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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended July 31, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the transition period from ________ to ________
Commission File Number 1-12119
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED
(Exact name of registrant as specified in its charter)
Bermuda 72-123940
- -------------------------------- --------------------------------------
State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization
One Galleria Boulevard, Metairie, Louisiana 70001
- ----------------------------------------------------- -------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (504) 849-2739
Indicate by a check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes_____ No X
Number of shares of common stock outstanding
at September 16, 1996: 3,696,876
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AMERICAN CRAFT BREWING INTERNATIONAL LIMITED
FORM 10-Q
PART I FINANCIAL INFORMATION
ITEM 1. Financial Statements (unaudited):
Consolidated Balance Sheets -
July 31, 1996 and October 31, 1995
Consolidated Statements of Operations -
Three and nine months ended July 31, 1996 and 1995
Consolidated Statements of Cash Flows -
Nine months ended July 31, 1996 and 1995
Notes to Consolidated Financial Statements (unaudited)
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II OTHER INFORMATION
ITEM 4. Submission of Matters to a Vote of Security Holders
ITEM 6. Exhibits and Reports on Form 8-K
SIGNATURE
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Amounts expressed in United States Dollars)
<TABLE>
<CAPTION>
JULY 31, OCTOBER 31,
1996 1995
----------- -----------
(UNAUDITED) (AUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 57,433 $ 102,248
Accounts receivable, less allowance
for doubtful accounts of $1,766 and $556 82,720 21,680
Inventories 31,268 22,922
Other current assets 24,362 391
Total current assets 195,783 147,241
---------- ----------
Rental, utility & other deposits 35,749 35,174
Deferred tax assets 61,925 49,096
Equipment & capital leases, net 656,385 634,767
Deferred stock issuance costs 593,174 --
---------- ----------
Total assets $1,543,016 $ 866,278
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Long-term bank loan, current portion $ 452,000 $ 113,000
Capital lease obligations, current portion 12,858 13,284
Accrued liabilities 419,720 39,294
Bridge notes 370,000 --
Shareholders' loans 65,000 85,638
---------- ----------
Total current liabilities 1,319,578 251,216
Long-term bank loan -- 395,500
Capital lease obligations 21,223 30,221
---------- ----------
Total liabilities 1,340,801 676,937
---------- ----------
Commitments
Shareholders' equity:
Preferred stock, $0.01 par, 500,000 shares
authorized, none issued -- --
Common stock, $0.01 par and $0.13 par, 10,000,000
shares and 11,000 shares authorized, 2,000,000
and 5,000 shares issued and outstanding, 20,000 645
respectively
Additional paid-in capital 535,032 --
Subscription monies received in advance -- 437,156
Accumulated deficit (352,817) (248,460)
---------- ----------
Total shareholders' equity 202,215 189,341
---------- ----------
Total liabilities and shareholders' equity $1,543,016 $ 866,278
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts expressed in United States Dollars)
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
--------------------- ---------------------
JULY 31, JULY 31, JULY 31, JULY 31,
1996 1995 1996 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Sales $110,954 $ 6,755 $355,707 $ 6,755
Cost of Sales 31,692 8,845 74,747 8,845
--------- --------- --------- ---------
Gross profit 79,262 (2,090) 280,960 (2,090)
Selling, general and administrative expenses 153,932 184,415 361,026 281,457
Interest expense, net 11,178 13,865 36,086 15,644
Other expenses, net 146 1,128 1,034 1,128
--------- --------- --------- ---------
Loss before income taxes (85,994) (201,498) (117,186) (300,319)
Income tax benefit 7,682 33,248 12,829 49,553
--------- --------- --------- ---------
Net loss ($ 78,312) ($168,250) ($104,357) ($250,766)
========= ========= ========= =========
Net loss per common share ($0.04) $(0.08) ($0.05) ($0.12)
========= ========= ========= =========
Weighted average number of shares outstanding 2,071,422 2,071,422 2,071,422 2,071,422
========= ========= ========= =========
The accompanying notes are an integral part of these financial statements.
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AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts expressed in United States Dollars)
(Unaudited)
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------------
July 31, July 31,
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($104,357) ($250,766)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation 48,335 3,739
Deferred income taxes (12,829) (49,553)
Increase in operating assets:
Accounts receivable, net (61,040) (3,155)
Inventories (8,346) (36,451)
Other current assets (23,971) (457)
Rental, utility and other deposits (575) (25,741)
Increase in operating liabilities:
Accrued liabilities 41,287 25,450
--------- ---------
Net cash used in operating activities (121,496) (336,934)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (69,953) (467,866)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from bank loan - 565,000
Repayment of bank loan (56,500) -
Repayment of capital lease obligations (9,424) (4,067)
Proceeds from bridge notes 370,000 -
Proceeds from shareholders' loans - 37,893
Repayment of shareholders' loans (20,638) -
Proceeds from issuance of stock 117,231 8,345
Stock issuance costs (254,035) -
--------- ---------
Net cash provided by financing activities 146,634 607,171
--------- ---------
Decrease in cash (44,815) (197,629)
Cash at beginning of period 102,248 197,752
--------- ---------
Cash at end of period $57,433 $123
========= =========
SUPPLEMENTAL DISCLOSURES TO STATEMENTS OF CASH FLOWS:
Interest $36,421 $ 1,407
========= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
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AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Amounts expressed in United States Dollars)
(Unaudited)
1. Basis for Preparation of the Consolidated Financial Statements
The consolidated financial statements have been prepared by American
Craft Brewing International Limited ("AmBrew International") and its
subsidiaries (collectively, the "Company"), without audit, with the exception of
the October 31, 1995 consolidated balance sheet. The financial statements
include consolidated balance sheets, consolidated statements of operations and
consolidated statements of cash flows. In the opinion of management, all
adjustments, which consist of normal recurring adjustments, necessary to present
fairly the financial position, results of operations and cash flows for all
periods have been made.
These financial statements should be read in conjunction with the
consolidated financial statements as of and for the fiscal year ended October
31, 1995, and the footnotes thereto included in the Company's Form S-1 as filed
with the Securities and Exchange Commission on September 10, 1996, as
supplemented by the prospectus, dated as of September 11, 1996, filed by the
Company pursuant to Rule 424(b) of Regulation C of the Securities and Exchange
Commission's rules and regulations (the "Form S-1").
2. Basis of Presentation
The consolidated balance sheet as of October 31, 1995, the consolidated
statements of operations for the three-month and nine-month periods ended July
31, 1995, and the consolidated statement of cash flows for the nine months ended
July 31, 1995 incorporate the financial statements of the South China Brewery
(as defined in the Form S-1). The consolidated financial statements as of and
for the periods ended July 31, 1996 incorporate the financial statements of
AmBrew International (previously Craft, as defined in the Form S-1) and the
South China Brewery.
3. Net Loss per Common Share
Net loss per common share is computed by dividing net loss by 2,071,422,
the weighted average common shares outstanding during the periods, on the basis
that the Share Exchange, the Share Split and the Merger (each as defined in the
Form S-1) had been consummated prior to the periods presented, plus 71,422
shares which represent the effect, using the treasury stock method, of shares
issued to the holders of the Bridge Notes (as defined in the Form S-1) assuming
such issuance had been made prior to the periods presented.
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4. Inventories
<TABLE>
<CAPTION>
JULY 31, OCTOBER 31,
1996 1995
----------------- --------------
(UNAUDITED) (AUDITED)
<S> <C> <C>
Raw materials $24,462 $16,682
Work-in-process and finished goods 6,806 6,240
------- -------
$31,268 $22,922
======= =======
</TABLE>
5. Shareholders' Equity
As of July 31, 1996, the common stock recorded in the consolidated
balance sheet represents the common stock of the Company as of that date giving
effect to the Share Exchange, Share Split and Merger. As of October 31, 1995,
the common stock recorded in the consolidated balance sheet represents the
common stock of the subsidiaries of the Company as of that date.
The Board of Directors is authorized, without further stockholder
approval, to issue up to 500,000 shares of "blank check" preferred stock in one
or more series and to fix the rights, preferences, privileges and restrictions
granted or imposed upon unissued shares of preferred stock and to fix the number
of shares constituting any series and designations of such series.
6. Stock Option Plan
On July 18, 1996, the Stock Option Plan was adopted by the Company's
Board of Directors and approved by its shareholders. The Company has reserved
300,000 authorized but unissued shares of common stock for issuance under the
plan. Under the terms of the Stock Option Plan, a committee of the Board of
Directors may grant options to eligible individuals that will allow the holders
of the options to purchase shares of common stock at the fair market value on
the date the options are granted.
7. Subsequent Events
Subsequent to July 31, 1996, the following events took place:
a. On September 16, 1996, the Company completed an initial public
offering of 1,580,000 shares of its common stock and 1,580,000 redeemable common
stock purchase warrants at initial public offering prices of $5.50 and $0.10,
respectively. The net proceeds from this offering, after underwriters' discounts
and commissions and other expenses, were $7,590,285. At July 31, 1996, deferred
stock issuance costs of $593,174 were recorded as a long-term asset in the
accompanying consolidated balance sheet. An additional $110,234 of such costs
were incurred subsequent to July 31, 1996. The proceeds to be recorded as an
increase to shareholders' equity will be net of these amounts. A portion of the
proceeds were used to retire $120,000 principal amount of Bridge Notes, $452,000
principal amount of the bank loan, $65,000 principal of the shareholder's loan
from BPW (as defined in the Form S-1) and various stock issuance costs, all as
reflected in the unaudited pro forma condensed consolidated balance sheet in
Note 8. In addition, 116,876 shares of
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common stock and 116,876 redeemable common stock purchase warrants were issued
to the Bridge Note holders.
b. On September 16, 1996, the 158,000 Representative's Warrants (as
defined in the Form S-1) were sold to the Representative (as defined in the Form
S-1) for nominal consideration. These warrants allow the holder to purchase from
the Company up to 158,000 shares of common stock and/or 158,000 warrants. The
Representative's Warrants are not exercisable until September 16, 1997.
c. On September 17, 1996, the Company made a non-refundable deposit of
$200,000 for the purchase of twenty brew systems.
8. Pro Forma Consolidated Financial Statements (Unaudited)
The following unaudited pro forma consolidated financial statements have
been prepared on the basis described below. The unaudited pro forma condensed
consolidated balance sheet as of July 31, 1996, has been prepared to give effect
to the following events as if such events had occurred on July 31, 1996: (i) the
aforementioned subsequent event a, (ii) the repayment of the Company's bank loan
of $452,000 and the shareholder's loan from BPW of $65,000, (iii) the repayment
of $120,000 principal amount of Bridge Notes and the issuance of common stock
and Bridge Warrants (as defined in the Form S-1) to the holder of such Bridge
Notes, (iv) the conversion of $250,000 principal amount of Bridge Notes into
common stock and the issuance of Bridge Warrants to the holders of such Bridge
Notes and (v) the payment of $339,139 of accrued stock issuance costs. The
unaudited pro forma consolidated statement of operations for the nine months
ended July 31, 1996, has been prepared to give effect to the following events as
if such events had occurred on November 1, 1995: (i) the aforementioned
subsequent event a, (ii) the accrual of salary payable to the Company's
Executive Vice President, Chief Operating Officer and Secretary at an annual
rate of $72,000 as if such salary had become payable on and after November 1,
1995, and (iii) the elimination of interest expense payable for the period in
respect of the bank loan and shareholder's loan as if such loans had been repaid
on November 1, 1995.
The pro forma condensed financial statements are unaudited and have been
prepared using the historical financial statements of the Company, and are
qualified entirely by reference to, and should be read in conjunction with, such
historical financial statements. The pro forma financial statements are provided
for informational and comparative purposes only. The pro forma adjustments are
based on available financial information and certain estimates and assumptions.
The pro forma financial statements do not purport to be indicative of the
results of operations and financial position of the Company had such
transactions in fact occurred on November 1, 1995 or July 31, 1996,
respectively, or during the period presented or during any future period.
Unaudited pro forma condensed balance sheet as of July 31, 1996:
<TABLE>
<CAPTION>
PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
-------------- --------------- ---------------
<S> <C> <C> <C> <C>
Total current assets $ 195,783 $7,480,051 (1) $6,699,695
(517,000) (2)
</TABLE>
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<TABLE>
<CAPTION>
PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
------------ -------------- --------------
<S> <C> <C> <C> <C>
(120,000) (3)
(339,139) (4)
Total assets $1,543,016 $7,480,051 (1) $7,453,754
(517,000) (2)
(120,000) (3)
(339,139) (4)
(593,174) (5)
Total current liabilities $1,319,578 $(517,000) (2) $93,439
(120,000) (3)
(250,000) (6)
(339,139) (4)
Total liabilities $1,340,801 $(517,000) (2) $114,662
(120,000) (3)
(250,000) (6)
(339,139) (4)
Total shareholders' equity $202,215 $7,480,051 (1) $7,339,092
250,000 (6)
(593,174) (5)
265,000 (7)
(265,000) (7)
</TABLE>
Unaudited pro forma statement of operations for the nine months ended July 31,
1996:
<TABLE>
<CAPTION>
PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
------------ -------------- --------------
<S> <C> <C> <C>
Net sales $ 355,707 $ 355,707
Cost of sales 74,747 74,747
---------- ----------
Gross profit 280,960 280,960
Selling, general and
administrative expenses 361,026 44,300 (8) 405,326
Interest expense, net 36,086 265,000 (7) 266,036
(35,050) (9)
Other expenses, net 1,034 1,034
---------- ----------
Loss before income taxes (117,186) (391,436)
Income tax benefit 12,829 (2,893) (9) 9,936
---------- ----------
Net loss $ (104,357) $ (381,500)
========== ===========
Net loss per common share $(0.05) $(0.10)
========== ===========
Weighted average number
</TABLE>
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<TABLE>
<CAPTION>
PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
------------ -------------- --------------
<S> <C> <C> <C>
of shares outstanding 2,071,422 3,696,876 (10)
========= =========
</TABLE>
Notes to unaudited pro forma financial statements:
(1) Represents the proceeds from the initial public offering of 1,580,000 shares
of the Company's common stock and 1,580,000 redeemable common stock purchase
warrants, net of underwriting discounts and commissions and offering expenses,
and net of stock issuance costs incurred by the Company subsequent to July 31,
1996.
(2) Represents the repayment of the bank loan of $452,000 and the shareholder's
loan from BPW of $65,000 with the proceeds of the initial public offering.
(3) Represents the repayment of $120,000 principal amount of the Bridge Notes
with the proceeds of the initial public offering.
(4) Represents the payment of accrued stock issuance costs with the proceeds of
the initial public offering.
(5) Represents the charging of deferred stock issuance costs against the
proceeds of the initial public offering.
(6) Represents the conversion of $250,000 principal amount of the Bridge Notes
into shares of common stock.
(7) Represents the recognition of a non-recurring, non-cash interest expense of
$265,000 representing the original issue discount relating to the Bridge Notes.
(8) Represents the additional salary expense payable to the Company's Executive
Vice President, Chief Operating Officer and Secretary at an annual rate of
$72,000.
(9) Represents elimination of interest expense as a result of the repayment of
the bank loan and shareholder's loan from BPW.
(10) The pro forma weighted average shares outstanding includes the weighted
average shares outstanding during the period, as if the Share Exchange, Share
Split and Merger had been consummated at November 1, 1995, and the 1,580,000
shares issued in the initial public offering and the 116,876 shares issued in
connection with the satisfaction of the Bridge Notes, as if those issuances
occurred on November 1, 1995.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
GENERAL
Unless otherwise indicated, the following discussion addresses
the financial condition and results of the Company's Hong Kong brewing and
distribution subsidiaries, South China Brewing Company Limited ("South China")
and SCBC Distribution Company Limited ("SCBC"), respectively. On May 31, 1996,
the stockholders of South China and SCBC exchanged substantially all of the
issued and outstanding shares of South China and SCBC for 23,750 shares of
capital stock of Craft Brewing Holdings Limited, a British Virgin Islands
Company ("Craft"), in a transaction accounted for as a reorganization of
companies under common control in a manner similar to a
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pooling of interests. On July 30, 1996, Craft amalgamated into AmBrew
International in a transaction accounted for as a pooling of interests. The
officers and directors of AmBrew International remained in office after the
amalgamation. South China and SCBC are collectively referred to as the South
China Brewery. This discussion should be read in conjunction with the Unaudited
Consolidated Financial Statements. In addition, the period-to-period
presentation set forth under "--Results of Operations" will not necessarily be
indicative of future results and future net losses can be expected as increased
expenses are incurred in connection with the establishment of expansion
breweries that the Company proposes to establish and operate, either through
wholly-owned subsidiaries or through majority-owned or otherwise
Company-controlled joint venture arrangements with strategic local partners.
With the exception of historical information, the matters
discussed herein are "forward looking statements" within the meaning of the
Private Litigation Reform Act of 1995. Such forward looking statements are
subject to risks, uncertainties and other factors which could differ materially
from future results implied by such forward looking statements. Potential risks
and uncertainties include, but are not limited to, the Company's ability to
establish and operate additional breweries on a timely basis, increased
acceptance by consumers of the Company's brands and development by the Company
of new brands of beer and the Company's ability to finance any additional
capital expenditures once the proceeds of its recent initial public offering of
securities (the "Offering") have been committed.
RESULTS OF OPERATIONS
The South China Brewery commenced operations in June 1995 and has
not experienced a full fiscal year of operations. The first sales of the South
China Brewery's products occurred in July 1995. For comparison purposes, the
following presentation compares the nine months ended October 31, 1995 with the
nine months ended July 31, 1996. The following table sets forth for the periods
indicated certain line items from the South China Brewery's combined and the
Company's consolidated statements of operations expressed as a percentage of net
sales for each of the nine months ended October 31, 1995 and July 31, 1996,
respectively:
<TABLE>
<CAPTION>
NINE MONTHS ENDED
--------------------------------
October 31, July 31,
1995 1996
----------- --------
<S> <C> <C>
Net Sales 100.0% 100.0%
Cost of Sales 61.2% 21.0%
Gross Profit 38.8% 79.0%
Selling, general & administrative expenses 410.7% 101.5%
Operating loss 371.9% 22.5%
</TABLE>
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<TABLE>
<S> <C> <C>
Interest expense, net 31.5% 10.1%
Net loss 339.8% 29.3%
</TABLE>
Net Sales. For the nine months ended October 31, 1995 and July
31, 1996, the South China Brewery had net sales of $63,707 and $355,707,
respectively. The growth in sales resulted from an increased awareness of and
acceptance by consumers of the South China Brewery's brands Dragon's Back India
Pale Ale and Crooked Island Ale, the first micro-brewed beers produced and sold
in Hong Kong. In addition, in September 1995, the South China Brewery entered
into contracts for the brewing and supply of custom brewed ales for consumption
in two Hong Kong pubs. Both of these contracts expired in September 1996. The
Company has renewed one of the contracts and is in the process of negotiating
renewal of the second contract. Custom brew sales have accounted for 70% of
all of the South China Brewery's sales for the nine months ending July 31, 1996
though the Company expects that sales of the South China Brewery's brands will
continue to increase relative to its custom brew sales.
The South China Brewery had net sales of $110,954 for the three
months ended July 31, 1996. Third quarter sales declined from levels experienced
in the first two quarters due to the temporary closure for renovation of one of
the South China Brewery's Hong Kong pub customers and to seasonally lower
volumes during the Hong Kong summer months, as well as other factors.
Cost of Sales. The South China Brewery's cost of sales for the
nine months ended October 31, 1995 and July 31, 1996 was $38,960 and $74,747,
respectively. The improvement in gross profit percentage was due to the lower
cost of kegged products relative to bottled products, as the South China Brewery
has increased sales of kegged products during the nine months ended July 31,
1996, and to more efficient use of brewery equipment.
Selling, General and Administrative Expenses. Selling, general
and administrative expenses for the nine months ended October 31, 1995 and July
31, 1996 were $261,653 and $361,026, respectively. This increase in expenses was
in part due to increased salary expense which increased during the nine months
ended July 31, 1996 over the nine months ended October 31, 1995 by $49,382 due
to the fact that the South China Brewery did not commence operations until June
1995 and the hiring of an office manager and an additional sales representative.
The Company's selling, general and administrative expenses, including salary,
marketing and other operational expenses, will increase as the proposed
expansion breweries are established.
Results for the three months ended July 31, 1996, reflect
additional advertising and marketing costs relating mainly to the promotion
of a new brand, Stonecutter's Lager.
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<PAGE>
Net Interest Expense. Net interest expense for the nine months
ended October 31, 1995 and July 31, 1996 was $20,093 and $36,086, respectively.
The Company's net interest expense should decrease in the future as
approximately $637,000 of the proceeds of the Offering was utilized to retire
certain notes issued by the Company.
LIQUIDITY AND CAPITAL RESOURCES
At July 31, 1996, the Company had total current assets of
$195,783, consisting of $57,433 in cash on hand, $82,720 in accounts receivable,
net, $31,268 in inventories, and $24,362 in other current assets. Substantially
all of the South China Brewery's sales are made to a small number of customers
on an open account basis and generally no collateral is required. At July 31,
1996, the South China Brewery's five largest accounts receivable accounted for
81% of its total accounts receivable as of such date.
At July 31, 1996, the Company had total liabilities of
$1,340,801, of which $1,319,578 were current liabilities, and a working capital
deficit of $1,123,795.
At July 31, 1996, the South China Brewery had fixed capital lease
obligations of $34,081 relating to its delivery vehicles: $12,858 due during the
year ended July 31, 1997, $12,858 due during the year ended July 31, 1998 and
$8,365 due during the year ended July 31, 1999. At July 31, 1996, the South
China Brewery had $13,865 in operating lease commitments over the two year
period ending July 31, 1998 relating to its warehouse and brewery facility.
During May 1996, the predecessor of the Company issued $370,000
principal of convertible notes bearing an interest rate of 12% per annum to
certain investors in Hong Kong and Singapore and maturing September 1, 1997 (the
"Bridge Notes"). Pursuant to the terms of the Bridge Notes, the holders of
$250,000 principal amount of these Notes converted the principal amount and
accrued interest on such notes into an aggregate of 94,255 shares of Common
Stock, par value $0.01 per share (the "Common Stock") upon the consummation of
the Offering. The holder of the remaining $120,000 principal amount of Bridge
Notes was repaid the entire principal amount plus interest of $5,193.42 and
received 22,621 shares of Common Stock. The Bridge Note holders received an
aggregate of 116,876 warrants entitling them to purchase, in the aggregate, up
to 116,876 shares of Common Stock, commencing March 11, 1997 and terminating
March 11, 2002, at $8.25 per share.
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
(a) At the first annual general meeting of the Company on June 5,
1996, the following resolutions were adopted by the affirmative vote of
1,200,000 shares, par value $0.01 per share, of the Company, such shares
constituting all of the issued and outstanding shares of capital stock of the
Company on such date:
(i) that the Bye-Laws, in the form filed hereto as Exhibit 3.2,
were approved;
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(ii) that the number of directors of the Company be not less than
two nor more than ten;
(iii) that the following directors be elected until the second
annual general meeting of the Company or until their respective
successors are elected or appointed:
Pierre William Harriston Bordeaux
Federico G. Cabo Alvarez
David K. Haines
Norman H. Brown, Jr.
John F. Beaudette
Wyndam H. Carver
Joseph Heid
John D. Campbell
Tonesan Amissah-Furbert;
(iv) that the Board of Directors be authorized to fill any
vacancy on the Board as and when it deems fit;
(v) that Arthur Andersen & Co. be appointed auditors of the
Company to hold office until the close of the second annual
general meeting;
(vi) that the 1,200,000 shares, par value $0.01 per share,
originally issued at the provisional directors' meeting held on
June 5, 1996 be classified as shares of common stock; and
(vii) that the authorized share capital of the Company be
increased from $12,000,000 to $ 105,000,000 by the creation of
8,800,000 shares of Common Stock, and 500,000 shares of preferred
stock, par value $0.01 per share.
(b) On July 18, 1996, the sole stockholder of the Company, Mr.
Bordeaux, executed a written consent approving the Company's 1996 Stock Option
Plan in the form filed hereto as Exhibit 10.1.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
2.1 - Plan and Agreement of Amalgamation between Craft and the
Company.*
3.1 - Memorandum of Amalgamation of the Company (incorporated by
reference to Exhibit 3.1 of the Company's registration
statement on Form S-1 (file no. 333-6033) (the "Registration
Statement").
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<PAGE>
<PAGE>
3.2 - Bye-Laws of the Company (incorporated by reference to Exhibit
3.2 of the Registration Statement).
4.1 - Specimen common stock certificate (incorporated by reference to
Exhibit 4.1 of the Registration Statement).
4.2 - Warrant Agreement between the Company, National Securities
Corporation ("National Securities") and the Bank of New York
(including form of Redeemable Common Stock Purchase Warrant).*
4.3 - Representative's Warrant Agreement between the Company and
National Securities (including form of Representative's
Warrant) (incorporated by reference to Exhibit 4.3 of the
Registration Statement).*
10.1 - 1996 Stock Option Plan of the Company (incorporated by
reference to Exhibit 10.1 of the Registration Statement).
10.2 - Agreement of Lease between Ping Ping Investment Company Limited
("Ping Ping") and South China dated as of December 12, 1994
(incorporated by reference to Exhibit 10.2 of the Registration
Statement).
10.3 - Agreement of Lease between Ping Ping and South China dated as
of May 1, 1995 (incorporated by reference to Exhibit 10.3 of
the Registration Statement).
10.4 - Management Agreement and Performance Guaranty between South
China and Lunar Holdings Limited dated as of April 1, 1995
(incorporated by reference to Exhibit 10.4 of the Registration
Statement).
10.5 - Distributors Limited Brewing Contract between South China and
DaBeers Distributors Limited ("DaBeers") dated as of September
23, 1995 (incorporated by reference to Exhibit 10.5 of the
Registration Statement).
10.6 - Brewing Agreement between South China and Delaney's (Wanchai)
Limited dated as of September 20, 1995 (incorporated by
reference to Exhibit 10.6 of the Registration Statement).
10.7 - Employment Agreement, dated as of June 14, 1996, between the
Company and James L. Ake.*
10.8 - Employment Agreement, dated as of April 27, 1995, between
Edward Cruise Miller and South China (incorporated by reference
to Exhibit 10.12 of the Registration Statement).
10.9 - Ratification and Exchange Agreement, dated May 31, 1996, by and
among South China, SCBC, Craft and each of the persons listed
on the signature page hereto.*
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<PAGE>
<PAGE>
10.10 - Bridge Financing Purchase Agreement, dated as of May 31, 1996,
between the Company and Mark Youds.*
10.11 - Bridge Financing Purchase Agreement, dated as of May 31, 1996,
between the Company and John Arvanitis.*
10.12 - Bridge Financing Purchase Agreement, dated as of May 31, 1996,
between the Company and Mark Gallagher.*
10.13 - Bridge Financing Purchase Agreement, dated as of May 31, 1996,
between the Company and Harry Allen Friedberg.*
10.14 - Bridge Financing Purchase Agreement, dated as of May 31, 1996,
between the Company and Micro Brew Systems Co., Ltd.*
10.15 - Bridge Financing Purchase Agreement, dated as of May 31, 1996,
between the Company and Noah Schaffer.*
10.16 - Bridge Financing Purchase Agreement, dated as of May 31, 1996,
between the Company and Long-Term Partners Ltd.*
10.17 - Forms of Bridge Financing Convertible Notes (including forms of
Bridge Financing Warrants attached thereto) (incorporated by
reference to Exhibit 10.11 of the Registration Statement).
10.18 - Novation Agreement, dated as of October 3, 1996, among SCBC,
DaBeer and Iconic America Limited ("Iconic").*
10.19 - Brewing Agreement, dated as of October 3, 1996, between SCBC
and Iconic.*
27.0 - Financial Data Schedule.*
*filed herewith
(b) Reports on Form 8-K:
None
STATEMENT OF DIFFERENCE
Section mark is expressed as.... 'ss'
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<PAGE>
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
AMERICAN CRAFT BREWING
INTERNATIONAL LIMITED
Date: October 24, 1996 /s/ James L. Ake
----------------
James L. Ake
Executive Vice President,
Chief Operating Officer
and Secretary (principal
executive and financial officer)
-17-
<PAGE>
<PAGE>
Exhibit 2.1
PLAN AND AGREEMENT OF AMALGAMATION
This agreement dated as of July 18, 1996, among American Craft
Brewing International Limited, a British Virgin Islands company ("Craft"), and
American Craft Brewing International Limited, a Bermuda company ("American
Brewing International" and together with Craft, the "Constituent Companies").
WHEREAS, Craft is a company duly organized and existing under the
laws of the British Virgin Islands, having been incorporated on December 6,
1995;
WHEREAS, American Brewing International is a company duly
organized and existing under the laws of Bermuda, having been incorporated on
June 3, 1996; and
WHEREAS, the Boards of Directors of the parties hereto deem it
desirable, upon the terms and subject to the conditions herein stated, that
Craft be amalgamated with and into American Brewing International (the
"Amalgamation") and that American Brewing International be the surviving
corporation with the outstanding shares of capital stock of Craft, par value
US$1.00 per share (the "Craft Shares"), converted into common shares of US$0.01
each in the capital of the Company (the "ABI Shares"), of American Brewing
International and that all of the Craft Shares in existence prior to the
Amalgamation be canceled so that after the Amalgamation all of the outstanding
ABI Shares, other than directors' qualifying shares, will be owned by those who
prior to the Amalgamation owned all of the outstanding Craft Shares.
NOW THEREFORE, it is agreed as follows:
ARTICLE I
1.1 On the effective date of the Amalgamation, Craft and
American Brewing International shall amalgamate and continue
as one company, with American Brewing International as the
surviving corporation. The Constituent Companies shall make
the appropriate filings with the Registrar of Companies of
Bermuda and the Registrar of Companies of the British Virgin
Islands.
1.2 Upon the effective date of the Amalgamation:
<PAGE>
<PAGE>
2
(i) each then outstanding Craft Share shall, by virtue of
the Amalgamation and without any action on the part
of the holder thereof, be converted into an ABI
Share;
(ii) each holder of a share certificate or certificates
representing Craft Shares immediately prior to the
effective date of the Amalgamation (each an "Old
Craft Share Certificate"), upon surrender of such
certificate or certificates to American Brewing
International after the effective date of the
Amalgamation, shall be entitled to receive a share
certificate or certificates representing the number
of ABI Shares equal to the number of Craft Shares
held by such holder immediately prior to the
effective date of the Amalgamation;
(iii) if any certificate representing ABI Shares is to be
issued in a name other than that in which an Old
Craft Share Certificate is registered, it shall be a
condition of such issuance that the certificate so
surrendered shall be properly endorsed or otherwise
in proper form for transfer and that the person
requesting such issuance shall either pay to American
Brewing International or its transfer agent any
transfer or other taxes required by reason of the
issuance of certificates representing ABI Shares in a
name other than that of the registered holder of the
Old Craft Share Certificate surrendered, or establish
to the satisfaction of American Brewing International
or its transfer agent that such tax has been paid or
is not applicable; and
(iv) any and all ABI Shares issued and outstanding prior
to such effective date, including the 12,000 ABI
Shares issued to Peter W. H. Bordeaux, shall be
canceled, and shall be null and void.
ARTICLE II
2.1 Each record holder of the 2,000,000 issued and outstanding
Craft Shares shall be entitled to vote on this Agreement and
the Amalgamation as provided by the applicable laws of the
British Virgin Islands. The record holder of the 12,000
issued and outstanding ABI Shares shall be entitled to vote
on this Agreement and the Merger as provided by the
applicable laws of Bermuda. If this Agreement is duly
adopted by the requisite votes of such members and is not
terminated as contemplated by Article VI, a Certificate of
Amalgamation, executed in accordance with the law of
Bermuda, shall be filed with the Registrar of Companies of
Bermuda. The Amalgamation shall become effective on the time
and date specified in the Certificate of Amalgamation issued
by the Registrar of Companies of Bermuda, referred to herein
as the "effective date of the Amalgamation."
<PAGE>
<PAGE>
3
2.2 Each of Craft and American Brewing International represent
and warrant to each other that they are in good standing
under the laws of the British Virgin Islands and Bermuda,
respectively.
ARTICLE III
As of the effective date of the Amalgamation, the separate
existence of Craft shall cease; American Brewing International shall
thereupon possess all the rights, privileges, immunities and franchises,
of a public as well as a private nature of Craft, and all property,
real, personal and mixed and all debts due on whatever accounts,
including subscriptions to shares, and all other choses in action, and
each and every other interest of or belonging to or due to Craft shall
be deemed to be the rights, privileges, immunities, franchises,
property, debts and interests of American Brewing International without
further act or deed, and the title to any real estate, or any interest
therein, vested in Craft shall not revert or in any way be impaired by
reason of the Amalgamation; and American Brewing International shall
thenceforth be responsible and liable for all liabilities and
obligations of Craft, and any claim existing or action or proceeding
pending by or against Craft may be prosecuted as if the Amalgamation had
not taken place, or American Brewing International may be substituted in
its place. Neither the rights of creditors nor any liens upon the
property of Craft shall be impaired by the Amalgamation.
ARTICLE IV
The Memorandum of Amalgamation with respect to the Amalgamation
shall be deemed to be the Memorandum of Association of American Brewing
International and the Certificate of Amalgamation with respect to the
Amalgamation shall be deemed to be the Certificate of Incorporation of
American Brewing International. The Bye-Laws of American Brewing
International shall not be affected by the Amalgamation.
