and their respective officers,
directors, agents and representatives harmless against any Loss for bodily injury, death or
property damage where such injury, death or damage is caused by: (i) any services provided
hereunder by or on behalf of Boston Beer, (ii) any material breach of this Agreement by Boston
Beer, or (iii) the willful misconduct or gross negligence of Boston Beer, its Affiliates,
employees, agents or representatives, in each case other than Losses caused by or relating to the
matters described in clauses (i) through (viii) of Section 8.2.

Section 8.4 Limitation on Damages.

In no event shall Boston Beer or Diageo or any of their Affiliates or successors be liable under or
relating to this Agreement (including under Section 8.2 or Section 8.3) for any consequential,
incidental, indirect, special, punitive or exemplary damages or other Losses, or any damages or
other Losses based on lost profits, lost sales or any similar theory of recovery, whether or not
such Party has been made aware of the potential for any such liability.

			
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 Section 8.5 Conditions and Control of Defense

The foregoing indemnifications obligations are conditioned upon the Party claiming indemnification
hereunder (the “Indemnified Party”) promptly furnishing the
other Party (the “Indemnifying Party”) with written notice of each Loss for which indemnity is claimed and
permitting the Indemnifying Party to assume control and/or the defense thereof at its sole cost and
expense. The Indemnifying Party shall have [ * ] from the receipt of such notice to notify the
Indemnified Party as to (a) whether or not the Indemnifying Party disputes the liability of the
Indemnifying Party to the Indemnified Party hereunder with respect to such claim or demand and
(b) whether or not it desires to defend the Indemnified Party against such claim or demand; it
being understood that if the Indemnifying Party fails to notify the Indemnified Party of whether or
not it desires to defend the Indemnified Party against such claim or demand within such [ * ], then
the Indemnified Party shall, upon written notice thereof to the Indemnifying Party ([ * ]), have
the right to assume the defense of such claim or demand. The Indemnified Party shall not settle,
compromise, or offer to settle or compromise, or make an admission of liability with respect to, a
claim or demand. The Indemnifying Party shall not, without the prior written consent of the
Indemnified Party, which consent shall not be unreasonably withheld, settle, compromise or offer to
settle or compromise any such claim or demand on a basis that would result in (i) the imposition of
a consent order, injunction or decree that would restrict the future activity or conduct of the
Indemnified Party or any of its Affiliates, or (ii) any monetary liability of the Indemnified Party
that will not be paid or reimbursed by the Indemnifying Party. The Party handling any defense of
any claim hereunder shall use its reasonable efforts in such defense. To the extent the
Indemnifying Party shall direct, control or participate in the defense or settlement of any third
party claim or demand, the Indemnified Party shall give the Indemnifying Party and its counsel
access to, during normal business hours, the relevant business records and other documents, and
shall permit them to consult with the employees and counsel of the Indemnified Party. If the
Indemnifying Party assumes the defense with respect to any third party claim, the Indemnified Party
shall have the right to participate in the defense thereof and to employ counsel reasonably
acceptable to the Indemnifying Party, at the Indemnified Party’s sole expense.

Section 8.6 Product Recall

Diageo shall have the final decision as to whether a product withdrawal or recall shall be issued
and the extent of such recall. In the event of any product withdrawal or product recall, Boston
Beer shall use its best efforts to provide all such information set forth below in Section 11.3 to
Diageo within two (2) hours of request (or within a reasonable amount of time not to exceed 24
hours during non-business hours, including weekends and holidays) by electronic format on Microsoft
Excel spreadsheets as well as hard copy. Further, Boston Beer shall fully cooperate with Diageo in
withdrawing/recalling the Products, passing along to Diageo all information known or suspected by
Boston Beer to cause, or potentially cause, the withdrawal or recall of the Products, and passing
along to Diageo any subsequent testing, whether internal or external, of the Products or
subcomponent thereof relating to the withdrawal or recall for conformity, time being of the
essence. Except as set forth in the following sentence, any cost incurred in connection with a
recall of the Products shall be at Diageo’s expense; provided, that if a recall or withdrawal of
any of the Products is caused by Boston Beer’s gross negligence or willful misconduct, including
any Affiliate or subcontractor performing on behalf of Boston Beer, Boston Beer shall be
responsible for its proportionate share, where Boston Beer’s share is equal to its contribution to
the recall event, of costs associated with identifying, recalling and supplying replacement product
within a reasonable lead-time at the
time of the withdrawal or recall, provided that Boston Beer shall have an opportunity to discuss
with Diageo the most cost effective method of such recall and any Product disposal, but Diageo’s
decision shall be final.

			
	[*]	 	 indicates that information has been omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

