Exhibit 10.18
LIQUIDATION PREFERENCE
AGREEMENT
THIS LIQUIDATION PREFERENCE
AGREEMENT (the “
Agreement ”) is dated effective as of October 27,
2004 by and among RSTW PARTNERS III, L.P., a Delaware
limited partnership (“ RSTW ”), GORDON
BIERSCH BREWERY RESTAURANT GROUP, INC., a Tennessee corporation
(“ Gordon Biersch ”) for the limited purposes
set forth herein and each of the undersigned holders of Gordon
Biersch’s common stock, no par value per share, (“
Common Stock ”) outstanding as of the date hereof (the
“ Holders ”).
WHEREAS, RSTW and Gordon Biersch entered into that
certain Note Purchase Agreement dated as of December 10, 1999
(as amended, supplemented or otherwise modified from time to time,
the “ Note Agreement ”), pursuant to which a
senior subordinated promissory note in the original principal
amount of $23,000,000 was issued by Gordon Biersch to RSTW (as
amended, supplemented or otherwise modified from time to time, the
“ Senior Subordinated Note ”); and
WHEREAS, RSTW and Gordon Biersch entered into that
certain Warrant Purchase Agreement dated as of December 10,
1999 (the “ Warrant Agreement ”) under which
Gordon Biersch issued RSTW a warrant to purchase capital stock;
and
WHEREAS, pursuant to a Settlement Agreement between RSTW
and Gordon Biersch dated as of the date hereof (the “
Settlement Agreement ”). RSTW has agreed to terminate
the Note Agreement and the Warrant Agreement and settle all
obligations owing or incurred under such agreements, including
cancellation of the Senior Subordinated Note (the “
Obligations ”) and a warrant to purchase capital stock
of Gordon Biersch;
WHEREAS , Gordon Biersch is willing to act as an
administrator to the limited extent provided herein for certain
payments that may be made under this Agreement;
WHEREAS, each of the Holders acknowledges and agrees that
such Holder is the beneficiary of good and valuable consideration
as a result of RSTW’s actions under the Settlement
Agreement;
NOW, THEREFORE,
in consideration of the mutual
promises contained in this Agreement, the legal sufficiency of
which is hereby acknowledged, RSTW, Gordon Biersch and each Holder
hereby agree as follows:
1. Payment upon Liquidation
Event.
(a) If the Holders shall be entitled
to be paid or distributed proceeds in cash or in securities
(including, without limitation, debt securities) or in other
property pursuant to a Liquidity Event (as defined below) or
payment of dividends or other distributions (collectively, “
Distributions ”), each Holder hereby agrees that such
Holder’s rights to receive such Distributions are hereby
assigned to RSTW in an amount of up to $4,200,000 (the “
Liquidation Amount ”).
(b) For purposes of this Agreement,
a “ Liquidity Event ” shall mean:
(i) any liquidation, dissolution or
winding up of Gordon Biersch, whether voluntary or
involuntary;
(ii) any consolidation or merger of
Gordon Biersch with or into any other corporation or other entity
or person, or any other corporate reorganization or transaction or
series of related transactions
by Gordon Biersch in which in excess
of 50% of Gordon Biersch’s voting power is transferred,
excluding any consolidation or merger effected exclusively to
change the domicile of Gordon Biersch; or
(iii) a sale or other disposition of
all or substantially all of the assets of Gordon
Biersch.
(c) Each Holder hereby irrevocably
authorizes and appoints Gordon Biersch to act as such
Holder’s administrator and attorney-in-fact with respect to
all such Distributions to which such Holder may become entitled. In
the event that any such Distributions are payable to the Holders,
the Holders shall cause such Distributions to first be deposited
with Gordon Biersch which shall then, without any further action on
the part of any party, deliver all such Distributions to RSTW until
RSTW shall have been distributed the Liquidation Amount and shall
thereafter distribute any such Distributions in excess of the
Liquidation Amount ratably to each Holder based upon the
allocations set forth on Exhibit A , as may be amended to
reflect transfers of Common Stock by Holders.
(d) Any securities or other property
to be delivered to RSTW or the Holders pursuant to this Agreement
shall be valued as follows:
(i) Securities shall be valued as
follows:
(A) If traded on a securities
exchange or Nasdaq NMS, the value shall be deemed to be the average
of the closing prices of the securities on such exchange over the
20 trading-day period ending three (3) trading-days prior to
the closing;
(B) If actively traded
over-the-counter (other than Nasdaq NMS), the value shall be deemed
to be the average of the closing bid prices over the 20 trading-day
period ending three (3) trading-days prior to the closing;
and
(ii) If there is no active public
market, the value shall be the fair market value thereof, as
determined by the board of directors of Gordon Biersch.
(iii) All other property shall be
valued at the fair market value thereof, as determined by the board
of directors of Gordon Biersch.
(e) The amounts distributed under
this Agreement to RSTW shall not exceed in the aggregate the
Liquidation Amount. The Liquidation Amount is a maximum amount that
may be payable to RSTW under this Agreement and RSTW acknowledges
such amount may not be paid in full if Distributions are not
greater than $4,200,000.
(f) Each Holder’s obligations
under this Agreement is several and each Holder’s obligation
is limited to such Holder’s allocable percentage (as
expressed on Exhibit A , as may be amended to reflect
transfers of Common Stock by Holders) of Distributions.
2. Transfers.
(a) No Holder may sell, assign,
pledge or otherwise dispose of (a “ Transfer ”)
any interest in any Common Stock covered by this Agreement, either
voluntarily or involuntarily, by operation of law or otherwise,
unless the transferee of such Common Stock (except in the case of
Transfers to Gordon Biersch) is either a party to this Agreement or
shall have executed and delivered to Gordon Biersch an
Inst