ARTICLE V
This Agreement may be supplemented or amended in any manner at
any time and from time to time before the issue of the Certificate of
Amalgamation by the Constituent Companies without any action by the
members of Craft or American Brewing International save with respect to
the terms of conversion set forth in clause 1.2 above. Any variation,
modification or amendment to this Agreement must be made in writing and
executed by the Constituent Companies. This Agreement may be terminated
and the Amalgamation abandoned at any time prior to the issuance by the
Registrar of Companies in Bermuda of a Certificate of Amalgamation by
action taken by the respective Boards of Directors of the Constituent
Companies.
<PAGE>
<PAGE>
4
ARTICLE VI
The names and addresses of the directors of American Brewing
International after giving effect to the Amalgamation are as follows:
(i) John P. Beaudette
MHW, Ltd.
1165 Northern Boulevard
Manhasset, New York 11030
UNITED STATES;
(ii) Peter W. H. Bordeaux
One Galleria Boulevard
Metairie, Louisiana 70001
UNITED STATES;
(iii) Norman H. Brown, Jr.
277 Park Avenue
New York, New York 10172
UNITED STATES;
(iv) Federico Guillermo Cabo Alvarez
Pablo Neruda #2640, Suite 702
Guadalajara, Jalisco
MEXICO 44630;
(v) John Campbell
Appleby, Spurling & Kempe
Cedar House
41 Cedar Avenue
Hamilton HM EX
BERMUDA;
(vi) Wyndham H. Carver
Rondie Wood House
Near Milland
Liphook
Hampshire
UNITED KINGDOM;
<PAGE>
<PAGE>
5
(vii) Tonesan Amissah-Furbert
Appleby, Spurling & Kempe
Cedar House
41 Cedar Avenue
Hamilton HM EX
BERMUDA
(viii) David K. Haines
American Craft Brewing International Limited
Unit A1, 1/F, Vita Tower
29 Wong Chuk Hang
Aberdeen, HONG KONG; and
(ix) Joseph E. Heid
Sara Lee Corporation
3 First National Plaza
Chicago, IL 60602
ARTICLE VII
This Agreement shall be governed by the laws of Bermuda, but
without giving effect to applicable principles of conflicts of law to
the extent that the application of the laws of another jurisdiction
would be required thereby.
IN WITNESS WHEREOF, Craft and American Brewing International have
each caused this Agreement to be executed by its authorized officer as
of the date first above written.
AMERICAN CRAFT BREWING
INTERNATIONAL LIMITED, a
British Virgin Islands company
/s/ Peter W. H. Bordeaux
_________________________________________
By: Peter W. H. Bordeaux
Title: Chairman
AMERICAN CRAFT BREWING
INTERNATIONAL LIMITED, a
Bermuda company
/s/ Peter W. H. Bordeaux
_________________________________________
By: Peter W. H. Bordeaux
Title: Chairman
<PAGE>
<PAGE>
Exhibit 4.2
================================================================================
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED
AND
THE BANK OF NEW YORK
AND
NATIONAL SECURITIES CORPORATION
-----------
WARRANT AGREEMENT
DATED AS OF SEPTEMBER 11, 1996
================================================================================
<PAGE>
<PAGE>
AGREEMENT, dated this 11th day of September, 1996, by and among
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED, a Bermuda company (the "Company"),
THE BANK OF NEW YORK, as Warrant Agent (the "Warrant Agent"), and NATIONAL
SECURITIES CORPORATION, its successors and assigns (collectively, "National" or
the "Representative") .
W I T N E S S E T H:
WHEREAS, in connection with (i) the offering to the public of up to
1,580,000 shares of Common Stock (as defined in Section 1) and 1,580,000
redeemable common stock purchase warrants (the "Warrants"), each Warrant
entitling the holder thereof to purchase one additional share of Common Stock,
(ii) the over-allotment option to purchase up to an additional 237,000 shares of
Common Stock and/or 237,000 Warrants (the "Over-allotment Option"), and (iii)
the sale to National of warrants (the "Representative's Warrants") to purchase
up to 158,000 shares of Common Stock and/or 158,000 Warrants, the Company will
issue up to 1,975,000 Warrants (subject to increase as provided herein and in
the Representative's Warrant Agreement); and
WHEREAS, the Company desires to provide for the issuance of
certificates representing the Warrants; and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer, exchange and redemption of the Warrants, the
issuance of certificates representing the Warrants, the exercise of the Warrants
and the rights of the holders thereof.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of the Warrants
<PAGE>
<PAGE>
and the certificates representing the Warrants and the respective rights and
obligations thereunder of the Company, National, the holders of certificates
representing the Warrants and the Warrant Agent, the parties hereto agree as
follows:
SECTION 1. Definitions. As used herein, the following terms shall have
the following meanings, unless the context shall otherwise require:
(a) "Act" shall mean the Securities Act of 1933, as amended.
(b) "Common Stock" shall mean the authorized stock of the Company
of any class, whether now or hereafter authorized, which has the right to
participate in the voting and in the distribution of earnings and assets of the
Company without limit as to amount or percentage which at the date hereof
consists of 10,000,000 shares of Common Stock, par value $0.01 per share.
(c) "Commission" shall mean the Securities and Exchange
Commission.
(d) "Corporate Office" shall mean the office of the Warrant Agent
(or its successor) at which at any particular time its business in New York, New
York, shall be administered, which office is located on the date hereof at 101
Barclay Street (12 West), New York, New York 10286.
(e) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended.
(f) "Exercise Date" shall mean, subject to the provisions of
Section 5(b) hereof, as to any Warrant, the date on which the Warrant Agent
shall have received both (i) the Warrant Certificate representing such Warrant,
with the exercise form thereon duly executed by the Registered Holder thereof or
his attorney duly authorized in writing, and (ii) payment in cash or by official
bank or certified check made payable to the Warrant Agent for the account
2
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<PAGE>
of the Company, of the amount in lawful money of the United States of America
equal to the applicable Purchase Price (as hereinafter defined) in good funds.
(g) "Initial Warrant Exercise Date" shall mean March 11, 1997.
(h) "Initial Warrant Redemption Date" shall mean March 11, 1998.
(i) "NASD" shall mean the National Association of Securities
Dealers, Inc.
(j) "Nasdaq" shall mean the Nasdaq SmallCap Market.
(k) "Purchase Price" shall mean, subject to modification and
adjustment as provided in Section 8, $6.875 and further subject to the Company's
right, in its sole discretion, to decrease the Purchase Price for a period of
not less than 30 days on not less than 30 days' prior written notice from the
Company to the Registered Holders and National.
(l) "Redemption Date" shall mean the date (which may not occur
before the Initial Warrant Redemption Date) fixed for the redemption of the
Warrants in accordance with the terms hereof.
(m) "Redemption Price" shall mean the price at which the Company
may, at its option, redeem the Warrants, in accordance with the terms hereof,
which price shall be $0.10 per Warrant, subject to adjustment from time to time
pursuant to the provisions of Section 9 hereof.
(n) "Registered Holder" shall mean the person in whose name any
certificate representing the Warrants shall be registered on the books
maintained by the Warrant Agent pursuant to Section 6.
(o) "Transfer Agent" shall mean The Bank of New York, or its
authorized successor.
3
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(p) "Underwriting Agreement" shall mean the underwriting agreement
dated as of September 10, 1996 between the Company and the several underwriters
listed therein relating to the purchase for resale to the public of 1,580,000
shares of Common Stock and 1,580,000 Warrants.
(q) "Representative's Warrant Agreement" shall mean the agreement
dated as of September 11, 1996 between the Company and National relating to and
governing the terms and provisions of the Representative's Warrants.
(r) "Warrant Certificate" shall mean a certificate representing
each of the Warrants substantially in the form annexed hereto as Exhibit A.
(s) "Warrant Expiration Date" shall mean, unless the Warrants are
redeemed as provided in Section 9 hereof prior to such date, 5:30 p.m. (New York
time), on September 11, 2001, or the Redemption Date as defined herein,
whichever date is earlier; provided that if such date shall in the State of New
York be a holiday or a day on which banks are authorized to close, then 5:30
p.m. (New York time) on the next following day which, in the State of New York,
is not a holiday or a day on which banks are authorized to close. Upon five
business days' prior written notice to the Registered Holders, the Company shall
have the right to extend the Warrant Expiration Date.
4
<PAGE>
<PAGE>
SECTION 2. Warrants and Issuance of Warrant Certificates.
(a) Each Warrant shall initially entitle the Registered Holder of
the Warrant Certificate representing such Warrant to purchase at the Purchase
Price therefor from the Initial Warrant Exercise Date until the Warrant
Expiration Date one share of Common Stock upon the exercise thereof in
accordance with the terms hereof, subject to modification and adjustment as
provided in Section 8.
(b) Upon execution of this Agreement, Warrant Certificates
representing the number of Warrants sold pursuant to the Underwriting Agreement
(subject to modification and adjustment as provided in Section 8) shall be
executed by the Company and delivered to the Warrant Agent.
(c) Upon exercise of the Representative's Warrants as provided
therein, Warrant Certificates representing all or a portion of 158,000 Warrants
to purchase up to an aggregate of 158,000 shares of Common Stock (subject to
modification and adjustment as provided in Section 8 hereof and in the
Representative's Warrant Agreement) shall be countersigned, issued and delivered
by the Warrant Agent upon written order of the Company signed by its Chairman of
the Board, Chief Executive Officer, President or a Vice President and by its
Treasurer or an Assistant Treasurer or its Secretary or an Assistant Secretary.
(d) From time to time, up to the Warrant Expiration Date or the
Redemption Date, whichever date is earlier, the Warrant Agent shall countersign
and deliver Warrant Certificates in required denominations of one or whole
number multiples thereof to the person entitled thereto in connection with any
transfer or exchange permitted under this Agreement. Except as provided herein,
no Warrant Certificates shall be issued except (i) Warrant Certificates
initially issued hereunder, those issued pursuant to the exercise of the
Over-
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allotment Option and those issued on or after the Initial Warrant Exercise Date,
upon the exercise of fewer than all Warrants held by the exercising Registered
Holder, (ii) Warrant Certificates issued upon any transfer or exchange of
Warrants, (iii) Warrant Certificates issued in replacement of lost, stolen,
destroyed or mutilated Warrant Certificates pursuant to Section 7, (iv) Warrant
Certificates issued pursuant to the Representative's Warrant Agreement, and (v)
at the option of the Company, Warrant Certificates in such form as may be
approved by its Board of Directors, to reflect any adjustment or change in the
Purchase Price, the number of shares of Common Stock purchasable upon exercise
of the Warrants or the Redemption Price therefor made pursuant to Section 8
hereof.
SECTION 3. Form and Execution of Warrant Certificates.
(a) The Warrant Certificates shall be substantially in the form
annexed hereto as Exhibit A (the provisions of which are hereby incorporated
herein) and may have such letters, numbers or other marks of identification or
designation and such legends, summaries or endorsements printed, lithographed or
engraved thereon as the Company may deem appropriate and as are not inconsistent
with the provisions of this Agreement, or as may be required to comply with any
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange on which the Warrants may be listed, or to
conform to usage. The Warrant Certificates shall be dated the date of issuance
thereof (whether upon initial issuance, transfer, exchange or in lieu of
mutilated, lost, stolen or destroyed Warrant Certificates) and issued in
registered form. Warrants shall be numbered serially with the letter W on the
Warrants.
(b) Warrant Certificates shall be executed on behalf of the
Company by its Chairman of the Board, Chief Executive Officer, President or any
Vice President and by its
6
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<PAGE>
Treasurer or an Assistant Treasurer or its Secretary or an Assistant Secretary,
by manual signatures or by facsimile signatures printed thereon, and shall have
imprinted thereon a facsimile of the Company's seal. Warrant Certificates shall
be manually countersigned by the Warrant Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the Company who shall
have signed any of the Warrant Certificates shall cease to be such officer of
the Company before the date of issuance of the Warrant Certificates or before
countersignature by the Warrant Agent and issue and delivery thereof, such
Warrant Certificates, nevertheless, may be countersigned by the Warrant Agent,
issued and delivered with the same force and effect as though the person who
signed such Warrant Certificates had not ceased to be such officer of the
Company. After countersignature by the Warrant Agent, Warrant Certificates shall
be delivered by the Warrant Agent to the Registered Holder promptly and without
further action by the Company, except as otherwise provided by Section 4(a)
hereof.
SECTION 4. Exercise.
(a) Warrants in denominations of one or whole number multiples
thereof may be exercised by the Registered Holder thereof commencing at any time
on or after the Initial Warrant Exercise Date, but not after the Warrant
Expiration Date, upon the terms and subject to the conditions set forth herein
and in the applicable Warrant Certificate. A Warrant shall be deemed to have
been exercised immediately prior to the close of business on the Exercise Date
and the person entitled to receive the securities deliverable upon such exercise
shall be treated for all purposes as the holder, upon exercise thereof, as of
the close of business on the Exercise Date. If Warrants in denominations other
than whole number multiples thereof shall be exercised at one time by the same
Registered Holder, the number of full shares of Common Stock which shall be
issuable upon exercise thereof shall be computed on the basis of
7
<PAGE>
<PAGE>
the aggregate number of full shares of Common Stock issuable upon such exercise.
As soon as practicable on or after the Exercise Date and in any event within
five business days after such date, if one or more Warrants have been exercised,
the Warrant Agent on behalf of the Company shall cause to be issued to the
person or persons entitled to receive the same a Common Stock certificate or
certificates for the shares of Common Stock deliverable upon such exercise, and
the Warrant Agent shall deliver the same to the person or persons entitled
thereto. Upon the exercise of any one or more Warrants, the Warrant Agent shall
promptly notify the Company in writing of such fact and of the number of
securities delivered upon such exercise and, subject to subsection (b) below,
shall cause all payments of an amount in cash or by check made payable to the
order of the Company, equal to the Purchase Price, to be deposited promptly in
the Company's bank account.
(b) At any time upon the exercise of any Warrants after one year
and one day from the date hereof, the Warrant Agent shall, on a daily basis,
within two business days after such exercise, notify National of the exercise of
any such Warrants and shall, on a weekly basis (subject to collection of funds
constituting the tendered Purchase Price, but in no event later than ten
business days after the last day of the calendar week in which such funds were
tendered), remit to National an amount equal to five percent (5%) of the
Purchase Price of such Warrants then being exercised unless National shall have
notified the Warrant Agent within the time period specified in subsection (vii)
below that the payment of such amount with respect to such Warrant is violative
of the General Rules and Regulations promulgated under the Exchange Act, or the
rules and regulations of the NASD or applicable state securities or "blue sky"
laws, or the Warrants are those underlying the Representative's Warrants in
which event, the Warrant Agent shall have to pay such amount to the Company;
provided, that the Warrant Agent shall
8
<PAGE>
<PAGE>
not be obligated to pay any amounts pursuant to this Section 4(b) during any
week that such amounts payable are less than $1,000 and the Warrant Agent's
obligation to make such payments shall be suspended until the amount payable
aggregates $1,000, and provided further, that, in any event, any such payment
(regardless of amount) shall be made not less frequently than monthly.
Notwithstanding the foregoing, National shall be entitled to receive the
commission contemplated by this Section 4(b) as Warrant solicitation agent only
if: (i) the current market value per share of Common Stock (as determined in
accordance with Section 4(c) hereof) is greater than the Purchase Price, (ii)
National has provided actual services in connection with the solicitation of the
exercise of a Warrant(s) by a Registered Holder, (iii) the Registered Holder
exercising a Warrant(s) affirmatively designates in writing on the exercise form
on the reverse side of the Warrant Certificate that the exercise of such
Registered Holder's Warrant(s) was solicited by National, (iv) at the time of
solicitation of the exercise of the Warrant(s), National is a member of the
NASD, (v) the Warrant(s) is not held in a discretionary account, (vi) the
solicitation of the exercise of the Warrant(s) is not in violation of Rule 10b-6
(as such rule or any successor rule may be in effect as of such time of
exercise) promulgated under the Exchange Act and (vii) National provides the
Warrant Agent with a certificate certifying as to the truth of the items
contained in subsections (i) through (vi) above within seven business days after
the Warrant Agent has notified National of the exercise of any Warrants.
(c) The Company shall not be required to issue fractional shares
on the exercise of Warrants. Warrants may only be exercised in such multiples as
are required to permit the issuance by the Company of one or more whole shares.
If one or more Warrants shall be presented for exercise in full at the same time
by the same Registered Holder, the number of whole shares which shall be
issuable upon such exercise thereof shall be computed
9
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<PAGE>
on the basis of the aggregate number of shares purchasable on exercise of the
Warrants so presented. If any fraction of a share would, except for the
provisions provided herein, be issuable on the exercise of any Warrant (or
specified portion thereof), the Company shall pay an amount in cash equal to
such fraction multiplied by the then current market value of a share of Common
Stock, determined as follows:
(1) If the Common Stock is listed, or admitted to unlisted trading
privileges on a national securities exchange, or is traded on Nasdaq, the then
current market value of a share of Common Stock shall be the closing sale price
of the Common Stock at the end of the regular trading session on the last
business day prior to the date of exercise of the Warrants on whichever of such
exchanges or Nasdaq had the highest average daily trading volume for the Common
Stock on such day; or
(2) If the Common Stock is not listed or admitted to unlisted
trading privileges on any national securities exchange, or listed, quoted or
reported for trading on Nasdaq, but is traded in the over-the-counter market,
the current market value of a share of Common Stock shall be the average of the
last reported bid and asked prices of the Common Stock reported by the National
Quotation Bureau, Inc. on the last business day prior to the date of exercise of
the Warrants; or
(3) If the Common Stock is not listed, admitted to unlisted
trading privileges on any national securities exchange, or listed, quoted or
reported for trading on Nasdaq, and bid and asked prices of the Common Stock are
not reported by the National Quotation Bureau, Inc., the current market value of
a share of Common Stock shall be an amount, not less than the book value thereof
as of the end of the most recently completed fiscal quarter of the Company
ending
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prior to the date of exercise, determined by the members of the Board of
Directors of the Company exercising good faith and using customary valuation
methods.
SECTION 5. Reservation of Shares; Listing; Payment of Taxes; etc.
(a) The Company covenants that it will at all times reserve and
keep available out of its authorized Common Stock, solely for the purpose of
issue upon exercise of Warrants, such number of shares of Common Stock as shall
then be issuable upon the exercise of all outstanding Warrants. The Company
covenants that all shares of Common Stock which shall be issuable upon exercise
of the Warrants shall, at the time of delivery thereof, be duly and validly
issued and fully paid and nonassessable and free from all preemptive or similar
rights, taxes, liens and charges with respect to the issue thereof, and that
upon issuance such shares shall be listed on each securities exchange, if any,
on which the other shares of outstanding Common Stock of the Company are then
listed.
(b) The Company covenants that if any securities to be reserved
for the purpose of exercise of Warrants hereunder require registration with, or
approval of, any governmental authority under any federal securities law before
such securities may be validly issued or delivered upon such exercise, then the
Company will file a registration statement under the federal securities laws or
a post-effective amendment, use its best efforts to cause the same to become
effective and to keep such registration statement current while any of the
Warrants are outstanding and deliver a prospectus which complies with Section
10(a)(3) of the Act, to the Registered Holder exercising the Warrant (except, if
in the opinion of counsel to the Company, such registration is not required
under the federal securities law or if the Company receives a letter from the
staff of the Commission stating that it would not take any enforcement action if
such registration is not effected). The Company will use its best efforts to
obtain appropriate
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approvals or registrations under state "blue sky" securities laws with respect
to any such securities. However, Warrants may not be exercised by, or shares of
Common Stock issued to, any Registered Holder in any state in which such
exercise would be unlawful.
(c) The Company shall pay all documentary, stamp or similar taxes
and other governmental charges that may be imposed with respect to the issuance
of Warrants, or the issuance or delivery of any shares of Common Stock upon
exercise of the Warrants; provided, however, that if shares of Common Stock are
to be delivered in a name other than the name of the Registered Holder of the
Warrant Certificate representing any Warrant being exercised, then no such
delivery shall be made unless the person requesting the same has paid to the
Warrant Agent the amount of transfer taxes or charges incident thereto, if any.
(d) The Warrant Agent is hereby irrevocably authorized as the
Transfer Agent to requisition from time to time certificates representing shares
of Common Stock or other securities required upon exercise of the Warrants, and
the Company will comply with all such requisitions.
SECTION 6. Exchange and Registration of Transfer.
(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants of the same
class or may be transferred in whole or in part. Warrant Certificates to be
exchanged shall be surrendered to the Warrant Agent at its Corporate Office,
and, upon satisfaction of the terms and provisions hereof, the Company shall
execute and the Warrant Agent shall countersign, issue and deliver in exchange
therefor the Warrant Certificate or Certificates which the Registered Holder
making the exchange shall be entitled to receive.
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(b) The Warrant Agent shall keep, at its office, books in which,
subject to such reasonable regulations as it may prescribe, it shall register
Warrant Certificates and the transfer thereof in accordance with customary
practice. Upon due presentment for registration of transfer of any Warrant
Certificate at such office, the Company shall execute and the Warrant Agent
shall issue and deliver to the transferee or transferees a new Warrant
Certificate or Certificates representing an equal aggregate number of Warrants
of the same class.
(c) With respect to all Warrant Certificates presented for
registration of transfer, or for exchange or exercise, the subscription or
exercise form, as the case may be, on the reverse thereof shall be duly endorsed
or be accompanied by a written instrument or instruments of transfer and
subscription, in form satisfactory to the Company and the Warrant Agent, duly
executed by the Registered Holder thereof or his attorney-in-fact duly
authorized in writing.
(d) A service charge may be imposed by the Warrant Agent for any
exchange or registration of transfer of Warrant Certificates. In addition, the
Company may require payment by any exchanging or transferring Holder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith.
(e) All Warrant Certificates surrendered for exercise or for
exchange in case of mutilated Warrant Certificates shall be promptly canceled by
the Warrant Agent and thereafter retained by the Warrant Agent until termination
of this Agreement.
(f) Prior to due presentment for registration of transfer thereof,
the Company and the Warrant Agent may deem and treat the Registered Holder of
any Warrant Certificate as the absolute owner thereof and of each Warrant
represented thereby (notwithstanding any notations of ownership or writing
thereon made by anyone other than a
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duly authorized officer of the Company or the Warrant Agent) for all purposes
and shall not be affected by any notice to the contrary.
SECTION 7. Loss or Mutilation. Upon receipt by the Company and the
Warrant Agent of evidence satisfactory to them of the ownership of and the loss,
theft, destruction or mutilation of any Warrant Certificate and (in the case of
loss, theft or destruction) of indemnity satisfactory to them, and (in case of
mutilation) upon surrender and cancellation thereof, the Company shall execute
and the Warrant Agent shall (in the absence of notice to the Company and/or the
Warrant Agent that a new Warrant Certificate has been acquired by a bona fide
purchaser) countersign and deliver to the Registered Holder in lieu thereof a
new Warrant Certificate of like tenor representing an equal aggregate number of
Warrants. Applicants for a substitute Warrant Certificate shall also comply with
such other reasonable regulations and pay such other reasonable charges as the
Warrant Agent may prescribe.
SECTION 8. Adjustment of Purchase Price and Number of Shares of Common
Stock Deliverable.
(a) Except as hereinafter provided, in the event the Company
shall, at any time or from time to time after the date hereof and prior to the
Warrant Expiration Date, issue or sell any shares of Common Stock for a
consideration per share less than the Purchase Price or issue any shares of
Common Stock as a stock dividend to the holders of Common Stock, or subdivide or
combine the outstanding shares of Common Stock into a greater or lesser number
of shares (any such issuance, subdivision or combination being herein called a
"Change of Shares"), then, and thereafter upon each further Change of Shares,
the Purchase Price for the Warrants (whether or not the same shall be issued and
outstanding) in effect immediately prior to such Change of Shares shall be
changed to a price (including any applicable fraction of a cent
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to the nearest cent) determined by dividing (i) the sum of (a) the total number
of shares of Common Stock outstanding immediately prior to such Change of
Shares, multiplied by the Purchase Price in effect immediately prior to such
Change of Shares and (b) the consideration, if any, received by the Company upon
such sale, issuance, subdivision or combination, by (ii) the total number of
shares of Common Stock outstanding immediately after such Change of Shares;
provided, however, that in no event shall the Purchase Price be adjusted
pursuant to this computation to an amount in excess of the Purchase Price in
effect immediately prior to such computation, except in the case of a
combination of outstanding shares of Common Stock.
For the purposes of any adjustment to be made in accordance with this
Section 8(a), the following provisions shall be applicable:
(A) In case of the issuance or sale of shares of Common Stock (or
of other securities deemed hereunder to involve the issuance or sale of shares
of Common Stock) for a consideration part or all of which shall be cash, the
amount of the cash portion of the consideration therefor deemed to have been
received by the Company shall be (i) the subscription price, if shares of Common
Stock are offered by the Company for subscription, or (ii) the public offering
price (before deducting therefrom any compensation paid or discount allowed in
the sale, underwriting or purchase thereof by underwriters or dealers or others
performing similar services, or any expenses incurred in connection therewith),
if such securities are sold to underwriters or dealers for public offering
without a subscription offering, or (iii) the gross amount of cash actually
received by the Company for such securities, in any other case.
(B) In case of the issuance or sale (otherwise than as a dividend
or other distribution on any stock of the Company, and otherwise than on the
exercise of options, rights
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or warrants or the conversion or exchange of convertible or exchangeable
securities) of shares of Common Stock (or of other securities deemed hereunder
to involve the issuance or sale of shares of Common Stock) for a consideration
part or all of which shall be other than cash, the amount of the consideration
therefor other than cash deemed to have been received by the Company shall be
the value of such consideration as determined in good faith by the Board of
Directors of the Company, using customary valuation methods and on the basis of
prevailing market values for similar property or services.
(C) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been issued
immediately after the opening of business on the day following the record date
for the determination of shareholders entitled to receive such dividend or other
distribution and shall be deemed to have been issued without consideration.
(D) The reclassification of securities of the Company other than
shares of Common Stock into securities including shares of Common Stock shall be
deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of business on the
date fixed for the determination of security holders entitled to receive such
shares, and the value of the consideration allocable to such shares of Common
Stock shall be determined as provided in subsection (B) of this Section 8(a).
(E) The number of shares of Common Stock at any one time
outstanding shall be deemed to include the aggregate maximum number of shares
issuable (subject to readjustment upon the actual issuance thereof) upon the
exercise of options, rights or warrants and upon the conversion or exchange of
convertible or exchangeable securities.
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(b) Upon each adjustment of the Purchase Price pursuant to this
Section 8, the number of shares of Common Stock purchasable upon the exercise of
each Warrant shall be the number derived by multiplying the number of shares of
Common Stock purchasable immediately prior to such adjustment by the Purchase
Price in effect prior to such adjustment and dividing the product so obtained by
the applicable adjusted Purchase Price.
(c) In case the Company shall at any time after the date hereof
issue options, rights or warrants to subscribe for shares of Common Stock, or
issue any securities convertible into or exchangeable for shares of Common
Stock, for a consideration per share (determined as provided in Sections 8(a)
and 8(b) and as provided below) less than the Purchase Price in effect
immediately prior to the issuance of such options, rights or warrants, or such
convertible or exchangeable securities, or without consideration (including the
issuance of any such securities by way of dividend or other distribution), the
Purchase Price for the Warrants (whether or not the same shall be issued and
outstanding) in effect immediately prior to the issuance of such options, rights
or warrants, or such convertible or exchangeable securities, as the case may be,
shall be reduced to a price determined by making the computation in accordance
with the provisions of Sections 8(a) and 8(b) hereof, provided that:
(A) The aggregate maximum number of shares of Common Stock, as the
case may be, issuable or that may become issuable under such options, rights or
warrants (assuming exercise in full even if not then currently exercisable or
currently exercisable in full) shall be deemed to be issued and outstanding at
the time such options, rights or warrants were issued, for a consideration equal
to the minimum purchase price per share provided for in such options, rights or
warrants at the time of issuance, plus the consideration, if any, received by
the Company for such options, rights or warrants; provided, however, that upon
the expiration
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or other termination of such options, rights or warrants, if any thereof shall
not have been exercised, the number of shares of Common Stock deemed to be
issued and outstanding pursuant to this subsection (A) (and for the purposes of
subsection (E) of Section 8(a) hereof) shall be reduced by the number of shares
as to which options, warrants and/or rights shall have expired, and such number
of shares shall no longer be deemed to be issued and outstanding, and the
Purchase Price then in effect shall forthwith be readjusted and thereafter be
the price that it would have been had adjustment been made on the basis of the
issuance only of the shares actually issued plus the shares remaining issuable
upon the exercise of those options, rights or warrants as to which the exercise
rights shall not have expired or terminated unexercised.
(B) The aggregate maximum number of shares of Common Stock
issuable or that may become issuable upon conversion or exchange of any
convertible or exchangeable securities (assuming conversion or exchange in full
even if not then currently convertible or exchangeable in full) shall be deemed
to be issued and outstanding at the time of issuance of such securities, for a
consideration equal to the consideration received by the Company for such
securities, plus the minimum consideration, if any, receivable by the Company
upon the conversion or exchange thereof; provided, however, that upon the
termination of the right to convert or exchange such convertible or exchangeable
securities (whether by reason of redemption or otherwise), the number of shares
of Common Stock deemed to be issued and outstanding pursuant to this subsection
(B) (and for the purposes of subsection (E) of Section 8(a) hereof) shall be
reduced by the number of shares as to which the conversion or exchange rights
shall have expired or terminated unexercised, and such number of shares shall no
longer be deemed to be issued and outstanding, and the Purchase Price then in
effect shall forthwith be readjusted and thereafter be the price that it would
have been had adjustment been made on
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the basis of the issuance only of the shares actually issued plus the shares
remaining issuable upon conversion or exchange of those convertible or
exchangeable securities as to which the conversion or exchange rights shall not
have expired or terminated unexercised.
(C) If any change shall occur in the price per share provided for
in any of the options, rights or warrants referred to in subsection (A) of this
Section 8(c), or in the price per share or ratio at which the securities
referred to in subsection (B) of this Section 8(c) are convertible or
exchangeable, such options, rights or warrants or conversion or exchange rights,
as the case may be, to the extent not theretofore exercised, shall be deemed to
have expired or terminated on the date when such price change became effective
in respect of shares not theretofore issued pursuant to the exercise or
conversion or exchange thereof, and the Company shall be deemed to have issued
upon such date new options, rights or warrants or convertible or exchangeable
securities.
(d) In case of any reclassification or change of outstanding
shares of Common Stock issuable upon exercise of the Warrants (other than a
change in par value, or from par value to no par value, or from no par value to
par value or as a result of a subdivision or combination), or in case of any
consolidation or merger of the Company with or into another corporation (other
than a merger with a subsidiary of the Company in which merger the Company is
the continuing corporation) and which does not result in any reclassification or
change of the then outstanding shares of Common Stock or other capital stock
issuable upon exercise of the Warrants (other than a change in par value, or
from par value to no par value, or from no par value to par value or as a result
of subdivision or combination) or in case of any sale or conveyance to another
corporation of the property of the Company as an entirety or substantially as an
entirety, then, as a condition of such reclassification, change, consolidation,
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merger, sale or conveyance, the Company, or such successor or purchasing
corporation, as the case may be, shall make lawful and adequate provision
whereby the Registered Holder of each Warrant then outstanding shall have the
right thereafter to receive on exercise of such Warrant the kind and amount of
securities and property receivable upon such reclassification, change,
consolidation, merger, sale or conveyance by a holder of the number of
securities issuable upon exercise of such Warrant immediately prior to such
reclassification, change, consolidation, merger, sale or conveyance and shall
forthwith file at the Corporate Office of the Warrant Agent a statement signed
by its Chief Executive Officer, President or a Vice President and by its
Treasurer or an Assistant Treasurer or its Secretary or an Assistant Secretary
evidencing such provision. Such provisions shall include provision for
adjustments which shall be as nearly equivalent as may be practicable to the
adjustments provided for in Sections 8(a), (b) and (c). The above provisions of
this Section 8(d) shall similarly apply to successive reclassifications and
changes of shares of Common Stock and to successive consolidations, mergers,
sales or conveyances.
(e) Irrespective of any adjustments or changes in the Purchase
Price or the number of shares of Common Stock purchasable upon exercise of the
Warrants, the Warrant Certificates theretofore and thereafter issued shall,
unless the Company shall exercise its option to issue new Warrant Certificates
pursuant to Section 2(e) hereof, continue to express the Purchase Price per
share and the number of shares purchasable thereunder as the Purchase Price per
share and the number of shares purchasable thereunder were expressed in the
Warrant Certificates when the same were originally issued.
(f) After each adjustment of the Purchase Price pursuant to this
Section 8, the Company will promptly prepare a certificate signed by the
Chairman, Chief Executive
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Officer or President, and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, of the Company setting forth: (i) the
Purchase Price as so adjusted, (ii) the number of shares of Common Stock
purchasable upon exercise of each Warrant, after such adjustment, and (iii) a
brief statement of the facts accounting for such adjustment. The Company will
promptly file such certificate with the Warrant Agent and cause a brief summary
thereof to be sent by ordinary first class mail to each Registered Holder at his
last address as it shall appear on the registry books of the Warrant Agent. No
failure to mail such notice nor any defect therein or in the mailing thereof
shall affect the validity thereof except as to the holder to whom the Company
failed to mail such notice, or except as to the holder whose notice was
defective. The affidavit of an officer of the Warrant Agent or the Secretary or
an Assistant Secretary of the Company that such notice has been mailed shall, in
the absence of fraud, be prima facie evidence of the facts stated therein.