ARTICLE 9

TRADEMARK AND KNOW-HOW; CONFIDENTIALITY

Section 9.1 Trademarks and Know-How

During the Term of this Agreement, Diageo grants to Boston Beer a non-exclusive, non-transferable,
royalty-free license to use the Trademarks and Know-How solely to the extent needed to perform its
obligations under and in accordance with the terms and conditions of this Agreement. Boston Beer
understands and agrees that: (i) the Trademarks and Know-How are and shall be the property of
Diageo and its Affiliates; (ii) except as otherwise expressly provided in this Section 9.1, neither
Boston Beer nor any of its Affiliates shall acquire any right, title or interest in any of the
Trademarks or Know-How or any related intellectual property or right; (iii) all use of the
Trademarks and the goodwill associated therewith shall inure solely to the benefit of Diageo and
its Affiliates; and (iv) Boston Beer shall have no right to sublicense the rights licensed to it in
this Section 9.1 to any Person. Nothing in this Agreement shall be interpreted as restraining or
prohibiting Boston Beer from using and operating the Lehigh Valley Brewery as configured and
delivered at the Effective Date. If by operation of law or otherwise, Boston Beer or any of its
Affiliates acquires any ownership rights in any of the Trademarks or Know-How by virtue of its
activities pursuant to this Agreement, such rights shall automatically vest in, or if not legally
possible, be assigned promptly upon request to, Diageo or one of its Affiliates. Boston Beer
agrees to perform such commercially reasonable acts as Diageo may request, at Diageo’s expense, in
order to protect or confirm Diageo’s interest in any of the Trademarks, Know-How, or any related
intellectual property or right, including disclaiming in writing any interest in or ownership of
such Trademarks, Know-How, or related intellectual property or right. Diageo will indemnify,
defend and hold harmless Boston Beer from any claim of alleged infringement with respect to the
Trademarks and Know-How brought by any party against Boston Beer or any of its Affiliates, agents,
representatives or contractors, or other losses incurred by Boston Beer or any of its Affiliates,
agents, representatives or contractors in connection with Boston Beer’s use of the Trademarks and
Know-How in accordance with the terms and conditions of this Agreement, including, but not limited
to, reasonable legal fees and expenses.

Section 9.2 Confidentiality

Except as otherwise required by applicable Laws: (a) each Party shall keep confidential all the
terms of this Agreement; and (b) Boston Beer shall keep confidential all information regarding the
Products, including the Know-How and Brand Technical Manual, and use such information only in
accordance with the terms and conditions of this Agreement unless otherwise agreed to in advance in
writing by Diageo.

			
	[ * ] 	 	indicates that information has been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

ARTICLE 10

INSURANCE

Section 10.1 Coverage

During the Term Diageo and Boston Beer shall each maintain commercial general liability insurance,
including product liability insurance, in an amount of not less than U.S. [ * ] each occurrence,
including the Products produced at the Lehigh Valley Brewery.

Section 10.2 Additional Insured

The insurance policies referred to in Section 10.1 shall, with respect to that maintained by Boston
Beer, name Diageo as an additional insured and, with respect to that being maintained by Diageo,
name Boston Beer as an additional insured. Such insurance policies shall provide for at least
thirty (30) days’ prior written notice to Diageo or Boston Beer, as the case may be, in the event
of cancellation, material change or lapse or expiration of the policy. Each Party shall furnish
the other, upon request, with a certificate of insurance evidencing the insurance required herein.

Section 10.3 Additional Insurance of Boston Beer 

In addition to the above, Boston Beer shall, at it’s sole cost and expense, place in effect and
maintain in full force and effect during the term of this Agreement the minimum insurance coverage
described below. Insurance is to be maintained with insurers who have a Best’s Insurance Reports
rating of no less than “A” and a financial size of no less than Class VII, and policies (including
endorsements naming Diageo as an additional insured) shall be on an occurrence basis and otherwise
shall be in form and substance satisfactory to Diageo. Certificates of insurance will be provided
by Boston Beer to Diageo prior to the Term commencing and annually thereafter, which certificates
shall provide that Boston Beer will not terminate or reduce the coverage without first giving
Diageo at least (30) days prior written notice.

(a) Worker’s Compensation (in accordance with the statutory requirements of all applicable
states in which Boston Beer’s employees reside and the state in which Boston Beer is domiciled),
Occupational Diseases and Employers’ Liability Insurance with limits of not less than [ * ] per
occurrence. The Worker’s Compensation Policy shall contain an all states endorsement or equivalent
coverage, and waiver of subrogation in favor of Diageo.

(b) Automobile Liability for Bodily Injury and Property Damage with a minimum single limit of
liability per accident of [ * ].

(c) Property and Casualty insurance policy insuring all property owned or leased by Boston
Beer and used at the Lehigh Valley Brewery against all risks for its full insurable value including
full Business Interruption and extra expense insurance coverage with limits and form to meet the
needs of the business activity.

(d) Commercial Crime insurance, including Employee Dishonesty with a minimum limit of [ * ]
per occurrence.

			
	[ * ] 	 	 indicates that information has been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

Section 10.4 Additional Insurance of Diageo 

In addition to the above, Diageo shall, at it’s sole cost and expense, place in effect and maintain
in full force and effect during the term of this Agreement the minimum insurance coverage described
below. Insurance is to be maintained with insurers who have a Best’s Insurance Reports rating of no
less than “A” and a financial size of no less than Class VII, and policies (including endorsements
naming Boston Beer as an additional insured) shall be on an occurrence basis and otherwise shall be
in form and substance satisfactory to Boston Beer. Certificates of insurance will be provided by
Diageo to Boston Beer prior to the Term commencing and annually thereafter, which certificates
shall provide that Diageo will not terminate or reduce the coverage without first giving Boston
Beer at least (30) days prior written notice.

(a) Worker’s Compensation (in accordance with the statutory requirements of all applicable
states in which Diageo’s employees reside and the state in which Diageo is domiciled), Occupational
Diseases and Employers’ Liability Insurance with limits of not less than [ * ] per occurrence. The
Worker’s Compensation Policy shall contain an all states endorsement or equivalent coverage, and
waiver of subrogation in favor of Diageo.

(b) Property and Casualty insurance policy insuring all property owned or leased by Diageo and
used at the Lehigh Valley Brewery against all risks for its full insurable value.

(c) Commercial Crime insurance, including Employee Dishonesty with a minimum limit of [ * ]
per occurrence.

ARTICLE 11

RECORDS, REPORTING AND TRACEABILITY

Section 11.1 Records

Boston Beer and Diageo will work cooperatively to ensure that the information that Diageo requires
to receive on the transactions at the Lehigh Valley Brewery are transferred to Diageo similar to
other Diageo copack partners as outlined in Schedule G.