(g) No adjustment of the Purchase Price shall be made as a result
of or in connection with (A) the issuance or sale of shares of Common Stock
pursuant to options, warrants, stock purchase agreements and convertible or
exchangeable securities outstanding or in effect on the date hereof and on the
terms described in the final prospectus relating to the public offering
contemplated by the Underwriting Agreement; or (B) the issuance or sale of
shares of Common Stock if the amount of said adjustment shall be less than $.10,
provided, however, that in such case, any adjustment that would otherwise be
required then to be made shall be carried forward and shall be made at the time
of and together with the next subsequent adjustment that shall amount, together
with any adjustment so carried forward, to at least $.10. In addition,
Registered Holders shall not be entitled to cash dividends paid by the Company
prior to the exercise of any Warrant or Warrants held by them.
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SECTION 9. Redemption.
(a) Commencing on the Initial Warrant Redemption Date, the Company
may, on 30 days' prior written notice, redeem all, but not less than all, of the
Warrants at ten cents ($0.10) per Warrant, provided, however, that before any
such call for redemption of Warrants can take place, the closing bid price for
the Common Stock as reported by Nasdaq, if the Common Stock is then traded on
the Nasdaq (or the closing sale price, if the Common Stock is then traded on the
Nasdaq National Market or on a national securities exchange) shall have equalled
or exceeded $16.50 per share for any twenty (20) trading days within a period of
thirty (30) consecutive trading days ending on the fifth trading day prior to
the date on which the notice contemplated by subsections (b) and (c) below is
given (subject to adjustment in the event of any stock splits or other similar
events as provided in Section 8 hereof).
(b) In case the Company shall exercise its right to redeem all of
the Warrants, it shall give or cause to be given notice to the Registered
Holders of the Warrants, by mailing to such Registered Holders a notice of
redemption, first class, postage prepaid, at their last address as shall appear
on the records of the Warrant Agent. Any notice mailed in the manner provided
herein shall be conclusively presumed to have been duly given whether or not the
Registered Holder receives such notice. Not less than five (5) business days
prior to the mailing to the Registered Holders of the Warrants of the notice of
redemption, the Company shall deliver or cause to be delivered to National a
similar notice telephonically and confirmed in writing together with a list of
the Registered Holders (including their respective addresses and number of
Warrants beneficially owned) to whom such notice of redemption has been or will
be given.
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(c) The notice of redemption shall specify (i) the Redemption
Price, (ii) the Redemption Date, which shall in no event be less than thirty
(30) days after the date of mailing of such notice, (iii) the place where the
Warrant Certificate shall be delivered and the redemption price shall be paid,
(iv) if National is engaged as a Warrant solicitation agent, that National shall
receive the commission contemplated by Section 4(b) hereof, and (v) that the
right to exercise the Warrant shall terminate at 5:30 p.m. (New York time) on
the business day immediately preceding the date fixed for redemption. No failure
to mail such notice nor any defect therein or in the mailing thereof shall
affect the validity of the proceedings for such redemption except as to a holder
(a) to whom notice was not mailed or (b) whose notice was defective. An
affidavit of the Warrant Agent or the Secretary or Assistant Secretary of the
Company that notice of redemption has been mailed shall, in the absence of
fraud, be prima facie evidence of the facts stated therein.
(d) Any right to exercise a Warrant shall terminate at 5:30 p.m.
(New York time) on the business day immediately preceding the Redemption Date.
The Redemption Price payable to the Registered Holders shall be mailed to such
persons at their addresses of record.
(e) The Company shall indemnify National and each person, if any,
who controls National within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act against all loss, claim, damage, expense or liability
(including all expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which any of them may become subject
under the Act, the Exchange Act or otherwise, arising from the registration
statement or prospectus referred to in Section 5(b) hereof to the same extent
and with the same effect (including the provisions regarding contribution) as
the provisions pursuant
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to which the Company has agreed to indemnify National contained in Section 7 of
the Underwriting Agreement.
SECTION 10. Concerning the Warrant Agent.
(a) The Warrant Agent acts hereunder as agent and in a ministerial
capacity for the Company and National, and its duties shall be determined solely
by the provisions hereof. The Warrant Agent shall not, by issuing and delivering
Warrant Certificates or by any other act hereunder, be deemed to make any
representations as to the validity or value or authorization of the Warrant
Certificates or the Warrants represented thereby or of any securities or other
property delivered upon exercise of any Warrant or whether any stock issued upon
exercise of any Warrant is fully paid and nonassessable.
(b) The Warrant Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause to be made
any adjustment of the Purchase Price or the Redemption Price provided in this
Agreement, or to determine whether any fact exists which may require any such
adjustments, or with respect to the nature or extent of any such adjustments,
when made, or with respect to the method employed in making the same. It shall
not (i) be liable for any recital or statement of fact contained herein or for
any action taken, suffered or omitted by it in reliance on any Warrant
Certificate or other document or instrument believed by it in good faith to be
genuine and to have been signed or presented by the proper party or parties,
(ii) be responsible for any failure on the part of the Company to comply with
any of its covenants and obligations contained in this Agreement or in any
Warrant Certificate, or (iii) be liable for any act or omission in connection
with this Agreement except for its own negligence, bad faith or willful
misconduct.
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(c) The Warrant Agent may at any time consult with counsel
satisfactory to it (who may be counsel for the Company or for National) and
shall incur no liability or responsibility for any action taken, suffered or
omitted by it in good faith in accordance with the opinion or advice of such
counsel.
(d) Any notice, statement, instruction, request, direction, order
or demand of the Company shall be sufficiently evidenced by an instrument signed
by the Chairman of the Board of Directors, Chief Executive Officer, President or
any Vice President (unless other evidence in respect thereof is herein
specifically prescribed). The Warrant Agent shall not be liable for any action
taken, suffered or omitted by it in accordance with such notice, statement,
instruction, request, direction, order or demand reasonably believed by it to be
genuine.
(e) The Company agrees to pay the Warrant Agent reasonable
compensation for its services hereunder and to reimburse it for its reasonable
expenses hereunder; the Company further agrees to indemnify the Warrant Agent
and save it harmless from and against any and all losses, expenses and
liabilities, including judgments, costs and counsel fees, for anything done or
omitted by the Warrant Agent in the execution of its duties and powers hereunder
except losses, expenses and liabilities arising as a result of the Warrant
Agent's negligence, bad faith or willful misconduct.
(f) The Warrant Agent may resign its duties and be discharged from
all further duties and liabilities hereunder (except liabilities arising as a
result of the Warrant Agent's own negligence, bad faith or willful misconduct),
after giving 30 days' prior written notice to the Company. At least 15 days
prior to the date such resignation is to become effective, the Warrant Agent
shall cause a copy of such notice of resignation to be mailed to the Registered
Holder of each Warrant Certificate at the Company's expense. Upon such
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resignation, or any inability of the Warrant Agent to act as such hereunder, the
Company shall appoint in writing a new warrant agent. If the Company shall fail
to make such appointment within a period of 15 days after it has been notified
in writing of such resignation by the resigning Warrant Agent, then the Warrant
Agent or any Registered Holder may apply to any court of competent jurisdiction
for the appointment of a new warrant agent. Any new warrant agent, whether
appointed by the Company or by such a court, shall be a bank or trust company
having a capital and surplus, as shown by its last published report to its
stockholders, of not less than $10,000,000 or a stock transfer company. After
acceptance in writing of such appointment by the new warrant agent is received
by the Company, such new warrant agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named herein as
the Warrant Agent, without any further assurance, conveyance, act or deed; but
if for any reason it shall be necessary or expedient to execute and deliver any
further assurance, conveyance, act or deed, the same shall be done at the
expense of the Company and shall be legally and validly executed and delivered
by the resigning Warrant Agent. Not later than the effective date of any such
appointment the Company shall file notice thereof with the resigning Warrant
Agent and shall forthwith cause a copy of such notice to be mailed to the
Registered Holder of each Warrant Certificate.
(g) Any corporation into which the Warrant Agent or any new
warrant agent may be converted or merged, any corporation resulting from any
consolidation to which the Warrant Agent or any new warrant agent shall be a
party, or any corporation succeeding to the corporate trust business of the
Warrant Agent or any new warrant agent shall be a successor warrant agent under
this Agreement without any further act, provided that such corporation is
eligible for appointment as successor to the Warrant Agent under the provisions
of the preceding
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paragraph. Any such successor warrant agent shall promptly cause notice of its
succession as warrant agent to be mailed to the Company and to the Registered
Holders of each Warrant Certificate.
(h) The Warrant Agent, its subsidiaries and affiliates, and any of
its or their officers or directors, may buy and hold or sell Warrants or other
securities of the Company and otherwise deal with the Company in the same manner
and to the same extent and with like effect as though it were not Warrant Agent.
Nothing herein shall preclude the Warrant Agent from acting in any other
capacity for the Company or for any other legal entity.
(i) The Warrant Agent shall retain for a period of two years from
the date of exercise any Warrant Certificate received by it upon such exercise.
SECTION 11. Modification of Agreement.
The Warrant Agent and the Company may by supplemental agreement make
any changes or corrections in this Agreement (i) that they shall deem
appropriate to cure any ambiguity or to correct any defective or inconsistent
provision or manifest mistake or error herein contained; or (ii) that they may
deem necessary or desirable and which shall not adversely affect the interests
of the holders of Warrant Certificates; provided, however, that this Agreement
shall not otherwise be modified, supplemented or altered in any respect except
with the consent in writing of the Registered Holders representing not less than
66-2/3% of the Warrants then outstanding; provided, further, that no change in
the number or nature of the securities purchasable upon the exercise of any
Warrant, or to increase the Purchase Price therefor or to accelerate the Warrant
Expiration Date, shall be made without the consent in writing of the Registered
Holder of the Warrant Certificate representing such Warrant, other than such
changes as are presently specifically prescribed by this Agreement as originally
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executed. In addition, this Agreement may not be modified, amended or
supplemented without the prior written consent of National, other than to cure
any ambiguity or to correct any provision which is inconsistent with any other
provision of this Agreement or to make any such change that is necessary or
desirable and which shall not adversely affect the interests of National and
except as may be required by law.
SECTION 12. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been made when delivered or
mailed first-class registered or certified mail, postage prepaid, as follows: if
to the Registered Holder, at the address of such holder as shown on the registry
books maintained by the Warrant Agent; if to the Company at 1 Galleria
Boulevard, Suite 912, Metairie, Louisiana 70001, Attention: James L. Ake, Chief
Operating Officer, or at such other address as may have been furnished to the
Warrant Agent in writing by the Company; and if to the Warrant Agent, at its
Corporate Office. Copies of any notice delivered pursuant to this Agreement
shall also be delivered to National Securities Corporation, 1001 Fourth Avenue,
Suite 2200, Seattle, Washington 98154-1100, Attention: General Counsel, or at
such other address as may have been furnished to the Company and the Warrant
Agent in writing.
SECTION 13. Governing Law; Jurisdiction.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without giving effect to conflicts of laws.
All actions and proceedings brought by the parties to this Agreement relating to
or arising from, directly or indirectly, this Agreement shall be litigated in
courts located within the State of New York.
28
<PAGE>
<PAGE>
SECTION 14. Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the
Company, National, the Warrant Agent and their respective successors and assigns
and the holders from time to time of Warrant Certificates or any of them.
Nothing in this Agreement is intended or shall be construed to confer upon any
other person any right, remedy or claim, in equity or at law, or to impose upon
any other person any duty, liability or obligation.
SECTION 15. Termination.
This Agreement shall terminate at the close of business on the Warrant
Expiration Date or such earlier date upon which all Warrants have been exercised
or redeemed, except that the Warrant Agent shall account to the Company for cash
held by it and the provisions of Section 10 hereof shall survive such
termination.
SECTION 16. Counterparts.
This Agreement may be executed in several counterparts, which taken
together shall constitute a single document.
29
<PAGE>
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
[SEAL]
AMERICAN CRAFT BREWING
INTERNATIONAL LIMITED
By: /s/ Peter W. H. Bordeaux
----------------------------------
Peter W.H. Bordeaux
Chairman
Attest:
By: /s/ James L. Ake
----------------
James L. Ake
Secretary
THE BANK OF NEW YORK,
As Warrant Agent
By: /s/ Joseph Varca
----------------------------------
Name: Joseph Varca
Title: Vice President
NATIONAL SECURITIES CORPORATION
By: /s/ Steven A. Rothstein
----------------------------------
Steven A. Rothstein
Chairman
<PAGE>
<PAGE>
EXHIBIT A
----------
No. W VOID AFTER SEPTEMBER 11, 2001
----------
___________ WARRANTS
REDEEMABLE WARRANT CERTIFICATE TO
PURCHASE ONE SHARE OF COMMON STOCK
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED
CUSIP G02702 11 9
THIS CERTIFIES THAT, FOR VALUE RECEIVED
or registered assigns (the "Registered Holder") is the owner of the number of
Redeemable Warrants (the "Warrants") specified above. Each Warrant initially
entitles the Registered Holder to purchase, subject to the terms and conditions
set forth in this Certificate and the Warrant Agreement (as hereinafter
defined), one fully paid and nonassessable share of Common Stock, par value
$0.01 per share, of American Craft Brewing International Limited, a Bermuda
company (the "Company"), at any time between March 11, 1997 (the "Initial
Warrant Exercise Date"), and the Expiration Date (as hereinafter defined) upon
the presentation and surrender of this Warrant Certificate with the Subscription
Form on the reverse hereof duly executed, at the corporate office of The Bank of
New York, as Warrant Agent, or its successor (the "Warrant Agent"), accompanied
by payment of $6.875, subject to adjustment (the "Purchase Price"), in lawful
money of the United States of America in cash or by check made payable to the
Warrant Agent for the account of the Company.
This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are subject in all respects to the terms and conditions set
forth in the Warrant Agreement (the "Warrant Agreement"), dated September 11,
1996, by and among the Company, National Securities Corporation ("National") and
the Warrant Agent.
In the event of certain contingencies provided for in the Warrant
Agreement, the Purchase Price and the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant represented hereby are subject to
modification or adjustment.
Each Warrant represented hereby is exercisable at the option of the
Registered Holder, but no fractional interests will be issued. In the case of
the exercise of less than all the Warrants represented hereby, the Company shall
cancel this Warrant Certificate upon the surrender hereof and shall execute and
deliver a new Warrant Certificate or Warrant Certificates of like tenor, which
the Warrant Agent shall countersign, for the balance of such Warrants.
A-1
<PAGE>
<PAGE>
The term "Expiration Date" shall mean 5:30 p.m. (New York time) on
September 11, 2001. If each such date shall in the State of New York be a
holiday or a day on which the banks are authorized to close, then the Expiration
Date shall mean 5:30 p.m. (New York time) on the next following day which in the
State of New York is not a holiday or a day on which banks are authorized to
close.
The Company shall not be obligated to deliver any securities pursuant
to the exercise of this Warrant unless a registration statement under the
Securities Act of 1933, as amended (the "Act"), with respect to such securities
is effective or an exemption thereunder is available. The Company has covenanted
and agreed that it will file a registration statement under the Federal
securities laws, use its best efforts to cause the same to become effective, use
its best efforts to keep such registration statement current, if required under
the Act, while any of the Warrants are outstanding, and deliver a prospectus
which complies with Section 10(a)(3) of the Act to the Registered Holder
exercising this Warrant. This Warrant shall not be exercisable by a Registered
Holder in any state where such exercise would be unlawful.
This Warrant Certificate is exchangeable, upon the surrender hereof by
the Registered Holder at the corporate office of the Warrant Agent, for a new
Warrant Certificate or Warrant Certificates of like tenor representing an equal
aggregate number of Warrants, each of such new Warrant Certificates to represent
such number of Warrants as shall be designated by such Registered Holder at the
time of such surrender. Upon due presentment and payment of any tax or other
charge imposed in connection therewith or incident thereto, for registration of
transfer of this Warrant Certificate at such office, a new Warrant Certificate
or Warrant Certificates representing an equal aggregate number of Warrants will
be issued to the transferee in exchange therefor, subject to the limitations
provided in the Warrant Agreement.
Prior to the exercise of any Warrant represented hereby, the
Registered Holder shall not be entitled to any rights of a stockholder of the
Company, including, without limitation, the right to vote or to receive
dividends or other distributions, and shall not be entitled to receive any
notice of any proceedings of the Company, except as provided in the Warrant
Agreement.
Subject to the provisions of the Warrant Agreement, this Warrant may be
redeemed at the option of the Company, at a redemption price of $0.10 per
Warrant, at any time commencing after March 11, 1998, provided that the closing
bid price for the Common Stock as reported by the Nasdaq SmallCap Market, if the
Common Stock is then traded on the Nasdaq Small Cap Market (or the closing sale
price, if the Common Stock is then traded on the Nasdaq National Market or a
national securities exchange), shall have equalled or exceeded $16.50 per share
for any twenty (20) trading days within a period of thirty (30) consecutive
trading days ending on the fifth trading day prior to the Notice of Redemption,
as defined below (subject to adjustment in the event of any stock splits or
other similar events). Notice of redemption (the "Notice of Redemption") shall
be given not later than the thirtieth day before the date fixed for redemption,
all as provided in the Warrant Agreement. On and after the date fixed for
redemption, the Registered Holder shall have no rights with respect to the
Warrants except to receive the $0.10 per Warrant upon surrender of this Warrant
Certificate.
A-2
<PAGE>
<PAGE>
Under certain circumstances as set forth in the Warrant Agreement,
National may be entitled to receive an aggregate of five percent (5%) of the
Purchase Price of the Warrants represented hereby.
Prior to due presentment for registration of transfer hereof, the
Company and the Warrant Agent may deem and treat the Registered Holder as the
absolute owner hereof and of each Warrant represented hereby (notwithstanding
any notations of ownership or writing hereon made by anyone other than a duly
authorized officer of the Company or the Warrant Agent) for all purposes and
shall not be affected by any notice to the contrary, except as provided in the
Warrant Agreement.
This Warrant Certificate shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to
conflicts of laws.
This Warrant Certificate is not valid unless countersigned by the
Warrant Agent.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed, manually or in facsimile by two of its officers thereunto duly
authorized and a facsimile of its corporate seal to be imprinted hereon.
Dated:
AMERICAN CRAFT BREWING
INTERNATIONAL LIMITED
[SEAL]
By:
----------------------------------
Peter W.H. Bordeaux
Chairman
By:
----------------------------------
James L. Ake
Secretary
COUNTERSIGNED:
THE BANK OF NEW YORK,
as Warrant Agent
By:
----------------------------
Authorized Officer
A-3
<PAGE>
<PAGE>
SUBSCRIPTION FORM
-----------------
To Be Executed by the Registered Holder
in Order to Exercise Warrants
The undersigned Registered Holder hereby irrevocably elects to exercise
_________ Warrants represented by this Warrant Certificate, and to purchase the
securities issuable upon the exercise of such Warrants, and requests that
certificates for such securities shall be issued in the name of
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
______________________________
______________________________
______________________________
______________________________
(please print or type name and address)
and be delivered to
______________________________
______________________________
______________________________
______________________________
(please print or type name and address)
and if such number of Warrants shall not be all the Warrants evidenced by this
Warrant Certificate, that a new Warrant Certificate for the balance of such
Warrants be registered in the name of, and delivered to, the Registered Holder
at the address stated below.
A-4
<PAGE>
<PAGE>
IMPORTANT: PLEASE COMPLETE THE FOLLOWING:
1. The exercise of this Warrant was solicited by
National Securities Corporation. [ ]
2. The exercise of this Warrant was solicited by
_______________________. [ ]
3. The exercise of this Warrant was not
solicited. [ ]
Dated: _________________ X_______________________________
________________________________
________________________________
Address
________________________________
Social Security or Taxpayer
Identification Number
________________________________
Signature Guaranteed
________________________________
A-5
<PAGE>
<PAGE>
ASSIGNMENT
To Be Executed by the Registered Holder
in Order to Assign Warrants
FOR VALUE RECEIVED, ____________________, hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER
_______________________________
_______________________________
_______________________________
_______________________________
(please print or type name and address)
____________________________________ of the Warrants represented by this Warrant
Certificate, and hereby irrevocably constitutes and appoints ___________________
Attorney to transfer this Warrant Certificate on the books of the Company, with
full power of substitution in the premises.
Dated:_____________________________ X_____________________________
Signature Guaranteed
______________________________
THE SIGNATURE TO THE ASSIGNMENT OR THE SUBSCRIPTION FORM MUST CORRESPOND TO THE
NAME AS WRITTEN UPON THE FACE OF THIS WARRANT CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER AND MUST BE
GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION (BANKS, STOCKBROKERS, SAVINGS
AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT TO S.E.C. RULE 17Ad-15.
A-6
<PAGE>
<PAGE>
Exhibit 4.3
- --------------------------------------------------------------------------------
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED
AND
NATIONAL SECURITIES CORPORATION
--------
REPRESENTATIVE'S
WARRANT AGREEMENT
DATED AS OF SEPTEMBER 11, 1996
- --------------------------------------------------------------------------------
<PAGE>
<PAGE>
REPRESENTATIVE'S WARRANT AGREEMENT dated as of September 11, 1996
between AMERICAN CRAFT BREWING INTERNATIONAL LIMITED, a Bermuda company (the
"Company"), and NATIONAL SECURITIES CORPORATION (hereinafter referred to
variously as the "Holder" or the "Representative").
W I T N E S S E T H:
WHEREAS, the Company proposes to issue to the Representative warrants
("Warrants") to purchase up to an aggregate of 158,000 shares of Common Stock,
par value $0.01 per share, of the Company and/or 158,000 redeemable common stock
purchase warrants of the Company ("Redeemable Warrants"), each Redeemable
Warrant to purchase one additional share of Common Stock (as hereinafter
defined); and
WHEREAS, the Representative has agreed pursuant to the underwriting
agreement (the "Underwriting Agreement") dated as of the date hereof between the
Company and the several underwriters listed therein to act as the Representative
in connection with the Company's proposed public offering of up to 1,580,000
shares of Common Stock and 1,580,000 Redeemable Warrants (the "Public Warrants")
at a public offering price of $5.50 per share of Common Stock and $0.10 per
Public Warrant (the "Public Offering"); and
WHEREAS, the Warrants to be issued pursuant to this Agreement will be
issued on the Closing Date (as such term is defined in the Underwriting
Agreement) by the Company to the Representative in consideration for, and as
part of the Representative's compensation in connection with, the Representative
acting as the Representative pursuant to the Underwriting Agreement;
<PAGE>
<PAGE>
NOW, THEREFORE, in consideration of the premises, the payment by the
Representative to the Company of an aggregate fifteen dollars and eighty cents
($15.80), the agreements herein set forth and other good and valuable
consideration, hereby acknowledged, the parties hereto agree as follows:
1. Grant. The Representative (or its designees) is hereby granted the
right to purchase, at any time from September 11, 1997, until 5:30 p.m., New
York time, on September 11, 2001, up to an aggregate of 158,000 shares of Common
Stock and/or 158,000 Redeemable Warrants at an initial exercise price (subject
to adjustment as provided in Section 8 hereof) of $7.70 per share of Common
Stock and $0.14 per Redeemable Warrant, subject to the terms and conditions of
this Agreement. One Redeemable Warrant is exercisable to purchase one additional
share of Common Stock at an initial exercise price of $11.34 from March 11, 1997
until 5:30 p.m. New York time on September 11, 2001, at which time the
Redeemable Warrants shall expire. Except as set forth herein, the shares of
Common Stock and the Redeemable Warrants issuable upon exercise of the Warrants
are in all respects identical to the shares of Common Stock and the Public
Warrants being purchased by the Underwriters for resale to the public pursuant
to the terms and provisions of the Underwriting Agreement. The shares of Common
Stock and the Redeemable Warrants issuable upon exercise of the Warrants are
sometimes hereinafter referred to collectively as the "Securities."
2. Warrant Certificates. The warrant certificates (the "Warrant
Certificates") delivered and to be delivered pursuant to this Agreement shall be
in the form set forth in Exhibit A, attached hereto and made a part hereof, with
such appropriate insertions, omissions, substitutions, and other variations as
required or permitted by this Agreement.
3. Exercise of Warrant.
-2-
<PAGE>
<PAGE>
'ss'3.1 Method of Exercise. The Warrants initially are exercisable at
an aggregate initial exercise price (subject to adjustment as provided in
Section 8 hereof) per share of Common Stock and Redeemable Warrant set forth in
Section 6 hereof payable by certified or official bank check in New York
Clearing House funds, subject to adjustment as provided in Section 8 hereof.
Upon surrender of a Warrant Certificate with the annexed Form of Election to
Purchase duly executed, together with payment of the Exercise Price (as
hereinafter defined) for the shares of Common Stock and/or Redeemable Warrants
purchased at the Company's principal executive offices in Metairie, Louisiana
(presently located at 1 Galleria Boulevard, Suite 912, Metairie, Louisiana
70001) the registered holder of a Warrant Certificate ("Holder" or "Holders")
shall be entitled to receive a certificate or certificates for the shares of
Common Stock so purchased and a certificate or certificates for the Redeemable
Warrants so purchased. The purchase rights represented by each Warrant
Certificate are exercisable at the option of the Holder thereof, in whole or in
part (but not as to fractional shares of the Common Stock and Redeemable
Warrants underlying the Warrants). In the event the Company redeems all of the
Public Warrants (other than the Redeemable Warrants underlying the Warrants),
then the Warrants may only be exercised if such exercise is accompanied by the
simultaneous exercise of the Redeemable Warrant(s) underlying the Warrants being
so exercised. Warrants may be exercised to purchase all or part of the shares of
Common Stock together with an equal or unequal number of the Redeemable Warrants
represented thereby. In the case of the purchase of less than all the shares of
Common Stock and/or Redeemable Warrants purchasable under any Warrant
Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the shares of Common Stock and/or Redeemable
Warrants purchasable thereunder.
-3-
<PAGE>
<PAGE>
'ss'3.2 Exercise by Surrender of Warrant. In addition to the method of
payment set forth in Section 3.1 and in lieu of any cash payment required
thereunder, the Holder(s) of the Warrants shall have the right at any time and
from time to time to exercise the Warrants in full or in part by surrendering
the Warrant Certificate in the manner specified in Section 3.1 in exchange for
the number of shares of Common Stock equal to the quotient derived from DIVIDING
the NUMERATOR (X) an amount equal to the DIFFERENCE BETWEEN (A) the SUM OF (1)
the number of shares of Common Stock as to which the Warrants are being
exercised MULTIPLIED by the per share Market Price, AND (2) the number of
Redeemable Warrants as to which the Warrants are being exercised MULTIPLIED by
the per Redeemable Warrant Market Price, AND (3) the number of shares of Common
Stock issuable upon exercise of the Redeemable Warrants underlying the Warrants
being exercised MULTIPLIED by the per share Market Price, AND (B) the SUM OF (1)
the number of Warrants which are being exercised MULTIPLIED by the Exercise
Price AND (2) the number of Redeemable Warrants included in the Warrants which
are being exercised MULTIPLIED by the exercise price per Redeemable Warrant (as
calculated pursuant to the Redeemable Warrant Agreement (hereinafter defined))
as then in effect, BY the DENOMINATOR (Y) the per share Market Price of the
Common Stock. Solely for the purposes of this paragraph, Market Price shall be
calculated either (i) on the date on which the form of election attached hereto
is deemed to have been sent to the Company pursuant to Section 14 hereof
("Notice Date") or (ii) as the average of the Market Prices for each of the five
trading days preceding the Notice Date, whichever of (i) or (ii) is greater.
'ss'3.3 Definition of Market Price. As used herein, the phrase "Market
Price" at any date shall be deemed to be (i) when referring to the Common Stock,
the last reported sale price, or, in case no such reported sale takes place on
such day, the average of the last reported
-4-
<PAGE>
<PAGE>
sale prices for the last three (3) trading days, in either case as officially
reported by the principal securities exchange on which the Common Stock is
listed or admitted to trading or by the Nasdaq SmallCap Market ("Nasdaq/SC"),
or, if the Common Stock is not listed or admitted to trading on any national
securities exchange or quoted by the National Association of Securities Dealers
Automated Quotation System ("Nasdaq"), the average closing bid price as
furnished by the National Association of Securities Dealers, Inc. ("NASD")
through Nasdaq or similar organization if Nasdaq is no longer reporting such
information, or if the Common Stock is not quoted on Nasdaq, as determined in
good faith (using customary valuation methods) by resolution of the members of
the Board of Directors of the Company, based on the best information available
to it or (ii) when referring to a Redeemable Warrant, the last reported sales
price, or, in the case no such reported sale takes place on such day, the
average of the last reported sale prices for the last three (3) trading days, in
either case as officially reported by the principal securities exchange on which
the Redeemable Warrants are listed or admitted to trading or by Nasdaq/SC, or,
if the Redeemable Warrants are not listed or admitted to trading on any national
securities exchange or quoted by Nasdaq, the average closing bid price as
furnished by the NASD through Nasdaq or similar organization if Nasdaq is no
longer reporting such information, or if the Redeemable Warrants are not quoted
on Nasdaq or are no longer outstanding, the Market Price of a Redeemable Warrant
shall equal the difference between the Market Price of the Common Stock and the
Exercise Price of the Redeemable Warrant.
4. Issuance of Certificates. Upon the exercise of the Warrants, the
issuance of certificates for shares of Common Stock and/or Redeemable Warrants
and/or other securities, properties or rights underlying such Warrants and, upon
the exercise of the Redeemable Warrants, the issuance of certificates for shares
of Common Stock and/or other securities,
-5-
<PAGE>
<PAGE>
properties or rights underlying such Redeemable Warrants shall be made forthwith
(and in any event within five (5) business days thereafter) without charge to
the Holder thereof including, without limitation, any tax which may be payable
in respect of the issuance thereof, and such certificates shall (subject to the
provisions of Sections 5 and 7 hereof) be issued in the name of, or in such
names as may be directed by, the Holder thereof; provided, however, that the
Company shall not be required to pay any tax which may be payable in respect of
any transfer involved in the issuance and delivery of any such certificates in a
name other than that of the Holder, and the Company shall not be required to
issue or deliver such certificates unless or until the person or persons
requesting the issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
The Warrant Certificates and the certificates representing the shares
of Common Stock and the Redeemable Warrants underlying the Warrants and the
shares of Common Stock underlying the Redeemable Warrants (and/or other
securities, properties or rights issuable upon the exercise of the Warrants or
the Redeemable Warrants) shall be executed on behalf of the Company by the
manual or facsimile signature of the then Chairman or Vice Chairman of the Board
of Directors or President or Vice President of the Company. Warrant Certificates
shall be dated the date of execution by the Company upon initial issuance,
division, exchange, substitution or transfer. Certificates representing the
shares of Common Stock and Redeemable Warrants, and the shares of Common Stock
underlying each Redeemable Warrant (and/or other securities, properties or
rights issuable upon exercise of the Warrants) shall be dated as of the Notice
Date (regardless of when executed or delivered) and dividend bearing securities
so issued shall accrue dividends from the Notice Date.
-6-
<PAGE>
<PAGE>
5. Restriction On Transfer of Warrants. The Holder of a Warrant
Certificate, by its acceptance thereof, covenants and agrees that the Warrants
are being acquired as an investment and not with a view to the distribution
thereof; that the Warrants may not be sold, transferred, assigned, hypothecated
or otherwise disposed of, in whole or in part, for a period of one (1) year from
the date hereof, except to officers of the Representative.
6. Exercise Price.
'ss'6.1 Initial and Adjusted Exercise Price. Except as otherwise
provided in Section 8 hereof, the initial exercise price of each Warrant shall
be $7.70 per share of Common Stock and $0.14 per Redeemable Warrant. The
adjusted exercise price shall be the price which shall result from time to time
from any and all adjustments of the initial exercise price in accordance with
the provisions of Section 8 hereof. Any transfer of a Warrant shall constitute
an automatic transfer and assignment of the registration rights set forth in
Section 7 hereof with respect to the Securities or other securities, properties
or rights underlying the Warrants.
'ss'6.2 Exercise Price. The term "Exercise Price" herein shall mean
the initial exercise price or the adjusted exercise price, depending upon
the context or unless otherwise specified.
7. Registration Rights.
'ss'7.1 Registration Under the Securities Act of 1933. The Warrants,
the shares of Common Stock and Redeemable Warrants issuable upon exercise of
the Warrants, the shares of Common Stock issuable upon exercise of the
Redeemable Warrants issuable upon exercise of the Warrants and any of the other
securities issuable upon exercise of the Warrants (collectively, the "Warrant
Securities") have been registered under the Securities Act of 1933, as amended
(the "Act"), pursuant to the Company's Registration Statement on Form S-1
(Registration No. 333-
-7-
<PAGE>
<PAGE>
6033) (the "Registration Statement"), except for 3,504 shares of Common
Stock issuable upon exercise of the Redeemable Warrants issuable upon exercise
of the Warrants (the "Unregistered Shares"), which Unregistered Shares shall
bear the legend set forth below until such Unregistered Shares have been
registered under the Act. All of the representations and warranties of the
Company contained in the Underwriting Agreement relating to the Registration
Statement, the Preliminary Prospectus and Prospectus (as such terms are defined
in the Underwriting Agreement) and made as of the dates provided therein, are
incorporated by reference herein. The Company agrees and covenants (i) promptly
to file post-effective amendments to such Registration Statement as may be
necessary in order to maintain its effectiveness and otherwise to take such
action as may be necessary to maintain the effectiveness of the Registration
Statement as long as any Warrants are outstanding and (ii) within forty-five
(45) days after the Market Price of the Common Stock initially equals or exceeds
$10.00 per share of Common Stock, to prepare and file with the Securities and
Exchange Commission (the "Commission") a registration statement and such other
documents, including a prospectus, as may be necessary in the opinion of both
counsel for the Company and counsel for the Representative and Holders, in order
to comply with the provisions of the Act, so as to permit a public offering and
sale of their respective Unregistered Shares for nine (9) consecutive months by
such Holders. In the event that, for any reason whatsoever, the Company shall
fail to maintain the effectiveness of the Registration Statement, the
certificates representing the Warrant Securities shall bear the following
legend:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended
("Act"), and may not be offered or sold except pursuant to
(i) an effective registration statement under the Act, (ii)
to the extent applicable, Rule 144 under the Act (or any
similar rule under such Act relating to the disposition of
securities), or (iii) an opinion of
-8-
<PAGE>
<PAGE>
counsel, if such opinion shall be reasonably satisfactory to
counsel to the issuer, that an exemption from registration
under such Act is available.
'ss'7.2 Piggyback Registration. If, at any time commencing after the
date hereof and expiring seven (7) years thereafter, the Company proposes to
register any of its securities under the Act (other than pursuant to Form S-4,
Form S-8 or a comparable registration statement) it will give written notice by
registered mail, at least thirty (30) days prior to the filing of each such
registration statement, to the Representative and to all other Holders of the
Warrants and/or the Warrant Securities of its intention to do so. If the
Representative or other Holders of the Warrants and/or Warrant Securities notify
the Company within twenty (20) business days after receipt of any such notice of
its or their desire to include any such securities in such proposed registration
statement, the Company shall afford the Representative and such Holders of the
Warrants and/or Warrant Securities the opportunity to have any such Warrant
Securities registered under such registration statement (sometimes referred to
herein as a "Piggyback Registration").
Notwithstanding the provisions of this Section 7.2, the Company shall
have the right at any time after it shall have given written notice pursuant to
this Section 7.2 (irrespective of whether a written request for inclusion of any
such securities shall have been made) to elect not to file any such proposed
registration statement, or to withdraw the same after the filing but prior to
the effective date thereof.
If a Piggyback Registration is an underwritten primary registration on
behalf of the Company, and the managing underwriters advise the Company in
writing that in their good faith opinion the number of securities requested to
be included in such registration exceeds the number which can be sold in such
offering, the Company will include in such registration (i)
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<PAGE>
<PAGE>
first, the securities the Company proposes to sell, (ii) second, the Warrant
Securities requested to be included in such registration, pro rata among the
Holders of such Warrant Securities on the basis of the number of Warrant
Securities of such Holders requested to be included in such registration, and
(iii) third, other securities requested to be included in such registration.
If a Piggyback Registration is an underwritten secondary registration
on behalf of holders of the Company's Common Stock, and the managing
underwriters advise the Company in writing that in their good faith opinion the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering, the Company will include in such
registration (i) first, the securities requested to be included therein by the
holders requesting such registration pursuant to a demand registration right,
pro rata among such holders, (ii) second, the Warrant Securities requested to be
included by Holders under this Section 7.2 on a pro rata basis based upon the
number of Warrant Securities of such Holders requested to be included in such
registration and (iii) third, other securities requested to be included in such
registration.
'ss'7.3 Demand Registration.
(a) At any time commencing after the date hereof and expiring five (5)
years thereafter, the Holders of the Warrants and/or Warrant Securities
representing a "Majority" (as hereinafter defined) of such securities (assuming
the exercise of all of the Warrants) shall have the right (which right is in
addition to the registration rights under Section 7.2 hereof), exercisable by
written notice to the Company, to have the Company prepare and file with the
Commission, on one occasion, a registration statement and such other documents,
including a prospectus, as may be necessary in the opinion of both counsel for
the Company and counsel for the Representative and Holders, in order to comply
with the provisions of the Act, so as
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to permit a public offering and sale of their respective Warrant Securities for
nine (9) consecutive months by such Holders and any other Holders of the
Warrants and/or Warrant Securities who notify the Company within ten (10) days
after receiving notice from the Company of such request.
(b) The Company covenants and agrees to give written notice of any
registration request under this Section 7.3 by any Holder or Holders to all
other registered Holders of the Warrants and the Warrant Securities within ten
(10) days from the date of the receipt of any such registration request.
(c) Intentionally omitted.
(d) Notwithstanding anything to the contrary contained herein, if the
Company shall not have filed a registration statement for the Warrant Securities
within the time period specified in Section 7.4(a) hereof pursuant to the
written notice specified in Section 7.3(a) of a Majority of the Holders of the
Warrants and/or Warrant Securities, the Company may, at its option, upon the
written notice of election of a Majority of the Holders of the Warrants and/or
Warrant Securities requesting such registration, repurchase (i) any and all
Warrant Securities of such Holders at the higher of the Market Price per share
of Common Stock and per Redeemable Warrant on (x) the date of the notice sent
pursuant to Section 7.3(a) or (y) the expiration of the period specified in
Section 7.4(a) and (ii) any and all Warrants of such Holders at such Market
Price less the Exercise Price of such Warrant. Such repurchase shall be in
immediately available funds and shall close within two (2) days after the later
of (i) the expiration of the period specified in Section 7.4(a) or (ii) the
delivery of the written notice of election specified in this Section 7.3(d).
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(e) For a period not to exceed thirty (30) days, the Company shall not
be prevented from delaying a registration statement pursuant to this Agreement
at any time when the Company, in its good faith judgment, reasonably believes
that the filing thereof at the time requested, or the offering of Warrant
Securities pursuant thereto, would require the disclosure of non-public material
information not otherwise required to be disclosed under the Act or the Exchange
Act (as hereinafter defined) that would be detrimental to the Company or would
materially and adversely affect (a) a bona fide pending or scheduled public
offering of the Company's securities pursuant to a bona fide letter of intent
entered into prior to delivery of a notice by a Holder(s) of the exercise of his
or its demand registration rights pursuant to this Section 7.3, or (b) an
acquisition, merger, recapitalization, consolidation, reorganization or similar
transaction by or of the Company.
'ss'7.4 Covenants of the Company With Respect to Registration. In
connection with any registration under Sections 7.1, 7.2 or 7.3 hereof, the
Company covenants and agrees as follows:
(a) The Company shall use its best efforts to file a registration
statement within forty-five (45) days of receipt of any demand therefor, shall
use its best efforts to have any registration statements declared effective at
the earliest possible time, and shall furnish each Holder desiring to sell
Warrant Securities such number of prospectuses as shall reasonably be requested.
(b) The Company shall pay all costs (excluding fees and expenses of
Holder(s)' counsel and any underwriting or selling commissions), fees and
expenses in connection with all registration statements filed pursuant to
Sections 7.1, 7.2 and 7.3 hereof including, without
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limitation, the Company's legal and accounting fees, printing expenses, blue
sky fees and expenses.
(c) The Company will take all necessary action which may be required
in qualifying or registering the Warrant Securities included in a registration
statement for offering and sale under the securities or blue sky laws of such
states as reasonably are requested by the Holder(s), provided that the Company
shall not be obligated to execute or file any general consent to service of
process or to qualify as a foreign corporation to do business under the laws of
any such jurisdiction.
(d) The Company shall indemnify the Holder(s) of the Warrant
Securities to be sold pursuant to any registration statement and each person, if
any, who controls such Holders within the meaning of Section 15 of the Act or
Section 20(a) of the Securities Exchange Act of 1934, as amended ("Exchange
Act"), against all loss, claim, damage, expense or liability (including all
expenses reasonably incurred in investigating, preparing or defending against
any claim whatsoever) to which any of them may become subject under the Act, the
Exchange Act or otherwise, arising from such registration statement but only to
the same extent and with the same effect as the provisions pursuant to which the
Company has agreed to indemnify each of the Underwriters contained in Section 7
of the Underwriting Agreement; provided, however, that the Company shall be
under no obligation to indemnify any such Holder(s) or controlling persons for
any untrue statement of a material fact or omission of a material fact contained
in any preliminary prospectus, registration statement or prospectus prepared
pursuant to this Section 7, or any amendment thereof or supplement thereto,
which was made in reliance upon and in strict conformity with written
information furnished to the Company with respect to any
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Holder by or on behalf of such Holder expressly for use in any such preliminary
prospectus, registration statement or prospectus, or any amendment thereof or
supplement thereto.
(e) The Holder(s) of the Warrant Securities to be sold pursuant to a
registration statement, and their successors and assigns, shall severally, and
not jointly, indemnify the Company, its officers and directors and each person,
if any, who controls the Company within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, against all loss, claim, damage, expense or
liability (including all expenses reasonably incurred in investigating,
preparing or defending against any claim whatsoever) to which they may become
subject under the Act, the Exchange Act or otherwise, arising from information
furnished by or on behalf of such Holders, or their successors or assigns, for
specific inclusion in such registration statement to the same extent and with
the same effect as the provisions contained in Section 7 of the Underwriting
Agreement pursuant to which the Underwriters have agreed to indemnify the
Company.
(f) Nothing contained in this Agreement shall be construed as
requiring the Holder(s) to exercise their Warrants prior to the initial filing
of any registration statement or the effectiveness thereof.
(g) Intentionally omitted.
(h) The Company shall furnish to each Holder participating in the
offering and to each underwriter, if any, a signed counterpart, addressed to
such Holder or underwriter, of (i) an opinion of counsel to the Company, dated
the effective date of such registration statement (and, if such registration
includes an underwritten public offering, an opinion dated the date of the
closing under the underwriting agreement), and (ii) a "cold comfort" letter
dated the effective date of such registration statement (and, if such
registration includes an underwritten
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public offering, a letter dated the date of the closing under the underwriting
agreement) signed by the independent public accountants who have issued a report
on the Company's financial statements included in such registration statement,
in each case covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and, in the case of
such accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to underwriters in underwritten public
offerings of securities.
(i) The Company shall as soon as practicable after the effective date
of the registration statement, and in any event within 15 months thereafter,
make "generally available to its security holders" (within the meaning of Rule
158 under the Act) an earnings statement (which need not be audited) complying
with Section 11(a) of the Act and covering a period of at least 12 consecutive
months beginning after the effective date of the registration statement.
(j) The Company shall deliver promptly to each Holder participating in
the offering requesting the correspondence and memoranda described below and to
the managing underwriters, copies of all correspondence between the Commission
and the Company, its counsel or auditors and all memoranda relating to
discussions with the Commission or its staff with respect to the registration
statement and permit each Holder and underwriter to do such investigation, upon
reasonable advance notice, with respect to information contained in or omitted
from the registration statement as it deems reasonably necessary to comply with
applicable securities laws or rules of the NASD. Such investigation shall
include access to books, records and properties and opportunities to discuss the
business of the Company with its officers and independent auditors, all to such
reasonable extent and at such reasonable times and as often as any such Holder
or underwriter shall reasonably request.
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(k) The Company shall enter into an underwriting agreement with the
managing underwriters selected for such underwriting by Holders holding a
Majority of the Warrant Securities requested to be included in such
underwriting, which may include the Representative. Such agreement shall be
satisfactory in form and substance to the Company, each Holder and such managing
underwriter(s), and shall contain such representations, warranties and covenants
by the Company and such other terms as are customarily contained in agreements
of that type used by the managing underwriter(s). The Holders shall be parties
to any underwriting agreement relating to an underwritten sale of their Warrant
Securities and may, at their option, require that any or all of the
representations, warranties and covenants of the Company to or for the benefit
of such underwriter(s) shall also be made to and for the benefit of such
Holders. Such Holders shall not be required to make any representations or
warranties to or agreements with the Company or the underwriter(s) except as
they may relate to such Holders and their intended methods of distribution.
(l) In addition to the Warrant Securities, upon the written request
therefor by any Holder(s), the Company shall include in the registration
statement any other securities of the Company held by such Holder(s) as of the
date of filing of such registration statement, including without limitation
restricted shares of Common Stock, options, warrants or any other securities
convertible into shares of Common Stock; provided, however, that such Holder(s)
will pay all additional accountable costs, fees and expenses attributable to the
inclusion of any other securities of the Company held by such Holder(s) in any
registration statement prepared by the Company pursuant to Section 7 hereof. The
Company shall remain liable for all costs, fees and expenses which it is
required to pay in connection with the registration of the Warrant Securities
pursuant to Section 7.4(b).
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(m) For purposes of this Agreement, the term "Majority" in reference
to the Holders of Warrants or Warrant Securities, shall mean in excess of fifty
percent (50%) of the then outstanding Warrants or Warrant Securities that (i)
are not held by the Company, an affiliate, officer, creditor, employee or agent
thereof or any of their respective affiliates, members of their family, persons
acting as nominees or in conjunction therewith and (ii) have not been resold to
the public pursuant to a registration statement filed with the Commission under
the Act.
(n) Notwithstanding anything to the contrary contained herein, all
registration rights granted any Holder under Sections 7.1, 7.2 or 7.3 hereof
shall terminate as to any such Holder upon such Holder becoming eligible to
resell his or its Warrants or Warrant Securities pursuant to the provisions of
paragraph (k) of Rule 144 promulgated under the Act ("Rule 144"), provided that
no other provisions of Rule 144 in any way limit such Holder's resale of his or
its Warrants or Warrant Securities.
8. Adjustments to Exercise Price and Number of Securities.
'ss'8.1 Subdivision and Combination. In case the Company shall at any
time subdivide or combine the outstanding shares of Common Stock, the Exercise
Price shall forthwith be proportionately decreased in the case of subdivision or
increased in the case of combination.
'ss'8.2 Stock Dividends and Distributions. In case the Company shall
pay a dividend in, or make a distribution of, shares of Common Stock or of the
Company's capital stock convertible into Common Stock, the Exercise Price shall
forthwith be proportionately decreased. An adjustment made pursuant to this
Section 8.2 shall be made as of the record date for the subject stock dividend
or distribution.
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'ss'8.3 Adjustment in Number of Securities. Upon each adjustment of
the Exercise Price pursuant to the provisions of this Section 8, the number of
Warrant Securities issuable upon the exercise at the adjusted exercise price of
each Warrant shall be adjusted to the nearest full amount by multiplying a
number equal to the Exercise Price in effect immediately prior to such
adjustment by the number of Warrant Securities issuable upon exercise of the
Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Exercise Price.
'ss'8.4 Definition of Common Stock. For the purpose of this Agreement,
the term "Common Stock" shall mean (i) the class of stock designated as Common
Stock in the Memorandum of Amalgamation of the Company as may be amended as of
the date hereof, or (ii) any other class of stock resulting from successive
changes or reclassifications of such Common Stock consisting solely of changes
in par value, or from par value to no par value, or from no par value to par
value. In the event that the Company shall after the date hereof issue
securities with greater or superior voting rights than the shares of Common
Stock outstanding as of the date hereof, the Holder, at its option, may receive
upon exercise of any Warrant either the Warrant Securities or a like number of
such securities with greater or superior voting rights.
'ss'8.5 Merger or Consolidation. In case of any consolidation of the
Company with, or merger of the Company with, or merger of the Company into,
another corporation (other than a consolidation or merger which does not result
in any reclassification or change of the outstanding Common Stock), the
corporation formed by such consolidation or merger shall execute and deliver to
the Holder a supplemental warrant agreement providing that the holder of each
Warrant then outstanding or to be outstanding shall have the right thereafter
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(until the expiration of such Warrant) to receive, upon exercise of such
Warrant, the kind and amount of shares of stock and other securities and
property receivable upon such consolidation or merger, by a holder of the number
of securities of the Company for which such Warrant might have been exercised
immediately prior to such consolidation, merger, sale or transfer. Such
supplemental warrant agreement shall provide for adjustments which shall be
identical to the adjustments provided in Section 8. The above provision of this
subsection shall similarly apply to successive consolidations or mergers.
'ss'8.6 No Adjustment of Exercise Price in Certain Cases. No
adjustment of the Exercise Price shall be made:
(a) Upon the issuance or sale of the Warrants or the Warrant
Securities issuable upon the exercise of the Warrants;
(b) If the amount of said adjustment shall be less than two cents
(24) per Warrant Security, provided, however, that in such case any
adjustment that would otherwise be required then to be made shall be
carried forward and shall be made at the time of and together with the
next subsequent adjustment which, together with any adjustment so
carried forward, shall amount to at least two cents (24) per Warrant
Security.
9. Exchange and Replacement of Warrant Certificates. Each Warrant
Certificate is exchangeable without expense, upon the surrender thereof by the
registered Holder at the principal executive office of the Company, for a new
Warrant Certificate of like tenor and date representing in the aggregate the
right to purchase the same number of Warrant Securities in such denominations as
shall be designated by the Holder thereof at the time of such surrender.
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Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of any Warrant Certificate, and,
in case of loss, theft or destruction, of indemnity or security reasonably
satisfactory to it, and reimbursement to the Company of all reasonable expenses
incidental thereto, and upon surrender and cancellation of the Warrants, if
mutilated, the Company will make and deliver a new Warrant Certificate of like
tenor, in lieu thereof.
10. Elimination of Fractional Interests. The Company shall not be
required to issue certificates representing fractions of shares of Common Stock
or Redeemable Warrants upon the exercise of the Warrants, nor shall it be
required to issue scrip or pay cash in lieu of fractional interests, it being
the intent of the parties that all fractional interests shall be eliminated by
rounding any fraction up to the nearest whole number of shares of Common Stock
or Redeemable Warrants or other securities, properties or rights.
11. Reservation and Listing of Securities. The Company shall at all
times reserve and keep available out of its authorized shares of Common Stock,
solely for the purpose of issuance upon the exercise of the Warrants and the
Redeemable Warrants, such number of shares of Common Stock or other securities,
properties or rights as shall be issuable upon the exercise thereof. The Company
covenants and agrees that, upon exercise of the Warrants and payment of the
Exercise Price therefor, all shares of Common Stock, Redeemable Warrants and
other securities issuable upon such exercise shall be duly and validly issued,
fully paid, non-assessable and not subject to the preemptive rights of any
stockholder. The Company further covenants and agrees that upon exercise of the
Redeemable Warrants underlying the Warrants and payment of the respective
Redeemable Warrant exercise price therefor, all shares of Common Stock and other
securities issuable upon such exercises shall
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be duly and validly issued, fully paid, non-assessable and not subject to the
preemptive rights of any stockholder. As long as the Warrants shall be
outstanding, the Company shall use its best efforts to cause all shares of
Common Stock issuable upon the exercise of the Warrants and Redeemable Warrants
and all Redeemable Warrants underlying the Warrants to be listed (subject to
official notice of issuance) on all securities exchanges on which the Common
Stock or the Public Warrants issued to the public in connection herewith may
then be listed and/or quoted on Nasdaq/SC or Nasdaq.
12. Notices to Warrant Holders. Nothing contained in this Agreement
shall be construed as conferring upon the Holders the right to vote or to
consent or to receive notice as a stockholder in respect of any meetings of
stockholders for the election of directors or any other matter, or as having any
rights whatsoever as a stockholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the following
events shall occur:
(a) the Company shall take a record of the holders of its
shares of Common Stock for the purpose of entitling them to
receive a dividend or distribution payable otherwise than in
cash, or a cash dividend or distribution payable otherwise than
out of current or retained earnings or capital surplus (in
accordance with applicable law), as indicated by the accounting
treatment of such dividend or distribution on the books of the
Company; or
(b) the Company shall offer to all the holders of its
Common Stock any additional shares of capital stock of the
Company or securities convertible into or exchangeable for shares
of capital stock of the Company, or any option, right or warrant
to subscribe therefor; or
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(c) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation or merger)
or a sale of all or substantially all of its property, assets and
business as an entirety shall be proposed;
then, in any one or more of said events, the Company shall give written notice
of such event to the Representative and the Holders at least thirty (30) days
prior to the date fixed as a record date or the date of closing the transfer
books for the determination of the stockholders entitled to such dividend,
distribution, convertible or exchangeable securities or subscription rights, or
entitled to vote on such proposed dissolution, liquidation, winding up or sale.
Such notice shall specify such record date or the date of closing the transfer
books, as the case may be. Failure to give such notice or any defect therein
shall not affect the validity of any action taken in connection with the
declaration or payment of any such dividend, or the issuance of any convertible
or exchangeable securities, or subscription rights, options or warrants, or any
proposed dissolution, liquidation, winding up or sale.
13. Redeemable Warrants.
The form of the certificate representing Redeemable Warrants (and the
form of election to purchase shares of Common Stock upon the exercise of
Redeemable Warrants and the form of assignment printed on the reverse thereof)
shall be substantially as set forth in Exhibit "A" to the Warrant Agreement
dated as of the date hereof by and among the Company, the Representative and The
Bank of New York (the "Redeemable Warrant Agreement"). Each Redeemable Warrant
issuable upon exercise of the Warrants shall evidence the right to initially
purchase a fully paid and non-assessable share of Common Stock at an initial
purchase price of $11.34 from March 11, 1997 until 5:30 p.m. New York time on
September 11, 2001 at which time the Redeemable Warrants, unless the exercise
period has been extended, shall
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expire. The exercise price of the Redeemable Warrants and the number of shares
of Common Stock issuable upon the exercise of the Redeemable Warrants are
subject to adjustment, whether or not the Warrants have been exercised and the
Redeemable Warrants have been issued, in the manner and upon the occurrence of
the events set forth in Section 8 of the Redeemable Warrant Agreement, which is
hereby incorporated herein by reference and made a part hereof as if set forth
in its entirety herein. Subject to the provisions of this Agreement and upon
issuance of the Redeemable Warrants underlying the Warrants, each registered
holder of such Redeemable Warrant shall have the right to purchase from the
Company (and the Company shall issue to such registered holders) up to the
number of fully paid and non-assessable shares of Common Stock (subject to
adjustment as provided herein and in the Redeemable Warrant Agreement), free
and clear of all preemptive rights of stockholders, provided that such
registered holder complies with the terms governing exercise of the Redeemable
Warrant set forth in the Redeemable Warrant Agreement, and pays the applicable
exercise price, determined in accordance with the terms of the Redeemable
Warrant Agreement. Upon exercise of the Redeemable Warrants, the Company shall
forthwith issue to the registered holder of any such Redeemable Warrant in his
name or in such name as may be directed by him, certificates for the number of
shares of Common Stock so purchased. Except as otherwise provided in this
Agreement, the Redeemable Warrants underlying the Warrants shall be governed
in all respects by the terms of the Redeemable Warrant Agreement. The Redeemable
Warrants shall be transferable in the manner provided in the Redeemable
Warrant Agreement, and upon any such transfer, a new Redeemable Warrant
Certificate shall be issued promptly to the transferee. The Company covenants
to, and agrees with, the Holder(s) that without the prior written consent of
a Majority of the Holder(s), which will not
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be unreasonably withheld, the Redeemable Warrant Agreement will not be modified,
amended, canceled, altered or superseded, and that the Company will send to each
Holder, irrespective of whether or not the Warrants have been exercised, any and
all notices required by the Redeemable Warrant Agreement to be sent to holders
of Redeemable Warrants.
14. Notices.
All notices, requests, consents and other communications hereunder
shall be in writing and shall be deemed to have been duly made and sent when
delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to any Holder, to the address of such Holder as shown on
the books of the Company;
(b) If to the Representative, to 1001 Fourth Avenue, Suite 2200,
Seattle, Washington 98154, Attention: General Counsel; or
(c) If to the Company, to the address set forth in Section 3
hereof or to such other address as the Company may designate by notice
to the Holders.
15. Supplements and Amendments. The Company and the Representative may
from time to time supplement or amend this Agreement without the approval of any
Holders (other than the Representative) in order to cure any ambiguity, to
correct or supplement any provision contained herein which may be defective or
inconsistent with any provisions herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and the
Representative may deem necessary or desirable and which the Company and the
Representative deem shall not adversely affect the interests of the Holders.
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16. Successors. All the covenants and provisions of this Agreement
shall be binding upon and inure to the benefit of the Company, the Holders and
their respective successors and assigns hereunder.
17. Termination. This Agreement shall terminate at the close of
business on September 11, 2003. Notwithstanding the foregoing, the
indemnification provisions of Section 7 shall survive such termination until the
close of business on September 11, 2009.
18. Governing Law; Submission to Jurisdiction. This Agreement and each
Warrant Certificate issued hereunder shall be deemed to be a contract made under
the laws of the State of New York and for all purposes shall be construed in
accordance with the laws of said State without giving effect to the rules of
said State governing the conflicts of laws.
The Company, the Representative and the Holders hereby agree that any
action, proceeding or claim against it arising out of, or relating in any way
to, this Agreement shall be brought and enforced in the courts of the State of
New York or of the United States of America for the Southern District of New
York, and irrevocably submits to such jurisdiction, which jurisdiction shall be
exclusive. The Company, the Representative and the Holders hereby irrevocably
waive any objection to such exclusive jurisdiction or inconvenient forum. Any
such process or summons to be served upon any of the Company, the Representative
and the Holders (at the option of the party bringing such action, proceeding or
claim) may be served by transmitting a copy thereof, by registered or certified
mail, return receipt requested, postage prepaid, addressed to it at the address
set forth in Section 14 hereof. Such mailing shall be deemed personal service
and shall be legal and binding upon the party so served in any action,
proceeding or claim.
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19. Entire Agreement; Modification. This Agreement (including the
Underwriting Agreement and the Redeemable Warrant Agreement to the extent
portions thereof are referred to herein) contains the entire understanding
between the parties hereto with respect to the subject matter hereof and may not
be modified or amended except by a writing duly signed by the party against whom
enforcement of the modification or amendment is sought.
20. Severability. If any provision of this Agreement shall be held to
be invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provision of this Agreement.
21. Captions. The caption headings of the Sections of this Agreement
are for convenience of reference only and are not intended, nor should they be
construed as, a part of this Agreement and shall be given no substantive effect.
22. Benefits of this Agreement. Nothing in this Agreement shall be
construed to give to any person or corporation other than the Company and the
Representative and any other registered Holder(s) of the Warrant Certificates or
Warrant Securities any legal or equitable right, remedy or claim under this
Agreement; and this Agreement shall be for the sole benefit of the Company and
the Representative and any other registered Holders of Warrant Certificates or
Warrant Securities.
23. Counterparts. This Agreement may be executed in any number of
counterparts and each of such counterparts shall for all purposes be deemed to
be an original, and such counterparts shall together constitute but one and the
same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the day and year first above written.
AMERICAN CRAFT BREWING
INTERNATIONAL LIMITED
By: /s/ PETER W. H. BORDEAUX
-----------------------------
Peter W. H. Bordeaux
Chairman
Attest:
/s/ JAMES L. AKE
- -------------------
James L. Ake
Secretary
NATIONAL SECURITIES CORPORATION
By: /s/ STEVEN A. ROTHSTEIN
--------------------------------
Steven A. Rothstein
Chairman
<PAGE>
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EXHIBIT A
[FORM OF WARRANT CERTIFICATE]
THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, (ii) TO THE
EXTENT APPLICABLE, RULE 144 UNDER SUCH ACT (OR ANY SIMILAR RULE UNDER SUCH ACT
RELATING TO THE DISPOSITION OF SECURITIES), OR (iii) AN OPINION OF COUNSEL, IF
SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THE ISSUER, THAT AN
EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.
EXERCISABLE ON OR BEFORE
5:30 P.M., NEW YORK TIME, SEPTEMBER 11, 2001
No. W- Warrants to Purchase
____ Shares of Common Stock and/or
____ Redeemable Warrants
WARRANT CERTIFICATE
This Warrant Certificate certifies that ______, or registered assigns,
is the registered holder of ________ Warrants to purchase initially, at any time
from September 11, 1997 until 5:30 p.m. New York time on September 11, 2001
("Expiration Date"), up to __________ fully-paid and non-assessable shares of
common stock, par value $0.01 per share ("Common Stock"), of AMERICAN CRAFT
BREWING INTERNATIONAL LIMITED, a Bermuda company (the "Company"), and/or _____
Redeemable Warrants of the Company (one Redeemable Warrant entitling the owner
to purchase one fully-paid and non-assessable share of Common Stock) at the
initial exercise price, subject to adjustment in certain events (the "Exercise
Price"), of $7.70 per share of Common Stock and $0.14 per Redeemable Warrant
upon surrender of this Warrant Certificate and payment of the Exercise Price at
an office or agency of the Company, but subject to the conditions set forth
herein and in the Representative's Warrant Agreement dated as of September 11,
1996 between the Company and NATIONAL SECURITIES CORPORATION (the "Warrant
Agreement"). Payment of the
A-1
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<PAGE>
Exercise Price shall be made by certified or official bank check in New York
Clearing House funds payable to the order of the Company or by surrender of this
Warrant Certificate.
No Warrant may be exercised after 5:30 p.m., New York time, on the
Expiration Date, at which time all Warrants evidenced hereby, unless exercised
prior thereto, shall thereafter be void.
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of Warrants issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of this
instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Company and the
holders (the words "holders" or "holder" meaning the registered holders or
registered holder) of the Warrants.
The Warrant Agreement provides that upon the occurrence of certain
events the Exercise Price and the type and/or number of the Company's securities
issuable thereupon may, subject to certain conditions, be adjusted. In such
event, the Company will, at the request of the holder, issue a new Warrant
Certificate evidencing the adjustment in the Exercise Price and the number
and/or type of securities issuable upon the exercise of the Warrants; provided,
however, that the failure of the Company to issue such new Warrant Certificates
shall not in any way change, alter, or otherwise impair the rights of the holder
as set forth in the Warrant Agreement.
Upon due presentment for registration of transfer of this Warrant
Certificate at an office or agency of the Company, a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like number
of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided herein and in the Warrant
Agreement, without any charge except for any tax or other governmental charge
imposed in connection with such transfer.
Upon the exercise of less than all of the Warrants evidenced by this
Certificate, the Company shall forthwith issue to the holder hereof a new
Warrant Certificate representing such number of unexercised Warrants.
The Company may deem and treat the registered holder(s) hereof as the
absolute owner(s) of this Warrant Certificate (notwithstanding any notation of
ownership or other writing hereon made by anyone), for the purpose of any
exercise hereof, and of any distribution to the holder(s) hereof, and for all
other purposes, and the Company shall not be affected by any notice to the
contrary.
All terms used in this Warrant Certificate which are defined in the
Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.
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IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be duly executed under its corporate seal.
Dated as of September 16, 1996
AMERICAN CRAFT BREWING
INTERNATIONAL LIMITED
By:
--------------------------------------
Name:
Title:
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[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase:
[ ] _____________________ shares of Common Stock;
[ ] _____________________ Redeemable Warrants;
[ ] _____________________ shares of Common Stock together with an equal number
of Redeemable Warrants; or
[ ] _____________________ shares of Common Stock together with
_____________________ Redeemable Warrants.
and herewith tenders in payment for such securities a certified or official
bank check payable in New York Clearing House funds to the order of American
Craft Brewing International Limited in the amount of $_______________________,
all in accordance with the terms of Section 3.1 of the Representative's Warrant
Agreement dated as of September 11, 1996 between American Craft Brewing
International Limited and National Securities Corporation. The undersigned
requests that a certificate for such securities be registered in the name
of _____________________ whose address is ______________________ and
that such Certificate be delivered to __________________________ whose
address is _____________________.
Dated:
Signature________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate.)
________________________________________
(Insert Social Security or Other
Identifying Number of Holder)
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<PAGE>
[FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.2]
The undersigned hereby irrevocably elects to exercise the right,
represented by this Warrant Certificate, to purchase:
[ ] _____________________ shares of Common Stock;
[ ] _____________________ Redeemable Warrants;
[ ] _____________________ shares of Common Stock together with an equal number
of Redeemable Warrants; or
[ ] _____________________ shares of Common Stock together with
_____________________ Redeemable Warrants.
and herewith tenders in payment for such securities ________ Warrants all in
accordance with the terms of Section 3.2 of the Representative's Warrant
Agreement dated as of September 11, 1996 between American Craft Brewing
International Limited and National Securities Corporation. The undersigned
requests that a certificate for such securities be registered in the name of
_______________ whose address is _________________ and that such Certificate be
delivered to _____________________ whose address is _________________________.
Dated:
Signature________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate.)
________________________________________
(Insert Social Security or Other
Identifying Number of Holder)
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<PAGE>
[FORM OF ASSIGNMENT]
(To be executed by the registered holder if such holder
desires to transfer the Warrant Certificate.)
FOR VALUE RECEIVED ___________________ hereby sells, assigns and
transfers unto
________________________________________________________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint___________ Attorney, to
transfer the within Warrant Certificate on the books of the within-named
Company, with full power of substitution.
Dated:________________ Signature________________________________
(Signature must conform in all respects
to name of holder as specified on the
face of the Warrant Certificate.)
________________________________________
(Insert Social Security or Other
Identifying Number of Assignee)
A-6
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<PAGE>
Exhibit 10.7
AGREEMENT dated as of June 14, 1996, between American Craft
Brewing International Limited, a Bermuda company having its principal address at
Unit 1A, 1F, Vita Tower, 29 Wong Chuck Hang, Aberdeen, HONG KONG, and James L.
Ake, whose principal home address is listed beneath his signature below (the
"Executive").
The Company and the Executive desire to set forth the terms upon
which the Executive will be employed by the Company during the term of this
Agreement and agree as follows:
1. Working Relationship
1.1 Employment. The Company shall employ the Executive, and the
Executive shall serve as Executive Vice President and Chief Operating Officer,
during the term of this Agreement. The Executive shall use his best efforts,
skill and abilities to faithfully and effectively manage the Company as directed
by the Company's Board of Directors (the "Board"). The Executive shall perform
such supervisory and management functions as may be commensurate with the
Executive's position and such other duties as may from time to time reasonably
be delegated to the Executive by the Board, subject to the terms and conditions
of the organizational documents of the Company.