Section 11.2 Reports

Boston Beer shall prepare and submit any reports on behalf of Diageo under power of attorney,
including without limitation TTB Forms 5000.24 and 5130.9, required by any Government Authority as
a result of the Alternating Proprietorship. Any incremental administrative costs created from
preparation and submission of any reports shall be paid by Diageo.

			
	[ * ] 	 	 indicates that information has been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

Section 11.3 Traceability

Boston Beer will maintain complete records of the Products produced at the Lehigh Valley Brewery
and report such data to Diageo via SAP or comparable means in accordance with Schedule G ,
including quantities shipped, lot codes of each shipment, time and date of shipment, specific
Lehigh Valley Brewery, specific equipment used (e.g. packaging line), dates and time of production
for each lot, inventories on hand by lot code, plus any other detail as mutually agreed to by
Diageo and Boston Beer (such agreement not to be unreasonably withheld), and will otherwise provide
such information to Diageo upon its request. Complete and accurate records of all Ingredients used
to make the Products shall be maintained at the Lehigh Valley Brewery. Boston Beer shall maintain
all such records for each lot for three years after production. In addition, each bottle, outer
carton, truck and rail car used for shipping the Products shall be individually marked to readily
discern lot codes and production dates. Lot codes printed on containers shall conform to the Brand
Technical Manual and other specifications agreed with Diageo. No other code-dating is acceptable
unless agreed in writing with Diageo. Any Products packaged at the Lehigh Valley Brewery that do
not meet the coding specification shall be notified to Diageo in writing within 24 hours of
discovery.

ARTICLE 12

REPRESENTATIONS AND WARRANTIES

Each Party represents and warrants to the other Party as follows:

Section 12.1 Due Authorization

This Agreement and all agreements, instruments and documents herein provided to be executed or to
be caused to be executed by such Party are duly authorized, executed and delivered by and are
binding upon the same.

Section 12.2 Due Organization

Such Party is an entity, duly organized, validly existing and in good standing under the laws of
the state of its formation and is duly authorized and qualified to do all things required of it
under this Agreement and any agreement executed in connection with the matters herein contemplated.

Section 12.3 Other Agreements

Such Party has the capacity and authority to enter into and perform its obligations under this
Agreement and nothing prohibits or restricts the right or ability of such Party to enter into this
Agreement and carry out the terms hereof. Neither this Agreement nor any agreement, document or
instrument executed or to be executed in connection with the same, nor anything provided in or
contemplated by this Agreement or any other agreement, document or instrument, does now or shall
hereafter breach, invalidate, cancel, make inoperative or
interfere with, or result in the acceleration or maturity of, any contract, agreement, lease,
easement, right or interest, affecting or relating to such Party.

			
	[ * ] 	 	 indicates that information has been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

ARTICLE 13

MISCELLANEOUS

Section 13.1 Notices

All notices, consents, waivers and other communications under this Agreement must be in writing and
will be deemed to have been duly given when (a) delivered by hand (with written confirmation of
receipt), (b) sent by telecopier (with written confirmation of receipt), provided that a copy is
also mailed to such Party, or (c) when received by the addressee, if sent by a nationally
recognized overnight delivery service (receipt requested), in each case to the appropriate
addresses and telecopier numbers set forth below (or to such other addresses and telecopier numbers
as a Party may designate by notice to the other Party):

To Boston Beer:

Boston Beer Corporation

One Design Center Place, Suite 850

Boston, MA 02210

Attn: Legal Department

Telephone: (617) 368-5000

Fax: (617)368-5553

With a copy to:

Frederick H. Grein, Jr., Esq.

Nixon Peabody, LLP

100 Summer Street

Boston, MA 02110

Telephone: (617) 345-6117

Fax: (866) 369-4741

To Diageo:

Diageo North America, Inc.

801 Main Avenue

Norwalk, CT 06851

Attn: Tom Deskin

Telephone: (203) 229-8228

Fax: (203) 229-4999

			
	[ * ] 	 	indicates that information has been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

With a copy to:

Diageo North America, Inc.

801 Main Avenue

Norwalk, CT 06851

Attn: Joseph Barry

Telephone: (203) 229-7124

Fax: (203) 229-8925

Section 13.2 Table of Contents and Headings

The table of contents of this Agreement and the underlined headings contained herein are for
convenience of reference only, shall not be deemed to be a part of this Agreement and shall not be
referred to in connection with the interpretation hereof.

Section 13.3 Counterparts

This Agreement may be executed in several counterparts, each of which shall constitute an original
and all of which, when taken together, shall constitute one agreement.

Section 13.4 Governing Law

This Agreement shall be governed by the laws of the Commonwealth of Pennsylvania and the federal
laws of the United States applicable therein without regard to principles of conflicts of law.
Each Party hereto agrees that it shall bring any action or proceeding in respect of any claim
arising out of or related to this Agreement or the transactions contained in or contemplated by
this Agreement exclusively in Pennsylvania and in connection with claims arising under this
Agreement or the transactions contained in or contemplated by this Agreement (i) irrevocably
submits to the exclusive jurisdiction of Pennsylvania, (ii) waives any objection to laying venue in
any such action or proceeding in Pennsylvania, (iii) waives any objection that Pennsylvania is an
inconvenient forum or does not have jurisdiction over any Party hereto and (iv) agrees that service
of process upon such Party in any such action or proceeding shall be effective if notice is given
in accordance with Section 13.1 of this Agreement

Section 13.5 Successors and Assigns

This Agreement shall be binding upon the Parties hereto and their respective successors and
assigns, if any, and, except as otherwise provided herein, shall inure to the benefit of the
Parties hereto and their respective successors and assigns, if any. Except as otherwise permitted
in this Agreement, neither Party hereto may assign any of its rights or delegate any of its
obligations hereunder without the prior written consent of the other Party hereto, which consent
may be granted or withheld in such other party’s sole discretion. Notwithstanding the foregoing,
either Party, upon notice to the other, shall have the right to assign this Agreement to an
Affiliate of such Party that agrees in writing to assume all of the obligations of such Party
hereunder (it being understood that such assignment shall not relieve the assigning Party from its
obligations under this Agreement).