1.2 Term. The term of this Agreement shall commence on June 14,
1996 (the "Commencement Date"), and shall continue until the second anniversary
hereof or until terminated by the Company or the Executive as hereinafter
provided.
1.3 Full Time. The Executive shall devote his full and exclusive
business time and energies to the performance of his duties under this
Agreement, except that the Executive shall be free to devote reasonable time and
attention to public and charitable affairs and to his personal affairs,
consistent with his duties hereunder.
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2. Compensation
2.1 Base Compensation. As compensation for his services
hereunder, the Company shall pay the Executive each month, payable in arrears,
US$5,000.00 until the closing date of the Company's initial public offering of
common stock and warrants and US$6,000.00, payable in arrears, each month after
such closing date. If this Agreement is terminated, for any reason, during a
calendar month the Company shall pay the Executive on the last business day of
such month an amount equal to the amount specified in the preceding sentence
reduced by multiplying such amount by a quotient, the numerator of which is the
number of days during such month prior to the termination of this Agreement and
the denominator of which is the number of days in such month.
2.2 Bonuses and Profit Sharing. The Company and the Executive
shall negotiate in good faith the participation of the Executive in any bonus
and profit sharing plans provided that the nature and extent of such
participation shall be based upon the success of the Executive and the Company
in meeting performance goals, also to be negotiated in good faith.
2.3 1996 Stock Option Plan. The Executive shall be entitled to
participate in the Company's 1996 Stock Option Plan on the basis described
therein.
3. Fringe Benefits.
3.1 Participation in Benefit and Insurance Plans; Vacation. The
Company will pay premiums of up to $750.00 per month, in the aggregate, for
life, health and disability insurance for the Executive. During his employment
hereunder, the Executive shall be entitled to fifteen calendar days of paid
vacation and holidays in accordance with applicable policies from time to time
adopted by the Company.
3.2 Company Car. The Company will select and provide to the
Executive, free of charge, one automobile of reasonably current model and year
to be used solely by the Executive in performing his duties hereunder. The
Company will provide comprehensive collision, property damage, and public
liability insurance for such automobile and will replace such automobile in the
event it is lost, destroyed or damaged beyond repair unless the same is caused
by the Executive's negligence, recklessness or willful malfeasance. The Company
will also pay all ad valorum taxes and
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license fees for such automobile and will provide for all routine maintenance
therefore. Upon the termination of this Agreement for any reason, the Executive
shall promptly return such automobile to the Company in the same condition as
when received by the Executive, ordinary wear and tear alone excepted.
4. Business Expenses. The Company shall reimburse the Executive
for all travel, lodging, entertainment and other expenses actually incurred by
him in connection with the performance of his duties hereunder, against vouchers
and receipts or other appropriate written evidence of such expenditures, all in
accordance with the policies of the Company applicable thereto. The Executive
shall be reimbursed for coach class airfare on domestic flights and business
class airfare on international flights.
5. Termination of Agreement. Notwithstanding anything contained
in Section 2, 3 or 4 to the contrary and except as provided in Section 6, this
Agreement and all of the obligations hereunder (other than Sections 8, 9 and 10
which shall remain in full force and effect in accordance with the terms
thereof) shall immediately terminate upon the earliest to occur of the
following:
(a) 10 days after written notice of termination to the Company by
the Executive;
(b) immediately upon written notice of termination for cause to
the Executive by the Company; "cause" shall mean (i) fraud or any
other intentional wrongful act, any violation of law (excluding
minor traffic violations), conviction thereof or plea of guilty
or nolo contendre thereto, moral turpitude or other willful
misconduct by the Executive or (ii) the Executive's failure or
refusal to perform, carry out or comply with the Executive's
duties or obligations hereunder in any material respect;
(c) immediately upon written notice of termination without cause
to the Executive by the Company;
(d) upon the death or permanent disability of the Executive;
"permanent disability" shall mean the inability of the Executive
to perform his duties hereunder by reason of physical or mental
disability during any continuous period of four months or for
periods aggregating eight months during any period of twelve
consecutive months; and
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<PAGE>
(e) On the second anniversary of the date hereof; provided,
however, that the term of this Agreement shall be automatically
renewed and extended for successive two-year terms on June 14,
1998 and on each June 14 falling on a year whose number is
divisible by two without remainder unless either the Company or
the Executive gives written notice that this Agreement shall not
be renewed, not less than 20 days prior to any such June 14.
6. Termination Payment. If this Agreement is terminated pursuant
to Section 5(c) or 5(d), the Executive or his beneficiary in accordance with the
laws of descent shall be entitled to an amount equal to the product of two and
the Executive's annual compensation as determined in accordance with the first
sentence of Section 2.1 and 12 months of continuous health, life and disability
coverage, as provided in Section 3.1; provided, however, that the Executive
shall be entitled to receive such payments only if he is in full compliance with
Sections 8, 9 and 10.
7. Change in Control.
7.1 If within two years of a change in control, as defined in
Section 7.2, the Executive experiences a reduction of his responsibilities or
compensation, or is terminated, the Executive shall be entitled to receive an
amount equal to the product of two and the Executive's annual compensation as
determined in accordance with the first sentence of Section 2.1 and 12 months of
continuous health, life and disability coverage, as provided in Section 3.1.
7.2 As used in Section ,7.1 "Change in Control" means a change in
control of the Company which will be deemed to have occurred if (i) the
acquisition by any person or entity not controlled by the Company's stockholders
of more than 50% of the Company's then outstanding Stock, (ii) the sale of all
or substantially all of the Company's assets, or (iii) the merger of the Company
with or into a corporation that is not an Affiliate (other than any merger,
continuation, reorganization or similar transaction with or into American Craft
Brewing International Limited, a British Virgin Islands company).
8. Cooperation with the Company After Termination of this
Agreement. Following any notice of termination of employment by the Executive,
the Executive shall fully cooperate with the Company in all matters relating to
the winding up of his pending work on behalf of
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<PAGE>
the Company and the orderly transfer of any such pending work to other employees
of the Company as may be designated by the Company.
9. Confidentiality; Return of Property. The Executive
acknowledges that during the term of this Agreement he will receive confidential
information from the Company and subsidiaries of the Company and the respective
clients thereof (each a "Relevant Entity"), accordingly the Executive agrees
that during the term of this Agreement (as it may be extended pursuant to
Section 5(e)) and thereafter for a period of two years, the Executive and his
affiliates shall not, except in the performance of his obligations to the
Company hereunder or as may otherwise be approved in advance by the Company,
directly or indirectly, disclose or use (except for the direct benefit of the
Company) any confidential information that he may learn or has learned by reason
of his association with any Relevant Entity. Upon termination of this Agreement,
the Executive shall promptly return to the Company any and all properties,
records or papers of any Relevant Entity, that may have been in his possession
at the time of termination, whether prepared by the Executive or others,
including, but not limited to, confidential information and keys. For purposes
of this Agreement, "confidential information" includes all data, analyses,
reports, interpretations, forecasts, documents and information concerning a
Relevant Entity and its affairs, including, without limitation, with respect to
clients, products, policies, procedures, methodologies, trade secrets and other
intellectual property, systems, personnel, confidential reports, technical
information, financial information, business transactions, business plans,
prospects or opportunities, (i) that the Company reasonably believes are
confidential or (ii) the disclosure of which could be injurious to a Relevant
Entity or beneficial to competitors of a Relevant Entity, but shall exclude any
information that the Executive is required to disclose under any applicable
laws, regulations or directives of any government agency, tribunal or authority
having jurisdiction in the matter or under subpoena or other process of law. For
purposes of this Agreement, "affiliate" means any entity that, directly or
indirectly, is controlled by, or under common control with, the Executive; for
purposes of this definition, the terms "controlled by" and "under common control
with" means the possession, direct or indirect, of the power to direct or cause
the direction of the management and policies of such person, whether through the
ownership of voting stock, by contract or otherwise.
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10. Non-Competition
10.1 Non-Competition. During the term of this Agreement (as it
may be extended pursuant to Section 5(e)) and thereafter for a period of two
years the Executive agrees that he and his affiliates shall not, anywhere in
Hong Kong or any other location defined by the Company as an area in which the
Company or any of its subsidiaries (the "AmBrew Companies") has operations,
directly or indirectly, (i) engage in any activity competitive with the business
of any of the AmBrew Companies for or on behalf of himself or any other person
or entity engaged in a line of business which competes with the AmBrew
Companies; (ii) solicit or attempt to solicit the business of any clients or
customers of any of the AmBrew Companies for products that are the same or
similar to those offered, sold or produced at any time by any of the AmBrew
Companies; (iii) otherwise divert or attempt to divert from any of the AmBrew
Companies any business whatsoever; (iv) hire or attempt to hire for any business
endeavor any employee or prior employee of any of the AmBrew Companies; or (v)
interfere with any business relationship between any of the AmBrew Companies and
any other person or entity.
10.2 Severability and Reform. If any portion of Section 10.1
shall for any reason be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provisions of Section 10.1, but Section 10.1 shall be construed as if such
invalid, illegal or unenforceable provision had never been contained therein. It
is the intention of the parties hereto that if any of the restrictions or
covenants contained in Section 10.1 is held to cover a geographic area or to be
for a length of time that is not permitted by applicable law, or in any way
construed to be too broad or invalid, such provision shall not be construed to
be null, void and of no enforceable effect, but to the extent such provision
would be valid or enforceable under applicable law, a court of competent
jurisdiction shall construe and interpret or reform Section 10.1 to provide for
a covenant having the maximum enforceable geographic area, time period and other
provisions (not greater than those contained herein) as shall be valid and
enforceable under such applicable law.
11. Miscellaneous
11.1 Notices. Any notice or communication required or permitted
to be given under this Agreement shall be (a) in writing, (b) delivered by hand,
Federal Express, facsimile transmission or by registered or certified mail
postage prepaid, if to the Company, to the attention of Peter W. H. Bordeaux at
the address set forth above, or if to the Executive at his address set forth
below, or at such
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other addresses as the respective parties may designate by such notice and (c)
deemed to have been given on the date delivered by hand or sent by facsimile,
two business days after deposit with Federal Express and upon receipt after
being deposited with a governmental postal service.
11.2 Governing Law; Consent to Jurisdiction. This Agreement, and
the application or interpretation hereof, shall be governed by and construed in
accordance with the laws of New York applicable to agreements made and to be
performed entirely therein. The Executive irrevocably submits to the
non-exclusive jurisdiction of courts in New York.
11.3 Amendments. This Agreement may be amended only pursuant to
an instrument in writing signed by each of the parties hereto.
11.4 Headings. The headings in this Agreement are for convenience
only and are in no way intended to describe, interpret, define or limit the
scope, extent or intent of this Agreement or any of its provisions.
11.5 Waivers; Rights and Remedies Cumulative. The failure of any
party to pursue any remedy for breach, or to insist upon the strict performance,
of any covenant or condition contained in this Agreement shall not constitute a
waiver thereof or of any other right with respect to any subsequent breach.
Except as otherwise expressly set forth herein, rights and remedies under this
Agreement are cumulative, and the pursuit of any one right or remedy by any
party shall not preclude, or constitute a waiver of, the right to pursue any or
all other remedies. All rights and remedies provided under this Agreement are in
addition to any other rights the parties may have by law, in equity or
otherwise.
11.6 Severability. Except as otherwise provided in Section 10, if
any provision, or portion thereof, of this Agreement, or its application to any
person or entity or circumstance, shall be invalid, illegal or unenforceable to
any extent, the remainder of this Agreement, such provision and their
application shall not be affected thereby, but shall be interpreted without such
unenforceable provision or portion thereof so as to give effect, insofar as is
possible, to the original intent of the parties, and shall otherwise be
enforceable to the fullest extent permitted by law.
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11.7 Successors and Assigns. All of the covenants, terms,
provisions and agreements contained in this Agreement shall be binding upon, and
inure to the benefit of, the parties hereto and, in the case of the Company, its
respective successors and assigns.
11.8 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
11.9 No Third-Party Beneficiaries. Other than as set forth in
Section 6 above, the covenants, obligations and rights set forth in this
Agreement are not intended to benefit any third person or entity.
11.10 Entire Agreement. This Agreement embodies the entire
understanding and agreement between the parties hereto and concerning the
subject matter hereof and supersedes any and all prior negotiations,
understandings or agreements between the parties hereto with respect hereto.
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11.11 Withholding. The payment of any amount pursuant to this
Agreement shall be subject to applicable withholding and payroll taxes, and such
other deductions as may be required under the Company's employee benefit plans,
if any, or under applicable law.
AMERICAN CRAFT BREWING
INTERNATIONAL LIMITED
By: /s/ Peter W. H. Bordeaux
______________________________
Name: Peter W. H. Bordeaux
Title: Chairman of the Board of
Directors
/s/ James L. Ake
______________________________
James L. Ake
Address:
4828 Folse Dr.
______________________________
Metairie, La. 70006
______________________________
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Exhibit 10.9
RATIFICATION AND EXCHANGE AGREEMENT
This Ratification and Exchange Agreement (this "Agreement") is
dated and entered into as of the 31st day of May, 1996 by and among South China
Brewing Company Limited, a Hong Kong company (the "Brewing Company"), SCBC
Distribution Company Limited, a Hong Kong company (the "Distribution Company"),
Craft Brewing Holdings Limited, a British Virgin Islands company ("Craft"), and
each the persons listed on the signature pages hereto.
WHEREAS, the shareholders (the "Brewing Company Shareholders")
and directors (the "Brewing Company Directors") of the Brewing Company, and the
shareholders (the "Distribution Company Shareholders") and directors (the
"Distribution Company Directors") of the Distribution Company and the members
(the "Craft Members") and directors (the "Craft Directors") of Craft desire to
ratify and confirm certain matters and to rescind the Shareholders' Agreement
(the "Brewing Company Shareholders' Agreement") among the Brewing Company
Shareholders party thereto a copy of which is attached hereto as Annex A and the
Shareholders' Agreement (the "Distribution Company Shareholders' Agreement")
among the Distribution Company Shareholders party thereto a copy of which is
attached hereto as Annex B;
WHEREAS, each of the Brewing Company Shareholders listed on
Schedule I hereto (the "Brewing Company Shareholders") desires to sell and Craft
desires to purchase the number of shares of HK$1.00 each in the capital of the
Brewing Company (the "Brewing Company Shares") set forth opposite each Brewing
Company Shareholder's name in column two of Schedule I in consideration of Craft
issuing and delivering the number of shares of US$1.00 each in the capital of
Craft (the "Old Craft Shares") to each Brewing Company Shareholder set forth
opposite such Brewing Company Shareholder's name in column three of Schedule I;
WHEREAS, each of the Distribution Company Shareholders listed on
Schedule II hereto (the "Distribution Company Shareholders") desires to sell and
Craft desires to purchase the number of shares of HK$1.00 each in the capital of
the Distribution Company (the "Distribution Company Shares") set forth opposite
each Distribution Company Shareholder's name in column two of Schedule II hereto
in consideration of Craft issuing and delivering the number of Old Craft Shares
to each Distribution Company Shareholder set forth opposite such Distribution
Company Shareholder's name in column three of Schedule II;
WHEREAS, Craft desires to ratify and approve the sale by Sazerac
Company, Inc., a Louisiana corporation ("Sazerac"), to Federico Guillermo Cabo
Alvarez ("Cabo") of 7,600 Old Craft Shares, constituting all of the Old Craft
Shares beneficially owned by Sazerac;
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2
WHEREAS, to provide incentive to Pierre William Harrison Bordeaux
("Bordeaux"), who, as President of Sazerac, has considerable experience in the
alcohol beverage industry, to agree to act as Chairman of the Board of Directors
of Craft or any successor to the business of Craft incorporated in Bermuda
("Newco"), Craft desires to ratify and approve the sale by Cabo of 2,500 Old
Craft Shares beneficially owned by Cabo to Bordeaux;
WHEREAS, the Board of Directors of Craft desires to change its
name to American Craft Brewing International Limited;
WHEREAS, Craft desires to appoint Bordeaux Chairman of the Board
of Directors of Craft, to appoint James L. Ake ("Ake") Executive Vice President
and Secretary of Craft and to appoint David K. Haines ("Haines") Managing
Director for Hong Kong Operations of Craft;
WHEREAS, each of the persons having the right to acquire the Old
Craft Shares listed on Schedule III hereto (the "Hong Kong Investors") desires
to consummate the acquisition of the number of Old Craft Shares set forth
opposite each Hong Kong Investor's name in column two of Schedule III hereto and
for which such Hong Kong Investor heretofore has remitted to the Brewing Company
the amount set forth opposite such Hong Kong Investor's name in column three of
Schedule III, and Craft desires to issue such number of Old Craft Shares to each
such Hong Kong Investor;
WHEREAS, Craft desires to engage in a share split whereby each
Craft Member would receive eighty shares of US$0.01 each in the capital of Craft
(the "New Craft Shares") for each Old Craft Share held by such Craft Member;
WHEREAS, Craft desires to merge into Newco;
WHEREAS, Craft desires to borrow US$350,000 from certain
lenders; and
WHEREAS, the parties desire to take such other actions as
described herein;
NOW THEREFORE, the parties hereto agree and take corporate action
as follows:
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3
ARTICLE I
Authorization, Ratification, Confirmation and Rescission Matters Relating to the
Brewing Company
1. The undersigned Brewing Company Directors hereby:
1.1 acknowledge and confirm the allotment, dated as of
October 26, 1995, of that number of Brewing Company
Shares set forth opposite the name of each Brewing
Company Shareholder set forth on Schedule IV hereto;
1.2 approve the transfer of the number of Brewing Company
Shares set forth opposite each Brewing Company
Shareholder's name in column two of Schedule I from
each such Brewing Company Shareholder to Craft subject
to the relevant instruments of transfer and bought and
sold notes being properly stamped and confirm that the
resolution of the Board of Directors of the Brewing
Company dated December 31, 1995 authorizing the
transfer of 4,749 Brewing Company Shares to Craft was
erroneously recorded and that such transfer has not in
fact been consummated;
1.3 authorize, subject to the relevant instruments of
transfer and bought and sold notes being properly
stamped, the issuance and delivery of a share
certificate evidencing the Brewing Company Shares
being transferred to Craft pursuant to Article IV
hereof and the entry of Craft's name as the transferee
of such Brewing Company Shares in the Brewing
Company's register of members;
1.4 acknowledge and confirm that the Brewing Company's
fiscal year end shall be October 31;
1.5 acknowledge and confirm the resignation of Tengis
Limited as Secretary of the Brewing Company effective
as of May 25, 1995 and the appointment J. P. Walsh &
Co. as Secretary of the Brewing Company effective as
of June 20, 1995;
1.6 acknowledge and confirm the resignation of OnLine
Group Limited as a director of the Brewing Company
effective as of April 11, 1995;
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4
1.7 acknowledge and confirm that the registered office of
the Brewing Company, effective as of October 18, 1994,
is located at Unit A1, 1/F, Vita Tower, 29 Wong Chuk
Road, Aberdeen, Hong Kong;
1.8 acknowledge and confirm the resignation of Lunar
Holdings Limited ("Lunar") as a director of the
Brewing Company and the election of Haines pursuant to
Article 83 of the Brewing Company's Articles of
Association to fill the resulting vacancy, in each
case effective as of March 15, 1996;
1.9 elect Bordeaux Chairman of the Board of Directors of
the Brewing Company;
1.10 elect Haines Managing Director of the Brewing Company;
1.11 agree that by their execution of this Agreement all
resolutions, authorizations or approvals of the
Brewing Company Directors contained herein shall be
regarded as being resolved, authorized or approved by
the Brewing Company Directors by written resolution
pursuant to Article 107 of the Articles of Association
of the Brewing Company; and
1.12 approve this Agreement and authorize Bordeaux to
execute this Agreement on behalf of the Brewing
Company.
2. The undersigned Brewing Company Shareholders hereby:
2.1 agree that any and all bought notes and instruments of
transfer previously signed by each of them in escrow
in respect of the number of Brewing Company Shares set
forth opposite his name in column two of Schedule I
shall be regarded as null and void as of the date
hereof and shall cease to have any effect; and
2.2 rescind the Brewing Company Shareholders' Agreement
and agree that such agreement shall be void and no
longer of any force and effect.
ARTICLE II
Authorization, Ratification, Confirmation and Rescission Matters Relating to the
Distribution Company
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5
1. The undersigned Distribution Company Directors hereby:
1.1 acknowledge and confirm the allotment of October 26,
1995 of that number of Distribution Company Shares set
forth opposite the name of each Distribution Company
Shareholder set forth on Schedule V hereto;
1.2 approve the transfer of the number of Distribution
Company Shares set forth opposite each Distribution
Company Shareholder's name in column two of Schedule
II from each such Distribution Company Shareholder to
Craft subject to the relevant instruments of transfer
and bought and sold notes being properly stamped;
1.3 authorize, subject to the relevant instruments of
transfer and bought and sold notes being properly
stamped, the issuance and delivery of a share
certificate evidencing the Distribution Company Shares
being transferred to Craft pursuant to Article V
hereof and the entry of Craft's name as the transferee
of such Distribution Company Shares in the
Distribution Company's register of members;
1.4 acknowledge and confirm the resignation of Sovereign
Secretaries (HK) Limited as Secretary of the
Distribution Company effective as of July 11, 1995 and
the appointment of J. P. Walsh & Co. as Secretary of
the Distribution Company effective as of July 11,
1995;
1.5 acknowledge and confirm the election of Bordeaux,
Norman Herbert Brown, Jr., ("Brown") and John F.
Beaudette to the Board of Directors of the
Distribution Company effective as of October 16, 1995;
1.6 acknowledge and confirm the resignation of Lunar as a
director of the Distribution Company pursuant to
Article 15 of the Distribution Company's Articles of
Association and the election of Haines to fill the
resulting vacancy, in each case effective as of March
15, 1995;
1.7 acknowledge and confirm the resolutions of the
Distribution Company Directors passed at meetings of
the Board of Directors of the Distribution Company on
September 26, 1995 and January 31, 1996,
notwithstanding the fact that the directors
participated by telephone;
<PAGE>
<PAGE>
6
1.8 elect Bordeaux Chairman of the Board of Directors of
the Distribution Company;
1.9 elect Haines Managing Director of the Distribution
Company;
1.10 adopt a seal, an impression of which is affixed hereto
as Exhibit A, as the common seal of the Distribution
Company;
1.11 agree that by their execution of this Agreement, all
resolutions, authorizations or approvals of the
Distribution Company Directors contained herein shall
be regarded as being resolved, authorized or approved
by the Distribution Company Directors by written
resolution pursuant to Article 20 of the Articles of
Association of the Distribution Company; and
1.12 approve this Agreement and authorize Bordeaux to
execute this Agreement on behalf of the Distribution
Company.
2. The undersigned Distribution Company Shareholders hereby:
2.1 agree that any bought and sold notes and instruments
of transfer previously signed by them in escrow in
respect of the number of Distribution Company Shares
set forth opposite his name in column two of Schedule
II shall be recorded as null and void as of the date
hereof and shall cease to have any effect;
2.2 rescind the Distribution Company Shareholders'
Agreement and agree that such agreement shall be void
and no longer of any force and effect;
2.3 Confirm that Bordeaux's name has appeared as Peter W.
H. Bordeaux in all records and documents of the
Distribution Company and that both the names Pierre
William Harrison Bordeaux and Peter W. H. Bordeaux
refer to him as the one and same person.
ARTICLE III
Authorization, Approval and Recommendation Matters Relating to Craft
1. The undersigned Craft Directors hereby:
<PAGE>
<PAGE>
7
1.1 authorize the issuance and delivery, effective as of
the date hereof, of the Old Craft Shares (and
certificates evidencing such Shares) set forth
opposite each Brewing Company Stockholder's name in
column three of Schedule I in exchange for the
transfer and delivery of all of the Brewing Company
Shares in column two of Schedule I and the entry of
such Brewing Company Shareholder's name as the holder
of such Old Craft Shares in Craft's register of
members;
1.2 authorize the issuance and delivery, effective as of
the date hereof, of the Old Craft Shares (and
certificates evidencing such Shares) set forth
opposite each Distribution Company Stockholder's name
in column three of Schedule II in exchange for the
transfer and delivery of all of the Distribution
Company Shares in column two of Schedule II and the
entry of such Distribution Company Shareholder's name
as the holder of such Old Craft Shares in Craft's
register of members;
1.3 ratify and approve, effective as of the date hereof
immediately following consummation of the share
transfers authorized in Sections 1.1 and 1.2 of this
Article III, the sale by Sazerac of 7,600 Old Craft
Shares to Cabo and sale by Cabo of 2,500 Old Craft
Shares to Bordeaux pursuant to that certain agreement
among Sazerac, Cabo and Bordeaux dated as of June 1,
1995 attached hereto as Exhibit B;
1.4 authorize the issuance and delivery to the Hong Kong
Investors of the Old Craft Shares set forth opposite
each Hong Kong Investor's name in column two of
Schedule III and for which each Hong Kong Investor has
remitted the amount set forth opposite such Hong Kong
Investor's name in column three of Schedule III;
1.5 resolve that the Memorandum of Association and
Articles of Association of Craft be amended to change
the name of the company to American Craft Brewing
International Limited;
1.6 resolve that the Memorandum of Association of Craft be
amended by deleting Clause 9 in its entirety and
replacing it with the following;
"9. The authorized capital is made up of one class
and one series of shares divided into 5,000,000
shares of US$0.01 par value."
<PAGE>
<PAGE>
8
1.7 resolve that immediately upon the effective date of
Articles IV and V, each Old Craft Share shall be split
into eighty (80) shares, US$0.01 par value of Craft
("New Craft Shares") so that each Craft Member will
receive the number of New Craft Shares set forth
opposite such Craft Member's name on Schedule VI
hereto and that any Old Craft Shares previously issued
shall be canceled and void as of such effective date
and shall no longer represent any right, title or
interest in any capital stock of Craft;
1.8 accept the resignation of Lunar as a director of Craft
pursuant to Article 85 of the Articles of Association
of Craft and the election of Haines pursuant to
Article 86 of the Articles of Association of Craft to
fill the resulting vacancy, in each case effective as
of March 15, 1995;
1.9 elect Bordeaux Chairman of the Board of Directors of
Craft;
1.10 elect Ake Executive Vice President and Secretary of
Craft;
1.11 elect Haines Managing Director for Hong Kong
Operations of Craft;
1.12 authorize and approve the merger (the "Merger") of
Craft into Newco pursuant to which each Craft member
will receive one share of Newco for each New Craft
Share held by such Craft Member and resolve that the
Merger is in the best interest of the Craft Members;
1.13 approve the form, terms and provisions of the
Agreement and Plan of Merger, between Craft and Newco
attached hereto as Exhibit C (the "Merger Agreement")
and authorize the Chairman of the Board of Craft, the
Executive Vice President and Secretary of Craft and
the Managing Director for Hong Kong Operations of
Craft (the "Authorized Officers"), and each of their
designees, to execute and deliver, in the name and on
behalf of Craft, the Merger Agreement in substantially
the form attached hereto, with such additions,
deletions or changes as the Authorized Officer
executing the same shall approve (the execution
thereof by any Authorized Officer to be conclusive
evidence of his approval of any such additions,
deletions or changes);
1.14 authorize the Authorized Officers and their designees
to consummate the Merger in accordance with the Merger
<PAGE>
<PAGE>
9
Agreement, and in connection therewith, to execute,
deliver, acknowledge, file and record, as appropriate,
any and all documents and instruments in the name of
and on behalf of Craft and, if so required, under its
corporate seal or otherwise as they shall deem
necessary or advisable, including but not limited to
filing of the appropriate certificate of merger in
accordance with the laws of the British Virgins
Islands;
1.15 authorize the Authorized Officers, in the name and on
behalf of Craft, to pay all necessary, appropriate or
advisable fees incurred by Craft or any of its
directors, officers or agents in connection with the
Merger and to execute, acknowledge, deliver and file
all statements, applications, certificates,
undertakings, notices, consents and other agreements
with appropriate persons (including governmental
agencies) and to appear before officials of any
foreign or domestic governmental agencies,
authorities, commissions or other similar bodies in
connection with the Merger;
1.16 adopt the form of any and all resolutions required by
such agencies, authorities, commissions or similar
bodies to be adopted in connection with the Merger;
and the Secretary of Craft shall evidence such
adoption by filing with the records of Craft copies of
such resolutions, which shall thereupon be deemed to
have been duly adopted by the Board of Directors of
Craft;
1.17 authorize the Authorized Officers to execute and
deliver any and all agreements, instruments and
documents and to do any and all acts and things, and
to pay such expenses and taxes, including without
limitation, legal fees and expenses, as they, or any
of them, deem necessary or advisable to carry out
fully the Merger Agreement (and the execution and
delivery thereof) and the Merger;
1.18 authorize the Authorized Officers, by a written
power-of-attorney, to authorize any other officer,
employee, agent or counsel of Craft to take any action
and to execute and deliver any agreement, instrument
or other document referred to in the foregoing
resolutions in place of or on behalf of such officer,
with full power as if such officer were taking such
action himself;
1.19 recommend that the Craft Members' vote for approval
and adoption of the Merger Agreement and the Merger;
<PAGE>
<PAGE>
10
1.20 ratify and approve the bridge financing (the "Bridge
Financing") provided by Harry Allen Friedberg, John
Arvanitis, Mark John Gallagher, Mark Youts, Noah
Shaffer and Long Term Partners, Ltd. (collectively,
the "Bridge Lenders") pursuant to which the Bridge
Lenders have loaned or will lend, in the aggregate,
US$350,000 to Craft in return for the issuance of
Redeemable Convertible Notes, Series A (the
"Redeemable Convertible Notes") in favor of each of
the Bridge Lenders;
1.21 approve the form, terms and provisions of (i) purchase
agreements between Craft, on the one hand, and each of
the Bridge Lenders, on the other hand, attached hereto
as Exhibits D, E, F G, H and I (the "Purchase
Agreements") and (ii) the Redeemable Convertible Notes
attached hereto as Exhibits J, K, L, M, N and O and
approve and authorize the execution and delivery of,
in the name of and on behalf of Craft, the Purchase
Agreements and the Redeemable Convertible Notes by the
Authorized Officers in substantially the form attached
hereto, with such additions and deletions or changes
as the Authorized Officers executing the same shall
approve (the execution thereof by any Authorized
Officer to be conclusive evidence of his approval of
any such additions, deletions or changes);
1.22 authorize the Authorized Officers to execute and
deliver any and all agreements, instruments and
documents and to do any and all acts and things, and
to pay such expenses and taxes, including without
limitation legal fees and expenses, as they, or any of
them, deem necessary or advisable to carry out fully
the Purchase Agreements and the Redeemable Convertible
Notes;
1.23 authorize the Authorized Officers, by a written power
of attorney, to authorize any other officer, employee,
agent or counsel of Craft to take any action and to
execute and deliver any agreement, instrument or other
document referred to in the foregoing resolutions in
place of or on behalf of such officer, with full power
as if such officer were taking such action himself;
1.24 reserve for issuance pursuant to the terms of the
Convertible Notes and the warrants issued pursuant to
the terms thereof 500,000 New Craft Shares; and
1.25 approve this Agreement and authorize Bordeaux to
execute this Agreement on behalf of Craft.
<PAGE>
<PAGE>
11
2. The undersigned members of Craft hereby:
2.1 agree that any and all share certificates purporting
to evidence Old Craft Shares in their hands prior to
the date of this Agreement which were not considered
duly issued due to lack of consideration given shall
be delivered to Craft for cancellation upon execution
of this Agreement and are null and void and do not
represent any right, title or interest in any Old
Craft Shares;
2.2 authorize the Merger of Craft into Newco pursuant to
which the Craft Members would receive one share of
Newco for each New Craft Share and approve the form,
terms and provisions of the Merger Agreement; and
2.3 agree that any and all stock certificates representing
Old Craft Shares held by each Craft Member shall be
delivered to Craft upon execution of this Agreement
and shall be canceled and void as of the effective
date of Articles IV and V and shall no longer
represent any right, title or interest in any capital
stock of Craft.
ARTICLE IV
The Brewing Company Exchange
1. Each of the Brewing Company Shareholders hereby agrees to sell
to Craft, and Craft hereby, agrees to purchase and acquire, the Brewing Company
Shares set forth opposite each Brewing Company Shareholder's name in column two
of Schedule I, and in consideration for each such purchase and acquisition,
Craft shall issue and deliver the number of Old Craft Shares set forth opposite
such Brewing Company Shareholder's name in column three of Schedule I to each
such Brewing Company Shareholder.
2. Each of the Brewing Company Shareholders and Craft agrees
that:
2.1 completion of the sale and purchase of the number of
the Brewing Company Shares set forth opposite each
Brewing Company Shareholder's name in column two of
Schedule I pursuant to paragraph 1 above shall take
place upon execution of this Agreement when all of the
following conditions shall have been satisfied by each
such Brewing Company Shareholder and Craft:
(i) each Brewing Company Shareholder shall have
delivered a duly executed bought note and
instrument of transfer in favor of
<PAGE>
<PAGE>
12
Craft in respect of the number of the Brewing
Company Shares set forth opposite his name in
column two of Schedule I;
(ii) a declaration of trust duly executed by Lunar
in favor of Craft in respect of one Brewing
Company Share shall have been delivered to
Craft; and
(iii) any and all share certificates representing
Brewing Company Shares, other than Certificate
No. 4 held by Lunar, held by such Brewing
Company Shareholder shall have been delivered
to Craft;
2.2 any stamp duty payable in connection with the sale and
purchase of the number of the Brewing Company Shares
set forth opposite each Brewing Company Shareholder's
name in column two of Schedule I pursuant to this
Article IV hereof shall be borne by Craft; and
2.3 upon the relevant instruments of transfer and bought
and sold notes being properly stamped, Craft shall
tender to the Brewing Company all such share
certificates delivered by the Brewing Company
Shareholders under paragraph 2.1(iii) above for
cancellation together with the relevant duly stamped
instruments of transfer and bought and sold notes
whereupon Craft shall be issued a certificate in
respect of 4,749 Brewing Company Shares, thereafter,
each such Brewing Company Shareholder shall have no
right, title or interest in any Brewing Company
Shares.
ARTICLE V
The Distribution Company Exchange
1. Each of the Distribution Company Shareholders hereby agrees to
sell to Craft, and Craft hereby agrees to purchase and acquire, the Distribution
Company Shares set forth opposite each Distribution Company Shareholder's name
in column two of Schedule II, and in consideration for each such purchase and
acquisition, Craft shall issue and deliver the number of Craft Shares set forth
opposite such Distribution Company Shareholder's name in column three of
Schedule II to each such Distribution Company Shareholder.
2. Each of the Distribution Company Shareholders and Craft agrees
that:
2.1 completion of the sale and purchase of the number of the
Distribution Company Shares set forth opposite each
Distribution Company Shareholder's name in column two of
Schedule II
<PAGE>
<PAGE>
13
pursuant to paragraph 1 above shall take place upon
execution of this Agreement by each such Distribution
Company Shareholder and Craft when all of the
following conditions shall have been satisfied:
(i) each Distribution Company Shareholder shall
have delivered to Craft a duly executed bought
note and instrument of transfer in favor of
Craft in respect of the number of the
Distribution Company Shares set forth opposite
his name in column two of Schedule II;
(ii) a declaration of trust duly executed by Lunar
in favor of Craft in respect of one
Distribution Company Share shall have been
delivered to Craft; and
(iii) any and all share certificates representing
Distribution Company Shares held by each such
Distribution Company Shareholder shall have
been delivered to Craft;
2.2 any stamp duty payable in connection with the sale and
purchase of the number of the Distribution Company
Shares set forth opposite each such Distribution Company
Shareholder's name in column two of Schedule II pursuant
to this Article V hereof shall be borne by Craft; and
2.3 upon the relevant instruments of transfer and bought and
sold notes being properly stamped Craft shall tender to
the Distribution Company all such share certificates
delivered by the Distribution Company Shareholders under
paragraph 2.1(iii) above for cancellation together with
the relevant duly stamped instruments of transfer and
bought and sold notes where upon Craft shall be issued a
certificate in respect of 249 Distribution Company
Shares and Lunar shall be issued a certificate in
respect of one Distribution Company Share. Thereafter,
each such Distribution Company Shareholder shall have no
right title or interest in any Distribution Company
Shares.
<PAGE>
<PAGE>
14
ARTICLE VI
Effectiveness of Agreement
This Agreement shall become effective when (i) counterparts
hereof shall have been executed and delivered by persons entitled to receive a
majority of the Old Craft Shares issued pursuant to Article III, Article IV and
Article V and by each of the Craft Directors, the Brewing Company Directors and
the Distribution Company Directors and (ii) a majority of the Old Craft Shares
authorized to be issued under Article III, Article IV and Article V have been
issued pursuant to such Articles to the person or persons described herein.
ARTICLE VII
Miscellaneous
1. This Agreement embodies the complete agreement and
understanding among the parties hereto with respect to the
subject matter hereof and supersedes any prior understandings,
agreements, resolutions or representations, written or oral,
that may have related to the subject matter in any way. Each
of the parties hereto confirms and acknowledges that he is not
entitled to any shares of capital stock in the Brewing
Company, the Distribution Company or Craft or any interest
therein other than pursuant to this Agreement and all previous
documents signed by any such party with respect to any of the
matters referred to herein shall cease to have any effect
unless otherwise provided herein.
2. This Agreement may be executed in counterparts, each of which
shall be an original and all of which shall constitute one and
the same instrument when a counterpart hereof has been signed
by each of the parties hereto.
3. This Agreement shall be governed by the laws of the State of
New York, but without giving effect to applicable principles
of conflicts of law to the extent that the application of the
laws of another jurisdiction would be required thereby.
4. The article headings in this Agreement are for convenience of
reference only and shall in no event affect the meaning or
interpretation of this Agreement.
<PAGE>
<PAGE>
15
5. In this Agreement, words importing the singular include the
plural and vice versa, words importing a gender include every
gender and references to persons include bodies corporate or
unincorporate.
IN WITNESS WHEREOF, this Agreement has been executed and
delivered by the parties hereto as of the date set forth above.
SOUTH CHINA BREWING COMPANY LIMITED
/s/ Pierre William Harrison Bordeaux
______________________________________________
By: Pierre William Harrison Bordeaux
SCBC DISTRIBUTION COMPANY LIMITED
/s/ Pierre William Harrison Bordeaux
______________________________________________
By: Pierre William Harrison Bordeaux
CRAFT BREWING HOLDINGS LIMITED
/s/ Pierre William Harrison Bordeaux
______________________________________________
By: Pierre William Harrison Bordeaux
SAZERAC COMPANY, INC.
/s/ Pierre William Harrison Bordeaux
______________________________________________
By: Pierre William Harrison Bordeaux
/s/ Federico Guillermo Cabo Alvarez
______________________________________________
Federico Guillermo Cabo Alvarez
/s/ David K. Haines
______________________________________________
By: David K. Haines
<PAGE>
<PAGE>
16
BPW HOLDING, LTD.
/s/ John F. Beaudette
______________________________________________
By: John F. Beaudette
/s/ Norman Herbert Brown, Jr.
______________________________________________
Norman Herbert Brown, Jr.
/s/ Harry Friedberg
______________________________________________
Harry Friedberg
/s/ Jonathan Julian Ashby Gurnsey
______________________________________________
Jonathan Julian Ashby Gurnsey
/s/ Sheldon Kasowitz
______________________________________________
Sheldon Kasowitz
/s/ Michael MacKenzie
______________________________________________
Michael MacKenzie
/s/ Jeremy Muller
______________________________________________
Jeremy Muller
/s/ P.M.H. Carr-Smith
______________________________________________
P.M.H. Carr-Smith
/s/ James Craig Chapman
______________________________________________
James Craig Chapman
/s/ Steven Marzo
______________________________________________
Steven Marzo
/s/ Danny L. Quant
______________________________________________
Danny L. Quant
/s/ Rajesh Sharma
______________________________________________
Rajesh Sharma
/s/ Philip Teed
______________________________________________
Philip Teed
/s/ Susan Sisko Teed
______________________________________________
Susan Sisko Teed
/s/ Geoffrey Carolan
______________________________________________
Geoffrey Carolan
/s/ David Cody
______________________________________________
David Cody
/s/ Thomas D. Schroeder
______________________________________________
Thomas D. Schroeder
/s/ C. Porter Shutt
______________________________________________
C. Porter Shutt
/s/ Niall Shiner
______________________________________________
Niall Shiner
/s/ Darryl Tang
______________________________________________
Darryl Tang
/s/ Michael Novogratz
______________________________________________
Michael Novogratz
/s/ Cyril Yap
______________________________________________
Cyril Yap
/s/ Alvin Khoo
______________________________________________
Alvin Khoo
/s/ Eric Green
______________________________________________
Eric Green
/s/ Peter Hirschman
______________________________________________
Peter Hirschman
/s/ Adam Aston
______________________________________________
Adam Aston
/s/ Joel Abramson
______________________________________________
Joel Abramson
<PAGE>
<PAGE>
17
Schedule I
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
South China Brewing Craft Brewing Holdings
Company Limited Shares Limited Shares
- -----------------------------------------------------------------------------------------
(1) (2) (3)
<S> <C> <C>
Sazerac Company, Inc. 1,520 3,800
Federico Guillermo Cabo Alvarez 1,520 3,800
Lunar Holdings Limited 949 2,375
BPW Holding, Ltd. 380 950
Norman Herbert Brown, Jr. 380 950
</TABLE>
<PAGE>
<PAGE>
18
Schedule II
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
SCBC Distribution Company Craft Brewing Holdings
Limited Shares Limited Shares
- -------------------------------------------------------------------------------------------
(1) (2) (3)
<S> <C> <C>
Sazerac Company, Inc. 80 3,800
Federico Guillermo Cabo Alvarez 80 3,800
Lunar Holdings Limited 49 2,375
BPW Holdings, Ltd. 20 950
Norman Herbert Brown, Jr. 20 950
</TABLE>
<PAGE>
<PAGE>
19
Schedule III
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Hong Kong Investor Craft Brewing Holdings Consideration
Limited Shares
- -----------------------------------------------------------------------------------------
(1) (2) (3)
<S> <C> <C>
Harry Friedberg 135 US$32,400
Jonathan Julian Ashby Gurnsey 100 US$24,000
Sheldon Kasowitz 100 US$24,000
Michael MacKenzie 90 US$21,600
Jeremy Muller 90 US$21,600
P.M.H. Carr-Smith 50 US$12,000
James Craig Chapman 50 US$12,000
Steven Marzo 50 US$12,000
Danny L. Quant 50 US$12,000
Rajesh Sharma 50 US$12,000
Philip & Susan Sisko Teed 50 US$12,000
Geoffrey Carolan 45 US$10,800
David Cody 45 US$10,800
Thomas D. Schroeder 45 US$10,800
C. Porter Shutt 45 US$10,800
Niall Shiner 45 US$10,800
Darryl Tang 45 US$10,800
Michael Novogratz 40 US$9,600
Cyril Yap 40 US$9,600
Alvin Khoo 25 US$6,000
Eric Green 20 US$4,800
Peter Hirschman 20 US$4,800
Adam Aston 15 US$3,600
Joel Abramson 5 US$1,200
</TABLE>
<PAGE>
<PAGE>
20
Schedule IV
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
South China Brewing Company Limited
Shares Allotted on October 26, 1995
- -----------------------------------------------------------------------------------------
<S> <C>
Sazerac Company, Inc. 1,519
Francisco Guillermo Cabo Alvarez 1,519
Lunar Holdings Limited 948
BPW Holding, Ltd. 380
Norman Herbert Brown, Jr. 379
</TABLE>
<PAGE>
<PAGE>
21
Schedule V
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
SCBC Distribution Company Limited
Shares Allotted on October 26, 1995
- --------------------------------------------------------------------------------------
<S> <C>
Francisco Guillermo Cabo Alvarez 80
Sazerac Company, Inc. 79
Lunar Holdings Limited 49
BPW Holding, Ltd. 20
Norman Herbert Brown, Jr. 20
</TABLE>
<PAGE>
<PAGE>
22
Schedule VI
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Craft Brewing Holdings Limited Shares
Craft Brewing Holdings Limited Members Allotted Upon Share Split
- -----------------------------------------------------------------------------------------
<S> <C>
Federico Guillermo Cabo Alvarez 1,016,000
Lunar Holdings Limited 380,000
BPW Holding LLC 152,000
Norman Herbert Brown, Jr. 152,000
Peter W. H. Bordeaux 200,000
Harry Friedberg 10,800
Jonathan Julian Ashby Gurnsey 8,000
Sheldon Kasowitz 8,000
Michael MacKenzie 7,200
Jeremy Muller 7,200
P.M.H. Carr-Smith 4,000
James Craig Chapman 4,000
Steven Marzo 4,000
Danny L. Quant 4,000
Rajesh Sharma 4,000
Philip & Susan Sisko Teed 4,000
Geoffrey Carolan 3,600
David Cody 3,600
Thomas D. Schroeder 3,600
C. Porter Shutt 3,600
Niall Shiner 3,600
Darryl Tang 3,600
Michael Novogratz 3,200
Cyril Yap 3,200
Alvin Khoo 2,000
Eric Green 1,600
Peter Hirschman 1,600
Adam Aston 1,200
Joel Abramson 400
</TABLE>
<PAGE>
<PAGE>
Exhibit 10.10
American Craft Brewing International Limited
Unit A1, 1/F Vita Tower
29 Wong Chuk Hang
Aberdeen, Hong Kong
May 31, 1996
Mark Youds
_______________________
_______________________
(Address)
_______________________
_______________________
Dear Sir:
American Craft Brewing International Limited, a British Virgin
Islands company (the "Company"), or its successor, hereby agrees to issue and
sell, and Mark Youds (the "Purchaser"), hereby agrees to purchase (the "Issuance
and Sale") US$20,000 principal amount (the "Principal Amount") of a Redeemable
Convertible Note. "Redeemable Convertible Note" shall mean a note issued by the
Company or its successor in the form attached hereto as Exhibit A with the
following terms: interest on the Redeemable Convertible Note shall accrue at the
rate of 12% per annum; provided, that if the Company, or its successor, does not
consummate an initial public offering of its shares of capital stock, par value
US$0.01 per share (the "Shares"), in the United States (the "IPO") prior to
September 1, 1996, interest on the Redeemable Convertible Note shall accrue at
the rate of 14% per annum for the period from but excluding September 1, 1996 to
but including September 1, 1997 (the "Conversion Date"); provided further that
if the IPO is not consummated prior to the Conversion Date, the Purchaser shall
have the right to convert the Redeemable Convertible Note into that number of
Shares so that immediately after such conversion the Purchaser shall hold 0.5%
of the issued and outstanding Shares. Upon the date of the consummation of the
IPO (the "Closing Date"), the Purchaser shall have the right to convert the
Redeemable Convertible Note into that number of Shares equal to the quotient
obtained by dividing the Principal Amount by the product of 0.5 and
<PAGE>
<PAGE>
2
the price per Share of the price to public in the IPO (the "IPO Price"). In
addition, upon the Closing Date, the Company or its successor shall issue to the
Purchaser a redeemable warrant (the "Redeemable Warrant"), in the form attached
to the Convertable Note as Exhibit A, entitling the Purchaser to purchase up to
the number of Shares issued to it in accordance with the immediately preceding
sentence at a price per Share equal to the product of 1.5 and the IPO Price on
one or more occasions during the period commencing thirteen months (the
"Commencement Date") from the date of the prospectus relating to the IPO (the
"Effective Date") and terminating on the fifth anniversary of the Commencement
Date. Commencing 18 months after the Effective Date, the Company or its
successor shall be entitled to redeem the Redeemable Warrant at a price equal to
the product of the number of Shares into which the Redeemable Warrant is
convertable and US$0.10 on 30 days prior written notice to the holder of the
Redeemable Warrant if the per Share closing bid quotation on the Nasdaq SmallCap
Market equals or exceeds 160% of the IPO Price for any 20 trading days within a
period of 30 consecutive trading days, ending on the fifth trading day prior to
the notice of redemption. The Redeemable Convertible Note shall mature on the
earlier of the Closing Date and the Conversion Date and shall be redeemable by
the Company or its successor at any time.
2. Lock-Up Agreement. The Purchaser agrees that, for a period of
six months following the effective date of the Company's or its successor's
registration statement on Form S-1 relating to the IPO, he will not, without the
prior written consent of the Company, or its successor, and the representative
of the underwriter(s) of the IPO, directly or indirectly, issue, offer, agree to
offer to sell, sell, grant an option for the purchase or sale of, transfer,
pledge, assign, hypothecate, distribute or otherwise encumber or dispose of the
Redeemable Convertible Note, the Shares or the Redeemable Warrant (or the Shares
underlying the Redeemable Warrant) or options, rights, warrants or other
securities convertible into exchangeable or exercisable for or evidencing any
right to purchase or subscribe for the Redeemable Convertible Note, the Shares
or the Redeemable Warrant (or the Shares underlying the Redeemable Warrant)
(whether or not beneficially owned), or any beneficial interest therein, other
than (i) Shares transferred pursuant to bona fide gifts where the transferee
agrees in writing to be similarly bound or (ii) Shares transferred through the
laws of descent.
3. Registration and Transfer of the Redeemable Convertible Note,
the Shares or the Redeemable Warrant (or the Shares underlying the Redeemable
Warrant). The Company shall not register any transfer of the Redeemable
Convertible Note, the Shares or the Redeemable Warrant (or the Shares underlying
the Redeemable Warrant) unless there are effective registrations under the
Securities Act of 1933 (the "Act"), pursuant to Regulation S promulgated under
the Act ("Regulation S") or pursuant to another exemption under the Act.
4. Resale of the Redeemable Convertible Note, the Shares or the
Redeemable Warrant (or the Shares underlying the Redeemable Warrant). The
Purchaser shall not resell or otherwise transfer either the Redeemable
Convertible Note, the Shares or the Redeemable Warrant (or the Shares underlying
the Redeemable Warrant) unless (i) there are effective registrations under the
Act, pursuant to Regulation S or pursuant to another exemption under the Act and
(ii) if requested by the Company, or its successor, the Purchaser delivers to
the
<PAGE>
<PAGE>
3
Company an opinion of counsel, in form and substance satisfactory to counsel for
the Company, to the effect that such sale is in conformance with the
registration requirements of the Act, pursuant to Regulation S or pursuant to
another exemption under the Act.
5. Legend on Share Certificates. The certificates evidencing the
Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF A LETTER AGREEMENT, DATED AS OF MAY 31, 1996
BETWEEN AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND MARK
YOUDS, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE
THEREWITH. A COPY OF SUCH AGREEMENT IS ON FILE AT THE OFFICE OF
THE EXECUTIVE VICE PRESIDENT AND SECRETARY OF AMERICAN CRAFT
BREWING INTERNATIONAL LIMITED.
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). THESE
SHARES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT, PURSUANT TO REGULATION S PROMULGATED THEREUNDER OR PURSUANT
TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE ACT."
6. Representations and Warranties. The Purchaser hereby
represents and warrants to, and expressly agrees with, the Company that:
(a) he is not a U.S. person (as defined in Regulation S) and is
not acquiring the Redeemable Convertible Note, the Shares or the
Redeemable Warrant (or the Shares underlying the Redeemable Warrant) for
the account or benefit of any U.S. person;
(b) the Redeemable Convertible Note, the Shares and the
Redeemable Warrant (and the Shares underlying the Redeemable Warrant)
will be acquired by him for his own account, for investment purposes
only, and not with a view to the resale or distribution thereof, unless
there are effective registrations under the Act, pursuant to Regulation
S or pursuant to another exemption under the Act;
(c) he is not, and does not intend to become, a "distributor" (as
defined in Regulation S) of the Redeemable Convertible Note, the Shares
or the Redeemable Warrant (or the Shares underlying the Redeemable
Warrant) provided that if he does become a distributor, he shall
promptly notify the Company, or its successor, and he shall comply with
all applicable requirements of Regulation S;
(d) he is an "accredited investor" (as defined in Regulation D
promulgated under the Act);
<PAGE>
<PAGE>
4
(e) he is a sophisticated investor with such knowledge and
experience in business and financial matters as will enable him to
evaluate the merits and risks of an investment in the Company; and
(f) he understands that the Redeemable Convertible Note, the
Shares and the Redeemable Warrant (and the Shares underlying the
Redeemable Warrant), have not been, and will not be, registered under
the Act or any U.S. state securities laws, and are being offered and
sold in reliance upon U.S. federal and state exemptions and the
Purchaser recognizes that reliance upon such exemptions is based in part
upon his representations contained herein.
7. Understanding Among the Parties. The determination of the
Purchaser to enter into this Agreement and to purchase the Redeemable
Convertible Note, the Shares and the Redeemable Warrant (and the Shares
underlying the Redeemable Warrant) has been made by the Purchaser independently
of the Company and its subsidiaries and their respective representatives, agents
and employees and independently of any statement or opinion as to the
advisability of executing this Agreement or as to the properties, business,
prospects or conditions (financial or otherwise) of the Company, which may have
been made or given by the Company or any of its subsidiaries or their respective
representatives, agents or employees. The Purchaser further acknowledges and
agrees that he will acquire the Redeemable Convertible Note, the Shares and the
Redeemable Warrant (and the Shares underlying the Redeemable Warrant) "as is,"
without any express or implied representations or warranties.
8. Modification or Waiver in Writing. This Agreement shall not be
modified or amended except by a writing signed by both of the parties hereto. No
waiver of this Agreement or of any promises, obligations or conditions contained
herein shall be valid unless in writing and signed by the party against whom
said waiver is to be enforced and any party hereto that shall be adversely
affected by said waiver. No delay on the part of any person in exercising any
right, remedy or power hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any person of such right, remedy or power, nor any
single or partial exercise of any such right, remedy or power, preclude any
further exercise thereof or the exercise of any other right, remedy or power.
9. Survival. All representations, warranties, covenants and
agreements shall survive the execution and delivery of this Agreement, the
Redeemable Convertible Note and the Redeemable Warrant and the consummation of
the transactions contemplated hereby and thereby, regardless of any
investigation made by any party hereto or on behalf of such party.
10. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto, their affiliates and their
respective predecessors, successors, assigns, heirs, executives, administrators
and personal representatives, and each of them, whether so expressed or not.
This Agreement is not assignable by the Purchaser, and any attempted assignment
of this Agreement without the prior written consent of the Company, or its
successor, and any attempted assignment of this Agreement, without such prior
written consent, shall be void. This Agreement shall inure to the benefit of and
constitute an obligation of any successor to the Company's business.
<PAGE>
<PAGE>
5
11. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable under any applicable law, rule or regulation
in any jurisdiction, such provision will be ineffective only to the extent of
such invalidity, illegality or unenforceability in such jurisdiction, without
invalidating the remainder of this Agreement in such jurisdiction or any
provision hereof in any other jurisdiction.
12. Entire Agreement. This Agreement embodies the complete
agreement and understanding among the parties with respect to the subject matter
hereof and supersedes any prior understandings, agreements or representations,
written or oral, which may have related to the subject matter hereof in any way.
13. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be an original and both of which shall
constitute one and the same instrument when a counterpart hereof has been signed
by both parties hereto.
14. Governing Law. This Agreement, the Redeemable Convertible
Note and the Redeemable Warrant shall be governed by the laws of New York, but
without giving effect to applicable principles of conflicts of law to the extent
that the application of the laws of another jurisdiction would be required
thereby.
15. Headings. The section headings in this Agreement are for
convenience of reference only and shall in no event affect the meaning or
interpretation of this Agreement.
If the terms of this Agreement have been correctly set forth
herein, please confirm this by signing and returning to us the enclosed copy of
this Agreement.
Very truly yours,
AMERICAN CRAFT BREWING
HOLDINGS LIMITED
by
/s/ David K. Haines
_____________________________
David K. Haines
Managing Director for Hong Kong
Agreed to and accepted this
28th day of May 1996.
/s/ Mark Youds
____________________________
Mark Youds
<PAGE>
<PAGE>
Exhibit 10.11
American Craft Brewing International Limited
Unit A1, 1/F Vita Tower
29 Wong Chuk Hang
Aberdeen, Hong Kong
May 31, 1996
John Arvanitis
(Address)
Dear Sir:
American Craft Brewing International Limited, a British Virgin
Islands company (the "Company"), or its successor, hereby agrees to issue and
sell, and John Arvanitis (the "Purchaser"), hereby agrees to purchase (the
"Issuance and Sale") US$40,000 principal amount (the "Principal Amount") of a
Redeemable Convertible Note. "Redeemable Convertible Note" shall mean a note
issued by the Company or its successor in the form attached hereto as Exhibit A
with the following terms: interest on the Redeemable Convertible Note shall
accrue at the rate of 12% per annum; provided, that if the Company, or its
successor, does not consummate an initial public offering of its shares of
capital stock, par value US$0.01 per share (the "Shares"), in the United States
(the "IPO") prior to September 1, 1996, interest on the Redeemable Convertible
Note shall accrue at the rate of 14% per annum for the period from but excluding
September 1, 1996 to but including September 1, 1997 (the "Conversion Date");
provided further that if the IPO is not consummated prior to the Conversion
Date, the Purchaser shall have the right to convert the Redeemable Convertible
Note into that number of Shares so that immediately after such conversion the
Purchaser shall hold 1% of the issued and outstanding Shares. Upon the date of
the consummation of the IPO (the "Closing Date"), the Purchaser shall have the
right to convert the Redeemable Convertible Note into that number of Shares
equal to the quotient obtained by dividing the Principal Amount by the product
of 0.5 and the
<PAGE>
<PAGE>
2
price per Share of the price to public in the IPO (the "IPO Price"). In
addition, upon the Closing Date, the Company or its successor shall issue to the
Purchaser a redeemable warrant (the "Redeemable Warrant"), in the form attached
to the Convertable Note as Exhibit A, entitling the Purchaser to purchase up to
the number of Shares issued to it in accordance with the immediately preceding
sentence at a price per Share equal to the product of 1.5 and the IPO Price on
one or more occasions during the period commencing thirteen months (the
"Commencement Date") from the date of the prospectus relating to the IPO (the
"Effective Date") and terminating on the fifth anniversary of the Commencement
Date. Commencing 18 months after the Effective Date, the Company or its
successor shall be entitled to redeem the Redeemable Warrant at a price equal to
the product of the number of Shares into which the Redeemable Warrant is
convertable and US$0.10 on 30 days prior written notice to the holder of the
Redeemable Warrant if the per Share closing bid quotation on the Nasdaq SmallCap
Market equals or exceeds 160% of the IPO Price for any 20 trading days within a
period of 30 consecutive trading days, ending on the fifth trading day prior to
the notice of redemption. The Redeemable Convertible Note shall mature on the
earlier of the Closing Date and the Conversion Date and shall be redeemable by
the Company or its successor at any time.
2. Lock-Up Agreement. The Purchaser agrees that, for a period of
six months following the effective date of the Company's or its successor's
registration statement on Form S-1 relating to the IPO, he will not, without the
prior written consent of the Company, or its successor, and the representative
of the underwriter(s) of the IPO, directly or indirectly, issue, offer, agree to
offer to sell, sell, grant an option for the purchase or sale of, transfer,
pledge, assign, hypothecate, distribute or otherwise encumber or dispose of the
Redeemable Convertible Note, the Shares or the Redeemable Warrant (or the Shares
underlying the Redeemable Warrant) or options, rights, warrants or other
securities convertible into exchangeable or exercisable for or evidencing any
right to purchase or subscribe for the Redeemable Convertible Note, the Shares
or the Redeemable Warrant (or the Shares underlying the Redeemable Warrant)
(whether or not beneficially owned), or any beneficial interest therein, other
than (i) Shares transferred pursuant to bona fide gifts where the transferee
agrees in writing to be similarly bound or (ii) Shares transferred through the
laws of descent.
3. Registration and Transfer of the Redeemable Convertible Note,
the Shares or the Redeemable Warrant (or the Shares underlying the Redeemable
Warrant). The Company shall not register any transfer of the Redeemable
Convertible Note, the Shares or the Redeemable Warrant (or the Shares underlying
the Redeemable Warrant) unless there are effective registrations under the
Securities Act of 1933 (the "Act"), pursuant to Regulation S promulgated under
the Act ("Regulation S") or pursuant to another exemption under the Act.
4. Resale of the Redeemable Convertible Note, the Shares or the
Redeemable Warrant (or the Shares underlying the Redeemable Warrant). The
Purchaser shall not resell or otherwise transfer either the Redeemable
Convertible Note, the Shares or the Redeemable Warrant (or the Shares underlying
the Redeemable Warrant) unless (i) there are effective registrations under the
Act, pursuant to Regulation S or pursuant to another exemption under the Act and
(ii) if requested by the Company, or its successor, the Purchaser delivers to
the
<PAGE>
<PAGE>
3
Company an opinion of counsel, in form and substance satisfactory to counsel for
the Company, to the effect that such sale is in conformance with the
registration requirements of the Act, pursuant to Regulation S or pursuant to
another exemption under the Act.
5. Legend on Share Certificates. The certificates evidencing the
Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF A LETTER AGREEMENT, DATED AS OF MAY 31, 1996
BETWEEN AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND JOHN
ARVANITIS, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN
ACCORDANCE THEREWITH. A COPY OF SUCH AGREEMENT IS ON FILE AT THE
OFFICE OF THE EXECUTIVE VICE PRESIDENT AND SECRETARY OF AMERICAN
CRAFT BREWING INTERNATIONAL LIMITED.
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). THESE
SHARES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT, PURSUANT TO REGULATION S PROMULGATED THEREUNDER OR PURSUANT
TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE ACT."
6. Representations and Warranties. The Purchaser hereby
represents and warrants to, and expressly agrees with, the Company that:
(a) he is not a U.S. person (as defined in Regulation S) and is
not acquiring the Redeemable Convertible Note, the Shares or the
Redeemable Warrant (or the Shares underlying the Redeemable Warrant) for
the account or benefit of any U.S. person;
(b) the Redeemable Convertible Note, the Shares and the
Redeemable Warrant (and the Shares underlying the Redeemable Warrant)
will be acquired by him for his own account, for investment purposes
only, and not with a view to the resale or distribution thereof, unless
there are effective registrations under the Act, pursuant to Regulation
S or pursuant to another exemption under the Act;
(c) he is not, and does not intend to become, a "distributor" (as
defined in Regulation S) of the Redeemable Convertible Note, the Shares
or the Redeemable Warrant (or the Shares underlying the Redeemable
Warrant) provided that if he does become a distributor, he shall
promptly notify the Company, or its successor, and he shall comply with
all applicable requirements of Regulation S;
(d) he is an "accredited investor" (as defined in Regulation D
promulgated under the Act);
<PAGE>
<PAGE>
4
(e) he is a sophisticated investor with such knowledge and
experience in business and financial matters as will enable him to
evaluate the merits and risks of an investment in the Company; and
(f) he understands that the Redeemable Convertible Note, the
Shares and the Redeemable Warrant (and the Shares underlying the
Redeemable Warrant), have not been, and will not be, registered under
the Act or any U.S. state securities laws, and are being offered and
sold in reliance upon U.S. federal and state exemptions and the
Purchaser recognizes that reliance upon such exemptions is based in part
upon his representations contained herein.
7. Understanding Among the Parties. The determination of the
Purchaser to enter into this Agreement and to purchase the Redeemable
Convertible Note, the Shares and the Redeemable Warrant (and the Shares
underlying the Redeemable Warrant) has been made by the Purchaser independently
of the Company and its subsidiaries and their respective representatives, agents
and employees and independently of any statement or opinion as to the
advisability of executing this Agreement or as to the properties, business,
prospects or conditions (financial or otherwise) of the Company, which may have
been made or given by the Company or any of its subsidiaries or their respective
representatives, agents or employees. The Purchaser further acknowledges and
agrees that he will acquire the Redeemable Convertible Note, the Shares and the
Redeemable Warrant (and the Shares underlying the Redeemable Warrant) "as is,"
without any express or implied representations or warranties.
8. Modification or Waiver in Writing. This Agreement shall not be
modified or amended except by a writing signed by both of the parties hereto. No
waiver of this Agreement or of any promises, obligations or conditions contained
herein shall be valid unless in writing and signed by the party against whom
said waiver is to be enforced and any party hereto that shall be adversely
affected by said waiver. No delay on the part of any person in exercising any
right, remedy or power hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any person of such right, remedy or power, nor any
single or partial exercise of any such right, remedy or power, preclude any
further exercise thereof or the exercise of any other right, remedy or power.
9. Survival. All representations, warranties, covenants and
agreements shall survive the execution and delivery of this Agreement, the
Redeemable Convertible Note and the Redeemable Warrant and the consummation of
the transactions contemplated hereby and thereby, regardless of any
investigation made by any party hereto or on behalf of such party.
10. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto, their affiliates and their
respective predecessors, successors, assigns, heirs, executives, administrators
and personal representatives, and each of them, whether so expressed or not.
This Agreement is not assignable by the Purchaser, and any attempted assignment
of this Agreement without the prior written consent of the Company, or its
successor, and any attempted assignment of this Agreement, without such prior
written consent, shall be void. This Agreement shall inure to the benefit of and
constitute an obligation of any successor to the Company's business.
<PAGE>
<PAGE>
5
11. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable under any applicable law, rule or regulation
in any jurisdiction, such provision will be ineffective only to the extent of
such invalidity, illegality or unenforceability in such jurisdiction, without
invalidating the remainder of this Agreement in such jurisdiction or any
provision hereof in any other jurisdiction.
12. Entire Agreement. This Agreement embodies the complete
agreement and understanding among the parties with respect to the subject matter
hereof and supersedes any prior understandings, agreements or representations,
written or oral, which may have related to the subject matter hereof in any way.
13. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be an original and both of which shall
constitute one and the same instrument when a counterpart hereof has been signed
by both parties hereto.
14. Governing Law. This Agreement, the Redeemable Convertible
Note and the Redeemable Warrant shall be governed by the laws of New York, but
without giving effect to applicable principles of conflicts of law to the extent
that the application of the laws of another jurisdiction would be required
thereby.
15. Headings. The section headings in this Agreement are for
convenience of reference only and shall in no event affect the meaning or
interpretation of this Agreement.
If the terms of this Agreement have been correctly set forth
herein, please confirm this by signing and returning to us the enclosed copy of
this Agreement.
Very truly yours,
AMERICAN CRAFT BREWING
HOLDINGS LIMITED
by
/s/ David K. Haines
_______________________________
David K. Haines
Managing Director for Hong Kong
Agreed to and accepted this
Twenty third day of May 1996.