			
	[ * ] 	 	 indicates that information has been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

Section 13.6 Entire Agreement

This Agreement (including all Schedules hereto) contains the entire agreement between the Parties
hereto with respect to the subject matter hereof and supersedes all prior agreements and
understandings, oral or written, between the Parties hereto with respect to the subject matter
hereof.

Section 13.7 Waiver

No failure on the part of either Party hereto to exercise any power, right, privilege or remedy
hereunder, and no delay on the part of either Party hereto in exercising any power, right,
privilege or remedy hereunder, shall operate as a waiver thereof; and no single or partial exercise
of any such power, right, privilege or remedy shall preclude any other or further exercise thereof
or any other power, right, privilege or remedy.

Section 13.8 Amendments. 

This Agreement may not be amended, modified, altered or supplemented except by means of an
agreement or other instrument executed on behalf of both of the Parties hereto; provided, however,
that Diageo may reasonably amend or supplement Schedules B [Brand Technical Manual], C
[Trademarks], H [KPIs] and J [Material Incident Report Policy] to this Agreement at any time upon
written notice to Boston Beer; provided, that Diageo shall give Boston Beer reasonable notice of
any such amendment or supplement to such Schedules and the Parties shall negotiate in good faith
any appropriate adjustment to the Bottling Fee or the Repack Fee, which adjustment, if any, shall
be based solely on demonstrated increases or decreases in Boston Beer’s actual costs in connection
with such amendment or supplement. Boston Beer shall make all reasonable efforts to conform to any
such amendments or supplements, but will not be deemed in default of this Agreement provided Boston
Beer achieves the Lehigh Valley Standard; Diageo shall reimburse Boston Beer for any incremental
costs incurred by Boston Beer in its efforts to meet the amendments or supplements.

Section 13.9 Parties in Interest

This Agreement is solely for the benefit of the Parties hereto and, to the extent specified herein,
their Affiliates, and does not and is not intended to create any rights in favor of any other
Person.

Section 13.10 Fees and Expenses

Except as otherwise provided herein, each Party hereto shall pay all fees, costs and expenses that
it incurs in connection with the negotiation and preparation of this Agreement and in carrying out
the transactions contemplated hereby (including, without limitation, all fees and expenses of its
counsel and accountants).

			
	[ * ] 	 	 indicates that information has been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

Section 13.11 Arbitration

Any controversy or claim arising out of or relating to this Agreement, or the breach hereof, with
the exception of any claim for a temporary restraining order or preliminary or permanent
injunctive relief to enjoin any breach or threatened breach hereof, shall be settled by arbitration
to be conducted in Philadelphia, Pennsylvania in accordance with the rules of JAMS/Endispute, LLC
(“JAMS”) applying the laws of Pennsylvania. The Parties agree that such arbitration shall be
conducted by a retired judge, that discovery shall not be permitted except as required by the rules
of JAMS and that no punitive or exemplary damages or damages based on lost profits shall be
awarded. Any award rendered by the arbitrator shall be final and binding on the Parties, and
judgment may be entered on it in any court of competent jurisdiction as otherwise provided by law.
In the event of any such arbitration (including, without limitation, any arbitration relating to
the interpretation or enforcement of this Agreement), the prevailing Party or Parties shall be
entitled to recover from the other Party or Parties all reasonable attorneys’ fees incurred in
connection therewith.

Section 13.12 Severability

The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability
of any provision shall not affect the validity or enforceability of the other provisions hereof.
If any provision of this Agreement, or the application thereof to any Person or any circumstance,
is invalid and unenforceable, the remainder of this Agreement and the application of such provision
to other Persons or circumstances shall not be affected by such invalidity or unenforceability, nor
shall such invalidity or unenforceability affect the validity or enforceability of such provision,
or the application thereof, in any other jurisdiction.

Section 13.13 Interpretation

Each Party acknowledges that such Party, either directly or through such Party’s representatives,
has participated in the drafting of this Agreement and any applicable rule of construction that
ambiguities are to be resolved against the drafting Party shall not be applied in connection with
the construction or interpretation of this Agreement.

Section 13.14 Relationship of Parties

Boston Beer shall act as an independent contractor and not as the agent or employee of Diageo in
performing its obligations under this Agreement, and shall maintain complete control over its
employees and all of its suppliers and contractors. Neither Boston Beer nor any of its employees
shall in any respect act as an agent or employee of Diageo, and neither Diageo nor any of its
employees shall in any respect act as an agent or employee of Boston Beer.

Section 13.15 Boston Beer Due Diligence Rights

Boston Beer has a 90 day due diligence period under the Contract of Sale. If during such due
diligence, Boston Beer shall discover any material new facts that affects Boston Beer’s ability to
economically perform under this agreement, then the Parties agree to meet to engage in good faith
discussions to find mutually acceptable solutions to such problems, including potentially making
revisions to this Agreement.

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

Section 13.16 Non-Exclusive Nature of Agreement

(a) Nothing contained in this Agreement shall preclude Diageo from engaging any other brewer
or production facility for the purpose of packaging, warehousing and shipping its Products.

(b) Diageo acknowledges that Boston Beer’s business includes brewing specialty malt beverage
products, including products that may compete directly with, use the same ingredients as, and/or
are of the same style as one or more of the Products.

IN WITNESS WHEREOF, the Parties have executed or caused this Agreement to be executed as of
the date first written above.

	 	 	 	 	 
	 	BOSTON BEER CORPORATION

 	 
	 	By:  	/s/ MARTIN F. ROPER
 	 
	 	 	Name:  	Martin F. Roper 	 
	 	 	Title:  	President & CEO 	 
	 
	 	DIAGEO NORTH AMERICA, INC.

 	 
	 	By:  	/s/ JOSEPH BARRY
 	 
	 	 	Name:  	Joseph Barry 	 
	 	 	Title:  	Vice President & Secretary 	 
	 

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

Schedule A

Products

“Products” means the malt beverage products listed below (brands, flavors, package size,
configuration, and pallet configuration):

[ * ]

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

Schedule B

Brand Technical Manual

Brand Technical Manual to be attached hereto as Schedule B within 45 days of the execution of this
Agreement.

 

 

 

Schedule C

Trademarks

[ * ]

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

Schedule D

Packaging Fee Schedule

[ * ]

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

Schedule E

Available Packaging Capacity

[ * ]

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

Schedule F

Available Warehouse Capacity

[ * ]

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

Schedule G

Provision to Diageo of Production/Shipping Information

[ * ]

			
	[ * ]	 	 indicates that information has been omitted and filed separately with the Securities
and Exchange Commission pursuant to a request for confidential treatment.

 

 

 

Schedule H

Diageo KPIs

Performance Standards

[ * ]

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

Schedule I

Minimum Run Guidelines

[ * ]

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

Schedule J

Material Incident Report Policy

[ * ]

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

EXHIBIT I

Confidentiality Agreement

Confidentiality Agreement

THIS CONFIDENTIALITY AGREEMENT (the “Agreement”) is made and entered into as of August _, 2006,
by and between Diageo North America, Inc., a Connecticut corporation having its principal offices
at 801 Main Avenue, Norwalk, CT 06851 (together with its subsidiaries and affiliates,“Diageo”),
and Boston Beer Corporation, d/b/a The Boston Beer Company, a Massachusetts corporation having
its principal offices at 75 Arlington Street, Boston, MA 02116 (together with its subsidiaries
and affiliates, “Boston Beer”).

WHEREAS, Diageo is a producer of a wide variety of internationally-recognized branded
spirits, wine and malt beverage products and has amassed information that it considers to be
highly proprietary and confidential; and

WHEREAS, Boston Beer is a producer of beer products and has amassed information that it
considers to be highly proprietary and confidential (said information of Boston Beer and said
information of Diageo being referred to collectively herein as “Confidential Information”); and

WHEREAS Diageo and Boston Beer intend to discuss a potential transaction involving Diageo’s
Lehigh, Pennsylvania facility and certain production agreements (the “Project”).

WHEREAS, evaluating the Project will necessitate the exchange of Confidential Information
from one party to another, and each party recognizes the confidential and proprietary nature of
the Confidential Information.

NOW, THEREFORE, in consideration of the foregoing and the mutual undertakings of the parties
as set forth below, the parties hereto have mutually agreed as follows:

I. CONFIDENTIAL INFORMATION

Confidential Information shall include confidential or proprietary information disclosed by
one party to another orally, in writing or via electronic means, learned by a party through
observation or examination of any documents, books, records, data, or products as provided or
made available to it by the other party, or learned by a party through observation or examination
of the other party’s places of business, research, and development facilities, plant and
machinery, production facilities, process or procedures, in connection with the Project. The fact
that the parties are discussing the Project shall constitute Confidential Information.
Confidential Information shall not include information that:

	 	a.	 	was known to the receiving party prior to disclosure;
	 
	 	b.	 	was publicly available at the time of the disclosure;
	 
	 	c.	 	subsequently becomes publicly
available through no fault of the receiving
party;

 

 

 

	 	d.	 	is rightfully acquired from a third party who is not in breach of a confidential
relationship to either party or with regard to such information, or
	 
	 	e.	 	is independently developed by one party or any of its affiliates
without access to the other party’s Confidential Information.

II. OBLIGATION OF SECRECY

The parties agree that the Confidential Information disclosed or learned pursuant to this
Agreement shall be retained in confidence as set forth in this Agreement. The receiving party
shall not disclose the disclosing party’s Confidential Information to any unauthorized party
without prior express written consent of the disclosing party or unless required by law or court
order. If a party is required by law or court order to disclose Confidential Information of the
other party, they shall give such party prompt notice of such requirement so that an appropriate
protective order or other relief may be sought. Confidential Information will be used only in
connection with discussions contemplated by this Agreement; no other use will be made of it by the
receiving party, it being recognized that both parties have reserved all rights to their
respective Confidential Information not expressly granted herein.

III. FURTHER OBLIGATION

Proper and appropriate steps shall be taken and maintained by the receiving party, at all
times and no less rigorous than those taken to protect its own confidential and proprietary
information, to protect the Confidential Information received. Each party agrees that it will
disclose the other party’s Confidential Information only to such of its employees and advisers
who have a need to know said information in order to carry out their respective responsibilities
and only then to employees and advisers who have been advised of the confidential nature of the
information and have agreed to accept the same obligation of secrecy. In the event of any
threatened breach known to a party of the provisions of this Agreement by it or its employees or
advisers, or in the event of any loss of, or inability to account for, Confidential Information,
it will immediately notify the other party thereof and shall cooperate as reasonably requested by
the other party to prevent or curtail such a threatened breach or to recover Confidential
Information. At the termination of the Agreement or at any time upon demand, each party shall
return or destroy all of the documents transferred to it in confidence and retain no copy or
reproduction (whether held in electronic form or otherwise) thereof.