/s/ John Arvanitis
______________________________
<PAGE>
<PAGE>
Exhibit 10.12
American Craft Brewing International Limited
Unit A1, 1/F Vita Tower
29 Wong Chuk Hang
Aberdeen, Hong Kong
May 31, 1996
Mark John Gallagher
_____________________________
_____________________________
(Address)
_____________________________
_____________________________
Dear Sir:
American Craft Brewing International Limited, a British Virgin
Islands company (the "Company"), or its successor, hereby agrees to issue and
sell, and Mark John Gallagher (the "Purchaser"), hereby agrees to purchase (the
"Issuance and Sale") US$30,000 principal amount (the "Principal Amount") of a
Redeemable Convertible Note. "Redeemable Convertible Note" shall mean a note
issued by the Company or its successor in the form attached hereto as Exhibit A
with the following terms: interest on the Redeemable Convertible Note shall
accrue at the rate of 12% per annum; provided, that if the Company, or its
successor, does not consummate an initial public offering of its shares of
capital stock, par value US$0.01 per share (the "Shares"), in the United States
(the "IPO") prior to September 1, 1996, interest on the Redeemable Convertible
Note shall accrue at the rate of 14% per annum for the period from but excluding
September 1, 1996 to but including September 1, 1997 (the "Conversion Date");
provided further that if the IPO is not consummated prior to the Conversion
Date, the Purchaser shall have the right to convert the Redeemable Convertible
Note into that number of Shares so that immediately after such conversion the
Purchaser shall hold 0.75% of the issued and outstanding Shares. Upon the date
of the consummation of the IPO (the "Closing Date"), the Purchaser shall have
the right to convert the Redeemable Convertible Note into that number of Shares
equal to the quotient obtained by dividing the Principal Amount by the product
of 0.5 and
<PAGE>
<PAGE>
2
the price per Share of the price to public in the IPO (the "IPO Price"). In
addition, upon the Closing Date, the Company or its successor shall issue to the
Purchaser a redeemable warrant (the "Redeemable Warrant"), in the form attached
to the Convertable Note as Exhibit A, entitling the Purchaser to purchase up to
the number of Shares issued to it in accordance with the immediately preceding
sentence at a price per Share equal to the product of 1.5 and the IPO Price on
one or more occasions during the period commencing thirteen months (the
"Commencement Date") from the date of the prospectus relating to the IPO (the
"Effective Date") and terminating on the fifth anniversary of the Commencement
Date. Commencing 18 months after the Effective Date, the Company or its
successor shall be entitled to redeem the Redeemable Warrant at a price equal to
the product of the number of Shares into which the Redeemable Warrant is
convertable and US$0.10 on 30 days prior written notice to the holder of the
Redeemable Warrant if the per Share closing bid quotation on the Nasdaq SmallCap
Market equals or exceeds 160% of the IPO Price for any 20 trading days within a
period of 30 consecutive trading days, ending on the fifth trading day prior to
the notice of redemption. The Redeemable Convertible Note shall mature on the
earlier of the Closing Date and the Conversion Date and shall be redeemable by
the Company or its successor at any time.
2. Lock-Up Agreement. The Purchaser agrees that, for a period of
six months following the effective date of the Company's or its successor's
registration statement on Form S-1 relating to the IPO, he will not, without the
prior written consent of the Company, or its successor, and the representative
of the underwriter(s) of the IPO, directly or indirectly, issue, offer, agree to
offer to sell, sell, grant an option for the purchase or sale of, transfer,
pledge, assign, hypothecate, distribute or otherwise encumber or dispose of the
Redeemable Convertible Note, the Shares or the Redeemable Warrant (or the Shares
underlying the Redeemable Warrant) or options, rights, warrants or other
securities convertible into exchangeable or exercisable for or evidencing any
right to purchase or subscribe for the Redeemable Convertible Note, the Shares
or the Redeemable Warrant (or the Shares underlying the Redeemable Warrant)
(whether or not beneficially owned), or any beneficial interest therein, other
than (i) Shares transferred pursuant to bona fide gifts where the transferee
agrees in writing to be similarly bound or (ii) Shares transferred through the
laws of descent.
3. Registration and Transfer of the Redeemable Convertible Note,
the Shares or the Redeemable Warrant (or the Shares underlying the Redeemable
Warrant). The Company shall not register any transfer of the Redeemable
Convertible Note, the Shares or the Redeemable Warrant (or the Shares underlying
the Redeemable Warrant) unless there are effective registrations under the
Securities Act of 1933 (the "Act"), pursuant to Regulation S promulgated under
the Act ("Regulation S") or pursuant to another exemption under the Act.
4. Resale of the Redeemable Convertible Note, the Shares or the
Redeemable Warrant (or the Shares underlying the Redeemable Warrant). The
Purchaser shall not resell or otherwise transfer either the Redeemable
Convertible Note, the Shares or the Redeemable Warrant (or the Shares underlying
the Redeemable Warrant) unless (i) there are effective registrations under the
Act, pursuant to Regulation S or pursuant to another exemption under the Act and
(ii) if requested by the Company, or its successor, the Purchaser delivers to
the
<PAGE>
<PAGE>
3
Company an opinion of counsel, in form and substance satisfactory to counsel for
the Company, to the effect that such sale is in conformance with the
registration requirements of the Act, pursuant to Regulation S or pursuant to
another exemption under the Act.
5. Legend on Share Certificates. The certificates evidencing the
Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF A LETTER AGREEMENT, DATED AS OF MAY 31, 1996
BETWEEN AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND MARK
JOHN GALLAGHER, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN
ACCORDANCE THEREWITH. A COPY OF SUCH AGREEMENT IS ON FILE AT THE
OFFICE OF THE EXECUTIVE VICE PRESIDENT AND SECRETARY OF AMERICAN
CRAFT BREWING INTERNATIONAL LIMITED.
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). THESE
SHARES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT, PURSUANT TO REGULATION S PROMULGATED THEREUNDER OR PURSUANT
TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE ACT."
6. Representations and Warranties. The Purchaser hereby
represents and warrants to, and expressly agrees with, the Company that:
(a) he is not a U.S. person (as defined in Regulation S) and is
not acquiring the Redeemable Convertible Note, the Shares or the
Redeemable Warrant (or the Shares underlying the Redeemable Warrant) for
the account or benefit of any U.S. person;
(b) the Redeemable Convertible Note, the Shares and the
Redeemable Warrant (and the Shares underlying the Redeemable Warrant)
will be acquired by him for his own account, for investment purposes
only, and not with a view to the resale or distribution thereof, unless
there are effective registrations under the Act, pursuant to Regulation
S or pursuant to another exemption under the Act;
(c) he is not, and does not intend to become, a "distributor" (as
defined in Regulation S) of the Redeemable Convertible Note, the Shares
or the Redeemable Warrant (or the Shares underlying the Redeemable
Warrant) provided that if he does become a distributor, he shall
promptly notify the Company, or its successor, and he shall comply with
all applicable requirements of Regulation S;
(d) he is an "accredited investor" (as defined in Regulation D
promulgated under the Act);
<PAGE>
<PAGE>
4
(e) he is a sophisticated investor with such knowledge and
experience in business and financial matters as will enable him to
evaluate the merits and risks of an investment in the Company; and
(f) he understands that the Redeemable Convertible Note, the
Shares and the Redeemable Warrant (and the Shares underlying the
Redeemable Warrant), have not been, and will not be, registered under
the Act or any U.S. state securities laws, and are being offered and
sold in reliance upon U.S. federal and state exemptions and the
Purchaser recognizes that reliance upon such exemptions is based in part
upon his representations contained herein.
7. Understanding Among the Parties. The determination of the
Purchaser to enter into this Agreement and to purchase the Redeemable
Convertible Note, the Shares and the Redeemable Warrant (and the Shares
underlying the Redeemable Warrant) has been made by the Purchaser independently
of the Company and its subsidiaries and their respective representatives, agents
and employees and independently of any statement or opinion as to the
advisability of executing this Agreement or as to the properties, business,
prospects or conditions (financial or otherwise) of the Company, which may have
been made or given by the Company or any of its subsidiaries or their respective
representatives, agents or employees. The Purchaser further acknowledges and
agrees that he will acquire the Redeemable Convertible Note, the Shares and the
Redeemable Warrant (and the Shares underlying the Redeemable Warrant) "as is,"
without any express or implied representations or warranties.
8. Modification or Waiver in Writing. This Agreement shall not be
modified or amended except by a writing signed by both of the parties hereto. No
waiver of this Agreement or of any promises, obligations or conditions contained
herein shall be valid unless in writing and signed by the party against whom
said waiver is to be enforced and any party hereto that shall be adversely
affected by said waiver. No delay on the part of any person in exercising any
right, remedy or power hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any person of such right, remedy or power, nor any
single or partial exercise of any such right, remedy or power, preclude any
further exercise thereof or the exercise of any other right, remedy or power.
9. Survival. All representations, warranties, covenants and
agreements shall survive the execution and delivery of this Agreement, the
Redeemable Convertible Note and the Redeemable Warrant and the consummation of
the transactions contemplated hereby and thereby, regardless of any
investigation made by any party hereto or on behalf of such party.
10. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto, their affiliates and their
respective predecessors, successors, assigns, heirs, executives, administrators
and personal representatives, and each of them, whether so expressed or not.
This Agreement is not assignable by the Purchaser, and any attempted assignment
of this Agreement without the prior written consent of the Company, or its
successor, and any attempted assignment of this Agreement, without such prior
written consent, shall be void. This Agreement shall inure to the benefit of and
constitute an obligation of any successor to the Company's business.
<PAGE>
<PAGE>
5
11. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable under any applicable law, rule or regulation
in any jurisdiction, such provision will be ineffective only to the extent of
such invalidity, illegality or unenforceability in such jurisdiction, without
invalidating the remainder of this Agreement in such jurisdiction or any
provision hereof in any other jurisdiction.
12. Entire Agreement. This Agreement embodies the complete
agreement and understanding among the parties with respect to the subject matter
hereof and supersedes any prior understandings, agreements or representations,
written or oral, which may have related to the subject matter hereof in any way.
13. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be an original and both of which shall
constitute one and the same instrument when a counterpart hereof has been signed
by both parties hereto.
14. Governing Law. This Agreement, the Redeemable Convertible
Note and the Redeemable Warrant shall be governed by the laws of New York, but
without giving effect to applicable principles of conflicts of law to the extent
that the application of the laws of another jurisdiction would be required
thereby.
15. Headings. The section headings in this Agreement are for
convenience of reference only and shall in no event affect the meaning or
interpretation of this Agreement.
If the terms of this Agreement have been correctly set forth
herein, please confirm this by signing and returning to us the enclosed copy of
this Agreement.
Very truly yours,
AMERICAN CRAFT BREWING
HOLDINGS LIMITED
by
/s/ David K. Haines
_______________________________
David K. Haines
Managing Director for Hong Kong
Agreed to and accepted this
29th day of May 1996.
/s/ Mark John Gallagher
____________________________
<PAGE>
<PAGE>
Exhibit 10.13
American Craft Brewing International Limited
Unit A1, 1/F Vita Tower
29 Wong Chuk Hang
Aberdeen, Hong Kong
May 23, 1996
Harry Allen Friedberg
18 Jervois Rd 03-02
- --------------------
(Address)
Singapore 249001
- --------------------
- --------------------
Dear Sir:
American Craft Brewing International Limited, a British Virgin
Islands company (the "Company"), or its successor, hereby agrees to issue and
sell, and Harry Allen Friedberg (the "Purchaser"), hereby agrees to purchase
(the "Issuance and Sale") US$100,000 principal amount (the "Principal Amount")
of a Redeemable Convertible Note. "Redeemable Convertible Note" shall mean a
note issued by the Company or its successor in the form attached hereto as
Exhibit A with the following terms: interest on the Redeemable Convertible Note
shall accrue at the rate of 12% per annum; provided, that if the Company, or its
successor, does not consummate an initial public offering of its shares of
capital stock, par value US$0.01 per share (the "Shares"), in the United States
(the "IPO") prior to September 1, 1996, interest on the Redeemable Convertible
Note shall accrue at the rate of 14% per annum for the period from but excluding
September 1, 1996 to but including September 1, 1997 (the "Conversion Date");
provided further that if the IPO is not consummated prior to the Conversion
Date, the Purchaser shall have the right to convert the Redeemable Convertible
Note into that number of Shares so that immediately after such conversion the
Purchaser shall hold 2.5% of the issued and outstanding Shares. Upon the date of
the consummation of the IPO (the "Closing Date"), the Purchaser shall have the
right to convert the Redeemable Convertible Note into that number of Shares
equal to the quotient obtained by dividing the Principal Amount by the product
of 0.5 and
<PAGE>
<PAGE>
2
the price per Share of the price to public in the IPO (the "IPO Price"). In
addition, upon the Closing Date, the Company or its successor shall issue to the
Purchaser a redeemable warrant (the "Redeemable Warrant"), in the form attached
to the Convertable Note as Exhibit A, entitling the Purchaser to purchase up to
the number of Shares issued to it in accordance with the immediately preceding
sentence at a price per Share equal to the product of 1.5 and the IPO Price on
one or more occasions during the period commencing thirteen months (the
"Commencement Date") from the date of the prospectus relating to the IPO (the
"Effective Date") and terminating on the fifth anniversary of the Commencement
Date. Commencing 18 months after the Effective Date, the Company or its
successor shall be entitled to redeem the Redeemable Warrant at a price equal to
the product of the number of Shares into which the Redeemable Warrant is
convertable and US$0.10 on 30 days prior written notice to the holder of the
Redeemable Warrant if the per Share closing bid quotation on the Nasdaq SmallCap
Market equals or exceeds 160% of the IPO Price for any 20 trading days within a
period of 30 consecutive trading days, ending on the fifth trading day prior to
the notice of redemption. The Redeemable Convertible Note shall mature on the
earlier of the Closing Date and the Conversion Date and shall be redeemable by
the Company or its successor at any time.
2. Lock-Up Agreement. The Purchaser agrees that, for a period of
six months following the effective date of the Company's or its successor's
registration statement on Form S-1 relating to the IPO, he will not, without the
prior written consent of the Company, or its successor, and the representative
of the underwriter(s) of the IPO, directly or indirectly, issue, offer, agree to
offer to sell, sell, grant an option for the purchase or sale of, transfer,
pledge, assign, hypothecate, distribute or otherwise encumber or dispose of the
Redeemable Convertible Note, the Shares or the Redeemable Warrant (or the Shares
underlying the Redeemable Warrant) or options, rights, warrants or other
securities convertible into exchangeable or exercisable for or evidencing any
right to purchase or subscribe for the Redeemable Convertible Note, the Shares
or the Redeemable Warrant (or the Shares underlying the Redeemable Warrant)
(whether or not beneficially owned), or any beneficial interest therein, other
than (i) Shares transferred pursuant to bona fide gifts where the transferee
agrees in writing to be similarly bound or (ii) Shares transferred through the
laws of descent.
3. Registration and Transfer of the Redeemable Convertible Note,
the Shares or the Redeemable Warrant (or the Shares underlying the Redeemable
Warrant). The Company shall not register any transfer of the Redeemable
Convertible Note, the Shares or the Redeemable Warrant (or the Shares underlying
the Redeemable Warrant) unless there are effective registrations under the
Securities Act of 1933 (the "Act"), pursuant to Regulation S promulgated under
the Act ("Regulation S") or pursuant to another exemption under the Act.
4. Resale of the Redeemable Convertible Note, the Shares or the
Redeemable Warrant (or the Shares underlying the Redeemable Warrant). The
Purchaser shall not resell or otherwise transfer either the Redeemable
Convertible Note, the Shares or the Redeemable Warrant (or the Shares underlying
the Redeemable Warrant) unless (i) there are effective registrations under the
Act, pursuant to Regulation S or pursuant to another exemption under the Act and
(ii) if requested by the Company, or its successor, the Purchaser delivers to
the
<PAGE>
<PAGE>
3
Company an opinion of counsel, in form and substance satisfactory to counsel for
the Company, to the effect that such sale is in conformance with the
registration requirements of the Act, pursuant to Regulation S or pursuant to
another exemption under the Act.
5. Legend on Share Certificates. The certificates evidencing the
Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF A LETTER AGREEMENT, DATED AS OF MAY 31, 1996
BETWEEN AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND HARRY
ALLEN FRIEDBERG, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN
ACCORDANCE THEREWITH. A COPY OF SUCH AGREEMENT IS ON FILE AT THE
OFFICE OF THE EXECUTIVE VICE PRESIDENT AND SECRETARY OF AMERICAN
CRAFT BREWING INTERNATIONAL LIMITED.
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). THESE
SHARES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT, PURSUANT TO REGULATION S PROMULGATED THEREUNDER OR PURSUANT
TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE ACT."
6. Representations and Warranties. The Purchaser hereby
represents and warrants to, and expressly agrees with, the Company that:
(a) he is not a U.S. person (as defined in Regulation S) and is
not acquiring the Redeemable Convertible Note, the Shares or the
Redeemable Warrant (or the Shares underlying the Redeemable Warrant) for
the account or benefit of any U.S. person;
(b) the Redeemable Convertible Note, the Shares and the
Redeemable Warrant (and the Shares underlying the Redeemable Warrant)
will be acquired by him for his own account, for investment purposes
only, and not with a view to the resale or distribution thereof, unless
there are effective registrations under the Act, pursuant to Regulation
S or pursuant to another exemption under the Act;
(c) he is not, and does not intend to become, a "distributor" (as
defined in Regulation S) of the Redeemable Convertible Note, the Shares
or the Redeemable Warrant (or the Shares underlying the Redeemable
Warrant) provided that if he does become a distributor, he shall
promptly notify the Company, or its successor, and he shall comply with
all applicable requirements of Regulation S;
(d) he is an "accredited investor" (as defined in Regulation D
promulgated under the Act);
<PAGE>
<PAGE>
4
(e) he is a sophisticated investor with such knowledge and
experience in business and financial matters as will enable him to
evaluate the merits and risks of an investment in the Company; and
(f) he understands that the Redeemable Convertible Note, the
Shares and the Redeemable Warrant (and the Shares underlying the
Redeemable Warrant), have not been, and will not be, registered under
the Act or any U.S. state securities laws, and are being offered and
sold in reliance upon U.S. federal and state exemptions and the
Purchaser recognizes that reliance upon such exemptions is based in part
upon his representations contained herein.
7. Understanding Among the Parties. The determination of the
Purchaser to enter into this Agreement and to purchase the Redeemable
Convertible Note, the Shares and the Redeemable Warrant (and the Shares
underlying the Redeemable Warrant) has been made by the Purchaser independently
of the Company and its subsidiaries and their respective representatives, agents
and employees and independently of any statement or opinion as to the
advisability of executing this Agreement or as to the properties, business,
prospects or conditions (financial or otherwise) of the Company, which may have
been made or given by the Company or any of its subsidiaries or their respective
representatives, agents or employees. The Purchaser further acknowledges and
agrees that he will acquire the Redeemable Convertible Note, the Shares and the
Redeemable Warrant (and the Shares underlying the Redeemable Warrant) "as is,"
without any express or implied representations or warranties.
8. Modification or Waiver in Writing. This Agreement shall not be
modified or amended except by a writing signed by both of the parties hereto. No
waiver of this Agreement or of any promises, obligations or conditions contained
herein shall be valid unless in writing and signed by the party against whom
said waiver is to be enforced and any party hereto that shall be adversely
affected by said waiver. No delay on the part of any person in exercising any
right, remedy or power hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any person of such right, remedy or power, nor any
single or partial exercise of any such right, remedy or power, preclude any
further exercise thereof or the exercise of any other right, remedy or power.
9. Survival. All representations, warranties, covenants and
agreements shall survive the execution and delivery of this Agreement, the
Redeemable Convertible Note and the Redeemable Warrant and the consummation of
the transactions contemplated hereby and thereby, regardless of any
investigation made by any party hereto or on behalf of such party.
10. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto, their affiliates and their
respective predecessors, successors, assigns, heirs, executives, administrators
and personal representatives, and each of them, whether so expressed or not.
This Agreement is not assignable by the Purchaser, and any attempted assignment
of this Agreement without the prior written consent of the Company, or its
successor, and any attempted assignment of this Agreement, without such prior
written consent, shall be void. This Agreement shall inure to the benefit of and
constitute an obligation of any successor to the Company's business.
<PAGE>
<PAGE>
5
11. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable under any applicable law, rule or regulation
in any jurisdiction, such provision will be ineffective only to the extent of
such invalidity, illegality or unenforceability in such jurisdiction, without
invalidating the remainder of this Agreement in such jurisdiction or any
provision hereof in any other jurisdiction.
12. Entire Agreement. This Agreement embodies the complete
agreement and understanding among the parties with respect to the subject matter
hereof and supersedes any prior understandings, agreements or representations,
written or oral, which may have related to the subject matter hereof in any way.
13. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be an original and both of which shall
constitute one and the same instrument when a counterpart hereof has been signed
by both parties hereto.
14. Governing Law. This Agreement, the Redeemable Convertible
Note and the Redeemable Warrant shall be governed by the laws of New York, but
without giving effect to applicable principles of conflicts of law to the extent
that the application of the laws of another jurisdiction would be required
thereby.
15. Headings. The section headings in this Agreement are for
convenience of reference only and shall in no event affect the meaning or
interpretation of this Agreement.
If the terms of this Agreement have been correctly set forth
herein, please confirm this by signing and returning to us the enclosed copy of
this Agreement.
Very truly yours,
AMERICAN CRAFT BREWING
HOLDINGS LIMITED
by /s/ David K. Haines
---------------------------
David K. Haines
Managing Director for Hong Kong
Agreed to and accepted this
23 day of May 1996.
/s/ Harry Allen Friedberg
- ----------------------------
<PAGE>
<PAGE>
Exhibit 10.14
American Craft Brewing International Limited
Unit A1, 1/F Vita Tower
29 Wong Chuk Hang
Aberdeen, Hong Kong
May 31, 1996
Microbrew Systems Co. Ltd.
__________________________
__________________________
(Address)
__________________________
__________________________
Dear Sir:
American Craft Brewing International Limited, a British Virgin Islands
company (the "Company"), or its successor, hereby agrees to issue and sell, and
Microbrew Systems Co. Ltd. (the "Purchaser"), hereby agrees to purchase (the
"Issuance and Sale") US$20,000 principal amount (the "Principal Amount") of a
Redeemable Convertible Note. "Redeemable Convertible Note" shall mean a note
issued by the Company or its successor in the form attached hereto as Exhibit A
with the following terms: interest on the Redeemable Convertible Note shall
accrue at the rate of 12% per annum; provided, that if the Company, or its
successor, does not consummate an initial public offering of its shares of
capital stock, par value US$0.01 per share (the "Shares"), in the United States
(the "IPO") prior to September 1, 1996, interest on the Redeemable Convertible
Note shall accrue at the rate of 14% per annum for the period from but excluding
September 1, 1996 to but including September 1, 1997 (the "Conversion Date");
provided further that if the IPO is not consummated prior to the Conversion
Date, the Purchaser shall have the right to convert the Redeemable Convertible
Note into that number of Shares so that immediately after such conversion the
Purchaser shall hold .5% of the issued and outstanding Shares. Upon the date of
the consummation of the IPO (the "Closing Date"), the Purchaser shall have the
right to convert the Redeemable Convertible Note into that number of Shares
equal to the quotient obtained by dividing the Principal Amount by the product
of 0.5 and
<PAGE>
<PAGE>
2
the price per Share of the price to public in the IPO (the "IPO Price"). In
addition, upon the Closing Date, the Company or its successor shall issue to the
Purchaser a redeemable warrant (the "Redeemable Warrant"), in the form attached
to the Convertable Note as Exhibit A, entitling the Purchaser to purchase up to
the number of Shares issued to it in accordance with the immediately preceding
sentence at a price per Share equal to the product of 1.5 and the IPO Price on
one or more occasions during the period commencing thirteen months (the
"Commencement Date") from the date of the prospectus relating to the IPO (the
"Effective Date") and terminating on the fifth anniversary of the Commencement
Date. Commencing 18 months after the Effective Date, the Company or its
successor shall be entitled to redeem the Redeemable Warrant at a price equal to
the product of the number of Shares into which the Redeemable Warrant is
convertable and US$0.10 on 30 days prior written notice to the holder of the
Redeemable Warrant if the per Share closing bid quotation on the Nasdaq SmallCap
Market equals or exceeds 160% of the IPO Price for any 20 trading days within a
period of 30 consecutive trading days, ending on the fifth trading day prior to
the notice of redemption. The Redeemable Convertible Note shall mature on the
earlier of the Closing Date and the Conversion Date and shall be redeemable by
the Company or its successor at any time.
2. Lock-Up Agreement. The Purchaser agrees that, for a period of six
months following the effective date of the Company's or its successor's
registration statement on Form S-1 relating to the IPO, he will not, without the
prior written consent of the Company, or its successor, and the representative
of the underwriter(s) of the IPO, directly or indirectly, issue, offer, agree to
offer to sell, sell, grant an option for the purchase or sale of, transfer,
pledge, assign, hypothecate, distribute or otherwise encumber or dispose of the
Redeemable Convertible Note, the Shares or the Redeemable Warrant (or the Shares
underlying the Redeemable Warrant) or options, rights, warrants or other
securities convertible into exchangeable or exercisable for or evidencing any
right to purchase or subscribe for the Redeemable Convertible Note, the Shares
or the Redeemable Warrant (or the Shares underlying the Redeemable Warrant)
(whether or not beneficially owned), or any beneficial interest therein, other
than (i) Shares transferred pursuant to bona fide gifts where the transferee
agrees in writing to be similarly bound or (ii) Shares transferred through the
laws of descent.
3. Registration and Transfer of the Redeemable Convertible Note, the
Shares or the Redeemable Warrant (or the Shares underlying the Redeemable
Warrant). The Company shall not register any transfer of the Redeemable
Convertible Note, the Shares or the Redeemable Warrant (or the Shares underlying
the Redeemable Warrant) unless there are effective registrations under the
Securities Act of 1933 (the "Act"), pursuant to Regulation S promulgated under
the Act ("Regulation S") or pursuant to another exemption under the Act.
4. Resale of the Redeemable Convertible Note, the Shares or the
Redeemable Warrant (or the Shares underlying the Redeemable Warrant). The
Purchaser shall not resell or otherwise transfer either the Redeemable
Convertible Note, the Shares or the Redeemable Warrant (or the Shares underlying
the Redeemable Warrant) unless (i) there are effective registrations under the
Act, pursuant to Regulation S or pursuant to another exemption under the Act and
(ii) if requested by the Company, or its successor, the Purchaser delivers to
the
<PAGE>
<PAGE>
3
Company an opinion of counsel, in form and substance satisfactory to counsel for
the Company, to the effect that such sale is in conformance with the
registration requirements of the Act, pursuant to Regulation S or pursuant to
another exemption under the Act.
5. Legend on Share Certificates. The certificates evidencing the
Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF A LETTER AGREEMENT, DATED AS OF MAY 31, 1996 BETWEEN
AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND MICROBREW SYSTEMS CO.
LTD. AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE
THEREWITH. A COPY OF SUCH AGREEMENT IS ON FILE AT THE OFFICE OF THE
EXECUTIVE VICE PRESIDENT AND SECRETARY OF AMERICAN CRAFT BREWING
INTERNATIONAL LIMITED.
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). THESE SHARES MAY NOT BE
OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, PURSUANT TO REGULATION
S PROMULGATED THEREUNDER OR PURSUANT TO ANOTHER EXEMPTION FROM
REGISTRATION UNDER THE ACT."
6. Representations and Warranties. The Purchaser hereby represents and
warrants to, and expressly agrees with, the Company that:
(a) he is not a U.S. person (as defined in Regulation S) and is not
acquiring the Redeemable Convertible Note, the Shares or the Redeemable
Warrant (or the Shares underlying the Redeemable Warrant) for the account
or benefit of any U.S. person;
(b) the Redeemable Convertible Note, the Shares and the Redeemable
Warrant (and the Shares underlying the Redeemable Warrant) will be
acquired by him for his own account, for investment purposes only, and not
with a view to the resale or distribution thereof, unless there are
effective registrations under the Act, pursuant to Regulation S or
pursuant to another exemption under the Act;
(c) he is not, and does not intend to become, a "distributor" (as
defined in Regulation S) of the Redeemable Convertible Note, the Shares or
the Redeemable Warrant (or the Shares underlying the Redeemable Warrant)
provided that if he does become a distributor, he shall promptly notify
the Company, or its successor, and he shall comply with all applicable
requirements of Regulation S;
(d) he is an "accredited investor" (as defined in Regulation D
promulgated under the Act);
<PAGE>
<PAGE>
4
(e) he is a sophisticated investor with such knowledge and experience
in business and financial matters as will enable him to evaluate the
merits and risks of an investment in the Company; and
(f) he understands that the Redeemable Convertible Note, the Shares
and the Redeemable Warrant (and the Shares underlying the Redeemable
Warrant), have not been, and will not be, registered under the Act or any
U.S. state securities laws, and are being offered and sold in reliance
upon U.S. federal and state exemptions and the Purchaser recognizes that
reliance upon such exemptions is based in part upon his representations
contained herein.
7. Understanding Among the Parties. The determination of the Purchaser
to enter into this Agreement and to purchase the Redeemable Convertible Note,
the Shares and the Redeemable Warrant (and the Shares underlying the Redeemable
Warrant) has been made by the Purchaser independently of the Company and its
subsidiaries and their respective representatives, agents and employees and
independently of any statement or opinion as to the advisability of executing
this Agreement or as to the properties, business, prospects or conditions
(financial or otherwise) of the Company, which may have been made or given by
the Company or any of its subsidiaries or their respective representatives,
agents or employees. The Purchaser further acknowledges and agrees that he will
acquire the Redeemable Convertible Note, the Shares and the Redeemable Warrant
(and the Shares underlying the Redeemable Warrant) "as is," without any express
or implied representations or warranties.
8. Modification or Waiver in Writing. This Agreement shall not be
modified or amended except by a writing signed by both of the parties hereto. No
waiver of this Agreement or of any promises, obligations or conditions contained
herein shall be valid unless in writing and signed by the party against whom
said waiver is to be enforced and any party hereto that shall be adversely
affected by said waiver. No delay on the part of any person in exercising any
right, remedy or power hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any person of such right, remedy or power, nor any
single or partial exercise of any such right, remedy or power, preclude any
further exercise thereof or the exercise of any other right, remedy or power.
9. Survival. All representations, warranties, covenants and agreements
shall survive the execution and delivery of this Agreement, the Redeemable
Convertible Note and the Redeemable Warrant and the consummation of the
transactions contemplated hereby and thereby, regardless of any investigation
made by any party hereto or on behalf of such party.
10. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, their affiliates and their
respective predecessors, successors, assigns, heirs, executives, administrators
and personal representatives, and each of them, whether so expressed or not.
This Agreement is not assignable by the Purchaser, and any attempted assignment
of this Agreement without the prior written consent of the Company, or its
successor, and any attempted assignment of this Agreement, without such prior
written consent, shall be void. This Agreement shall inure to the benefit of and
constitute an obligation of any successor to the Company's business.
<PAGE>
<PAGE>
5
11. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such a manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable under any applicable law, rule or regulation in any
jurisdiction, such provision will be ineffective only to the extent of such
invalidity, illegality or unenforceability in such jurisdiction, without
invalidating the remainder of this Agreement in such jurisdiction or any
provision hereof in any other jurisdiction.
12. Entire Agreement. This Agreement embodies the complete agreement
and understanding among the parties with respect to the subject matter hereof
and supersedes any prior understandings, agreements or representations, written
or oral, which may have related to the subject matter hereof in any way.
13. Counterparts. This Agreement may be executed in two counterparts,
each of which shall be an original and both of which shall constitute one and
the same instrument when a counterpart hereof has been signed by both parties
hereto.
14. Governing Law. This Agreement, the Redeemable Convertible Note and
the Redeemable Warrant shall be governed by the laws of New York, but without
giving effect to applicable principles of conflicts of law to the extent that
the application of the laws of another jurisdiction would be required thereby.
15. Headings. The section headings in this Agreement are for
convenience of reference only and shall in no event affect the meaning or
interpretation of this Agreement.
If the terms of this Agreement have been correctly set forth herein,
please confirm this by signing and returning to us the enclosed copy of this
Agreement.
Very truly yours,
AMERICAN CRAFT BREWING
HOLDINGS LIMITED
by
/s/ DAVID K. HAINES
______________________________________
David K. Haines
Managing Director for Hong Kong
Agreed to and accepted this
30 day of May 1996.
/s/ Mark Myrick
_______________________________
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Exhibit 10.15
American Craft Brewing International Limited
Unit A1, 1/F Vita Tower
29 Wong Chuk Hang
Aberdeen, Hong Kong
May 31, 1996
Noah Shaffer
(Address)
Dear Sir:
American Craft Brewing International Limited, a British Virgin
Islands company (the "Company"), or its successor, hereby agrees to issue and
sell, and Noah Shaffer (the "Purchaser"), hereby agrees to purchase (the
"Issuance and Sale") US$40,000 principal amount (the "Principal Amount") of a
Redeemable Convertible Note. "Redeemable Convertible Note" shall mean a note
issued by the Company or its successor in the form attached hereto as Exhibit A
with the following terms: interest on the Redeemable Convertible Note shall
accrue at the rate of 12% per annum; provided, that if the Company, or its
successor, does not consummate an initial public offering of its shares of
capital stock, par value US$0.01 per share (the "Shares"), in the United States
(the "IPO") prior to September 1, 1996, interest on the Redeemable Convertible
Note shall accrue at the rate of 14% per annum for the period from but excluding
September 1, 1996 to but including September 1, 1997 (the "Conversion Date");
provided further that if the IPO is not consummated prior to the Conversion
Date, the Purchaser shall have the right to convert the Redeemable Convertible
Note into that number of Shares so that immediately after such conversion the
Purchaser shall hold 1% of the issued and outstanding Shares. Upon the date of
the consummation of the IPO (the "Closing Date"), the Purchaser shall have the
right to convert the Redeemable Convertible Note into that number of Shares
equal to the quotient obtained by dividing the Principal Amount by the product
of 0.5 and the
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2
price per Share of the price to public in the IPO (the "IPO Price"). In
addition, upon the Closing Date, the Company or its successor shall issue to the
Purchaser a redeemable warrant (the "Redeemable Warrant"), in the form attached
to the Convertable Note as Exhibit A, entitling the Purchaser to purchase up to
the number of Shares issued to it in accordance with the immediately preceding
sentence at a price per Share equal to the product of 1.5 and the IPO Price on
one or more occasions during the period commencing thirteen months (the
"Commencement Date") from the date of the prospectus relating to the IPO (the
"Effective Date") and terminating on the fifth anniversary of the Commencement
Date. Commencing 18 months after the Effective Date, the Company or its
successor shall be entitled to redeem the Redeemable Warrant at a price equal to
the product of the number of Shares into which the Redeemable Warrant is
convertable and US$0.10 on 30 days prior written notice to the holder of the
Redeemable Warrant if the per Share closing bid quotation on the Nasdaq SmallCap
Market equals or exceeds 160% of the IPO Price for any 20 trading days within a
period of 30 consecutive trading days, ending on the fifth trading day prior to
the notice of redemption. The Redeemable Convertible Note shall mature on the
earlier of the Closing Date and the Conversion Date and shall be redeemable by
the Company or its successor at any time.