IV. PURPOSE OF AGREEMENT

The purpose of this Agreement is to address Confidential Information and not for the
conception of intellectual property. No license or right is granted hereby to the receiving party,
by implication or otherwise, with respect to or under any trademark, copyright, patent application,
patent, or claims of patent of the disclosing party.

 

2

 

V. MODIFICATION

This Agreement may not be changed or modified except in writing signed
by an officer of Diageo and by an authorized representative of Boston Beer.

VI. TERM AND TERMINATION

This Agreement shall be effective as of date hereof and shall terminate
three (3) years from the date hereof.

VII. JURISDICTION; EQUITABLE RELIEF

This Agreement shall be governed by and construed in accordance with
the laws of the State of Connecticut, USA, and the parties submit to the
exclusive jurisdiction of the courts located in the Slate of Connecticut,
USA in respect of all matters or things arising out of this Agreement. Each
party acknowledges that any breach or threatened breach of the covenants
contained in this Agreement would result in irreparable harm to the other
party, and that money damages would not provide an adequate remedy to them.
Therefore, each party agrees that the other party shall have the right and
remedy, in addition to any other rights and remedies available at law or in
equity, to have the covenants contained in this Agreement specifically
enforced by any court of competent jurisdiction, including without
limitation injunctions against violations, threatened or actual, of the
covenants in this Agreement.

VIII. NO WAIVER

No failure or delay on the part of the disclosing party in exercising any
right, power or privilege conferred by this Agreement shall operate as a
waiver of that right, power or privilege, or of this Agreement as a whole.
No single or partial exercise of any right, power or privilege shall
preclude any further exercise of that right, power or privilege.

IX. ASSIGNMENT; NO AGENCY

There shall be no assignment of rights and obligations under this
Agreement absent written agreement by the parties. No agency or partnership
is intended to be formed by entering into this Agreement.

	 	 	 	 	 	 	 	 	 	 
	 	Diageo North America, Inc.	 	 	 	Boston Beer Corporation	 	 
	 	 
	 	 	 	 	 	 	 	 
	By:     

	/s/ Joseph Barry	 	 	 	By:

	 	/s/ Martin F. Roper
 

	 	 
	Name:

	Joseph Barry	 	 	 	Name:
	 	Martin F. Roper	 	 
	Title:

	Secretary	 	 	 	Title:
	 	President and CEO	 	 

 

3

 

EXHIBIT J

Solicitation of Key Employees 

[ * ]

			
	[ * ]	 	indicates that information has been omitted and filed separately with the Securities and
Exchange Commission pursuant to a request for confidentiality treatment.

 

 

 

EXHIBIT K

Asset Listing

 

 

 

EXHIBIT L

Deed

Prepared by and Return to:

Nixon Peabody LLP

100 Summer Street

Boston, MA 02110

Attention: Frederick H. Grein, Jr., Esquire

DEED

THIS INDENTURE is made as of                     , 200___, between DIAGEO NORTH AMERICA, INC., f/k/a
Guinness UDV North America, Inc., a Connecticut corporation, with an address at 801 Main Avenue,
Norwalk, CT 06851 (“Grantor”), and BOSTON BEER CORPORATION, a Massachusetts corporation,
with an address at One Design Center Place, Suite 850, Boston, MA 02210 (“Grantee”).

WITNESSETH, that the Grantor for and in consideration of the sum of [amount determined to be
allocated to Land and Building in accordance with
Section 2.6]
                                         Dollars ($                                        )
lawful money of the United States of America, unto it well and truly paid by the Grantee at and before the sealing
and delivery of these presents, the receipt whereof is hereby acknowledged, has granted, bargained,
sold, aliened, enfeoffed, released and confirmed, and by these presents does grant, bargain, sell,
alien, enfeoff, release and confirm unto the Grantee, its successors and assigns:

ALL THAT CERTAIN tract or parcel of land situated in the Township of Upper Macungie, County of
Lehigh and Commonwealth of Pennsylvania, and described in Exhibit A attached hereto and
made a part hereof;

TOGETHER with all and singular the buildings, improvements, ways, streets, alleys, passages,
waters, watercourses, rights, liberties, privileges, hereditaments and appurtenances whatsoever
thereunto belonging, or in any wise appertaining, and the reversions, remainders, rents, issues and
profits thereof, and all the estate, right, title, interest, property, claim and demand whatsoever
in and to the same and every part thereof;

UNDER AND SUBJECT to those matters set forth in Exhibit B attached hereto and made a
part hereof;

UNDER AND SUBJECT to all coal and mining rights and waiver of damage, if any, as have been
heretofore been excepted and reserved and/or sold and conveyed.

TO HAVE AND TO HOLD the said tract or parcel of land above described, with the buildings and
improvements thereon erected, the hereditaments and premises hereby granted, or mentioned and
intended so to be, with the appurtenances, unto the Grantee, its successors and
assigns, to and for the only proper use and behoof of the Grantee, its successors and assigns,
forever, UNDER AND SUBJECT, as aforesaid;

 

 

 

AND the Grantor, for itself and its successors, does by these presents covenant, grant and
agree, to and with the Grantee, its successors and assigns, that it the Grantor and its successors,
all and singular the hereditaments and premises herein described and granted, or mentioned and
intended so to be, with the appurtenances, unto the Grantee, its successors and assigns, against it
the Grantor and its successors, and against all and every other person and persons whomsoever
lawfully claiming or to claim the same or any part thereof, by, from or under it, them or any of
them, shall and will warrant SPECIALLY and forever defend, UNDER AND SUBJECT as aforesaid.

THIS DOCUMENT MAY NOT SELL, CONVEY, TRANSFER, INCLUDE OR INSURE THE TITLE TO THE COAL AND RIGHT OF
SUPPORT UNDERNEATH THE SURFACE LAND DESCRIBED OR REFERRED TO HEREIN, AND THE OWNER OR OWNERS OF
SUCH COAL MAY HAVE THE COMPLETE LEGAL RIGHT TO REMOVE ALL OF SUCH COAL, AND, IN THAT CONNECTION,
DAMAGE MAY RESULT TO THE SURFACE OF THE LAND AND ANY HOUSE, BUILDING OR OTHER STRUCTURE ON OR IN
SUCH LAND. THE INCLUSION OF THIS NOTICE DOES NOT ENLARGE, RESTRICT OR MODIFY ANY LEGAL RIGHTS OR
ESTATES OTHERWISE CREATED, TRANSFERRED, EXCEPTED OR RESERVED BY THIS INSTRUMENT.

THE GRANTOR HEREIN STATES THAT THE HEREINABOVE DESCRIBED PROPERTY IS NOT PRESENTLY BEING USED FOR
THE DISPOSAL OF HAZARDOUS WASTE, NOR TO THE BEST OF HIS/HER/THEIR KNOWLEDGE, INFORMATION AND BELIEF
HAS IT EVER BEEN USED FOR THE DISPOSAL OF BELIEF HAS IT EVER BEEN USED FOR THE DISPOSAL OF
HAZARDOUS WASTE. THIS STATEMENT IS MADE IN COMPLIANCE WITH THE SOLID WASTER MANAGEMENT ACT, ACT OF
JULY 7, 1980, P.L. 380, 35 P.S. § 6018.101 ET SEQ.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

 

 

 

IN WITNESS WHEREOF the Grantor has caused this Deed to be duly executed the day and year first
above written.

	 	 	 	 	 
	 	DIAGEO NORTH AMERICA, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

	 	 	 
	STATE OF                                   

	 	:
	 

	 	:  SS
	COUNTY OF                               

	 	:

On
the ___ day of                     , 200___, before me, a Notary Public, the undersigned officer,
personally appeared                                         , who acknowledged himself to be the person whose name
is subscribed to the within instrument, and acknowledged that he executed the same for the purposes
therein contained.

In witness whereof, I hereunto set my hand and official seal.

(NOTARIAL SEAL)

                                                               

Notary Public

My Commission Expires:

 

 

 

Exhibit A to Deed

All that certain tract or piece of land, with the buildings and improvements thereon located in
Upper Macungie Township, Lehigh County, Pennsylvania, bounded and described as follows:

Beginning at an iron pin (found), a property corner in the southwesterly line of lands now or
formerly of Keystone Lodging ENT. L.P. (Deed recorded in Deed Book Volume 1692, at Page 920) and
also being a northwesterly property corner of lands now or formerly of Minnesota Mining and
Manufacturing Company (Deed recorded in Deed Book Volume 1468, at Page 834), and also being the
most northwesterly corner of a variable width access easement over lands now or formerly of
Minnesota Mining and Manufacturing Company, (easement recorded in Deed Book Volume 1455, at Page
1), said point being located the four following courses and distances from an iron pin (found) in
the southeasterly right-of-way line at the westerly terminus of Upper Macungie Township Road 907,
also known as Stroh Drive (100.00 feet wide) and being a northerly property corner of lands now or
formerly of Minnesota Mining and Manufacturing Company (Deed recorded in Deed Book Volume 1468, at
Page 834): (a) partially crossing the westerly terminus of Upper Macungie Township Road 907,
crossing the easterly terminus of the variable width access easement, and along the northerly
property line of the lands now or formerly of Minnesota Mining and Manufacturing Company, N 24° 26’
21” W 80.11 feet to a point on a curve in the northerly property line of the lands now or formerly
of Minnesota Mining and Manufacturing Company, and the northerly side of the variable width access
easement; thence along the northerly property line of the lands now or formerly of Minnesota Mining
and Manufacturing Company, and the northerly side of the variable width access easement, the three
following courses and distances: (b) on a curve to the right having a radius of 542.96 feet (delta
43° 29’ 37”, tangent 216.58 feet, chord S 86° 52’ 33” W 402.34 feet) for an arc distance of 412.16
feet to a point of tangency, (c) N 71° 22’ 38” W 239.75 feet to a point, and (d) N 59° 46’ 17” W
165.85 feet to the beginning point of this description; thence (1) along the lands now or formerly
of Minnesota Mining and Manufacturing Company, and crossing the westerly terminus of the variable
width access easement, S 18° 37’ 22” W 149.99 feet to an iron pin (found) on a curve; thence
continuing along the lands now or formerly of Minnesota Mining and Manufacturing Company the three
following courses and distances: (2) on a curve to the left having a radius of 344.00 feet (delta
47° 02’ 55”, tangent 149.75 feet, chord S 82° 38’ 08” W 274.61 feet) for an arc distance of 282.48
feet to an iron pin (found) at a point of tangency, (3) S 59° 06’ 42” W 965.07 feet to an iron pin
(found) at a point of curvature, and (4) on a curve to the right having a radius of 376.00 feet
(delta 64° 00’ 55”, tangent 235.02 feet, chord N 88° 52’ 49” W 398.58 feet) for an arc distance of
420.10 feet to an iron pin (found); thence (5) continuing along the lands now or formerly of
Minnesota Mining and Manufacturing Company and partially crossing former Upper Macungie Township
Road 523B, also known as Fogel Road (33.00 feet wide), vacated by Upper Macungie Township Ordinance
No. 1-95, S 59° 07’ 22” W 58.65 feet to a railroad spike (found) in line of lands now or formerly
of the Great Spring Waters of America, Inc. (Deed recorded in Deed Book Volume 1542, at Page 786);
thence (6) through former Upper Macungie Township Road 523B, as vacated by Township Ordinances No.
1-95 and No. 3-95, along the lands now or formerly of the Great Spring Waters of America, Inc.,
lands now or formerly of the PREFCO Fifteen Limited Partnership (Deed recorded in Deed Book Volume
1657, at Page 293), and partially crossing Pennsylvania State Route 0078, also known as Interstate
Route 78, U.S. Route 22, and formerly known as L.R. 443 (variable width), N 30° 52’ 38
W (passing
over an iron pin [found] in the southerly legal right-of-way line for limited access of
Pennsylvania State Route