2. Lock-Up Agreement. The Purchaser agrees that, for a period of
six months following the effective date of the Company's or its successor's
registration statement on Form S-1 relating to the IPO, he will not, without the
prior written consent of the Company, or its successor, and the representative
of the underwriter(s) of the IPO, directly or indirectly, issue, offer, agree to
offer to sell, sell, grant an option for the purchase or sale of, transfer,
pledge, assign, hypothecate, distribute or otherwise encumber or dispose of the
Redeemable Convertible Note, the Shares or the Redeemable Warrant (or the Shares
underlying the Redeemable Warrant) or options, rights, warrants or other
securities convertible into exchangeable or exercisable for or evidencing any
right to purchase or subscribe for the Redeemable Convertible Note, the Shares
or the Redeemable Warrant (or the Shares underlying the Redeemable Warrant)
(whether or not beneficially owned), or any beneficial interest therein, other
than (i) Shares transferred pursuant to bona fide gifts where the transferee
agrees in writing to be similarly bound or (ii) Shares transferred through the
laws of descent.
3. Registration and Transfer of the Redeemable Convertible Note,
the Shares or the Redeemable Warrant (or the Shares underlying the Redeemable
Warrant). The Company shall not register any transfer of the Redeemable
Convertible Note, the Shares or the Redeemable Warrant (or the Shares underlying
the Redeemable Warrant) unless there are effective registrations under the
Securities Act of 1933 (the "Act"), pursuant to Regulation S promulgated under
the Act ("Regulation S") or pursuant to another exemption under the Act.
4. Resale of the Redeemable Convertible Note, the Shares or the
Redeemable Warrant (or the Shares underlying the Redeemable Warrant). The
Purchaser shall not resell or otherwise transfer either the Redeemable
Convertible Note, the Shares or the Redeemable Warrant (or the Shares underlying
the Redeemable Warrant) unless (i) there are effective registrations under the
Act, pursuant to Regulation S or pursuant to another exemption under the Act and
(ii) if requested by the Company, or its successor, the Purchaser delivers to
the
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3
Company an opinion of counsel, in form and substance satisfactory to counsel for
the Company, to the effect that such sale is in conformance with the
registration requirements of the Act, pursuant to Regulation S or pursuant to
another exemption under the Act.
5. Legend on Share Certificates. The certificates evidencing the
Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF A LETTER AGREEMENT, DATED AS OF MAY 31, 1996
BETWEEN AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND NOAH
SHAFFER, AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN ACCORDANCE
THEREWITH. A COPY OF SUCH AGREEMENT IS ON FILE AT THE OFFICE OF
THE EXECUTIVE VICE PRESIDENT AND SECRETARY OF AMERICAN CRAFT
BREWING INTERNATIONAL LIMITED.
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). THESE
SHARES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT, PURSUANT TO REGULATION S PROMULGATED THEREUNDER OR PURSUANT
TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE ACT."
6. Representations and Warranties. The Purchaser hereby
represents and warrants to, and expressly agrees with, the Company that:
(a) he is not a U.S. person (as defined in Regulation S) and is
not acquiring the Redeemable Convertible Note, the Shares or the
Redeemable Warrant (or the Shares underlying the Redeemable Warrant) for
the account or benefit of any U.S. person;
(b) the Redeemable Convertible Note, the Shares and the
Redeemable Warrant (and the Shares underlying the Redeemable Warrant)
will be acquired by him for his own account, for investment purposes
only, and not with a view to the resale or distribution thereof, unless
there are effective registrations under the Act, pursuant to Regulation
S or pursuant to another exemption under the Act;
(c) he is not, and does not intend to become, a "distributor" (as
defined in Regulation S) of the Redeemable Convertible Note, the Shares
or the Redeemable Warrant (or the Shares underlying the Redeemable
Warrant) provided that if he does become a distributor, he shall
promptly notify the Company, or its successor, and he shall comply with
all applicable requirements of Regulation S;
(d) he is an "accredited investor" (as defined in Regulation D
promulgated under the Act);
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<PAGE>
4
(e) he is a sophisticated investor with such knowledge and
experience in business and financial matters as will enable him to
evaluate the merits and risks of an investment in the Company; and
(f) he understands that the Redeemable Convertible Note, the
Shares and the Redeemable Warrant (and the Shares underlying the
Redeemable Warrant), have not been, and will not be, registered under
the Act or any U.S. state securities laws, and are being offered and
sold in reliance upon U.S. federal and state exemptions and the
Purchaser recognizes that reliance upon such exemptions is based in part
upon his representations contained herein.
7. Understanding Among the Parties. The determination of the
Purchaser to enter into this Agreement and to purchase the Redeemable
Convertible Note, the Shares and the Redeemable Warrant (and the Shares
underlying the Redeemable Warrant) has been made by the Purchaser independently
of the Company and its subsidiaries and their respective representatives, agents
and employees and independently of any statement or opinion as to the
advisability of executing this Agreement or as to the properties, business,
prospects or conditions (financial or otherwise) of the Company, which may have
been made or given by the Company or any of its subsidiaries or their respective
representatives, agents or employees. The Purchaser further acknowledges and
agrees that he will acquire the Redeemable Convertible Note, the Shares and the
Redeemable Warrant (and the Shares underlying the Redeemable Warrant) "as is,"
without any express or implied representations or warranties.
8. Modification or Waiver in Writing. This Agreement shall not be
modified or amended except by a writing signed by both of the parties hereto. No
waiver of this Agreement or of any promises, obligations or conditions contained
herein shall be valid unless in writing and signed by the party against whom
said waiver is to be enforced and any party hereto that shall be adversely
affected by said waiver. No delay on the part of any person in exercising any
right, remedy or power hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any person of such right, remedy or power, nor any
single or partial exercise of any such right, remedy or power, preclude any
further exercise thereof or the exercise of any other right, remedy or power.
9. Survival. All representations, warranties, covenants and
agreements shall survive the execution and delivery of this Agreement, the
Redeemable Convertible Note and the Redeemable Warrant and the consummation of
the transactions contemplated hereby and thereby, regardless of any
investigation made by any party hereto or on behalf of such party.
10. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto, their affiliates and their
respective predecessors, successors, assigns, heirs, executives, administrators
and personal representatives, and each of them, whether so expressed or not.
This Agreement is not assignable by the Purchaser, and any attempted assignment
of this Agreement without the prior written consent of the Company, or its
successor, and any attempted assignment of this Agreement, without such prior
written consent, shall be void. This Agreement shall inure to the benefit of and
constitute an obligation of any successor to the Company's business.
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<PAGE>
5
11. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable under any applicable law, rule or regulation
in any jurisdiction, such provision will be ineffective only to the extent of
such invalidity, illegality or unenforceability in such jurisdiction, without
invalidating the remainder of this Agreement in such jurisdiction or any
provision hereof in any other jurisdiction.
12. Entire Agreement. This Agreement embodies the complete
agreement and understanding among the parties with respect to the subject matter
hereof and supersedes any prior understandings, agreements or representations,
written or oral, which may have related to the subject matter hereof in any way.
13. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be an original and both of which shall
constitute one and the same instrument when a counterpart hereof has been signed
by both parties hereto.
14. Governing Law. This Agreement, the Redeemable Convertible
Note and the Redeemable Warrant shall be governed by the laws of New York, but
without giving effect to applicable principles of conflicts of law to the extent
that the application of the laws of another jurisdiction would be required
thereby.
15. Headings. The section headings in this Agreement are for
convenience of reference only and shall in no event affect the meaning or
interpretation of this Agreement.
If the terms of this Agreement have been correctly set forth
herein, please confirm this by signing and returning to us the enclosed copy of
this Agreement.
Very truly yours,
AMERICAN CRAFT BREWING
HOLDINGS LIMITED
by
/s/ David K. Haines
_______________________________
David K. Haines
Managing Director for Hong Kong
Agreed to and accepted this
24 day of May 1996.
/s/ Noah Shaffer
____________________________
<PAGE>
<PAGE>
Exhibit 10.16
American Craft Brewing International Limited
Unit A1, 1/F Vita Tower
29 Wong Chuk Hang
Aberdeen, Hong Kong
May 31, 1996
Long Term Partners, Ltd.
_____________________________
(Address)
_____________________________
_____________________________
Dear Sir:
American Craft Brewing International Limited, a British Virgin
Islands company (the "Company"), or its successor, hereby agrees to issue and
sell, and Long Term Partners, Ltd. (the "Purchaser"), hereby agrees to purchase
(the "Issuance and Sale") US$120,000 principal amount (the "Principal Amount")
of a Redeemable Convertible Note. "Redeemable Convertible Note" shall mean a
note issued by the Company or its successor in the form attached hereto as
Exhibit A with the following terms: interest on the Redeemable Convertible Note
shall accrue at the rate of 12% per annum; provided, that if the Company, or its
successor, does not consummate an initial public offering of its shares of
capital stock, par value US$0.01 per share (the "Shares"), in the United States
(the "IPO") prior to September 1, 1996, interest on the Redeemable Convertible
Note shall accrue at the rate of 14% per annum for the period from but excluding
September 1, 1996 to but including September 1, 1997 (the "Conversion Date");
provided further that if the IPO is not consummated prior to the Conversion
Date, the Purchaser shall have the right to convert the Redeemable Convertible
Note into that number of Shares so that immediately after such conversion the
Purchaser shall hold 3% of the issued and outstanding Shares. Upon the date of
the consummation of the IPO (the "Closing Date"), the Company or its successor
shall issue that number of Shares equal to the quotient obtained by dividing the
Principal Amount by the price per Share of the price to the public in the IPO.
In addition, upon
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2
the Closing Date, the Company or its successor shall issue to the Purchaser a
redeemable warrant (the "Redeemable Warrant"), in the form attached to the
Convertable Note as Exhibit A, entitling the Purchaser to purchase up to the
number of Shares issued to it in accordance with the immediately preceding
sentence at a price per Share equal to the product of 1.5 and the IPO Price on
one or more occasions during the period commencing thirteen months (the
"Commencement Date") from the date of the prospectus relating to the IPO (the
"Effective Date") and terminating on the fifth anniversary of the Commencement
Date. Commencing 18 months after the Effective Date, the Company or its
successor shall be entitled to redeem the Redeemable Warrant at a price equal to
the product of the number of Shares into which the Redeemable Warrant is
convertable and US$0.10 on 30 days prior written notice to the holder of the
Redeemable Warrant if the per Share closing bid quotation on the Nasdaq SmallCap
Market equals or exceeds 160% of the IPO Price for any 20 trading days within a
period of 30 consecutive trading days, ending on the fifth trading day prior to
the notice of redemption. The Redeemable Convertible Note shall mature on the
earlier of the Closing Date and the Conversion Date and shall be redeemable by
the Company or its successor at any time.
2. Lock-Up Agreement. The Purchaser agrees that, for a period of
six months following the effective date of the Company's or its successor's
registration statement on Form S-1 relating to the IPO, he will not, without the
prior written consent of the Company, or its successor, and the representative
of the underwriter(s) of the IPO, directly or indirectly, issue, offer, agree to
offer to sell, sell, grant an option for the purchase or sale of, transfer,
pledge, assign, hypothecate, distribute or otherwise encumber or dispose of the
Redeemable Convertible Note, the Shares or the Redeemable Warrant (or the Shares
underlying the Redeemable Warrant) or options, rights, warrants or other
securities convertible into exchangeable or exercisable for or evidencing any
right to purchase or subscribe for the Redeemable Convertible Note, the Shares
or the Redeemable Warrant (or the Shares underlying the Redeemable Warrant)
(whether or not beneficially owned), or any beneficial interest therein, other
than (i) Shares transferred pursuant to bona fide gifts where the transferee
agrees in writing to be similarly bound or (ii) Shares transferred through the
laws of descent.
3. Registration and Transfer of the Redeemable Convertible Note,
the Shares or the Redeemable Warrant (or the Shares underlying the Redeemable
Warrant). The Company shall not register any transfer of the Redeemable
Convertible Note, the Shares or the Redeemable Warrant (or the Shares underlying
the Redeemable Warrant) unless there are effective registrations under the
Securities Act of 1933 (the "Act"), pursuant to Regulation S promulgated under
the Act ("Regulation S") or pursuant to another exemption under the Act.
4. Resale of the Redeemable Convertible Note, the Shares or the
Redeemable Warrant (or the Shares underlying the Redeemable Warrant). The
Purchaser shall not resell or otherwise transfer either the Redeemable
Convertible Note, the Shares or the Redeemable Warrant (or the Shares underlying
the Redeemable Warrant) unless (i) there are effective registrations under the
Act, pursuant to Regulation S or pursuant to another exemption under the Act and
(ii) if requested by the Company, or its successor, the Purchaser delivers to
the Company an opinion of counsel, in form and substance satisfactory to counsel
for the Company,
<PAGE>
<PAGE>
3
to the effect that such sale is in conformance with the registration
requirements of the Act, pursuant to Regulation S or pursuant to another
exemption under the Act.
5. Legend on Share Certificates. The certificates evidencing
the Shares shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF A LETTER AGREEMENT, DATED AS OF MAY 31, 1996
BETWEEN AMERICAN CRAFT BREWING INTERNATIONAL LIMITED AND LONG
TERM PARTNERS, LTD., AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN
ACCORDANCE THEREWITH. A COPY OF SUCH AGREEMENT IS ON FILE AT THE
OFFICE OF THE EXECUTIVE VICE PRESIDENT AND SECRETARY OF AMERICAN
CRAFT BREWING INTERNATIONAL LIMITED.
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT"). THESE
SHARES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
ACT, PURSUANT TO REGULATION S PROMULGATED THEREUNDER OR PURSUANT
TO ANOTHER EXEMPTION FROM REGISTRATION UNDER THE ACT."
6. Representations and Warranties. The Purchaser hereby
represents and warrants to, and expressly agrees with, the Company that:
(a) he is not a U.S. person (as defined in Regulation S) and is
not acquiring the Redeemable Convertible Note, the Shares or the
Redeemable Warrant (or the Shares underlying the Redeemable Warrant) for
the account or benefit of any U.S. person;
(b) the Redeemable Convertible Note, the Shares and the
Redeemable Warrant (and the Shares underlying the Redeemable Warrant)
will be acquired by him for his own account, for investment purposes
only, and not with a view to the resale or distribution thereof, unless
there are effective registrations under the Act, pursuant to Regulation
S or pursuant to another exemption under the Act;
(c) he is not, and does not intend to become, a "distributor" (as
defined in Regulation S) of the Redeemable Convertible Note, the Shares
or the Redeemable Warrant (or the Shares underlying the Redeemable
Warrant) provided that if he does become a distributor, he shall
promptly notify the Company, or its successor, and he shall comply with
all applicable requirements of Regulation S;
(d) he is an "accredited investor" (as defined in Regulation D
promulgated under the Act);
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4
(e) he is a sophisticated investor with such knowledge and
experience in business and financial matters as will enable him to
evaluate the merits and risks of an investment in the Company; and
(f) he understands that the Redeemable Convertible Note, the
Shares and the Redeemable Warrant (and the Shares underlying the
Redeemable Warrant), have not been, and will not be, registered under
the Act or any U.S. state securities laws, and are being offered and
sold in reliance upon U.S. federal and state exemptions and the
Purchaser recognizes that reliance upon such exemptions is based in part
upon his representations contained herein.
7. Understanding Among the Parties. The determination of the
Purchaser to enter into this Agreement and to purchase the Redeemable
Convertible Note, the Shares and the Redeemable Warrant (and the Shares
underlying the Redeemable Warrant) has been made by the Purchaser independently
of the Company and its subsidiaries and their respective representatives, agents
and employees and independently of any statement or opinion as to the
advisability of executing this Agreement or as to the properties, business,
prospects or conditions (financial or otherwise) of the Company, which may have
been made or given by the Company or any of its subsidiaries or their respective
representatives, agents or employees. The Purchaser further acknowledges and
agrees that he will acquire the Redeemable Convertible Note, the Shares and the
Redeemable Warrant (and the Shares underlying the Redeemable Warrant) "as is,"
without any express or implied representations or warranties.
8. Modification or Waiver in Writing. This Agreement shall not be
modified or amended except by a writing signed by both of the parties hereto. No
waiver of this Agreement or of any promises, obligations or conditions contained
herein shall be valid unless in writing and signed by the party against whom
said waiver is to be enforced and any party hereto that shall be adversely
affected by said waiver. No delay on the part of any person in exercising any
right, remedy or power hereunder shall operate as a waiver thereof, nor shall
any waiver on the part of any person of such right, remedy or power, nor any
single or partial exercise of any such right, remedy or power, preclude any
further exercise thereof or the exercise of any other right, remedy or power.
9. Survival. All representations, warranties, covenants and
agreements shall survive the execution and delivery of this Agreement, the
Redeemable Convertible Note and the Redeemable Warrant and the consummation of
the transactions contemplated hereby and thereby, regardless of any
investigation made by any party hereto or on behalf of such party.
10. Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto, their affiliates and their
respective predecessors, successors, assigns, heirs, executives, administrators
and personal representatives, and each of them, whether so expressed or not.
This Agreement is not assignable by the Purchaser, and any attempted assignment
of this Agreement without the prior written consent of the Company, or its
successor, and any attempted assignment of this Agreement, without such prior
written consent, shall be void. This Agreement shall inure to the benefit of and
constitute an obligation of any successor to the Company's business.
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5
11. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable under any applicable law, rule or regulation
in any jurisdiction, such provision will be ineffective only to the extent of
such invalidity, illegality or unenforceability in such jurisdiction, without
invalidating the remainder of this Agreement in such jurisdiction or any
provision hereof in any other jurisdiction.
12. Entire Agreement. This Agreement embodies the complete
agreement and understanding among the parties with respect to the subject matter
hereof and supersedes any prior understandings, agreements or representations,
written or oral, which may have related to the subject matter hereof in any way.
13. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be an original and both of which shall
constitute one and the same instrument when a counterpart hereof has been signed
by both parties hereto.
14. Governing Law. This Agreement, the Redeemable Convertible
Note and the Redeemable Warrant shall be governed by the laws of New York, but
without giving effect to applicable principles of conflicts of law to the extent
that the application of the laws of another jurisdiction would be required
thereby.
15. Headings. The section headings in this Agreement are for
convenience of reference only and shall in no event affect the meaning or
interpretation of this Agreement.
If the terms of this Agreement have been correctly set forth
herein, please confirm this by signing and returning to us the enclosed copy of
this Agreement.
Very truly yours,
AMERICAN CRAFT BREWING
HOLDINGS LIMITED
by /s/ Davis K. Haines
_________________________________
David K. Haines
Managing Director for Hong Kong
Agreed to and accepted this
28 day of May 1996.
/s/ James Craig Chapman
_____________________________
Long Term Partners
<PAGE>
<PAGE>
Dated this 3rd day of October 1996
SCBC DISTRIBUTION COMPANY LIMITED
and
DABEER DISTRIBUTORS LIMITED
and
ICONIC AMERICA LIMITED
---------------------------------------
NOVATION AGREEMENT
---------------------------------------
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<PAGE>
THIS NOVATION AGREEMENT is made the 3rd day of October 1996
BETWEEN
1. SCBC DISTRIBUTION COMPANY LIMITED, ("SCBC") a company incorporated in Hong
Kong;
2. DABEER DISTRIBUTORS LIMITED, ("DDL") a company incorporated in Hong Kong;
and
3. ICONIC AMERICA LIMITED, ("IAL") a company incorporated in Hong Kong.
WHEREAS
(1) This Novation Agreement is supplemental to an agreement dated 23rd
September, 1995 made between SCBC and DDL, as amended by an instrument dated
15th December, 1995, ("the Brewing Agreement"), a copy of which is attached
hereto and marked "A".
(2) SCBC and IAL wish to enter into a brewing agreement upon the signing hereof
in substantially the form as attached hereto and marked "B" ("the New
Brewing Agreement").
(3) DDL wishes to be released and discharged from the Brewing Agreement and SCBC
has agreed to release and discharge DDL upon the terms that IAL shall
undertake to perform the obligations of DDL under the Brewing Agreement as
set
-1-
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<PAGE>
out herein and to settle certain accrued obligations of DDL thereunder upon
the terms and conditions hereinafter appearing.
NOW IT IS HEREBY AGREED as follows:-
1. IAL hereby undertakes to perform the Brewing Agreement and to be bound by
its terms in every way as if IAL were a party to the Brewing Agreement in
lieu of DDL, save that in the event of conflict or ambiguity between the
terms of the Brewing Agreement and the New Brewing Agreement, the terms of
the New Brewing Agreement shall prevail.
2. Upon the signing hereof, SCBC and IAL shall enter in the the New Brewing
Agreement.
3. Upon the signing hereof and subject to the execution of the New Brewing
Agreement:-
(a) SCBC hereby absolutely and unconditionally releases and discharges DDL
from all claims and demands whatever in respect of the Brewing Agreement
and accepts the liability of IAL under the Brewing Agreement in lieu of
the liability of DDL and agrees to be bound by the terms of the Brewing
Agreement in every way as if IAL were named in the Brewing Agreement as
a party in lieu of DDL;
-2-
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<PAGE>
(b) DDL hereby absolutely and unconditionally releases and discharges SCBC
from all claims and demands in respect of the Brewing Agreement
including without limitation any claim for repayment in whole or in part
of the Deposit (as defined in Clause 5).
4. (a) IAL agrees to pay to SCBC the sum of HK$51,500 and SCBC accepts such sum
in full and final settlement of all obligations and liability of DDL in
respect of its failure to meet the minimum order pursuant to Clause 4
(b) (ii) of the Brewing Agreement.
(b) IAL shall have no claim against DDL arising out of the payment referred
to in Clause 4 (a) above.
5. SCBC agrees with IAL and DDL to hold the sum of HK$133,900 received from DDL
as deposit under Clause 7 of the Brewing Agreement ("the Deposit")
henceforth for the account of IAL and DDL hereby confirms and acknowledges
that it shall have no claim in respect of the Deposit against either SCBC or
IAL.
6. IAL agrees to settle the liability of HK$300,200 incurred by DDL under the
Brewing Agreement in respect of a shortfall or orders thereunder by placing
orders with SCBC for the supply of beer on the following basis:-
(a) The invoice value of all beer ordered, delivered and
-3-
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<PAGE>
paid for in excess of redacted kegs per month as specified in the New
Brewing Agreement will be deducted from the shortfall amount of
HK$300,200 until such amount is eliminated;
(b) If the New Brewing Agreement terminates by effluxion of time on 31st
October, 1997 and at such time there remains any balance of the said
shortfall amount outstanding, SCBC may deduct such balance and any other
accrued liabilities of IAL under the New Brewing Agreement from the
Deposit and any balance remaining shall forthwith be paid to IAL. IAL
shall be liable to SCBC for any part of the said shortfall amount and
any other such accrued liabilities which may remain outstanding.
(c) In the event of IAL exercising its right to terminate the New Brewing
Agreement prior to 31st October, 1997 pursuant to Clause 8 thereof, the
Deposit shall be dealt with as set out in such Clause 8.
7. This Agreement and the documents referred to herein constitute the entire
agreement between the parties relating to the subject matter hereof and
supersede all prior agreements arrangements or understandings whether oral
or written. Any waiver, modification or variation to this Agreement shall
not be valid unless made in
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<PAGE>
<PAGE>
writing and signed by the parties hereto.
8. This Agreement shall be governed by and construed in accordance with the
laws of Hong Kong and the parties hereto submit to the exclusive
jurisdiction of the Hong Kong courts.
AS WITNESS the hands of the authorised officers of the parties the day and year
first before written.
SIGNED by /s/ David K. Haines )
for and on behalf of SCBC )
DISTRIBUTION COMPANY LIMITED )
in the presence of: /s/ David Larid )
SIGNED by /s/ Adrian J. King )
for and on behalf of DABEER )
DISTRIBUTORS LIMITED in the )
presence of: /s/ David Larid )
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<PAGE>
<PAGE>
SIGNED by /s/ Adrian J. King )
for and on behalf of ICONIC )
AMERICA LIMITED in the )
presence of: /s/ David Larid )
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<PAGE>
<PAGE>
Dated this 3rd day of October 1996
SCBC DISTRIBUTION COMPANY LIMITED
and
ICONIC AMERICA LIMITED
---------------------------------------
BREWING AGREEMENT
---------------------------------------
<PAGE>
<PAGE>
BREWING AGREEMENT
THIS AGREEMENT is made the 3rd day of October, 1996.
BETWEEN
SCBC DISTRIBUTION COMPANY LIMITED ("SCBC"), a company incorporated in Hong Kong
AND
ICONIC AMERICA LIMITED ("IAL"), a company incorporated in Hong Kong
THE PARTIES AGREE AS FOLLOWS:
1. APPOINTMENT
IAL hereby appoints and engages SCBC with effect from 1st August 1996 to
prepare, brew and supply two (2) private label beers exclusively for IAL and in
addition, through its BB's Bar and Brassiere outlet, IAL will order, stock and
dispense no less than three (3) SCBC beers for a period of fifteen (15) months
from August 1st 1996 to October 31st 1997. The parties undertake to commence
negotiations in good faith for the replacement of this contract no later than
August 1st 1997. IAL agrees not to engage any other company to supply exclusive
beers for its Hong Kong outlet located at G/F, 114-120 Lockhart Road, Wanchai,
Hong Kong, for the term of this contract.
2. PRODUCT
(a) SCBC will supply two (2) house beers which will be Signal 8 Stout and
Breen's Brew and no less than three (3) SCBC products.
(b) All beer will be supplied in 30 litre lightweight kegs ("Kegs")
(c) SCBC and IAL will work together to develop and agree the style and recipe
for the beers.
(d) IAL will be entitled to determine the name of the beers and to design a
label and motif under which the beer shall be distributed. IAL will own the
copyright and all other intellectual rights pertaining to the name and the
label and motif.
(e) SCBC will own all rights pertaining to the recipe for the beer (the
"Recipe")
(f) During the term of this contract and any future contract for the supply of
the beers by SCBC to IAL beer brewed in accordance with the Recipe will be
supplied by SCBC only to IAL or any other party or parties whom IAL in its
absolute discretion may nominate.
-1-
<PAGE>
<PAGE>
(g) SCBC guarantees that all beers delivered will be of merchantable quality and
of a consistent standard and further guarantees the beers against spoilage
for a period of three months from its production and will promptly replace
at its cost any beer that spoils within that time providing clause 5(b) of
this agreement is complied with.
3. ORDERS
(a) IAL shall order at least redacted total of beer per month.
(b) Sales will be reviewed on a quarterly basis and adjustments in costs be made
forthwith.
(c) In response to particular orders by IAL, SCBC shall supply beer to IAL
within three (3) weeks after IAL places such order.
4. PRICE AND PAYMENT
REDACTED
(b) Payment for all deliveries exceeding pre-paid redacted will be totaled and
payable on the first of the following month.
(c) Fifteen (15) days grace will be provided on each payment, though IAL shall
endeavor to make payment on date due. All payments past fifteen (15) days
will incur an interest penalty equal to three percent (3%) per month on all
outstanding balances.
(d) The price of the beer shall be determined in accordance with the cumulative
amount of beer delivered as described in this contract and shall be:
REDACTED
(e) The partie shall negotiate in good faith to determine the price for
extraordinary beer orders such as specialty bottling, exceptional beer
styles and recipes and the production of beer for special events and/or
non BB's distribution.
5. DISTRIBUTION AND DELIVERY SYSTEMS
(a) SCBC shall deliver the beer to IAL at two (2) locations within Hong Kong
island as designated by IAL.
(b) IAL shall provide cold storage (between 5 and 10 degrees celsius) for the
beers.
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<PAGE>
<PAGE>
(c) IAL shall be responsible to provide all systems required to deliver beer
from Kegs to glasses. SCBC shall consult with IAL to assist IAL to design,
install and maintain such systems. SCBC will provide adequate tower signage
for each product.
6. TRAINING/INCENTIVE
At IAL's request, SCBC will at its own expense provide training to IAL's staff
or assignees in relation to the beer, its delivery and how best to serve and
sell it. Such training shall be conducted in sessions to be held not more than
once per month.
SCBC will provide a monthly staff incentive to IAL to dispense as it so desires.
7. DEPOSIT
(a) IAL shall forthwith procure payment to SCBC of a deposit of HK$133,900.00
(the "Deposit") receipt of which is hereby acknowledged by SCBC.
(b) If this agreement terminates by effluxion of time on 31st October 1997 the
Deposit will be refunded to IAL, subject to SCBC deducting any accrued
liabilities of IAL under this agreement.
(c) If this agreement is terminated by IAL in accordance with Clause 8 hereof,
IAL shall not be entitled to a refund of the Deposit which will be
forfeited to SCBC and IAL will also be liable to SCBC for any accrued
liabilities under this agreement.
8. TERMINATION OF THE AGREEMENT
(a) IAL may terminate this agreement at any time by giving SCBC no less than one
month's notice in writing of its intention to do so.
(b) This agreement may be terminated forthwith by either party without prior
notice on the occurrence of any of the following events:-
(i) If the other party enters into liquidation (other than for the purpose
of reconstruction or amalgamation where the new or reconstructed
company offers to and in fact does enter into a contract with the
party not in default in the same terms as herein before such
liquidation) or passes any resolution for winding up (whether
voluntary or compulsory) or has any petition for winding up presented
against it; or has any execution levied against it which remains
unsatisfied after 7 days or enters into any compromise with its
creditors.
(ii) If the other party commits any act of bankruptcy or insolvency
according to the Laws of Hong Kong or any other jurisdiction whether
in Hong Kong or elsewhere.
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<PAGE>
<PAGE>
(iii) If the other party is in continued breach of any of the provisions
hereof 10 days after the party not in default has served notice
requiring the same to be remedied.
9. INTERPRETATION
This Agreement constitutes the entire agreement between the parties relating to
the subject matter hereof and supersedes all prior agreements arrangements or
understandings whether oral or written. Any waiver, modification or variation to
this Agreement shall not be valid unless made in writing and signed by parties
hereto.
10. GOVERNING LAW
This agreement shall be governed by and constructed in accordance with the laws
of Hong Kong and the parties hereto submit to the exclusive jurisdiction of the
Hong Kong courts.
AS WITNESS the hands of the authorised officers of the parties the day and year
first before written.
SIGNED by /s/ David K. Haines )
For and on behalf of SCBC )
DISTRIBUTION COMPANY )
LIMITED in the )
presence of: /s/ David Larid )
SIGNED by /s/ David K. Haines )
For and on behalf of )
ICONIC AMERICA LIMITED )
in the presence of: /s/ David Larid )
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<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet of American Craft Brewing International Limited
and its Subsidiaries as of July 31, 1996, and the consolidated statements of
operations for the nine months ended July 31, 1996, and 1995, and is
qualified in its entirety by reference to such financial statements (the
"Financial Statements").
</LEGEND>
<S>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> OCT-31-1996 OCT-31-1995
<PERIOD-START> NOV-01-1995 NOV-01-1994
<PERIOD-END> JUL-31-1996 JUL-31-1995
<CASH> 57,433 0
<SECURITIES> 0 0
<RECEIVABLES> 84,486 0
<ALLOWANCES> 1,766 0
<INVENTORY> 31,268 0
<CURRENT-ASSETS> 195,783 0
<PP&E> 726,717 0
<DEPRECIATION> 70,332 0
<TOTAL-ASSETS> 1,543,016 0
<CURRENT-LIABILITIES> 1,319,578 0
<BONDS> 0 0
<COMMON> 20,000 0
0 0
0 0
<OTHER-SE> 182,215 0
<TOTAL-LIABILITY-AND-EQUITY> 1,543,016 0
<SALES> 355,707 6,755
<TOTAL-REVENUES> 355,707 6,755
<CGS> 74,747 8,845
<TOTAL-COSTS> 435,773 290,302
<OTHER-EXPENSES> 1,034 1,128
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 36,086 15,644
<INCOME-PRETAX> (117,186) (300,319)
<INCOME-TAX> (12,829) (49,553)
<INCOME-CONTINUING> (104,357) (250,766)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (104,357) (250,766)
<EPS-PRIMARY> (0.05) <F1> (0.12) <F1>
<EPS-DILUTED> 0 0
<FN>
<F1>Refer to Note 3 of the Notes to the Financial Statements for discussion of
total common shares used in EPS.
</TABLE>