 

 

 

0078 at 1,900.00 feet) for a distance of 1,923.06 feet to a point in Pennsylvania State Route 0078;
thence through Pennsylvania State Route 0078 the three following courses and distances: (7) N 5°
52’ 22” E 47.85 feet to a point, (8) N 50° 12’ 22” E 7.35 feet to a point, and (9) N 75° 05’ 17” E
1,461.57 feet to a point; thence (10) partially crossing Pennsylvania State Route 0078, along lands
now or formerly of Lehigh County Industrial Development Authority (Deed recorded in Deed Book
Volume 1375, at Page 978), S 37° 00’ 43” E (passing through an iron pipe [found] in the southerly
legal right-of-way line for limited access of Pennsylvania State Route 0078 at 75.55 feet) for a
distance of 1,666.24 feet to an iron pipe (found) in line of the aforementioned lands now or
formerly of Keystone Lodging ENT. L.P.; thence (11) along the lands now or formerly of Keystone
Lodging ENT. L.P., S 71° 22’ 38” E 167.00 feet to the point or place of beginning.

Containing approximately 69 Acres.

Being the same premises that Pabst Brewing Company, a Delaware corporation, conveyed unto Guinness
UDV North America, Inc., a Connecticut corporation, now known as Diageo North America, Inc., a
Connecticut corporation, by Deed dated 12/5/2001 and recorded 12/17/2001 in Lehigh County,
Pennsylvania, in Deed Book Vol. 1700 page 1104, in fee.

 

 

 

Exhibit B to Deed

Permitted Encumbrances

 

 

 

DEED

DIAGEO NORTH AMERICA, INC., Grantor

to

BOSTON BEER CORPORATION, Grantee

	 	 	 
	Premises:

	 	7880 Penn Drive
	 

	 	Township of Upper Macungie
	 

	 	County of Lehigh
	 

	 	Commonwealth of Pennsylvania

Return recorded document

to:

Nixon Peabody LLP

100 Summer Street

Boston, MA 02110

Attention: Frederick H. Grein, Jr., Esquire

I hereby certify that

the correct address of

the Grantee is:

One Design Center Place

Suite 850

Boston, MA 02210

	 	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

For Grantee
	 	 

 

 

 

EXHIBIT M

Assignment and Assumption of Contracts

This Assignment and Assumption of Contracts (the “Assignment”) is entered into as of
                    ,
200___ by DIAGEO NORTH AMERICA, INC., a Connecticut corporation, with offices at
801 Main Avenue, Norwalk, CT 06851 (“Seller”), and BOSTON BEER CORPORATION, a Massachusetts
corporation, with offices at One Design Center Place, Suite 850, Boston, MA 02210
(“Buyer”). For valuable consideration, the parties hereto, each intending to be legally
bound and to bind their respective successors and assigns, hereby covenant and agree as follows.

1. Seller hereby assigns, transfers and sets over unto Buyer, and Buyer hereby accepts and
assumes, all Seller’s rights, title and interest in and to those certain contracts, listed on
Exhibit A attached hereto and made a part hereof (“Contracts”), which Contracts
pertain to certain real property located at 7880 Penn Drive, Township of Upper Macungie, County of
Lehigh and Commonwealth of Pennsylvania, which Seller has contemporaneously herewith conveyed unto
Buyer.

2. Seller shall be responsible for the observance and performance of all its agreements and
obligations under the Contracts arising prior to the date hereof. Buyer, and not Seller, shall be
responsible for the observance and performance of all such agreements and obligations under the
Contracts arising on or after the date hereof.

3. Seller shall defend, protect, indemnify and save harmless Buyer from and against any and all
liabilities, suits, actions, losses, damages, costs and expenses, including without limitation
counsel fees, suffered or incurred by Buyer resulting from or relating to any failure by Seller to
observe or perform any of its agreements or obligations under the Contracts prior to the date
hereof.

4. Buyer shall defend, protect, indemnify and save harmless Seller from and against any and all
liabilities, suits, actions, losses, damages, costs and expenses, including without limitation
counsel fees, suffered or incurred by Seller resulting from or relating to any failure by Buyer to
observe or perform any of its agreements or obligations under the Contracts on or after the date
hereof.

[SIGNATURE PAGE FOLLOWS]

 

M-1

 

IN WITNESS WHEREOF, Seller and Buyer have executed this Assignment as of the date first above
written.

	 	 	 	 	 	 	 
	SELLER:	 	DIAGEO NORTH AMERICA, INC., a Connecticut
 corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 
	 
	 	 	 	 	 	 
	BUYER:	 	BOSTON BEER CORPORATION, a Massachusetts
 corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:	 	 	 	 

 

M-2

 

Exhibit A to Assignment and Assumption of Contracts

Contracts

 

M-3

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